Utility companies were originally allowed as a public service and were not-for-profit. It was never intended that this public service be a money making business, let alone one of the largest and wealthiest in the country.
Utilities were given access to public lands as a Public Utility Easement (PUE) in order to deliver power to each house. The decision allowed the utility to be a monopoly in order to prevent a multiplicity of power lines going to each house.
Originally when the Arizona REST was established in 2006, The Arizona Corporation Commission (ACC) saw the value of solar electric power. It was touted as the best thing to help Arizona — ever. It established a roadmap that was gentle and beneficial for the entire state: reach 15 percent renewable power by the year 2025.
As of this moment, with the new ACC’s direction, that goal cannot and will not be met. With passage and the Arizona Department of Revenue’s (AZ DOR) interpretation of HB2595, which enforces an additional fee on solar customers, solar DG will likely die in the state of Arizona.
Today, APS gives zero incentives for distributed generation (DG) rooftop solar power.
The Utility Monopoly Must Change
Utilities have long enjoyed the monopoly control over power production but in my opinion there is nothing that can be done to stop this change from taking place. Right now, the renewable energy arena employs more people that all of the coal industries combined. More energy is now being made in the USA by solar electric sources than all of the hydroelectric power plants combined.
Every American should have the right to produce his or her own power from the sun without the utility company standing in the way. At a renewable energy summit in 2011, Governor Jan Brewer stated that Arizona needs to be the “sun” state and the country’s leader in solar power. She said Arizona should start selling solar power to other states and take advantage of its number one natural resource. She was right.
However, now she hasn’t vetoed the ACC’s decision to allow APS to add a tax to solar customers. She also isn’t showing leadership by directing the Arizona Department of Revenue to eliminate HB2595 which adds a property tax to solar electric systems. No one understands why the Republican-led ACC would think that the taxpayers want another tax. Recent surveys show 77 percent of citizens said they would not vote for a candidate that opposed solar electric power in Arizona.
Utility Company Claims
Utility companies say that solar DG customers cost them more money than large consumers of their power. This is nonsense.
At the APS “Cost Shifting” ACC meetings in December 2013, absolutely zero data was presented that proved that DG customers actually cause a financial burden to APS or the utility companies power lines and distribution system. At the meeting there were over 2,000 supporters of solar DG and only a handful of utility supporters. Over 200 people (myself included) presented data about solar DG benefits. There was no data to support utility claims that solar DG causes a financial burden on the grid. Despite this evidence, the ACC, led by Gary Pierce and Brenda Burns, decided against the majority of the citizens and allowed APS to add the unfair tax on solar customers.
The reduced revenue was not documented as being caused by higher efficiency appliances, e.g., CFL, high-SEER AC units, etc. All of the reduced revenue was blamed on solar DG customers.
Utility Company Income Oversights
When the utility says it has to pay more money because of solar DG customers it is not taking into account the funds it is are collecting.
Each of the 20,000 solar DG customers also has a monthly connection fee of $20. That equates to over $4.8 million per year.
Now APS has successfully convinced the ACC to allow them to charge a “cost shifting” or surcharge to all the new solar customers. This fee is nothing but an additional tax. The present fee is $0.70 per kW per month. This equates to over $1.2 million per year. The scary fact is the ACC wanted to allow APS to charge more than 10 times this amount.
For only 0.9 percent of utility customers, that is a sizeable amount of line usage and maintenance funds. Suggestion: If the AZ DOR and ACC want to tax solar DG customers, it would be fair to tax APS $1/kWh for power generated by Arizona’s sun and add it to the Arizona Department of Commerce to support state solar incentives.
Baseline Connection Fee vs. Wear and Tear by High Usage
Solar DG customers use less of the utility’s distribution infrastructure than other customers. If fact, they are the lowest users of the utility grid.
When a utility company makes power they have fuel costs, generation costs, and distribution losses. When DG customers generate their own power, 90 percent is used on site. The other 10 percent goes to direct adjacent neighbors. It does not go to the transfer station, transmission lines or power plants. The utility company receives the power at no cost during daytime peak hours, sells the same power at peak rates and is not subject to the fuel costs, generation costs or distribution losses.
The distasteful commercials funded by out-of-state utility supporters, including Duke Energy, Edison Electric Institute and the Koch Brothers, stated that solar DG customers don’t pay their fair share of line maintenance. They’ve spent over $9 million for these negative ads, which are incorrect and misleading.
The graph below depicts the baseline charge or “connection fee” that all customers pay. It also shows that as the customer uses more power, there is more wear and tear on the distribution system. If the utility company were to be fair and accurate with their statements and charges for using the grid, they would charge more to the large power users.
Adding an additional tax to solar DG customers, the lowest users of the distribution grid, is unfair.
The baseline connection fee is for administrative, accounting, meter reading fees, etc. It is not for power generation and distribution. If the basic connection fee doesn’t cover costs of connectivity to the grid, fix the cost model and apply it fairly and unilaterally to all utility customers, not just the solar DG customers.
Utility companies are trying to discourage the growth of solar DG customers and build their own solar power plants where they get the revenue from the free source of power. Utilities would rather offer power generated by their owner solar farms at a premium even though the 30-year cost of generation to be significantly lower than all other power sources.
Global Warming/Climate Change Put Aside
Regardless of which side of the climate change fence you sit on, utility companies and solar DG customers can live together peacefully. The need for the grid will never go away. Solar only generates power when the sun is shining. Wind generators only generate power when the wind is blowing. Utilities will have to provide power when the sun isn’t shining. However, the utilities will need to have “smart grids.”
All fossil fuel power generation produces pollution. Coal-fueled power plants are the number one source of Green House Gasses (GHG) in the country. Solar electric power produces zero pollution, hazards or detrimental environmental side effects. Where are the fees or fines for Arizona fossil fuel power plant pollution cleanup, hazard and future waste disposal?
Can we so quickly forget the Fukushima nuclear disaster in 2011, Dan River Coal Ash disaster on March 22, 2014 by Duke Energy’s Edan Power plant, Chernobyl nuclear disaster in 1986 that cost $6.8 billion, Three Mile Island nuclear accident in 1979 that cost $1 billion, BP Gulf oil spill in 2010, which cost $9.2 billion, etc.
Another common misconception is that solar electric power doesn’t need or deserve incentives. All energy sources receive federal incentives — coal, natural gas, fracking, oil, wind, etc. Renewable power sources received $46 billion in incentives in 2010. While that seems like a lot, remember that the federal government gave over $557 billion for fossil fuel incentives in 2008. And while all the renewable incentives are temporary, a little known fact is that many fossil fuel incentives are permanent.
Why does the utility company give energy reduction rebates for replacing refrigerators, air conditioning units, light bulbs, etc., but not for reducing energy consumption by installing solar? All the energy reduction, efficiency home improvements will asymptotically approach zero. But, with DG, a homeowner can easily approach net-zero energy consumption.
Why do APS and SRP invest in out-of-state power sources instead of in-state solar power? This leads to the assumption that they are fighting the growth of solar DG in the state and are only interested in their bottom line.
It is time for a bill to support and establish the sun as Arizona’s number one natural resource and assure the permanent and future financial strength of the state. This bill should stop all attempts that take any action to “tax the sun.”
Lead image: Arizona sign via Shutterstock