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Bret Fanshaw,
Environment America

Report: Utilities like Arizona Public Service vastly undervalue solar energy

For Immediate Release

PHOENIX – Households and businesses with solar panels deliver greater benefits than they receive through programs like net metering, a report said today, countering increasing complaints from utilities that solar homeowners don’t pay their fair share.

“While some utilities claim they’re subsidizing solar panel owners, our report shows the opposite is probably true,” said Bret Fanshaw, Solar Program Coordinator with Environment Arizona.  “If anything, utilities should be paying people who go solar more, not less.”

The Environment Arizona Research & Policy Center report, Shining Rewards: The Value of Rooftop Solar Power for Consumers and Society, comes as utilities like Arizona Public Service attempt to increase charges on solar customers.

Net metering programs credit solar panel owners at a fixed rate -- often the retail price of electricity -- for providing excess power to the grid, similar to rollover minutes on a cell phone plan. The arrangements have helped solar energy skyrocket across the country, but in recent years utilities have increasingly attacked them as unjustified “subsidies.”

Today’s report tells a different story. Of the 11 net metering studies reviewed, eight found that the value of solar energy was higher than the average local residential retail electricity rate. The median value of solar power across all 11 studies was nearly 17 cents per unit, compared to the nation’s average retail electricity rate of about 12 cents. 

In other words: utilities were likely underpaying solar panel owners, not subsidizing them.

All 11 of the studies found that solar panel owners offered the electric system as a whole net benefits, including reduced capital investment costs, avoided energy costs, and reduced environmental compliance costs. 

“Distributed solar power means we don’t have to build expensive new power plants; it means electricity is delivered more easily and efficiently; and it helps save precious water to boot,” said State Representative Ken Clark, who has also served as Director of the Energy Office for the State of Arizona.

Solar advocates hoped today’s report would shed new light on the debate raging in Arizona over how much solar panel owners should be compensated for the power they produce.

Currently, Arizona Public Service is urging the Arizona Corporation Commission to increase fees on solar customers by more than quadrupling the “lost fixed cost recovery” charge for distributed solar users.

“Considering the studies we reviewed and the clear benefits that distributed solar provides to society and the power grid, it’s possible that Arizona Public Service has actually been undercompensating solar customers, as opposed to the utility’s plans to gouge those who ‘go solar’ with increased fees,” said Fanshaw.

The wide popularity of solar, along with programs like net metering, has sparked many Arizonans to choose solar energy to power their lives.

“My wife and I decided to install solar on our home because the cost included a full return on investment,” said Ken Muir, a solar homeowner and Arizona resident. “It just made sense for us to invest while we were working and could afford it, so we could realize fixed energy cost in our retirement years. Our goal is to be responsible citizens of the earth by working to reduce pollution, manage water use wisely, by not using it to wash and process coal, and be examples to our children and grandchildren regarding the seriousness of climate change. We are thrilled that our solar system powers our home with clean energy and charges our electric car, which literally runs on sunshine.”

Arizona Public Service is not alone in their efforts to ramp up charges on solar customers rather than compensate them for the value they provide. Earlier this year, Salt River Project approved a special rate design for new solar customers that could increase the cost of going solar by $50-$130 per month in SRP territory.

“Solar power’s rewards are far greater than its costs,” said Fanshaw. “That’s why we should be encouraging more of it in Arizona, not penalizing it.”