solar vs utilities

There’s A Fight Brewing Over Who Profits From Solar Power

solar vs utilitiesIn the ongoing wars over solar energy, one power company is consistently painted as the archetypal, mustache-twirling nemesis of clean electricity: Arizona Public Service. So you might be surprised to learn that this same company is about to become a big new producer of rooftop solar power.

APS is an unlikely solar patron: In the summer of 2013, the Phoenix-area utility launched a campaign to weaken Arizona’s net metering rule, which requires utilities to buy the extra solar power their customers generate and provides a major incentive for homeowners to install rooftop panels. A few months later, APS admitted giving cash to two nonprofits that ran an anti-solar ad blitz in the state. Early this year, the Arizona Center for Investigative Reporting revealed that a letter criticizing the solar industry’s business practices, sent by members of Congress to federal regulators, was originally authored by an employee of APS. And a couple weeks ago, APS asked state regulators to let the company quadruple the fees it tacks on to the monthly bills of solar-equipped homeowners.


time of use pricing

A California Utility Explores Time-Sensitive Electricity Pricing

time of use pricingThe Sacramento Municipal Utility District (SMUD), a utility that serves approximately 540,000 customers in and around Sacramento, California, has a summer peaking problem. SMUD’s peak load is around 3,000 MW, but 400 MW of that total is needed only about 40 hours a year (less than one half of one percent of the time), during summer afternoons. Those 40 hours drive significant costs for SMUD and in turn, its customers. e-Lab’s Rate Design for the Distribution Edge advocated more sophisticated rate structures along time, location, and attribute continuums. Some progressive utilities around the country have been exploring such rates. SMUD is one of them, conducting a two-year pilot experimenting with time-of-use (TOU) options to cut its peak load.


TOU rates pay heed to predictable, but significant, differences in the cost of producing and delivering electricity throughout the day, charging a higher price during peak hours (usually a handful occurring at the same time each weekday) and less at all other times. A critical-peak pricing (CPP) rate is used during the most expensive hours per year—in essence the highest-peak hours on the highest-peak days. SMUD operated a two-year SmartPricing Options (SPO) pilot program in which it tested three time-of-use options. In one scenario it charged an on-peak rate from 4:00 to 7:00 p.m. on weekdays; in another scenario it charged a critical peak rate from 4:00 to 7:00 p.m. on up to 12 days per summer; and in the third scenario it charged both an on-peak rate and critical peak rate. One set of customers were defaulted into these pilot scenarios; other customers voluntarily opted in.

SMUD discovered that time-of-use pricing works. Customers turned off appliances and lights and were less likely to crank up their air conditioners during peak pricing times. SPO’s TOU rates reduced demand by nearly 12 percent during the peak period. Consistent with the larger price differential, CPP was able to shave around 25 percent of load during peak hours on peak days.


So how were customers affected? There is no evidence that comfort was sacrificed; indeed, SPO participants did not differ from regular SMUD customers in how frequently they reported feeling too warm in their homes because of a reluctance to pay to run their air conditioners

In contrast, SPO customers did differ markedly from standard customers when it came to believing that their pricing plans enabled them to save money.

Approximately one-third of the study participants qualified for SMUD’s low-income tariff, the Energy Assistance Program Rate. These participants received discounted SPO rates as well, and results were similar, proving that low-income customers can also benefit from time-of-use rate designs. “We’re seeing that well-constructed rate designs can and do work for a broad array of customers, including low-income customers,” according to Owen Smith, a principal in RMI’s electricity practice.


SPO employed both opt-in and opt-out recruitment approaches. Opt-in customers had to take action to be part of the program. In contrast, those selected for the opt-out treatment were defaulted by SMUD onto the SPO rates without a prior customer request; opt-out “recruits” stayed on SPO rates unless they demanded a return to standard pricing.

SMUD devoted considerable resources to its marketing for opt-in customers, utilizing various channels, including direct mail, mass media, door hangers, and outbound calling. And the results were impressive, with enrollment rates between 16 and 19 percent. But compare those recruitment outcomes with the acceptance levels for the defaulted, where such a small percentage of people opted out that enrollment rates were between 93 and 98 percent. For anyone inclined to assume that customers will balk en masse if defaulted away from traditional flat volumetric rates onto innovative pricing structures, SPO should be an eye opener.


Some customers received an in-home display so they could in theory know how much energy they were consuming at what time and at what price.  But forget paying attention to that info. Most customers never even bothered connecting the in-home displays. And yet TOU pricing still made a difference. It seems that simple customer knowledge of TOU pricing with big enough price differences was sufficient to change behavior.


Of all the plans in the pilot project, the people who opted in to the critical-peak pricing plan showed the largest load impacts, cutting the peak load during CPP events by 25 percent. Yet although the customers who opted in to the programs had twice as much impact as the default customers, that effect was outweighed by the customer “acceptance” rates. This is because the defaulted customers accepted time-sensitive pricing in overwhelming numbers. In other words, opt-in customers on the critical-peak plan had a bigger load difference, but there were fewer of them. Conversely, defaulted customers had smaller load differences, but there far more of them, so their aggregate impact was bigger.

Per customer, the defaulted demonstrated smaller load impacts than those who actively sought inclusion in the pilot, but as it turned out there was value inherent in the low-intensity nature of their engagement: lower recruitment costs, greater penetration rates, and lower dropout rates combined to outweigh reduced individual impacts. By SMUD’s estimate, deploying the CPP plan on an opt-out basis to 100,000 customers would yield 34.5 MW of load reduction, three times more than offering the same plan to customers who have to opt in.


Time-varying pricing is just one of the methods that utilities (and their consumers) can use to free up value in a more flexible and data-rich electricity generating and delivery system. RMI’s Smith explains, “This program is part of a growing body of evidence that reveals the benefits and customer acceptance of more sophisticated electricity pricing structures. Well-constructed pricing structures can align the interests of utilities with those of customers and innovative distributed energy resource providers. We are encouraged by these findings and are eager to see more utilities moving aggressively in this direction.”

With SPO, SMUD has shown the potential to achieve major system benefits without sacrificing customer satisfaction. By smashing the taboo against the use of opt-out recruitment, SMUD has also demonstrated a low-touch path forward to mass participation. The challenge now is to encourage other utilities to follow this impressive lead.


Solar Power Battle Puts Hawaii at Forefront of Worldwide Changes

hawaii-solarAllan Akamine has looked all around the winding, palm tree-lined cul-de-sacs of his suburban neighborhood in Mililani here on Oahu and, with an equal mix of frustration and bemusement, seen roof after roof bearing solar panels.

Mr. Akamine, 61, a manager for a cable company, has wanted nothing more than to lower his $600 to $700 monthly electric bill with a solar system of his own. But for 18 months or so, the state’s biggest utility barred him and thousands of other customers from getting one, citing concerns that power generated by rooftop systems was overwhelming its ability to handle it.

Only under strict orders from state energy officials did the utility, the Hawaiian Electric Company, recently rush to approve the lengthy backlog of solar applications, including Mr. Akamine’s.

grid defection

Defecting from the Power Grid? Unlikely, Analysts Say

grid defectionFormer Vice President Al Gore stood before a crowd of renewables investors, analysts and clean energy industry executives and declared the electric power grid in the U.S. as much of a technological dinosaur as landline telephones.

Gore, speaking in New York City at the Bloomberg New Energy Finance Future of Energy Summit, asked those in the crowd to raise their hands if they had gotten rid of their landline telephones in favor of a cell phone. Hands went up all over the room.

“We’re not far off from the day when I can ask you how many of you no longer have a grid connection,” Gore said, referring to the link between a home and the power lines outside.

The industry name for cutting the wire between homes and power lines is “grid defection,” and it’s controversial because there is broad disagreement about whether it’s both possible and sensible.

Musk and Rive

Elon Musk’s Cousins Battle Utilities to Make Solar Rooftops Cheap

Musk and RiveIn September 2013, Hawaiian Electric Co. told thousands of customers they couldn’t connect their new solar panels to its distribution grid. In some neighborhoods, HECO said, its system couldn’t absorb any more unused energy from home solar arrays. The moratorium, which lasted 13 months, made Hawaii a central battleground in the effort by utilities to control the rapid growth of independent solar companies across the U.S. And it was a big deal to people such as Robert Gould, a retired Northwest Airlines pilot living near Honolulu. He’d just paid $53,000 to have solar panels installed.

Gould and other customers protested loudly to state officials. They finally got help from Lyndon Rive, the CEO of SolarCity. The San Mateo, California, company is the biggest installer of rooftop solar panels in the U.S. and has 10,000 Hawaiian customers, Bloomberg Markets magazine reports in its May issue. Rive studied the situation and zeroed in on a key fact: HECO had never directly measured how much solar its grid could handle, relying on computer simulations instead. “Because the technology is brand-new, no one had ever done this in the field before,” says Colton Ching, HECO’s vice president for energy delivery.


solar and utilities

NRG Energy Exec Questions Why Solar Is the ‘Bad Boy’

solar and utilitiesIs there a way to integrate increasing amounts of rooftop solar, enabling customer choice and a cleaner grid, while ensuring that utilities are compensated for lost revenue?

It’s a question on the minds of many experts in the power sector. For Steve Corneli, senior vice president of sustainability, policy and strategy at NRG Energy, the answer is not to put up barriers for solar adoption by adding grid charges, in hopes that incentives might run out and rooftop solar will eventually go away.

“Our fundamental motivation is to think through a variance on [solar and utility] policies that will actually satisfy the regulators’ obligation to make sure the utilities get their cost back and rates are just and reasonable without acting like a tire-slasher or a roadblock,” said Corneli, in an interview on the sidelines of a Public Utility Fortnightly event last week in Washington, D.C.

California Public Utilities Commission

California’s Investor-Owned Utilities Surpass Efficiency Goals

California Public Utilities CommissionThe California Public Utilities Commission (CPUC) and the state’s four large investor-owned utilities, which serve 75 percent of the state, have proved yet again that energy efficiency is a great investment to save customers money and clean the air. The electricity and natural gas savings from efficiency surpassed the utilities’ 2010-2012 energy-savings goals and put more than $750 million back into consumers’ pockets after accounting for the costs of running the programs.

That’s according to the CPUC’s new assessment of the customer-funded efficiency programs operated from 2010-2012 by Pacific Gas & Electric, San Diego Gas & Electric, Southern California Edison, and Southern California Gas, with the help of local government and third-party partners. While it naturally takes time after the conclusion of a program to conduct a complete evaluation, it would be helpful for the CPUC to leverage successful evaluation processes across the country to improve the timeliness of the information so program implementers can more quickly use it to improve their programs.

Regardless, the $2.5 billion invested in three years of programs overseen by the commission — ranging from weatherization to rebates for high-efficiency appliances and equipment — yielded substantial benefits as opposed to spending the same amount of money on polluting conventional power resources that harm our health and the environment, and provide zero net benefits for customers. In particular, the efficiency programs serving over 28 million Californians:

  • Saved enough electricity to power 600,000 households;
  • Reduced demand enough to avoid the need for nearly three large power plants(500 megawatts each); and
  • Avoided enough carbon pollution from electricity generation to equal the emissions from more than 1 million cars.

According to this week’s report, the utilities collectively surpassed all of their goals (147% of electric saving goals, 111% of the reduction in peak demand (the time when energy use is the highest), and 132% of natural gas savings goals for 2010-2012). While this is GREAT news, there is always more that can be done to improve the programs and the policies that guide what utilities, local governments, and third- parties can do to support smarter energy use. The CPUC is currently looking at how to move toward a rolling portfolio approach to program planning, an unprecedented and exciting development, as well as what changes the utilities and their partners can make for 2016 to save customers even more energy and money.

In addition, ramping up efficiency — and NOW — is critical to meeting Governor Jerry Brown’s call to double the expected energy savings from existing buildings by 2030. The CPUC should therefore focus on the following in the coming year to enhance policies and programs for existing and new buildings:

Continue encouraging extensive building energy codes and appliance standards programs

The most cost-effective way to save energy is by locking in minimum levels of energy usage for products and buildings. Utilities are critical partners to advance codes and standards as they fund numerous studies and work with California Energy Commission staff and other stakeholders to make sure the next level of codes and standards updates get adopted. As noted in the report, energy codes and standards programs cost just 1 percent of utilities’ total portfolio budget ($30 million), but accounted for approximately 22 percent of total electricity savings and 20 percent of peak demand savings. This represents impressive energy and cost savings for customers and the utilities should continue to be incentivized to focus on state – as well as federal – codes and standards improvements.

Use market assessments to focus programs on motivating customers to cut energy waste

Assessing “what would happen” without the efficiency program is critical to ensure that customer funds are spent wisely. The state’s approach often relies on a customer survey years after the efficiency upgrade action was taken, making it difficult, if not impossible, to get accurate and useful information. It would be far better to conduct an assessment of the market before the program begins, and then again soon after it ends, to get a more accurate and timely accounting of program impacts (that is, what additional savings were achieved due to the program beyond what was originally anticipated).

Design programs to capture savings where and when they are needed the most

While the programs are currently providing enormous energy savings to customers, improving the value of efficiency that is focused on certain locations and/or during particular times of the day (or year) could yield even more benefit. To ensure the efficiency programs are able to be used to offset investment in costly utility infrastructure (like power plants, poles, and wires) and to better support the integration of renewable power into the electricity generation mix, the CPUC should gather better details about where and when efficiency makes the most impact and alter portfolios accordingly.

Expand energy savings from low-income programs

The new CPUC analysis also shows that 2 percent of the energy savings came from efficiency programs aimed at low-income customers. While this is a great start, the Energy Savings Assistance Program, which provides no-cost efficiency upgrades to qualifying customers, could be significantly enhanced to produce even more savings. For example, the CPUC should set an energy-saving goal to accompany the current outreach goal, including criteria to determine which energy-saving measures should be offered to particular customers. These programs should better reach multifamily customers, as well as multifamily building owners, to ensure individual dwellings as well as whole building approaches can be maximized to save energy and lower bills for customers who need relief the most.

There is no doubt that energy efficiency has provided substantial savings to customers and environmental benefits to all Californians. But to get even more benefit from efficiency, the CPUC should take a hard look at current policies to determine whether they are in line with California’s climate and energy goals – and to make sure efficiency savings aren’t being missed. After all, as this week’s report shows, using efficiency to save customers energy is the cleanest, cheapest, and fastest way to lower bills and reduce pollution.

power grid

3 Reasons Solar and Wind Energy Will Take Over Our Power Grid Much Sooner Than You Think

power gridGetting power from the wind and the sun no longer seems like a hippie fantasy: Elon Musk is betting that solar power will be so profitable it will help fund space travel, and big tech companies like Apple and Google are buying in, too. Today most homes and businesses are still powered by fossil fuels, but in just a few decades — maybe even as little as 15 years — most energy could be coming from renewable sources.

An enormous new survey of industry experts shows how fast things are moving. Recently, DNV GL, an international energy consulting company, asked 1,600 people who actually work in the field — at equipment manufacturers, power producers, utilities, policy-making agencies, energy retailers, regulators, and equity investment firms — about the future of renewables. One of the main questions: How quickly will renewables be generating 70 percent of the energy in the markets you work with?

Almost half of the survey respondents said they could see that happening by 2030. And almost all of them — about 80 percent — thought renewables would dominate by 2050.

Here’s why they’re optimistic about renewable energy:


drought's effect on utilities

How utilities are being affected by the California drought

drought's effect on utilitiesCalifornia Governor Jerry Brown made an announcement last week ordering California residents to conserve water, only days after his $1 billion emergency relief package. The drought is affecting many in the state — and utilities are learning to manage their resources.

Hydroelectric production is down due to the shortage of water, but it’s not the only obstacle utilities have to consider. According to the California Energy Commission (CEC), “The times when the highest intense energy water supply options are needed occur during multiyear droughts when surface water supplies are low and groundwater levels drop, requiring even more energy to pump each gallon of water. To compound the problem, reduced surface water supplies and snowpack in higher elevations are likely to reduce the availability of valuable hydroelectric supplies.”

Utilities are working to meet the needs of the customer, the CEC is working to make that an easy process for utilities.


solar as a grid resource

How to Deploy Solar as a Grid Resource

solar as a grid resourceWhen I pass through the residential and commercial areas of a city, it’s interesting to note which homes and businesses have solar panels on their roofs, and then to think about why those particular buildings are the ones with solar. Are the owners or occupants simply more environmentally conscious or climate concerned than their neighbors? Or perhaps they’re interested in self-sufficiency and energy independence? Or maybe they just had the financial means to jump on a solid economic investment with a higher upfront cost but compelling long-term ROI?

Reasons like these aren’t unique to solar. The same could be said about why some properties have lawns and others have drought-tolerant landscaping, or why some buildings have energy-efficient windows while others have single-pane. What’s different here is that with solar PV we’re talking about an interconnected piece of the electric grid, with the ability to directly influence the operation of everything from a transformer down the street to a power plant hundreds of miles away. There’s an opportunity to use distributed PV to better utilize the existing electricity system, which not only makes that PV more valuable to the individual customers who install it but also by reducing the cost to operate the grid, thus benefiting all customers.


In practical terms, it’s fair to say that the deployment of distributed PV today is fairly arbitrary. PV panels are installed wherever there’s a customer who wants them. Make no mistake—that’s a good thing! It’s important that anyone who wants it has access to solar PV, whether on a homeowner’s own roof or through a shared solar project. But there’s also an untapped opportunity to strategically deploy distributed PV so that it provides the right service, in the right place, at the right time. Distributed PV can create benefits and costs to the electric grid in numerous ways, and there are many potential strategies for optimizing those benefits and costs to maximize PV’s usefulness as an electricity system resource. In particular, two such strategies that can be implemented today are:

  • Siting in hot spots. Some areas of the grid—hot spots—are more congested than others. Just like a highway, when everyone is using the grid at the same time (such as when turning on the A/C on a hot afternoon) electricity “traffic” can build up and create problems. Utilities eventually have to add capacity (like adding a lane to a highway), which is expensive. But distributed PV can often be installed in a hot spot to offset load (which is like taking some of those cars off the highway). When done right (so that the PV takes enough cars off the road at the right time of day), this can defer or obviate the need for that expensive capacity investment.
  • Aligning with load. Demand for electricity tends to peak at different times in different areas. This is true at both a macro scale (for example, think about how weather can differ between Oregon and Texas on a given day) and a micro scale (like if one side of a city consists of residences where everyone gets home and turns on their oven at 5:00 p.m., while on the other side are factories that run from 7:00 a.m.–4:00 p.m.). Meanwhile, the amount of power a PV panel produces at a given time depends on the angle of its tilt (i.e., flat vs. upright) and orientation (i.e., east vs. south vs. west). Just as installing solar PV in the right places on the distribution grid can relieve the most congested “highways,” so can solar PV reduce the electric grid’s “rush hour” by taking electron cars off the road at the right time of day by matching the tilt and orientation of our PV with the needs of the grid (locally and/or system-wide). This can help not only with capacity investments, but can also offset high-cost “peaking” power plants (and numerous other benefits).


To capture the value from these opportunities to increase operational benefits, utilities and solar companies will need to collaboratively optimize distributed PV deployment. RMI’s recent report Bridges to New Solar Business Models helped to explain how:

  • Identify optimal timing and locations. To successfully increase value, utilities and solar companies can proactively work together to identify the specific sites and PV configurations that would be most beneficial. Solar companies can contribute their experience with PV projects to help screen for project economic viability and installation feasibility, while utilities can leverage their knowledge of grid operations and the broader system’s needs to screen for operational compatibility. Once identified, optimal locations can be communicated in a variety of ways; for instance, the utility could issue a request for proposal (RFP) for individual projects, or could send pricing signals to direct development.
  • Incorporate multiple project types. A model that incorporates strategic deployment of PV needn’t be limited to a single type of project. These concepts are equally applicable for projects ranging from rooftop solar installations to large shared solar arrays at a distribution substation, and for customer-, utility-, and third-party-owned arrangements. In practice, physical limitations, system needs, and existing regulations may constrain the range of possible projects, but pricing signals and RFPs should be designed to allow for a variety of project types.
  • Provide physical assurance. To realize the opportunities at the identified locations, it’s important that PV projects meet the performance expected of them. Utilities must ensure that distributed PV systems designed to optimize operational benefits are able to perform as expected with a high level of certainty, and that they won’t compromise reliability. Pricing signals or RFPs should make these expectations explicit, providing solar companies clear targets as they design, procure equipment for, and install projects. The utility can then manage grid integration and monitor project performance to ensure that projects meet stated performance specifications.
  • Prioritize education and outreach. Because of the complexity inherent in the process of identifying optimal locations and configurations for PV deployment, clear and transparent communication is critical to the success of this model. As a trusted voice, it will be incumbent on the utility to educate both customers and solar companies on project design features that optimize the temporal aspects of distributed PV generation. Possibilities range from direct outreach to specific customers, to developing maps that highlight the targeted areas and soliciting applications from interested parties. Solar companies can similarly explain to customers the benefits of hosting a project, including revenues, public relations, and educational opportunities.

Several existing utility efforts have included some of these components. For example, Con Edison (Con Ed)—at the behest of the New York Public Service Commission (PSC)—has proposed to avoid a $1 billion substation investment by instead using a portfolio of demand- and utility-side resources (including PV). The Brooklyn-Queens Demand Management (BQDM) program will combat projected load growth by procuring 52 MW of non-traditional solutions within the Brooklyn-Queens hot spot to reduce the area’s peak load. The BQDM program also includes 6 MW of traditional utility-side measures, two new substation transformers, and 91 MW of load transfers. In total, the program and related measures are slated to cost roughly $505 million. While a $500 million reduction in investment might not normally be very appealing to a regulated utility, the NY PSC (recognizing the BQDM program’s consistency with the state’s Reforming the Energy Vision proceeding goals) has offered a 100-basis-point adder to Con Ed’s return on equity (dependent on performance).


All of the strategic deployment concepts outlined here can be implemented today in much of the U.S., without additional regulatory reform. To get started, utilities and solar companies should begin to discuss how to design new solar business models that incorporate these concepts while addressing any concerns. Through this collaborative process they can determine how best to shape several specific aspects of the business model to fit their situation. These situation-specific aspects include the mechanism used to direct deployment, data collection and sharing, and company roles in long-term operation and maintenance of installations.

There are, however, several actions that stakeholders can take to streamline this process and ensure that the needs of all stakeholders are met. In some situations, regulatory mechanisms will need to be implemented to incentivize the utility to prioritize distributed PV where it is the least-cost option, and must do so in a way that ensures the utility optimizes both grid value and customer value together. Elsewhere, both utilities and solar companies can provide guidance to regulators regarding rules to govern reasonable physical assurance. In addition, utilities may need to develop or procure new tools that enable holistic planning and operational management of distributed PV resources, and must take steps to work across internal and external silos.

There are clear pathways to using distributed solar as a grid resource to benefit the grid and society. But to realize—and maximize—the value that distributed PV provides to the grid it will be important for utilities and solar companies to collaborate as they fine tune new solar business models. Ultimately, distributed PV can be used to operate the grid more efficiently, reducing the cost to operate the system and benefitting everyone.

Download Bridges to New Solar Business Models: Opportunities to Increase and Capture the Value of Distributed Solar Photovoltaics


renewables and the grid

Three trends that get the grid to 70% renewables by mid-century

renewables and the gridFor a decade, electricity system operators have wrestled with how to respond to the challenge of growing renewables, but a change has come.

System operators are now looking to solar and wind as a solution — rather than the problem — in their drive for more affordable reliability. But realizing the grid of the future necessitates some basic changes, regulators, utilities, and system operators are thinking about resource planning, pricing, and integration.

“Wind and solar can provide nearly anything a system or network operator wants except power on demand if they are given reason to do it,” explained DNV GL Senior Consultant Felicity Jones, co-author of the new report “Beyond Integration; Three dynamics reshaping renewables and the grid.”

Arizona net metering

Why Arizona Utilities’ New Solar Taxes are A Bad Idea for Everyone

Arizona net meteringSolar taxes are taking off, especially in states whose fading utilities are afraid of losing their political and economic stranglehold on the energy industry. The latest disgrace is Arizona’s Tucson Electric Power, which is following in Arizona Public Service and Salt River Project’s clumsy footprint by complicating net metering progress with inequitable fees.

“At first glance, it looks extremely unfair,” said Solar Energy Industries Association spokesman Ken Johnson. “What Tucson Electric Power is proposing is that customers are able to offset their energy’s full retail credit, and the exports would be valued at what Renewable Portfolio Standard projects are being paid. No other state does that.”

Doing so would “slice rooftop solar rate benefits,” according to an insightful analysis from the Arizona Daily Star. It noted that, thanks to the decreased emissions of home solar and net metering, TEP’s photovoltaic pioneers pay an average of $15 a month for service. Meanwhile, the utility’s traditional customer base, whose energy comes from oil, gas and other dirty fuels, pay an average of $117. The analysis also noted Sierra Club’s math, which explained that not only are net metering pioneers investing millions in TEP infrastructure by basically building mini-power plants on their houses, but also that “the real subsidy at TEP goes to mines and other industrial customers, who use about 21 percent of the utility’s total electric load, but pay barely 7 percent of its revenues.”

“The other 42 states that have net metering all allow for full retail value,” Johnson told “Obviously, what Tucson Electric Power wants to do will seriously hurt the solar value proposition and, in all likelihood, scare off many people in Arizona from investing in rooftop solar. Simply put, these types of issues should be settled by state regulators as part of a comprehensive rate case.”

If TEP’s unfair proposal is accepted by the Arizona Corporate Commission, its rambling press release explained, it would not affect customers who have already installed solar systems or those who submit grid connection requests by June 1. But that process is sure to be problematized by recent allegations of political corruption at the Arizona Corporate Commission, which is charged with being too cozy with the Arizona Public Service.

Revelations from a whistleblower inside APS argue that now-retired ACC commissioner Gary Pierce — a Republican who owned a string of automobile dealerships and gas stations before joining the Arizona House of Representatives, for which he pulled in over $360,000 in campaign contributions from the ACC — colluded with APS CEO Don Brandt and steered money targeting two Democratic competitors. Pierce allegedly also offered the whistleblower, his own executive assistant, a promotion in exchange for silence on the matters. It didn’t work.

None of this inspires much confidence that the ACC is capable of fielding TEP’s unfair proposal in an equitable manner. Nor does Attorney General Mark Brnovich’s investigation into Pierce’s alleged wrongdoings, given that the AG is also a Republican as well as a recipient of $425,000 in campaign contributions from APS’ parent corporation, Fortis Inc. Add it up, and you have a one-sided power move against the state’s solarizers, who are, more and more, voting with their roofs.

“Solar has overwhelming public support because customers are demanding energy choice,” Vote Solar’s Jessica Scott told “Lower panel costs and local business growth mean that solar power is within reach for more Arizonans than ever before. It’s helping families, schools, churches and businesses save on their energy bills by harnessing Arizona’s abundant sunshine.”

“Even better, this investment in local solar energy is helping keep rates low for all of us,” she added. “Numerous studies have now indicated that the grid benefits from net metered clean energy systems outweigh the costs. Net metering is compensation for self-generated power that customers are selling back to the utilities — reducing the need for polluting traditional utility power plants and other expensive infrastructure.”

The concept that all of this forward-thinking assistance from the public it is supposedly serving is somehow bad for TEP, APS, SRP or any other utility trying to hold onto the past is ridiculous. From its alleged political corruption to its obvious economic preference for non-solar customers, Arizona’s utilities, and their parent corporations, are putting themselves on the wrong side of the inevitable renewable energy future, and history itself. Whatever short-term costs they may score against solarizers are vastly outweighed by the long-term losses they will incur by making the most bone-headed of maneuvers.

“For whatever reasons, rooftop solar in Arizona is now under assault from one end of the state to the other,” Johnson said. “Without an independent study to determine the true value of solar, the Arizona Corporation Commission would be shooting in the dark when it comes to ruling in a case like this. The fairest way to resolve this dispute is for the ACC to stick to its established rate case procedures. It’s hard to imagine that 42 other states all have it wrong.”


TEP net metering

TEP claims new net metering plan will promote equitable pricing and reliable grid

TEP net meteringTucson Electric Power (TEP) has proposed a new net metering plan to ensure that customers who install new rooftop solar power systems pay a more equitable price for their electric service while still enjoying significant bill savings.

Users of rooftop solar power systems rely just as heavily on TEP’s electrical system as other customers – more heavily, even, since TEP must manage their systems’ intermittent output. But they pay far less for TEP service under current rates, due in part to net metering rules that allow them to exchange excess solar energy for free, on-demand utility power.

TEP is proposing instead to purchase excess solar output from new rooftop systems at the same price it pays for energy from large local solar arrays. The resulting bill credits would allow customers to reduce their electric bills by going solar, even as they pay the same price as other customers for the energy they use from TEP.

“Our proposal will allow the continued expansion of southern Arizona’s solar energy resources while preserving safe, reliable and affordable electric service at more equitable prices for all of our customers,” said David G. Hutchens, TEP’s President and Chief Executive Officer.

Customers who go solar under the proposed plan would still enjoy significant savings on their monthly electric bills. Typical residential customers who use 900 kilowatt-hours (kWh) per month and install a 6-kilowatt (kW) array would save more than $80 per month on their average electric bill – about $22 less than they would save under current net metering requirements.

If TEP’s proposal is approved by the Arizona Corporation Commission (ACC), it would not affect customers who already have solar power systems or those whose requests to connect new solar arrays to TEP’s grid are submitted by June 1, 2015.

TEP’s proposal would reduce – but not eliminate – subsidies embedded in current rates that shift the burden of paying for our local electrical system from rooftop solar array users to other customers.

“The generous subsidies provided by current net metering requirements were an effective short-term incentive for a costly, relatively new technology,” Hutchens said. “Now that solar power is far more popular and affordable, we can achieve our renewable energy goals and preserve significant bill savings for solar power users without creating unmanageable cost burdens for our other customers.”

To provide safe, reliable service to customers, TEP must operate, maintain and improve a system of power plants, transmission lines, substations, underground cables and overhead distribution equipment while conducting metering, engineering, customer service and business operations. These costs are largely fixed – that is, they don’t vary with energy usage. But since TEP’s rates recover most of those costs through usage-based charges, customers with rooftop solar arrays don’t pay an equitable share of these costs.

The impact of this solar subsidy was minimal in 2008, when the ACC approved current net metering rules. At that time, fewer than 600 TEP residential customers had rooftop solar systems and large subsidies were necessary to help customers justify the purchase of photovoltaic (PV) arrays that cost more than $8 per watt of system capacity.

PV system prices have fallen steadily since then to less than $3 per watt, driving annual increases in the installation of both customer-owned and leased PV systems. About 7,900 of TEP’s residential customers now have solar power systems, and more than 600 customers have applied already this year to connect new PV arrays to TEP’s grid.

Without changes to TEP’s rates or net metering plan, the continuation of such growth would force significant rate increases to offset increasing subsidies to users of rooftop solar systems.

“We’re exceeding our renewable energy goals, but that won’t mean much if we’re forced to compromise the affordability of our community’s electric service,” Hutchens said. “Our proposed net metering plan would promote both sustainable power and a sustainable electric grid.”

Tucson Electric Power provides safe, reliable electric service to approximately 414,000 customers in southern Arizona. Solar power plays an important part in TEP’s increasingly diverse generating portfolio. The company has approximately 330 MW of total renewable generating capacity, enough to meet the electric needs of about 70,000 homes. For more information, visit