ACC

Download our briefs on policies that have been promulgated by the Arizona Corporation Commission, which regulates public service corporations including Tucson Electric Power (TEP) and Arizona Public Service (APS).

APS's Track and Record Proposal Part III

Published January 2016
Tags: , ,

Published January 2016

download full brief

The essentials

  • See our previous brief sheets for background on What a Renewable Energy Credit (REC) is and the background on why the Arizona Corporation Commission is addressing how utilities obtain the Renewable Energy Credits needed to comply with the Arizona Renewable Energy Tariff and Standard (REST).
  • Arizona's Renewable Energy Standard & Tariff (REST) requires that 4.5% of electricity comes from distributed generation (DG) systems such as rooftop solar.
  • Regulated utilities demonstrate compliance with the REST by purchasing Renewable Energy Credits (RECs) from their customers who have installed DG systems, typically with upfront cash incentives meant to help customers finance the installation of the DG system.
  • With the rising demand for DG installations since the start of the REST, the Arizona Corporation Commission agreed to significantly reduce upfront incentives. As a result, the regulated electric utilities lost their guaranteed source of RECs that are needed to demonstrate compliance.
  • In June 2012, utilities proposed a Track and Record option that would allow utilities to demonstrate compliance by tracking and counting towards compliance any new DG connection added within each service territory, independent of REC ownership.
  • The REST rules had not been updated since they were approved in 2006.
  • The Utilities Division Staff (“Staff”) of the ACC proposed seven options to modify the REST rules. Ultimately, the ACC adopted a modified version of APS’s Track and Record option.
  • The adopted modifications require a utility to include in its compliance reports the actual kWhs of energy produced within its service territory from DG. A utility must differentiate between kWhs for which it owns the REC, and kWhs produced in the service territory for which it does not own the REC. Those kWhs for which a utility does not own the REC will not count towards compliance, but will be “acknowledged” by the ACC for informational purposes only. The REC remains with the producer of DG energy, unless purchased by a utility.

Read full brief

APS's Proposal to Change Net-Metering

Published October 2013
Tags: , ,

(download full brief)

updated December 2013

The essentials

  • Rooftop solar installations have exponentially increased in recent years, in Arizona and nationally. With the continued increase penetration of distributed generation from rooftop solar installations, utilities have begun re-evaluating the price structures they use to compensate owners for the electricity their installations feed into the grid.
  • Currently, Arizona Public Service Company’s (APS) net-metering program compensates a solar rooftop owner at retail rates for the excess electricity the solar rooftop installation exports to the grid.
  • APS recently proposed to reduce compensation for electricity put onto the grid by solar rooftop installations, reducing the value that rooftop installations provide to their owners.
  • APS argues that the current net-metering rates effectively subsidize rooftop solar owners and unfairly shift costs from solar rooftop owners to non-solar rooftop owners. Rooftop solar installations also decrease residential electricity demand, thereby decreasing APS’s revenue.
  • The solar industry opposes the proposal because they argue the current plan fairly compensates for the value solar provides to the system, and will stall the development of the industry. Free market proponents also argue that the policy hurts competition and endorses the regulated monopoly utility model.
  • On October 1, 2013, the Arizona Corporation Commission (ACC) staff rejected both of APS’s suggestions for net-metering changes. Instead, they recommended addressing the distributed generation concerns during the next APS rate-case.
  • On November 14, 2013, the ACC voted to implement a $0.70/kW fee for customers with rooftop solar installations who participate in their net metering program. The fee equals roughly $5/month for a typical residential installation. The ACC agreed to review the net metering policy in more depth during the next APS rate case.

An Introduction to Restructuring of Electricity Markets

Published October 2013
Tags:

(download full brief)

The essentials

  • The electric utility industry has in the past typically been a monopoly with a few utilities in a particular geographical area that generate, transmit and distribute electricity.
  • Recently, the Arizona Corporation Commission (ACC) had opened up discussions to decide if Arizona should restructure the electricity market and allow competition (also referred to as retail competition or deregulation) or maintain its current regulated structure.
  • Restructuring the Arizona electricity market would have allowed consumers to choose among a variety of energy suppliers in a competitive market based on prices and services.
  • The stages of generation of power, transmission and distribution would be independently operated by competing power companies.
  • On September 11, 2013, the ACC voted 4-1 to end the discussion on retail electric competition in Arizona, reasoning that there were several constitutional hurdles.
  • However, the ACC kept open the potential for discussion about other changes to Arizona electricity markets.
  • Note: this brief uses the terms restructuring and deregulating interchangeably.

Renewable Energy Credits in Arizona

Published July 2013
Tags: , ,

(download full brief)

The essentials

  • In the U.S., when electricity is generated by a renewable energy source, two products are created: electricity and a Renewable Energy Credit (REC).
  • In Arizona, a Renewable Energy Credit (REC) represents the non-power attributes of a kilowatt hour of electricity from renewable energy. These attributes include renewable benefits (such as hedging against fossil fuel price increases) and environmental benefits (such as avoided pollutants).
  • The Arizona Corporation Commission requires regulated utilities to demonstrate their compliance with the Renewable Energy Standard and Tariff (REST) by obtaining RECs.
  • RECs can be bundled or unbundled, and traded, bought or sold in markets such as the Western Renewable Energy Generation Information System (WREGIS).

 

 

 

APS & TEP 2013 REST Distributed Generation Incentives

Published February 2013
Tags: , ,

(download full brief)

The essentials

  • On January 23, 2013, the newly-elected Arizona Corporation Commission (ACC) unanimously voted to end all photovoltaic (PV) rooftop incentives for commercial/non-residential entities for both APS and TEP.
  • They also voted unanimously to reduce APS’s combined residential photovoltaic (PV) rooftop and solar water heater (SWH) incentives to $4.48 million. TEP’s combined residential PV rooftop and SWH incentives budget was set at $744,486. Commissioner Pierce stated 2013 will likely be the last year that regulated utilities will offer residential incentives.
  • The ACC stated incentives are no longer necessary to continue the commercial solar distributed generation markets. The Solar Energy Industries Association predicts a serious market contraction in the wake of the Commission’s decision.

APS/TEP/UNSE Utility REST 2011 Compliance Reports

Published July 2012
Tags:

(download full brief)

The essentials

  • In 2006, the Arizona Corporation Commission adopted the Renewable Energy Standard and Tariff (“REST”) rule requiring regulated electric utilities in the state to obtain some of their energy from renewable sources, such as wind, solar, geothermal and biomass.
  • Every year, a prescribed percentage of each affected utility's electricity sales must come from renewable sources. The percentage required gradually increases until reaching 15% in 2025.
  • To ensure that each utility company is on track towards meeting its REST requirement, it must file two separate documents annually: 1) a Compliance Report and 2) an Implementation Plan.
  • In the Compliance Report, each company tracks its progress in renewable energy sales. The progress is tracked with Renewable Energy Credits.
    • In the Implementation Plan, each company describes its plan to meet the next year's requirement.
    • This brief covers the Compliance Reports. Please also see our corresponding brief on this year’s Implementation Plans:“APS/TEP/UNS Utility REST Implementation Plans.”

APS/TEP/UNSE Utility REST Implementation Plans

Published June 2012
Tags:

(download full brief)

The essentials

  • In order to comply with the Renewable Energy Standard and Tariff (“REST”) rules formally passed by the Arizona Corporation Commission (“ACC”) in 2007, affected utilities must provide
    • an annual report to the ACC that describes their intended implementation proposal to meet the REST requirements and
    • a follow-up compliance report explaining the utility’s progress towards meeting its annual REST Implementation requirements and targets for the previous year with the REST and intended future REST implementation plans.
  • Each year, the ACC reviews the implementation plan of the affected utility for the following year
  • The ACC then makes an official determination regarding the utility’s REST implementation plan which includes any amendments or changes that arise during the review process.
  •  The ACC also reviews the utility’s annual REST Compliance Report. After review, it is released to the public.

Solar Power Purchase Agreements

Published June 2012
Tags: ,

(download full brief)

The essentials

  • A Power Purchase Agreement is a contract between multiple parties, one who generates electricity for the purpose of sale (the seller) and one who is looking to purchase electricity (the buyer).
  • The PPA defines all of the commercial terms for the sale of electricity between the two parties, including when the project will begin commercial operation, schedule for delivery of electricity, penalties for under delivery, payment terms, and termination.
  • A PPA is the principal agreement that defines the revenue and credit quality of a generating project and is thus a key instrument of project finance.
  • There are many forms of PPA in use today. PPA’s vary according to the needs of buyer, seller, and financing counterparties.
  • PPA’s have grown popular because the installation, operation, and maintenance costs associated with rooftop solar systems can be overly expensive for individual property owners.

Arizona's Net Metering Rules

Published June 2012
Tags: ,

(download full brief)

The essentials

  • The Arizona Net Metering Rule allows customers to receive credit for excess electricity they generate from renewable energy installations at their home or business.
  • Both electricity purchased from the utility and electricity generated by the customer is measured with a bi-directional meter installed at the house of the customer.
  • Any net excess electricity generated in one month is carried over as a kilowatt-hour credit onto the customer’s next bill.
  • At the end of the calendar year, customers receive a check or a billing credit from the utility for any unused kilowatt-hour credits.
  • Utilities must annually file with the Arizona Corporation Commission proposed tariffs; such tariffs set standard rates for the annual purchase of credits. The tariff is then added to each utility customer’s electricity bills.
  • Update December 2013:

    On November 14, 2013, the ACC voted to implement a $0.70/kW fee for customers with rooftop solar installations who participate in their net metering program. The fee equals roughly $5/month for a typical residential installation. The ACC agreed to review the net metering policy in more depth during the next APS rate case.

Arizona's Renewable Energy Standard and Tariff

Published March 2012
Tags:

(download full brief)

The essentials

  • The rule requires all regulated electrical utilities to obtain 15 percent of their retail generated energy from renewable resources by 2025. Starting in 2007, utilities must follow a compliance schedule to meet reduction goals.
  • In 2025, 4.5 percent of total retail sales must come from distributed renewable resources.
  • One-half of the distributed renewable energy requirement must come from residential applications and the other one-half must come from nonresidential, non-utility applications.
  • Utilities may charge a tariff to ratepayers to recoup costs associated with implementing the Renewable Energy Standard