Thinking about Solar?
Plenty of people are considering solar energy for their homes or businesses. If you're one of them, please review the following information, which includes details about proposed rate changes that may affect your decision. We want to make sure you have all the information you need as you evaluate alternatives for expanding your use of solar energy.
Solar energy is a great source of clean, emission free power. Although photovoltaic (PV) arrays and other solar energy systems are expensive to build, they can operate for many years at little or no additional cost because they have free access to fuel whenever the sun is shining.
Solar energy produces significant environmental benefits, whether it comes from a rooftop array or one of UES' larger, more cost-effective community-scale systems. Using solar energy reduces power plant emissions, preserves water and avoids impacts associated with fossil fuel production.
Solar power also is becoming less expensive. Falling PV prices, low-interest rates, tax credits and utility rate subsidies have reduced the cost of generating power from rooftop PV arrays.
Going Solar with UES
UES offers an easy way to go solar.
Our Bright Arizona Community Solar Program provides residential and business customers a flexible way to serve some or all of their energy needs with the output of UES’ community-scale systems. Click here for more details.
Despite its many benefits, solar energy can't replace utility service — not even here in sunny Arizona. Rooftop PV arrays provide intermittent power that isn't always available when energy is needed. They also typically can't keep up with peak energy usage, which usually occurs in the late afternoon hours. And of course, solar energy isn't available at all after the sun sets.
Solar arrays are sometimes said to provide energy independence. In truth, they depend on the local utility system for voltage support, energy management and supplemental power. Solar power users could not even start their air conditioning units without a connection to UES' local grid.
UES still delivers plenty of power to customers with solar arrays — in many cases, more than half of the energy they use. Solar customers also make constant use of our local distribution system to import or export energy, depending on their consumption and solar production. Under current rates and rules, though, they avoid paying for most of that usage, and the grid that delivers it, thanks in part to credits they receive for excess solar energy.
In return for each kilowatt-hour (kWh) of excess energy that flows into the grid from rooftop solar arrays, UES provides an equivalent bill credit that can be used to offset charges for the energy we deliver.
This exchange, called net metering, effectively values excess solar energy at a price equivalent to UES' total retail rate, which includes all the costs of producing the energy plus the cost of building, operating and maintaining generation and delivery infrastructure. That credit is currently worth about 11 cents/kWh. But that's more than twice as much as it costs to buy solar power from large, community-scale solar arrays that provide broader benefits for all customers. Paying too much for excess solar energy reduces our ability to invest in more cost-effective solar resources for all customers.
That's why the ACC has approved changes to net metering that are expected to affect some UES customers beginning in 2017. Rather than providing energy credits in exchange for excess solar energy, UES and other utilities will provide bill credits based on the calculated value of that power. Initially, that value will reflect prices recently paid for power from large community-scale systems. In future years, that value also could be calculated based on the costs that UES and other utilities can avoid through the use of excess solar energy.
This new method is expected to take effect sometime in 2017, after final ACC review and approval of a request for new rates we filed in May 2015. The amount UES will pay for excess solar energy under this new process is not yet known, and must be reviewed and approved by the ACC.
Since February 2014, our solar interconnection agreement has included a disclosure form required by the ACC — Attachment A — that describes how future rate changes might affect costs incurred by customers who use solar panels. Here's the full, current text of that disclosure, which each customer must sign.
1. Your PV system is subject to the current rates, rules and regulations established by the Arizona Corporation Commission (Commission). The Commission may alter its rules and regulations and/or change rates in the future. If this occurs, your PV system is subject to those changes and you will be responsible for paying any future increases to electricity rates, charges or service fees from UNSE.
2. UNSE's electricity rates, charges and service fees are determined by the Commission and are subject to change based upon the decision of the Commission. These future adjustments may positively or negatively impact any potential savings or the value of your PV system.
3. Any future electricity rate projections which may be presented to you are not produced, analyzed or approved by UNSE or the Commission. They are based on projections formulated by external third parties not affiliated with UNSE or the Commission.
As that advisory makes clear, future rate changes may alter the economic benefits associated with rooftop solar power systems. The savings estimates provided by sellers of solar power systems may be based on current rates and net metering benefits and could reflect their own guesses about future changes or increases. Any changes to those rates or benefits would obviously undermine those assumptions.
The net metering changes approved by the ACC in December 2016 will affect the bills of customers who connect new solar power systems to UES’ energy grid after the changes take effect sometime in 2017.
Additionally, UES' has proposed new, higher rates for new solar customers that, if approved, could affect bills in 2017. Those rates include a proposed requirement that new users of solar power systems use a three-part rate plan that includes a basic service charge, lower usage-based rates and a "demand" charge based on their highest hourly energy use. Existing, or “grandfathered,” solar customers could choose from any available residential rate plan under UES’ proposal.
Customers who already have solar power systems connected to UES' energy grid or have filed a request to interconnect a new system when ACC-approved changes to net metering take effect - possibly sometime in 2017 - will be "grandfathered" under current net metering rules for 20 years from the date they filed a request to interconnect their systems.
UES also has asked the ACC to exempt, or "grandfather," current solar customers from our proposed requirement that DG customers use a demand-based pricing plan. If that request is approved, those customers could take service under any available residential pricing plan. They would, of course, remain subject to any approved increase in those rates.
All other new solar users would be compensated for excess energy under the new ACC-approved process once UES’ new rates for solar customers are finalized - possibly sometime in 2017. At that point, if UES’ proposal is approved, those customers also would be required to choose a demand-based pricing plan.
Potential Impact of New Rates and Net Metering Rules for Solar Customers*
Customers who file a request to interconnect solar power systems before UES’ new rates for solar customers are finalized and effective (possibly sometime in 2017):
- Are "grandfathered" under existing net metering rules for 20 years from the date of application
- Can choose from any available residential pricing plan*
- Still subject to approved rate increases
Customers who file a request to interconnect solar power systems to UES’ energy grid after the effective date of new rates and rules are:
- Subject to new ACC-approved compensation for excess solar energy.
- Subject to mandatory use of a demand-based rate*
*As proposed by UES. The ACC has final say over new rates and rules.
Anything Else I Should Consider?
We hope this information has been helpful. UES is committed to providing customers with the best available information about solar power and other energy options. For additional information about solar energy for your home, click here. For more details about solar energy for your business, click here.
Nobody knows for sure what electric service will cost in the future. But anyone considering a long-term investment in a solar power system should closely examine any assumptions about future increases against UES’ long history of stable electric rates.
Arizona's Residential Utility Consumer Office, which represents the interests of residential customers in utility matters before the ACC, also has published a Rooftop Solar Consumer Guide with sound advice for solar energy shoppers.