BREAKING: Arizona regulators preserve net metering in UNS case

After three days of amendments and grandstanding by members of the Arizona Corporation Commission (ACC), the regulatory body has issued a ruling which preserves net metering in the territory of UNS Energy – for now.

In a 4-1 ruling, the commission passed a modified version of a proposed decision by an administrative law judge which says that UNS must wait for the conclusion of a value of solar study before it can modify the basic net metering arrangement, impose solar-specific rates or impose demand charges.

It also says that any changes cannot be retroactive, a point which was emphasized by Attorney Court Rich, who represented the Alliance for Solar Choice (TASC). “Their commitment to grandfathering is a great thing for the solar industry and for all Arizonans,” Rich told pv magazine. “I think that is a very important outcome.”

Rich sees the ruling overall as a victory. “I think it is a win for the process, and a commitment to having a data-driven analysis, instead of the rush to judgement that some of the utilities were proposing.”

Vote Solar Initiative agrees.

“Overall I am pleased with the outcome,” Vote Solar Program Director of DG Regulatory Policy Briana Kobor told pv magazine. “I think what the commission did is affirm the need to have a data-driven analysis, prior to making decisions about when and how we modify net metering.”

While UNS serves only 93,000 electric customers in Arizona, the case was closely watched as it may serve as a precedent for the coming rate cases of much larger utilities including Tucson Electric Power (TEP) and Arizona Public Service (APS), both of which have attempted to make changes to rate structures that would affect net-metered solar.

Under the ruling, UNS may implement optional time-of-use (TOU) rates for its customers. In the course of many amendments, the commission also increased the fixed charge to customers who have not transitioned to TOU rates from $10 to $15 per month, however this will fall to $12 per month for customers once they move to the TOU rate.

In areas with high penetrations of solar PV, like Arizona, TOU rates tend to degrade the economics of generating electricity with rooftop solar under net metering. However, a recent study by Rocky Mountain Institute found that TOU rates are typically less damaging to the economics of solar than other changes, such as demand charges.

The final vote appeared to be a compromise between members of the commission and solar advocates, following exchanges which were at times heated. And while Commissioner Bob Stump repeatedly attacked Vote Solar Initiative and TASC, in the end he agreed to remove language that states that solar customers impose additional costs compared to non-solar customers.

Stump’s final amendment does contain language alleging a “cost shift” from solar customers under net metering to non-solar customers (original amendment here), however the ACC staff attorney noted that this will not be allowed to bias the findings of the value of solar study which is currently underway.

During the hearing Rich noted that the commission had not produced evidence of a cost shift in previous dockets. This conclusion has also been borne out by national studies, which find that the vast majority of studies of the value of solar which are not funded by utilities do not find that other customers are subsidizing solar customers who participate in net metering.

The ruling is not without outside factors. On August 30 primary elections will be held for the ACC, and the Commission is under heavy pressure. Last week Commissioner Bob Burns hired renowned utility lawyer Scott Hempling to investigate whether or not utilities have “undue influence” on the ACC. Burns’ hiring of Hempling was without the consent and over the protest of the other four members of the ACC.

It also comes as the FBI has launched an investigation into the financing of the 2014 ACC elections, where $3 million was spent by outside groups to support the campaigns of regulators. Solar advocates allege that much of this funding came from utility APS, however this has never been proven.