More than 1 million customers of Salt River Project will see a $1 to $4 decrease in their monthly bills starting in May following a contentious meeting Monday.
While the utility’s board of directors mostly agreed with the overall rate reduction, which is being spurred by low natural-gas prices, they were sharply divided over the rates for customers with solar.
The directors debated for approximately an hour as some of the elected officials offered alternative proposals for customers with rooftop solar and batteries to store their energy. But those alternatives all failed.
At the end of a contentious gathering, the elected SRP officials voted 10-5 to lower rates and approve three new options for solar customers. Solar advocates have criticized the options as being too punitive to people who install solar.
The overall rate decrease that nearly all customers will enjoy comes thanks to lower natural-gas prices. Even though SRP is increasing its base rates by $50 million a year, that is more than made up for by a $114 million reduction in the fee customers pay for natural gas.
The resulting $64 million annual decrease will bring down residential bills by about 1.3 percent, and more for businesses.
“We think the proposal we have before you creates tremendous value for customers,” Chief Financial Executive Aidan McSheffrey said of the plan that was ultimately approved.
New battery incentive
McSheffrey said that as a separate action from the rate changes, SRP plans to boost its incentive program for customers who install residential batteries.
Batteries benefit customers with solar by allowing them to capture the surplus electricity from their solar panels and use it at home during on-peak hours, when energy is most expensive.
SRP has a program that pays customers $150 per kilowatt-hour of batter storage they install, and McSheffrey proposed doubling it to $300 per kilowatt-hour for a maximum of $3,600.
“This would cover more than half of just the raw battery cost,” he said of the two-year proposal.
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SRP announced the initial program last year following a settlement with electric-car and battery maker Tesla Motors Corp.
But few customers have taken advantage of the program, which is capped at 4,500 participants. As of Monday, 3,933 incentives remain available, according to SRP’s website for the program.
Customers who install a battery only can use any rate plan, but if they also have solar, they must use one of the solar rate plans that have been the subject of much debate among board members.
Better low-income discount
The board members also agreed to new incentives for low-income customers.
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Customers who earn up to 200 percent of the federal poverty guideline will now be eligible for the low-income discount. Currently it is only available to those who earn as much as 150 percent of that federal guideline.
The 2019 federal poverty guideline for a family of four is $25,750, so a family with twice that income would be eligible for the SRP program.
Customers on that low-income rate will also get $23 a month in bill assistance, rather than the $20 to $21 they qualify for now.
The change will cost SRP and its customers about $2 million a year, according to McSheffrey.
New solar options
The board also on Monday approved the new solar rate plans that McSheffrey had presented.
SRP in 2015 began forcing solar customers to use a rate plan called E-27 that includes a demand fee. That fee is based on the single half hour during peak hours in the month when customers use the most energy.
The demand fee means that even customers who make a lot of their own electricity with solar can end up with a high bill because of one half hour during the month when they ran their air-conditioner and other major appliances at the same time.
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While solar companies have complained about the E-27 rate, SRP officials defended it Monday. McSheffrey said that the company saw 2,000 customers install solar last year.
“Solar installations are increasing in SRP territory,” he said.
The new alternative plans to E-27 include a plan that will use a customer’s average demand during peak hours, rather than the single highest demand, to set the demand fee.
Two other new rates for solar customers will not include a demand fee but will only credit the customers 2.81 cents per kilowatt-hour of electricity they send to the grid when their panels are making more energy than the home is consuming.
Currently those customers get a one-to-one credit for each kilowatt-hour they send to the grid, which is worth much more than 2.81 cents.
While not every customer will benefit from the plans, and are better off on E-27, most solar customer can save about $9 a month with one of the new alternatives, McSheffrey said.
“They do give customers choice,” he said.
Critics have said the new options are no better than E-27.
Debate and table pounding
A minority of board members tried to amend the rate plan to offer less expensive plans for customers with solar.
Among them was board member Keith Woods, who represents the Scottsdale area of SRP’s territory.
He proposed a plan to offer solar customers about 6.5 cents per kilowatt hour of surplus energy they send to the power grid. That figure was based on a rough average of other power purchases SRP makes. Management had come up with the 2.81-cent figure based on the price of power from large solar plants.
Woods said SRP managers have had it backwards when they say that non-solar customers are subsidizing solar customers. He referenced SRP data that shows the company pays much more than 2.81 cents for energy from a variety of other sources.
Vice President John Hoopes was among those who opposed paying solar customers more for their surplus.
Hoopes said SRP should not pay solar customers more than it costs SRP to get solar energy from a power plant, and that averaging costs of other power sources was not the proper way to set the price.
“This averaging exercise, I don’t know what it accomplishes other than to artificially magnify the supposed value of rooftop solar,” Hoopes said.
Solar companies had been asking for 8.5 cents per kilowatt hour of energy sent to the grid, and board member Mario Herrera, who represents an area south of Interstate 10 in the West Valley, became angry with their requests during the meeting.
“Contrary to what you think and the other members of the solar industry … we are really working hard to be a better solar representative,” Herrera said. “It just bothers me that everybody keeps questioning us.”
Herrera pounded the table.
“I’m just tired of hearing about it because we are working with solar advocacy!”
After five amendments dealing with solar, carbon prices and the monthly basic service fee failed, the board voted on the price plan from managers and approved it.
Those opposed were Nick Brown, Paul Hirt, Randy Miller, Stephen Williams and Woods. President David Rousseau chose to join the other nine board members and vote in favor of the plan even though his vote was not required.
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