The Arizona Corporation Commission voted Tuesday to uphold a controversial fee on Arizona Public Service’s solar customers.
When the commission voted earlier this year to approve an APS rate hike, it also allowed the utility to charge solar customers an extra $2-$3 per month to cover costs it found should not be shared with non-solar customers.
The commission later agreed to review the fee after critics argued it illegally discriminated against solar users. However, an administrative law judge found that wasn’t the case.
Judge Belinda Martin found the fee was not discriminatory but also concluded that it would not be discriminatory against non-solar customers if the commission opted to forego the fee.
“Both actions are well within the commission's broad discretion when setting rates as long as the rates are supported by sufficient evidence and are just and reasonable,” she said.
Critics, including the Arizona Attorney General’s Office, argued the judge’s analysis failed to account for the benefits APS realizes from solar customers, who can also deliver excess energy they generate back to the grid.
Mary Curtin with the Attorney General’s Office noted that comments filed by the public overwhelmingly opposed the new fee.
“So one could say the public and the Commission don't agree that a grid access charge is in the public interest,” she said.
Other critics, including solar advocates, customers and consumer advocates, also claimed the APS cost analysis used to justify the fee in the first place was flawed.
“A fundamental problem is that the [rate case] relies on a flawed cost of service study and because of that, it has a discriminatory grid access charge,” said Chanele Reyes, an attorney for Vote Solar, a pro-solar nonprofit.
The commission voted to uphold the fee on a 3-1 partyline vote, with Democratic Commissioner Anna Tovar casting the lone dissenting vote.
She argued imposing the fee could dissuade Arizonans from opting for solar energy in the future.
“Further, it doesn't account for the benefits that solar customers provide to APS and other non solar customers,” she said.
But Commission Chairman Jim O’Connor and fellow Republican Commissioners Nick Myers and Kevin Thompson argued the fee is needed to avoid forcing non-solar customers to pay more than their fair share to cover costs incurred by solar customers.
“A million customers have been paying the bill for the 200,000 customers who opted to install solar on their homes,” O’Connor claimed.
According to Martin’s opinion, the Commission previously found that “residential solar customers provided between 37.7 percent and 68 percent of APS's fixed costs to serve those customers.”
Supporters of the fee said it will help offset the costs incurred by APS to ensure “resource adequacy” for solar customers, or the ability to ensure the utility can provide enough power to serve the customer in any situation, including if their solar power system stops working.
But Court Rich, an attorney representing Tesla, disputed that argument, saying those solar customers have already been paying their fair share. He pointed out that the “resource adequacy” provided by APS to customers is based on the amount of electricity those solar customers actually receive from the grid - not the total amount of electricity they use, including the energy generated by their solar panels.
“So then when a solar customer pays their bill, they fully paid for that,” Rich said.
Critics also argued APS built its “resource adequacy” argument based on the notion that every solar customer in the state’s system could fail at the same time but failed to account for other unlikely scenarios that could strain the grid, like if every electric vehicle owner decided to charge their vehicle at the same time.
“And yet, APS isn't using a hypothetical load for, or charging them more for resource adequacy needs to make sure that 300,000 people can charge their [electric vehicles] for four hours,” said Autumn Johnson with the Arizona Solar Energy Industries Association
Johnson said she anticipates one of the organizations opposed to the fee will appeal the case.
EDITOR'S NOTE: This story has been modified to correct Johnson's comments about a potential appeal.
