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Mixed Result: Arizona Keeps Net Metering, But Levies Smaller Solar Fee

In one of the more closely-watched solar energy policy decisions in recent memory, the Arizona Corporation Commission (ACC) has ruled after two days of hearings to keep its net metering program, but implement a fixed fee of $0.70 per kW for solar rooftop owners starting in 2014. The split-decision resolution (a 3-2 vote) essentially means a few dollars extra per month for residential homeowners: $7 for a 10-kW system, though typical rooftop systems are generally a little smaller. Residents who already have solar, or get a signed installation contract before the end of the year, are not subject to the new fixed charge.

Arizona Public Service (APS) had lobbied for a far higher charge, amounting to $50-$100/month for solar homeowners, as part of its challenge to the current net metering structure. Its argument then and still: customers who add solar and get reimbursed for it are essentially being subsidized by non-solar customers.

Solar advocates, meanwhile, had lobbied to keep net metering in place, and against any such extra charge as an unfair penalty, suggesting APS wanted to protect its centralized-distribution business model and revenue stream rather than the best interests of its customer base.

In the end, ACC seems to have split the difference: acknowledging the value of distributed-generation solar, while also trying to address a certain level of cost shift it causes. Proving, perhaps, the wise observation that a fair bargain leaves both sides unhappy.

"We applaud the ACC for cutting through the rhetoric and focusing on how the cost shift impacts non-solar customers," APS top exec Don Brandt said in a statement, though "having determined that a problem exists, we would have preferred for the ACC to fix it."

On the solar industry side of the aisle victory was quickly trumpeted. The ACC's decision keeps intact the current net metering program against which APS had lobbied hard, both directly and secretly supporting some anti-solar nonprofits' efforts. "APS launched an unprecedented multimillion-dollar campaign to destroy the Arizona rooftop solar industry and failed," Bryan Miller, president of The Alliance for Solar Choice (TASC) and VP at SunRun. "The legacy of the Arizona net metering battle [is] a major loss for APS and its allies," echoed advocacy group Tell Utilities Solar won't be Killed (TUSK) and its chairman Barry Goldwater Jr.

Less clear is who wins with the ACC-approved $0.70 per kW fixed fee, but also what one local report called a "surprising" compromise between local solar advocates and the state's Residential Utility Consumer Office (RUCO). APS grumbles that the deal "surprisingly championed" by RUCO "falls well short of protecting the interests" of non-solar residents. On the other hand, while a fraction of what APS had sought, it's "a sacrifice by solar proponents" according to TUSK. During Thursday's hearings, TASC representative Hugh Hallman reportedly acknowledged that there is indeed a cost shift that the solar sector needs to help address, and "we've been authorized to propose that the solar industry will assist in providing some support to help bridge through this creative destructive period." That's likely to be especially true for third-party-owned solar (SolarCity does business in Arizona, Vivint does not) whose promises of monthly savings for customers are likely to be largely or entirely wiped out.

At a broader level, though, there's concern about how the ACC's decision and the fixed-charge compromise might influence similar discussions elsewhere into net metering and cost-shifting of residential solar deployment. Last month the Solar Energy Industries Association (SEIA) had been encouraged by the ACC's take on net metering, citing a broad consideration of solar's costs and benefits. Now, though, "while we applaud the ACC's decision to keep net energy metering in place, and appreciate the Commission's last-minute efforts to find a middle ground when it comes to new fees on solar customers, we are deeply troubled by today's precedent-setting action," SEIA president/CEO Rhone Resch. said in a statement. "Imposing punitive fees on Arizona consumers — without first proving the need and demonstrating the fairness of these charges through a comprehensive, transparent rate case where due process is afforded — is patently unfair, jeopardizing future solar growth and job creation statewide [...] Despite having some of the best solar resources in the nation, Arizona now has one of the shakiest policies for encouraging its development."

Lead image: Western ranch style house with solar panels, via Shutterstock

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