PHOENIX — Arizona’s largest electric utility said Wednesday it has reached a deal with solar and consumer advocates and business groups that will allow lower rate increases and smaller cuts to what it pays rooftop solar customers than it originally proposed.
Arizona Public Service Co. said the deal allows a 4.5 percent residential rate increase, below the 8 percent the utility proposed last June. Overall, the agreement allows a 3.3 percent revenue increase for the regulated company.
A typical homeowner will pay $6 a month more if state regulators approve the deal after hearings expected in the summer. APS proposed an $11 a month increase.
The utility also dropped a plan to charge all customers more during peak periods, a bone of contention for consumer groups who argued that there was no way for most homeowners to monitor their use in real-time to limit big surcharges. The plans will now be offered as options.
Existing rooftop solar customers will keep “net-metering” rates that pay them full retail costs for electricity sent back to the grid for 20 years. New customers will get substantially less, though more than initially proposed.
A driver in the rooftop solar rates was a December decision by the Arizona Corporation Commission that would end net metering for new customers once the regulatory body sets net rates. They would mainly be based on wholesale rates companies pay for power from commercial solar plants.
APS originally proposed in June paying 3 cents per kilowatt-hour to new solar customers, a huge cut from the current 14.5 cents per kWh. The agreement sets a rate of 12.9 cents per kWh, but that rate is adjusted down each year by as much as 10 percent until it reaches commercial rates. Once a new customer signs on, their rate would be locked for a decade.
Barbara Lockwood, the utility’s vice president for regulatory affairs, called the agreement reasonable and one that allows APS and its parent company, Pinnacle West Capital Corp., to avoid another “rate case” for three years.
“We think it’s a fair outcome for our solar customers and our non-solar customers,” Lockwood said in an interview.
Solar companies had fought the Corporation Commission’s effort to end net metering. They also joined some critics who believe that APS had an outsized influence on regulators, something that helped lead to the settlement.
A statement from the Arizona Solar Energy Industries Association said the agreement is expected to lead to a contraction in the rooftop solar industry, but the results could have been worse. Pinnacle West contributed more than $1.3 million through a political action committee to support three Republican Corporation Commission candidates in the November election and is widely believed to have spent $3.2 million to back Republicans Tom Forese and Doug Little in 2014. The company has neither confirmed nor denied it spent that money.
“At the end of the day, the alternative to this settlement was to risk the entire solar industry to litigation in front of the Arizona Corporation Commission and AriSEIA concluded that was simply too much risk to take” said Corey Garrison, a board member of the group
Other parts of the APS proposal would add $10 million to $15 million annually to install rooftop solar systems on low- and moderate-income homes and apartments. Those customers would get a credit from the utility for the use of their rooftops.
APS also will boost the amount of money it sets aside to help low-income customers pay their bills by 35 percent, to $48 million, allowing more people to use the programs. A $1.2 million emergency bill assistance fund will also be created.
The company that serves 1.2 million residential and commercial customers had proposed commercial rates increases of between 1 percent and just over 6 percent, but settled for a 1.9 percent average for that group.
The company will offer 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.