Pursuant to A.R.S. § 40-253, AriSEIA submits this Application for Rehearing of the Commission’s Decision that makes significant changes to net metering, export compensation, interconnection treatment, and related rate design elements applicable to solar customers. As set forth below, those changes are legally flawed, unsupported by substantial evidence, procedurally deficient, and inconsistent with governing constitutional, statutory, regulatory, and federal law requirements. Rehearing is necessary to correct errors of law, address unsupported and arbitrary findings, and remedy due process violations that materially affected the outcome of this proceeding.
At a high level, AriSEIA seeks rehearing on the following grounds:

First, the utility failed to meet its burden of proof. The Decision relies on a defective cost-of-service analysis that does not demonstrate justness, reasonableness, or cost causation sufficient to support eliminating net metering or different treatment for solar customers.

Second, the Commission unlawfully eliminated net metering through adjudication without modifying its own net metering rules. Net metering is required by the Commission’s existing rules, which bind the Commission and the utility. Nothing in the rules or Arizona administrative law permits agencies, including the Commission, to ignore binding rules. Changes in substantive policy of general applicability must be accomplished through lawful rulemaking. The Commission’s Decision unlawfully skips rulemaking and changes net metering treatment through an ad hoc adjudication decision.

Third, the avoided cost methodology reflected in the Decision does not correspond to the definition of avoided cost under the Public Utility Regulatory Policies Act of 1978 (PURPA). The utility’s calculation of avoided cost fails to reflect the utility’s marginal costs that would be incurred but-for solar customer’s exported solar electricity and in a non-discriminatory way compared to how the utility’s other sources of supply are treated.

Fourth, the Decision reflects arbitrary and capricious ratemaking. The Commission’s choice to eliminate the 10-year export rate lock and the premature termination of grandfathering are unsupported by substantial evidence and constitute unexplained departures from prior regulatory treatment. At the same time, the Decision imposes new interconnection fees and other adverse changes on solar customers without evidentiary support or a reasoned explanation for departing from prior Commission practice, resulting in an internally inconsistent and unsupported ratemaking outcome.

Fifth, the Decision unlawfully discriminates against solar customers. Differential treatment, including interconnection fees, is imposed without a showing of cost causation, in violation of the Arizona Constitution, Arizona statutes, the Commission’s net metering rules, and PURPA.

Finally, the proceeding was marred by due process violations. These include an unexplained reversal by Staff following the settlement process, refusal to respond to data requests or engage on critical issues, reliance on untested and shifting rationales, misrepresentations to the Commission regarding AriSEIA’s willingness to negotiate, and no opportunity for AriSEIA to respond to those allegations during the open meeting.

​For these reasons, and as set forth in greater detail below, AriSEIA respectfully requests that the Commission grant rehearing and provide appropriate relief.

FOR IMMEDIATE RELEASE

AriSEIA Responds to the Arizona Corporation Commission Vote Ending Solar Protections in Sulphur Springs Rate Case

Phoenix, Arizona — The Arizona Solar Energy Industries Association (AriSEIA) expressed deep concern today after the Arizona Corporation Commission (ACC) voted unanimously to approve changes to Sulphur Springs Valley Electric Cooperative’s (SSVEC) rate structure that dramatically roll back long standing consumer protections for solar customers in Cochise County.

In a 5 to 0 vote, the Commission approved SSVEC’s request to eliminate net metering for non residential solar customers effective immediately, end the ten year export rate lock for new residential solar customers, and terminate twenty year grandfathering for existing commercial solar systems. The Commission also approved the creation of punitive and discriminatory interconnection fees that apply only to solar customers. The only issue the Commission rejected was a component that would have violated federal law.

These decisions overturn years of established policy. Grandfathering protections were upheld in the original Value of Solar decision, in SSVEC’s last rate case, in the 2023 Resource Comparison Proxy review docket, and in the Trico rate case decided just last month. The Commission also had previously affirmed the ten year export rate lock and the principle that avoided cost is the lawful floor for export rates.

The Commission also declined to require SSVEC to evaluate virtual power plant programs or other modern Demand Side Management innovations that other utilities across the state are actively adopting. These programs reduce peak demand, improve reliability, and lower system costs, yet SSVEC will not be required to even study them.

In addition, the Commission voted not to require SSVEC to reimburse the documented underpayment to residential solar customers in 2023, when the cooperative paid an export rate below its own calculated avoided cost. That payment level was not only contrary to federal requirements under the Public Utility Regulatory Policies Act (PURPA), but also contrary to SSVEC’s Plan of Administration and the Value of Solar decision.

“For years, the Commission has emphasized the importance of regulatory certainty for businesses and consumers,” Autumn Johnson, Executive Director of AriSEIA. “That certainty was abandoned today. Decisions that were reaffirmed again and again were reversed without new evidence and without any demonstration that circumstances had changed. Customers who made investments based on Commission rules are now being told those rules no longer apply.”

AriSEIA will continue to advocate for fair, lawful, and transparent rate design and for policies that support customer choice, reliability, and innovation across all Arizona utilities.

Media Contact:
Autumn Johnson
Executive Director, AriSEIA
[email protected]
www.ariseia.org

Arizona Corporation Commission
1200 W. Washington Street
Phoenix, AZ 85007
 
RE: Sulphur Springs Docket No. E-01575A-24-0160 and E-01575A-23-0299
 
Chairman and Commissioners,
 
We request that you pull agenda item No. 7 from the consent agenda on the September 5th open meeting and place it on the regular agenda to allow public comment and also so that Commissioners and Staff can ask the utility questions.
 
AriSEIA sent Sulphur Springs (SSVEC) questions about this filing earlier this week and scheduled a call with them to discuss those same questions on August 30th. However, SSVEC was not able to answer any of the questions and abruptly ended the call after only approximately 17 minutes.
 
SSVEC filed a different avoided cost calculation on November 6th, 2023.[1] That avoided cost calculation was $.0629, which is greater than their export rate of $.041310. For some unknown reason, this filing never moved forward and was withdrawn one day later. AriSEIA filed a letter in that docket explaining that an export rate below the avoided cost rate was a violation of the Public Utility Regulatory Policies Act (PURPA).[2] Vote Solar and Solar United Neighbors have sued Salt River Project (SRP) in federal court over the same issue.[3]
 
Six days later, SSVEC filed a new avoided cost calculation in a new docket.[4] That avoided cost calculation is $.0307, less than half that of the avoided cost calculation from the prior filing. They filed an amended tariff on August 1st and a Staff proposed order was docketed within a few weeks and it was scheduled for the September 5th open meeting (approximately 6 weeks after being initially filed).
 
Additionally, both tariffs include a meter fee unique to solar customers of $2.70, despite the fact that all residential customers, solar or not, have identical meters. This is the identical issue to the DG meter fee in the last TEP rate case. AriSEIA presented extensive evidence on why that fee was unjustified and it was ended as a result.[5]
 
AriSEIA would like the following questions answered by SSVEC before this item receives a vote:
 

1. Why is the avoided cost calculation so dramatically different between November 2023 and July 2024? Is the methodology the same? Can stakeholders be provided with the workpapers? Has Staff received the workpapers?
2. Why was the November filing withdrawn? How are those customers going to be made whole? It is very concerning that when the utility finds the avoided cost is too low the item does not move, but when the utility finds the avoided cost is too high, the item moves immediately. The process should be applied consistently.
3. Why are solar customers paying more for an identical meter than non-solar customers?

 
Respectfully,
/s/ Autumn T. Johnson
Executive Director
AriSEIA 
(520) 240-4757
[email protected]

[1] SSVEC Tariff Filing, November 6, 2023, available here https://docket.images.azcc.gov/E000032051.pdf?i=1724737112344.

[2] AriSEIA Letter, July 9, 2024, available here https://docket.images.azcc.gov/E000036580.pdf?i=1725068843076.

[3] Complaint for Declaratory and Injunctive Relief, U.S. District Court for the District of Arizona, Case 2:24-cv-02021-DJH, August 12, 2024.

[4] SSVEC Amendment to Application, August 1, 2024, available here https://docket.images.azcc.gov/E000037043.pdf?i=1724736609230.

[5] TEP rate case, AriSEIA direct testimony, P. 365, January 27, 2023, available here https://docket.images.azcc.gov/E000023835.pdf. 

Arizona Corporation Commission
1200 W. Washington Street
Phoenix, AZ 85007
 
RE: Docket No. E-01575A-23-0299
 
Chairman, Commissioners, Staff, and Sulphur Springs,
 
AriSEIA was not aware of this docket until recently and we understand that the Company intends to raise this issue in its forthcoming rate case application. However, we want to make it clear that an export rate (in this case the DGEE) below avoided cost is a violation of federal law. The Company’s filing makes it clear that its avoided cost is $.0629 and its current DGEE rate is $.041310.[1] The Company then filed for a withdrawal of the proposed tariff seeking to rectify this discrepancy one day later stating, “[a]fter working with ACC Staff we learned that the last approved export rate year can remain in effect multiple years until SSVEC filed for an update.”[2]
 
The Public Utility Regulatory Policies Act (PURPA) was enacted by Congress in 1978 for the primary purpose “to lessen the country's dependence on foreign oil” and to encourage the development of renewable energy technologies as alternatives to fossil fuel.[3] The Federal Energy Regulatory Commission (FERC) develops rules to implement PURPA. PURPA achieves its purpose by requiring electric utilities to purchase energy and capacity from qualifying facilities (QFs).[4] Those rates are set at avoided cost. The utility's avoided cost is the “incremental cost to an electric utility of electric energy or capacity or both which, but for the purchase from the [QF]…, such utility would generate itself or purchase from another source.”[5] The avoided cost rate must be just and reasonable, in the public interest, and nondiscriminatory against QFs.[6] PURPA prohibits utilities from engaging in price discrimination when they borrow supplemental power from or to small energy producers.[7] Congress enacted PURPA to “overcome obstacles imposed by [] utility monopolies for non-utility generation, including customer-sited small renewable generation.”[8] Qualifying small power producers includes residential customers with rooftop solar.[9]

Importantly, the courts have determined that QFs are entitled to key protections against discriminatory rates and charges. “For example, when a home or business with solar panels needs to buy extra power from or wants to sell surplus power to the local utility, PURPA bars the utility from charging that home or business different rates than it would any other customer or supplier.”[10] “Section 210(f) requires state public utility commissions and nonregulated independent utilities to ‘implement’ the rules issued by FERC under Section 210(a) by incorporating them into their regulations and procedures.”[11] 

The Commission’s decision as to the implementation of PURPA can be found in Docket No. 81-0045. The Commission last visited PURPA in Docket Nos. 17-0360, 16-0272, and 18-0087 in 2019.
 
While the Company intends to file a rate case sometime at the end of this year, that means solar customers have been underpaid for at least a year, depending on how long the rate case takes to resolve. AriSEIA believes this delay is in violation of PURPA and that it was inappropriate to withdraw and then close this docket. AriSEIA respectfully requests that the Company include a proposal to rectify this situation in its 2024 rate case, including a mechanism to make these solar customers whole. AriSEIA also requests that future filings that make it clear the export rate is lower than avoided cost be resolved promptly.
 
Respectfully,
 
/s/ Autumn T. Johnson
Executive Director
AriSEIA 
(520) 240-4757
[email protected]

[1] Sulphur Springs Valley Electric Cooperative, Tariff Filing, Docket No. E-01575A-23, Filed November 6, 2023, available here https://docket.images.azcc.gov/E000032051.pdf?i=1720586124384.

[2] Sulphur Springs Valley Electric Cooperative, Tariff Filing Withdrawal, Docket No. E-01575A-23, Filed November 7, 2023, available here https://docket.images.azcc.gov/E000032051.pdf?i=1720586124384.

[3] FERC v. Mississippi, 456 U.S. 742, 745-46 (1982).

[4] 18 C.F.R. § 292.303.

[5] 18 C.F.R. § 292.101(b)(6).

[6] 18 C.F.R. 292.304(a)(1)(i)-(ii).

[7] 16 U.S.C. § 824a-3-(b).

[8] Petition for Enforcement Under the Public Utility Regulatory Policies Act of 1978 under EL24-54, Docket EL24-54-000, p. 2, filed January 12, 2024, available at https://elibrary.ferc.gov/eLibrary/filelist?accession_number=20240112-5029&optimized=false [hereinafter Vote Solar PURPA Petition]; Am. Paper Institute v. Am. Elec. Power Serv. Co., 461 U.S. 402, 405 (1983).

[9] 16 U.S.C. § 796(7)(A), (C), & (D). See also 18 C.F.R. §§ 293.203(a), 292.201(a)(1), (d)(1), 292.204(b)(1)(i); In re Westar, 460 P.3d 821, 824 (Kan. 2020); Sun Edison LLC, 129 FERC 61,146 at 18 (2009).

[10] Solar v. City of Farmington, 2 F.4th 1285, 1287 (10th Cir. 2021); 16 U.S.C. § 824a-3-(b).

[11] Id. at 1288.