Ryan Randazzo

The Republic | azcentral.com

The Alliance For Solar Choice filed an analysis that indicates rooftop solar is a fair deal for nonsolar customers

The report was submitted to the state's investigation into the value of rooftop solar

Public comments began Tuesday in a rate case for UNS Energy

Paying rooftop solar customers for the excess energy they send to the power grid is a square deal for solar users and nonusers alike, according to a study commissioned by a solar trade group.

The study found solar customers save utilities money by reducing expenses, a position at odds with a recent analysis by Arizona Public Service Co. that said solar customers were a net drag on the utility.

What the study found

The Alliance for Solar Choice submitted the study to a state investigation of the value of rooftop solar, which the Arizona Corporation Commission will use to guide decisions on solar rates for utilities in the state.

The new study, conducted by Crossborder Energy in Berkeley, Calif., concludes that rooftop solar's benefits are worth 18.7 cents per kilowatt hour. That value increases to 28 cents per kilowatt-hour if societal benefits like reduced pollution are included in the calculation.

The costs, by comparison, are 17 cents per kilowatt-hour for people with solar, and 17.9 cents for customers without solar, according to the calculations.

The TASC study concludes that if the costs and benefits are close, there should be no change in the net metering rates.

All costs and benefits calculated in the study are levelized over 20 years. Evaluating prices on a levelized basis is commonly done to make comparisons between power sources, like solar, where much of the cost is upfront but power is generated for years, with sources like natural gas plants, which are cheaper to build but require ongoing fuel purchases.

“There is a balance between the costs and benefits of residential (solar) for both participants and non participants, as shown by the results for the participant and ratepayer impact measure tests,” said R. Thomas Beach, a consultant for Crossborder, in written testimony submitted on behalf of TASC.

An investigation into costs and benefits of solar was ordered by the Corporation Commission. It will inform a rate case for Arizona Public Service Co. that will begin this summer. A similar case for UniSource Energy Services began Tuesday, and likely will be decided before the APS case.

Conflicting reports

APS filed a cost-of-service study in October that contrasts with the TASC report. It found the hard costs to deliver power to solar customers outweigh the savings to the utility from customers’ solar panels.

The TASC study found the benefits to utility customers increase if solar panels are aimed to the west, where they catch the setting sun and better align their production with the late-afternoon peak demand on the power grid. South-facing solar panels provide benefits of 15.5 cents per kilowatt-hour, while west-facing have benefits of 21.8 cents per kilowatt-hour, according to the Crossborder study.

“If there is a concern about the cost of (solar) to non-participating ratepayers, west-facing systems should be encouraged and incentivized, particularly for residential customers,” Beach said in his testimony.

When APS gets into its rate hearings, it's likely that officials from the utility and from TASC will debate the merits of the conflicting studies.

Demand fees in Mohave and Santa Cruz counties

Meanwhile, public comments began in Tucson on Tuesday for the UniSource Energy Services rate case. The utility with 93,000 customers in Mohave and Santa Cruz counties is asking state regulators to approve demand fees for residential customers.

UniSource is owned by the same parent company as Tucson Electric Power.

Demand charges are common for business customers but not for residential. They discourage the use of multiple appliances at once.

UniSource proposed the demand charge for solar customers and as an option for other residential customers without solar, but the Arizona Corporation Commission Utilities Director suggested making it mandatory for all residential customers.

Solar companies oppose demand charges because customers would not be able to save as much money with their panels, if they could save at all.

AARP also opposes demand charges for different reasons, saying they should not be required for all residential customers.

"We are concerned about low energy users," AARP consultant John Coffman said in a Monday interview with The Arizona Republic before the UniSource hearing. "A majority of those 65 and older use less than the average kilowatt-hours."

He proposed increased options for time of use rates, which discount electricity sold off peak hours and charge higher rates for power consumed during the hours of the day when demand on the power grid is highest.

"Time-of-use rates are much easier to understand," he said. "It's much easier to respond to."

Utilities across the country are proposing demand charges as more customers install rooftop solar and also take advantage of energy efficiency programs, all reducing utility revenue and leaving electric companies with excess power supply, he said.

"It is unfair to be trying to address an issue you think you will have with rooftop solar by making all customers pay higher fixed fees," Coffman said.

The Arizona Investment Council, which represents people who invest in utilities, strongly supports forcing all residential customers onto a rate plan with demand fees, AIC lawyer Meghan Grabel said at Tuesday's hearing.

Grabel said demand fees encourage customers to smooth out their demand and benefit utilities.

She said if solar companies can't continue to sell rooftop panels despite new demand fees, "that would seem to be a them problem, not a commission problem."

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