APS, solar companies clash over credits to customers
The state’s largest utility and companies that install solar panels are spending hundreds of thousands of dollars in a highstakes battle over how much customers should be paid for the power their panels produce.
As part of its strategy, Arizona Public Service Co. sent cash to two non-profit groups that support the utility’s goal to make solar customers pay higher bills.
Solar-panel companies have been equally aggressive, characterizing the utility as trying to “kill solar.”
APS’ marketing campaign includes its own television ads explaining its commitment to solar. The cash sent to the two non-profits
is helping to pay for ads and websites that use a more negative tone toward the solar industry.
For most of this year, APS and solar companies have battled over the utility’s proposal to change the rules for net metering, a system where utilities give solar customers credit for the electricity they send to the power grid.
That credit offsets the cost of the electricity they buy from the utility at night. APS’ proposed changes would add $50 to $100 to solar customers’ monthly bills, the company said.
APS says solar customers get too much credit for their excess power, which they say means solar customers push too much of the costs of maintaining the power grid to non-solar customers.
Solar representatives say the rules change would devastate the industry.
The state’s energy regulator, the Arizona Corporation Commission, is expected to begin hearings on the net-metering proposal in November.
The rooftop solar industry has grown at a breakneck pace in recent years, but industry representatives say the solar expansion will stall out if new customers can’t save any money by installing solar panels.
The campaigns have involved many of the state’s biggest political consultants, pollsters and advertising firms.
Major solar companies months ago began a marketing campaign to fight the proposed changes, which they see as a threat to the residential roof top-solar industry.
The changes APS proposes would erase the financial incentive for using solar, officials say. Campaigns by a solar industry-supported group said APS is attempting to “tax the sun.”
APS recently acknowledged to The Arizona Republic that it provided money to a Washington, D.C.-based conservative organization called 60 Plus, which focuses on seniors’ issues such as taxes, Social Security and Medicare.
It also gave money to another non-profit called Prosper, which was launched this year by Republican Kirk Adams, a former Arizona House speaker.
The non-profits have supported APS’ position in websites, online videos and television advertisements.
John Hatfield, APS vice president of communications, said the utility is contributing money to the non-profits, and potentially other groups, through political consultant Sean Noble and his firm, DC London.
“We needed to respond to these ridiculous assertions that we do not support solar,” Hatfield said, adding that APS does not agree with all political positions at 60 Plus and Prosper.
Early this year, APS initiated a series of meetings with solar companies and other interested parties to address net metering.
In March, California rooftop-installation companies SolarCity Corp. and Sunrun Inc., with other partners, formed TUSK, or “Tell Utilities Solar won’t be Killed.”
The group opposed changes to net metering even before APS formally submitted its proposed changes to the Corporation Commission, which approves rates and related policies for most of the state’s utilities.
TUSK began an online campaign to criticize APS. At first, a TUSK spokesman did not identify the solar companies behind the effort, but later confirmed their involvement. The group uses an elephant symbol in an appeal to conservatives. All five Corporation Commission members are Republican.
The companies, particularly SolarCity, control a large portion of the rooftop-solar market in Arizona, and their business has grown rapidly thanks to utilities’ incentives and their net-metering policies.
Industry fears
If solar customers didn’t get credit for their excess electricity, few likely would use solar, officials said.
Most new solar customers are installing the panels with leases, and with their new lower power bill and lease payment, they save from $5 to $10 a month, said Lyndon Rive, founder and CEOof SolarCity. Any additional cost to solar customers greater than a few dollars would prevent most people from using solar, he and other industry experts said.
Rive said a proposal from the Corporation Commission staff that would add about $2 a month to solar customers’ bills would be better than the $50 or more APS proposes, but the best option would be for regulators to wait and address the issue in two years when APS files its next rate case.
“A $2 fixed fee, if that were the action, the industry could survive,” he said. “It would be a hit, but the industry could survive and we could continue to grow the industry.”
Rive said he supports the tactics of TUSK, which have prompted thousands of letters and signatures in support of maintaining net metering to be filed at the commission.
“Our goal is to educate consumers that they do have a rightful alternative source of ener-
gy,” he said.
Rooftop-solar companies also contend that solar customers are saving utilities the cost of new power plants and power lines, and if anything should be compensated more.
APS-supported campaigns
Shortly after TUSK launched, 60 Plus began criticizing SolarCity and Sunrun, comparing them with Solyndra, the California solar company that took more than $500 million in federal assistance and then filed for bankruptcy.
Soon after, Prosper joined the debate on the side of APS. Prosper has been running television commercials calling for changes to net metering.
Money sent to non-profits is difficult to track in a timely fashion, because the Internal Revenue Service only requires non-profits to file annual reports. That can make the identity of their financial supporters unknown for long periods.
This is the first time APS has acknowledged it is contributing to the groups.
In July, APS officials suggested it was coincidental that they were paying Noble and that 60 Plus and Prosper were siding with the utility on net metering.
Noble did not return calls from The
Republic.
Adams said he formed Prosper to promote free-market principles. He would not acknowledge the group is getting money from APS, even though company officials confirmed contributing to the group.
Adams said Prosper has several donors, and that he did not form the group to work exclusively for APS. “That is categorically false in every respect,” he said. “Our organization had its genesis last fall.”
He said Prosper has also been campaigning to prevent the expansion of Medicaid. He said Prosper has had limited contact with APS regarding net metering and that he chose to get involved in the issue independent of any donations.
“We think the net-metering issue is a wonderful example of subsidies for a specific industry that are decidedly not free market and hurt the general public,” he said.
No ratepayer funds
Hatfield said APS is not using ratepayer funds to finance its political campaign. Instead, he said the utility is using profits that otherwise would go to stockholders. APS’ parent company, Pinnacle West Capital Corp., is publicly traded.
APS officials declined to say how much they are spending on 60 Plus and Prosper, but costs of the television advertisements tied to the net-metering issue run into hundreds of thousands of dollars.
“We are in a political battle,” APS spokesman Jim McDonald said. “We didn’t ask for it. But we are not going to lie down and get our heads kicked in. We are just not. We are obligated to fight. It is irresponsible to our customers not to fight back.”
He said APS supports solar — the utility is ahead of its state-mandated goals for renewable energy and recently opened Solana, one of the world’s largest solar plants. But the company views net metering as unfair to non-solar customers. The ads are meant to highlight that and counter the inaccurate claims from TUSK that APS doesn’t support solar at all, he said.
“What the 60 Plus stuff is doing is at least pointing out, gee, (TUSK) is supposed to be for conservative principles, but the biggest supporters (TUSK) has are the Democrats that supported Obama,” McDonald said. “I don’t see any conservative principles at play here.”
Hatfield suggested that APS is using the tactics because of the nature of the solar fight.
“What has characterized our approach to the regulatory environment is working in a collaborative and constructive way (with regulators and opposition groups),” Hatfield said. “That was the approach we would have preferred to take on the net-metering issue.”