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Ariz. regulators hit roadblock over rates to pay rooftop solar customers

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Ariz. regulators hit roadblock over rates to pay rooftop solar customers

Arizona utility regulators remain unable to reach an agreement on the rates and charges to be set for future rooftop solar customers of Tucson Electric Power Co. and UNS Electric Inc. even though they set such rates for the state's largest utility in 2017.

The Arizona Corporation Commission on June 12 reviewed an administrative law judge's proposed orders for the two Fortis Inc. subsidiaries that would have reduced credits for solar energy from distributed solar systems delivered to the grid and imposed new fees on future customers who install rooftop solar systems.

Chief Administrative Law Judge Jane Rodda conducted the proceedings for both Tucson Electric Power, or TEP, and UNS concurrently because of the overlap in parties and subject matter, though she issued similar but separate proposed orders for the two utilities. But despite their long history of dealing with rooftop solar issues, the commissioners seemed, at least temporarily, to reach an impasse when the time came for them to consider Rodda's proposed orders.

The commission in August 2016 ordered UNS to offer a solar credit option instead of net energy metering in a case that at the time was viewed as a precedent for the Arizona Public Service Co. and TEP rate cases. However, the agency postponed addressing a proposed new rate design that would have replaced net metering altogether for new customers.

As a tool for developing an alternative to net metering, the commission in January 2017 issued a decision in a so-called "value of solar docket" in which it adopted a "resource comparison proxy methodology" to be used for determining the appropriate compensation rate for exported distributed solar energy. The commissioners used that new tool in August 2017 in approving a settlement for rooftop solar customers of Arizona Public Service, or APS, that offered new solar customers 12.9 cents per kWh for their excess energy during the first year and less in subsequent years, thereby ending longstanding rancor between solar interests and the Pinnacle West Capital Corp. subsidiary over retail net energy metering.

However, the commissioners still had to return to the issue of replacing net metering for TEP and UNS.

Those two utilities asserted that the proxy method used in the APS proceeding understates the actual cost of serving solar customers and that those costs should be directly assigned to distributed solar customers. Consequently, TEP and UNS wanted to pay customers less than APS for excess power customers export to the grid.

Rodda agreed, recommending approval of an initial rate of 9.64 cents per kWh for TEP and UNS customers. She also called for a $2.33 per month meter fee for residential solar customers.

The Alliance for Solar Choice and the Energy Freedom Coalition of America opposed the proposed orders, saying they would jeopardize the future of distributed generation in Tucson, Ariz., and UNS service areas and would offer an export rate that would be 25% lower than the rate provided to solar customers of APS. They also said the move would depart from the commission's commitment that the transition away from net metering would be gradual.

During the commission's June 12 meeting, Commissioner Andy Tobin proposed a consolidated amendment intended as a compromise but then withdrew it after solar parties said it would hurt rather than help them. Tobin then said he needed more time to consider the matter and so the commission agreed to table it for now. The commission is set to meet again on June 19, although a spokesman for the agency said no date has been set for the issue to be considered further.