Arizona Corporation Commission
1200 W. Washington Street
Phoenix, AZ 85007
Re: Value of Solar, Docket No. E-00000J-14-0023
Chairman and Commissioners,
The Arizona Solar Energy Industries Association (AriSEIA) is a party to the Value of Solar proceeding. That matter took three years to conclude, had approximately 35 parties, and resulted in a compromise. That compromise was adopted by an entirely republican Commission by a 4-1 vote. It is not a decision the solar industry is excited about. But it put in place a predictable framework by which homeowners, solar companies, and the utilities understood the regulatory landscape. As such, AriSEIA strongly opposes reopening the Value of Solar decision.
This Commission has stated multiple times that it supports “regulatory certainty.” Regulatory certainty should apply to all matters before the Commission, not only select matters. It is impossible to do business when the rules under which you operate can change on a whim. While reasonable minds can differ on policy, the institution has a responsibility to ratepayers, utilities, and the other stakeholders that appear before it, including the solar industry, to uphold its own rules, regulations, and orders. Decision 75859 states,
There were also concerns raised in regard to the possibility of dramatic changes in the export rate and resulting uncertainty. However, to allow the export rate developed using this methodology to change gradually, it will be updated annually after it is initially set in a rate case proceeding or separate rate design phase. At the time that the initial DG export rate is set, a Plan of Administration that provides the mechanism for annual modifications to that initial rate also will be adopted. The annual updates accomplished between rate cases should be formulaic exercises where the Resource Comparison Proxy Methodology and the Avoided Cost Methodology established in the rate case is updated; however the reduction to the compensation rate under the RCP methodology shall not exceed ten percent per year.
Gradualism is referred to eighteen (18) times in the order. Multiple parties asserted the importance of making any changes gradually. “RUCO assert[ed] that the process of applying step-down schedules to the initially-established rate, and predictably and gradually lowering the rate, as market uptake increases and the cost of solar declines, will allow solar to ‘become a net benefit to all ratepayers - DG and non-DG customers alike.’” “Staff assert[ed] that it is critical that the Commission's move away from the current framework be accomplished in a gradual manner.” Further, the Commission’s order determined that the proposed methodologies “provide[d] a path for a gradual transition away from the current net metering model.” The Commission stated, “[w]e believe that this will reduce the risk of dramatic changes to customers and the solar industry and is consistent with our interest in rate gradualism.” Again, this adherence to gradual changes in rates or regulations is an essential component to regulatory certainty. Increasing the stepdown percentage would run counter to the positions of RUCO, Staff, and the Commission, as well as the stated goals in every rate case in recent memory.
Decision 75859 also locked in the export rate for a period of ten (10) years. This period provides regulatory certainty for the homeowner. Homeowners make significant investments with private capital, into a generating resource that provides predictable power to the grid. Those investments can be tens of thousands of dollars. Those investment decisions take into account the export rate. It would be impossible to evaluate such a significant investment decision without certainty as to the Commission’s regulations for a period of time directly after the investment. Given the cost of the investment and the longevity of the system, ten (10) years is a very reasonable lock-in period.
There are more than 350 solar companies operating in Arizona. These companies employ approximately 8,337 people in Arizona alone and have contributed $16.8 billion dollars to the state’s economy, with $1.5 billion invested just last year. Residential rooftop solar installations are down almost 30% year over year since 2022. This decline is due in part to the declining export rate, in combination with very high interest rates for anyone taking out a loan to install solar. Any homeowner looking to finance rooftop solar will find interest rates as high as 11.99%. Further declines in installations are likely to result in workforce reductions. Individual installers are considering job cuts of dozens of jobs with an average, annual pay of $62,500 a year. A decline in solar will also result in declines in the roofing industry and other energy efficiency contractors, such as HVAC, windows, and insulation. Reopening this docket will plunge an already struggling industry into uncertainty. It is hard to imagine why anyone would install solar when they have no way to predict what the Commission will do or if it will continue to honor any decision it does reach longer than an election cycle. High interest rates paired with a declining export rate and significant regulatory uncertainty will result in a substantial negative impact to the state’s economy.
Companies looking to do business in Arizona investigate the regulatory environment prior to investing in the state. The rate riders for the Resource Comparison Proxy (RCP) are notably forward looking. For example, APS’ rate rider explicitly states, “[t]he RCP rate may not be reduced by more than 10% each year” and “[e]ach Customer’s initial RCP rate will be applicable for 10 years from the time of their interconnection.” Similarly, TEP’s website on RCP specifically states, “the RCP will not be allowed to fall more than 10 percent annually.” Companies do not make business decisions in two-year election cycles. Changing the rules that impact major investments for homeowners or businesses is not good for the economy or the State.
Lastly, the Commission spends considerable time discussing staffing shortages, high workloads, and trouble juggling competing deadlines. A redo of a matter that took three years is simply not a good use of Commission or Staff time and resources. AriSEIA urges you to vote no on reopening the Value of Solar docket for the reasons stated above.
/s/ Autumn T. Johnson
 Arizona Corporation Commission, Order 75859, Page 151, Line 24 through Page 152, Line 4 (emphasis added), Filed January 3, 2017, available here https://docket.images.azcc.gov/0000176114.pdf?i=1692725715837.
 Id. at 96, Line 20-23.
 Id. at 137, Line 11-12.
 Id. at 148, Line 7-8.
 Id. at 154, Line 2-4.
 Id. at 156, Line 22-24.
 Solar Energy Industries Association (SEIA), Arizona Solar Census, Q2 2023, available here https://www.seia.org/sites/default/files/2023-09/Arizona.pdf.
 APS Rate Rider RCP, Page 1 (a) and (c).
 TEP, Resource Comparison Proxy Export Rate, available here https://www.tep.com/rcp/.
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