Dive Brief:

• The Arizona Corporation Commission (ACC) has begun hearing a request from the Sulphur Springs Valley Electric Cooperative to approve an average 3.8% rate increase and a move to higher fixed charges, including higher charges for customers who own distributed generation (DG), the Arizona Daily Star reports.
• The utility proposes to recover more of its operating costs from monthly fixed charges, which it would increase from $10.25 to $25. It also proposes to reduce its volumetric from $0.126/kWh to $0.102/kWh. The result would be an average residential bill increase of $3.22/month, the utility estimates.
• Sulphur Springs also asked approval for a monthly fixed charge for residential customers who obtained their DG after April 15, 2015, that would rise from $10.25 to $50 over four years. Their per-kWh charge would drop from $0.125 to $0.0712. Exported generation would earn a $0.0258/kWh credit.

Dive Insight:

Sulphur Springs, which serves about 51,000 customers in southern Arizona, is following a familiar policy playbook to deal with rising levels of distributed generation in its footprint.

To mitigate what the utility says is a $1 million annual cost shift from rooftop solar customers to the rest of the rate base, the utility is pushing to increase fixed charges, reduce volumetric rates, and lower remuneration for distributed solar systems. 

Residential customers who had solar systems approved before April 15, 2015, would be “grandfathered" — allowed to keep their existing rates and net metering credits for the life of their systems. They would, however, be subject ot the four year increase in fixed charges. 

The Sulphur Springs request comes after a number of its peer utilities have pushed similar policy proposals, sparking protracted regulatory debates with solar advocates in the state.

Arizona Public Service requested a $3/kW charge in 2013 and was granted a $0.70/kW charge. It recently resubmitted the $3/kW request but then deferred the request to its upcoming general rate case.

Last November, Tucson Electric Power asked to double its fixed monthly charge to residential customers from $10 to $20, increase business customers' fixed and variable usage-based charges, and reduce the NEM credit. Hearings on that rate case are slated to begin in August and will also involve consideration of TEP's utility-owned rooftop solar project, which regulators delayed ruling on earlier this month.

In February, TEP's sister company, UniSource Energy Services (UES), asked the ACC to approve mandatory demand charges for residential customers, along with increases in monthly charges and reductions in solar net metering rates. 

UES, however, amended its proposal after significant backlash, making demand charges optional for all customers except those with their own distributed generation.

The Sulphur Springs plan, originally filed last year, is the latest rate case to be taken up by the ACC. Hearings began May 17 before an administrative law judge, who is expected to make a recommendation to the full commission later this year. 

Correction: An earlier version of this post stated hearings on the rate plan began last Wednesday, May 18. That was incorrect. Hearings began on the 17th.