Ryan Randazzo

The Republic | azcentral.com

SRP is proposing %2450 a month in new fees for solar customers.

All customers are looking at a %245 a month rate hike effective in April%2C pending board approval.

The solar changes would not affect customers who already have solar for 10 years.

Salt River Project customers who want to add solar to their homes could be hit with $50 a month in new fees as part of a rate-hike plan.

The proposal also would raise the average bill for non-solar customers by about $5.

The new solar fees are an attempt to charge for the cost of maintaining the power grid, even from those who generate much of their own electricity.

The proposal mirrors a failed attempt by Arizona Public Service Co. last year to add $50 to $100 in fees on rooftop-solar customers. In that case, state regulators eventually decided on a fee averaging about $5.

SRP is a municipal utility and will not need regulatory approval, as APS does, to put the fees in place.

"We believe this reflects the cost of service to those customers," said Robert Taylor, senior director of regulatory policy. "If they can lower their (electricity) demand, they can reduce their costs."

The more than 12,000 SRP customers who already have solar, along with those who are in the process of signing a contract before Monday, will remain under the old rate schedule for the next decade, officials said.

SRP officials didn't want to penalize customers in the process of installing solar but didn't want a rush of customers trying to get solar before the billing changes.

"We are concerned there could be quite a push," pricing-design manager John Tucker said.

He said SRP will be reaching out to officials in the solar industry soon to discuss the proposal.

Some solar-industry advocates were surprised to learn SRP was seeking such broad changes.

"SRP might as well simply outlaw solar within its service territory if it is going to hit people with a $50 to $100 charge for their right to use the sun," said Court Rich, attorney for the Alliance for Solar Choice.

"This proposal means that as of December 8, there will be no more solar industry in SRP's service territory, and they make this decision without public input and without a board vote," he said. "Do the members of the SRP board really want to be known for taxing solar out of existence in the sunniest state in the country?"

He suggested SRP as an acronym for "Solar Recklessly Prohibited."

Tucker said the changes will not eliminate customers' ability to save money with solar.

"They would absolutely still be saving but just wouldn't be saving as much," he said.

All users affected

The elected board of directors at SRP will take up the solar fees as part of a larger rate-increase proposal that will affect all the utility's nearly 1 million customers.

The board is expected to vote on both issues Feb. 26. If approved, the increases would appear on April bills.

The last SRP rate increase was approved in September 2012 and, like the current proposal, was a 3.9 percent hike.

SRP officials said they have spent more than

$1 billion on a new natural-gas power plant and other grid upgrades since then and need the increase to pay for those investments.

The average SRP residential customer uses 1,110 kilowatt-hours per month and pays a bill of $128.25. The proposal would increase that an estimated $4.61, to $132.86.

Customers on the time-of-use rate plan, who average 1,569 kilowatt-hours of electricity a month, would see an increase of about $8.23 a month.

SRP said it will provide additional details of the increases Friday online at srpprices.com. The site will include a form for customers to submit comments.

As part of the change, the monthly service charge of $17 would increase to $20. This fee is charged regardless of power usage.

SRP plans two community meetings and a special board meeting before the vote to listen to the public.

Solar increasing

Like many other utilities, SRP is seeing a sharp increase in the number of people installing solar. In October, 677 customers applied for solar interconnections with the utility, more than three times the number in October 2013, and the utility has even cut its solar incentives since then.

With lower prices and increasingly affordable options to lease or finance solar panels, SRP officials said, the company needs to find a way to charge solar customers for the "fixed" costs of maintaining power lines and other equipment, which don't go away just because customers generate some of their own power.

APS officials made a similar case last year when they asked the Arizona Corporation Commission to raise bills on solar customers by $50 to $100. The solar industry challenged the utility, and both sides used television advertising and other publicity campaigns to make their case.

The five elected corporation commissioners approved a fee averaging $5 a month on solar customers. APS declared that a partial victory, as the regulators at least agreed with the theory that solar customers don't pay their fair share of grid costs. The solar industry declared a victory in APS not getting the high fees it sought.

Rich said, "I am surprised that SRP would back punitive solar taxes that have already proven to be wildly unpopular with Arizonans. SRP apparently learned nothing from APS' reputation-damaging attempts to tax the sun."

He said it is "outrageous" for SRP to seek fees of $50 or more when APS only got a $5 fee approved for solar customers.

Taylor said that the average SRP solar customer gets about $51 in unpaid services from the utility each month and that the new rate structure is designed to fix that by aligning prices with the cost of service. As solar proliferates, that could amount to millions of dollars within a few years.

Three changes are proposed for solar customers:

An additional service fee of $12.50.

A decrease in their cost per kilowatt-hour of electricity, from averages of about 10 cents to about 4 cents. This change would lower their bills but also would lower the value of the credits they get through net metering, or 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, while those who had a peak demand of 10 kilowatts would pay $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.

Taylor said people can do several things to limit those costs and save with solar. For example, they can use load-controller devices to prevent their largest appliances from running at the same time, limiting their peak demand, he said.

Or they can point their solar panels west, toward the setting sun, when summer afternoons draw the highest demand from air- conditioners. By coordinating their energy production with peak demand, they also can limit monthly demand charges, he said.

"The area of opportunity is the demand charge," he said. "It reflects the value that solar can bring to SRP and SRP customers."

Public comments

SRP officials will have three opportunities to hear from the public before voting on the proposed rate hike.

6:30-9 p.m. Jan. 5, Gilbert Public Library, 775 N. Greenfield Road.

6:30-9 p.m. Jan. 8, Glendale High School, 6216 W. Glendale Ave.

9:30 a.m. Feb. 9, SRP headquarters, 1521 N. Project Drive, Tempe.