Arizona rural utility proposes demand charge, more fees on rooftop solar users

Dive Brief:

  • A small Arizona rural electric utility is requesting approval from the Arizona Corporation Commission to add more fees on rooftop solar users that could tack on an additional $31 on their monthly bill, the Arizona Republic reports. 
  • UniSource Energy Services (UES), which serves 93,000 customers, asked the Arizona Corporation Commission (ACC) for a monthly $5 to $10 per month increase to its basic service charge for residential and small commercial customers, require a demand charge for new solar owners and an optional demand charge for all other customers.
  • UES also asked state regulators to approve a net metering credit that would initially be $0.0584/kWh, or “the price of power from large solar arrays," and would be updated annually. 

Dive Insight:

If approved, the additional fees requested by UES could spark a precedent in the state, the news outlet reported. 

The tension between Arizona utilities and solar users appeared to simmer down when dominant utility Arizona Public Service withdrew its request to raise its grid access fee for rooftop solar users from $5 to $21 and instead participate in a full cost/benefit analysis for the value of solar. 

But with UES's new filing, the state could see that controversy revived. UES is owned by Canada's largest investor-owned utility, UNS Energy Corp., also the parent company of Tuscon Electric Power, which experienced its own constroversy last year when it requested to reduce its net metering credit from retail to wholesale rates. 

The UES filing with the ACC explains that retail sales are down almost 8% from the last rate case period. Industrial and mining customer usage is down 50% and residential customer usage is down nearly 4% and expected to continue to decline.

Other factors to which UES attributes falling sales are the shutdown or curtailment of operations by some large customers, including the bankruptcy of its biggest customer, the increased use of energy efficiency and distributed generation, and a slow economy.

Its historic dependence on per-kWh volumetric charges “may have been appropriate in times of increasing customer usage and sales growth…[but now it is causing] difficulties for UNS Electric in recovering its authorized revenue requirement and inequities in recovering fixed costs,” the filing explains.

Instead, demand charges are widely seen as technologically agnostic and better reflect power costs than energy use charges, the Arizona Republic reported. 

If UniSource customers who do not own solar choose to pay the demand fee for peak period usage, they would get a reduced per-kWh rate. The result would be an unchanged or potentially lower bill if they negotiate how to control consumption, but higher electricity costs if they don’t. 

The ACC hearing begins March 1.

Filed Under: Solar & Renewables Distributed Energy Regulation & Policy Corporate News
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