Like the desert in summer, the solar power controversy in Arizona continues to sizzle. The drama involving Arizona Public Service (APS), net metering and solar power has been well documented. Now, a new storyline has emerged.


UES Energy (UES) is a relatively small electric utility servicing about 93,000 customers in rural Arizona. The provider is proposing residential demand charges as part of its ongoing, general rate case.


On the surface, demand charges may seem unrelated to solar power, but, as pricing is an important element of the solar proposition, every adjustment has an impact. In this case, to keep overall costs the same to consumers, the proposed demand charges would be coupled with a decrease in volume rates. Any decrease in volume rates—or charges for the total amount of electricity consumed in a billing cycle—makes rooftop solar less attractive to customers.


In a familiar scenario, the utility and its supporters have squared off against installers and consumer advocates. Both sides have commissioned studies that support their positions.


An intervener in the case, APS commissioned and filed a report prepared by Navigant Consulting, “Solar Project Return Analysis for Third-Party Owned Solar Systems,” asserting that solar providers operating on the solar lease model could withstand the proposed decrease in volume charges because they have a high profit margin.


“Solar third-party ownership providers have headroom to adjust to some changes in rate structures while maintaining project returns,” according to the study.


The Alliance for Solar Choice (TASC) is another intervener. It commissioned and filed a study by Crossborder Energy, “The Benefits and Costs of Solar Distributed Generation for Arizona Public Service (2016 Update).” The study’s focus is “on the value that customers receive for the electricity that is exported from their premises.” It concludes that rooftop solar is worth between $0.248 per kilowatt-hour (kWh) and $0.311 per kWh to the utility, which is above the retail rate credit that rooftop solar currently earns from net metering.


In other words, the latter study says that utilities should be offering more incentives, not fewer, to consumers who want to add rooftop solar power, and lowering volume charges would actually be a disincentive.