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Ariz. rooftop solar backers withdraw voter initiative to ward off opposing bills

Q2: U.S. Solar and Wind Power by the Numbers

Essential Energy Insights - September 17, 2020

Essential Energy Insights September 2020

Rate case activity slips, COVID-19 proceedings remain at the forefront in August


Ariz. rooftop solar backers withdraw voter initiative to ward off opposing bills

Underthe threat of Arizona legislative counterpunches, the Yes on AZ Solar politicalaction committee agreed April 28 to drop its voter to preserve net energymetering and instead enter negotiations with the state's utilities.

SolarPAC Chair Kristin Mayes rushed a message to the Senate from the secretary of state'soffice proving the initiative had been withdrawn in order to keep the Senatemajority from taking a final vote on resolutions that would have requiredcompeting voter initiatives to appear on the November ballot to preserve theArizona Corporation Commission's power to set rooftop solar rates.

Thesolar industry-backed initiative would have asked voters to amend the stateconstitution to require utilities to continue providing retail net energymetering credits to rooftop solar customers. However, the Senatewas on the verge of passing legislation to put a second initiative on theballot that would have asked voters instead to allow the commission to continueto set rooftop solar rates as the elected commissioners choose. Solar interestshave been critical of a majority of the commissioners in election and publicrelations campaigns.

Senatorsalso were about to pass a resolution to put a third initiative on the ballotfor voters to decide whether the commission should regulate rooftop solarcompanies as utilities. That initiative could have crippled the solar industry.Solar companies have fought off attempts to have distributed generationinstallations regulated as public utilities, which would put onerousrequirements on their unregulated competitive business.

Tokeep the Senate from passing both resolutions, the solar lobby met withsponsoring senators, utility representatives and the governor's staff to comeup with an agreement that stipulated both sides would withdraw their voterinitiative efforts for the rest of the year and would enter negotiationsmediated by a representative of Gov. Doug Ducey, according to Sen. Debbie Lesko.

Lesko,as chair of the Senate Finance Committee, had a "strike everything"amendment in House Concurrent Resolution 2041 to preserve the ArizonaCorporation Commission's ratemaking powers through a second ballot initiative.

Sen.Don Shooter, as chairman of the Senate Appropriations Committee, introduced HCR2039 to ask voters to amend the constitution to have the ACC regulate companiesthat lease or otherwise finance devices or systems that are used forelectricity generation or storage as public service corporations.

Asthe Legislature was in the final hours of negotiating a state budget, thesenators, with their powerful finance and appropriations committee positions,asked for and received their colleagues' support to deliver the senators'double-whammy.

Inresponse, the solar lobby decided it was better to enter negotiations toward acompromise that might preserve at least some of the "value of solar"proposition they sought to secure through a constitutional change.

Leskosaid the parties met in the Senate president's office to hammer out a jointstatement and waitedfor Mayes to return from the Secretary of State's office with proof she hadwithdrawn the solar initiative.

"Iwent to the podium with a SolarCityrepresentative standing next to me to announce the joint agreement. I announcedthey had withdrawn their initiative and I would not move forward with mylegislation nor would Senator Shooter move his," Lesko said in aninterview, referring to the solar leasing and installation company thatspearheaded and bankrolled the solar voter initiative.

Theagreement states the solar initiative is being withdrawn for the 2016 electioncycle. The announcement followed Republican and Democratic caucuses and floorparliamentary moves that showed in voice votes there was majority support forboth the senators' resolutions, Lesko said. "The governor hasgotten involved in trying to set up some type of negotiations," she added.

WhileLesko said a governor's representative will mediate the negotiations,Arizona Public Service Co.spokesman Jim McDonald said the parties will choose a professional mediatoramong themselves.

"Weappreciate the efforts of Sens. Lesko and Shooter and the governor's office inworking to a compromise on the ballot initiatives," McDonald said in afollow-up email. "We're open to engaging in constructive dialogue withSolarCity that benefits all Arizonans. Our goal, as we've stated, has alwaysbeen to ensure fair energy policy for the state at affordable pricing for allof our customers, and sustainable solar for the long term."

Duringan April 29 earnings call, APS parent PinnacleWest Capital Corp. Chairman, President and CEO Donald Brandt saidthe Arizona utility industry and SolarCity agreed to further dialogue "toseek a constructive outcome on net metering." He also addressed a questionfrom an analyst who asked whether Pinnacle West and APS expect to "burythe hatchet with the solar leasing guys" and come to settlement that makeseveryone happy.

Brandtreplied, "Our expectation at this point is to sit down … and havegood-faith discussions with representatives of the solar leasing industry andsee where that takes us."

APSSenior Vice President, Public Policy Jeffrey Guldner said the net-meteringdebate started in 2012 when APS sought a more sustainable model for rooftopsolar compensation. "As you know, that was met with a very aggressivepolitical campaign that has continued to date," he said. SolarCitylaunched the initiative to put very detailed provisions around net metering andsolar interconnection into the constitution. "We think it's probably moreconstructive to have a dialogue," Guldner said.

Anumber of proceedings concerning net metering are in play, including thecommission's generic value of solar docket as well as subsidiary 's rate case inwhich three-part rates, which would impact solar customers. That is seen as atest case for how the commission will proceed with other utilities.

APS'splans to file a general rate case on June 1 with proposals for including demandrates and a shift in time-of-use periods, Brandt said on the earnings call.