Sunset for solar? APS proposal threatens sustainabilityAug 28 - McClatchy-Tribune Regional News - Christopher Leone The Arizona Daily Sun, FlagstaffGeoff Barnard recently put 10 solar panels on his roof, although he concedes that he and his wife were already big advocates of renewable energy and reducing their carbon footprint as much as possible. "We don't have a single incandescent bulb in the house," Barnard said. "They're all CFLs [compact fluorescent lamps], so we don't use a lot of energy." Before installing the solar system, Barnard's electric bill was about $60 per month. After installing a 2.6-kilowatt system, his bill dropped to about $10 to $20 per month. One reason for the low bill is that Barnard is now using less electricity from Arizona Public Service and more from his rooftop panels. (The average solar monthly bill, says APS, is $62 a month). Another is that when the sun is shining and he's not using much electricity, the excess solar power is bought back by APS at the same price as the utility sells its power to him. The billing arrangement, called net metering, helps solar customers like Barnard pay off their installation costs even faster because of the greater monthly savings. But APS says net metering doesn't recover the fixed costs of transmission lines and other infrastructure that solar customers still use. It is proposing to cut by more than half -- from 12 cents a kwh to 5 cents -- the price it buys back excess electricity from rooftop solar customers, a move that would more than double the average monthly electric bill for a solar customer. (APS is also proposing to increase incentives for installing a rooftop solar system.) That cut in the buyback price, in turn, might make discourage many prospective rooftop installations, putting the nascent solar panel industry in Arizona into a financial tailspin. If APS's request is denied, the utility would probably have to ask for an overall rate increase to offset net metering's pinch on its ability to recover its fixed costs from rooftop solar clients, said Barbara Lockwood, general manager for energy Innovation at Arizona Public Service. That means nonsolar customers would be subsidizing solar even more. "Even though there is great community support [for solar] in Flagstaff, there is less opportunity," Lockwood added. "I know that folks in Flagstaff don't want to go cut down all their trees to install solar." APS is asking for the change because with a surge in the number of applications for rooftop solar -- 500 per month in 2012, double the figure for 2011 -- it gauges that in 10 to 15 years, 200,000 or more customers out of 1.2 million could be net metered, up from 18,000 today. Firms that install solar systems, which employ more than 9,000 people in Arizona, and solar advocacy groups don't see a very bright future for solar in Arizona if net metering is changed the way APS has proposed. "It's up to the utility whether or not they want to change [its] planning agenda so that they can capture more of the benefits of distributed solar," said Annie Lappe, solar policy director at Vote Solar, a nonprofit promoting energy security and fighting climate change. "From their perspective it is more ideal to slow the growth of solar than to transform the way they're used to doing business," Lappe said. Lappe points to the telecom industry as an example of how a large, regulated industry should not respond to changes happening at a grassroots level. "Those old telecom businesses faced the exact same challenge that utilities are facing today," Lappe said. As cellphone service became more affordable and accessible, similar to what is currently happening with distributed solar energy, what customers needed from their traditional landline phone company changed fundamentally, Lappe said, and utilities are at a very similar turning point today. On top of that, Lappe adds, "What is the value of local, clean energy?" The reports that both APS and others who have analyzed the costs and benefits of distributed solar energy do not take into account any societal benefits, such as energy independence, clean air, and other environmental benefits that come from transitioning to distributed solar energy, Lappe said. It is those societal benefits, however, that are very important to more than a few in Flagstaff. Lappe points to a January 2013 poll commissioned by Arizona utilities and others that indicates that 62 percent of Arizonans support more solar power being used, and would encourage the state to use more of it. Carl Taylor is one of the early adopters of rooftop solar power in Flagstaff, or what is technically called distributed solar energy (vs. industrial-scale solar). The recently retired Coconino County supervisor installed 20 panels on his property about seven or eight years ago. His bill dropped from $120 to $20 per month after that, and as of last month his electric bill was still below $30, Taylor said. Taylor said he has recovered his initial investment through the monthly savings, and although he feels Arizona Public Service's net metering arrangement is "not as equitable" as he thought it would be, Taylor said that he has no regrets. "Distributed energy ... is a good deal all the way around," Taylor said. "I would still do it ... because we have saved an enormous amount -- 75,000 pounds -- of CO2 that did not go into the air," since installing the system. The average car emits about 11,000 pound of CO2 into the air each year, according to the U.S. Environmental Protection Agency. And because of the environmental benefits, Taylor said that he would purchase a rooftop solar system today even if it cost him more than he paid eight years ago. Barnard, whose net, out-of-pocket purchase and installation costs came to below $6,000 after incentives and rebates, takes a less charitable view toward APS reducing solar customer subsidies. "The electric power industry nationally is hugely subsidized by the taxpayer," he said. And Barnard is quick to point out that solar avoids a lot of the negative "externalities" that utility firms don't pay for, like air pollution, acid rain and public lands scarred by transmission lines. "Let look at the big picture," Barnard said. "Who is being subsidized to do what, and let's decide what's in the public good." The whole idea of distributed solar energy is to make life better for everybody, including the utility by having it avoid needing to make huge capital outlays, Barnard said. "This isn't as though we're getting a gift," Barnard added. "We're paying significantly for this system" in ways other than just actual dollars, Barnard added. It's a misperception to think that as distributed solar energy comes online that additional capacity is not needed, said Robert Mittelstaedt, dean emeritus of the W.P. Carey School of Business at Arizona State University. "Most people ... will admit that there has to be reserve capacity, but they will argue about the amount of reserve capacity that is necessary," Mittelstaedt said. Both APS and opponents to changing net metering have pointed to studies that almost contradict each other in terms of the costs and benefits to the grid of distributed solar energy, and the need for more or less reserve capacity. The real question that needs to be asked is what will be the business model for an investor-owned electric utility company in the future, Mittelstaedt said. How does a utility company that for decades had produced electricity at wholesale prices and sold it at retail prices turn into a utility company that provides standby energy to over half of its customers. "We haven't worked out a business model that allows the utilities to make sense of that economically," Mittelstaedt said. And part of the problem is that Arizona regulators basically forced utilities to accept a payment arrangement that doesn't offer a lot of flexibility, Mittelstaedt said. A fairly straightforward solution that Mittelstaedt said is not being considered is to simply charge a flat fee. "There ought to be some minimum charge that you have to pay the electric company that helps them pay for their connection to the transmission systems or having idle capacity, independent of how much you use," Mittelstaedt said. Mittelstaedt points to water and gas utilities that charge $25 per month whether a single drop of water or a single BTU worth of gas is consumed. Yet, unlike water or gas utilities, standby electric power doesn't idly standby, Mittelstaedt said. Sometimes it takes hours, even days, to bring a power plant on line so that it is ready to serve customers.
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