Demand rates proven with our customers

June 02, 2016

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On June 1, an organization funded by SolarCity (NASDAQ: SCTY) issued a press release reacting to certain aspects of our recently filed rate request with the Arizona Corporation Commission. That release is reprinted in italics below, along with our response.
PHOENIX, June 1, 2016 /PRNewswire/ -- Arizona's largest utility provider, Arizona Public Service, has filed a radical and untested proposal seeking to become the first utility in the United States to impose mandatory demand charges on its customers. 

Our response: Demand-based rates are neither radical nor untested; APS has offered them since 1981. Approximately 120,000 APS residential customers are already on a demand-based rate, and it is our fastest-growing rate plan.

The utility is also seeking to eliminate net metering, rooftop solar's cornerstone policy.

Our proposed changes would not affect the 44,000 APS customers who have already installed rooftop solar. We would continue to compensate future rooftop solar customers for the excess electricity they produce, but we would reduce the amount of the subsidy, which is not sustainable and is driving up rates for our non-solar customers. 

Arizona, once considered a national leader for rooftop solar, has seen its solar progress grind to a halt over the last few years due to persistent utility attacks. 

Arizona ranks second only behind California in total solar power capacity. Rooftop solar has never been growing faster in areas served by APS. And APS continues to invest in new solar and in advanced solar research. If Arizona’s reputation for solar has taken a hit, advocates for the rooftop solar industry should first look in the mirror. Over the last three years they have attacked anyone who disagrees with them as being anti-solar.

This year, the utility attacks are aimed at all ratepayers of Arizona, designed to keep people from going solar.

We refer to them as our customers, not ratepayers, and today the 96 percent of our customers who do not want or cannot afford private rooftop solar are paying higher bills to subsidize the business model of the rooftop solar industry. APS is pro-solar and pro-customer; we support more solar for more customers, without driving up the monthly bills of our non-solar customers.

Kris Mayes, of the Energy Freedom Coalition of America (EFCA), voiced concern about the APS proposal…

The Energy Freedom Coalition of America has a great name, but it is another front group for SolarCity and other for-profit companies in the rooftop solar leasing industry. Kris Mayes may refer to herself as a “solar advocate,” but her employers have an enormous financial stake in delaying any action by the Arizona Corporation Commission that would reduce today’s subsidies for their industry.

"Demand charges are a dangerous plan that will force customers to constantly monitor their energy use out of fear of exorbitant charges. They especially penalize customers who have made substantial investments to reduce energy and contribute to more resilient Arizona energy future."

Arizonans should expect to hear a lot of fear-mongering about demand charges in the months ahead. But during seven years on the Arizona Corporation Commission, what did Kris Mayes do to eliminate these “dangerous,” “radical” and “untested” rates that cause “exorbitant charges” for Arizona electricity customers? Nothing. APS has offered demand-based rates to residential customers since 1981, but apparently, these rates became dangerous only when they threatened the subsidies being earned by her new employer.
"The loss of net metering in Arizona would mean the loss of thousands of jobs and consumer choice.  Arizona will take a giant step backwards in transforming its energy future if this proposal is approved."

More fear-mongering. A study by the global consulting firm Navigant found that the rooftop solar leasing industry’s profit margins are so large that a reduction in the subsidies currently paid by non-solar customers would not put them out of business, nor would it eliminate the opportunity for future customers to choose rooftop solar.

The Conservative Alliance for Solar Energy, CASE, also criticized the APS plan, calling it an overt attempt to stifle competition in Arizona.

We don’t intend disrespect, but we had to check the internet to find out what CASE is. We found the address for a post office box, but no information about the membership or funding of the group. 

"This effort by APS to impose demand charges poses a serious setback to the ability of all Arizonans to produce their own power," said Dru Bacon, co-Chairman of CASE. "We call on the Commission to reject this anti-competitive plan."

Across the country, critics of demand charges ranging from the solar industry to AARP have pushed back on utility proposals that include demand charges and have prevailed.

Unlike the rooftop solar industry, which opposes demand charges out of a desire to protect their subsidies, AARP has voiced sincere concerns about the impact of demand charges on their constituents. We respect AARP’s position and we’re confident that by working together in the best interest of seniors living on a fixed income, we can find an approach that works for all.

Salt River Project instituted demand rates for solar customers that ended the industry overnight. Net metering was eliminated in Nevada and killed the solar industry.  Here, Arizona Public Service is asking to do both.

The rooftop solar industry may have turned its marketing resources to other more profitable areas of the country, but that doesn’t mean rooftop solar isn’t viable in the SRP territory. Local Arizona companies such as Sun Valley Solar Solutions are devising innovative ways to thrive in the new market structure, which will be better for all simply because it is sustainable. Our proposal would continue Arizona’s solar leadership while protecting the vast majority of customers who do not have rooftop solar on their homes.