APS Stock Price, Profits Should Be Secondary to Arizona Solar Energy Consumer Choice

During their last earnings call, as reported in the Arizona Republic, Arizona Public Service (APS) CEO Don Brandt was asked about the financial impact rooftop solar could have on APS if solar’s popularity continued to soar.

RooftopSolarJust like the public education monopoly, the APS utility monopoly is concerned that more energy efficiency and choice, specifically more rooftop solar, is starting to eat into its profits and revenue growth.  APS clearly disclosed this to its investors when it revealed that between now and 2015, it expects its electricity sales to grow by less than 1% even though its customer base will grow 2% annually. The reason? APS customers are investing in more energy efficiency with rooftop solar being the primary technology of choice.

Frankly, how APS addresses this with investors is no concern of mine. And neither should it concern the Arizona Corporation Commission.  A more innovative future with more energy choices for Arizona consumers should not and must not be dictated by the utility’s bottom line. By that same logic, we would have harnessed the Internet because of the challenge it posed to newspapers and many other technologies.

I would think by now that any astute energy consumer would recognize that APS’s sudden concern about the proliferation of rooftop solar in Arizona has nothing to do with empathy for Arizona ratepayers.  It has everything to do with curbing a disruptive technology growing quickly in their existing marketplace. As one pollster has opined, allowing APS to do this would be “political malpractice.”

But there appears to be a far greater threat to APS’ stock price (PNW) on the horizon and that, fortunately for consumers, is a healthy competitive change.  Because of their blatantly naked attempts to kill independent solar in Arizona, along with other reasons, the Arizona Corporation Commission is rightfully looking at opening up more utility competition in Arizona.  In fact, they took the first step down this path last week. Kudos to Chairman Bob Stump and Commissioners Gary Pierce, Brenda Burns, Susan Bitter Smith and Bob Burns for their actions. Clearly, APS’ effort to thwart more solar choice in Arizona is exactly why we need more competition in Arizona.

Choice and competition – these are concepts all conservatives can rally behind.  And it is one all Wall Street stock investors will surely be watching.  The bottom line for consumers is we simply cannot have a better energy future in Arizona if the primary focus is on APS profits rather than innovation and competition that always best serves the marketplace.

APS Wrong. Solar Saves Ratepayers, New Study Shows

Tell Utilities Solar Won't Be Killed

Rooftop Solar Generates $34 Million A Year for APS. APS’ Customers – Not Shareholders – Should Reap This Benefit

(SCOTTSDALE, Ariz.) A new study shows that rooftop solar and net metering generate a windfall for Arizona Public Service (APS). Rooftop solar generation provides APS with $34 million in benefits each year.

TUSK (Tell Utilities Solar won’t be Killed) is calling on APS to give back the windfall it has made from rooftop solar energy.  $34 million a year should be returned to APS customers in the form of lower rates, not put into the pockets of a giant monopoly and its shareholders.

TUSK Chairman Barry Goldwater Jr. said, “In free enterprise, those who make the investment should reap the rewards. APS has not invested in private rooftop solar. Rather, the utility has been trying to kill the industry to limit competition. And for that, they deserve no reward.”

Net metering allows people who invest in rooftop solar to receive fair credit for the power they send back to the grid. It is a simple policy – used in 43 states today – that works very much like rollover minutes on a cell phone bill.  Solar is far and away the most popular source of energy in the eyes of Arizonans, but to APS, rooftop solar has become a competitive threat to its monopoly.  By working to get the Corporation Commission to change net metering rules, APS is attempting to kill the thriving independent rooftop solar market in Arizona in order to protect its monopoly interests and overwhelming profits.

Rooftop solar is a free market enterprise built by the private investments of homeowners and businesses that install solar panels on their roofs. School districts have also invested in rooftop solar.  Through these investments, schools are saving taxpayers millions of dollars while home and business owners are saving money on their electricity bills.

The study showing that solar provides a $34 million benefit to non-solar customers was commissioned by the Solar Energy Industries Association (SEIA) and authored by Crossborder Energy. Using APS and energy market data, the study found that in addition to providing benefits to solar adopters, like control and savings, rooftop solar provides benefits all APS customers.  For each dollar of cost, rooftop solar generates $1.54 in benefits to all APS customers.

There are several ways that rooftop solar benefits all APS customers.  First, rooftop solar enables APS to spend less money on purchasing power and building expensive conventional power plants. Second, APS can also avoid or delay investments in transmission and distribution infrastructure, because electricity is being generated at the same place it is consumed.  In addition, rooftop solar saves APS money on ancillary service costs, capacity reserve costs, avoided renewables costs, and by providing environmental benefits, like lower air pollution emissions and less water use.  To learn more about the study and see the full results, click here.

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.

New Study: Distributed Solar Energy Provides $34 Million in Benefits to Arizona Ratepayers

More information on the debate taking place to eliminate net metering and energy choice in Arizona. This is reposted from The Solar Energy Industry Association:

WASHINGTON, DC – A study released today shows that distributed solar generation (DG) and net energy metering will provide Arizona Public Service (APS) customers with $34 million in annual benefits.

The study was commissioned by the Solar Energy Industries Association (SEIA) and was authored by Tom Beach of Crossborder Energy. Using data from APS’ 2012 Integrated Resource Plan and other APS data, the study examines the costs incurred and the benefits generated by distributed solar over the useful life of a distributed solar system — 20 years. This is consistent with how APS approaches long-term resource planning.

The study found that for each dollar of cost, DG provides $1.54 worth of benefits to APS customers. The net benefits for APS customers will amount to $34 million per year beginning in 2015. Benefits include savings on expensive and polluting conventional power and power plants; reduced investments in transmission and distribution infrastructure; reduced electricity lost during transportation over power lines, as distributed solar power is generated and consumer locally; and savings on the cost of meeting renewable energy requirements.

“This study clearly shows that solar offers concrete net benefits to all APS ratepayers, regardless of whether or not they have installed solar” said Carrie Cullen Hitt, senior vice president of state affairs at the Solar Energy Industries Association (SEIA). “It’s essential that we keep smart policies like net metering in place so that Arizona can continue to benefit from its abundant solar resources.”

Net metering is a popular consumer policy in place in 43 states that empowers homes, businesses, schools, and public agencies to install solar while helping the economy and other ratepayers. As a result of thousands of Arizonans’ choice to adopt rooftop solar, a competitive solar energy industry employs 9,800 Arizonans today.  Arizona boasts the most solar per capita of any state in the nation with 1,097 megawatts (MW) of solar capacity. Beyond making a smart energy choice, this study shows that these customers’ investments provide financial benefits to all APS customers. Overall, Arizona ranks 2nd in the country for most installed solar, with enough capacity to power 139,000 homes. In 2012 alone, $590 million was invested in Arizona to install solar on homes and businesses.

“Arizona has become a national leader in the use of distributed solar energy.  This is due to net metering and other policies put into place by the Arizona Corporation Commission and Legislature. In order to maintain this leadership role, it is imperative that these consumer-friendly policies remain in place,” says Michael Neary, former executive director of AriSEIA, the Arizona SEIA chapter.

The full Crossborder Energy Study is available here.

About Crossborder Energy:
Crossborder Energy has deep analytical experience in the energy field, and has participated actively in many of the major energy policy debates over the last 30 years, including the addition of new natural gas pipeline capacity to serve California and the restructuring of the state’s gas and electric industries. Crossborder Energy provides expert testimony, strategic advice, market intelligence, and economic consulting services on market and regulatory issues in the natural gas and electric industries in California, the western U.S., Canada, and Baja California, Mexico.

About SEIA®:

Established in 1974, the Solar Energy Industries Association® is the national trade association of the U.S. solar energy industry. Through advocacy and education, SEIA and its 1,000 member companies are building a strong solar industry to power America. As the voice of the industry, SEIA works to make solar a mainstream and significant energy source by expanding markets, removing market barriers, strengthening the industry and educating the public on the benefits of solar energy. www.seia.org

Background Materials:
– The Costs and Benefits of Solar Distributed Generation for Arizona Public Service, May 10, 2013: http://www.seia.org/research-resources/benefits-costs-solar-distributed-…
– U.S. Solar Market Insight: 2012 Year in Reviewwww.seia.org/smi
– The Solar Foundation’s State Solar Jobs Map: www.solarstates.org

Barry Goldwater Jr. Issues Open Letter to Arizona Corporation Commission

Tell Utilities Solar Won't Be Killed

 

Commissioner Gary Pierce
Arizona Corporation Commission
Commissioners Wing
1200 W. Washington – 2nd Floor
Phoenix, Arizona 85007

VIA EMAIL & U.S. MAIL

Docket No. E-01345A-12-0290

Dear Honorable Arizona Corporation Commissioners:

As you are well aware Arizona Public Service (APS) has launched a hostile attack on rooftop solar, a customer choice driven alternative to its monopoly.  They claim to like solar but it’s clear they only like what solar they own. Their fear of the future and the increased adoption rate of independent solar is cited for acute concern in their Wall Street filings, a clearer indication of their real feelings and true motivations.

But thanks to your leadership energy choice via a thriving rooftop solar market in Arizona is one of the country’s great success stories.  Your “more rooftop solar for less ratepayer money” policy has worked to date, driving down prices and increasing adoption for residential solar consumers. Now, APS is asking you to be the first governing body in the country to reverse the net metering policy that is law in 43 states.  It would be the most anti-solar move in the country for what has been the most opportunistic of solar states.

APS continually echoes that net metering is a subsidy.  It is not and will be proven as much.  However, since they raise the issue of subsidies, they introduce the notion that any decision on net metering prior to a more comprehensive review of all APS subsidies, would be premature.  I certainly believe this to be the case.  Consequently, we ask that you formally undertake such an analysis, prior to the any decision on net metering, in order to convey to the public what the true impacts to Arizona ratepayers are. And, in addition to their monopoly status how APS’ subsidies grant an unfair competitive advantage to energy choices like ours.

At every step from the beginning to the end of the electrical generation cycle, incentives in the form of preferential treatment are applied such as subsidies, price support, tax treatment, accelerated depreciation, and capitol recovery.

While the Corporation Commission does not control and did not create all of these subsidies, its constituents, the utility ratepayers, pay for all of them whether it be through their electric bills or state or federal taxes.  As a result, their impacts on those you represent are real, must be understood, and cannot, despite APS’ wishes, be ignored.

Why would the Commission take action on one alleged “subsidy” without understanding the impact of all subsidies on Arizona ratepayers?

Such an analysis should include but not be limited to:

  • The Price Anderson Act:  This subsidy allows APS to own, operate and profit from one of the largest nuclear plants in the country while Arizona and American taxpayers are on the hook to write a blank check should any accident take place.  APS has benefited from this subsidy ever since Palo Verde shipped its first electron, about 25 years ago.
  • What about the tax credits APS receives on its nuclear decommissioning trusts?  Across the country that subsidy alone costs Arizona and American taxpayers more than $1 billion each year.  This is literally a tax break to cover the costs to close down a power plant.
  • When it comes to coal what about the percentage depletion tax break which is a tax credit for depleting natural resources.  This costs Arizona and American taxpayers another $1 billion per year.
  • What about the burden placed upon small businesses in APS service territory to disproportionately absorb costs associated with electric service to keep rates lower for others?  Should our small businesses be paying much more than their fair share so that APS can show returns for its shareholders?  We must understand the true costs to our small businesses of this massive subsidization.
  • Subsidies for transmission line extensions to serve new development:  APS previously advocated in favor of a policy that provides line extensions to new development at no cost to the developer of the property.  These costs are instead shifted onto all ratepayers so that APS can more easily add new customers and more money to its bottom line.  Now that growth has accelerated it is imperative that we understand the costs of this subsidy.
  • Protected monopoly status: Of course, the biggest subsidy to APS is its protected monopoly status.  This is a subsidy of the highest order as the government literally forbids competition with this utility.  The appropriate type of measured competition will undoubtedly be good for ratepayers yet APS seeks to crush even the smallest notion of customer choice.  Before taking away all customer choice at APS’ behest, it is essential that the Commission calculate the costs to APS customers associated with continuing a system devoid of competition.

These are just a few examples.  APS’ premise seems to be that APS and her shareholders should continue to receive subsidies for dirty and dangerous power sources while solar choice should be punished such that APS should make even more money when its customers choose to buy a different product?  APS is standing on stilts and calling the solar industry short.

Because of their audacity – and abuse of its monopolistic privilege in trying to squash a disruptive technology like solar – it is imperative that the Arizona Corporation Commission not only say no to their outrageous requests but entertain new ones like even more competition, because of them.

Very clearly, APS intends to try and convince you to defeat any competitor and any threat just as typewriters once lamented computers.  In APS’ world no disruptive technology should ever be allowed because it would be bad for them.

But like school choice and healthcare choice the tide of freedom and innovation should be our yardstick.  It should not and must not be the job of this Commission to be more concerned with APS’ assured profits than accelerating the kind of competition that is best for consumers and our state’s future.

In other words, just as Republicans have looked for ways to end the public school monopoly because it has hindered innovation and achievement, so too should you look for more ways to end APS’ monopoly now.

I sincerely appreciate your service, having been in that arena myself, once upon a time.

APS’ recent actions remind us of the opportunity you now have:  To say no to their requests and maintain a robust solar market in Arizona.  To say yes to a thorough analysis of their extraordinary incentives and tax breaks so we may best understand the debate now before us.  And to say yes to new ways to wean ourselves off the monopoly.

Republicans are at our best when we are pushing for more innovation and competition that inevitably benefits the taxpayers, as opposed to doing the bidding of companies most concerned about their bottom line, not Arizona’s.

The Best Always,

Barry Goldwater, Jr.
Chairman, T.U.S.K.

APS Continues Pressure to Quash Solar Energy Choice in Arizona

Several weeks ago when I took up the cause of energy choice via the issue of net metering, little did I realize I would strike at the nerve of the big utility energy monopolies like APS. While my intention was not to overly criticize the Republican-led Arizona Corporation Commission, several of my posts were mistakenly perceived that way when all along criticism, was meant to challenge big utilities for quashing energy choice.

Recently, Arizona Public Service Co.’s CEO Don Brandt wrote an editorial in defense of APS’ push to eliminate net metering claiming that rooftop solar consumers are a burden on other energy consumers not using solar. What’s striking in this is the audacity of APS’ top executive blaming solar users while APS pushes to widen its profit margin. The last time I checked, APS was regulated by the ACC because of its unique monopoly power in the marketplace. Thanks to the commissioners at the ACC, APS has been kept in check.

I’ve obviously struck a nerve with APS (as other utilities watch this critical discussion take place) to the point where the CEO feels the need to respond and wage a public relations battle against those who want the choice to offer back a surplus of clean, cheap energy. APS obviously feels threatened – and they should – after recent polls show energy choice is extremely important to Arizonans.

It’s time for credit and criticism to be given.

To the Arizona Corporation Commissioners I commend them for a job well done in holding the line for ratepayers, encouraging energy innovation and for the pursuit of realistic consumer-based energy choices for Arizonans. I also continue to urge and encourage the ACC to reject the pressures by big utilities like APS prowling for corporate cronyism deals.

Thanks to the Arizona Corporation Commission, solar is a great success story in our state and will be operating free of utility incentives by the end of the year. With Arizona continuing to score solar touchdowns for schools, consumers and thousands of solar jobs let’s not fumble in the red zone because APS is trying to strip the ball away.

ICYMI: TUSK Representatives Discuss Solar Energy Choice in Arizona

Jason Rose of Rose, Moser & Allyn Public Relations and Court Rich of The Rose Law Group, discuss the monopolistic utility challenges to solar energy choice in Arizona on AZ PBS’ Horizon.

http://www.youtube.com/watch?v=Tclm7ER6SRs&feature=share&list=UU_p64g9Ke-gfdR7d-EnYFNQ

Arizona Republican Icon Barry Goldwater, Jr. Gives Voice to Efforts to Save Arizona Solar Choice

Tell Utilities Solar Won't Be Killed

Effort To Stop APS From Killing Independent Solar In AZ Takes To Radio

(SCOTTSDALE, Ariz.) Following in his father’s footsteps as a conservative trailblazer in Arizona, Barry Goldwater Jr. is standing up to utility monopolies to preserve Arizona’s rooftop solar industry.

The voice of T.U.S.K (Tell Utilities Solar won’t be Killed), Goldwater can now be heard valley-wide in a new radio commercial that urges energy consumers to stand up to Arizona Public Service (APS). Goldwater and T.U.S.K oppose efforts by APS to extinguish rooftop solar in Arizona by trying to eliminate a cornerstone policy called net metering.

To listen to the commercial click here. To learn more about T.U.S.K. visit www.dontkillsolar.com

Net metering ensures that customers with rooftop solar get fair market credit from APS for any extra power they return to the grid. Conservatives in Arizona have stood up for school choice and healthcare choice, and now they are standing up for energy choice.

If APS pulls the plug on net metering, thousands of jobs would be lost. Businesses would suffer. Schools that utilize net metering will be sending more tax dollars to APS. Consumers would pay more.

“Energy choice is the American way. It’s the Republican way. And it’s the way to energy independence,” said Goldwater. We can’t allow monopolies to end consumer choice by changing the rules at the Arizona Corporation Commission.”

Barry Goldwater Jr. served 14 years in Washington and amassed expertise in energy, the space program, aviation and defense and government procurement. Goldwater was particularly instrumental in all facets of energy policy and research and development, including authoring the Solar Photovoltaic Act.

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 solar.

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Why Does APS Want Energy Consumers to Subsidize Their Profits?

We all know that it’s mainly Republicans who read Sonoran Alliance. Last year, Arizona voters rewarded Republicans with a sweep on all of the open seats on the Arizona Corporation Commission. Now all five members of the ACC are Republicans. All commissioners are constitutionally obligated to oversee the utility companies which of course, include APS. Republicans commissioners, big utility corporations, you’d think Arizona consumers would be getting the biggest bang for the buck right?

But anyone who reads this blog has probably noticed a little back and forth over the past few weeks regarding energy issues here in Arizona and how one monopoly utility is attempting to squash emerging competition from flourishing rooftop solar entrepreneurs and their consumers.

But APS’ efforts are actually far more disturbing. If you’ve made the choice to install rooftop solar panels, APS is essentially trying to confiscate the power that you generate and provide back to the grid.

How is this possible?

When you install your own solar power plant on your roof, any power that you don’t instantly consume yourself flows onto the grid and over to your neighbor’s home, therefore reducing the overall demand on utilities like APS that distribute power to other homes and businesses. Seems fair, makes sense and benefits everyone right? Energy production and distribution should be a free-market transaction. Consumers have to buy power from utilities. Utilities should have to buy power from consumers. And that’s exactly why it’s law in 43 states.

But, according to what APS has told Wall Street in their investor reports, there’s a radically different story than what’s being told to the public and Arizona Corporation Commission here in Arizona. APS views the increasing use of consumer-based solar as an inhibitor to their further growth and profit and even as a mortal threat to their profits. It’s very much the same way the public education establishment views charter schools and school choice.

That’s why APS wants our Republican-controlled Arizona Corporation Commission to lower the price of what APS has to pay for power consumers generate and provide to the grid – so they can sell it to others for a higher profit.

In other words, APS wants residential solar consumer-providers to subsidize the APS monopoly. Using government to punish innovation, ingenuity and self-sustainability among individuals who pursue energy choice is not a Republican principle. As Barry Goldwater, Jr. recently said this type of practice is not the American or Republican way.

This isn’t  the first time APS has tried to play this game. Take for example, a mailer insert recently sent out to APS customers notifying them that as of March, 2013, they would see a rate increase because more ratepayers are implementing more energy efficient measures and it’s eating into APS’ revenues. That was not a typo. If you choose to recycle your refrigerator or compact fluorescent light bulbs, you will indeed pay more! More energy efficiency and choice of course, obviously means lower profits for them. So APS passes along these fees and rate increases to offset consumers who are becoming more efficient.

APS Ratepayer Notice

APS Notice

As I wrote about earlier, Republican policymakers need to move away from supporting this type of corporate cronyism. When it comes to promoting a culture of competition, we should take a lesson from American Enterprise Institute President Arthur Brooks who recently wrote in the Wall Street Journal:

Corporate cronyism should be decried as every bit as noxious as statism, because it unfairly rewards the powerful and well-connected at the expense of ordinary citizens. Entrepreneurship should not to be extolled as a path to accumulating wealth but as a celebration of everyday men and women who want to build their own lives, whether they start a business and make a lot of money or not.

Many elected Republican officials are embracing changes of competition and innovation taking place in the energy marketplace as they have in other sectors of the economy including education and health care. When we do, the vast beneficiaries are parents of school children, patients, small business and energy consumers.

Like many Republicans realizing the need to refocus back to a free-market entrepreneurial-supportive marketplace, more than ever, we need to extend and reinforce these same principles within the burgeoning small energy provider arena.

To further support my argument, watch as American Enterprise Institute’s Tim Carney exhorts us to pursue a “Culture of Competition” because pursuing profit through competition has the broad effect of benefiting the consumer.