TEP: Net metering opponent to solar advocate

July 14, 2015 | By Jaclyn Brandt

Tucson Electric Power (TEP) has announced a project that, a month ago, would have been out of place for the utility. After changing their mind on net metering, TEP wants to be known as the solar advocate -- but more importantly, the customer advocate.

Tucson, Arizona. Credit: Zereshk/Wikimedia Commons

TEP submitted their renewable energy plan with the Arizona Corporation Commission (ACC), which included many provisions, like adding up to 1,000 new participants in the utility's Residential Solar Program in 2016. The program fixes prices for electric service to customers with installed solar arrays, and is allowing 500 homeowners into the program in 2015.

Out of those 500 spots, which were made available on July 1st, 200 were reserved in less than 30 minutes.

However, it was less than a month ago that the utility changed their mind on net metering. In June, they proposed a net metering plan that they say would create a more equitable fee, allowing the utility to recover more of their service costs from net metering customers.

"We filed our original net metering proposal in March 2015 but withdrew that request in June 2015," TEP spokesperson Joseph Barrios told FierceEnergy. "Some stakeholders in that proceeding said such changes should be considered as part of a request for new rates before the Arizona Corporation Commission (ACC). We plan to file a request later this year with the ACC for new 2017 rates. That request will incorporate our previous proposals to change our net metering plan, which would include fair-market pricing for the excess energy produced by rooftop solar arrays."

TEP has changed their mind on net metering -- but says there is no discrepancy in their behavior, because they only had one thing in mind.

"Our strategy is simple: We want our community to have more solar energy for less money," Barrios said. "Arizona's current net-metering rule increases costs for working-class families by forcing them to subsidize higher-income customers with better credit scores who can afford to buy or lease solar arrays. TEP pays net-metered customers nearly twice as much for their excess energy as we pay for the output of large, community-scale solar arrays. Those overpayments increase our rates, since TEP's service costs are ultimately passed along to customers. That's why TEP is supporting a new net-metering plan and other changes that will allow us to secure more solar energy."

Since announcing the proposal, the utility seems to be fully on board with net metering -- because the protest came down to the pricing. Now, TEP is doing all they can to promote solar for their customers.

"Our customers are clearly enthusiastic about this new affordable solar energy option," said David Hutchens, TEP's president and chief executive officer, in a statement. "The TEP Residential Solar Program offers homeowners a personal stake in our plan to expand our community's renewable energy resources."

Although the Solar Energy Industry Association (SEIA) said they have not yet taken a position on utility-owned generation, SEIA's Ken Johnson told FierceEnergy, "We applaud a utility when it's attempting to add more solar onto the grid for their customers. But that offering should be as an additional choice for customers, so that they can choose to install solar on their rooftop and offset their own usage, or participate in one of these types of programs. Most importantly, there must be a level playing field for consumers. We will be watching what happens in Arizona very carefully."

The Solar Electric Power Association (SEPA) agrees. SEPA spokesperson Bob Gibson told FierceEnergy that "Tucson Electric Power's filing to expand its residential solar program is not just another indication of the growing appeal of solar, but it is a sign of the growing vitality, diversity and maturity of the solar market."

He added, "That market is not just solar manufacturers, or installers, or solar leasing companies. It also includes utilities. When utilities like TEP are proactively engaged as solar providers -- as opposed to operating in a reactive mode - the ultimate beneficiary will be the customer. Customers benefit from choice and markets grow as more customers are drawn to a variety of products that promise long-term value. Solar is no exception. The unique and deep value that utilities bring to the solar marketplace is the ability to maximize the value of solar power as a resource integrated into the electricity grid."

TEP budgeted $10 million for the program in 2015, and plans for another $15 million in 2016.

In TEP's application to the ACC, they are also proposing a Residential Community Solar Program that would provide fixed-rate benefits for 10 years to customers who agree to purchase the output of local, community-scale solar arrays. TEP is proposing $10 million for the program, which would produce 5 megawatts (MW), is expected to be launched in 2016.

"Our commitment to solar energy in Arizona is clear. We've been investing in solar in the state for more than a decade and have been recognized repeatedly for those efforts, particularly by the Solar Electric Power Association. And we continue with plans to expand solar power options for our customers," Barrios told FierceEnergy.

TEP plans to recover the fees from the program though program fees and future rates. As net metering battles are fought in different states, utilities may take a page from TEP's change of mind -- and their sudden support for solar.

"Outside of Arizona and a few other states, more and more utilities nationwide are beginning to see solar as an ally -- and not an enemy," Johnson told FierceEnergy. "We still have some tough fights ahead in certain states. But 10 years from now, we believe solar will be a key part of most utilities' energy mix. In particular, for states struggling to meet new obligations under the EPA's Clean Power Plan, solar can be a real game changer."

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