Sparks Fly in New Arizona Solar-Energy-Initiative Campaign

A new citizens' initiative launched last week aims to help solar-power companies and customers by guaranteeing lucrative power-purchase rates for six years.

But don't expect a clear, sunny picture of the facts during what is sure to be a nasty fight in the next several months — the truth is going to be obscured by clouds of money. Sparks are already flying.

Under the new initiative, that rate would be guaranteed until January 1, 2023. Until then, utilities could no longer add the demand fees on the bills of solar customers.

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The new initiative filed with the state Secretary of State's Office last week is called Yes on AZ Solar and will be backed by the new political-action committee, Energy Choice for America.

Kris Mayes, formerly an Arizona Corporation Commissioner, Arizona Republic reporter, and aide to ex-Governor Janet Napolitano, is chair of the new campaign, which aims to gather 225,000 valid signatures by July to get on the November ballot. If voters approve, the initiative will become law as a constitutional amendment.

On Mayes' side is SolarCity and other solar-power companies, plus their customers. They're being battered by utilities that want to place extra charges on solar customers that reduce the payments they receive for the power they produce from their panels. Their initiative would ban utilities from levying those extra charges and ensure that solar customers are paid full retail value for their contribution to the grid.

In the other corner are electric utilities. Arizona Public Service and Tucson Electric Power are two well-known utilities regulated by the Arizona Corporation Commission that will be affected should voters approve the initiative. Salt River Project isn't targeted in the measure, and apparently won't be affected.

Which side can the public trust? Possibly neither.

APS has been widely criticized by solar advocates and foes of "dark money" for contributing to anti-solar ads produced by the conservative group 60 Plus, and also for allegedly donating money to the campaigns of two new Commission members who are perceived as anti-solar, Tom Forese and Doug Little. As reported last week, Commissioner Bob Burns vows to abstain on any votes dealing with APS until the company divulges details of its political spending. So far, APS has declined Burns' request.

When New Times asked APS about its funding of 60 Plus in 2013, the company fibbed and said it wasn't funding it. Then, a few months later, APS admitted it had made donations to the group. Though APS, for ratepayers in its territory, is a state-approved monopoly regulated by the Corporation Commission, it's owned by Pinnacle West, a public company that must provide a healthy return to investors. Rooftop solar's subsidies have been a thorn in the side of APS and other utilities that see the technology as a threat to the firms' long-term health.

The rooftop solar companies are in it for the money, too. Their message to the public must also be viewed with skepticism.

Rooftop solar is too expensive to survive on its own and must be subsidized so customers can afford it. The federal government pays 30 percent of the installation costs, and although generous up-front subsidies by utilities have been scaled back, solar customers enjoy the retail-rate subsidy — called net-metering — for the electricity they send to the grid.

Under the new initiative, that rate would be guaranteed until January 1, 2023. Until then, utilities could no longer add the demand fees on the bills of solar customers.

Some studies have shown that the net-metering fees paid to solar customers are funded by a utility's non-solar customers. The staff of the Corporation Commissions of Arizona and Nevada independently conclude that a "cost shift" occurs because of the policy and that the effect becomes more pronounced over time — that is, the more solar customers getting net-metering payments, the more non-solar customers have to pay to subsidize the program.

But the initiative's chairwoman, Mayes, told a reporter on Friday that the idea of a subsidized cost shift is "a bunch of hooey."

"The argument that APS and other utilities make that non-solar customers are subsidizing solar customers is mythology and has been completely debunked in all the evidence that's been presented in all the cases that are currently going on before the corporation commission," Mayes said.

While there's room for opinion in part of her statement, it's simply not the case that "all" evidence for the cost shift has been "completely debunked." Reached on Monday, Mayes admits her statement isn't accurate.

"Maybe I should have said all the credible evidence," she says.

Mayes, who's taking time off from her teaching job at Arizona State University to work for the campaign, says the studies showing a cost shift were funded by utilities and are biased, while "unbiased" studies came to the opposite conclusion. Asked about the conclusion by the staff of the Arizona Corporation Commission, Mayes says, "I disagree with the conclusion, which wasn't based on an independent study."

Mayes says rooftop solar causes an "immediate benefit" in that it stalls the building of new power plants and transmission lines and that power bills would be even higher these days if not for rooftop power.

Somehow in the next few months, as the well-financed solar campaign uses its resources to grab the public's attention, voters will be asked to wade through the competing studies and campaign rhetoric and pick a side.

SolarCity, which probably will be be the prime financial backer of the initiative, referred questions about the measure to Mayes.

APS claims she's not being straight with the public.

According to Jim McDonald, spokesman for APS, Mayes' comment about the "mythology" of a cost shift from solar power is "completely untrue, and Kris Mayes knows it, as a former commissioner."

Joe Salkowski, spokesman for Tucson Electric, which, like APS, wants to charge its solar customers more money, also took issue with Mayes' statement. He says a lot of evidence has been filed with the Corporation Commission about the reality of cost shifts. Subsidizing rooftop-solar systems means the company has to put fewer resources into large-scale solar farms that are half the cost and save twice as much carbon dioxide from being pumped into the atmosphere.

"Were this initiative to succeed, we would be locking in subsidies that prevent utilities from investing our community's resources more cost-effectively," Salkowski says.

Mayes says people should look to a 2014 Nevada study that showed net metering provides a "net positive." That study concluded that non-solar customers didn't experience a "substantial cost shift to non-participants because of [net energy metering] going forward given the current and proposed reforms to the program."

However, the Nevada Public Utilities Commission found that non-solar customers subsidized solar customers to the tune of $16 million a year. Nevada's commission, acting on the information, placed a heavy demand fee on solar customers earlier this year, sparking a lawsuit, protests, and a citizens' initiative similar to the one just launched in Arizona.

Arizona's solar initiative received support today from the national Solar Energy Industries Association, which prepared a statement for New Times after it was forwarded the initiative's text.

"We support the direction this petition takes, and we look forward to seeing smart solar policies endorsed in a state that badly needs changes in its approach to rooftop solar," says SEIA spokesman Dan Whitten.

With the underpinnings of the net-metering argument so technical and complex, Arizonans are sure to hear a lot of heated rhetoric about this new initiative, especially with so much money on the line.

One fact seems to stand out: There really is a cost shift, at least in the short term.

Paul Thomsen, chair of the Nevada Public Utilities Commission, said in a Fortune Magazine article last week that people who deny that solar users are getting subsidized by non-solar ratepayers are similar to climate-change deniers.

Still, as the 2014 Nevada study that Mayes mentioned explains, the cost shift isn't "substantial" and, like Mayes says, ratepayers come out ahead in the long run.

However, the utilities have math on their side, as explained in a 2013 New Times article about net metering. If a large portion — say, 20 or 30 percent — of ratepayers were paid retail rates for electricity they sold to utilities, the scheme wouldn't work because utilities would pay out too much to solar customers.

Another problem is that when solar takes over a substantial portion of a grid's power, reliability becomes an issue because solar-power generation takes a dive when clouds move in. That's why California is considering partnering with another western grid: The state has so much solar power, it's risking blackouts this summer.

Mayes says too much solar in Arizona is a moot point because rooftop solar makes up less than 2 percent of electricity for ratepayers now. When the initiative ends the generous retail rate after six years, new technologies will be on line that will help with any problems from adding more solar in Arizona, she says.

Expect to hear a lot more in the coming months from Yes on AZ Solar and its opponents — just be prepared to do some homework to figure out who's right.

See below for text of Yes on AZ Solar initiative:

UPDATE 4-19: Energy Choice for America announces that it has received $3 million in initial funding, and that major funding was by SolarCity.
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Ray Stern has worked as a newspaper reporter in Arizona for more than two decades. He's won numerous awards for his reporting, including the Arizona Press Club's Don Bolles Award for Investigative Journalism.
Contact: Ray Stern