Fri, Dec 15, 2017
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Arizona Solar Center Blog

Commentary from Arizona Solar Center Board Members and invited contributors.

While blog entries are initiated by the Solar Center, we welcome dialogue around the posted topics. Your expertise and perspective are highly valued -- so if you haven't logged in and contributed, please do so!

The $500 Million Question

There’s an important struggle being waged over solar energy in Arizona. At issue is whether utilities can charge residents who've installed solar-power equipment substantial fees.

Utilities are required to purchase any excess electricity private solar producers create, but the state’s largest utility, Arizona Public Service Co., is asking the Arizona Corporation Commission (ACC) to allow it to levy fees for these residential customers’ “use” of APS transmission lines. In addition, APS wants to cut in half the rate it pays these independents for the energy they produce.

The stakes in the so-called “net-metering” battle are colossal. 

On Aug. 26 a notice was sent to a number of APS customers outlining an upcoming deadline to install solar before the new APS net-metering fees take hold. The notice was sent in error. No changes have been approved by the ACC. Any decision is months off, and there’s no guarantee the ACC will grant APS’s wish. 

Still, the notice and the prospects of new rules have alarmed solar homeowners.

APS’s plan would not only destabilize energy costs and undermine energy independence offered by the distributed-rooftop generators, it would also result in a direct hit on nearly $500 million in home values across the state.

While utility and solar advocates talk past one another on the wisdom of APS’s proposal, the issue of home values has yet to emerge as more than a footnote in the exchange.

That doesn’t sit well with Surprise residents Jon and Rita Wittig.  Last year the couple, both 67, locked into a 20-year lease for a rooftop solar system for which they pay $82.82 a month.

As part of the public-comment process on the net-metering proposal, Jon wrote to the ACC to explain that the new rules would make it hard to sell his home.  No buyer will want to assume the $82.82-a-month lease payment for a solar electric system whose value is offset by a “new” $50-100 surcharge imposed on solar-users only, on top of a 50 percent reduction the utility would be willing to pay for their excess clean energy.    

As a result, the value of the Wittigs' house could plunge by $20,000.

Harold Baas and his wife are retired and living on fixed incomes in Payson.  The couple recently spent $8,000 for a fully prepaid 20-year lease for a rooftop solar system.  Harold told the ACC that APS actively encouraged him and other customers to consider residential roof-top solar arrays.  He says up-front financial incentives in the form of rebates, continuing incentives in the form of net-metering and transferability to subsequent owners upon sale were heavily marketed to the customers of APS.

But, if new rules are passed, the Baas', Wittigs, plus many others, will find themselves in a 20-year trap with no way out. Although they could be grandfathered in under the "old" rules,  those rules would not be transferable upon the sale of their property.

Walter Urback Jr. is a 79-year-old retired Army colonel living in Sun City West. He tells the ACC he believed APS when the utility touted the benefits to the state and the homeowner with respect to the installation of rooftop solar panels for the generation of electricity.  He signed his contract in 2008 and had an out-of-pocket expense of nearly $35,000.

Walter knew he would never live long enough to see the system pay for itself, but an important factor in his decision was knowing that he was not only helping the state solve future energy needs, but whomever bought his home would have a substantial asset that would be reflected in the sales price.

Larry Blodgett , another rooftop solar energy producer, writes that he, too, was showered with information from APS encouraging him to install solar panels on his central Phoenix home.  He says he was told solar was good for the environment, that he would save money each month and it would increase the value of his home.  Less than a year ago, Larry and his wife decided to install solar panels on their roof. 

Unfortunately, he says, the proposed new rules would not only reduce his home’s overall value – it would make it much less desirable for a new buyer and more difficult for him to sell when the time comes.

Larry says he wouldn’t have bought the solar system had he known that APS could change the terms of the contract.

It is a story that is being repeated all over the state.    

Determining the increased home value of a solar rooftop system is not rocket science.  The National Remodelers Association and Wells Fargo Bank used to promote the same formula to determine value.  Multiply the annual energy savings by 20 – and you have the anticipated energy cost savings over the life of the system.  That is the increased value of the home. So, if as APS says the average system saves $1,000 a year – this number would be multiplied by 20 to establish the increased home value – which would be $20,000. Each year the multiplier would decrease by one to reflect one less year on the expected life of the system.

If the proposed rule changes are approved, Arizonans who’ve taken the solar leap would see their investment in rooftop solar-generating equipment gutted and the value of their homes diminish.  The nearly 25,000 new rooftop solar systems across the state would calculate to $500 million in potential stranded investments on Arizona rooftops. 

With this much at stake, one can anticipate that if the APS net-metering rule is instituted, class-action attorneys will pounce on the opportunity to remedy the injuries sustained by these property owners.

Jim Arwood
Communications Director
Arizona Solar Center

 

Question: Should the ACC consider the impact to property values when deliberating whether to change the net metering rules and impose new fees? Should the existing rules apply to the system and thus be transferable upon the sale of a house, or should "new" rules (if adopted) be applied to future owners of an existing rooftop solar system?

Please weigh in below in the comment section. (You must be registered on the website to comment.)

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Comments 6

Mark Lyzwa on Sunday, 08 September 2013 10:00

The ACC should definitely “consider” the severe negative impact to property values when deliberating about APS’es proposal to decimate their net metering requirement(s). In all good conscience the existing rules should unquestionably be transferable upon the sale of these thousands of homes. The ACC should do what is morally and ethically right by their citizenry when deciding about all of APS’es proposals to change their net metering requirements.

The ACC should definitely “consider” the severe negative impact to property values when deliberating about APS’es proposal to decimate their net metering requirement(s). In all good conscience the existing rules should unquestionably be transferable upon the sale of these thousands of homes. The ACC should do what is morally and ethically right by their citizenry when deciding about all of APS’es proposals to change their net metering requirements.
Jim Stack on Sunday, 08 September 2013 08:17

YES, the ACC has to consider the impact to local businesses , consumers and the environment. That's why we pay them over $100K a year each in salary. If not get out of the way and we will get some who will make the best choices for our state and world.

In FACT the rules can only apply to new systems. BUT the utilities should pay us all what they charge for Renewable Energy at Peak Time Of Day. That's over 35 cents a kWh not night time avoided cost. Pay what's it's worth and be fair and honest about it.

YES, the ACC has to consider the impact to local businesses , consumers and the environment. That's why we pay them over $100K a year each in salary. If not get out of the way and we will get some who will make the best choices for our state and world. In FACT the rules can only apply to new systems. BUT the utilities should pay us all what they charge for Renewable Energy at Peak Time Of Day. That's over 35 cents a kWh not night time avoided cost. Pay what's it's worth and be fair and honest about it.
greg collins on Sunday, 08 September 2013 09:10

If APS is allowed to destroy the net metering rule, Arizona will blow a big opportunity to become the solar capital of North America. While I admit that the jury is still out on what the future will be for energy production in our world, solar has a good potential of being at least a big percentage of it. Its clean, unlimited qualities are unmatched by the other energy sources. There are other considerations to energy production besides least cost - ask Japan about nukes, and the Harvard Medical school about the health effects of burning coal. So what if solar is more expensive? I can tell you that the public perception is that Arizonans know we have lots of sun and believe in solar power. Yes, there are intermittency problems to solve, but if we would lead out in supporting solar and do what it takes to make it work, Arizona could capture this industry. Let's be fair - have the coal and nuclear industries pay the full costs of their technology and the solar industry will be happy to pay the full costs of interconnect metering.

If APS is allowed to destroy the net metering rule, Arizona will blow a big opportunity to become the solar capital of North America. While I admit that the jury is still out on what the future will be for energy production in our world, solar has a good potential of being at least a big percentage of it. Its clean, unlimited qualities are unmatched by the other energy sources. There are other considerations to energy production besides least cost - ask Japan about nukes, and the Harvard Medical school about the health effects of burning coal. So what if solar is more expensive? I can tell you that the public perception is that Arizonans know we have lots of sun and believe in solar power. Yes, there are intermittency problems to solve, but if we would lead out in supporting solar and do what it takes to make it work, Arizona could capture this industry. Let's be fair - have the coal and nuclear industries pay the full costs of their technology and the solar industry will be happy to pay the full costs of interconnect metering.
James Pitre on Sunday, 08 September 2013 09:22

For the consumer, solar is a marginal investment at best. Most of us who have invested in the past did so to be good citizens and help out our collective energy problems in addition to any minimal personal advantage. To change the rules now is unconscionable and cannot be tolerated in a civilized society. More of the Wall Street attitude based on greed rather than any thought about what is best morally or best overall for our economy and future. The Arizona Corporation Commission and the utilities sucked us into the whole idea of grid-tied solar and are now wanting to change the rules to the detriment of all who bought into the concept - both from the point of view of the consumers and installers. The whole program has been poorly thought out and one of manipulation from day one rather than a program genuinely designed to promote a solid solar industry and base for our energy future.
Energy-wise, we do not have a clear, integrated plan that gives us all a path to work to for the future. The utilities and regulators alike have adopted knee-jerk reaction planning techniques that are seriously detrimental to our energy future and will cripple (has crippled) development of a viable renewable energy industry. This APS plan is an example of piecemeal planning that is extremely detrimental to our renewable energy industry and must not be allowed to move forward.

For the consumer, solar is a marginal investment at best. Most of us who have invested in the past did so to be good citizens and help out our collective energy problems in addition to any minimal personal advantage. To change the rules now is unconscionable and cannot be tolerated in a civilized society. More of the Wall Street attitude based on greed rather than any thought about what is best morally or best overall for our economy and future. The Arizona Corporation Commission and the utilities sucked us into the whole idea of grid-tied solar and are now wanting to change the rules to the detriment of all who bought into the concept - both from the point of view of the consumers and installers. The whole program has been poorly thought out and one of manipulation from day one rather than a program genuinely designed to promote a solid solar industry and base for our energy future. Energy-wise, we do not have a clear, integrated plan that gives us all a path to work to for the future. The utilities and regulators alike have adopted knee-jerk reaction planning techniques that are seriously detrimental to our energy future and will cripple (has crippled) development of a viable renewable energy industry. This APS plan is an example of piecemeal planning that is extremely detrimental to our renewable energy industry and must not be allowed to move forward.
Terry Howlett on Monday, 09 September 2013 10:40

YES to both questions.
Question: Should the ACC consider the impact to property values when deliberating whether to change the net metering rules and impose new fees? Should the existing rules apply to the system and thus be transferable upon the sale of a house, or should "new" rules (if adopted) be applied to future owners of an existing rooftop solar system?

I had a rooftop solar system installed a few months ago thinking that I would lower my electricity bill, increase the resale value of my residence and help the world by using less fossil and nuclear fuel. I understand that I will be "grandfathered" with net-metering if APS gets their way but not the future owner when I sell. This will obviously devalue my house when I sell. I have done a lot of research on this subject since I first learned of the monopoly APS proposing it. What I fail to understand is WHY APS doesn`t want to pay me at the same rate (or a fair rate) as they pay nuclear and coal burning plants for electricity generation. The electricity I provide to APS is CLEAN and does not require all the expensive infrastructure and does not have the power loss as the long transmission lines. If someone can explain this to me please do so at thowlett@centurylink.net.

In my opinion, the ACC should consider that the APS proposal would just about kill the solar industry in Arizona. This would be bad for the country and put a lot of people out of work. Everyone says "go green, save our environment", I did and this proposal is what I get from APS. The employees at APS should be ashamed of themselves.

If the ACC approves the APS proposal or any form of change, they should be fired.

YES to both questions. Question: Should the ACC consider the impact to property values when deliberating whether to change the net metering rules and impose new fees? Should the existing rules apply to the system and thus be transferable upon the sale of a house, or should "new" rules (if adopted) be applied to future owners of an existing rooftop solar system? I had a rooftop solar system installed a few months ago thinking that I would lower my electricity bill, increase the resale value of my residence and help the world by using less fossil and nuclear fuel. I understand that I will be "grandfathered" with net-metering if APS gets their way but not the future owner when I sell. This will obviously devalue my house when I sell. I have done a lot of research on this subject since I first learned of the monopoly APS proposing it. What I fail to understand is WHY APS doesn`t want to pay me at the same rate (or a fair rate) as they pay nuclear and coal burning plants for electricity generation. The electricity I provide to APS is CLEAN and does not require all the expensive infrastructure and does not have the power loss as the long transmission lines. If someone can explain this to me please do so at thowlett@centurylink.net. In my opinion, the ACC should consider that the APS proposal would just about kill the solar industry in Arizona. This would be bad for the country and put a lot of people out of work. Everyone says "go green, save our environment", I did and this proposal is what I get from APS. The employees at APS should be ashamed of themselves. If the ACC approves the APS proposal or any form of change, they should be fired.
tom on Monday, 09 September 2013 13:18

well i musy say this, as a retired person i puy solar on my roof to save energy not to make money. Being retired and the cost of living ever going up monthly i did for economic reasons only. I am on a fixed income and now with this stareing in the face i now could lose not only my ability to pay my bills but noe lose my home. Gas,food,utilitys,water,garbage,doctor bills,insurance and it goes on and on!!!!!!!! The government has not helped us either, yes we on a fixed income with our social security. I thought at last a way to save some of my income but now i am looking at total loss not a gain.

well i musy say this, as a retired person i puy solar on my roof to save energy not to make money. Being retired and the cost of living ever going up monthly i did for economic reasons only. I am on a fixed income and now with this stareing in the face i now could lose not only my ability to pay my bills but noe lose my home. Gas,food,utilitys,water,garbage,doctor bills,insurance and it goes on and on!!!!!!!! The government has not helped us either, yes we on a fixed income with our social security. I thought at last a way to save some of my income but now i am looking at total loss not a gain.
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