Corporation Commission Decides the "Value of Solar"

This week, over two long days of public comment and intervenor hearings, a landmark decision was made at the ACC that will impact solar customers, both current and future.  Today, a press release was issued that summarized the outcome.

The issue:  how much is power generated by rooftop solar worth to the utility provider and to fellow customers.

The decision was made 4-1.  Only Bob Burns dissented, recently reelected and the sole commissioner who has pressed APS and its parent company, Pinnacle West, to open their books to reveal whether they secretly funded the campaigns of two sitting commissioners.

Burns said, “in my view, this decision did not get to where I needed it to be in order to support it. Future solar customers should have their solar export rate grandfathered for 20 years, not 10 years, just like what was approved for existing customers. The decision to designate solar customers as a separate rate class for rate design purposes is a rate design question that should be decided in the rate case, not this proceeding.... Although this decision came close to the result I was hoping for, it regrettably came up short and I could not support it.”

The public comment portion of the hearing lasted over four hours on Monday, with customers and organizations urging the commission to support solar customers and solar installers by preserving net metering in some form and by grandfathering existing customers, as their investment was based on certain economic factors and changing the rules in the middle of the game isn't fair.

Literally dozens of people and parties made their case.  At the end of it all, the commissioners decision does the following:

• Ends net metering as an option for new customers
• Grandfathers net metering for existing solar customers
• Applies market variability to wholesale rates for excess power generated by a solar customer
• Sets a 10-year window for stability of those wholesale rates, making it easier to calculate long-term return on investment

These decisions will almost certainly be applied to the current APS rate case, which is already seeking to end net metering and change the way APS compensates solar customers for the power they re-sell to neighboring homes.  Exactly how remains to be seen.

Utilities Council Opinion (by Michael Harris):
In my opinion, the ACC missed the point with this decision.  Rooftop solar customers make up just 3% of APS' customer base; that's hardly significant.  And the traditional utility rate model is based on one thing: consumption.  The more you use, the more the company makes.  This puts the company directly at odds with anyone who is serious about conservation, whether for ethical or economic purposes.  If you use less power, you threaten their profit model.
APS sells excess power generated by rooftop customers (at zero incremental cost to the company) to our neighbors at retail rates.  That makes APS a "broker" in that transaction.  A broker makes a commission off the transaction; that should be the model.
Ultimately, APS needs to seriously re-think how it designs its profit model.  Consumption-only profit is going the way of the dinosaur.  Power management services will be the future of electric utility providers, which puts the customer and the company in partnership to get the most value out of what they need and use.  The longer it takes for them to make this transition, the greater the friction will become between customers and the company.