Skip to comments.Solar Industry Takes on Crony Capitalism in Arizona
Posted on 11/04/2013 6:52:02 AM PST by Kaslin
A heated battle is taking place in Arizona between the fledgling solar industry and APS, the states largest energy company, which enjoys a state-granted near-monopoly over energy. In sunny Arizona, it is peculiar that solar energy is being portrayed as the bad guy. Since Arizona is a Republican-dominated state, APS is sneakily buying up influential Republicans, both directly and indirectly, to perpetuate its crony capitalism. The Washington Post refers to these Republicans as some of the best pollsters and consultants money can buy.
The spin goes like this, stop subsidizing the solar industry. The word subsidy is used to scare Republicans. The solar companies are being compared to Solyndra, the green energy company that went bankrupt despite receiving more than $500 million in loans from the Department of Energy.
The reality is, the solar industry is not being subsidized. Energy users who do not use APS power, but use their solar panels instead for power, are simply not being double-charged. When they are not using APS power, but are instead sending unused solar power energy back to the grid for others to use, they receive a rebate. This is known as net metering and has been in place since 2009. APS wants to eliminate this, which will essentially have the effect of charging solar users for APS power they do not use. Instead of receiving 15 cents per kilowatt-hour rebates for power the solar users send back to the grid, APS wants to reduce the rebate to 4 to 10 cents. This would add $50 to $100 a month to the power bills of solar users. The utility also wants to start charging solar users a monthly maintenance fee.
Solar users are saving everyone additional costs. As energy users dependent upon APS decrease their usage and move to solar power, fewer generating stations need to be built, and fewer distribution lines put into place. While it is true that solar users are paying less towards the maintenance costs of APS, it is because they are using less of APS services.
What has complicated the issue and made it easy for crony capitalist arguments to prevail is that energy is not a purely free market commodity. Due to the limited nature of energy, and the expense of outfitting each home with energy sources, it is virtually impossible for competing energy sources to exist without government - or some type of neutral entity - stepping in to split up the pot in some way. If APS has its way, it will continue to be propped up as a near-monopoly by the government, subsidized by taxpayers. Allowing solar companies to compete merely reduces the gargantuan market share that is artificially allocated to APS. I lived alone in a small home in Arizona for most of the last 12 years, and thought it was outrageous that my bill from APS was frequently close to $300 per month, no matter how frugally I used electricity and air conditioning.
This feud has come to a head this year because APS is discovering its profits are decreasing as more and more people in Arizona move to solar power. This is happening in part because the cost of installing solar panels has decreased drastically in recent years. About 200 APS customerseach month are adding solar to their houses now.
APS has been secretly contributing large amounts of money to conservative organizations like 60 Plus Association, the conservative alternative to the AARP, and the conservative organization Prosper, in order to influence the groups to run negative ads against solar power. When a reporter asked APS spokesman Jim McDonald in July whether APS was funding the 60 Plus costly TV ads, he denied it, saying, No, we are not. Instead, APS claimed it was a coincidence that the two organizations were aligned with it. McDonald has a history of advocating for tax increases.
In October, it was discovered that APS had been lying all along about funding conservative organizations to run attack ads. These groups bashed the solar net-metering policy as corporate welfare. It is ironic, because corporate welfare is actually what APS is demanding for itself.
Perhaps the term net metering needs to be changed to something more accurate, so consumers arent as easily fooled into believing it is a subsidy to solar companies. Call it what it is, non-double charging or rebates for contributing power.
Some conservatives have been fooled, lining up behind crony capitalism. Others see through the false rhetoric. Barry Goldwater, Jr., has come out against APS near monopoly. A Green Tea Party Coalition has been formed in Georgia by Debbie Dooley, national coordinator for the Tea Party Patriots and co-founder of the Atlanta Tea Party.
Conservatives who can see through the crony capitalism are forming a strange alliance with the left. It is one of very few issues that liberals and conservatives can both agree on, although for different reasons. Obamas Organizing for America organization is taking sides with the solar companies in the name of climate change.
The Arizona Corporation Commission (ACC) will be starting hearings on November 13 regarding net metering. The ACC has rejected APS proposals so far. If the ACC does not resolve the matter this month, debate could continue for two more years until APS next rate hearing. Commissioner Bob Burns has asked for an investigation into APS funding of 60 Plus, demanding information on any secret funding of nonprofits or public relations campaigns. It would be brutally unfair if APS customers money is being used to kill off the solar industry, and is likely a violation of the utilitys last rate case settlement.
Forty-three states and the District of Columbia use net metering. Arizona State Universitys business school has determined that Arizona is the most promising state in the country for solar production. Jason Rose, a veteran Republican consultant working for the solar industry, told The Washington Post, If the utilities are able to upend rooftop solar in Arizona, the sunniest state, then imagine what they can do everywhere else.
This is a case of follow the money. When there is big money involved, which a utility company with a state-sanctioned near-monopoly is lying about, and conservatives are backing crony capitalism, you can be assured theirs is not the conservative position.
Why should the utility pay more for solar power generated by a homeowner than power from a power plant? I am in the middle on this issue.
The utility has to maintain the distribution system and pay for the power plants 24/7. If a home owner wants to get the same rate for his generated kw as the utility charges him..pull the plug. But they can’t do that since their usage peaks and falls..and they can’t cheaply store the power.
Utilities are monopolies that are politically regulated..fact of life.
” Instead of receiving 15 cents per kilowatt-hour rebates for power the solar users send back to the grid, APS wants to reduce the rebate to 4 to 10 cents. This would add $50 to $100 a month to the power bills of solar users. The utility also wants to start charging solar users a monthly maintenance fee.”
Since I am paying between 6 and 12 cents per kilowatt hour depending on the time of day (budget billing), I think maybe the 15 cents per hour might be a little steep. Maybe the 4 to 10 cent rate is the more realistic figure. That said, I also am against any "maintance fee" from the power companies.
My husband and I went the Solar City route earlier this year and the big difference we see is in being able to run hot water anytime (we were on the 9-9 energy saving system before and got it grandfathered into our lease with the solar panels). We are pretty frugal in our energy use and our monthly bills have always been very economical because we didn’t run the air much between the daytime hours. We do still keep it on at around 83 when we are all out but it does get run more since going to solar. Our energy bills are still less than before and I do not like it that APS is trying to SQUEEZE the solar city companies. I encourage everyone to get solar - better get on the leasing bandwagon before they (APS) get the rebates axed.
How much does electricity cost in Arizona? Locally (and maybe for the entire state of Ohio) the generation charge is separate from the delivery charge and you can contract with other companies for the generation. I just contracted for 5.66¢/kWh for the next two years. Since the wiring costs the same on the delivery side whether I'm receiving or sending power, I would expect to net less than that for any power I generate if I had solar panels, windmills or could attach the idiot squirrels in my neighborhood to treadmills.
What is typically ignored by those who want to sell their solar power back to the grid with this claim, they are actually using the APS infrastructure to sell their power without paying for the building and maintenance of the equipment necessary to do so.
It cost to move the power out, just as it cost to move the power in.
Net Metering, as setup in California, allows homeowners to bank excess production during peak sunlight period of the day. This is done on a kilowatt per kilowatt basis. Both the utility and the homeowner benefit, to a point, since the excess production is typically during the period of peak demand, or slightly after. Any excess production is compensated at the wholesale rate, probably 2 to 4 cents per kwh, but not sure about that. Obviously this was setup by legislators to encourage more solar, and to reduce the need for generated power. Whether this is sustainable for the utilities long-term is debatable, especially since the utilities must have a reserve production capability to offset cloudy days when solar production is significantly reduced. Same problem applies to wind power.
I have solar power with Net Metering, a system that I installed personally, not for any altruistic reason, but for simple economics. The utilities in CA have a tiered rate structure where they decide how much you will pay for each kilowatt depending on the tier, starting at about `13 cents/kwh rising to 32 cents/kwh if youre a bad consumer and reach tier 5, as I do. I adamantly oppose this, admittedly for selfish reasons, because I work at home, and during the summer that would be impossible absent A/C, which Ive upgraded to achieve greater efficiency. I also have computer servers that run 24/7. My electric bill always exceeded $500/mo during the summer. I just received my annual adjustment bill and paid about $10 since I slightly under produced what I estimated I needed for the year.
I calculated my solar production capacity to annually match consumption, or slightly over produce, using that objective to evaluate return on investment, although I missed the mark by a few kilowatts and was charged $10 for the year.
In my narrow minded way of thinking, each kilowatt should be priced the same, just like most other commodities, such as gasoline, at the same rate for all residential and commercial users.
Good or bad, now is not the time to change the rules, in AZ , CA or any other state, at least not for existing systems where owners made the investment based on existing rules.
Er, no. It will mean homeowners can no longer force an unwilling buyer to pay government fixed prices for energy homeowners produce but do not use.
There are no innocent parties in this dispute. One side is trying to preserve their free lunch. The other is trying to steal their french fries.
Wow, ignorance abounds even on Townhall. Net metering would be fine if APS were allowed to negotiate the price with the the home owner and more importantly if the home owner had to pay the full price of the solar panels rather than having the solar panels subsidized heavily by taxpayers and by APS and then by extension the non-solar customers of APS.
The utility is not having to pay the capital costs nor is the utility having to pay fuel costs. Keep in mind that coal and natural gas plants have relatively low capital costs and relatively high operating(fuel) costs while solar and wind have relatively high capital costs and low operating(no fuel) costs.
Having said that, there is a problem in that the homeowner generators sell the power to the utility at a time when the utility may not need it. When the homeowner is at work he is not consuming his self generated power so he sells it to the utility, when the utility probably doesn't need it. When the homeowner gets home he uses his self-generated power, when the utility probably needs it most.
This is not a problem if the utility is using significant amounts of natural gas to generate because they can turn the natural gas plants on and off relatively quickly. If the utility's fuel is mostly coal, it can be a problem
This irked me as well when I lived in CA.
Many houses are not suitable for solar. They have to have significant roof facing south or west away from tree shade.
At the time I was investigating my own natural gas powered generator that I would switch on during weekday afternoons. This would reduce tier levels significantly.
I'm sure there are regulations against this but luckily was not faced with taking the risk.
I just checked one of my TEP (Tucson Electric Power) bills - these are summer residential rates.
Delivery Services -
Tiered, but in the range of 5.6 to 8 cents per kWh
There is a $10 monthly flat fee
Power Supply Charges -
3.5 cents per kWh
No monthly fee
Green Energy Charges -
0.2 cents per kWh
$3.80 monthly fee
Plus State, County and City taxes at a fixed percentage.
I guess the power companies want to buy the customer energy back at nearer the 3.5 cents per kWh rate.
As a tax and rate payer, why should I be forced to subsidize someone putting solar on their home? Without stealing money for installation from me and others solar is not competitive. Some of my local friends have installed solar. They are staunch conservatives. When I ask them what gives them the right to steal from others for their benefit the reply is it’s the law. When I ask them what gives them the moral right to steal from others for their benefit they reply, it’s the law. When I say the law cannot make thievery moral or just they mumble platitudes and try to laugh it off. Folks, this is a far larger problem then net metering. It speaks to the soul of our people. At its core it is simple...thou shall not steal. Both sides need to apply the commandment to their actions.
Interesting. How about states that receive a lot of snow which the sun cannot penetrate? This sounds like someone who is all for solar energy. She doesn’t seem to realize this country needs all types of energy to make things work.
You make a valid point however Im not sure if Im after the free lunch or the French fries. The fact is, my solar installation was a result of government intervention in the first place. Had it not been for the tiered rate structure, along with the utility and government telling me how much energy to which Im entitled, the economics, and the financial sanctions for being bad, my project would have penciled out much differently. I dont make the rules, but I try to make them work for me when I can, thanks to meddling bureaucrats and legislators that are intent on perverting the marketplace.
Without taking any credits, the payback (breakeven point) is just under 5 years, at current rates. Afterwards I decided to take the federal tax credit which lowered the payback to 3.5 years. Of course I appreciate that the federal government continues to borrowing money from China, along with tapping the taxpayer, to subsidize my solar installation. At least mine works, which is more than can be said for the large projects funded by the feds.
Not less than half of all energy (not only electricity) goes waste in United States.
There is a huge room for improvement without all this green crap.
Of course it is automobiles which makes the most energy consumption for households but take to account that Western European rate of car ownership is way ahead of US thus overall European energy consumption per capita is twice lower.
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