What Do SSVEC’s Proposals Mean for Solar?

Welcome to the solar coaster

Members of Sulphur Springs Valley Electric Cooperative (SSVEC) have a pretty good feeling of what the “solar coaster” is. Since April of 2015, when SSVEC abruptly proposed elimination of net metering, they’ve felt the tug of war between utility interests, the solar industry, and other stakeholders. We’re now in the home stretch of this long, involved process. Over the next 2-3 months, the Arizona Corporation Commission (ACC) will decide if they want there to be a minimally viable solar market within SSVEC’s service area, or if the current solar slowdown will come to a complete halt.

So how’d we get here? Since this post isn’t intended as a sleep aid, I won’t dig too deep. As noted above, SSVEC proposed gutting net metering over two years ago, and tried to make those changes effective about 30 days after submitting their proposal, before any review by the ACC occurred. This effectively stopped the solar market in their territory—in the next four months, we had only one customer choose to install solar with the possibility of the new rate structures hanging over their head.

Since that time, SSVEC has proposed increased basic monthly charges for all customers, and even greater solar-specific monthly charges. In October of 2016, the ACC approved an enormous increase in monthly charges for all customers from $10/month to $25/month, phased in over four years, but deferred decisions on solar until after the Value of Solar docket was completed. Unlike other Arizona utilities, SSVEC has not proposed residential demand charges, because they don’t currently have the metering technology to support that type of rate.

With the ACC’s December 2016 decision on the Value of Solar, net metering is indeed now riding into the sunset. But the question is now what solar-specific fees (if any), the ACC will approve for SSVEC, and how much co-op members who install solar will be compensated for solar energy they send to SSVEC’s grid.

How will this affect those who install solar after the ACC’s decision?

In this “Phase II” of SSVEC’s rate case, they’ve proposed the following for new solar customers:

• An increased monthly fee of $35, $10 more than other residential customers.
• A retail rate of $0.102996 for energy purchased from SSVEC.
• A first-year export rate of $0.071165/kWh for solar energy sent to SSVEC, with this rate dropping by 10% in years 2-5, and by 11.5% in year six.
• No ten-year “lock-in” of the export rate, even though utilities were directed to do so by the Commission.

If approved by the ACC, the result of these proposals would mean very few (if any) SSVEC customers would choose to install solar. As shown in the table below, it would take a minimum of 15 years for an SSVEC member to recoup their investment in a solar electric system. You can see more in my comments to the ACC.

To continue with a viable solar market, the ACC should adopt the 10-year export rate lock-in, a higher initial export rate, and reject extra monthly fixed fees for solar customers. I’ve found that if the initial export rate was set at $0.10/kWh, this would allow the continuation of a stable (if likely smaller) solar installation market in SSVEC’s territory.

The ACC’s own staff (“Staff”) have also proposed rates in the case. Their proposed rates aren’t as bad as what SSVEC wants, but would make the economics of solar installation very challenging, with simple payback times of about 13-14 years for the next three years, then jumping to over 17 years for systems installed in 2022.

What about current solar customers?

The good news is that the ACC has made clear that customers who already have solar or submit an interconnection application to SSVEC before the decision date will have net metering available for twenty years. They will also remain on a two-part rate, which means they’ll pay a monthly customer charge and a per-kWh energy charge.

But SSVEC is proposing to change the customer charge and energy charge, even for existing customers! This will affect the financial benefits for customers who already have solar installed. After a four-year phase in, solar customers would pay an extra $5 each month in customer charges. Not great.

Much more troubling is their proposal to lower the energy charge from $0.118046 to $0.102995 over the same time. This would mean a drop of 12.8% in the value of energy produced by solar.

It’s time to tell SSVEC to back off on their anti-solar proposals

So there you have it. SSVEC and the ACC need to hear from folks who love their solar, and the ability to choose their energy sources. We also really encourage people who are thinking of installing solar in the future to participate in the process, since your ability to go solar will be greatly reduced if these SSVEC proposals are approved.

Hearings will start with public comment on Thursday, July 20th (see below for specifics) and could continue through the following week. After the hearings are complete, the administrative law judge in the case will complete a recommended order, which will go to the full ACC for their decision. It’s likely this final decision will be made in later in the fall, but the exact schedule may change.

How to take action

Give public comment at the Commission on July 20th, starting at 10:00am. The hearing will be held at the ACC’s offices here in Tucson. The address is 400 West Congress, Room 222, Tucson, Arizona, 85701.

Submit a public comment opposing these anti-solar rates. You can comment online, at http://eservice.azcc.gov/Utilities/PublicComment, referencing Docket E-01575A-15-0312. You can also mail a comment referencing the same docket number to:

Arizona Corporation Commission
Docket Control Center
1200 West Washington
Phoenix, AZ  85007

Spread the word. Let your friends and family know about how these proposed rates could affect them, and how they would hurt local small businesses like Net Zero Solar.

If you have thoughts or questions, we’d love to hear them in the comments!