A hot topic around solar in Arizona these days is net metering. Tucson Electric Power (TEP) had submitted a proposal to the utility governing body, the Arizona Corporation Commission (ACC), earlier this year requesting a major change to net metering that would not be in the interest of homeowners wanting to go solar in the future. TEP recently withdrew its initial proposal to the ACC to change net metering rules, however, TEP has indicated its intention to resubmit the same proposal as part of a rate case sometime this fall. The ACC is not planning on deciding the case until late summer or early fall of 2016. TEP has indicated it is still going to ask that any excess power sent back to the grid will automatically be converted into a dollar amount credit at a rate of $.058/kwh, rather than at the customer's retail rate. TEP will likely ask that this change to a less favorable net metering policy be applied to any customers who submitted a TEP solar contract after June 1, 2015.  

The ACC can, of course, either accept this proposal as is, deny the proposal, or choose parts that they feel are appropriate. 

One of the AZ Corporation Commissioners stated that the ACC will not engage in retroactive rate-making. ACC Staff has also stated that they will seek a solution that applies to all customers irrespective of any grandfathering dates. Based on this, prospective customers should assume that rates will change, and that savings from grid tied solar will be less than it is currently. But it is unclear what the form or magnitude these changes may be.

With the existing net metering rules, solar energy systems are sized so that "over-production" (producing more solar energy that can be used in the moment) will occur both seasonally and daily, in the middle of the day. With the proposed net metering policy changes, this excess energy would no longer be exchanged equally for energy use later, but would instead be compensated at a much lower rate.

For solar customers who are concerned that the ACC will adopt TEP's proposed net metering changes, or something similar, we can size solar energy systems smaller than would make sense under the existing net metering rules. Additionally, many customers are choosing to proceed with solar systems sized to meet 90-100% of their energy needs under the current net metering rules, hopeful that the ACC will rule in favor of solar customers.

Although the ACC may ultimately decide something completely different which would dictate a different Analysis, an easy way to approximate the effects of TEP's proposal is to assume solar energy is worth 8 or 9 cents per kwh, as compared to 10.5 to 11.5 today. Also, if your household uses a lot of energy during the day (you are home most days, or have a pool pump) you will be less effected than someone who's house is shut down during the day.