Bernosky, APS' renewable energy manager, admits that the problem hardly is "crisis scale" yet. He refers to a study showing that for every solar customer, $1,000 gets "shifted" to the overall customer base.

Doing the math, it sounds like a lot of money over 20 years: $320 million, just for existing customers. But APS has 1.1 million customers — so that breaks down to $14.55 per year. Just $1.21 a month for each customer.

That amount seems plenty palatable for most Arizonans.

Don Brandt, CEO of APS and Pinnacle West Capital Corporation
Don Brandt, CEO of APS and Pinnacle West Capital Corporation
Clockwise, from top left: Arizona Corporation Commission members Susan Bitter Smith, Bob Burns, Brenda Burns, Bob Stump, and Gary Pierce
Clockwise, from top left: Arizona Corporation Commission members Susan Bitter Smith, Bob Burns, Brenda Burns, Bob Stump, and Gary Pierce

Surveys show bipartisan support in Arizona for continued taxpayer-funded subsidies for renewable-energy sources, including solar power, and support for pro-renewable policies that result in higher power bills. The requirement that 15 percent of Arizona's electricity needs must be met with renewable energy by 2025, for example, means that each APS residential user is hit with a maximum monthly surcharge of $3.84 to help pay for subsidies for renewables, not including APS' estimated net-metering bump.

Not much money, for now. For all but the most impoverished ratepayers, it's seen as a relatively inexpensive way to help promote solar power.

Jobs are created. The product, though not totally free of the taint of pollution, produces cleaner kilowatts per hour than nearly any other generation source — as long as the sun's up.

But Bernosky notes that solar customers expect their power to be purchased for a retail-equivalent rate for as long as systems work, which may be more than 20 years. Right now, it's possible to lock in the current plan for existing solar customers, he says. Eventually, though, if rooftop keeps growing at a fast clip, too many solar customers will have sprung up to "grandfather" them all in, he says.

APS' solution is to have solar customers (new ones, anyway) pony up more money for the privilege of using the "virtual battery."

If that change helps thwart what APS calls a "disruptive technology," all the better from the perspective of the utility's investors. Customers can only trust that blowing up the rooftop-solar business will be good for them in the long run.

Still, nobody likes the winner in a game of Monopoly.


Clouding the debate on net metering is a contested question: Does the subsidy really cost money for utilities and, therefore, their ratepayers, or does the juice from rooftop panels actually make money for utilities?

Under the latter theory, backed up by a Crossborder Energy study commissioned by solar companies, utility execs are so greedy that they aren't sharing the bounty with all customers by lowering rates accordingly, and they want to game the system even more in their favor by slashing payments to customers who provide a source of clean power.

If true, APS is stealing from its 1.1 million customers, with the Corporation Commission as a willing accomplice.

This, in fact, is the position of solar advocates such as Michael Dee, publisher and editor-in-chief of Arizona Foothills Magazine, which publishes a Solar Style section on its website and columns blasting APS for its stance on net metering.

The site also produced a YouTube video for a song performed by Krystal Baker that takes a sarcastic bite at the utility to the tune of Bonnie Tyler's "Total Eclipse of the Heart."

A lyric goes: "We don't know what to do / They want to keep us in the dark / APS is a monopoly / That acts like a shark!"

Dee didn't respond to a request for comment.

The song sums up the spirit of TUSK, the group fronted by Jason Rose.

"If APS is successful in changing [net metering], it will effectively end the rooftop-solar market in Arizona," Rose tells New Times.

He pins the timing of this debate squarely on the all-Republican ACC panel. "They see this as their opportunity to have it their way."

Rose, whose wife, lawyer Jordan Rose, has solar companies as clients, says the utilities "fear the future — it's like the typewriter holding back the computer."

APS makes money on solar customers, Rose maintains.

He points to the Crossborder study, released in May, that shows how rooftop solar purportedly adds $34 million a year to APS' bottom line. It seems that rather than $1.21 a month extra on customers' bills, as the APS study estimates, there should be an average reduction of $2.58 a month.

Solar advocates claim the threat of rate increases is bogus, nothing but fear-mongering. They say utilities like APS are just interested in hoarding profits — at the expense of public health.

In what sounds like a conspiracy theory, advocates claim utilities' fears mentioned in the Edison paper constitute propaganda designed to fool the public into supporting local proposals to change net-metering payments.

In fact, they say, as the Crossborder study states, the addition of distributed-energy generation to the grid means that APS can put off buying new transmission lines, natural-gas plants, and other equipment for a few years — a significant financial benefit to the power company.

The study points to APS' own data that shows rooftop solar is a cheaper way for APS to meet its renewable-standard requirement than other renewable sources and that the power provided by solar users meets peak demands that the utility would otherwise fill by ordering up power from more-expensive sources.

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46 comments
Schultzy
Schultzy

Maintaining two redundant systems, one of which is barely used, is a waste of money -- and a for-profit company shouldn't be expected to do it unless the country agrees to subsidize the loss that company is incurring. But since you're probably already complaining about high taxes, I suspect you're not willing to pay for the privilege of keeping an inefficient and obsolete technology around just because you don't like cell phones (no you literally)

Thanks

Schultzy

MD@contacttelephonenumbers.com

eeecuzin
eeecuzin

Seems the problem is the guaranteed profit part. What about all of the additional charges on the bills like delivery meter reading that no longer happens because of these dangerous and invasive smart meters. This is a bunch of whinning greedy pukes that are just greedy  and refuse to allow any competition. Notice how they said solar costs them 5 times as much? so for every dollar it costs them they get 5 dollars for it. And that a 500 % mark up. Hmm

BobDobbs
BobDobbs

One thing that is sort of glossed over in this article is that APS and other utilities charge higher rates in the summer than in winter. And then there are the on and off peak rates for each season. My solar panels produce the bulk of their output during the summer, due to longer days. But, APS totals the account out once a year, in December and pays us based on the off-season rates. For 11 months we carry a credit balance expressed in kilowatt hours over from month to month. December's bill has a cash-out total on it, you can take your credit as a check or roll it over to pay next year's bills.

Another misconception is that solar customers don't pay an electric bill. Obviously, if you use more than you produce, or have banked up from prior months, you pay for electricity. But, I also pay a bill that ranges from $18-$21 per month, depending on the number of days in the billing period, for 'metering fee', 'meter reading fee', 'customer account charge', 'billing fee', taxes and several other fees. The meter reading fee is a joke, as the new meters are automatically remotely read by a computer via WiFi. Anyway, APS does get paid for its services by solar customers.

helpIliveinaz
helpIliveinaz

Well miss Sun City spokesman so glad to hear all the money that you will be saving, so now you have no excuse to raise fees and assesments.

of Couse your leader Gm Jan Ek, will put a spin on things , she always does , its called lies.

In my opinion Jan Ek has ruined Sun city. has made it a place older folks do not want to live, a perfect example is doing the solar without a vote, or say so, just dictatorship.

That is what is buying you a law suit, well deserved!  I hope Anne wins,

Geowil
Geowil

I was wondering whom was behind these stupid ass ads I have been seeing plastered all over Fox lately.  Now I know what I suspected, I knew all along that it was a move to push out solar though; the argument they made in that commercial makes absolutely no sense unless interpreted in that fashion.

How can solar power being fed back into the grid cost non-solar users more?  There is more power to spread around, less cost from peak hour production, and the utility faces less strain.  How does that translate into higher costs?

Simple, it doesn't.  What does is the fact that APS is losing money due to solar production instead of customers buying power from them and so they have to justify raising their rates.  In doing so they create this lie.

I hope someone takes them to the wood shed over this.  20th century utility pyramids are starting to break down, wind and solar become more viable by the year and there is more push back against dirty fuel sources.  Eventually APS has to accept the reality that their day in the sun is over, just like steam power is no longer used to great extent; now it is the solar panel's turn.

eeecuzin
eeecuzin

The rub is the utilities guarantee to make a certain profit margin. Much  like the gas tax amount went down becuse more people used public transportation and better mileage in cars but those pigs at the public trough werent about to let it go. Greed is the problem

emmdeecee
emmdeecee

Clearly, Mr Stern is no friend of the solar industry.  By my estimation this is the second hit piece in at least as many months on the solar industry penned by Mr. Stern who is obviously pining to be an energy industry spokesperson.  The article is particularly noteworthy for the paucity of facts therein.  It reads like a he said, she said journalism and Mr. Stern leaves little doubt as to which industry was applying the screw job to APS consumers.  Let's take the institutional solar power consumer who was unable or unwilling to reveal the truth of the "sunny-solar power story".  Perhaps she simply didn't want to give you the satisfaction of taking a worthy discussion into the gutter.  You did ask her to call APS a group of liars.

Before you decide to actually do some investigative journalism and to provide your readers with some facts to support the APS spin, maybe you should take into consideration the fact that APS has already been granted a rate increase in May of 2012 because of those pesky energy efficiency measures their customers are employing valley wide.  You see, across the valley APS customers are using less electricity because they are becoming better consumers and perhaps, just maybe,  it is time that APS who is guaranteed a certain profit level by our esteemed ACC also learned to become a better business so that their profit level was truly earned and not handed to them by a panel of rubber stampers.

drdweiss
drdweiss

the energy that is produced from solar is most active and efficient when phoenix needs it the most, during full sun, summer and winter. aps/srp have to be moving to a sustainable model of business, not just growth.

the 'privilege' of a monopoly has to tempered with a public interest to allow it, less pollution, lower capital costs, and a gradual transition to renewable energy. if it costs us now that is a reasonable investment.

arizonacea
arizonacea

The solar momentum has started and APS is only pushing it's evolution to it's own demise. Off-Grid systems are going up everywhere and are advanced enough in technology to roll out large scale.  If they're using them in large scale solar plants the technology will support rooftops.

Solar companies are unknowingly creating a monster by promoting 3rd party lease/finance giants dominating the market due to net metering and grid-tied systems. Homeowners in AZ are unfairly being sold only one option... leasing! This business practice is resulting in 90% of solar in AZ in 2012 being Leased. 

The real benefits of solar are going to Homeowner who have purchased/financed their systems and who can own their power. When you lease you are locked into an iron clad financing option that doesn't allow add ons to the system for the 20-25 year term. As technology advances those locked into leases cannot change with technology.

Ownership allows for the option to go Off-Grid with power stations/battery backup. 

Leasing is financing! You need at least a 700 FICO in order to get financed with payment obligations for 20-25 years... Iron Clad!!

It's time for Solar companies to step up their game and start selling the future of solar for the solution instead of lining the pockets of Banks/Leasing that are too big to fail/jail. The long term ultimate goal for those who are in the business for reasons other than just money should be running the unsustainable, environmentally destructive methods currently destroying our planet, for energy production out of business. It's bad business to begin with.

The only thing that is going to come from utility companies eliminating net metering or reducing the price it pays for net metering is that leasing and On-Grid Solar will become obsolete. (Applaud)   

Way to go APS!


harlotsghost
harlotsghost

These are APS quotes:

"APS officials said the 18,000 solar customers are getting too much credit for the power they send to the grid. Such power helps APS avoid the expense of power-plant fuel, but the utility still must cover the cost of new transmission lines, grid repairs and other expenses that solar customers don’t contribute to because they pay reduced bills."

O&M is an ongoing cost.

"APS officials said solar customers are not paying enough for the services they get from the power grid, which enables them to get electricity at night when solar panels don’t generate power and balance their household energy needs during the day when their solar-panel output and home demand don’t match up."

This is a no brainer.  Solar panels are not developed based on sunlight incident reflection from the Moon.  8760hrs takes this into consideration.

Customer solar panels are not primary base, intermediate, and peak resource load supply.  Although, solar panel supply overlaps all three generation units. And during the most productive period customers are minimal users.  Some are doing APS's books, rate design, and forecasts during these periods.

Jeff Guldner, APS senior vice president of customers and regulation. “You actually need the grid 24 hours a day.”

TOD Rates, Flat Rates or any other imaginary rates are composed on 8760hrs.  This takes into consideration base, intermediate, and peak resource supply.  If not the rate design is flawed.

"customers who install solar panels on a rate plan based partly on the maximum amount of electricity they use each month, which would add a substantial new service fee to their bills."

APS doesn't know what this target is.  But if APS can establish a kwh range for a flat fee it increases their confidence they can hit the target.  Basically it's a Take-or-Pay rate.  A type of energy contract APS has plenty of for fuel and purchase power.

"Solar customers tend to be more affluent, with larger homes that use more electricity, so the average price they pay for a kilowatt-hour is about 15.5 cents"

Hmmm....  Who else has the money to argue failed forecasts and rate design with APS?  Or maybe this is a new "Class Rate."

Reality?  All that number crunching missed the target and now there must be a plausible story because the ACC approved the last batch of numbers.  If there were significant customer growth, or some whole system benefit APS could point to they might have a viable argument.  But to simply point at an under earning rate or business unit impacting their overall ROI is a little weak since they are scheduled for rate revisions in 2016 anyway.

sammy750
sammy750

APS is directly attacking solar power.  They are trying to rid this state of solar power in the fees they are attempting to charge.  Republicans hate Solar energy and any kind of renewal energy.  They prefer coal burning power plants,  gas powered engines, anything that pollutes this earth more.   Republicans are against trying to cut back pollution.     The people of the state should put up hard attack against APS and the Republicans.   They are trying to rid the state of solar panel manufacturing companies too by higher taxes.  

harlotsghost
harlotsghost

Arguing against retail solar is a common theme in the E-utility industry.  The argument non-solar rate base subsidizes solar revenue deficiency is really an argument for a missed revenue target in the prior rate case.  Since solar is a close 1-1 exchange there are no more sunk Gen, Trans, Dist, Metering costs.  Any of the retail eroding programs are simply bad forecasts.  Customers still pay QF demand and energy costs in their purchase power adjustments.  Most of this cost is just peak capacity cost.  The QF may not even run and just reports availability.  Some of those gas conversion jet engine generators look good sitting in the field and probably won't start.  But APS and others like APS still hinge their argument on the magical 500kW deferred incremental peak cost.  State Commissions are easy marks for making up deficient retail revenue targets.  FERC mandates those QF capacity payments.

arizonaeagletarian
arizonaeagletarian

"APS is expected to submit an application by Friday, July 12, to the Corporation Commission asking for approval to lower the amount paid to solar users for their power — with the stated goal of protecting its non-solar customers.

"The request follows months of posturing by the utility industry and by solar advocates, both of which have painted the scene as an epic battle that may result in the death of one side or the other."

That is really the intriguing thing about this whole situation. APS may actually be facing a scenario in which its stock price could tank. Why else would it's current executive management have been appearing to be doing a big time pump and dump in advance of the top one or two guys cashing out and going into retirement? By pump and dump, I mean that Pinnacle West may have been divesting itself of major subsidiaries to stockpile its cash reserves so that those top guys look like they've done stockholders a huge favor by enhancing the value. When that enhanced value could possibly be only a mirage.

ExpertShot
ExpertShot topcommenter

APS is a lying piece of crap corporation that doesn't give a shite about you or their customers or the environment.  They lied us into nuclear power, they lied us into letting them split their business apart, they're lying now.  I remember Ed Fox lying to people right and left about the EPA's regulations to try to reduce the HAZE from the Generating Stations - mandated by the Clean Air Act!  In 2009, Ed Fox, vice president and chief sustainability officer for Arizona Public Service, said that the company would not build another coal-fired plant until “new technology comes along that allows us to manage pollutants, including carbon dioxide.  Arizona Public Service expects to fulfill virtually all of its demand growth in the next five years with wind and solar projects and increased energy efficiency".  Lying sack of crap!!!!

MrDuke
MrDuke

I worked for APS for 3+ years, and quit because of all the nefarious shit they pushed to justify rate hikes year after year, while doing almost nothing to streamline or become more efficient. They are the poster child for monopolies and entitlement culture. I sat in a meeting once with Don Bryant, and his message was this, "Our number one concern is shareholder value, period".  There is ZERO recognition that people have no choice but to do business with them or provide a superior service to their customers. They KNOW who they've got you over a barrel and trade on that fact daily.  How else can they already charge some of the highest utility rates in the country, and cry poor in any fashion??  And the surcharge discussed in this article goes beyond just making up for the solar subsidy. As mentioned, it also used to make up for revenue shortfalls due to people simply using less power due to conservation. Where else can a company charge people for buying less of their product and get away with it???  And what's sad is, when the Corporate Commission sat three Democrats (which was during my time there), the APS PR machine was all about renewables. They even rolled out those ridiculous cartoon heroes "The Renewables" to tout they're green leaning culture. And now that they've got the deck stacked with Repbulicans, look at'em go! I wonder if they'll invite "The Renewables" to the first commision hearing on this issue??? I'm just waiting for the days when battery technology catches up, and the days of companies like APS will be numbered. 

Mikey1969
Mikey1969

Haven't read more than the first paragraph yet, but I wanted to chime in and say that having the solar arrays double as covered parking is absolute genius in AZ. If those things just even out on their power usage without giving anything back to the grid, they're a 'win' in my book. 


I'm SO glad I don't have to park in an asphalt lot in 115 degree temps anymore...

princesswhoopass
princesswhoopass

I have  a grid-tied solar system with APS. They paid for part of the installation in 2010. That agreement is a 10-year contract to feed power I don't use back to APS, or pay them if I disconnect before the 10 years. 

I don't know what they are crying about retail rates. The contract specifies that APS pays me half the amount they charge me for electricity. So I feed back during peak hours; if APS is charging (for example, not an actual number) 50 cents per unit of electricity, they pay me 25 cents. During peak hours. How is that retail?

That said, up here in the Arizona Attic, power goes out a lot. We have several 2- to 8-hour power outages every summer because of old infrastructure (except the brand new meters they just installed for net metering). Around the nine-year point of my contract I will be looking into batteries that will let me get off the grid. Then I could have power at night as well as when APS is down for the rest of the town during the day.

marcy
marcy

The Big Lie APS wants to tell is that it is being forced to "buy at retail".  The reality is that they are buying at a substantial discount to the PEAK DEMAND rates they charge customers and at a large discount to their COST for peak demand power.

The real problem APS faces is people are learning how to use less electricity.  Replacing those incandescent bulbs with CFL or LED saves a lot of power and a lot of money.  More energy efficient houses do likewise.   APS needs to learn to make do with less, like any other business whose customers are buying less.

marcy
marcy

That vicious cycle ends when it becomes obvious that the current utility model which permits them to continually increase profits without being subject to normal market pressures, ends.

The utility isn't a virtual battery, as the article alleges, as the peak demand electricity that solar panels produces is immediately used by non-solar customers.  This reduces peak demand generation by the utility, the most expensive form of electricity.  

Solar customers primarily consume off peak power, the cheapest power.

But that isn't important to APS, they LIKE peak demand because it allows them to make the case to build more power plants and investing capital in new power plants allows them to collect a guaranteed return in the form of rate hikes


ray.stern
ray.stern moderator

@emmdeecee Em, the story mentions the May 2012 rate increase and why it happened. 

True, I'm no friend of the solar industry -- but in fact, your first sentence would have been correct no matter what word you put before the word "industry." I don't see myself as enemy of industry, either, btw.

I did ask Joelyn some questions, but never asked her to "call APS a group of liars."

Ray

ronpage80
ronpage80

@arizonacea On-grid solar is 100% efficient storage.  off-grid is expensive and inefficient.  No doubt if APS somehow wins, people will be forced to go off-grid.  The leases with sunrun guarantee that the cost of lease plus aps bill will be less than the aps bill without solar, so sunrun would support off-grid add-ons if it has to come to that

sammy750
sammy750

@arizonaeagletarian  
"with the stated goal of protecting its non-solar customers".  protection from what?  This is an excuse to destroy the solar power industry.  Republicans are all for that. 

ExpertShot
ExpertShot topcommenter

@ray.sternRetail prices for what?  Electricity produced during periods of peak usage has a different "retail" cost than that produced at off-peak hours.  Most solar photovoltaic power is produced during peak usage periods.  APS doesn't pay solar photovoltaic producers the same price for peak usage produced electricity that they pay other producers!  They pay PV producers LESS than they pay for electricity they purchase for peak power.  Come on Ray - get your facts straight!!! Perhaps you might find the encyclopedia helpful. 

https://en.wikipedia.org/wiki/Net_metering#Market_rate_net_metering

sammy750
sammy750

@ExpertShot CLOSE DOWN those coal burning plants NOW.  Quit polluting our air.  Who are the APS, what is there politics? 

sammy750
sammy750

@MrDuke Republicans are against any form of renewals.  They are against solar power and trying to close down the solar power panel manufacturing plants in AZ.  Lets shut down the APS and let the share holders suffer.   The people need to raise up and voice their concerns against this monopoly.  They would prefer building all coal powered plants.   

princesspellie
princesspellie

@MrDuke  Brilliant.  They also completely changed their website to remove all references to solar, and killed their program to certify qualified solar installers.

ray.stern
ray.stern moderator

I love words, Steve. The word "scheme" doesn't look to be overused in the story, so I'm not sure what your point is.

ray.stern
ray.stern moderator

Solar city says it's retail, as I quoted from their site. Even If it's a bit less than retail over a yearly average, the overall point of solar city's claim - which is similar to how my story describes the payment scheme (i used that word for steve's benefit) remains the same. ---- I just called sunrun for further confirmation. Was told that if I generate, for example, 100 kwh in excess of what I use on a particular day, I am credited at the "exact retail rate" for that power - he further explained that he means it would be what I would have paid for 100kwh on the same day.

princesspellie
princesspellie

@ExpertShot

Here is what is said in APS’s annual report for 2012

p. 32 – in the Operational Risks section:

 APS’s results of operations can be adversely affected by various factors impacting demand for electricity.

                Effects of Energy Conservation Measures and Distributed Energy. APS must also meet certain distributed energy requirements. A portion of APS’s total renewable energy requirement must be met with an increasing percentage of distributed energy resources (generally, small scale renewable technologies located on customers' properties). The distributed energy requirement was 25% of the overall RES requirement of 3% in 2011 and increased to 30% of the applicable RES requirement for 2012 and subsequent years. Customer participation in distributed energy programs would result in lower demand, since customers would be meeting some or all of their own energy needs.

                Reduced demand due to these energy efficiency and distributed energy requirements, unless substantially offset through ratemaking mechanisms, could have a material adverse impact on APS’s financial condition, results of operations and cash flows. Additionally, higher than anticipated penetration of distributed energy may also cause portions of APS’s existing resource fleet, such as coal, to become uneconomic or operationally burdensome.

In conclusion, 43 out of 50 states have net metering and APS is preparing to ask the ACC to make Arizona the first state in the nation to negatively impact its net metering policy.  That quite simply is not supporting the solar industry.  That is attacking it.  

arizonaeagletarian
arizonaeagletarian

@ray.stern Funny you should mention that you are not sure what MY point is. My point happens to be that I don't know what YOUR point was. The word "scheme" is loaded with ambiguity. The skillful wordsmith that we all know you to be, I have to wonder why you use a word that gives you plausible deniability for biased reporting.

Other than that, it appears to me that you like the word "scheme" when there are plenty of other words that would take away all possible guesswork from the reader as to what you intended to communicate.

Far be it from me to project onto you what I think you may have meant. I'd really rather you tell us.

ronpage80
ronpage80

@ray.stern 1. The total value of the energy that a typical solar customer gives to APS is greater than the total value of the energy that same customer takes back (without charge in either direction).  In addition, the typical customer buys more energy from APS at the "going rate".  However, if a customer produces more total energy than they use in a year, they get pennies on the dollar of its value.

2. Solar customers help reduce APS peak load capacity requirement, which should reduce energy cost for everyone.

3.  You would be believing incorrectly

4.  Those panels on a residential roof ARE a power plant.  In general distributed energy production is more efficient, however solar produces less when it is cloudy, which could lead to being less help than they normally are... not the same as solar causing blackouts as you imply.


marcy
marcy

@ray.stern 

You confuse solar peak production with peak demand.

Solar continues to produce substantial amounts of power during the utilitity's peak demand period in the summer.   That the panels aren't producing 100% of their rated power at 7pm doesn't mean they aren't producing power that is replacing peak demand power.

Solar users also tend to NOT have a spike in summer consumption at 5pm because they don't turn their thermostats up during the day and down when they get home after work. 


emmdeecee
emmdeecee

@ray.stern Peak demand according to SRP from the months of  May to October runs from 1pm to 8 pm.

ray.stern
ray.stern moderator

Your analysis is somewhat flawed, Marcy. 1. On whether solar customers are paid "retail:" SolarCity and SunRun, as I showed here, agree with APS that's basically what happens.

2. Solar peak production is about 12:30. Peak energy demand in Phoenix is about 5-7 pm.

3. If the juice generated by residential solar panels displaces another type of generation source, it could be argued that the utility should pay no more for the home-panel electricity as for the electricity it displaces. I have not confirmed this as I sit here, but I believe that most of the time, that would be less than what APS pays the solar customers for their energy.

4. Too few power plants could mean the utility company isn't growing as much as the shareholders would like, as you point out. But too few power plants when you need them could also result in blackouts for customers, as happened in California.

marcy
marcy

@ray.stern 

You and ExpertShot are talking about two different things.  The "other producers" that ExpertShot is talking about is what utilities pay other utilities for peak power.

During periods of peak demand a utility is often forced to purchase power from other providers who charge a market rate which is often in excess of what the utility is permitted to charge its customers.

In the case of APS, if Palo Verde loses one of its units in the summer they are force to start up power generation units that are very expensive in order to meet demand or purchase excess power from other utilities at peak rates.

That last kw of peak power APS supplies is their most expensive power and during the summer is almost always more costly than what customers are paying.

Solar reduces that peak power and replaces the most expensive power APS buys or produces, saving APS money.  However, it also costs APS revenue as the excess power from one person flows to their neighbor's homes.  In addition, while it saves APS money, it reduces their need for additional generating capacity and their rates are based in part on a return on their capital expenditures.  Fewer power plants means less capital spent equals less profit.

Regulators need to understand that while APS is guaranteed a return on their investment, they are not guaranteed that their profits will increase every year.  In fact it should be considered a good thing if their capital needs decline, which would lead to lowered profits and lowered customer rates in the long run.



arizonaeagletarian
arizonaeagletarian

@ray.stern Who said it was "strictly negative?" Certainly not me. Other than alluding to an intent to provoke something, you've clarified nothing.

 
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