AriSEIA filed a response to TEP's rebuttal testimony in the TEP rate case today. The testimony covered three main topics: the company's return on equity (ROE) proposal, community solar, and rate design for distributed solar and storage. TEP has attempted to have several of our issues removed from this rate case, but we have highlighted this is simply a delay tactic and should be denied. Read the full testimony above.

​Arizona Corporation Commission
1200 W. Washington Street
Phoenix, AZ 85007
 
RE: Community Solar Policy Statement, Docket No. E-00000A-22-0103, Exceptions to Staff’s Proposed Order filed February 24, 2023
 
Chairman and Commissioners,
 
The signatories to this letter — a coalition of solar and storage industry partners, including developers, subscriber acquisition and management firms, and nonprofit advocacy groups — have been participating in the Commission’s effort to develop a community solar program since May 2022, nearly a year ago. Our coalition has worked together, and in consultation with other stakeholders, to submit numerous filings that detail national best practices for community solar programs and recommendations for tailoring a community solar program to Arizona. To inform development of an Arizona-specific program, we have also provided a study from Brattle Group regarding the value of distributed community solar projects in APS’ service territory and a study completed by ASU that highlights the quantitative economic benefits of a community solar program in Arizona. We are supportive of the Commission’s effort to make community solar available to Arizonans and appreciate the opportunity to provide information and recommendations to support this goal.
 
The policy statement and proposed order filed by Commission Staff on February 24, 2023 is misaligned with the common understanding and implementation of community solar across the country. Staff’s memorandum and proposed order fails to address or incorporate any of the feedback and  recommendations provided by our coalition throughout the seven month working group process or in our stakeholder comments filed January 27, 2023. Staff’s memorandum includes many shortcomings and, if implemented, would not result in a community solar program, would not spur development of any community solar projects in the state, and would not expand the benefits of solar to families and businesses that currently cannot access rooftop solar.
 
The Commission should reject the Staff proposal. We recommend the Commission either adopt our attached amendment or direct that the five issues of location, structure, LMI carve out, use of an all-source RFP, and must-take requirements be resolved via an evidentiary hearing. If the will of the Commission is to do neither, we ask that you vote no on the Staff’s Recommended Opinion and Order.
 
For reference, a list of our previous filings can be found below:
 
-       Response[1] to July 7 Staff Memorandum and July 20, 2022 letter filed by RUCO;
-       Draft Program Proposal;[2]
-       The Brattle Group study[3] on the value of DG resources in APS territory;
-       Response[4] to Commissioner Marquez Peterson’s August 23, 2022 Letter;
-       Bill Credit Rate Proposal;[5]
-       Response[6] to APS Program Proposal;
-       Economic Impact Study conducted by Arizona State University;[7]
-       Exceptions and Proposed Amendment[8] to Staff’s Recommended Opinion and Order; and
-       Response to Staff’s request for comment on the forthcoming policy statement filed on January 27, 2023.[9]
 
Decision 78784[10] directed Utilities Division Staff to work with stakeholders to provide a recommendation to the Commission regarding five elements of community solar program design: “(1) Location of the community solar program; (2) Structure of the program; (3) The percentage of carve out for low to moderate income customers; (4) Whether the program should be included in an all-source Request for Proposal; (5) Must take provision.”[11]
Despite clear Commission direction, Staff’s memorandum and proposed order does not address or incorporate feedback filed by stakeholders. Additionally, Staff’s memorandum and proposed order includes several provisions that stakeholders have repeatedly demonstrated are not characteristic of other community solar programs and would not lead to a successful or robust program in Arizona. It also includes, without explanation, recommendations that were not discussed or recommended during the duration of the working group process. As a result, Staff’s order leaves the Commission without workable  guidance on how to proceed with a meaningful program that benefits Arizona communities.  

(1) Structure of the Program
Staff recommends that participation in a community solar program be optional for regulated electric utility companies. This is not a recommendation that was raised or discussed during the course of the working group process. This recommendation deviates from all traditional, third-party, community solar programs across the country, and will not result in a successful  program in Arizona.
 
Decision 78784 tasks the Commission with “adopting a statewide policy” for community solar.[12] Per the language within the Decision itself, a statewide community solar program should apply to all Commission-regulated investor-owned utilities (IOUs) in the state: Arizona Public Service (APS), Tucson Electric Power (TEP), and UNS Electric (UNS). An opt-in program for regulated utilities would result in inconsistent access to community solar across the state, depending on a customer’s utility service territory. Furthermore, the state’s investor-owned utilities have already announced their opposition to such a program, no matter how much their customers may want or benefit from it. We recognize that circumstances may differ for cooperative utilities and recommend that they should be permitted to opt-in to the program.
 
Additionally, Staff recommends that the bill credit for energy exported from community solar programs not exceed avoided cost. The bill credit rate was specifically identified in Decision No. 78784 as an item to be addressed in the evidentiary hearing,[13] not the policy statement. It is premature to determine the bill credit rate at this time, and in isolation from other important program details which have not yet been determined.  Regardless, the proposed bill credit would be by far the lowest in the country and would not result in the development of any community solar projects. 
 
Finally, Staff recommends that “[a] participating regulated electric utility company may offer community solar itself or via partnership with a third party.”  It is unclear whether Staff is recommending that the regulated electric utility will use a third-party to administer the program or whether this statement is related to community solar project ownership.  Community solar projects should be owned by competitive third-party entities in order to benefit Arizona customers through the use of private capital to develop projects.
 
There are several important components that define the “structure” of a community solar program and are not addressed in Staff’s memorandum and proposed order, including transaction and crediting structure, program size, permitted resources, procurement structure, project maturity requirements, ownership, bill credit term, guaranteed savings, eligible subscribers, the treatment of unsubscribed energy, and all elements of consumer protection other than how the program interfaces with the utility disconnect moratorium. These components were discussed at length in our last filing on January 27, 2023.[14]
 
(2) Location of the Community Solar Program
Staff recommends that “[c]ommunity solar energy should be generated within a participating regulated electric utility company's service territory.”[15] We agree, and further recommended that individual community solar projects be connected to that utility’s distribution system.
 
(3) Percentage Carve-Out for Low-Income Customers
The joint signatories have previously recommended a low- and moderate-income (LMI) carve out of 20%, based on the models we have seen created in other markets. However, we can support an LMI carve-out of thirty (30) percent, as recommended by Wildfire. This aligns with neighboring states, such as New Mexico, which have recently opened third-party community solar programs.
 
Staff recommends that the remaining project capacity not reserved for low- and moderate-income customers be “limited to non-profit (including faith-based organizations), schools, municipalities, extra small commercial, and small commercial customer classes.” This definition excludes residential customers. Decision No. 78583 clearly states that participating customers should include residential and low-income customers.[16] A recommendation that non-LMI residential customers be excluded from the program was never raised during the course of the working group process. Even residential customers who are not low-income cannot access rooftop solar if they are renters, live in a condo, or face other technical barriers to installing solar. A statewide community solar program should include all residential customers.
 
(4) Whether the Program Should be part of an RFP
Staff recommends use of a request for proposal (RFP) model for a community solar program in Arizona, without providing any details about how such a process could work.  As discussed in our prior filings, states that use an RFP process for selecting community solar projects do so in order to select projects based on the benefits they deliver to participants and communities, not cost alone. Community solar programs need not rely on a price-based RFP procurement format to control project and/or program costs because  project compensation is wholly determined by the value of Commission-approved bill credits paid to subscribers.
 
(5) Must-take provision
Staff states that a “must take requirement is not appropriate for Arizona’s community solar and storage program,” implying that utilities should be able to curtail community solar projects for any reason. Consistent with the precedent set in programs around the country, the signatories recommend against routine curtailment of power produced by community solar projects. There should be, of course, permissible instances during which the utility can curtail community solar production for emergency safety or reliability purposes.
 
Like rooftop solar, community solar project subscribers derive value from their subscription in the form of bill credits only when power is produced and exported to the grid. Decision No. 78583 states, “Direct bill offsets may be considered for subscribers to produce savings in a structure substantially similar to that offered to rooftop solar customers.”[17] If a utility curtails community solar projects on a routine basis, it would unreasonably deny bill credits and savings to subscribers who sign up for the program and substantially differ from the structure through which rooftop solar customers experience savings.[18] Additionally, without predictable certainty regarding if and when projects will be producing energy, it will be impossible to secure financing to develop and build community solar facilities. The signatories are not aware of any community solar program anywhere else in the country that currently allows for routine curtailment by the utility.
 
Utilities have stated that curtailment of community solar projects is necessary because negatively priced power is available, at times, on the market. In such instances, it is economic for utilities to curtail the highest-cost marginal resource in exchange for cheaper or negatively priced power on the market. Customers benefit when utilities curtail resources with high fuel costs or significant pollution impacts in exchange for cleaner, more affordable resources like solar. IOUs in Arizona do not curtail rooftop solar production, and yet they are able to appropriately manage the totality of resources on their system in order to provide cost-effective and reliable power to customers. We have recommended that a community solar program include a specific annual capacity allotment, and that utilities account for community solar project capacity in their long-term resource planning processes. This will make it easy for utilities to predict the amount of community solar resources that will be available to them and plan their operations and future resource procurement accordingly.
 
We have attached a proposed amendment below as Attachment A.
​
[1] Response to Staff Memorandum, filed in Docket No. E-00000A-22-0103 on July 29, 2022. See: https://docket.images.azcc.gov/E000020412.pdf?i=1673898931456.

[2] Draft Program Proposal, filed in Docket No. E-00000A-22-0103 on August 26, 2022. See: https://docket.images.azcc.gov/E000020811.pdf?i=1673359840801.

[3] Study of Community Solar Value Stack in Arizona, conducted by The Brattle Group, filed in Docket No. E-00000A-22-0103 on August 26, 2022. See: https://docket.images.azcc.gov/E000020793.pdf?i=1674487120887.

[4] Response to Chairwoman Marquez Peterson’s Letter, filed in Docket No. E-00000A-22-0103 on September 9, 2022. See: https://docket.images.azcc.gov/E000021024.pdf?i=1674487120887.

[5] Resource Comparison Proxy for Community Solar, filed in Docket No. E-00000A-22-0103 on September 9, 2022. See: https://docket.images.azcc.gov/E000021023.pdf?i=1674487120887.

[6] Response to APS Program Proposal, filed in Docket No. E-00000A-22-0103 on October 7, 2022. See: https://docket.images.azcc.gov/E000021583.pdf?i=1673359840801.

[7] The Potential Economic and Fiscal Impacts of Community Solar in Arizona, filed in Docket No. E-00000A-22-0103 on November 2, 2022. See: https://docket.images.azcc.gov/E000022238.pdf?i=1674487120887.

[8] The Solar Coalition’s Amendment and Proposed Exceptions to Staff’s Memorandum and Proposed Order, filed in Docket No. E-00000A-22-0103 on November 4, 2022. See: https://docket.images.azcc.gov/E000022223.pdf?i=1674662938969.

[9] Response to Staff Request for Comment on the Community Solar Policy Statement, filed in Docket No. E-00000A-22-0103 on January 27, 2023. See: https://docket.images.azcc.gov/E000023855.pdf?i=1677286561482.

[10] Decision 78784 filed in Docket No. E-00000A-22-0103 on November 21, 2022. See https://docket.images.azcc.gov/0000208038.pdf?i=1673898931456.

[11] Decision 78784 at pg. 11.

[12] Decision 78784 at pg. 11.

[13] Decision 78784 at pg. 11, Line 23.

[14]  Response to Staff Request for Comment on the Community Solar Policy Statement, filed in Docket No. E-00000A-22-0103 on January 27, 2023. See: https://docket.images.azcc.gov/E000023855.pdf?i=1677286561482.

[15] Staff Memorandum and Proposed Order, filed in Docket No. E-00000A-22-0103 on February 24, 2023, Attachment A.

[16] Decision No. 78583 filed in Docket No. E-01345A-21-0240 on May 27, 2022 at Page 11. See https://docket.images.azcc.gov/0000206888.pdf?i=1677813967352.

[17] Decision No. 78583, May 27, 2022, Page 11.

[18] Response to APS Proposal, Item 7.