Dive Brief:

• Arizona utility Tucson Electric Power has proposed new export rates, time-of-use rates with either demand charges or a grid access fee, and a meter-reading fee for solar customers on its system.
• Under the new proposal, rooftop solar customers would be compensated at $0.097/kWh for their excess generation, lower than the $0.115/kWh today. State regulators last year ended retail rate net metering in favor of avoided cost incentives to be set in individual rate cases
• Earlier this year, Arizona regulators approved new rates for the utility, including several new rate plans, new solar fees and tacking on about $8.50 to an average customer's monthly bill.

Dive Insight:

TEP has kicked off the second phase of its solar rate overhaul, proposing new rates that could make installing distributed solar less attractive to customers.

According to PV Tech, the utility is proposing to compensate solar customers at $0.097/kWh for their excess generation sent back to the grid. Currently, solar customers receive about $0.115/kWh, though the retail rate can vary between $0.13-0.14/kWh throughout the state.

Along with TOU rates, customers would need to choose between a grid-access fee of $3.50/month or a demand charge based on peak usage.

Arizona regulators voted last year to eliminate retail rate net metering and replace it with an avoided cost rate for rooftop solar generation, which would gradually decline over time. Solar advocates said the reduction will trim about 30% from the compensation value, though regulators said they didn't want the rates to fall more than 10% in any given year. The regulators will decide on the exact solar compensation numbers in individual rate cases, such as this TEP case. 

The first phase of TEP's plan was approved earlier this year, with new rate plans for residential and small commercial customers include time-of-use, peak demand and demand charge alternatives. The new plans feature a reduced basic service charge of $10, compared to $13 for the basic plan, and allow customers to reduce bills by shifting electricity use to hours when there is less demand.

The Arizona Corporation Commission is also set to approve two rate cases with similar plans. Incumbent utility Arizona Public Service Co. and solar interests reached a critical agreement earlier this year after the ACC decision, which would allow new rooftop solar customers to lock in a new rate of $0.129/kWh their excess energy, a slightly higher rate then TEP's proposal.