Arizona regulators: APS to ask for higher solar fees

• Regulators expect APS to seek higher fees for solar customers.
• The APS action would follow Salt River Project's recent decision to raise rooftop solar customers' bills.

Arizona Public Service Co. is preparing a request for state utility regulators that will further increase monthly fees on solar customers, officials said Friday.

"We are expecting a filing," said Rebecca Wilder, spokeswoman for the Arizona Corporation Commission, which regulates utilities.

APS would not confirm a filing is imminent, but APS officials have said they were watching closely as neighboring electric company Salt River Project raised rates on customers who installed solar after Dec. 8.

APS asked for rate changes in 2013 that would average $50 to $100 a month on solar customers to cover their use of the power grid, which would cut into or eliminate the savings of many solar customers.

After a lengthy series of hearings at the Arizona Corporation Commission, regulators approved fees that average $5 a month on solar customers. APS officials and two of the five commissioners at the time lamented those fees were too small.

The two commissioners who wanted higher fees are no longer in office. The two who replaced them, Republicans Tom Forese and Doug Little, won election last year with support from independent political groups widely believed to have recieved financial backing from APS, although the utility will not confirm or deny that funding.

The fees APS charges solar customers now are 70 cents per kilowatt of capacity, equating to a charge of $4.90 a month for the average-sized solar array of 7 kilowatts.

Rooftop leasing group Tell Utilities Solar won't be Killed, or TUSK, suggested the proposal APS is preparing would be for a fee of about $3 per kilowatt, or about $21 a month for the average solar array. That amount was proposed in 2013 as fair by the state consumer advocate, the Residential Utility Consumer Office.

RUCO officials agreed in general with APS that solar customers shift some of the cost of maintaining the grid to non-solar customers.

Since then, Gov. Doug Ducey has appointed a new director at RUCO.

Two of the commissioners from those 2013 hearings who still are in office, Bob Stump and Bob Burns, also suggested that year that monthly fees in the $20-$22 range would be fair. The commissioners in 2013 only settled on a lower monthly charge when RUCO and the solar industry reached a last-minute compromise.

2014 saw more APS customers install solar than any prior, with 7,800 making the decision that despite the fee, installing panels was worthwhile. APS officials are likely to use those figures to justify raising the fee.

"This robust level of growth causes the unfair cost shift to continue to increase," Don Brandt, president/CEO of APS' parent company, recently told investors.

APS customers who have installed solar after Dec. 31, 2013, also have contracts that, according to the decision, were to make it clear the 70-cent fee could be increased or decreased.

If APS does file for an increase as expected, it could affect those customers, although the people who installed solar before that likely will continue to avoid the increase.

SRP last month created a new rate schedule for customers who generate a portion of their own electricity, whether through solar or some other technology. The biggest change is a demand charge based on the highest use of electricity during a 30-minute period during the month.

The combination of changes will increase the monthly bills of customers who install solar after Dec. 8 by about $50, unless they alter their energy use to minimize their peak demand.

Rooftop solar companies strongly opposed the SRP changes and came out against the anticipated proposal from APS on Friday.

"Rooftop solar provides savings to thousands of customers, it provides energy choice to utility ratepayers, and it provides jobs for thousands of Arizonans," said a statement from Barry Goldwater Jr., chairman of TUSK. "The quickest way to kill a thriving industry is to tax it and over-regulate it. Sadly, that seems to be APS' objective."

APS officials said it would be premature to discuss an impending rate-hike request and bristled at the news release from TUSK warning of such a request.

"The only breaking news on this issue is that it looks like Arizona needs to brace itself for another political circus orchestrated by TUSK and TASC (The Alliance for Solar Choice)," APS officials said in a prepared statement. "Instead of engaging in an honest discussion about how to ensure the sustained growth of solar in Arizona, this latest stunt repeats the same tired distortions and character attacks that long ago lost credibility with anyone serious about Arizona's energy future."