Tom Chabin & Bill Mundell – The Clone Candidates

Tom Chabin & Bill Mundell - The Clone Candidates

If you look at the websites of liberal Democrat candidates Tom Chabin and Bill Mundell you’ll see they’re practically clones. They both use header photos from Roosevelt Lake, including a photo of Roosevelt Dam; the language is identical with the exception of their names and the layouts are inverse. Not much creativity and not much diversity.

(Incidentally, Roosevelt Dam is operated by the Salt River Project (SRP) and is not under the jurisdiction of the Arizona Corporation Commission. Read why here.)

That’s what you’d end up getting on the Arizona Corporation Commission if these two green corporatists get elected in November.

Both campaigns are running exclusively on the message that Arizona Public Service is evil and bazillion dollar deals are taking place in smoky backrooms.

What they won’t tell you is that the leftist-controlled “green” corporations will be working behind the scenes to make these two Democrats carry their agenda.

And what is the agenda of these big green corporations? To keep the flow of ratepayer and taxpayer dollars to the solar industry and other heavily-subsidized green corporations.

These are the companies that have imploded or gone bankrupt like Solyndra, Abengoa and SunEdison.

Don’t be fooled by all the hyperbole rhetoric by Bill Mundell and Tom Chabin over “dark money.” They themselves will be the beneficiaries of dark money as Big Solar dumps millions of dollars into the Arizona Corporation Commission race to get them elected.

For Big Solar and the other green corporatists, it’s about getting votes on the Commission so they can ramrod policies through that hurt taxpayers, ratepayers and cost thousands of jobs.

This election, beware the clone candidates who will open the door wide to disastrous Obama green energy policies right here in Arizona.

 

 

The Economics and Politics of Solar Net Metering

It’s been some time since I’ve written on the topic of solar energy and the utility industry. This area has always interested me given my background in nuclear power, energy services and Arizona politics. In recent years, my curiosity with the off-grid lifestyle and homesteading has also fueled that interest.

Originally, I wrote from the perspective that the big utility monopolies were taking advantage of ratepayers by pushing for changes in net metering that would result in hurting the rooftop solar industry. It was the classic David vs Goliath narrative.

That was incorrect.

What further economic and policy research revealed was that the solar industry was actually being heavily subsidized by ratepayers via cost shifting from solar customers to non-solar customers. In other words, the full and long-term cost of energy was being redistributed from the solar haves to the solar have-nots.

Rooftop solar is still fairly expensive to the average consumer. It can cost tens of thousands of dollars in up front cost to purchase a full system for your home. Cost is one of the main reasons why the vast majority of consumers opt for a lease arrangement

Rooftop solar companies and policy makers figured out early on that they needed to create an incentive for consumers to move toward expensive solar. Thus, net metering was established.

You’ve probably heard about selling your solar energy back to the grid or spinning your meter backwards. This is an arrangement in which a customer who is generating electricity from their solar panels is sending any excess electricity back to the grid for distribution to other energy users. This practice reduces the energy cost to the solar customer by creating a credit. Utility companies have been crediting consumers at a retail rate rather than a wholesale rate. That retail rate is above the true market value of electricity and is actually a cost to utility companies which have to operate and maintain the grid. Those costs are ultimately shifted over to non-solar users who pick up the tab for not having solar.

Here’s a video put out by a electric cooperative that helps explains the cost shifting.

As you can guess, this was driven by policy makers who wanted to create an incentive for consumers to transition to cleaner solar energy generation and away from a dependency of fossil fuels – a laudable goal.

But there’s also a political motive in driving consumers to solar. As part of the leasing arrangement, some rooftop solar companies sell the excess energy back to the utility companies at the higher retail rate and pocket the difference above the wholesale rate and why shouldn’t they?

The rooftop solar industry found a way to “rent seek” and use public policy to protect the practice – even at a cost to the broader energy market

This reminds me of another moment in Arizona history when the Arizona legislature passed a law creating a tax credit for those who purchased or converted their vehicles to run on alternative fuels. Almost overnight, an industry of alt-fuel conversion companies sprung up in Arizona. Thousands sought conversions and these companies benefited from the special law. What was supposed to cost Arizona taxpayers $10 Millions ended up costing $200 Million. It was a major public policy failure that demonstrated the law of unintended consequences at the cost of Arizona taxpayers.

Here in Arizona over the last two years, the rooftop solar industry and utility companies have been engaged in a heated battle over the economics of solar energy and net metering policy. Ultimately, the Arizona Corporation Commission decides on any changes to policy which may include an adjustment in the rate that ratepayers sell back their solar electricity to the grid.

Rooftop solar companies like SolarCity have insisted that any reduction in the net metering rate will take the incentive away from consumers to go solar therefore hurting the Arizona rooftop solar industry. APS argues that non-solar ratepayers are paying the cost to maintain the entire grid while solar-users are being subsidized.

Corporation Commissioners have tried to broker a compromise with industry leaders. Meantime, the politics of this battle continue to play out as challenger candidates threaten to replace current commissioners and special interest groups promise to engage in the 2016 election.

The problem with net metering may all be resolved by this summer as other proposals emerge. One indication of a solution may be seen over the next few weeks as one smaller Arizona utility offers an alternative to how it bills residential ratepayers. That alternative is called “demand charges” and I’ll explain in a later post how it provides a workaround to the problem of net metering.

Net Metering Levels The Energy Playing Field

By Barry Goldwater Jr.

I don’t recall Joe Galli, the former executive director of the North Scottsdale Chamber of Commerce, ever taking up the cause of economically disadvantaged people in south Phoenix. Nor do I understand why he doesn’t identify his new role as the Executive Director of  Market Freedom Alliance. It’s perplexing that the head of an organization by that name would be expressing disapproval of free market enterprise. Nor do I understand Mr. Galli’s motives in writing an article critical of net metering. Perhaps APS has found another front group to attack solar energy.

I am Chairman of TUSK, which stands for Tell Utilities Solar won’t be Killed. It’s a conservative group that supports energy choice and energy independence.

APS doesn’t like net metering because it forces the utility monopoly to pay a fair price for the excess solar energy rooftop solar users send back to the grid. That’s not a subsidy, that’s commerce. In fact Arizona subsidies for rooftop solar power are long gone. That’s a good thing. The industry is able to stand on its own two feet.

You can’t say the same about APS. It’s a regulated monopoly that depends on a government set rate of return of 10%. If APS makes some bad calls, no worries, they can ask regulators for a rate hike. And captive ratepayers have no choice. It’s not like they can switch power companies. As far as national subsidies, the fossil fuel industry is one of the most heavily subsidized industries in the country, receiving far more than solar.

The rooftop solar industry, which supports TUSK, is made up of private businesses, not regulated monopolies. Rooftop solar is giving these monopolies the first competition they ever had and they don’t like it; and apparently neither does Mr. Galli.

Whatever Joe’s motives in writing an article critical of net metering, I’d like to set the record straight. The federal government has dozens of favorable tax structures that benefit traditional energy sources such as natural gas, coal and nuclear.  Yet for solar there is only one and the benefit of the lower tax treatment is passed on to the end consumer through lower electricity costs.  As any good republican knows, lower taxes means more economic growth and more jobs.  Lower taxes on solar are no different.

Secondly, Mr. Galli makes the claim that rooftop solar is for the rich. That’s simply not the case. 57% of the rooftop systems installed in Arizona are installed in zip codes where the median household income is at or below the Arizona median income. That’s according to the Arizona Solar Energy Industry Association, a respected trade group.

Monopolies such as APS don’t like leased rooftop solar which has made solar available to people of more modest means. In fact, APS supports a property tax that targets leased rooftop solar customers. Hopefully Mr. Galli’s concern for those struggling in this economy will extend to working class families and retirees using solar; and perhaps he will write an article critical of this impending property tax.

Conservatives are smart enough to know that net metering opens energy choice and energy independence to more people through rooftop solar. And I am certain that conservatives can see though APS’ attempts to tax a competitor out of business.

AZ Electric Utility Rates: Regulated Monopoly or Free-Market Competition?

gavel1-300x223In May, 2013, the Arizona Corporation Commission (ACC) opened a docket to gather information on how Arizona might allow competition among electric companies. On September 11, they shut down the docket with a 4-1 vote, citing “legal issues” that were apparently just too much trouble to tackle. Maybe the ACC will tell us more about that later(?).

So until & unless a new docket on the subject is opened, it’s over.  Of course, Arizona residents do still have a choice: either sign up with the one company legally allowed to provide electric service in your area or go without electricity altogether.

APS and SRP are regulated monopolies. The ACC sets the rate of return that they are allowed to earn on their capital investment in generating stations, transmission lines, and so on*. Their day-to-day operating expenses, depreciation expenses, taxes, etc. are fully covered, dollar-for-dollar, by their customers (you and me). That’s the law.

power-transmissionIs that so bad? Yes, it can be. This is the classic problem of regulated monopolies. While their rate of return is firmly capped by ACC, what are the incentives these monopolies have to hold down their capital expenditures on which they earn that guaranteed return? And what are their incentives to minimize expenses such as payroll? Technically, there aren’t any, other than their own good will and the ACC looking over their shoulder.

So can’t the ACC guarantee that the monopolies are run efficiently?  Oh, would that it were!  No, ACC politicians can’t hope to micromanage a monopoly for efficiency.  On the other hand, if there were competition, the utility would have to run itself efficiently or lose customers to a more efficient competitor that could charge lower prices.

Even when the monopolies are run by people of good will and good intentions**, they can easily slip into inefficient behaviors when there is no overriding free-market, profit-motivated, competitive incentive to stay efficient and keep prices down.

Bell_System_1939I’ve been through deregulation before. From 1969 to 1984, I worked at Bell Laboratories, the research arm of the biggest regulated monopoly ever — the old Bell System (“Ma Bell”).  We even had our own tightly coupled manufacturing arm called Western Electric.  The old Bell System was heavily regulated at the federal, state, and (in some states like Texas) local level.

In the old Bell System our advertising proudly claimed that we provided the world’s best telephone service at the world’s lowest prices. And we really did. But the DOJ Antitrust Division broke up AT&T anyway in 1984, opening the long-distance and equipment manufacturing businesses to competition. It was traumatic for us.  It was complicated.  But the job got done, and today’s telecom industry is much more competitive, innovative, entrepreneurial, and a lot cheaper than it would be if we still had one grand national monopoly.

powerlinesWouldn’t it be nice if the same thing happened with electric power in Arizona?  It could — but not until the ACC opens another docket and attacks those “legal issues” anew.

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*Correction: As shown on the ACC website, ACC regulates rates for APS, but on SRP, ACC is only involved when SRP wants to build large power plants (100 Megawatts) or very high voltage transmission lines (115 kVolts.)  ACC also regulates Tucson Electric Power (TEP).

** Regarding good intentions:  A look at the SRP and APS websites will show that these utilities are indeed responsible corporate citizens, offering ratepayers tips, a choice of rate plans, rebates, and other assistance to help customers lower their electric bills. Both utilities and their employees are involved in conservation, and I know first-hand of their contributions to public education in Arizona. But business is business, and there’s nothing like the pressure of competition and the incentive of higher profits to drive a company to run the most efficient operation and offer the lowest prices possible.

Arizona: a Champion in Education Choice, should also be a Champion in Energy Choice

Ask any conservative if they support school choice and the answer is most likely a resounding, “Yes!” School choice empowers parents, families, communities and it reasserts parental control and autonomy back into the issue of education.

While some parents choose to send their child to public school, others may choose private schools, charter schools or even home school their children themselves. Choice in education makes sense and it should make the same sense when it comes to energy choice.

Here in Arizona, conservative lawmakers have pushed and enacted legislation promoting and protecting choice in education while reducing or offsetting the cost to parents who opt out of the public education system. These creative ways to reduce the burden of public education have been in the form of donations that reduce a family’s or business tax liability. It has led to Arizona becoming one of the most prolific school choice states in the country.

Now imagine if the powerful teachers unions were able to capture control of the Arizona Legislature and Executive and began to repeal every law protecting your choice in education. Gone would be scholarship tax credits for families and business. Imagine if the public education monopoly were to control Arizona’s education system to the point where it was almost impossible for charter, private and even homeschooling families to exercise their choice in education. That’s what is about to happen right here in Arizona’s energy market.

It’s about to become very difficult for anyone using residential rooftop solar to continue using this technology to generate their own power – if APS has their way.

In recent years, improvements in technology have allowed energy consumers to afford residential-based power generation technology such as wind and solar units. Consumers have had the choice to generate their own electricity for their own personal needs and even supply excess power back to the main grid. It’s energy choice in action.

Unfortunately, big utility companies like APS see your choice as a threat to their bottom line and have started pressuring rule makers at the Arizona Corporation Commission to change the rules. Specifically, APS would like to see the ACC eliminate the policy net metering which allows energy consumers to provide any excess electricity back to the main power grid and thus reduce their overall energy consumption and cost. APS would essentially regain its monopoly power by erecting a barrier to entry to your ability to supply the grid. Overall, our main grid would lose out by not having thousands of consumers contributing clean power back to the grid.

I started out this editorial by describing how choice in education benefits everyone in Arizona by improving options and reducing the cost and burden on families and corporations. In several ways, energy choice is very much like school choice because everyone benefits, especially here in sun-rich Arizona.

When big utility companies like APS make an effort to take our choice and incentives away in order to protect their bottom line, let’s remind our elected officials whose best interest they’re supposed to serve. Siding with APS on the issue of energy choice would be akin to siding with teachers unions on education choice. Energy choice is as important as choice in education is and Arizona can demonstrate leadership in this arena. After all, that’s what Republican values are all about.

Shane Wikfors is the creator and editor of Sonoran Alliance and a longtime Arizona conservative Republican activist. He is also owner of Red Mountain Consulting & Development and has been an advocate of non-subsidized, consumer-based, taxpayer-friendly energy diversity and sustainability.

APS’ First Solar, Erecting a Barrier to Solar Energy Choice in Arizona

APS knows that Arizonans love solar, but it doesn’t want its customers to have the choice to produce their own electricity and lower their electricity bills.

That’s why APS has chosen First Solar – the one solar company that could never give consumers choice — as its wolf in sheep’s clothing, deploying the company to make APS’s monopoly arguments for them.

Let’s take a look at where First Solar is coming from when it attacks rooftop solar. Unlike rooftop solar companies, which provide solar electricity to individual homeowners, First Solar does utility-scale projects for utilities like APS, whose former CEO William J. Post sits on First Solar’s board of directors.

In its 2012 Annual Report, First Solar lays out in black and white that the success of rooftop solar could compromise First Solar’s ability to execute on their own long term strategic plans:

“We face numerous difficulties…including the following…Difficulty in competing against competitors who may gain in profitability and financial strength over time by successfully participating in the global rooftop PV solar market…”(p. 19). 

And that rooftop PV solar market is driven by consumer demand. The more homeowners are empowered to go solar, the stiffer the competition First Solar and APS face.

First Solar may face another difficulty: it has set aside a whopping $271.2 million to cover the costs of replacing defective modules it made in 2008 and 2009, according to public filings. But APS doesn’t need to be concerned about First Solar’s technology failing because the utility can just pass that cost on to the ratepayers as well. In fact, the more money ratepayers spend to build and fix APS infrastructure, the more money APS makes since it earns a guaranteed rate of return on all its expenditures—whether they promote what consumers want, or not. It’s good to be a monopoly.

It’s no surprise that First Solar CEO Jim Hughes, a 10-year veteran of Enron who led the infamous company’s global assets division during the height of the its accounting scandal but who reportedly escaped as an “unindicted co-conspirator”, opines that net energy metering, the policy that gives customers fair credit for the solar electricity they provide to the grid, and ultimately, to their nearest neighbors, is unfair.

Neither APS nor First Solar want Arizonans to be able to build their own solar projects, because if customers don’t have any choice among competitive solar companies, it makes it easier for utilities to build solar farms and pass on the entire expense to ratepayers. It’s not difficult to imagine APS putting heavy pressure on First Solar to step up to the mic. But that’s just another reason not to believe either of them.

Arizona’s APS could take a lesson from Hawaii’s HECO

I couldn’t help but notice a recent article in the HonoluluStar Advertiser recognizing shifting plates in the energy marketplace, in particular, how the Hawaiian Electric Co. is addressing technological and the consumer-based changes in energy production. How the politics of what’s happening in a blue state like Hawaii relates to the politics in a red state like Arizona is anyone’s guess but some marketplace factors are universal regardless of the political climate.

Here are a few observations on the potentially tectonic plate-shifting changes taking place in the Hawaiian Islands. Keep in mind, Hawaii is unique in that it is isolated from the broader US electric grid and therefore all electrical production, transmission and distribution is self-contained. (It’s not as if they can tap into the grid of adjacent states.)

First, Hawaiian Electric Co. (HECO) presumed it would remain the sole producer of electric power on the Islands. HECO has underestimated customer demand for newer self-sustainable technologies and lessening reliance on its big utility production. During a recent announcement by the Hawaiian Public Utilities Commission (PUC) it chastised the utility monopoly for failing to prepare for renewable energy changes. “Most startling was the assertion that “HECO companies lack a strategic and sustainable business model to address technological changes and increasing customer expectations,’” noted the Star Advertiser.

Here in Arizona, APS seems to be experiencing the same identity crisis as HECO as energy consumers take self-sustainable energy matters into their own hands through independent solar energy production. Realizing the diversification of energy production into the hands of consumers can’t help but force a paradigm shift of APS’ big monopoly mindset away from sole producer to more of an energy distributor.

As the Star Advertiser describes HECO: “Going forward, the hope is for a collaborative, open discussion on how to make the “decoupling tariff” program less onerous for consumers, and on how the utility should transition to become primarily an energy distributor rather than a producer.” The decoupling tariff relates to fees and rates consumers pay as Hawaii transitions to renewable energy technologies – technologies that consumers themselves are pursuing independent of HECO.

Finally, much like our own Arizona Corporation Commission, the Hawaiian PUC is standing up for customers by insisting that utilities and utility shareholders should have to earn profits through a sound performance and an emphasis on customer service. As Commissioner Michael Champley stated in the PUC statement, “Attractive financial returns are not a utility entitlement. Instead, excellent utility performance with affordable rates and superior customer service should drive utility financial performance.” It would behoove APS’ corporate leadership to take this same advice when approaching the Arizona Corporation Commission over rate and policy changes.

Like Hawaii, Arizona’s energy marketplace is also changing to one that is driven by innovative consumer choices, independent production and self-sustainable technology. It’s time big utility monopolies like APS realize the ground is shifting and they are no longer the only major player in Arizona’s changing energy market.

What’s Good for APS Is Not Necessarily Good for Arizona (or Solar)

The typewriter, the phone book and the payphone had their day, and the businesses that relied on them either got busy changing or got busy dying.

Despite claims made by Arizona Public Service, the utility thus far has not been open to options on net metering. APS has been trying to kill rooftop solar in Arizona, or at least change the rules to have this effect.

photo by Gage Skidmore

photo by Gage Skidmore

Rather than innovate or find ways to profit from solar power, APS decries the solar industry and opines that its revenue is heading downward. That’s not the solar industry’s problem. That’s not the ratepayers’ problem. That’s a problem for APS shareholders, and that must not be our state’s concern.

Instead of trying to fix the problem, APS is trying to fix the game. It’s looking to rig the system so the utility doesn’t have to pay fair market value for the excess electricity that rooftop solar customers send back to the grid. That’s the essence of “net metering.”

The bottom line is that this will impact APS’ bottom line. And what APS is saying is that it doesn’t want to make less money.

Rather than try to outlaw smartphones, Bill Gates developed the Windows phone. Phone companies provide cable TV service. Cable TV companies provide internet service. Internet-based companies are carrying television programs and movies. In the private sector, you either innovate or evaporate.

APS executives should have embraced net metering and seen the potential for profits. Now that they have missed the boat, they want to sink it. They have been around for so long and are so set in their ways that they don’t understand that what’s good for APS isn’t necessarily good for Arizona.

APS enjoys a healthy profit margin. Its profits have increased by more than 50 percent since 2008. Its long-term financial forecasts cite solar energy as competition that could impact profits. But instead of trying to figure out a long-term solution, APS is trying to convince the Arizona Corporation Commission to change the rules so its shareholders will continue to see generous dividends. That’s not capitalism; that’s cronyism, and I firmly believe those serving on the ACC will side with energy choice and ratepayers and stand against a utility that would rather change the rules than change its ways.

Indeed, APS’ efforts to crash the future of solar power in this state are the very reason I applauded the ACC for taking the first steps toward more utility competition in this state.

***

Former U.S. Rep. Barry Goldwater Jr. is chairman of the group Tell Utilities Solar Won’t Be Killed. He can be reached at dontkillsolar@gmail.com.

Key Sun City Group Opposes APS Solar Kill Efforts

Tell Utilities Solar Won't Be Killed

The Recreation Centers of Sun City Have Written The Arizona Corporation Commission Supporting Net Metering

(SUN CITY, Ariz.) There’s a reason they call it “Sun City.”  The Recreation Centers of Sun City have written to the Arizona Corporation Commission  expressing opposition to any plans to alter net metering, pointing out that the Centers utilize solar energy and net metering as do many of the residents of Sun City, who live on fixed incomes.

The letter read in part:

The Recreation Centers of Sun City, Inc. (RCSC) would like to express our concerns over the recent discussions regarding changing the policies surrounding net metering.  RCSC has fourteen solar projects that will be completed and online in the very near future and many of our residents in Sun City have invested in rooftop solar, because of the net metering policies that the Commission adopted.  Net metering allows RCSC and our residents the choice of solar, while also providing those on a fixed income the ability to manage their energy costs and needs.

TUSK (Tell Utilities Solar won’t be Killed) is  grateful  that entities such as RCSC embrace solar energy and net metering, which requires  Arizona Public Service (APS) to pay fair market value for any excess electricity rooftop solar customers send back to the grid. APS is seeking to kill solar energy in Arizona by attempting to end net metering as we know it. The net metering policy in place in Arizona is being used in 43 states.

TUSK Chairman Barry Goldwater Jr. said, “They say with age comes a little wisdom. That’s evident by the support expressed by our friends in Sun City. They are among the many seniors Valley wide who save money with solar.”

To learn more about T.U.S.K. visit www.dontkillsolar.com

T.U.S.K. believes that rooftop solar is similar to a charter school—it provides a competitive alternative to the monopoly. Monopoly utilities aren’t known for reducing costs or for driving business innovation, but the Arizona solar industry is. Solar companies have a track record of aggressive cost reduction in Arizona. The more people use rooftop solar, the less power they need to buy from the utilities. Energy independence for Arizonans means smaller profits for the utilities, so APS is doing everything it can to stop the spread of independent solar.

TUSK Launches New Ad Against 800 Lb Utility Monopoly

TUSK (Tell Utilities Solar Won’t Be Killed) released a new ad Thursday against the APS monopoly by placing ads across the banner of the Drudge Report – one of the internet’s most visited political news sites.

Here’s a screenshot of the ad across Drudge:

TuskDrudge

In the latest ad, TUSK portrays APS as the “800 Lb. utility gorilla” beating up on independent solar businesses in Arizona. Former congressman, Barry Goldwater, Jr. then explains why conservative Republicans should be leading the charge for energy choice in Arizona.

Here is a copy of the ad:

The message: Don’t let APS monopolize Solar Energy in Arizona. To learn more about TUSK visit www.DontKillSolar.com.