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

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.