Ryan Randazzo

The Republic | azcentral.com

A new study commissioned by APS says solar-leasing companies can survive with higher rates for customers

Alliance for Solar Choice contends utilities are not counting the grid benefits of solar

Companies like SolarCity say they can't survive if utilities charge higher rates to their customers

Utilities and solar companies continued to spar over a rural utility's rate case Tuesday, with both sides issuing expert testimony to bolster their arguments.

A study commissioned by Arizona Public Service Co. concludes that solar leasing companies make enough money off customers to lower their lease rates. It suggests that leasing companies could lower prices and maintain healthy profit margins on leases even as utilities raise rates on solar customers.

Meanwhile, testimony from The Alliance for Solar Choice suggests that Arizona utilities are not counting the full benefits of rooftop solar to the power grid.

APS and other utilities across the country are introducing new rate plans for rooftop solar customers. The utilities contend that because solar customers rely on the full power and transmission capabilities of the grid at night and during times of peak demand, they should pay more every month to maintain the grid than they do under current rate plans.

Currently, a system called net metering gives solar customers full retail credit for most of the energy they send to the power grid during daylight hours, when their panels make electricity but they are not using it in the home. That net-metering credit offsets the cost of the power that solar customers draw from utilities at other times, leaving them with little in the way of a monthly bill.

Solar companies have fought utility rate changes, saying they make it uneconomical for customers to install solar and put the solar companies out of business.

The new APS study, by Navigant Consulting Inc., attempts to undercut that argument, suggesting that solar leasing companies could lower their lease rates and continue to earn money even if utilities charge more to solar customers.

"We conclude that solar (lease) provider have headroom to adjust to some changes in rate structures while maintaining project returns," wrote Navigant Consulting in the report. As evidence of pricing flexibility, the report said leasing companies charge higher lease rates in utility territories where electricity prices are higher, even though the solar panels are the same as those in lower-cost territories.

Rural utility's case could have big impact on rooftop solar fees

The analysis was submitted as part of a rate request for UniSource Energy Services, a utility with 93,000 customers in Mohave and Santa Cruz counties. UniSource has proposed a "demand rate" that would charge customers based on their highest hour of power demand during a month, in addition to a basic service fee and a charge for each kilowatt-hour of electricity used.

APS, and a variety of other interest groups view the UniSource rate case, in which hearings begin next week, as ground zero in the rooftop solar debate.

While several regulated utilities in Arizona are proposing new solar rates this year, UniSource will be the first to have the matter addressed in a full rate case. It could lead to a precedent-setting vote by the five elected Arizona Corporation Commission members.

TASC's hired expert, Mark Fulmer, principal with MRW & Associates research in Oakland, Calif., said in his new filing that the UniSource rate proposal was "not ready for prime time."

"In other instances where this has occurred, like SRP territory and Nevada, the market for rooftop solar has essentially grounded to a halt," Fulmer said.

APS solar customers facing approval delays while paying electric bills

As the case proceeds, officials will discuss whether a demand rate is appropriate and whether it could be used for new solar customers only; all solar customers, including those who already have installed panels; or even all residential customers, including those without solar.

"It is notable that APS is ... hiring expert witnesses from around the country in a big way in an apparent effort to turn a Nogales utility’s rate case into a blueprint for the entire state," said Court Rich, an attorney for TASC. "APS hopes it can set precedent in this case while its own ratepayers sit on the sideline and then use that precedent against its ratepayers when APS finally files its rate case."