New monthly fee for Arizona solar customers

tigerade · Nov 17, 2013

I knew this was coming...

Thought solar energy was free? Arizona proves it wrong - Energy Ticker - MarketWatch

The Arizona Corporation Commission voted Thursday to charge a small monthly fee to customers of the state’s largest utility who are using rooftop solar panels — leaving the door open for similar fights pitting power companies against solar-energy proponents in other states.
The charge of 70 cents a month per kilowatt, or about $5 for a typical rooftop solar customer, will be effective Jan. 1.
“Overall, [it is] negative for the solar companies exposed to residential/commercial market,” analysts at RBC Capital Markets said in a note to clients late Thursday.

This is important because utilities around the country could be doing the same thing very soon. The fee here was going to originally going to be $50 to $100 a month, which no doubt would be backbreaking for solar panel owners. This is a significant attack on the solar industry and should not be ignored.

tdiggity · Nov 17, 2013

What's the dumbed down reason why they are charging the fee? The article said it was to maintain the energy grid? What does that mean?

jerry33 · Nov 17, 2013

tdiggity said:
What's the dumbed down reason why they are charging the fee? The article said it was to maintain the energy grid? What does that mean?

If you are putting energy into the grid, you are using grid resources. The problem with this argument is that you are also providing electricity and so are reducing the amount the utility has to pay to generate electricity. The utilities say that the energy you provide less what they pay you isn't enough to pay for the grid infrastructure.

Lloyd · Nov 17, 2013

If the fee gets too high, it will push AZ residents to go off grid and intall battery systems. At $100 per month it begins to make sense to do so. Excessive increased fees can have the opposite effect from what they are trying to do!

tigerade · Nov 17, 2013

Lloyd said:
If the fee gets too high, it will push AZ residents to go off grid and intall battery systems. At $100 per month it begins to make sense to do so. Excessive increased fees can have the opposite effect from what they are trying to do!

Exactly. This is 100% what I anticipated and why I previously argued that home energy storage should be seriously looked at. In the mean time, if you are a solar energy system owner that also is plugged into the grid, expect further cash grabs and mafia-style shakedowns in your future.

nwdiver · Nov 17, 2013

These utility commissioners are elected, they work for US, it's important that we make our voices heard. Congratulations AZ on doing the right thing. Here in NM I have to pay ~$30/mo for the solar that I generate. Anyone in NM? Patrick Lyons is a corrupt sack of sh*t. He's letting Xcel pick our pockets and needs to lose his next election.

neroden · Nov 17, 2013

Lloyd said:
If the fee gets too high, it will push AZ residents to go off grid and intall battery systems. At $100 per month it begins to make sense to do so. Excessive increased fees can have the opposite effect from what they are trying to do!

Yeah -- they haven't thought this one through.

Robert.Boston · Nov 18, 2013

Let's stop throwing around the $100/month number. What got approved is about $5/month, which isn't going to send anyone off grid.

As an energy economist, I agree with this charge (I don't have the data to comment on its level). As a net-metered customer, you receive from your utility three valuable services:

1. Stand-by power. Want to use power at night? Or when it's cloudy? Your utility has to be ready, with no notice at all, to serve your full power needs. To do so, it has to maintain and staff generators, keep enough generation on-line to meet expected loads, and maintain a full transmission and distribution network. These costs collectively are more than the commodity cost of the delivered power.

2. Balance the system (aka ancillary services). Utilities need to maintain system frequency and control for contingencies (unplanned bad things). You, as a solar generator, don't, but those service aren't free. In some areas, wind generators are charged an integration fee to cover these balancing costs.

3. Marketing your power. Who exactly is buying that power your putting on the system? And who is billing them, collecting the money, handling customer issues, and incurring costs of bad debts? Not you, the solar generator, but the utility.

Net metering is an unsustainable model. This fee improves the alignment of cost causation and charges, but fundamentally a different approach is needed, I.e. A feed-in tariff with separately metered generation and usage.

Lloyd · Nov 18, 2013

Robert.Boston said:
Net metering is an unsustainable model. This fee improves the alignment of cost causation and charges, but fundamentally a different approach is needed, I.e. A feed-in tariff with separately metered generation and usage.

The way that solar panel are wired to a home panel and electrical system practically prevents separately metering generation. At my home I have 4 separate panel feeds into 4 separate subpanels. It would be very difficult to separately meter generation. In my case it would require 4 meters for generation and 2 for usage. You could take area averages and apply that for generation based on system capacity.

ZBB · Nov 18, 2013

Robert.Boston said:
Let's stop throwing around the $100/month number. What got approved is about $5/month, which isn't going to send anyone off grid.

As an energy economist, I agree with this charge (I don't have the data to comment on its level). As a net-metered customer, you receive from your utility three valuable services:

1. Stand-by power. Want to use power at night? Or when it's cloudy? Your utility has to be ready, with no notice at all, to serve your full power needs. To do so, it has to maintain and staff generators, keep enough generation on-line to meet expected loads, and maintain a full transmission and distribution network. These costs collectively are more than the commodity cost of the delivered power.

2. Balance the system (aka ancillary services). Utilities need to maintain system frequency and control for contingencies (unplanned bad things). You, as a solar generator, don't, but those service aren't free. In some areas, wind generators are charged an integration fee to cover these balancing costs.

3. Marketing your power. Who exactly is buying that power your putting on the system? And who is billing them, collecting the money, handling customer issues, and incurring costs of bad debts? Not you, the solar generator, but the utility.

Net metering is an unsustainable model. This fee improves the alignment of cost causation and charges, but fundamentally a different approach is needed, I.e. A feed-in tariff with separately metered generation and usage.

I'm an Arizona resident, although I don't have solar. I have a degree in economics, although my career went in a different direction after getting an MBA... I also have work experience in the energy industry (although not at a utility -- but with a large equipment and services supplier to utilities).

I understand your comments and generally agree -- but I want to make sure I understand your different approach.

In AZ our utility bills have long broken out the cost of generation from the cost of distribution / metering, etc (and most of these are based on kWh, although some line items are based on a daily charge). If I was building the pricing on this, I would apply net metering against the generation only. The remaining charges should have been based on total kWh flow (purchase plus sold) -- since those are what comes and goes from the grid... Is that your thinking too?

For reference, our utility bill from April this year had ~38% of the total as the charge for generation. Taxes made up about 10%. Distribution, metering, etc was about 50%...

yobigd20 · Nov 18, 2013

This makes no sense.

The article states "charge of 70 cents a month per kilowatt".

I use about 3500-4000 kilowatts per month. So my bill would be $2500-2800? Are you effing kidding me? My going rate right now is about $0.17 per kilowatt. Why would anyone get solar if it's going to cost 5x as much?

Clearly there is an error in this article....

- - - Updated - - -

update: I Read a different news article. It's $0.70 per kilowatt OF SYSTEM CAPACITY.

Using a simple calculator, http://michaelbluejay.com/electricity/solar.html, for a 3500-4000 kw/month I would need a 25.9-38.1kWp system, so the monthly fee for a system that size would cost me about $18-$26/month.

Robert.Boston · Nov 19, 2013

yobigd20 said:
I Read a different news article. It's $0.70 per kilowatt OF SYSTEM CAPACITY.

Using a simple calculator, Solar Calculator: How much do solar panels cost? -by Mr. Electricity, for a 3500-4000 kw/month I would need a 25.9-38.1kWp system, so the monthly fee for a system that size would cost me about $18-$26/month.

I read it as $0.70/kW of your installed solar capacity. But I haven't read the actual filing.

- - - Updated - - -

ZBB said:
In AZ our utility bills have long broken out the cost of generation from the cost of distribution / metering, etc (and most of these are based on kWh, although some line items are based on a daily charge). If I was building the pricing on this, I would apply net metering against the generation only. The remaining charges should have been based on total kWh flow (purchase plus sold) -- since those are what comes and goes from the grid... Is that your thinking too?

For reference, our utility bill from April this year had ~38% of the total as the charge for generation. Taxes made up about 10%. Distribution, metering, etc was about 50%...

Yes, that's generally the lines I was thinking of. You can buy or sell power based on the generation rate, not the wires+generation rate. The wires charge really ought to be recast based on some measure of peak draw on the system, probably during peak hours (e.g. 7am -- 11pm weekdays). Since wires costs are a fixed cost, it doesn't make a lot of sense to charge them out on a per-kWh basis.

AudubonB · Nov 19, 2013

The $0.70/kW of installed solar capacity is indeed correct. The $5/mo number bandied about occurred because APS stated that the average Arizona home solar system is approx. 7kW, thus 7 * .70 = $4.90 = $5.

miimura · Nov 19, 2013

Robert.Boston said:
I read it as $0.70/kW of your installed solar capacity. But I haven't read the actual filing.

- - - Updated - - -
Yes, that's generally the lines I was thinking of. You can buy or sell power based on the generation rate, not the wires+generation rate. The wires charge really ought to be recast based on some measure of peak draw on the system, probably during peak hours (e.g. 7am -- 11pm weekdays). Since wires costs are a fixed cost, it doesn't make a lot of sense to charge them out on a per-kWh basis.

Why not just cast the "wire charge" as a demand charge. Let's say $1/mo per kW peak daytime demand or infeed. I would define daytime as perhaps 10am-10pm or whatever part-peak and peak times are covered in the tariff. Off-Peak demand should not be considered.

TEG · Nov 19, 2013

In California PG&E they have a monthly "meter fee" to be grid tied. Depending on plan, it could be $10-20.
It isn't specifically targeted towards solar, but basically you get charged that fee even if you feed more power back into the grid than you use.

Robert.Boston · Nov 21, 2013

TEG said:
In California PG&E they have a monthly "meter fee" to be grid tied. Depending on plan, it could be $10-20.
It isn't specifically targeted towards solar, but basically you get charged that fee even if you feed more power back into the grid than you use.

That's a charge everywhere - it literally covers the cost of the meter, account management, customer service reps, etc. Since you're using all of those whether you roll the meter forwards or backwards, it's reasonable to charge regardless.

- - - Updated - - -

miimura said:
Why not just cast the "wire charge" as a demand charge. Let's say $1/mo per kW peak daytime demand or infeed. I would define daytime as perhaps 10am-10pm or whatever part-peak and peak times are covered in the tariff. Off-Peak demand should not be considered.

I agree, at least in part. A fairly big chunk of the cost is related to your (free) option to use power whenever you wish; another is to have the infrastructure to deliver it. Many of those costs are fixed and not necessarily proportionate to your actual usage in any month.

manitou820 · Nov 25, 2013

tigerade said:
Exactly. This is 100% what I anticipated and why I previously argued that home energy storage should be seriously looked at. In the mean time, if you are a solar energy system owner that also is plugged into the grid, expect further cash grabs and mafia-style shakedowns in your future.

When I first heard about this, the first thing I didn't is begin researching off grid options. They really haven't thought this through.

Robert.Boston · Nov 26, 2013

To avoid spending $5-$7/month, you'd invest thousands in going off-grid? I don't see the payoff.

rolosrevenge · Nov 26, 2013

yobigd20 said:
I use about 3500-4000 kilowatts per month. So my bill would be $2500-2800? Are you effing kidding me? My going rate right now is about $0.17 per kilowatt.

You use about 3500-4000 kilowatt hours, not kilowatts. kW are a measure of instantaneous power and if you were using 3.5-4.0 MW at any given time, I'm sure your bill would be in the thousands of dollars. Now since you use kWh you are billed $0.017/kWh - the energy you use.

Utilities should set distributed generation up on the same level as large generation. They pay you for the energy you produce at a certain sustained power level, and you pay a fee for wires, ancillary services, settlements, taxes, wheeling etc. The problem is that utilities have averaged those costs by the number of kWh sold to their customers and developed rates per kWh to account for them all, giving customers the erroneous impression that they pay merely for energy and thus any production on their part should be billed at the same rate. I applaud AZ for taking a step towards equality and sustainability.

- - - Updated - - -

manitou820 said:
When I first heard about this, the first thing I didn't is begin researching off grid options. They really haven't thought this through.

You'll find that off grid options won't be cheap at all. In addition to a sufficiently large energy storage system, you'll have to significantly oversize your generation. Imagine having 5 cloudy days in a row, how much storage would you need and how big would your system need to be to charge it during high production times.

ToddRLockwood · Nov 26, 2013

A lot of other utilities could learn from Green Mountain Power's approach in Vermont: separate the non-energy charges on the bill and charge them to everybody, including the net metering customers. That way everybody pays their fair share to maintain the grid. Net metering accounts pay down those non-energy charges first, and then the energy portion of the bill.

New monthly fee for Arizona solar customers

Member

Member

(S85-3/2/13 traded in) X LR: F2611##-3/27/20

Well-Known Member

Member

Well-Known Member

Model S Owner and Frustrated Tesla Fan

Model S VIN P01536

Well-Known Member

Emperor

Well-Known Member

Model S VIN P01536

One can NOT induce accuracy via precision!

Well-Known Member

Teslafanatic

Model S VIN P01536

Member

Model S VIN P01536

Dr. EVS

Active Member

Similar threads