Navigant Research Blog

In Arizona, A Net Metering Truce

Richelle Elberg — November 27, 2013

The Arizona Corporation Commission (ACC) voted 3-2 on November 14 to approve a change to the state’s net metering policy, requiring that new solar panel owners (after December 13) be required to pay a surcharge of $0.70 per kWh of capacity, beginning January 1, 2014.  The average Arizona solar panel owner is expected to pay about $4.90 per month under the new rule, which came in response to a petition by Arizona Public Service (APS) filed last July to modify net metering policies in order to stop what the utility terms cost shift to non-solar customers.

The spin-meisters were out in force following the ruling, with solar advocates suggesting that APS is putting nails in its own coffin.  Meanwhile, APS executives suggested that the compromise is merely a step in the right direction.  In a statement, APS Chairman, President, and CEO Don Brandt said, “Having determined that a problem exists, we would have preferred for the ACC to fix it.  The proposal … falls well short of protecting the interests of the 1 million residential customers who do not have solar panels.”

Hastening the Change

But NRG CEO David Crane, in an article in the New York Times, said “The more they charge people who are generating most of their own electricity for backing up that self-generation, they’re going to encourage those people to find a solution that doesn’t involve the grid at all.”

Despite the still polarized views amongst the stakeholders in the net metering controversy, Arizona’s ruling will be watched closely as public utility commissions nationwide grapple with the problem of determining how to fairly treat solar and non-solar customers.

In my last blog I highlighted the recommendations made to commissioners by the ACC staff, which effectively acknowledged that net metering policy in the state is in need of reform, but which suggested the commission wait until APS’ regular rate hearing next year before making a determination.  In that filing, the staff supported a per-kWh rate of roughly $3, whereas APS’ original proposal suggested closer to $8 per kWh in surcharges.

Commissioners this month elected to put a toe in the water, choosing a compromise that institutes the surcharge immediately, but at much lower levels than APS, and even the commission’s own staff, had recommended.  Considering the ire that this controversy has raised, even a small step toward compromise is a step in the right direction.

Hold the Rhetoric

There are a multitude of reasons why the proliferation of renewables like solar (and wind) should be encouraged, but at the same time, technology is a long way from giving homeowners an alternative to the grid as a critical backup.  The electric grid represents public infrastructure that’s needed by consumers, businesses, government agencies and … well … everyone.

Finding a compromise solution, one that provides a roadmap to resolution for stakeholders all 50 states (not to mention in other countries) is paramount.  But one thing’s sure.  Inflammatory statements like this gem in the NYT article referenced above don’t help:  Bryan Miller, head of the lobbying group Alliance for Solar Choice, said, “Those fees are real and they’ll have a real impact on the industry, but they do not accomplish APS’s goal of destroying the rooftop solar industry.”  Sheesh.

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