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 to July 7 Staff Memorandum and July 20, 2022 letter filed by RUCO;
- Draft Program Proposal;
- The Brattle Group study on the value of DG resources in APS territory;
- Response to Commissioner Marquez Peterson’s August 23, 2022 Letter;
- Bill Credit Rate Proposal;
- Response to APS Program Proposal;
- Economic Impact Study conducted by Arizona State University;
- Exceptions and Proposed Amendment 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.
Decision 78784 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.”
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. 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, 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.
(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.” 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. 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.” 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. 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.
 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.
 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.
 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.
 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.
 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.
 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.
 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.
 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.
 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.
 Decision 78784 filed in Docket No. E-00000A-22-0103 on November 21, 2022. See https://docket.images.azcc.gov/0000208038.pdf?i=1673898931456.
 Decision 78784 at pg. 11.
 Decision 78784 at pg. 11.
 Decision 78784 at pg. 11, Line 23.
 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.
 Staff Memorandum and Proposed Order, filed in Docket No. E-00000A-22-0103 on February 24, 2023, Attachment A.
 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.
 Decision No. 78583, May 27, 2022, Page 11.
 Response to APS Proposal, Item 7.
AriSEIA filed the direct testimony of our two experts today in the Tucson Electric Power rate case. We are focusing on community solar and battery storage programs for residential and commercial customers. The testimony and exhibits exceed 400 pages. You can view the entire filing at the button above. TEP is due to file their response on February 15th.
AriSEIA filed expert witness testimony in the currently pending TEP rate case focusing on why the Commission should deny TEP's request to increase their return on equity (ROE). Additionally, several other parties filed testimony about items other than rate design on January 11th. You can view the docket here.
AriSEIA Joins Letter in Support of Transportation Electrification Implementation Plan at ACC
RE: In the Matter of Electric Vehicles, EV Infrastructure and Electrification of the Transportation Sector in Arizona (Docket No. E-00000A-21-0104)
Madam Chair and Commissioners,
On behalf of Arizona Solar Energy Industries Association (“AriSEIA”), Solar United Neighbors (“SUN”), and Vote Solar, we would like to commend Tucson Electric Power (“TEP”) for bringing forward a comprehensive Transportation Electrification Implementation Plan (“TEIP”). We want to make our support known and urge the Commission to act swiftly to approve the TEIP.
Our organizations have been thoroughly engaged in developing electrification policy as we believe transportation electrification is key to building a cleaner, more flexible, and more affordable grid. The growth of transportation electrification is also an opportunity to make Arizona a leader in the clean energy transition. TEP’s TEIP provides a comprehensive framework for reaching this ambitious goal. Building out electric vehicle (EV) infrastructure has numerous economic and environmental benefits. Implementation of the TEIP will make it more convenient, affordable, and reliable for Arizonans to adopt EVs, while also reducing air pollution.
We would like to highlight and applaud some key objectives TEP laid out in the TEIP. First, we appreciate TEP’s willingness to invest in educational campaigns and outreach. Many customers remain unfamiliar with EVs, so it is important to give customers opportunities to learn more and especially to get hands-on experience driving an EV, as TEP has proposed through their “EV Showcase.” We hope that TEP’s proposal to develop multiple marketing campaigns based on segmented customer data will result in educational campaigns that appeal to a wide variety of TEP customers and are equally accessible in English and in Spanish. This will ensure consumers, especially in disadvantaged communities, better understand the benefits of EVs and how to optimize charging, thereby saving money and reducing peak demand. The plan correctly recognizes that although investments in EV charging will positively lead to a reduction in fuel costs, high peak loads on our grid systems need to be proactively minimized through education and awareness of rate structures.
Second, we are pleased that the TEIP includes a variety of incentive options to help residential and commercial customers adopt EV charging infrastructure at their homes and businesses. Incentivizing customers to adopt smart charging equipment that contributes to grid flexibility will save all customers money. Above and beyond the upfront cost of purchasing EV charging equipment, many EV adopters will find that they need to upgrade the wiring in their home or business. This additional cost can be a significant deterrent, so we appreciate that the proposed Smart Home and Smart City Programs include an incentive for a panel upgrade for Low- and Moderate-income (LMI) customers, as well as incentives to pre-wire new homes for EV charging.
Third, we commend TEP for including incentives to support charging infrastructure for public transit, micro-mobility solutions, and non-profit rideshares. These investments will help to ensure that Arizona residents who rely on public transportation, or cannot afford an EV, benefit from the electrification of the transportation sector.
Fourth, we are glad to see that TEP’s plan considers the needs of fleet customers who will rely on the correct planning tools to create cost-effective fleet transitions. Total cost of ownership calculators (TCO) will enable fleet customers to accurately address their needs while transitioning. The proposed assistance to fleet managers also creates an opportunity to educate managers about strategies and technologies to optimize charging and avoid adding to peak load. We hope to see a more developed plan in the near future.
Fifth, we appreciate that TEP’s plan includes considerations to proactively manage the grid impacts of transportation electrification as EV adoption grows. The TEIP proposes a managed charging pilot program that would encourage EV drivers to align charging with times of day when the cost of energy is lower or when plentiful clean energy resources, like solar, are available. Managed charging reduces peak demand, which improves grid resiliency and reduces the need to build additional generation. We hope this pilot will provide TEP with experience and information to roll out managed charging programs for all customers with EVs. In the meantime, we support the recommendation to require customers who use the Smart Home or Smart City incentives to purchase a networked charger to ensure that EV infrastructure installed today has the communications equipment necessary to help improve grid flexibility. We are also supportive of TEP’s proposal to conduct a grid impact analysis focused on optimizing the use of distribution assets. Understanding and planning for the growth of distributed energy resources is the best way to keep grid costs low for all customers.
Going forward, we provide the following recommendations for TEP’s consideration to improve the success of the TEIP. First, customers should be provided with additional information regarding the enrollment process and planned program initiation. We would also like to see how the company plans to evaluate and gather data from customers. Second, we support the recommendation to align the LMI incentive with that of other nearby states, at least $1,300, and distribute it as one lump sum instead of dividing it into separate upgrade allowances. Third, we agree that customers who receive an EV incentive should be required to purchase a networked Level 2 charger. Those receiving this incentive should also be encouraged to enroll in a managed charging program or time of use (TOU) rate when available, with the option to opt-out if appropriate.
Once again, the TEIP is a victory for Arizona’s economy. The sooner the plan is implemented, the sooner its plethora of benefits can be reaped. We request that the Commission vote to approve the TEIP and proposed budget during the October Open Meeting.
Arizona Solar Energy Industries Association (AriSEIA)
Western Region Director
Solar United Neighbors (SUN)
Interior West Regulatory Director
AriSEIA is partnering with the Solar Energy Industries Association (SEIA) to intervene in the Tucson Electric Power (TEP) 2022 General Rate Case. TEP filed the rate case in June 2022, testimony is due in January 2023, and the hearing is expected to start in late March 2023.
AriSEIA Negotiated TEP Revised Distributed Generation Interconnection Manual Approved by ACC
Commissioners approved Tucson Electric Power Company’s (TEP) revised Distributed Generation Interconnection Manual. The creation of these manuals was required following the Commission passing rules dealing with the interconnection of distributed generation facilities. TEP’s manual lays out technical and safety requirements that customers within its service territory must follow when interconnecting a distributed generation system, such as residential and commercial solar projects, to the existing grid. The manual is meant to create a standardization process for customers.
TEP’s manual was initially approved at the Commission’s February 2022 Open Meeting, however, following the passage of AriSEIA proposed amendments at that meeting, a revision to the manual was necessary. After several meetings between AriSEIA, TEP, and ACC Staff, the manual was revised to include information regarding Meter Socket Adapters (MSA), detailing their use for generating facilities. The manual was updated to better preserve the Super-Fast Track and Fast Track designations, allowing for faster review tracks for qualified projects. The revised manual also clarifies study cost fees customers are responsible for prior to beginning any study. TEP’s revised manual does not prematurely require inverters to comply with the IEEE sections that are not yet developed or for which equipment is not yet capable of compliance. Further, the manual modified its requirements around transfer trip infrastructure so as not to be overly burdensome, thereby reducing costs for large installations. Finally, the revised manual includes an additional section that provides a list of scenarios meriting an extension of time.
All documents related to this agenda item can be found in the Corporation Commission’s online docket at https://edocket.azcc.gov and entering docket number E-01933A-20-0116.
AriSEIA filed extensive comments and amendments on Friday, February 4, 2022 with the Arizona Corporation Commission (ACC) calling for changes with Tucson Electric Power (TEP)'s interconnection manual. Specifically, AriSEIA proposed changes to the treatment of Meter Socket Adapters; Construction Timelines; Fast Track, Non-Exporting, and Inadvertent Export Systems; and Fees and Costs charged to customers. This matter is on the agenda for the ACC's February Open Meeting on February 8, 2022. You can find the agenda and watch the meeting here.
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