APS settles on 3.3 percent revenue hike, reduces solar subsidies

Company will invest nearly 100 million over 3 years in programs expanding rooftop solar use, offering emergency bill assistance

Edgar Soto and Juan Jamoa with SolarCity install solar panels on the roof of a home south of Prescott in 2012. Part of Arizona Public Service’s 2016 request would do away with the solar buyback program and change the reimbursements.

Matt Hinshaw/The Daily Courier

Edgar Soto and Juan Jamoa with SolarCity install solar panels on the roof of a home south of Prescott in 2012. Part of Arizona Public Service’s 2016 request would do away with the solar buyback program and change the reimbursements.

PHOENIX — Arizona Public Service (APS) reached an agreement March 1 on its first rate review in five years. Under the new agreement, APS will be allowed a 3.3 percent increase in annual revenue. The agreement will now go before the Arizona Corporation Commission (ACC) for review, a public hearing and a vote by Commissioners later this summer.

According to a press release, residential customers will see around a 4.5 percent increase on their monthly bills, or around $6 per typical customer. Under the agreement, APS would refund to customers $15 million of surplus energy efficiency program funds over the first year that new rates are in effect, and will not be able to enter another rate review until June 1, 2019.

“Consumer advocates, environmental advocates, business customers, solar industry representatives and more have agreed on a path for Arizona’s energy future,” said Don Brandt, APS chairman, president and CEO. “What we have is a blueprint that will bring about more solar, a smarter energy infrastructure, a cleaner energy mix and more options for customers.”

If approved, the agreement would enable APS to continue to invest in clean energy improvements over the next three years, including upgrades and maintenance for the energy grid; reduce emissions and water use through a $500 million investment to modernize the Ocotillo Power Plant; reduce emissions and comply with more stringent federal environmental standards through a $400 million investment at the Four Corners Power Plant; fund the continued development of innovative technologies such as battery storage, microgrids and advanced solar research; and continue industry-leading performance at the Palo Verde Nuclear Generating Station, which produces 80 percent of Arizona’s carbon-free electricity.

Also included in the agreement is a commitment to assist lower-income customers by allocating an extra 13 million to the company’s bill assistance program, which provides a 25 percent monthly bill discount and a 1.25 million annual emergency bill assistance fund.

The agreement would also alter APS’ current subsidy program while still paying rooftop solar users for the excess electricity they produce. The ACC settled on an agreement in December to end the net metering system, which provided monthly bill credits for each kilowatt-hour of electricity sent to the grid. The credits roll over from month to month and offset the electricity solar homeowners use at night or when their solar panels can’t provide enough electricity. The credits are worth the retail value of electricity, around 10 to 14 cents each.

And administrative law judge recommended that APS buy the energy produced by solar customers for a price based on what the company actually saves in avoided costs of power plants, fuel and infrastructure, which would be less than the retail price of electricity. The new compensation rates won’t go into effect until the rate case is resolved.

If approved, the settlement would grandfather existing private solar customers for a period of 20 years, compensate future private solar customers for their excess electricity at a credit starting at 12.9 cents per kilowatt-hour, and allow future private rooftop solar customers to choose either a time-of use rate plan that incorporates a grid access charge, or a demand-based rate plan without a grid access charge.

For business customers, the agreement would establish a special discount rate for schools; offer a new economic development rate option to encourage businesses to relocate or expand, along with a rural municipal economic development rate; create a new rate to attract highly-efficient customers, such as data centers; provide an aggregation rate that lowers energy costs for chain accounts such as grocery stores; and improve time-of-use options that work better with the operating schedules of many businesses.

“This agreement allows us to continue investing in Arizona’s future, Brandt said. “Our work on advanced technology and grid innovations over the coming years will create jobs and opportunities for suppliers and others.”

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