AZ regulators adopt $5 a month Solar Fee

[MishMouse]

I do not know where I can post this, so I will post it here since it directly effects green technology.

(broken link removed to http://news.yahoo.com/arizona-regulators-adopt-5-monthly-solar-fee-022306910--finance.html)

Arizona regulators on Thursday voted to adopt a roughly $5 monthly fee for customers of the state's largest utility who install rooftop solar panels in a move that had the solar industry declaring victory over what it saw as an effort to topple its business.
. . .
According to the story Arizona Public Service sought a monthly rate increase for solar customers of $50 to $100.
...
Under the current system, homeowners with solar panels are able to cut their bills by selling excess power at full retail price back to APS in a practice called "net metering." Combined with using the power from the panels themselves, net metering can cut customer bills by about two-thirds.

So is this the future of the green industry?
Regulators adding fees so that the electric companies can make up their lost revenue.
Yes right now it is only $5, but that sure doesn't mean that it is going to stay that way, all the AZ Public Services need to do is get the regulators in their back pocket and the fee will skyrocket.
What will happen if other states adopt the same policy?

I thought that the government supported green technology and the reduction of green house gasses?
I do not think this was a victory for the Solar Industry, yes they got the fees reduced, but no where in the story did it say that those $5 fees are not going to change in the future.

In my opinion this sets a precedent that going green can be regulated by fees.

 

[Jags]

I understand your concerns - and now at $5.00 it is no big deal. On the flip side - you are using "their" wires. They can't be maintained for free, but I would think that the "connection" charge on most bills would cover that.

 

[jebatty]

We may be using "their" wires, but we also are saving them money by distributed generation at peak times, reducing their need to add peak power; also reducing their need to build additional power plants; also reducing their need to beef up their distribution lines. Big Power is scared stiff, it sees the end game, and it is not pretty for fossil fuel electric generation. This is about killing green power and ensuring the continued stuffing of profits in the pockets of Big Power, Big Oil, Big Coal, Big Natural Gas, etc.

 

[EatenByLimestone]

It's not scared stiff. All they need to do is lobby for subsidies to be decreased. If Govco wasn't paying people to go Solar many of the panels would not be installed.

 

[jebatty]

Surely you jest. The oil industry has been the benefactor of some of the largest and continuing subsidies, incentives, and tax breaks of any industry, and it has no reason to cry foul over subsidies, incentives and tax breaks to other energy producers, especially those that don't poison the world in which we live.

 

[EatenByLimestone]

Do you feel that it matters to them that they are receiving subsidies too? The economy would tank without oil. Not so with the solar industry. In fact, the solar industry would tank without the products and energy that oil provides.

I have nothing against solar. I just don't think they are as scared as you think they are.

Matt

 

[woodgeek]

There are many 'they's. The coal industry is struggling in many ways, and could (easily) cease to exist in the next 10-20 years. The gas industry is struggling to develop new supplies, deal with anti-frackers, etc but have guaranteed customers as a bridge fuel for decades. The oil cos are fat and happy. Their volumes might be flat or falling, but relative to the prices in the 90s, they have a great business model.

For the elec utils, its a highly regulated business that is currently living in 'interesting times'. Solar is not an imminent threat to provide 100% distributed local supply, but does significantly alter their operational modes by peak trimming, which can hurt the profits of some suppliers (with a lot of peaker capacity). I think they are scared, not of solar per se, but of how to navigate their existing generation fleet (with enormous sunk costs and carbon liabilites) to a new fleet, while surviving on very thin (and regulated) margins.

 

[Frozen Canuck]

Big power generation is not scared of solar…they just have not found a way to successfully integrate solar….yet. Currently it creates more problems than it solves. Like so many other areas this one requires some tech leaps to make it viable. Until then we burn fossil like it or not & "they" all know it.

 

[jebatty]

... is not scared of solar…they just have not found a way to successfully integrate solar….

I read this to mean Big Power has not yet found a way to control and monopolize solar for its profit and to mean not yet found a way to profit from distributed generation.

 

[EatenByLimestone]

Would you be against Big Power getting into solar?

 

[Where2]

I think they are scared, not of solar per se, but of how to navigate their existing generation fleet (with enormous sunk costs and carbon liabilites) to a new fleet, while surviving on very thin (and regulated) margins.

Thin margins? How about 10%-11% profit on a base of 4.6 million customers. The stock holders for my PoCo are not hurting.

Would you be against Big Power getting into solar?

In my state Big Power already has 110MW worth of solar driven generation. Although the fuel cost for their solar generation is $0/kWh, they still charge customers $0.025 per kWh fuel charge for every kWh it generates.

 

[jebatty]

Big Power can and is into solar on an ever increasing scale.

Distributed generation shakes up this century-old model by shifting control of electricity from utilities to smaller developers, communities or individuals, who produce power onsite and rely less on traditional grid infrastructure to keep the lights on. This, in turn, reduces the returns that utilities collect.

Big Power Solar

(broken link removed to http://www.duke-energy.com/environment/renewable-standards.asp) has been a leader in Big Power support of solar. (broken link removed to http://www.duke-energy.com/environment/renewable-standards.asp) Germany is a world leader in distributed generation and private ownership of solar electric systems.

BTW, Arizona Public Service electric utility spent more than $4 million to get the fee assessed. A problem with Big Power is that some of its members, like APS, are addicted to their entitlement: entitled to their monopoly, entitled to control the market, entitled to price control, entitled to a guaranteed return on investment and profits. Much of the public utility sector remains rooted on an outdated business model. It is like the horse and buggy industry trying to figure out how to deal with the new fangled automobile, and much of Big Power's strategy, like that of APS, is to cripple solar rather than join the ride to a brighter and cleaner future for all living things.

 

[woodgeek]

Thin margins? How about 10%-11% profit on a base of 4.6 million customers. The stock holders for my PoCo are not hurting.

Ok, In some months I pay my elec co $60 to run all the appliances and a little AC/heat in my house. In the same month I pay Comcast >$60 for high speed internet access...blips of data on a wire. What is their margin? This (old) link suggests a profit margin of 70%! (broken link removed to http://www.freepress.net/blog/2009/11/24)
Hi--speed in the EU costs more like $15-20/mo (and is faster). I guess the US is a more efficient market.

Both firms have a near monopolistic business running wires into my house. I am a lot more angered by the latter than the former. I would think most of the stockholders in your power co would be grannies, not fat cats lighting cigars with $20 bills.

What should their profit margin be in your opinion to not be highway robbery? With the enormous sunk costs your power co has, which are typically all debt financed, how big is that profit relative to their debt service and annual maintenance costs?

 

[jebatty]

A little off the wall, I think, to support Big Power because grannies may hold some stock. If we want welfare for grannies because they need income, then make it welfare, but subsidize Big Power with monopolistic regulation so that grannies have income, really? Lame.

 

[woodgeek]

Not lame. I am in fact saying you are missing the forest for the trees. 10% profit margin is 'outrageous' in a business with highly volatile fuel prices (costs), huge infrastructure and maintenance costs (that need to be insured against storms) AND that are some of the most regulated businesses out there? Really?

All y'all are missing some pretty outrageous stuff if you think THAT is an outrage. You are only mad at them because you have to write them a check every month.

Go look up how hedge funds work, military contracts get doled out, Washington lobbyist firms, you name it. You're all outraged about some guys taking $5 from you every month, while pretty much every other company you deal with is skimming a bigger profit margin.

 

[Doug MacIVER]

A little off the wall, I think, to support Big Power because grannies may hold some stock. If we want welfare for grannies because they need income, then make it welfare, but subsidize Big Power with monopolistic regulation so that grannies have income, really? Lame.

of course there are the 30 something grannies that have these companies in their ira, 401k, or general account. the great grannie unions in there pension funds and even grt.grt. grannies, the states, in their pensions. oh well.

 

[EatenByLimestone]

The best way to keep money from Big Power is to lower energy usage. It's not a bad philosophy for the rest of life either.

 

[woodgeek]

I am aok with Jim shaking his fist at the Power Cos if he wants. He has the lowest kWh usage of anyone I know AND he's got the biggest PV array.

 

[EatenByLimestone]

Edit: July of 2012 I finished off the attic of the house adding almost 50% to the heated/conditioned space of the house.

I think the big jump for October 2012 was switching the electric dryer to gas.

In July of '11 I switched hot water to gas.

 

[DBoon]

Since the "Great Recession", electricity usage is flat or declining for most major utilities. Yet, utilities only make ever-increasing profits by selling more electricity (i.e. regulated profits are tied to amount of electricity used). Given the investor-owned utilities are listed on stock exchanges and their stock is held by those who want to see an ever-increasing stock price, it is not hard to see why investor-owned utilities are trying to come up with ways to make more money in a time of flat demand. One way is to increase flat-rate service charges, and a solar charge is one way to do that. Expect "flat-rate" fees to increase in the future, even if you don't have a solar system, since there is no more ways to make profit off a variable fee rate structure in a declining demand environment - solar PV interconnection charges are just the first wave.

Having worked closely with investor-owned utilities (IOUs) in a previous job ~15 years ago, I can tell you that the staff and management of these companies are not the type to want to re-invent their business model. If it never changed, that would make them the most happy. This is not bad, in some ways (little change should equal better reliability). But it makes it very hard to accomplish change of any kind. Also, since de-regulation, the IOUs are keeping more revenue for profit and reducing long-term investment and maintenance - Northeast Utilities in Connecticut is a classic example of a completely mismanaged IOU in which their ratepayers pay high rates and get nothing for it. Literally, every time CT has a storm, the power is out for days since there is no one left to fix anything when damage is widespread, and the idiotic managers seem incapable of planning for anything more than 1 day ahead. Now, these IOUs have no other way to cut costs, so enter the flat-rate service charge increase!

IOUs are also very threatened by distributed generation. Distributed generation, especially of clean power, is good for people as a whole (I know I'll get some pushback here from those who tell me how much of a premium the clean power costs to subsidize), but bad for IOUs, their stockholders, and the managers who get big bonuses for meeting or exceeding profit targets. Worse, asking ossified IOUs to embrace distributed generation in some new form of profit model is liking speaking Chinese to a Russian. Good luck. It's interesting to note that Municipal Utility Districts (MUDs) are more eager to embrace these changes since their customers want the changes and the MUDs are more responsive, overall, to the ratepayers since they don't have investors to answer to. Sacramento MUD (SMUD) is a great example of this. By the way, their rates are lower than the CA IOUs - coincidence? (broken link removed to https://www.smud.org/en/residential/customer-service/rate-information/2013-residential-rate-proposal/documents/2013-Rate-Proposal-factsheet.pdf)

SMUD also generates a lot of "clean power" and seemingly doesn't have the issues of integrating distributed generation into its grid. Why? Probably because distributed generation is a net benefit and because they have a management structure and staff that makes it a good thing to do.

For those who would offer criticism that solar PV is too heavily subsidized, I would offer back that those who are purchasing solar PV systems are assuming a far higher personal cost for their electricity while providing a clean power benefit to others who are not making those personal investments. In essence, these solar PV pioneers are making a personal investment of 50% of the cost of clean power so that others don't have to make as large an investment.

Example - A 5kW solar PV system that generates 6000 kWh of electricity a year for 20 years that has an installed cost (net with subsidies) of $3/watt and $5000 of maintenance and replacements over that time period (probably a pretty reasonable average) averages out to 17 cents/kWh - more than would be paid for bulk power from a utility (separate from the flat-rate monthly fees). For me, the premium would be about 7 cents/kWh over a bulk power utility purchase.

 

[jebatty]

Go look up how hedge funds work, military contracts get doled out, Washington lobbyist firms, you name it. You're all outraged about some guys taking $5 from you every month, while pretty much every other company you deal with is skimming a bigger profit margin.

This looks like classic bate and switch, or rather raise another issue to distract from the current issue. No logic at all on this one.

$5/month?

APS asked the regulators in July to add $50 to $100 to the monthly bills of new solar customers.

APS now has its foot in the door, and it will be much easier to get fee increases in the future. This isn't about $5/month. It's about clean energy that benefits all of us.

 

[jebatty]

The best way to keep money from Big Power is to lower energy usage.

True, but as more and more people pursue conservation, Big Power just would seek increases in fixed monthly charges. The bulk, if not all of my solar, will simply reduce my usage, just like conservation, which I also pursue all the time. And our utility just raised its monthly fixed charge for everyone by 16%/month. The consumer is caught between a rock and a hard place. Lower usage, fees go up. If you want to use solar and do the right thing for all living creatures, utility wants more fees from you.

 

[btuser]

If solar could pay it's own way Big Biz would jump at it in a heartbeat. But it can't, not yet.

Oil and gas subsidies pay for themselves through royalties. Coal and nuclear is dying because of market forces, specifically the low cost of NG (and the comparably low capital cost for NG power plants), not because reweables are taking bites of market share. Germany is not a success story, unless you consider $.32/kwh vs $.13kwh a good direction. Germans pay 3x the cost per kwh as Americans.

 

[woodgeek]

This looks like classic bate and switch, or rather raise another issue to distract from the current issue. No logic at all on this one.

$5/month?

Did get OT, sorry, not trying to bait and switch you. Where2 is outraged about 10% profits. 10%! What is 10% of your electric bill? Maybe $5?

 

[woodgeek]

True, but as more and more people pursue conservation, Big Power just would seek increases in fixed monthly charges. The bulk, if not all of my solar, will simply reduce my usage, just like conservation, which I also pursue all the time. And our utility just raised its monthly fixed charge for everyone by 16%/month. The consumer is caught between a rock and a hard place. Lower usage, fees go up. If you want to use solar and do the right thing for all living creatures, utility wants more fees from you.

16% increase in monthly fees is what, $1? $2? IF someone showed you that your utility spent 90% of your bill on maintaining equipment, fuel, and payroll for its workers, would you still be upset about it? If usage goes down due to eff and PV, and the utility downsizes, their costs go down too, so you think they will increase fees to maintain the same revenue?