Utility, solar company battle over rooftop panels

PHOENIX - Arizona is in the midst of what seems like an intense election-year campaign: millions of dollars in spending, a barrage of negative TV ads and large amounts of outside money. The issue, however, has nothing to do with taxes, a hot-button policy or anything on the ballot.

It is about the future of rooftop solar power in a state known for its abundant sunshine and at a time when the industry is booming.

The state's largest utility, Arizona Public Service, has spent more than $3.7 million to convince the public that homeowners using solar panels are costing other customers money, and it wants utility regulators to OK a proposal it says would make the system more fair.

The solar industry, on the other hand, has spent at least $370,000 on its own ads, arguing that the utility's proposal would increase rates for those who use rooftop solar power and decrease competition.

The Arizona Corporation Commission is meeting yesterday to discuss the issue in what promises to be a heated debate. The outcome by the five-member commission with final say over APS rates is being watched by utilities nationwide and could affect the solar industry's future.

That's because utilities are pushing the same arguments elsewhere, and a victory in Arizona could create momentum for their policies.

Arizona Public Service says homeowners with solar panels are benefiting from the grid's 24-7 power supply but avoiding much of the costs of maintaining power plants, transmission lines and the distribution system.

Under the current system, homeowners are able to cut their bills by selling excess power at full retail price back to APS in a practice called "net metering." Combined with using the power from the panels themselves, net metering can cut their bills by about two-thirds.

APS says that effectively shifts the costs of operating the huge power distribution grid to homes without solar.

It is proposing changes that would effectively cut that benefit by either charging more for power that homeowners with solar use or cutting what it pays for the excess solar power sent back to the grid. Existing solar installations would be exempt from the changes for 20 years.

The solar industry says APS is worried it will lose revenue if solar continues to grow, and the company's proposal would decimate the industry by making it a losing proposition to install new solar panels.

The industry group, The Alliance for Solar Choice, said APS is misleading the public and just wants to boosts its profits. It says APS's cost-shift estimates of $1,000 a year for each solar-equipped home — currently $20 million — leaves out a much larger benefit that more than offsets that cost.

They cite a study they paid for that says savings on new power plants, reduced investments in new power lines and savings from meeting renewable energy standards actually will save APS $34 million in 2015.

"APS is not a ratepayer advocate, and their arguments are absolutely incorrect," said Bryan Miller, president of Alliance and vice president of public policy for solar company Sunrun, Inc. "APS is just trying to eliminate competition."

APS spokesman Jim McDonald said the company has never seen anything like the solar industry ads, saying "they distort the facts, they mischaracterize our proposals and they tell lies about the company. We have to respond."

Many utilities across the nation are pushing the same argument as APS, as is the utilities' national association, the Edison Electric Institute. Edison made a major television ad buy in the past week that echoes the APS arguments.

APS has also poured money into two outside groups that don't disclose the company's role. The groups have in turn run negative TV ads against the solar industry. APS later acknowledged its donation to the groups.

APS has about 20,000 homes in its service territory with solar panels and the company says 500 more are being added a month. A subsidiary of Pinnacle West Capital Corp., the utility serves 1.1 million home and business customers across Arizona.

While APS has supported net metering as a way to boost the industry and meet requirements for renewable power, McDonald said the number of users is growing so fast it will soon be unsustainable.

"We need to do it now while it's very manageable," he said of the proposed changes. "Later on it will be much more difficult."

The state's ratepayer advocate recommends a small monthly fee imposed on APS customers to offset the costs of running the grid, rather than the change in net metering that APS wants.

Catherine Wolfram, co-director of the Energy Institute at the University of California, Berkeley, said APS is right when it says solar users shift costs to non-solar customers.

She said utilities are worried about a vicious cycle — more rooftop solar panels means they have to raise other users' prices, which drives even more people to solar. She also said the installations are more common in affluent areas, shifting costs to poorer customers.

The APS proposal would in effect lower the "subsidies" for solar users and would surely make solar less affordable and cut demand for new installations, Wolfram said. "The viciousness of the fight indicates how high the subsidies have become," she said.