Arizona Corporation Commission: Protect solar and ratepayers’ pockets
Countless reports credit solar with creating thousands of jobs, reducing energy rates for consumers and increasing Arizona’s energy independence. So, why is the Arizona Corporation Commission (ACC) revisiting a 2017 decision that could stunt the growth of Arizona’s solar industry and increase rates for cash-strapped consumers?
The ACC will convene Oct. 11, to revisit Decision 75859, which determined a methodology for the resource comparison proxy (RCP) that recognizes the importance of avoiding dramatic changes in customer rates.
When the decision was docketed in January 2017, the ACC emphasized the importance of gradual transitions and that reductions to the compensation rate shall not exceed 10% annually. This decision was made after more than a year of negotiations between various stakeholders and an in-depth look at the value of solar.
Many companies and homeowners have based their planning on Decision 75859, expecting stability in the market due to trusting the decision the ACC had made.
My 2 cents? Oppose the ACC’s reopening of this docket and making changes to the regulatory structure that many people have relied on these past six years.
Reopening the docket is problematic for several reasons. One of the biggest concerns is the risk of long and expensive litigation if there is not full consideration of the repercussions. Costly and time-consuming litigation is not good for anyone, especially Arizona ratepayers.
Furthermore, there are more than 300 solar companies in Arizona — several of which are Arizona Technology Council members — and they collectively employ more than 8,000 people. These companies combined have contributed $16.5 billion to the state, with $1.5 billion invested last year alone.
Regulatory certainty is paramount to all industries. Reversing a foundational decision — reached following a years-long process and a litigated hearing in which many stakeholders participated — would create regulatory instability for utilities, stakeholders and customers. Add to that uncertainty about the future.
If the ACC does decide the Value of Solar docket needs to be reopened, it should not do so without full consideration of the issues I’ve cited. This should include comparing the RCP rates to the utilities’ average purchased power costs.
Additionally, any decision made should also include modernizing the regulation to include the value of distributed energy compared with the grid for new technologies like energy storage and at various times of the day and year. For example, one kilowatt-hour (kWh) delivered during peak time from a home’s storage system costs much less than one kWh purchased from an out-of-state source.
Arizona families and businesses urgently need solutions to help reduce their energy bills, especially at the levels experienced due to this summer’s brutal temperatures. Electricity prices rose 6% last year and 12% the year prior, and we must do everything we can to contain high energy costs for both families and businesses alike.
Instead of reopening the Value of Solar docket, I highly recommend that the ACC work with utilities to establish virtual power plant (VPP) programs to compensate customers for the value of the energy/capacity and services they can provide. Energy storage and VPP can reduce the overall rates, as well as reduce costs to utilities.
Changing a foundational decision reached after a years-long process and a litigated hearing involving many parties would only create regulatory instability for utilities, stakeholders and customers, as well as uncertainty about the future. Instead, let’s look at the value that new technologies are bringing to the market to help reduce rates.
Steven G. Zylstra is President & CEO of the Arizona Technology Council and SciTech Institute.