The Arizona Corporation Commission (ACC) approved both a significant rate hike and a 50 percent increase in the mandatory monthly basic service charge for UniSource Energy‘s 95,000 Arizona customers (Docket No. E-04204A-15-0142) on August 11. Meanwhile, proposed fee changes for customer-operators of rooftop solar have been postponed.
The average bills of residential users with typical usage are expected to increase by about $4 per month under the revised rates, UniSource said. The rates will be introduced in two steps. Customers will begin paying higher charges by September 1 – including a basic service charge of $15 for most residential customers.
New pricing plans
In addition, new pricing plans are expected to be available no later than March 2017. When those new plans become available, all residential and small commercial customers will have four options: a traditional rate, a demand rate, a time-of-use (TOU) rate, or a TOU demand rate.
TOU plans charge more for consumption during peak usage periods. Demand rates combine lower kilowatt-hour (kWh) charges with a demand charge based on a customer’s highest hourly energy use.
Customers who select a TOU or demand rate will pay reduced basic service charges of $12, an incentive designed to encourage use of the new pricing plans.
However, consumer advocates are concerned about how the higher electric rates will affect thousands of residential customers. Diane Brown, director of the Arizona Public Interest Research Group, said the new rates punish customers who try to use less power, according to a report on Public News Service.
According to Brown, making electricity less affordable – particularly in Arizona’s extreme summer climate – could become a threat to people’s health and safety. She said that low- and fixed-income customers are particularly vulnerable to rate increases.
Indeed, Brown is concerned that the higher rate structure approved for UniSource could serve as a model for the state’s larger utilities, including Tucson Electric Power and Arizona Public Service. Both companies have rate cases pending before state regulators.
The Arizona Corporation Commission called the rate increases “minimal.”
Meanwhile, in the same case, the ACC postponed its consideration of proposed changes for customers with rooftop solar arrays. UniSource is seeking approval to require new solar customers to use demand rates, “which more accurately reflect the costs incurred to serve them,” the utility said. The company also has proposed a new “net metering” plan to provide market-based compensation for excess energy from rooftop solar arrays. Existing solar customers would be grandfathered and would not be subject to those requirements.
The vote by the ACC is aligned with an Administrative Law Judge’s recommendation “to hold off on any decision that would impact solar customers until further analysis on the value of solar is complete,” the commission stated.
‘Value of Solar’ docket
Currently, the ACC has a Value of Solar docket open, intended to measure the costs and benefits of rooftop solar for all Arizona utility customers.
In its final ruling, the commission called for the Value of Solar docket to be concluded by October, and the final decision on net metering for UniSource Energy customers to be concluded by March 2017.
Nate Watters, representative of the advocacy group, Energy Freedom Coalition, responded to the ACC’s decision. “We are encouraged that the ACC largely agreed with the ALJ’s recommendation. The commission recognized that demand charges are not in the best interest of UniSource customers, and that any change to net metering without further analysis of solar would be imprudent. We look forward to a data-driven process in the Value of Solar docket that will account for all of the benefits rooftop solar provides to the grid and all ratepayers.”
For its part, UniSource commented, “The proposed changes would help ensure that solar users pay a fair price for their extensive use of the local electrical system. The ACC will address them after the conclusion of a separate commission proceeding focused on rooftop solar power. That proceeding is expected to conclude later this year.”
The ACC did approve a new option for solar users that provides bill credit-based compensation for solar production as an alternative to traditional net metering. More details about the plan will be available when the program is finalized later this year.