Arizona’s Net Metering Problem: A Band-Aid for a Gushing Wound?
Amongst all the rhetoric, media play over-kill, and corporate bashing and demonizing, the battle for net metering in Arizona is nearing an end (or is it?) as the Arizona Corporation Commission looks toward a decision on what to do about a growing problem this month.
I’ve previously written about the current net metering regime and its cost shifting consequences for homeowners who either don’t install or can’t afford to install rooftop solar panels (here, here, here). Even though rooftop solar systems continue to rely on the grid for distribution and transmission services and backup power, the current net metering paradigm fails to provide adequate recovery of these fixed costs from solar customers, leaving other customers to pick up this additional burden. This burden will only increase as more and more homeowners install solar panels under leasing and financing arrangements that significantly lower the up-front costs of installation, but fail to adequately account for the costs for accessing the grid.
Well, yesterday the Arizona Corporation Commission Staff filed its Report and Recommendations on Arizona Public Service Co’s filing to change its net metering tariff. Even though the staff report recognizes the growing cost shift problem, the report stops short of providing an adequate solution. The staff’s bottom line: the ACC should reject APS’ proposals to inject fairness into the current system and essentially do nothing before the middle of 2016, when APS can next implement new base rates. The staff also provides two back-up alternatives that would provide small increases to rooftop solar customers as a band-aid to what amounts to a gushing wound in the net metering system.
In the meantime -- that is over the next 2-3 years -- the staff proposes the ACC hold workshops among the company and stakeholders “. . . to help inform Commission policy on the value that DG installations bring to the grid.” One would hope this means the staff isn’t buying into the claims by rooftop solar industry consultants that rooftop solar provides $34 million in annual benefits to APS and its non-solar customers. Perhaps the rooftop solar consultants need additional time to undertake a more plausible study.
But, what about the benefits the grid brings to rooftop solar customers? Shouldn’t the Commission study that as well and shouldn’t solar customers pay their fair share of the grid, which they need and depend on at night and other times for transmitting excess solar production back to the grid or need back up power from the utility to meet home demand? To help the Commission begin this quest and to supplement the reams of data and information already made available by APS, the electricity think tank, Innovation Electricity Efficiency recently published Value of the Grid to DG Customers in which it identifies the components of the grid benefitting rooftop solar customers. A major point of the IEE study is that “. . . DG customers should pay their fair share of the cost of the grid because pushing any of this cost onto non-DG customers raises serious economic efficiency and fairness issues. . . Updating net metering policies to put an end to the cost shifting that is occurring today should be done now.”
Perhaps the staff recommendation to do nothing-to-very little to correct this problem now will produce a “cooling-off period” and spare us all from more outrageous and classless allegations and assertions from the rooftop solar mega mouthpiece, TUSK. It might also present an opportunity for APS and the rooftop solar industry to discuss a compromise solution. But, over the past year there seems to be little incentive for the rooftop solar industry to grasp the seriousness of the problem for the Commission and move from its position that nothing should change.
Unfortunately, the consequence of waiting 2-3 more years to resolve the matter is that more and more of the grid’s fixed costs will be shifted onto non-solar customers. APS is adding 500 solar customers within its service territory each month at an average cost of $1,000 per solar customer per year shifted onto non solar customers.
The do nothing-to-very-little path for the next few years will present the Commission a huge problem when confronted with complaints from angry, non-participant customers whose bills have increased to support rooftop solar panels of their neighbors.
It will also help the rooftop solar folks sell more rooftop systems.
And this rapidly escalating and unsustainable cycle will continue.
While the staff’s proposal represents a starting point for further discussion, the Commission should give serious and urgent consideration to moving beyond the staff alternatives and implement a net metering change that is fairer to non-participants and adequately values the benefits that rooftop solar customers receive from connecting to the grid.