Short Circuiting Policy: Interest Groups and the Battle Over Clean Energy and Climate Policy in the American States by Leah Cardamore Stokes

Author:Leah Cardamore Stokes [Stokes, Leah Cardamore]
Language: eng
Format: epub
ISBN: 9780190074265
Google: c9USzAEACAAJ
Publisher: Oxford University Press
Published: 2020-11-15T00:31:18.525553+00:00

Utilities Agree to a Policy They Later Regret: Net Metering and the Fog of Enactment

Beginning in 2007, the commission aimed to improve its latest clean energy target’s lagging implementation. Once again, the utilities were failing to comply. They were missing their goals and were doing particularly poorly at meeting the distributed generation requirements. To improve the policy’s implementation, the commission began developing a comprehensive net energy metering (NEM) and interconnection policy.23 This would allow homeowners and companies to invest in solar more easily. The commission also took up the idea because the federal Energy Policy Act of 2005 compelled states to consider net metering and interconnection standards.

Previously, Arizona’s utilities had the option of voluntarily setting up net metering. Given the asymmetry in bargaining power between a ratepayer and a utility, this approach yielded poor outcomes for early solar adopters. For example, during the 1990s, SRP was hostile to homeowners installing solar panels on their roofs (Johnstone 2011). The utility only paid solar customers 2.4 cents per kilowatt hour (¢/kWh), even though it sold power for almost four times that price. The accounting system was also poor. Many customers had conflicts with the utility over whether they were being paid for all the power they had provided. This was not unique to SRP. Overall, Arizona utilities paid low rates to the few customers who had installed solar. They were not “net” metering policies: customers were not paid the same, retail rate for the electricity that they bought and sold. And they likely weren’t getting paid for all their extra energy. Unsurprisingly, this arrangement led to little participation from customers. By the end of 2005, only 350 APS customers and 160 SRP customers had ever installed solar PV.24

The net metering policy was less controversial than the state’s latest renewable energy target, according to a commission employee involved in both proceedings.25 Several advocates working through associations intervened in the rulemaking, including AriSEIA, Americans for Solar Power, the Distributed Energy Association of Arizona, and the California-based Vote Solar. These groups argued for generous terms that would enable the solar industry: large systems should be eligible, there should not be a cap on participation, and fixed fees should not be used. Together, these rules would amplify the policy’s ability to shift the political landscape by growing the advocates faster.

Surprisingly, the utilities did not have major objections to the policy.26 In the NEM proceeding, APS said it supported the policy, provided only renewable energy and not combined heat and power projects could participate. APS went so far as to point out that NEM customers may actually provide benefits to the grid, including “voltage support, reliability, lower losses, power quality improvements, and in selective instances, the possible deferral or even avoidance of distribution investment.”27 Indeed, in January 2009, APS would publish a report that valued distributed generation solar between 7 and 14 ¢/kWh in 2025; at that time, electricity in Arizona cost less than 11 ¢/kWh.28 That said, APS also requested additional charges to cover grid costs. The ACC responded that other states had not approved such charges.

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