Solar Wars Part 1

This is part one of a three-part series discussing “solar wars.” There will be three battles in this war: net-metering, tariff reform, and grid defection. This will have short and long term impacts on the solar industry, and it is expected to drive innovation.

By Bill Ellard, Energy Economist March 9, 2017

9th Circuit ruling allows solar company to sue SRP

An Arizona utility can’t escape being sued for anti-trust violations for the rates it sets solely because it’s a quasi-governmental entity, at least not now — if ever, a federal appeals court ruled Monday.

The 9th Circuit Court of Appeals rejected arguments by attorneys for Salt River Project that SolarCity cannot challenge its pricing system. The appellate judges said they have no authority to consider the finding of a trial judge in Phoenix who said the challenge should be allowed to go ahead.

While Monday’s ruling is specific to SRP and its claims of immunity from suit, the implications could be broader.

Unless overturned on appeal, it means SRP ultimately could have to defend in court the rates it charges customers who want to generate their own electricity.

That could lead to rulings on how broad is the ability of utilities, all of which are monopolies, to set rates in a way that could harm other companies. And that, in turn, could impact efforts by other Arizona utilities to increase costs to solar customers.

SRP spokesman Scott Harelson said an appeal is possible.

“We would argue that ours is a statutory pricing process and that the courts have no business setting rates,” he said. But Harelson said if the case goes to court, the company believes its rate structure — and the additional charges imposed on solar customers — can be justified.

That’s the same argument that is being advanced by utilities like Tucson Electric Power and UniSource Energy which have pending rate hike requests.

Arizona Public Service has reached a settlement with SolarCity and other solar companies. But that deal is contingent on review by a hearing officer and final approval by the Arizona Corporation Commission.

Central to the debate is whether customers who install their own rooftop solar units and generate some of their own power are effectively being subsidized by others.

Attorneys for SolarCity contend SRP’s new pricing plan approved last year amounts to a “substantial penalty” on customers.

“Because solar customers are unable to completely disconnect from SRP’s grid — they still need power in the evening hours and at other times when their energy demands exceed what their solar energy systems produce — they cannot escape SRP’s penalty,” the lawsuit contends.

That penalty, according to SolarCity lawyers, is about $600 a year, an increase of about 65 percent over prior rate plans. That compares with an average 3.9 percent increase for residential customers who buy all their power from SRP.

“Customers recognize that SRP’s new pricing plan leaves them with no choice: After the effective date of SRP’s new plan, applications for distributed solar energy systems in SRP’s territory fell by 96 percent,” the lawsuit states.

All that, the lawyers contend, are part of SRP’s illegal efforts to eliminate competition and violate anti-trust laws.

SRP, for its part, contends the fact that the rates were approved by its governing board precludes the SolarCity lawsuit. Its attorneys said there was the legally required notice and comment period, public hearings, a board vote and an opportunity to challenge the board’s decision in state court, something SolarCity chose not to do.

Beyond that, Harelson said SolarCity can’t rely on antitrust claims. He said those laws “generally let businesses set their prices in a way that allows them to recover their costs, without regard to the impact of those prices on companies like SolarCity.”

That contention, Harelson said, is backed by the policies adopted by the Arizona Corporation Commission — which regulates utilities other than SRP — which concluded that utilities should be able to recover the cost of serving any particular group “and avoid shifting costs from solar customers to the rest of the customer base.” But the exact amount of what that figure is has to be decided on a case-by-case basis.

June 12, 2017

By: Howard Fischer, Capitol Media Services

Arizona still a power in solar power, despite other states’ gains

These projects could have a large effect on the Arizona economy, said Auriane Koster, a solar expert with the Julie Ann Wrigley Global Institute of Sustainability. The development of the solar industry in the state has the potential to attract and keep a skilled workforce.

“A private investor coming in and doing a large solar plant is going to increase the economy in the state. That brings in more money in the state. It provides jobs,” she said.

Nearly 7,000 people in Arizona were employed in a range of solar industry jobs in 2015, according to a jobs census produced by the Solar Foundation. It’s a factor that Vasari Energy considered when deciding to move to Gila Bend, said Vasari Executive Vice President Sam Lipman.

“We also have to look at what we give back to the community with these projects. Obviously being a solar company, we look at things a little differently,” he said.

Besides the environmental benefits, the solar industry “can provide some high-paying construction jobs and good revenue to an area that is relatively remote.”

Once online, the planned Vasari plant could produce 140 megawatts of electricity for homes across the state from Gila Bend, a town that encourages energy companies to build solar plants through special zoning rules.

It would not be the largest solar energy producer in the state, but by solar-production standards the Vasari plant would be relatively large, according to the Arizona Corporation Commission. Solar-panel plants typically produce between one and 50 megawatts of power.

By comparison, Arizona’s fossil-fuel power plants are capable of producing between 200 and 2,000 megawatts. The Palo Verde Nuclear Generating Station can produce 3,937 megawatts of electricity, a commission spokeswoman said.

But in addition to its environmental and economic impacts, solar power boasts another benefit: When energy consumption is at its highest, so is its power source, the sun.

“It really helps in that solar is a peak-power fuel, so the highest, most costly part of energy (consumption) is during the daytime, the utility has to go out and buy power,” Lipman said. “If they have a ready source of daytime peak power it gives them more reliability.”

The more sunlight the panels collect during those hours, the more energy the plant can provide to utilities when customers need it the most.

Gallagher said utility companies in Arizona are becoming more comfortable with the idea of buying solar energy from large-scale solar projects to meet Arizona’s renewable portfolio standard. Arizona pledged 15 percent of energy generation would be renewable by 2025.