Wait, TEP is Proposing More Anti-Solar Rates!?

Update, June 2019: Although this article will help you understand different rate structures and the end of net metering, much of the information is now outdated. We recommend you read our recent articles Is Your Arizona Solar Installer Telling You the Whole Story? and Should I Install Solar Right Now? for current information on going solar in Arizona.

Maybe you’re someone who checks every utility bill insert. Or maybe you just can’t get enough of the legal notices in the back of the newspaper. But if you aren’t “that guy” (or gal), you might not know that Tucson Electric Power is yet again proposing changes to rates around solar in the second phase of their rate case.

Forgive us for sharing the same narrative that’s been true for a number of years, but yes—these proposals are bad for Tucsonans who want to install solar on their own homes, but good for TEP’s proposed company-owned solar, and great for TEP’s profits.

First, some good news. The Arizona Corporation Commission (ACC) has made clear that they support “grandfathering” of net metering for existing solar customers, which will apply based on the date of the decision in this second phase of TEP’s rate case. So if you’re thinking about solar, there’s still a little time to get it installed under the current rules.

Net metering rides into the sunset

As we’ve shared before, net metering for new customers will be phased out, as each utility completes their rate cases. For Trico customers, net metering is already gone. TEP, UNS Electric, and SSVEC customers will have net metering available until phase two of each rate case concludes.

So what will replace net metering? A “DG export rate.” This rate, which is expected to be somewhere between 7-12 cents per kWh for TEP, will apply to any energy that a solar homeowner sends to TEP. For any solar electricity energy that you use as it is generated, you’ll save money at the retail rate. This means that TEP customers who install solar after net metering is gone could lose 30% or more of the value of a solar electric system compared to current rates. The amount of lost savings is highly dependent on a homeowner’s specific energy use patterns.

Proposed rates are more complex

TEP is proposing that new  “distributed generation” or “DG” customers—those who produce their own energy at their homes—must be on one of two specific rates.

The first proposed is a time-of-use rate. In addition to a monthly service charge of $13, you’d pay more for electricity during certain hours. For example, in the summer, the peak is from 3:00pm-7:00pm, and you would pay about fourteen cents per kWh under the proposal, while you’d pay just under ten cents per kWh during off-peak.

In the winter, the proposed difference between peak and off-peak pricing is less, with off-peak a little under ten cents per kWh, and peak pricing a little more than ten cents per kWh. In winter, the peak period would be from 6:00am-9:00am and from 6:00pm-9:00pm.

Time-of-use rates are generally designed to incentivize energy use in the off-peak time, when it’s cheaper for TEP to generate or purchase energy. For example, you might want to wait until after seven to start the washing machine, dryer, or other large loads during the summer.

Of course, some loads just can’t wait. You’ll probably need to run your air conditioner when you get home, whether it’s a bit expensive to do so or not. Similarly, it’s not usually practical to wait to cook dinner.

To add insult to injury, TEP is also proposing a new “Grid Access Charge” for those on this rate option. This charge would be based on the size of the installed solar electric system, and would apply to each month’s bill.  TEP says this is because solar customers “avoid paying their share” of the cost of the grid (though this conclusion is dubious).  This charge is proposed to be a whopping $3.50 per month per kW of solar electric system size. So for a fairly typical 8 kW solar electric system, you’d be paying an additional monthly charge of $28.00!

The second proposed rate option for solar customers also has a time-of-use component for your energy costs, and maintains the basic service charge of $13. But it adds another wrinkle: a demand charge. A demand charge is a charge based on the maximum amount of energy you use over a short period of time. In TEP’s proposal, they would measure your energy use over each hour during the month, and would bill you based on the maximum energy use over a one-hour period during peak time. For example, in my modest 1,100 square foot home with a relatively small 3.55 kW solar electric system, my maximum 1-hour peak use was 7.21 kW last August. If I were on that proposed rate, I’d pay $84.34 just in demand charges for that month, not to mention all the other charges!

Both of these rates increase the complexity of the decision to install solar on your home. It’s not too tough to understand and react to time-of-use rates. But demand rates are much more challenging for consumers to react to, and it’s more difficult to model estimated savings from solar, energy efficiency, or other technologies.

More meter fees

TEP has also proposed a new meter charge for solar customers. Back in February, the Arizona Corporation Commission approved a new $2.05/month charge for solar customers, due to the greater cost of the specialized meter needed to record energy flowing both to and from the grid. Although we aren’t exactly happy about this solar-specific surcharge, it does seem to be a reasonable amount to cover the costs incurred by TEP. And customers have the option of just buying the meter up-front, for $142.95.

Now, TEP is adding another wrinkle: They want to raise the meter charge to $4.32 each month! They claim this is due to the fact that TEP chooses to install a solar production meter, plus they say that billing costs increase significantly for solar customers. But the thing is, the solar production meter actually doesn’t provide any benefit to solar customer. Each solar electric system we install includes Enphase Energy’s monitoring solution, which accurately records both the energy output from your system and the amount of energy you use in your home, and makes this data available to you on a user-friendly portal in near real-time. The solar production meter does benefit TEP though, since they can use that meter to keep track of system performance, and can use the data to confirm compliance with ACC policy.

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

So there you have it. Net metering on the way out. Complicated demand charges or punitive solar-specific rates. Fees for metering infrastructure that solar customers don’t need. And it all seems to be calibrated to make it harder for TEP customers to choose to produce some of their own energy on their homes. This flood of poorly-considered anti-solar policies needs to be stopped. The ACC and TEP 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 under these proposals.

Hearings will start with public comment on Monday, June 26^th (see below for specifics) and could continue through mid-July. 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 early fall, but the exact schedule may change.

How to take action:

Give public comment at the Commission on June 26^th, 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. Over the coming weeks, we’ll share more specifics about the proposals, if you’d like help with some possible points to bring up in your public comments. Or feel free to contact us with questions.

Submit a public comment opposing these anti-solar rates. You can comment online, at http://eservice.azcc.gov/Utilities/PublicComment, referencing Docket 01933A-15-0322. 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!