Solar customers want more from SRP in new rate proposal

PHOENIX — What’s the rush?

Solar energy advocates are asking that question as Arizona’s second-largest utility is on the verge of adopting a new rate plan for the first time in six years.

Critics say SRP’s price-setting process, potentially impacting more than a million ratepayers, lacks proper scrutiny and time. SRP set into motion the public process for new rates on December 2nd of last year and the 15-member elected board could vote on a final proposal as soon as Thursday, February 27th.

“I don’t see how they can conclude this process on Thursday without some of these questions being resolved,” said Steve Neil, a Mesa homeowner and longtime home solar activist.

In an interview with 12News, SRP CEO Jim Pratt said the nonprofit utility will provide an updated recommendation to the board next week after reviewing a final round of amendments and input from stakeholders.

“Our process is faster than a lot of others (utilities), but it is definitely not rushed,” Pratt said. “It’s as transparent as – I would tell you – I think it can possibly be.”

SRP’s proposal would result in an increase of average residential bills by 3.5% ($5.61 per month) and average solar residential bills by 5.5% ($7.39), according to SRP’s website. Two time-of-use plans would shift later in the evening (6 p.m.-9 p.m. and 5 p.m.-10 p.m. respectively.) The plan would also result in 93% of limited-income customers having a rate decrease.

“We’re putting what we think is as small as price increase as we possibly can in place. We take that very seriously,” Pratt said.

Rooftop solar advocates have varying opinions about the proposed time-of-use plans. However, they are unified in their opposition to the export price that SRP is proposing for solar homeowners, and they question the methodology used by SRP to set its rates.

“This represents a step backwards for rooftop solar customers,” said Kate Bowman of the nonprofit Vote Solar.

Under the proposal, the amount SRP would pay for excess energy produced by rooftop solar customers would go up from 2.8 cents per kilowatt-hour to 3.5 cents. Although it’s an increase, SRP’s export rate is notoriously low. Neighboring APS (regulated by the Arizona Corporation Commission) pays 6.9 cents. Utah’s largest utility pays 5-6 cents. Nevada, Colorado and New Mexico pay 10-15 cents in a system known as net metering.

“The amount SRP is willing to pay for energy exported by solar customers to the grid is less than what SRP is paying to purchase power elsewhere or generate its own power,” said Bowman. “Another concern is the proposed rate has volatility. The value could change every year. Other utilities allow you to lock it in for a set amount of time, so you have some predictability, some certainty.”

Determining the value of rooftop solar generation is widely debated. One weakness of rooftop solar energy is that it generates less kilowatts during high-demand summer evenings and generates nothing at night.

A recent review of two dozen studies across the country concluded the actual “value of solar” that experts assigned to customer classes of solar owners varied widely depending on the “stakeholder perspective.”

There is no gold standard formula everyone accepts. However, half of the studies analyzed showed values landing between 8-20 cents. None were below 5 cents.

“SRP solar owners are not getting anywhere near the value of their energy,” said Randy Miller, an SRP board member and rooftop solar advocate.

Pratt says the reality is that rooftop solar customers create a “cost-shift” to non-solar customers, based on the results of a “Value of Solar” study commissioned by SRP last summer and a more recent cost allocation study.

“We show that result (cost-shift) in the proposal we put out, in the study work that we did. That is happening,” Pratt said.

Bowman disagrees, alleging SRP under-counts cost reduction provided by solar and over-states the purported revenue deficiency from solar customers.

Neil recently presented his own analysis to SRP.

“I took their own unbundled breakdown for what it costs per kilowatt hour and every way I look at it, the fair export rate comes out between eight and ten cents,” Neil said.

Supporting data for the pricing process was evaluated by the SRP Board of Director’s independent consultant, Christensen & Associates.

“The firm has concluded the data is accurate, reasonable, and based upon utility ratemaking principles used across the U.S.,” said a spokesperson for SRP by email.

Pratt defends SRP’s approach to renewable energy standards, saying it includes a slight decrease to the existing monthly service charge of solar customers, a renewable energy credits program, and a virtual power plant pilot program.

That pilot would incentivize solar customers with battery storage, Pratt said.

It’s one proposal both sides may support.

“I think a program that compensates customers fairly for choosing to dispatch battery storage to the grid could be a win-win,” Bowman said.

A genuine move towards a customer-sided battery storage program would represent a new front for SRP. The utility has historically emphasized its utility-scale solar programs in its long-term goal to reach net-zero emissions by 2050. It currently generates about 1,500 MW of solar and has 1,000 MW of battery storage. In the next five years, it plans to add 3,000 MW of solar and 4,500 MW of batteries.

Neil is asking SRP to conduct an audit of its pricing process.

“I see things that don’t make sense,” he said. “The pricing and methodology have not been audited by their own internal audit department.”

Regarding Neil’s concerns, an SRP spokesperson said Friday that management has met with him on “numerous occasions” and is confident the data is just.

“This data has been made public since December 2, 2024, on SRP’s website and in hard copy in the public information room at SRP’s offices. We have responded to multiple questions and data requests from Steve Neil – providing thousands of lines of data in support of his inquiries,” said Jennifer Schuricht of SRP.

Under the heading titled “What is the public pricing process?” the utility’s website says “SRP opened a public pricing process on Dec. 2, 2024. Over several months, the Board will review and decide on any proposed changes to SRP’s price plans after giving customers notice and offering them the opportunity to provide feedback.”

If the board votes next Thursday, it will have been just under three months for the entire process to play out.

An attorney representing solar companies says it’s not enough time to vet SRP’s work product.

“Because it’s only a two-month process, we don’t have time to hire an expert witness to competently review the study,” said attorney Autumn Johnson of AriSEIA, a solar industry firm. “Normally in one of these proceedings, you have the application for several months to intervene and there are several more months to hire expert witnesses.”

Schuricht responded to Johnson’s comment by providing 12News with a copy of a Tweet from Johnson dated October 29 of last year. It references a working study session held by SRP.

“SRP Management shared the need for a public pricing process in early 2024 at a public Board meeting and has maintained the timeframe it initially disclosed,” Schuricht told 12News by email. “The need for the pricing process and the timeline were discussed with the Board again on October 29, 2024, at a work-study session that was open to the public. The attached post on X from Autumn Johnson indicates she was aware of the upcoming pricing process.”