APS’s measured approach to rooftop solar would benefit all electricity customers

July 29, 2015

This opinion piece by Jeff Guldner, Arizona Public Service senior vice president for public policy, originally ran in the Arizona Capitol Times on July 28, 2015.

I appreciate Pat Quinn’s service as director of the Residential Utility Consumer’s Office (RUCO), but I was surprised by his recent description of what happened when the Arizona Corporation Commission first addressed the cost shifting resulting from rooftop solar and net metering in 2013. I was also disappointed by his characterization of the current grid access charge case.
 
There is a common misperception that customers with rooftop solar rely on the electricity grid less than customers who choose to buy all their power from the local utility. Not so. Rooftop solar customers still depend on the electricity grid for reliable power, even in the middle of a sunny Arizona afternoon.
 
From the beginning, the debate has been about how to establish the appropriate price for that continuing, around-the-clock reliance on the electricity grid. As the amount of rooftop solar installed began to grow several years ago, it became apparent that a cost shift was quickly developing through a subsidy program called “net metering.” Rooftop solar customers were no longer buying all of their electricity from the local utility, but they weren’t paying their fair share for continued use of the grid either. And that creates a growing problem for non-solar customers, who pick up the tab.
 
In 2013, APS began engaging with stakeholders to find a solution while the problem was still relatively small. RUCO was important because their constituents – average residential electricity customers – are the ones who get the short end of the stick under the current structure of net metering.
 
In that case, RUCO developed a proposal calling for a small grid access charge for solar customers that would grow over time depending on market conditions.  If that original RUCO proposal had been adopted, the grid access charge today would be at $3 per installed kilowatt – the exact level APS is currently seeking.
 
However, that proposal wasn’t adopted. In the last moments of the 2013 case, Mr. Quinn changed his position to ally with the California-based solar rooftop leasing companies, operating as TASC. He advocated for an outcome that was more favorable to those companies at the expense of the average electricity customers RUCO is charged with protecting.
 
As the director of RUCO, Mr. Quinn was free to make that decision. At the time, Mr. Quinn told me that he was concerned that even a small charge could jeopardize the ability of solar leasing companies to operate profitably in APS’s service territory – a concern that simply has not materialized as the pace of rooftop solar installations has continued to grow, and today is at record levels.
 
That’s great news for the rooftop solar leasing companies, but something that should be of growing concern for all Arizona electric customers for two reasons. First, a sustainable solution will not occur until sometime in 2017 at the earliest, following an APS rate case. In the interim, every month, average electricity customers will assume an increasingly larger burden of the cost of the electricity grid. APS’s current proposal is simply an interim measure designed to mitigate a portion of that cost shift; it does not generate additional profit for APS.
 
Second, the longer it takes to put an interim measure in place, the more challenging it will be to deal with the unintended consequences and impacts for rooftop solar customers when a sustainable solution is put into play. It will be more difficult for the ACC to “grandfather” or otherwise insulate solar customers from a more dramatic change in the pricing model.
 
APS and others who support APS’s interim proposal recognize that this measured approach is a step in the right direction for all electricity customers. It sends a more appropriate price signal to solar customers who still rely heavily on the underlying electric grid; helps insulate non-solar customers from absorbing more than their fair share of costs for that same grid; and it accomplishes all of that without adding to APS’s bottom line.
 
I was encouraged to see the current RUCO director’s response to Mr. Quinn in the July 27 Arizona Republic. We agree with RUCO that resolution of this issue should not wait until 2017.