Hearings slated to begin in Tucson Electric Power solar rate case
State regulators will soon decide Tucson Electric Power Co.’s solar rate case in a ruling that will likely dictate the pace of rooftop solar installations in the area for years to come.
After a three-month delay, Arizona Corporation Commission hearings are set to start in Tucson on Monday, Oct. 23, on proposed new rates for TEP customers with rooftop solar arrays, as well as for solar customers of sister utility UNS Electric.
TEP’s proposal, which follows a Corporation Commission policy set last year, would reduce credits customers get for excess solar generation while increasing some monthly fees.
The utility says the plan would increase the average bill paid by new solar customers by $14 per month, but the typical home solar customer will still be able to save about $90 a month under initial rates.
“We’re proposing changes that will help lower costs for all of our customers while helping to bring more solar power into our community from larger, more efficient systems,” TEP spokesman Joe Barrios said.
The new rates will not affect customers with existing solar systems, or those who file to connect new systems before the effective date of the new rates, which after a series of delays now isn’t expected until February.
Barrios said the changes would reduce a cost shift that results when solar customers avoid buying power from the grid, since those costs are largely recovered through usage-based charges.
But solar installers and industry advocates say TEP could choke off demand for rooftop solar systems in a few years.
“While the TEP proposed rates would not kill solar completely, I believe adoption would slow to a crawl and would effectively cease by 2020,” local solar installer Kevin Koch, co-founder and co-owner of Technicians for Sustainability, said as a formal intervenor in the TEP solar rate case.
The changes could especially make leased rooftop solar deals — which typically offer small monthly savings — less attractive and perhaps even uneconomical.
The move to end net metering has generated more interest from homeowners who want to install systems before the rate changes, but the uncertainty has left many customers balking at a purchase decision, said Charlie O’Dowd, president of Tucson-based Abco Solar.
“Things have slowed down now, but I have a lot of people on the fence,” O’Dowd said. “People don’t like uncertainty.”
TEP says 3,194 roo top solar systems have been installed in its service area this year through September, compared with 3,388 for all of 2016 and 3,192 in 2015.
SOLAR, PHASE 2
The solar case represents the second phase of a general rate case decided in February, raising TEP’s average residential bill about $8.50 a month for typical usage.
In December, the Corporation Commission voted to end net metering — the practice of crediting solar customers for their excess power production at full retail rates — after ruling the practice resulted in a cost shift to customers without solar.
The commission ordered that state-regulated utilities propose new solar “export rates,” initially based on the average cost of wholesale power each utility gets from utility-scale solar farms, to be adjusted in future rate cases.
In August, Arizona Public Service Co., the biggest state-regulated utility, won approval of new solar rates after reaching a settlement with major solar-industry groups as part of its general rate case.
APS’s initial solar export rate is 12.9 cents per kilowatt hour, a couple of cents below its average retail rate, stepping down 10 percent annually and locked in for 10 years, with the option of time-of-use or demand-charge rate plans.
LOWER EXPORT RATES
In its initial filing, TEP proposed a solar export rate of 9.7 cents per kilowatt hour for both TEP and UNS, with 10 percent decreases annually.
Overall, not including basic service charges, TEP residential customers on average pay a rate of 10.78 cents per kWh, while UNS customers pay an average 9.12 cents.
TEP also proposed two rate plans for solar customers, a two-part time-of-use (TOU) plan with higher charges for power usage during peak periods, and a time-of-use plan that includes “demand charges” with two tiers of charges based on highest usage during a one-hour period in a month.