Arizona regulators mock utility, set solar power standard contract at 18 years long – is a PURPA solar boom coming?


If you Google Yuma, Arizona you’ll find references to the city being among the sunniest in the world. Looking at the solar insolation map from the National Renewable Energy Lab, you’ll note that the whole state gets solid solar resources – with the southwestern area having the highest values on the legend. The state has a history of dirty energy politics, including FBI investigations and near Supreme Court Cases. Nonetheless, as of the middle of the year, Arizona got the third most of any state of its electricity from solar power at 9.6% overall and has some of the cheapest solar electricity in the country.

The Arizona Corporation Commission (ACC) voted to reject a request from the state’s investor-owned utilities to set two-year contract terms for renewable energy projects under the federal Public Utility Regulatory Policies Act (PURPA), and in fact created – for the first time – a standard contract term of 18 years. The original 2016 filing leaned heavily on an Idaho ruling requesting a 2 year PURPA contract.

The ruling noted specifically, that:

Arizona Public Service Electric (APS) will provide QFs with a contract term of no less than eighteen (18) years, applicable to a QF (qualifying facility) with nameplate capacity over 100 kw; The rate paid to the QF will be established using APS’s long-term avoided cost. APS shall use the long-term avoided cost methodology established by the Commission.

In April, local reporter Tuscon Electric Power models solar qualifying facilities rate ranging from about 2.1 to 2.5¢/kWh, depending on the type of installation and season. In a filing on the same day as the PURPA vote related to residential solar net metering, Arizona utility Trico Electric Cooperative requested avoided rates be increased from 2.737¢/kWh to 3.019¢/kwh based on changes in pricing over the course of 2018. APS notes their avoided costs in the below image in a document describing 100 kW or less sized systems.

Court Rich, Senior Partner (and what else could his destiny be with such a fine first name?) at the Rose Law Group, noted on its website that developers with 420 megawatts of solar projects were complaining of getting contracts with absurdly lower rates and two year contracts in the run up to this decision. Court suggested via Twitter that the  “ACC decision on PURPA will bring hundreds of MWs of solar, thousands of jobs, and millions in tax revenues to AZ.” EIA data suggests that North Carolina became a leading utility scale solar power state because of PURPA projects.

Court confirmed to pv magazine USA that before this ruling there was in fact no set time for PURPA contracts within the state.

In April, a prior push to gain a ruling on the case and a 15-year term on PURPA contracts ended with a failed vote. In his testimony at the time, Commissioner Tobin, claimed that a rejecting vote would cause the state to miss out on $600 million worth of potential PURPA-based projects. Tobin also noted, “the Commission could find that the intent of the 1981 PURPA Policy requires 15-year contract terms, but also find that contract terms for TEP of 5 years, for UNS of 2 years, and for APS of 10 years are reasonable exceptions to the 1981 Policy”.

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