Something that should come as no surprise to Tucson residents, Tucson Electric Power opposed the Arizona Corporation Commission’s efforts to require electric utilities to reduce the amount of power they sell by 22% by the year 2020. Arizona utilities regulated by the ACC would have to adopt tough conservation efforts.

The ACC adopted the new rules on a 5-0 vote Tuesday July 27, 2010.

TEP, which is heavily invested in coal-fired power plants in northern Arizona and New Mexico also recently sought to cut their solar rebate.

Does anyone think TEP’s parent company UniSource needs a new board of directors?

Arizona utilities told to help people cut energy use
by Ryan Randazzo on Jul.28, 2010, under Arizona Republic News

In an effort described as among the most aggressive in the nation, Arizona regulators have approved rules requiring utilities to promote energy efficiency and ultimately cut their projected power sales, a move that also will save customers money.

The Arizona Corporation Commission voted 5-0 Tuesday to require regulated electric utilities to reduce the amount of power they sell by 22 percent by the year 2020 by helping homeowners and businesses conserve energy.

The move parallels a national push by utility companies to increase energy-efficiency efforts as one way to cut back on building multimillion-dollar power plants and transmission lines – projects that ultimately are financed by customer rate hikes.

The effort also helps curb the air pollution and excessive water use resulting from power plants burning coal or natural gas to supply customers’ electricity.

Although Phoenix-based Arizona Public Service Co., the state’s largest utility, supports the standard; others, including Tucson Electric Power Co. oppose the goal, questioning how much energy conservation they will be able to coax from customers.

A variety of environmental and consumer groups, as well as companies that work with utilities to encourage energy conservation, back the rules.

The new rules’ top proponent, the Southwest Energy Efficiency Project, estimates the move will save Arizona utility customers who implement energy-efficiency measures over the next decade about $9 billion on their power bills.

“Utilities that underinvest in energy efficiency will deliver their customers the highest utility bills,” said Jeff Schlegel, Arizona representative for the Southwest Energy Efficiency Project.

Utilities will be able to meet the requirement many ways, from subsidizing the cost of low-power lightbulbs at grocery stores and paying rebates for people planting shade trees, to helping customers buy more-efficient appliances.

Two percent of the savings by 2020 must come from “demand-response” programs, such as voluntary efforts where businesses shut off some power during hot afternoons when energy demand peaks.

APS is planning to test a demand-response program in which the utility will control homes’ air-conditioners, raising the thermostat a notch or cycling the unit on and off to minimize peak demand.

Starting next year, utilities must show increasing amounts of electricity saved until 2020, when they are required to reach 22 percent. They can take credit for efficiency projects funded since 2005.

Power sales don’t have to be cut 22 percent from 2010 levels; the new rules allow utilities to factor in extra energy requirements tied to population growth.

The move had bipartisan support from the commission’s two Democrats and three Republicans because “it is the right thing for our state,” Corporation Commission Chairwoman Kris Mayes said.
“I personally think this is the most important thing I will ever do in my life. It is one of the most important decisions this commission has ever made in its 100-year history.”

The attorney general must certify the new rules before they are implemented.

Several states have similar guidelines, but they are hard to compare because they have different dates, goals and rules.

Still, officials agreed that Arizona’s rules are among the toughest.

Tucson Electric Power and several electric cooperatives opposed them, arguing that the rules have unreasonable goals and that it’s unclear how they will recover the money they spend promoting conservation.

See also Why isn’t Tucson the solar capital of Arizona?

____________________________________________________________________________

Citizen bloggers are not paid for doing  their blogs. If you like the View From Baja Arizona you can make a contribution to support this blog.  It is a secure Pay Pal transaction.

Thank you !!!   DONATE BY CLICKING HERE

The news account said Tucson Electric Power had applied to the Arizona Corporation Commission for permission to curtail its solar rebate program.

Appartently TEP is running out of money derived from a renewable energy surcharge on customer bills to fund the solar program.

Is there something seriously wrong with this picture?

I am finding it hard to understand whyt TEP cann’t earn a rate of return on solar systems put on people’s homes. They earn a rate of return from their coal-fired power plants. So why can’t the ACC allow them a profit from selling solar generated electricity from people’s rooftops? A kilowatt of energy production is a kilowatt of energy production, whether it comes from a 500 megwatt power plant in the Four Corners area, or a 5 kw rooftop system.

If the solar program is only going to function by subsidizing it with other ratepayers’ money, it is doomed.

TEP urges solar rebates be reduced
David Wichner Arizona Daily Star | Posted: Thursday, July 15, 2010 12:00 am |

Tucson Electric Power Co. is asking state regulators to lower subsidies for residential customers who install solar arrays, saying the utility is running out of funding for the rebates amid a surge in demand.

Nearly 1,100 local homeowners have reserved TEP’s SunShare rebates for solar photovoltaic (PV) systems this year, surpassing the total number of residential solar power systems completed over the previous nine years combined, TEP said.

TEP said residential customers have reserved more than $12.2 million of the $17.6 million in upfront SunShare incentives available this year, and at the current rate that money will run out in August. The rebates are funded by monthly surcharges paid by all electric customers.

Rebate requests from local businesses, meanwhile, have exceeded the $5 million budget for those upfront incentives. TEP business ratepayers interested in installing solar systems are being placed on a waiting list.

In response to the surging demand, TEP said it has asked the Arizona Corporation Commission to reduce residential SunShare rebates from $3 to $2.25 per watt for grid-tied PV arrays, for rebate applications received after the close of business on July 7.

That would cut the rebate on a 3-kilowatt system from $9,000 to $6,750.

The ACC could take action on TEP’s proposed changes as soon as an open meeting set for July 27-28.
“We looked at the trend and made the proposal that the incentive money would last longer if we lowered the rebate,” TEP spokesman Joe Salkowski said.

Reducing the rebate will allow more customers to take advantage of the program, TEP said.

TEP proposed several alternatives for commercial customers, subject to state approval. The company said it could wait until new resources are available next year; restore upfront rebates by tapping funds in a separate, “performance-based incentive” program normally paid out over 20 years, or raise more money through customer surcharges.

The surge in demand for TEP’s SunShare subsidies has been driven in part by reduced costs for solar power systems, said David Hutchens, a vice president of TEP and parent UniSource Energy Corp.

Prices for installed PV systems in the Tucson area have dropped to about $5 per watt from nearly $12 per watt in 2006, while TEP’s incentives have remained unchanged, TEP said.

A local solar system provider and longtime industry advocate said lowering the rebate makes sense.
“With the price of the PV systems dropping … it makes sense to drop the rebates. It allows more people to participate,” said Katharine Kent, president of The Solar Store.

“Electric rates continue to increase, so consumers (who install solar) are going to get their money back,” Kent added.

At the same time, she said, the solar industry should be looking beyond government incentives.
“It’s appropriate for government to help get an industry up and running, but for this industry to survive in the long term, we need to survive without incentives,” she said, adding that ratepayers also need to recognize the true costs of electricity.

TEP said the pace of rebate applications quickened after Phoenix-based Arizona Public Service Co. reduced its PV incentive levels to $1.95 per watt in April, with approval from the Corporation Commission. That encouraged PV installers to step up their marketing efforts in Tucson, TEP said.

DID YOU KNOW

In late January, Trico Electric Cooperative said it was at least $1 million behind on paying its solar rebates, leaving some Trico customers waiting months for thousands of dollars in promised rebates. Trico won approval to raise its monthly renewable-energy customer surcharge and cut back its rebates.

solar panels on commercial building

One of the things that puzzles me about Tucson is why it isn’t the solar capitol of the region?

You’d think that between all our sunshine, the environmentally oriented public and the desperate need to develop a real economy in the region, there would be a huge push to maximize solar energy development in the area.

The only thing that seems to be pushing solar development in the region is the Arizona Corporation Commission’s mandate that regulated electric utilities must produce 15% of their energy from renewable sources by 2025.

Tucson Electric Power has several large projects in the works. TEP will add 1.8 megawatts of additions to TEP’s photovoltaic plant near the coal-fired Springerville Generating Station which alread has 4.6-megawatts of capacity. The Springerville project is one of the nation’s biggest utility-owned solar plants. TEP will also construct a 1.6-megawatt solar array at Tucson International Airport.

The City of Tucson has a number of solar projects in the works for city buildings, and has proposed that a major solar facility be located on lands it owns in the Avra Valley. The city’s Avra lands are a perfect site for a large solar facility because the property was formerly irrigated farm land the city bought for water rights decades ago.

Davis Monthan AFB is in the process of looking at a major solar project to supply the base with electricity, similar to one developed for Nellis AFB in Nevada.

There are lots of pending applications for huge solar projects north of Tucson on state lands along the I-10 corridor, mostly in Pinal County.

But one does not get the sense that there is a really major push to maximize solar energy development in the area.

One reason may be that TEP is heavily invested in coal-fired power plants in northern Arizona and must recapture its investment in those plants before relying more heavily on solar. Were that utility facing major energy demand growth and needed another new major power source, more solar might make sense. Oddly growth could fuel more solar development in the city.

Rather than build giant new central generating facilities, some utilities have opted for more “distributed generation” meaning small sources all over the place. In Sacramento, for example, their electric utility leases warehouse rooftops for solar panel generation. Californbia has a mandate that their utilitiers get 20% of their energy from renewabkle sources by 2016.

When one flies in or out of Tucson one thing is obvious…there are a lot of large flat roofed buildings in the industrial and commercial areas of the city. A lot of solar energy generation capacity could be developed on these rooftops without destroying virgin desert.

There are some innovating financing options for governments wanting to go solar. Called “third party financing” companies will come in and install and operate solar systems at “host” sites, with the host agreeing to buy solar generated electricity from the project for 20 years.  This is a great benefit to governments who get a secure flat rate for their energy. Since the governments cannot get the tax credits available for solar installations, the third party financing outfits get the tax credits. An example of this type of project is a deal the Sahuarita School District recently made. Tucson’s school districts could insulate themselves from rising energy costs by doing third party financing deals and putting solar systems on the roofs of all area schools. Add the U of A, Pima College, Pima County and all the other governments in the area and that’s a lot of solar energy development potential in the region.

This gets really interesting when you consider that most schools are closed in the summer, and their rooftops could be generating summer peak period energy to power everyone else’s air conditioning, making money for the third party solar generators.

One of the drawbacks to more solar energy development is Arizona’s approach to selling solar energy back to the grid from homes and businesses. The sell-back rate is an average number, and doesn’t recognize the difference between costs of generating electricity during summer peak demand periods.

In some jurisdictions the amount one can get paid for selling home-generated energy back to the grid is based on time-of-day pricing. For example, solar energy which is generated during the day in the summer when energy production costs are the highest brings a premium price. Not so here.

A huge energy demand exists in the region due to summer air conditioning needs. Using solar to power that air conditioning demand makes enormous sense. Having time-of-day pricing for both energy use and rooftop energy generation would radically alter the economics of solar.