More Affordable Solar for Everyone
Tucson Electric Power’s plan to provide 30 percent of our power from renewable resources by 2030 will be more affordable if we update rates for new users of private rooftop solar arrays.
The Arizona Corporation Commission (ACC) has directed TEP and other utilities to reduce the costs customers pay to subsidize service for new users of rooftop power systems. In response, TEP has proposed updated rates that would reduce subsidies while still allowing significant savings for going solar.
But private solar industry lobbyists are fighting to increase outdated subsidies for rooftop photovoltaic systems. They’ve asked the ACC to increase customers’ rates to fund above-market payments that benefit their clients.
While higher subsidies might help sell solar arrays, they hurt TEP’s customers by raising electric rates and limiting our ability to build more cost-effective systems. TEP’s plan offers reasonable rates for new solar customers without imposing excessive costs on everyone else.
Key Benefits of TEP’s Solar Proposals
- Provide fair, affordable pricing plans for new solar customers
- Reduce costs for all TEP customers
- Direct additional renewable energy investments to larger, more cost-effective systems that benefit our entire community
In addition to preserving generous savings for users of private solar arrays, TEP is proposing new and improved ways for customers to go solar with power from TEP’s large, cost-effective community-scale solar arrays.
Customized Solar Rates
Under TEP’s current rates, customers with private solar arrays don’t pay enough to cover the cost of their electric service. While many people assume it costs TEP much less to serve customers with solar panels, that isn’t true because most service costs are fixed – they don’t vary with usage.
TEP’s standard pricing plans seek to cover these fixed costs through usage-based kilowatt-hour charges. But solar customers don’t cover an equitable share of these costs because they don’t pay for most of the power they use from TEP’s system.
Even customers with large solar arrays draw power from TEP’s grid at night and whenever their systems can’t keep up with their energy use. But they avoid paying for that power through credits they receive in exchange for the excess power their systems send to the grid – an exchange known as “net metering.”
To address this problem, the ACC ordered TEP and other utilities last year to replace net metering with a new energy export rate. The ACC also said solar customers should be provided with customized rates that reflect their unique characteristics.
New Pricing Plans
In response to the ACC’s order, TEP has developed two new rate options for new users of rooftop solar arrays and other distributed generation (DG) equipment:
- Time-of-Use DG: Customers would pay lower energy charges during most weekday hours, on weekends and on major holidays; higher prices would apply during on-peak hours when customers typically use the most energy. This plan also includes a grid access fee based on the size of the customer’s DG system. This $2.50 per kilowatt (kW) fee is designed to cover service costs that cannot be recovered from such customers through standard rates.
- Demand Time-of-Use DG: This pricing plan would combine even lower usage-based Time-of-Use rates with a “demand” charge based on the highest individual hour of usage during on-peak time periods. This pricing plan does not include a grid access fee because the demand charge would help recover service costs that cannot be collected with standard rates.
TEP also has proposed updated meter fees to more accurately reflect the higher cost of bi-directional meters used to measure excess solar production. If approved, the monthly fees would be $3.50 for residential customers and $5.62 for small commercial customers.
Revised Energy Export Rate
TEP has proposed paying new solar customers 9.73 cents per kWh for their systems' excess power, a price that reflects average market costs over a recent five-year period. When combined with other bill savings, these payments would allow a residential customer to recoup the cost of a new solar array in less than nine years – the same “payback” that was in place during a thriving rooftop solar marketplace in 2015*.
But rooftop solar advocates want their clients to be paid about 12.5 cents per kWh for excess solar energy. That’s higher than the price customers pay TEP for energy and more than four times the price TEP recently agreed to pay for solar energy from a large community-scale system!
Those exorbitant costs would be passed along directly to TEP customers. New solar customers with typically sized systems would pay average monthly electric bills of just $9*, forcing other customers to cover most of the cost TEP incurs to serve them.
The private solar industry’s proposal flies in the face of the ACC’s order to reduce solar subsidies. Instead, it would provide even deeper discounts for solar customers who continue to rely on TEP's robust, integrated electric system for safe, reliable power around the clock.
* Based on simple payback for a 6.3 kW DC system sized to offset 100 percent of average monthly usage of 964 kWh. Costs and savings will vary based on usage and installed system size.
No Impact on Current Solar Customers
The new rules and requirements would only affect customers who request interconnection of new rooftop systems after new rates and rules take effect.
Customers who already use private solar arrays and those who request to connect a new system before ACC-approved changes take effect will be "grandfathered" under current rate designs and net metering rules for 20 years from the date they applied to be interconnected to TEP’s system.
New Community Solar Options
TEP wants to reduce the cost of participating in our Bright Tucson Community Solar program, which allows customers to purchase some some or all of their power from large local solar arrays on a flexible, month-to-month basis. Because large-scale solar power has grown even more cost-effective since the program was launched, TEP has proposed reducing the cost of participation by half, to about one cent per kWh.
TEP also has asked the ACC to approve a new community solar option that would let customers buy all of their power from our local solar arrays for a fixed monthly price that would remain fixed for 10 years. Participating customers could essentially lock in their current average electric costs for a decade by committing to take service from the company's cost-effective solar energy resources.
Both community solar programs would provide affordable, attractive solar options for customers who might not be willing or able to install rooftop photovoltaic arrays.