Net Metering in Arizona: Fair or Not Fair?
Many organizations use public relations firms for one reason – spin a story for public consumption that paints their clients in a favorable light while demonizing the other side – whether accurate or not. That’s how most political campaigns operate. Sometimes the spin is effective, because the truth is ignored and/or distorted.
Well, there’s a PR campaign underway in our State which has been organized and funded by the rooftop solar industry. It’s championed largely by out-of-state corporations. They’ve created a cover organization called Tell Utilities Solar won’t be Killed (T.U.S.K.) and even enlisted a former California congressman with a familiar Arizona family name as their spokesperson. Their goal is to continue the current level of subsidies built into the arrangement where utility companies are required to buy-back excess power produced by homeowners’ solar systems at high retail prices – buyback prices the solar industry considers fair.
But, fairness, like beauty, is in the eye of the beholder.
While it is true that the excess power produced by rooftop solar systems and sent to the grid has a value to the utility, that value lies in avoiding the generation costs or wholesale power costs that the utility would otherwise have to cover. Homeowners with producing solar systems should be fairly compensated for this value. However, the utility company still has to cover the costs of transmission and distribution of the electricity – both to the solar owner’s house and away from the rooftop to other customers. Because net metering as currently priced requires the utility to buy power back at fully delivered retail rates, these additional, unrecovered distribution costs are simply transferred to other customers through rate surcharges and other cost recovery mechanisms.
Without these cost transfers and high buyback rates the solar companies would have a more difficult time convincing homeowners that solar is a profitable investment. Their business model is built on the assumption that utility customers who don’t have solar on their homes will be forced to pay these subsidies, i.e., a retail price for wholesale electrons.
In the early stages of the rooftop solar roll-out in our State, the cost of absorbing these net metering subsidies by non-solar customers was small. However, as the solar companies began offering leasing alternatives with little or no upfront cost for homeowners, the number of solar installations increased dramatically. According to APS, installations in its service territory increased from 10-20 per week to 150-200 per week at an annual subsidy from net metering to be borne by other customers of $1,000 per installation. Obviously, the magnitude of this cost shift to other customers is now reaching alarmingly high levels.
I think T.U.S.K.’s hyped-up and self-serving rhetoric that APS and other Arizona utility companies want to kill-off solar is pretty outrageous. The group’s politicization of net metering and its play to policymakers by using gross distortions is deplorable.
Here’s what T.U.S.K. spokesperson, Barry Goldwater Jr. said in a recent column in the Glendale Star:
Republicans and all Arizonans should have the freedom to make the best choices for their properties and their families and if that means saving money with solar, we should let that be the case. To offer a comparison, rooftop solar is really no different than a charter school that provides an alternative to the monopoly. It would be Republican heresy to eliminate such an option. What’s more, eliminating net metering would amount to a tax hike. . . [t]he last thing we need is more tax hikes (Glendale Star, April 25, 2013).
Puffed-up sound bites, overblown rhetoric and not much more. Actually, the last thing we need is people paying yet another subsidy to support an unsustainable business model that takes more credit than is justified for the power these installations send back to the grid.
It is silly to think Arizona’s utility companies want to kill solar. Nobody is even remotely suggesting that Arizonans should not have the freedom to choose solar. To the contrary, APS, SRP, Tucson Electric Power and other utilities have worked to make rooftop solar compatible with their systems.
But, net metering compensation as it stands today is simply unsustainable. It has to be changed. Some ideas include capping the size of a solar system or its output which is eligible for net metering; capping the amount of total subsidy payments for rooftop solar; or setting buyback rates at a level which recognizes an owner shouldn’t also get compensated for the fixed costs of transmission and distribution which the owner does not pay to get his product on the grid.
Otherwise, the transfer of costs to the rest of us innocent bystanders will continue to grow exponentially.