Originally Published: June 2, 2016 6:01 a.m.
PHOENIX — Arizona’s largest electric utility on Wednesday said it wants to increase residential rates by about 8 percent and move most customers to a billing plan that charges them more if their power use surges during peak hours.
Arizona Public Service also wants to end solar power buyback plans it says don’t fairly cover the costs of providing power to homes with solar panels, starting in mid-2017. Existing rooftop solar customers will keep their current rates for 20 years after they are connected.
The filing with the Arizona Corporation Commission kicks off a yearlong rate case that APS hopes ends with the new rates in effect by July 1, 2017.
A representative of a solar advocacy group, former corporation commissioner Kris Mayes, called the plan “the most anti-consumer, anti-solar proposal in the history of the state.”
The company that serves 1.2 million residential and commercial customers also hopes to raise commercial rates by between 1 percent and just over 6 percent and end some commercial discount programs. The company also proposes new lower rates for businesses that expand or relocate to Arizona, a new plan designed to lure computer data centers and one that allows businesses with multiple locations to bundle accounts and get a lower rate.
APS states it will boost the amount of money it sets aside to help low-income customers pay their bills by 35 percent, to $48 million. That will allow more people to use the programs. It’s also proposing a simplified flat-discount plan of $34 per month for those customers.
The most contentious parts of the proposal are likely to be the new “demand charges” and the ending of “net metering” for solar customers.
Net metering pays homeowners with rooftop solar full retail rates for excess power sent back to the grid. APS is proposing to pay only wholesale market rates for that power, a rate that will dramatically cut the amount of credits solar customers receive. APS and other utilities have been pushing for the changes in recent years, arguing that they unfairly benefit solar customers while shifting costs of maintaining the grid to non-solar customers.
APS currently has 40,000 rooftop solar customers, and the number is growing. The company said it expects $1 billion in costs to be shifted over 20 years from solar to non-solar customers.
“If we don’t fix it now, it’s only going to get bigger,” Gregory Bernosky, the utility’s director of state affairs and compliance, said in a briefing with The Associated Press. “And our point is a call for action — we need to make some changes on rate design and we think that this is something that it’s time has come to be addressed.”
But Mayes, who represents the solar advocacy group Energy Freedom Coalition of America which includes industry leader SolarCity, slammed the solar and demand fee proposals, plus one that boosts basic fees and will increase costs for solar customers.
“They’re asking to impose mandatory demand charges on most Arizonans which would require them to constantly know how much energy they are using,” she said. “Mandatory demand charges are unfair and it’s certainly no way to live.”
“Additionally, APS is proposing to undermine net metering by paying solar homeowners less than the true value of the energy they’re producing, which represents a blatant effort to stymie competition,” she said.
The proposal comes despite an APS agreement with SolarCity to go to mediation on new solar rates. The agreement reached in April after Gov. Doug Ducey intervened led to the withdrawal of competing measures asking voters about how to treat rooftop solar power. The meetings were set to begin this week.
The new rates won’t affect current solar customers for 20 years after they connect their systems, and will stay with the house if it is sold. Systems installed or connected to the system after July 1, 2017 will go onto the new rate structure.
“We’ve worked with the local solar industry, particularly the folks that have headquarters here in Arizona, and they’re supportive of this,” Bernosky said.
The demand rate proposal will force up to 90 percent of residential customers to limit power use during peak hours or face higher charges.
The proposal factors in normal use, including air conditioning, but would penalize customers who turn on appliances like clothes dryers or pool pumps between 3 p.m. and 8 p.m. The peak hours will change from the current noon to 7 p.m. to better align with actual peak usage.
“We believe demand rates do a lot of things,” Bernosky said. “They send a price signal to customers that are helpful for them to manage their load. They also allow APS to operate its system more efficiently, and over time you can really reduce the need to additional infrastructure investment, specifically additional peaking capacity.
But Mayes said penalizing customers for living normal lives is “ridiculous” and noted that there’s no way for consumers to monitor their power use.
“Who doesn’t come home and turn on appliances when they get home off of work?” she said. “Clearly what APS is proposing is going to be dramatically harmful to most Arizonans. We’re looking at something that’s going to result in hundreds of dollars in additional costs, possibly every month for ratepayers.”
Cutting peak energy demand helps power companies avoid overtaxing their systems and having to go out to the expensive “spot” market for power or build new power plants.