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Utilities and solar advocates clash over Corporation Comission races

This November, three of the five seats on the Arizona Corporation Commission are up for grabs. While the state regulatory body is not as well known as other bodies — such as the governorship, legislature or judiciary — the decisions of its members regulate energy production and expenses for utilities. The ACC has perhaps the biggest impact on your monthly bills of any state agency.

Arizona is among 13 states that vote for its own utility regulators in regular elections. Voters will choose from five candidates — two Democrats and three Republicans — to fill three seats. Some of the regulations set by the commission include adjustment of monthly payments for electricity and water, public safety requirements regarding sanitation and waste disposal and the setting of rates for users of solar power in the state.

The burgeoning solar power industry has become an important subject for Arizona consumers, regulators and utility companies. It has also raised many questions for the future of solar companies and utility corporations with few simple answers. One especially complicated topic is the practice of solar users reselling the surplus energy they generate. This activity, known as net metering, has become a subject of public controversy between solar users and utility companies.

A battle between industries

The current rules on net metering allow solar users to sell back the excess energy they produce from their own home to utility companies. Advocates for renewable energy argue that this offsets the expensive costs of installing solar panels and encourages more customers to use solar power.

“Net metering is a very important policy that has led to AZ becoming a leader in solar power production,” said Kris Mayes, the chairwoman of Solar Strong America, an advocacy group working to educate voters about the potential benefits of solar power. She is also a former member of the ACC who played a major role in the passage of the current net metering rules.

“Arizona is now third in the U.S. in total amount of solar deployed. We have over 65,000 systems across the state and 10,000 solar-related jobs,” said Mayes. A large part of this industry dominance, she claims, comes from the favorable rules that allow solar users to resell their energy at retail price.

Utility companies, however, point out that the current net metering laws were built for a different kind of solar market. The industry has changed significantly since 2009 when the current rules were implemented, according to Greg Bernosky of Arizona Public Service, the largest electric utility in the state.

Bernosky agrees that favorable net metering was important for the solar industry in its earlier stages, but said that as the industry expanded, more choices became available and installment became cheaper. He claims that laws which require utility companies to purchase power at retail price from users has resulted in unintended consequences. By reducing the payments that utility companies need to make to solar users, Bernosky said that traditional utility companies can have more flexibility to invest in more energy-efficient technologies without shifting charges to non-solar users.

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“Current net metering rules are creating a cost shift to other residential customers,” he said. “We need to modify the rules because of the pressure it’s putting on non-solar users. The current rules are not a sustainable, long-term solution to ensuring the growth of the solar industry.”

Bernowsky is quick to point out the major holdings that APS has in solar power. It has over a gigawatt of solar energy in its energy portfolio and has investments in solar power exceeding $2 billion. To help solar power flourish, according to him, requires innovative approaches to charging and rewarding customers rather than favorable net metering rules. One of these approaches is something solar power advocates have consistently voiced opposition to: demand rates.

Demand rates base monthly charges on a consumer’s peak level of power usage. According to advocates of utility companies, these rates can more accurately reflect which homes are placing pressure on the power grid. This can then allow utility companies to charge both solar and non-solar users more fairly.

When combining demand rates with new innovations, like in-home batteries that store and release energy throughout the day, advocates claim that demand charges can allow solar users to use their own energy without shifting costs throughout the larger power grid. Bernowsky points out that APS already charges several thousand customers these demand rates.

“We come from a position of experience with demand charges. Customers can still save money on plans like that,” he said. “During a period of time when energy is peaking, you can manage your consumption and save power in a way that’s much more efficient than under the current system.”

But solar advocates aren’t convinced. Mayes dismisses demand charges as hugely problematic to both solar and non-solar users in the state.

“Demand charges are an unprecedented scheme being proposed by utilities that would impose a new charge based on the apex of utility charge,” she said. Her criticism echoes the campaign themes of both Democratic candidates running for seats on the commission. Tom Chabin and Bill Mundell claim that demand charges, in addition to being burdensome to companies, can be overly disruptive to a growing solar industry that’s cutting into the market initially held by utility companies.

Public debates and private interests

This debate over net metering, demand charges and pay rates stretches back years in Arizona and throughout the nation. As solar companies continue to expand and the market for energy services gets more crowded, the issue of who to fund and how much is going to get more controversial. As a result, the ACC has allowed prominent stakeholders like solar companies, utility organizations and consumer advocacy groups to contribute facts to a public docket on the issue of solar power, energy and net metering.

“In deciding issues like whether solar users are charged a differential rate, or what the value of solar power is, the commission takes on a quasi-judicial role,” said Angie Holdsworth, a spokeswoman for the ACC. “The commission can’t make any decisions outside the public eye, so all of this is a subject of public debate.”

In an attempt to appease both solar companies and major utility companies, the commission has sought information from a variety of sources in public meetings before making any major decisions. This includes conflicting information from APS and SSA. As a result, the commissioners have a variety of choices moving forward.

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But not all relevant information is presented to the public. Both traditional utility and emerging solar companies have vast financial stakes in the direction of the energy industry of Arizona, with holdings amounting to billions of dollars. This has resulted in large amounts of anonymous outside spending and advocacy for different candidates. This shifting of millions of dollars culminated in Republican commissioner Robert Burns issuing a subpoena of APS’s parent company, Pinnacle West, to disclose whether it provided $3.2 million of “dark money” for two Republican candidates running in 2012.

But Robert Burns himself, and other candidates this election season, have also received large amounts of funding from solar advocates, albeit from disclosed sources. Burns has gotten nearly $1 million over his career as a commissioner from SolarCity. Mayes, who is also chairwoman of the advocacy group Save our AZ Solar, has pointed out that her organization has endorsed Robert Burns and the two Democrats, Mundell and Chabin. Major utility companies, on the other hand, have voiced their support for Robert Burns and the other two Republican candidates, Andy Tobin and Boyd Dunn.

The candidates up for election have either remained silent on the issue of solar power or have voiced some form of support for either maintaining net metering rates for current customers or improving them. But given the shifting nature of the energy industry, the cyclical movement of gas prices and the presence of outside funding from interest groups, voters should remain skeptical of statements made by commissioners before any final decisions are reached.

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Dennis Schroeder/National Renewable Energy Laboratory

Candidates for the Arizona Corporation Commission

Robert Burns (R) is running for his second term on the commission. Burns has experience as a former Arizona state senator and representative. He’s criticized the influence of what he calls large, undisclosed investments of “dark money” from regulated state utility companies (like Arizona Public Service) to influence the outcome of commissioner elections. This political spending can include funding for television and online advertising, mailing flyers and robocalls to potential voters. He’s backed this election by one of the fastest-expanding solar companies in Arizona, SolarCity. In addition to a formal endorsement, SolarCity has also paid staffers to call and mail potential supporters for this election.

Andy Tobin (R), the other incumbent for the race, was appointed by Gov. Doug Ducey in January of 2016. His experience includes serving in the Arizona State House of Representatives for eight years. He was selected to replace commission member Susan Bitter Smith (R), who, as a representative of Southwest Cable Communications Association, stepped down in the face of accusations of a conflict of interest. But Tobin himself has a son-in-law who works for SolarCity in Arizona, signaling his own conflict of interest. As a result, he’s said he will not vote or speak on any cases regarding large utility or solar companies.

Tom Chabin (D) has experience as a member of the Arizona State House of Representatives and ombudsman for the Northern Arizona Council or Governments Area Agency on Aging. He’s voiced support for policies that make it easier for consumers to pay, install and maintain solar power for their own houses. In addition to praising solar power as a economically feasible and environmentally healthy energy option, he has criticized larger utility companies for political spending and “exorbitant salaries for executives.” Major solar power companies have endorsed him across the state, including Solar Strong America and SolarCity.

William "Bill" Mundell (D) brings experience as a former commissioner who served on the Corporation Commission for two consecutive terms from 1999 to 2009. Before working at the commission, his experience includes serving as member of the Arizona State House of Representatives and a presiding judge in the Chandler Municipal Court. His campaign themes involve vocal opposition to policies recommended by major utility companies, like increased demand charges and reductions in net metering. In addition to this, he’s also a proponent for increased solar power use and has been endorsed by major solar companies.

Boyd Dunnis (R) the only Republican candidate who is not also an incumbent. He was appointed by Gov. Jan Brewer to serve as a judge on the Maricopa County Superior Court in 2011. Before that he served as the mayor of Chandler from 2002 to 2011. Currently, he’s the treasurer of the Arizona Judges Association. He says that current system of net metering credit for solar users should be “grandfathered,” protecting solar users who’ve already installed panels from any potential rate increases and allowing them to continue reselling their energy back to the grid. This is the same position several major utility companies have proposed and is deemed a “bare minimum” starting point by solar power advocates.