And TEP's sister utility, UniSource Energy Services, has begun offering SunShare solar-power subsidies to its 200,000 customers in rural Southern and Northern Arizona.

Under SunShare, TEP has offered an incentive of up to $2,000 per kilowatt of verified AC, or alternating current power output, from a home solar electric system or a $2,000 "buy-down" credit on a $6,000 system purchased through TEP. State tax credits of $1,000 per system also are available.

The average air-conditioned home in the Arizona desert needs about 4 kilowatts of energy on the hottest day of the year.

In addition to the subsidies, SunShare customers get credits on their monthly power bills for the energy their solar systems produce.

Despite these incentives, as of the end of 2003, only 56 of TEP's roughly 360,000 electric ratepayers had taken advantage of the 3- year-old SunShare program, according to TEP.

"We've increased the subsidy to attract more participation," TEP spokesman Joe Salkowski said, referring to the expanded incentive, which was approved Aug. 3 by the Arizona Corporation Commission.

Experts say the relatively high cost of the equipment is the main factor keeping customers from installing solar electric, or photovoltaic, systems.

Even a modest-sized system can take more than 10 years to pay for itself. Most SunShare customers cite their desire to foster solar energy as an environmental benefit.

"We're getting as much as we can out of the environment without hurting it," said Doug Miller, who recently installed a large, 6- kilowatt system on his West Side home under the SunShare program.

"You could put your money into something else and get a better return," Miller said.

He figures he'll cut 50 percent from his power bill with his photovoltaic system and a separate solar water-heating system.

Under the two existing options, customers would qualify for the full subsidy only if TEP verified the AC output of an installed system. AC is the type of current supplied to household outlets.

The third, new SunShare option offers subsidies of up to $3,000 per kilowatt, based on the solar system's DC capacity rating, to TEP customers who buy, install and maintain their own equipment.

Basing the subsidy on the manufacturers' DC power ratings will allow customers to get a higher subsidy than they might based on actual AC output, Salkowski said.

A typical, 1.5-kilowatt DC solar system produces about 1 kilowatt of AC power, he said.

To qualify for the new option, customers must complete their SunShare agreement with TEP by the end of 2004, and the system must be running within 180 days thereafter.

This year, a typical 1.5-kilowatt DC home system producing about 2,000 AC kilowatts annually would be eligible for a subsidy of up to $4,500. The program is limited to subsidizing up to 50 kilowatts of solar capacity per year.

The subsidy will decline to up to $2,700 in 2005 and up to $2,400 in 2006.

Local solar system installers said the new SunShare option is a good step, but the program needs more promotion.

"It's the price, but it's also awareness levels," said Jim Cooley, owner and general manager of Progressive Solar and a 30- year industry veteran.

There is much more awareness of solar power in California, which has suffered skyrocketing energy prices in recent years, Cooley said.

Jerry Samaniego, owner of Tucson-based Expert Solar, agreed. "It will certainly create a lot more people out there looking at solar, with the new option available," he said, noting the verification of AC power output was something of a deterrent for some customers.

In addition to offering SunShare, UniSource also is offering its customers GreenWatts, which lets customers subsidize new, grid- level solar projects by adding $2 or more to their monthly power bills.

That money funds such grid-connected solar generation as the Springerville Generating Station Solar System in Northeastern Arizona, which generates enough electricity to power 700 homes annually.