Following the ongoing and sometimes bitter confrontation between solar advocates and utilities, the Arizona Corporation Commission (ACC) has approved a proposal from Tucson Electric Power (TEP) to boost investments in renewable energy and deploy two 10 MW (5 MWh) energy storage pilot projects.
However, the issue of this utility owning the renewables it distributes remains undecided, pending further ACC review.
As reported by UtilityDIVE, the ACC approved a $56.6 million budget for the TEP renewables program, which would raise the typical residential customer surcharge for the program from $3.22 to $4.02 per month. $9.4 million will be allocated for large-scale, utility-owned renewables.
Regulators did not approve a request to expand TEP’s utility-owned rooftop solar and community solar programs. TEP says it will pursue approval as a part of its general rate case, but the commission staff has already recommended against expanding the rooftop program over concerns about its cost-effectiveness.
TEP CEO David Hutchens has stated his utility requested an expansion of its subscription-based rooftop solar program due to high customer demand.
The program, launched in 2015, allows 600 customers in selected areas to host solar systems averaging 6 kW on their roofs. In return for a $250 application fee and allowing the utility to use the electricity generated on their rooftops, customers receive a fixed electricity bill for 25 years.
“The rooftop and community solar programs the utility sought to expand are the first steps toward a “full suite” of distributed energy resources that could be offered by the utility, Hutchens said at the time, which would eventually include battery storage and other technologies.
“That vision makes many third-party energy providers nervous. Although Hutchens said the utility would be glad to partner with names like Tesla and SolarCity to offer DERs, independent providers expressed concern the utility could use its market power and existing customer relationships to force them out of the market.”
The renewables gold rush
TEP’s proposals will now be extended to the utility’s general rate case, as hearings commence in August. Although the ACC staff have recommended against expanding the rooftop solar program over cost concerns, a TEP spokesperson said the company will keep pushing for approval. That rate case includes proposals to reduce net metering credits and increase charges for solar customers.
On April 13th, fighting to maintain net metering in Arizona, Technicians for Sustainability has posted this perspective on its website:
It is asking this of the ACC:
- “Preserve net metering or, if changes are to be made, to have slow and gradual reduction in net metering with current solar owners grandfathered in. The ACC provide grandfathering of rate structure and net metering for the numerous Arizonans that have invested in solar while the Commission supported it. The rules of the game shouldn’t be changed midway through their investment in solar.
- “No abrupt changes in rate structure or net metering, which are devastating to the adoption of solar.The ACC should make changes to rate structures gradual, either through optional new rates or with changes that are less than 5% different per year. The people that will be most impacted by the changes being proposed are lower income citizens. Any changes in rate structure should continue to put increased costs on higher energy users which incentivizes energy efficiency and doesn’t put more financial burden on low income users.
- “Make any and all changes in a way that continues to encourage people to put solar on their homes. If the ACC determines that long-term changes to rate structures should be made, they should be gradual changes that continue to encourage people to put solar on their homes and to focus on energy efficiency.”
And of TEP’S proposals:
- “Change how we pay for electricity in a way that reduces the incentive to conserve energy and focuses instead on keeping maximum energy use at any given moment of the day down to a minimum.
- “Double the current fixed charge that we all pay on our electric bills (from ≈ $10 to $20/month). Lower energy using households, which are often the lower income households, would be more proportionally hit by the doubling of this charge.
- “Drastically change net metering, or in other words, reducing the $ value of solar energy that you produce and don’t use right away during the day from ≈ 10-12¢ per watt to less than 6¢ per watt.”
With approval of its renewable energy plans, TEP states it expects to add 800 MW of additional utility-owned renewables by the end of 2030, boosting its clean electricity portfolio to some 1,200 MW. The company is planning to meet a target of 30% renewable energy for retail customers by 2030, according to its latest integrated resource plan.
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