Orchestrated Confusion Over UniSource Proposal at Lake Havasu Corporation Commission Hearing

Reading the latest news story in the Lake Havasu News Herald, it would appear that operative from the rooftop solar industry have caused just enough confusion among ratepayers that the latest proposal to bring economic sense and equity to the energy market will require yet another hearing.

Thursday, in accordance with Arizona law, the Arizona Corporation Commission conducted a hearing in Lake Havasu to hear from ratepayers over a request by UniSource to modify its rate structure in order to iron out inequities in the way customers purchase electricity from the UniSource portion of the grid.

One of those changes would be the implementation of “demand charges” – a concept that charges a customer based on the highest demand placed by that customer during a given unit of time. Most demand is placed on the entire grid during early morning hours and early evening hours when users turn on more electrical loads in their households. It is at that time that the grid experiences its heaviest loads that ultimately costs in maintenance, repairs and even brownouts. (Read my earlier post on this concept.)

The UniSource request would allow the utility company to recover the costs of this demand while reducing costs during non-peak demand times.

Additionally, the request would also allow UniSource to adjust the price it purchases (credits) energy from rooftop solar users through net metering. Currently, that rate is sold back to utility companies at an inflated rate. That inflated rate is shifted to non-solar users who pay the difference causing an economic inequity. There are far fewer rooftop solar users than non-solar users so non-solar users are burdened by this rate inequity.

If approved by the Arizona Corporation Commission, UniSource’s request would not take effect until 2017 and rooftop solar users who purchased or began their leases before June 1, 2015 would be grandfathered into the proposal.

The political takeaway of this is that the rooftop solar industry has partaken of this form of corporate cronyism for too long. Because of a nationwide agenda to pick winners and losers in the energy sector, the solar energy industry has been heavily subsidized and given special breaks through policies like net metering. The industry cannot survive without some form of government intervention and when government pulls out and allows the market to adjust, these companies oftentimes go bankrupt leaving consumers on the hook and employees without jobs.

Here in Arizona, the battle to keep net metering in place is being waged at town hall meetings like we see in Lake Havasu.


When a utility company like UniSource proposes a innovative compromise to allow the free market to adjust properly to the benefit of all consumers, they are met with chaos and confusion orchestrated by the rooftop solar industry. These companies pay their lobbyists to circulate among a community to stoke the fears of ratepayers and senior citizens on fixed incomes.

What they won’t tell you is that they want a bigger bite at the apple of government subsidies and special deals. Meanwhile, its the ratepayers who bear the burden – those who cannot afford $40,000 systems and those who were told sunny days were ahead when they leased one.

Corporation Commissioners will conduct another hearing in Lake Havasu sometime in the next two weeks.

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.

Net Metering Tax Credits Discriminate

Recent legislation providing solar tax credits for residential homeowners has allowed billionaires, corporations, and Wall Street financiers to profit at the expense of working class Americans.  Solar corporations leasing panels to home owners, rather than selling, have reaped the financial benefit of solar tax credits intended for home owners to the tune of hundreds of millions.  These tax credits to solar companies have boosted dividends for their shareholders at taxpayers’ expense, while panel-leasing home owners get no immediate financial benefit.

meterWorse.  Solar tax credits discriminate against lower income communities.  Group housing, where many lower income families reside, cannot install residential solar panels, and are therefore not eligible from the get-go for these special tax credits.

Arizona is subsidizing the solar industry with $1.2 billion on residential solar, and not a dime goes to the state’s lowest income sectors – yet, another reason not to have discriminatory solar tax credits.

Further, after residential panels are installed at huge costs to taxpayers, the system of net metering goes to work, also discriminating against the working class.  Owners of solar panels can buy power from the grid as needed, or ship surplus power back to the grid when they produce more than they use.  Under net metering, solar panel owners, however, avoid paying for the service and repairs to maintain the grid.  These costs to maintain the grid are then shifted to non-solar users, placing a higher financial burden on this group, resulting in a disproportionate share of the burden falling on the aforementioned lower income sectors.

In Arizona, taxpayer subsidized solar panel ownership has led to the adding of “environmental programs cost adjustment factor” and renewable energy fees on utility bills, raising financial burdens for all non-solar users, lower income families included.  For example, the city of Scottsdale has a median family income of over $92,000.  Just in the past 5 years, they have had over 1,200 solar installations, which are eligible for state and federal subsidies.  In contrast, an area in south Phoenix with 29,000 residents and an average income of $41,000 has only 45 residential solar installations.  This is just an example, but the statistics are undeniable:  Taxpayer subsidies go to wealthier communities by a factor of 26 times more than lower income communities.

Regressive solar tax credits should end immediately.  Why have we chosen one industry over another?  And worse, we’ve chosen a discriminatory industry that keeps lower income communities down by unfairly forcing them to pay for others solar installation and operation.  Under any sun, these policies are just plain wrong.

Joe Galli

Former Executive Director – North Scottsdale Chamber of Commerce

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.

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

TUSK Releases New Ad – Tell Utilities Solar Won’t Be Killed

Don’t let APS monopolize Solar Energy in Arizona. Learn more at www.dontkillsolar.com