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Giffords: Don't let the sun set on solar for schools

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Guest opinion

Giffords: Don't let the sun set on solar for schools

Those of us who live in Arizona know that if there's one resource we have in abundance, it is sunlight. Phoenix and Tucson, two of the sunniest cities in the nation, receive sunshine for more than 80 percent of the day between sunrise and sunset, more than 300 days a year.

Given this plentiful resource, it only seems natural that we should harness its energy to power our homes, schools and businesses.

Unfortunately, a recent Arizona state court ruling has stated that companies that offer schools a financing method called the solar service agreement should be regulated as public utilities.

This case will come before the Arizona Corporation Commission on June 30 and it is critical to the future of state's entire solar industry because it will effectively decide whether schools can afford to utilize solar energy and save money on their electricity bills.

The solar service agreement, known by the acronym SSA, is a financing tool that allows schools to reap the financial benefits of solar power without having to pay any up-front costs. SSAs create an agreement between a company and customer, in which the company designs, installs, maintains and finances solar equipment at no up-front cost to the customer. In return, the company takes advantage of available tax incentives and passes on the savings to the school.

Currently, the federal tax incentives that make solar affordable cannot be claimed by non-profit entities, such as schools, because they have no tax burden.

Because solar companies compete to provide SSAs, schools are in a position to negotiate contracts that can bring significant cost savings. An increasing number of school districts are realizing the many benefits solar can offer. School buildings are used most heavily during the day, during the same hours that solar energy generation is highest. Solar power also provides price certainty over the long-term, a valuable advantage for cash-strapped schools that need every extra penny for their educational mission.

However, without SSAs, there is no way for schools to benefit from tax credits and implement solar in an affordable manner. It makes very little sense to regulate private solar energy companies in the same manner as utilities. Utility companies are regulated because they don't compete with each other and there must be a check on their monopoly power in order to protect consumers.

In contrast, there are many solar providers that compete with each other. It is this fierce competition that enabled the market-based pricing which allowed schools to save money in the first place. Arizona has never been a state that stifled the free market at the expense of its schools, businesses or residents - and this is not the time to start.

Deciding to regulate SSA providers as public utilities would make the price of deploying solar on schools throughout the state financially untenable. If it is decided that this business model should be regulated, Arizona will be the only state in the nation to do so.

For these reasons, I hope the Arizona Corporation Commission will allow schools to enter into SSAs without acquiring a utility designation. In addition,  I have drafted legislation that would allow schools to finance a solar installation through their existing tax-exempt bonding authority and to also enter an SSA by allowing an exemption from the anti-arbitrage provisions in federal tax code.

Publically owned utilities are currently granted just such an exemption to enter into similar contracting agreements. My Solar Schools Act would simply extend that exemption to local government entities.

Two members of the ACC, Gary Pierce and Kris Mayes, proposed amendments to the ruling made earlier this year. It was a smart move and my hope is that their colleagues will follow suit. We must continue to develop the state's solar industry to harness our abundant natural resources, create jobs, grow our economy and transition to using greater amounts of clean energy. We can only do that by telling the world that Arizona is open for solar business and supportive of the solar energy industry.

Gabrielle Giffords represented Arizona’s 8th Congressional District from 2007 to 2012, when she resigned to focus on her recovery after being wounded in the Jan. 8, 2011 shootings. She founded Americans for Responsible Solutions, along with husband Mark Kelly, to focus on preventing gun violence.

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