Monday, May 13, 2013

Public Hearing to be Set on Net Metering - Arizona’s Rooftop Solar Industry Hangs in the Balance

by Will Greene

Video streaming by Ustream
Much of what happens at the Arizona Corporation Commission occurs behind closed doors and that is why transparency won a rare victory on Friday when Commissioner Susan Bitter Smith requested a broader public hearing on the crucial matter of net metering.  The date for the hearing is still to be determined.
Net metering grants consumers the ability to feed excess electricity generated from rooftop solar systems to the grid – and to be fairly compensated for that electricity.  Without this agreement, a residential and commercial solar industry would not exist in Arizona, and the only solar on the grid would be utility-owned centralized generation.

Arizona Public Service, the state’s largest electric utility, is questioning the value of the electricity consumers are contributing to the grid, arguing it needs to be substantially lower, as indicated in a recent much-maligned My Turn by APS CEO Don Brandt. 

Previous studies examining the value of distributed solar energy determined it to be an asset for the grid.  A 2009 R.W. Beck valuation study commissioned by APS reported that savings from distributed solar due to reduced fuel, purchased power, line losses, and operation-maintanance costs alone equate to 8-11 cents/kWh.  To put that in context, the average rate of electricity in Arizona runs around 10 cents/kWh.  The cost of fuel such as coal and natural gas is unstable and in the long term only increasing.  Purchasing power on the open market introduces substantial risk to ratepayers due to fluctuating prices.  Transmission line losses can approach 10% when electricity must be transported from distant power plants.  Conventional fossil power plants require substantial operation and maintanence costs that can balloon as federal clean air action takes place through the EPA.  These vulnerabilities are eliminated by distributed solar energy, providing the value R.W. Beck calculated. 
One can argue, which no doubt APS is at this moment, that R.W. Beck did not examine fully the negative effects of distributed solar energy, such as grid infrastructure cost shifts from solar owners to non-solar owners.

A similar examination was undertaken by Texas utility Austin Energy, which placed the value of solar electricity to their system at 12.8 cents/kWh.  Studies like R.W. Beck and the valuation from Austin Energy have left many wondering whether APS is less worried about cost shifts to customers resulting from net metering, and more worried about losing their grip on the monopoly electric system they currently benefit from.

The rehtorical battle over the value of solar in Arizona is playing out well beyond the confines of the ACC.  In February, Sunrun CEO Ed Fenster called APS "probably the most anti-solar utility in the country."  Sunrun is a leading provider of residential solar leases, a business model that counts on the ability of consumers to put solar on their roof through net metering programs.  At this month's Solar Summit in Phoenix, Fenster took advantage of an opportunity to publically drill APS Renewable Energy program manager Greg Bernosky.  The must-watch video is below.

I will keep readers updated as the net metering discussions move forward, and opportunities for public input arise.

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