Monday, January 12, 2015

In Arizona, SRP's Unfair Proposed Solar Rate Hikes Cause Anger With Customers

 Ryan Randazzo, The Republic | azcentral.com
Originally posted in http://www.azcentral.com/

Joseph Hui, a retired Arizona State electrical-engineering professor, voices his concerns to SRP officials during the meeting.(Photo: Mark Henle/The Republic)

The utility, like others across the country, says solar customers don't pay their share of maintaining the power grid.


More than 15,000 SRP customers already have had solar panels installed. Hundreds of those who own or lease solar, and many who hope to, are protesting the increases, saying that the dramatic shift in rates is a calculated move to protect the company's revenue stream.

"I think you guys should be replaced!" retired Arizona State University electrical-engineering professor Joseph Hui shouted at SRP's elected leaders during a community meeting on the solar plan Thursday.

SRP managers, who proposed the plan for the utility's elected officials to vote on, calmly answered questions from the often-raucous crowd.

"We are trying to balance competing interests," said John Tucker, SRP manager of pricing design.

Most solar customers send their excess power to the grid during the daytime, getting a one-for-one credit from the utility. In the evening, when their panels are not making power, those customers draw power from the utility, which is supplied by gas, coal and nuclear plants across the region.

Solar customers pay much less for this service because of the credit they accumulate during the daytime. Utilities say that is a lopsided deal because they could buy power for less than they pay solar customers for their excess.

Arizona Public Service Co. proposed similar fees in 2013, only to have state regulators pare them back to about $5 a month for new solar customers only, allowing those who had already installed solar to escape the fees. Regulators in Wisconsin voted in November to allow the utility We Energies to raise rates on solar customers, but not as dramatically as SRP proposes.

"I'd say this takes the cake," said Ken Johnson, a spokesman for the Solar Energy Industries Association in Washington, D.C. "Personally, it's the worst I've seen. This is about as unfair and far-fetched as it gets. It's not so much a plan as it is a death sentence for solar energy across a big chunk of Arizona."

SRP goes further

If the SRP board approves the proposal, the 15,000 SRP customers who already have installed solar likely won't save as much money as they anticipated when they bought or leased their panels.

SRP plans to place them under the new rate plan in a decade, or as soon as a new owner buys their home.

APS and We Energies both allowed existing customers to be grandfathered into the program and keep their old rate structure.

That's because most people who buy or lease solar don't expect to save enough on their electricity bills to pay off the investment for years. Most solar leases are for 20 years.

We Energies had only about 600 customers using solar when it made its rate proposal. APS and SRP can add several hundred new solar customers in a month. The Arizona utilities argue that because solar is on a faster track in this state, they must act faster to make rates fair.

Most of the people with solar in SRP territory were enticed to install it by incentives from the utility, and they feel trapped by the plan to raise rates after they made the move with SRP's encouragement.

Many experts suspect SRP made its proposal intentionally heavy-handed, which would allow the utility to amend the plan to improve the lot of existing solar customers but still move ahead with the rate shift on future solar customers.

"One thing is really obvious: They will give on the 10-year grandfathering for existing customers," said Court Rich, an attorney for the Alliance for Solar Choice, which represents rooftop leasing companies. "They will try to create some narrative that they have been responsive to customers. It is shrewd public relations."

SRP spokesman Scott Harelson said the company hasn't decided whether to amend the plan.

"It's too early to say if any amendments will be made to management's pricing proposal, as we are still early in the public-input process," he said.

Rich said even if SRP amends the proposal, as expected, to allow existing customers to keep their current rates for more than 10 years, the utility's solar rates will be the worst nationwide.

"What they are doing still is terrible for the solar industry, for jobs, for water savings and for the people who want to save with solar in that district," Rich said.

Complicating home sales

Customers with solar in SRP territory also worry the proposal will make it hard for them to sell their property because the new owners will face the new rates, making solar homes less attractive.

SRP customer Mark Mulligan, of Tempe, spent $17,500 to install solar in 2012 and had hoped to recover the investment when he sells his home in a few years, once his youngest child is out of college. He had hoped to use the low power bills as a selling point.

"This plan will obliterate my solar investment and make it a liability during my home's sale," he said.

Mulligan got SRP to calculate what his bills would be if he were under the new rate plan today. He would have paid a total of about $1,575 more in 2014, about $131 more a month, if the new rates were in place.

He generates, on average, about 54 percent of his own electricity with his solar panels. Still, even with the new SRP rates, he would save about $338 a year with solar compared with buying 100 percent of his power from SRP, according to the analysis he shared with The Arizona Republic. Were he subject to those rates, it would take more than 50 years to pay off his $17,500 investment.

The 'demand charge'


SRP's proposal is complex, but the main component is a "demand charge" that would be based on a solar customer's highest 15-minute use of electricity during the month.

Such charges are common for businesses but not for residential utility customers.

Customers who had a peak demand of 4 kilowatts during the month would pay a fee that month of $32, while those who had a peak demand of 10 kilowatts would pay $82. The price spikes sharply after that. An 11-kilowatt peak brings a charge of $127, and a 14-kilowatt peak brings a fee approaching $200, all before the cost of electricity and other services is included in the total bill.

A demand fee would mean that two customers who use the same amount of electricity during the month could pay vastly different bills based on the time of day they use appliances.

Solar customers could wind up generating much of their own electricity throughout the month, but if they happen to run several appliances simultaneously for one 15-minute period, they could see their bills skyrocket because of the demand charge, Mulligan said.

Mulligan had a peak demand of more than 16 kilowatts in August, which would bring a fee of $326 under the new rate plan. He worries that if people are absent-minded and wash or dry a load of clothes, or run a vacuum cleaner or pool pump, at the wrong time during the month, they'll pay a steep fee.

"No one will want to live like this," he said.

A hard sell
Several SRP customers said they have no problem with the utility raising rates when it must to pay for the power grid, but they simply don't take company officials at their word when they say solar customers are not paying their share and should be singled out for higher rates.

Along with the solar fees, SRP is planning a rate hike that would average $4.60 a month for residential customers without solar power. Nearly every one of the estimated 200 customers who showed up at the Thursday meeting on the issue were concerned about the company's solar plans, not the broader rate hike.

Russell Nelson, a self-described conservative Republican SRP customer from Avondale, said utilities haven't made the case that solar customers don't pay their share.

"I haven't seen any studies that prove I cost SRP more than my neighbor who doesn't have solar," he said. "We are paying our fair share now. We put solar on our roof. We are not using the delivery system as much. Why should we pay as much for the delivery system?"

Nelson installed solar in April for $14,000 and is saving between $100 and $230 a month on electricity. When he signed his lease contract for solar with SolarCity Inc., he estimated it would take eight years to pay off the investment.

"I would be grandfathered in under SRP's plan, but if I wanted to sell my house, or someone else wants to put solar in now, they will be punished for doing what the politicians asked them to do," he said.

"It would be great if everybody had solar on their houses, from an environmental standpoint. But that's not the way our system has delivered electricity in the past. How do you make that transition away from having a monopoly supplier?"

Reach the reporter at ryan.randazzo@arizonarepublic.com.



At a glance

Three changes are proposed for SRP solar customers:

• An additional service fee of $12.50.

• A decrease in their cost per kilowatt-hour of electricity, to about 4 cents from about 10 cents. This change would lower their bills but also would lower the value of the credits they get selling their excess power back to the utility.

• A "demand charge" based on their highest momentary use of electricity during the month. The higher the use, the higher the charge. Customers who had a peak demand of 4 kilowatts would pay a fee of $32. A peak demand of 10 kilowatts would cost $82.

• The changes would average about $50 in increased monthly bills for solar customers. But the more electricity they used, the higher their fees would be.

• Those who contracted for solar before Dec. 8, 2014, would keep their current rates for a decade, but anyone who buys the house would be subject to the new rates.

• The plan also includes a broader rate hike averaging $4.60 a month for residential customers.

Upcoming meetings

SRP will offer customers one more chance to comment on the measures at a meeting scheduled for 9:30 a.m. Feb. 9 at the SRP Pera Club, 1 East Continental Drive in Tempe. The building is south of McDowell Road and west of 68th Street.

The vote on the matter will be Feb. 26, also at the Pera Club.


































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