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 currently 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 nearly 11 cents/kWh. But that's much more than UES pays for solar power from large, community-scale solar arrays that provide broader benefits for all customers. Paying too much for excess solar energy increases our rates and reduces our ability to invest in more cost-effective solar resources for all customers.
That's why, in 2016, the ACC approved changes to net metering that are expected to affect new users of private solar power systems. Rather than providing energy credits in exchange for excess solar energy, UES and other utilities will provide a bill credit 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 2018, after the ACC reviews UES' proposed export rate and other proposed changes for new users of private solar power systems.
Since February 2014, our solar interconnection agreement has included a disclosure required by the ACC that describes how future rate changes might affect costs incurred by customers who use solar panels. Here's the full text of that disclosure, which is included in the Interconnection Agreement Terms & Conditions that each customer must sign. (Please note: UNSE is an abbreviation for UNS Electric, the legal name of the operating subsidiary that provides electric service under the UES brand.)
9. DISCLAIMER REGARDING POSSIBLE FUTURE RULES / and or RATE CHANGES AFFECTING MY GENERATING FACILITY.
a. The Generating Facility is subject to the current rates, rules and regulations established by the Commission. The Commission may alter its rules and regulations and/or change rates in the future. If this occurs, the Generating Facility is subject to those changes including the Customer being responsible for paying any future applicable increases to electricity rates, charges or service fees from UNSE.
b. UNSE’s electricity rates, charges and service fees are determined by the Commission and are subject to changes based upon the decisions of the Commission. These future adjustments may positively or negatively impact any potential savings or the value of the Generating Facility.
c. The Commission has ordered that DG customers that have submitted an interconnection application prior to the effective date of the decision in Phase II of the UNSE rate case (Docket No. E-04204A-15-0142), will be grandfathered on their current rate design and continue to receive full retail rate net metering for twenty years from the date they first interconnect their system to UNSE’s electric system.
d. Any future electricity rate projections which have been presented to Customer 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.
UES is seeking to revise rates and rules for new users of private solar power systems to better reflect the costs of providing them with electric service. These proposed changes will be considered by the ACC later this year in a second phase of UES’ rate case.
These proposed changes include a new way to compensate new solar customers for the excess energy their systems produce. The new method, approved by the ACC last year, will replace “net metering” with bill credits based on the calculated value of excess solar power.
UES also is proposing a requirement that new users of private solar power systems choose from one of two new pricing plans designed to recover a greater share of their electric service costs. The proposals will be reviewed by the ACC later this year.
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 2018. 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.