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Arizona Solar Center Blog

Commentary from Arizona Solar Center Board Members and invited contributors.

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Net Metering: Point-Counterpoint Responses to the ACC Staff’s Recommendations

This week’s Sun Day Blog(s) covers both sides of the issue of the Net Metering debate. APS and AriSEIA (Arizona Solar Energy Industries Association) were asked to provide their respective positions on the Arizona Corporation Commission Staff’s recommendations concerning the net metering proposed changes offered earlier this summer by APS.


Net Metering: The APS Response to the ACC Staff’s Recommendations

By Rex Stepp, Renewable Energy Program Leader for Arizona Public Service and former board member of the Arizona Solar Center.

Very simply, we all want the same thing – solar that is sustainable for the long term and a reliable electric grid (and one that is paid for fairly by all customers who use it).

Last week, Arizona Corporation Commission staff issued a report making clear that the current net metering structure shifts costs to customers without solar and must be changed. Staff writes that:

with increasing levels of DG (distributed generation) penetration, the potential of shifting costs from customers with DG systems to those customers without such systems becomes apparent.  As more customers offset a portion of their monthly bills by using energy produced by their DG systems, they purchase less energy from the utility.  Because residential rates are typically designed to recover much of the utility’s fixed costs through volumetric energy rates, DG customers effectively pay less of these fixed costs. The additional fixed costs then must be picked up by non-DG customers either through higher energy rates or through other mechanisms such as APS’s Lost Fixed Cost Recovery mechanism.” [Staff Report, p. 5 (emphasis added)]

Further, Staff acknowledges that, “the magnitude and significance of this cost shift increases as more and more DG systems are added to the utility’s system.” [Staff Report, p. 5].  Staff’s report comes less than a week after the California Public Utilities Commission released a draft version of an important study that provides additional insight into the cost shift caused by net metering.  The CPUC concludes that net metering will shift $1.1 billion to non-solar customers by 2020 if left unchanged.

Since the beginning, APS has made the case that current net metering rules cause APS customers without rooftop solar to pay higher electricity rates. They pay those higher rates to cover the costs of maintaining a reliable electric grid because customers with rooftop solar essentially use the grid for free.  The Staff report agrees that the current net metering structure is not fair for all customers and must be changed. We are encouraged by Staff’s recognition as a starting point, but Staff’s recommendation to wait would do nothing to address a growing cost shift that is unfair and will be increasingly difficult to solve if left to expand.  Staff has recommended an alternative framework that could address the customer fairness issue if accurate data is used and we look forward to exploring that further.

Perhaps what is most encouraging is that the Staff report changes the conversation from “whether” there is an issue to “how” the issue should be addressed. We welcome Staff’s acknowledgment and look forward to working with Staff and others on finding the best solution for customers.

We continue to believe that APS’s original proposals are the best solution, and that the Commission should embrace up-front incentives as a flexible and transparent means to encourage rooftop solar. Staff’s recommendation is just one step in the process. The Commission will now review Staff’s recommendation and hold an open meeting to discuss and consider the future of net metering in Arizona. Action now on this issue is the best way to ensure that solar is sustainable and a key part of Arizona’s energy future.


Net Metering: AriSEIA’s Response to the ACC Staff’s Recommendations

By AriSEIA

The Arizona Corporation Commission Staff gets it absolutely right with its Recommended Opinion and Order (the “ROO”) in the net metering docket. Among the most interesting of Staff’s findings is that despite all APS’s talk about fairness to non-solar ratepayers, APS proposes solving this “fairness” issue by taxing the heck out of the only technological alternative to its monopoly dominated service and increasing its profits while giving nothing back to its non-solar customers.  That doesn’t sound fair, that sounds like a monopoly’s protectionist agenda.   

Rooftop solar sits right now as the only downward check on the monopoly’s otherwise unimpeded desire to slowly and steadily raise rates.  Rooftop solar is the only competitive market force having the power to make a utility reevaluate its desire to increase rates.  Businesses act more favorably toward their customers when those customers have alternatives.  It is no wonder that utilities around the Country have joined together in an effort to stop or slow the adoption of this new technology that, according to the utilities’ own industry organization, threatens the monopoly utility business model.  Oh yes, APS goes out of the way to say it loves solar but the facts are the facts. APS’s own annual report identifies its customers adopting solar as a threat to its profits and it repeatedly has been linked in the media to shady organizations that are pushing a resoundingly anti-solar message.  Bottom line, APS loves to own and make money off of solar but unquestionably dislikes it when its customers own solar.     

Staff hits the nail on the head that this issue is an issue of rate design –not a solar issue- and is one that must be dealt with in a general rate case.  APS has yet to offer any plausible explanation for why, less than six months after the conclusion of its last general rate case, a substantial issue that had to be dealt with immediately arose out of nowhere.  APS is in the business of planning for the future –aside from serving power that is what it does- and it is inconceivable that it is capable of being surprised to such an extent by the simple operation of the distributed solar market.  

With no evidence admitted; no witnesses examined or cross examined; no investigation of the fair value of APS’s assets; and simply no due process, how can a Commissioner possibly make an accurate decision? Corporation Commission Staff rightly points out that this docket does not permit the required level of exacting scrutiny needed to make such a decision.  The Commission Staff clearly concluded that it could not make a decision with the information it has before it.  This is why AriSEIA believes that the only way to even approach getting to the right answer here is to do so in a rate case setting where all the facts are on the table.  

What APS has identified is not a solar issue.  It’s a rate design issue and it must be dealt with in a rate case. 

 

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Comments 4

Nik on Sunday, 13 October 2013 12:29

APS is only looking out for themselves. They will be the only ones benefiting from the change. Solar customers will suffer, solar companies will suffer, the earth will suffer, jobs will be lost... We are supposed to be on the side of going "green". The only green APS really supports is higher profits!

APS is only looking out for themselves. They will be the only ones benefiting from the change. Solar customers will suffer, solar companies will suffer, the earth will suffer, jobs will be lost... We are supposed to be on the side of going "green". The only green APS really supports is higher profits!
James Pitre on Sunday, 13 October 2013 13:25

The issue of fairness may need to be addressed, however by far the more important issue is how do we collectively establish a policy to ensure that we will have adequate power to replace coal and in the longer term gas fired generation. Given that there is no National or State level comprehensive energy plan we are currently on a suicide mission. It is my opinion that the State must take a much stronger position in our energy future as it cannot be left to independent monopolies to plan and act in a hodgepodge fashion for the greater good of our society. A good start would be to separate distribution from generation. Encourage small producers to participate in power generation on a level playing field with the real costs of distribution factored into the equation. Small local generation adds much less distribution cost than large central systems, and, in the long run will also provide for a more resilient system with the right design - pricing paid by the distribution system would therefore be higher to the small local producers. Fossil fuel based systems must be paid less by way of a set-aside fund or tax to compensate for the true pollution and health costs inflicted on the public.

It is time to get our heads out of the sand and plan so that our future generations will benefit inherit a rational system rather pretending that all is well as is and that all we need to do is shuffle some paper to overpay the monopolies

Jim Pitre

The issue of fairness may need to be addressed, however by far the more important issue is how do we collectively establish a policy to ensure that we will have adequate power to replace coal and in the longer term gas fired generation. Given that there is no National or State level comprehensive energy plan we are currently on a suicide mission. It is my opinion that the State must take a much stronger position in our energy future as it cannot be left to independent monopolies to plan and act in a hodgepodge fashion for the greater good of our society. A good start would be to separate distribution from generation. Encourage small producers to participate in power generation on a level playing field with the real costs of distribution factored into the equation. Small local generation adds much less distribution cost than large central systems, and, in the long run will also provide for a more resilient system with the right design - pricing paid by the distribution system would therefore be higher to the small local producers. Fossil fuel based systems must be paid less by way of a set-aside fund or tax to compensate for the true pollution and health costs inflicted on the public. It is time to get our heads out of the sand and plan so that our future generations will benefit inherit a rational system rather pretending that all is well as is and that all we need to do is shuffle some paper to overpay the monopolies Jim Pitre
Jim Stack on Monday, 14 October 2013 09:31

So when a solar customer makes extra energy right during the Peak hours and it flows to a neighbors house and APS bills that customer the full price they don't want to give credit to the Solar home that made the power. When the reduced loads on their transformers keep them from failing they don't want to give any credit to the Solar homes. When they don't have to build or upgrade a large transmission line because the loads are lower they don't want to give any credit to the solar home owner.
When a Solar customer helps reduce loads during the Peak day hours and uses the excess that the GRID has at night that normally gets dumped because APS has no way to store it or ramp down Palo Verde that helps everyone they don't want to give the Solar home owner any credit.

Even a 5th grader can see this doesn't seem fair. How can we work together on being fair? Why should the Solar home owner pay a huge monthly fee to help the GRID when they are already helping the GRID. They improve the PF Power Factor, reduce day loads and use excess at night. We already pay a connection fee every month that is supposed to help with the infrastructure.
People that don't help the GRID or reduce Peak loads should pay extra not solar home owners.
People that create pollution we all have to live with should pay extra not Solar home owners.
Utilities that import COAL and Uranium should pay extra, a lot extra.

So when a solar customer makes extra energy right during the Peak hours and it flows to a neighbors house and APS bills that customer the full price they don't want to give credit to the Solar home that made the power. When the reduced loads on their transformers keep them from failing they don't want to give any credit to the Solar homes. When they don't have to build or upgrade a large transmission line because the loads are lower they don't want to give any credit to the solar home owner. When a Solar customer helps reduce loads during the Peak day hours and uses the excess that the GRID has at night that normally gets dumped because APS has no way to store it or ramp down Palo Verde that helps everyone they don't want to give the Solar home owner any credit. Even a 5th grader can see this doesn't seem fair. How can we work together on being fair? Why should the Solar home owner pay a huge monthly fee to help the GRID when they are already helping the GRID. They improve the PF Power Factor, reduce day loads and use excess at night. We already pay a connection fee every month that is supposed to help with the infrastructure. People that don't help the GRID or reduce Peak loads should pay extra not solar home owners. People that create pollution we all have to live with should pay extra not Solar home owners. Utilities that import COAL and Uranium should pay extra, a lot extra.
Jim Stack on Tuesday, 22 October 2013 19:56

Also note we have to have a way to control SRP, that is a government entity and not regulated the the Corp. Commission. Along with other small power utilities in the state like The City of Mesa's Energy Resources Department Electric. AEPCO owns and operates Apache Generating Station in Cochise, Ariz and many others. How can we get all of them to offer a fair Net-Metering rate?
It seems more and more we need a National plan and rate. Just like FERC The Federal commission we need one plan for the entire state and country. http://www.ferc.gov/ It seems they should have already made a ruling. see below.

Federal Interconnection Standards (from the seia website http://www.seia.org/policy/distributed-solar/interconnection-standards )

The Federal Government, through the Federal Energy Regulatory Commission (FERC) has jurisdiction over the interconnection of distributed generation solar projects involving the sale of electricity to a utility. In 2005, FERC issued standards for small generator interconnection procedures applicable to projects that generate 20 megawatts (MW) or less. Federal standards were a very positive development, but they have since become outdated due to the dramatic increase in solar market penetration. Interconnection poses particular issues for the growing solar wholesale distributed generation (DG) market as the volume of projects to be interconnected creates delays

Also note we have to have a way to control SRP, that is a government entity and not regulated the the Corp. Commission. Along with other small power utilities in the state like The City of Mesa's Energy Resources Department Electric. AEPCO owns and operates Apache Generating Station in Cochise, Ariz and many others. How can we get all of them to offer a fair Net-Metering rate? It seems more and more we need a National plan and rate. Just like FERC The Federal commission we need one plan for the entire state and country. http://www.ferc.gov/ It seems they should have already made a ruling. see below. Federal Interconnection Standards (from the seia website http://www.seia.org/policy/distributed-solar/interconnection-standards ) The Federal Government, through the Federal Energy Regulatory Commission (FERC) has jurisdiction over the interconnection of distributed generation solar projects involving the sale of electricity to a utility. In 2005, FERC issued standards for small generator interconnection procedures applicable to projects that generate 20 megawatts (MW) or less. Federal standards were a very positive development, but they have since become outdated due to the dramatic increase in solar market penetration. Interconnection poses particular issues for the growing solar wholesale distributed generation (DG) market as the volume of projects to be interconnected creates delays
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Tuesday, 23 January 2018

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