Thinking about solar?
Plenty of people are considering solar energy for their home or business. 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 TEP's 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 or buying solar energy through programs offered by TEP.
Going Solar with TEP
While solar power options are available from third party providers, you should be aware that TEP offers an easy way to go solar.
Our Bright Tucson Community Solar Program provides residential and business customers a flexible way to serve some or all of their energy needs with the output of TEP's local community-scale systems. Click here for more details.
We are no longer accepting applications for the TEP Residential Solar Program. That pilot program was designed to provide homeowners with energy from a rooftop solar array through a flat monthly fee for electric service that will remain fixed for up to 25 years.
TEP also has asked the ACC to approve a third solar program for 2017 that would combine the benefits of our existing solar offerings. The proposed Residential Community Solar Program would provide solar power from community-scale systems for a flat monthly electric rate that would remain fixed for up to 10 years. We'll make more details available if the program is approved.
Despite its many benefits, solar energy can’t replace utility service – not even here in sunny Southern 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 TEP's local energy grid.
TEP 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, TEP 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 TEP's 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 TEP 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 the ACC has approved changes to net metering that are expected to affect some TEP customers beginning sometime in 2017. Rather than providing energy credits in exchange for excess solar energy, TEP 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 TEP 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 November 2015. The amount TEP will pay for excess solar energy under this new process is not yet known, and must be reviewed and approved by the ACC.
Since December 2013, TEP's 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 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 TEP.
2) TEP'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 TEP or the Commission. They are based on projections formulated by external third parties not affiliated with TEP or the Commission.
As that advisory makes clear, future changes to TEP's rates 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 TEP's current rates and net metering benefits and could reflect their own guesses about future 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 TEP's energy grid after the changes take effect sometime in 2017.
Additionally, TEP has proposed new, higher rates that, if approved, could affect bills paid by all customers 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 TEP's proposal.
Customers who already have solar power systems connected to TEP's 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.
TEP 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 TEP's new rates for solar customers are finalized - possibly sometime in 2017. At that point, if TEP's 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 TEP's 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 TEP's 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 TEP. The ACC has final say over new rates and rules.
Anything else I should consider?
We hope this information has been helpful. TEP 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 our community solar program, 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 TEP’s 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.