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Arizona ALJ Intends to Topple Rooftop Solar

November 1, 2016 By Cheryl Kaften

An Arizona administrative law judge (ALJ) has called for state utility regulators to halt net-metering for rooftop solar customers – but not quite yet, according to an October 30 report by the Arizona Daily Star.

First, the Arizona Corporation Commission must rule on the Value of Solar filing (Docket No. E-00000J-14-0023) that is currently under consideration – intended to measure the costs and benefits of rooftop solar for all Arizona utility customers.

The actual value of solar has been under deliberation for more than two years at the commission, which has put off deciding net-metering and related rate-design issues until the so-called generic docket on the Value of Solar concludes, said the Arizona Daily Star.

Under Arizona’s current net-metering rules, customer-generators are credited for the full retail rate for excess energy they produce and export to the grid, and they can carry over, or bank, those credits, the newspaper reported.

If the Arizona Corporation Commission follows the October 27 recommendation of Assistant Chief Administrative Law Judge Teena Jibilian, it would mean that new solar customers initially would receive far less financial credit on their electric bills for the excess power they produce via solar generation – and that benefit might eventually disappear altogether.

Jibilian said net-metering “should eventually be eliminated and replaced with a mechanism for the direct purchase of excess solar power by utilities.” Specifically, the ALJ said that the valuation of rooftop solar power exports should be based on an avoided-cost methodology — essentially the cost the utility would pay to generate or purchase power from another source.

For the near future, Jibilian said, new credit rates for customers with rooftop solar panels should be based on short-term cost studies or on the cost of power from large, utility-scale solar farms, according to the report in the local news outlet.

The recommendation could have far-reaching implications as the commission mulls requests by Tucson Electric Power (Docket No. E-01933A-15-0322), UNS Electric (Docket No. E-04204A-15-0142), and other state-regulated utilities to increase charges on solar customers to offset an indicated cost shift to other ratepayers.

Indeed, the utilities are pushing very different ideas of what should constitute “avoided costs.”

The utilities say that, because rooftop solar customers use far less grid-supplied power, they impose unrecovered fixed costs on the utilities and non-solar customers. In the solar valuation case,  TEP proposed setting the value of rooftop solar based on adaptations of their own “cost of service” studies.

On the other hand, the Daily Star reported, the Residential Utility Consumer Office, a state agency that advocates on behalf of residential ratepayers, has proposed a solar valuation that would add a feature offering solar customers 20-year contracts for their excess energy exports.

Rates offered would be “stepped down” as more solar customers sign on and solar costs continue to fall. Existing rooftop-solar customers would be “grandfathered” at their existing full-credit rates, under current proposals.

Jibilian said that any decisions to grandfather existing rooftop solar customers at their current full reimbursement rate should be made in each rate case. But she opined that any new rates should apply only to those customers who sign up for new rooftop solar interconnections after the effective dates of those rate cases.

The commission was expected to decide the valuation matter during at an open meeting originally scheduled for October, but now has rescheduled for December 13-14.

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