Arizona Corporation Commission votes to end net metering

The Arizona Corporation Commission voted recently to change the way distributed generation is compensated in the state, promoting equity to all renewable energy customers and doing away with net metering.

After a three-year exploration into the cost and value of solar technology as well as input from a broad coalition of solar, utility, consumer advocates, the Commission voted four to one in favor of the new methodologies.

Under the former net metering rules, which were adopted in 2009, customers were compensated for the electricity they produced at its retail price. Customers received credit on monthly bills for each kilowatt-hour from solar panels that went to the grid. Those credits then offset the power the customer pulls from the grid.

Administrative Law Judge Teena Jibilian suggested that utility companies purchase solar electricity at a rate based on how much the company saves in costs such as infrastructure, building plants and fuel.

Under the new rules, the Resource Comparison Proxy (RCP), which takes into account a five-year average of what utility companies pay large-scale plants for solar energy, will be used to determine rates in current rate cases. The RCP or an avoided cost methodology that uses five-year forecasting will be employed in future cases.

The new rule will lower the amount utility companies pay customers for solar energy. Representatives from Vote Solar and the Alliance for Solar Choice said the payment would be reduced by approximately 30 percent, although other groups disagreed with that number. The commission said it did not want the payment to be reduced by more than 10 percent in a year.

Customers who are compensated according to the new rule will have their rate locked in for 10 years.

“I think we’ve accomplished something pretty historic today,” Commission Chairman Doug Little said. “While I will tell you that perhaps the decision we’ve come to today is not a perfect decision, it is definitely a step in the right direction.”

The decision will not affect current customers who produce solar energy for 20 years from the date the connected to the grid.

“Existing solar customers can rest assured that their investment is safe,” Commissioner Andy Tobin said. “Our decision recognizes those customers while taking the next step by determining rates which take into account advancements in solar and other renewable technology which helps us push forward proactively.”

The new rules will only affect energy that customers send to the grid. They still will be able to use energy their panels produce without having to purchase it from utility companies.

Utilities will still go through a rate case before the new rates are adopted.