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REST Surcharge

Funding for renewable energy.

The Arizona Corporation Commission (ACC) has approved a Renewable Energy Standard Tariff (REST) to fund UniSource Energy Services' investments in renewable energy in 2012.

The REST surcharge raises money to help UES comply with Arizona's Renewable Energy Standard, which requires utilities to increase their use of renewable energy each year until it represents 15 percent of their power in 2025. The standard calls on UES to produce 3.5 percent of its power from renewable resources in 2012, up from 3 percent in 2011.

The following questions and answers provide more information about the REST.

What is the REST charge for 2012?

The ACC has approved a REST surcharge of about nine-tenths of a cent per kilowatt-hour (kWh) for 2012. The commission also approved caps that limit the amount customers pay each month for this usage-based fee.

How will the REST affect customers' bills?

For residential customers, the monthly cap fell from $5 in 2011 to $4.50 in 2012. A residential customer with typical usage is expected to pay that capped amount each month.

For commercial customers (with loads under 3 megawatts (MW)), the monthly cap fell from $160 in 2011 to $150 in 2012. For industrial customers (with loads greater than 3 MW), the monthly cap increased to $5,500 in 2012 from $5,000 in 2011.

How is the REST calculated for customers with renewable power systems?

Because the REST is based on billed usage, customers with installed renewable systems typically pay reduced surcharges because they generate a portion of their own power. Beginning this year, though, the REST surcharges paid by customers who install renewable power systems will be based on their total electric usage – including that portion their systems generate.   This change will take effect later in the year, once UES adapts its billing software to accommodate this new policy approved by the ACC. Customers who installed renewable power systems before 2012 are not subject to this new policy and will continue to pay REST surcharges based on their billed electric usage.

How will UES use the resources raised by the REST?

UES will use its $7.6 million REST budget in 2012 to expand its renewable energy resources. UES will spend $2.1 million to buy renewable power from other providers while devoting $665,169 to help fund its own systems. About $4.3 million is available to fund incentives for customers who install photovoltaic (PV) panels, solar water heaters or other renewable energy systems at their homes or businesses. The rest of the budget will cover labor, administration, materials and other necessary costs.

What incentives are available for photovoltaic systems?

In 2012, the ACC has approved a $1.7 million budget for up-front incentives (UFIs) for residential customers and a $691,614 UFI budget for commercial systems. Those incentives will be available at levels beginning at $1 per watt. Incentives will be reduced if certain percentages of the respective residential or commercial UFI budgets are reserved on or before certain "trigger" dates, as shown in the following table:

If the following percentage of UES' 2012 residential or commercial incentive budget is reserved... ...on or before the following date... ...UES' residential or business incentives will be reduced in the following ways:
45% June 30 Incentives fall to $0.85/watt.
70% Sept. 30
  • Incentives fall to $0.85/watt if June 30 trigger was not activated.
  • Incentives fall to $0.70/watt if June 30 trigger was activated.
90% Nov. 30
  • Incentives fall to $0.85 if no prior triggers were activated.
  • Incentives fall to $0.70 if one prior trigger was activated.
  • Incentives fall to $0.50 if two prior triggers were activated.

Performance-based incentives for commercial PV systems will be available at up to $0.092 per kWh for systems with capacities from 70-200 kilowatts (kW); up to $0.088 per kWh for systems with capacities between 201 and 400 kW; and up to $0.084 per kWh for systems larger than 401 kW.

Are incentives available for solar water heating systems?

Incentives for residential solar water heating systems are available at $0.50 per kWh of estimated annual output, up to $1,750 per system. These incentives will be funded out of the $1.7 million residential incentive budget, so their availability may be limited if there is strong interest in residential PV systems.

Why does UES need extra money to pay for renewable energy?

UES's rates do not cover the cost of renewable energy, which remains more expensive than conventional power despite recent price reductions. Arizona also has a relative scarcity of hydroelectric, geothermal, wind and other renewable resources compared to many other states, although UES is tapping productive wind resources in Mohave County. While solar energy is abundant across Arizona, solar power systems carry a significant up-front cost.