Salt River Project management has proposed dramatic changes to its residential electricity rates that carry significant impacts for its more than 12,000 rooftop solar customers.
SRP’s proposal will create a new rate class that charges rooftop solar customers using a standard that differs from the one applied to all other residential customers. The new solar rate relies primarily on a demand charge that penalizes customers who have a high peak demand, and rewards those that have a low peak demand.
If approved, most residential customers will continue to be charged a fee based on their total consumption in a given month. It’s a fee based on a set price for each kilowatt hour of electricity they use.
Solar customers, on the other hand, will be charged using a complex system that includes a sliding fee based on the highest capacity (demand) required in any 15-minute interval during a billing cycle.
The proposal is the latest effort to address the cost-shift that utilities maintain occurs because solar customers don’t pay their fair share of the “true” cost of service. The theory being that the current fee per kilowatt-hour includes the cost for SRP fixed costs such as building and maintaining its infrastructure. Rooftop solar customers, by virtue of their on-site generation, are allegedly being under-charged because they store excess generation on the grid for later use at no cost -- thus not paying their share of the fixed infrastructure costs.
In other words, the utility wants compensation for lost revenue attributed to solar customers whose excess generation is stored on the system for use later by that customer through a credit process.
So why not charge a storage fee?
But that isn’t what SRP is proposing to do.
A solar rooftop system is just one of several energy efficiency measures that a typical SRP customer can take in an effort to manage home energy costs and reduce their carbon footprint. These improvements do not come cheaply.
Unfortunately SRP doesn’t know, or isn’t telling, how much generation any given customer stores on their system for use at a later time. The customer doesn't know that either--but he or she does know that not all of their generation is excess, and as such not all of it should be taxed by the utility to compensate for its lost revenue.
The amount of self-generated energy used on-site at the time of generation varies by customer. Over the years I have read reports that this number may be as high as 80 percent. If this number is close to accurate, that means a typical customer stores only 20 percent of his or her generation on the SRP grid.
But the new pricing plan doesn’t propose a fee for this storage. Instead, it creates a new way of charging the rooftop solar customer that severely limits personal control over their energy bills.
The amount of energy used on-site at the time of generation is no different than any other energy efficiency measure available to consumers. It reduces the total energy consumption. But, the new pricing plan will treat it, and the solar customer in general, differently.
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Most electric utility customers don’t have the tools to reduce their demand. If the customer doesn’t have the ability to avoid using energy at a certain time and have the information to do it – they won’t. As such, the rooftop solar customer doesn’t control when their refrigerator kicks on or whether that happens to occur at the same time their air conditioning is running – thus causing a spike in demand and a higher demand charge for that month. And since these spikes happen with all SRP customers, why is the utility proposing this measurement as a method of charging its solar customers?
Bottom line: SRP is punishing solar customers with the wrong “crime,” one that is committed by all customers, not just those with solar. SRP should instead address the issue directly and look at a rate plan that charges for the actual costs solar customers incur, to wit, the storage costs of their excess generated energy. After all, this tug of war is really about that “excess” generation. Problem is, nobody knows how much we are talking about, nor does anybody know the appropriate value or cost that “excess” generation provides, or inflicts, to the grid
Arizona Solar Center
(*For the purpose of full-disclosure, Mr. Arwood, is himself an SRP rooftop solar customer.)
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