Changes for new rooftop solar customers

One component of the price proposal approved on Feb. 26 is a new price plan for customers who install rooftop solar. Properties with existing solar systems, or those for which SRP was provided a signed solar contract by Dec. 8, 2014, can remain on their existing plan for 20 years from their date of commissioning.

These customers – known as self-generation customers – produce some of their power on their own. When self-generation customers produce more energy than they can use, they sell the extra to SRP. When their home is using more energy than their panels can produce (cloudy days, nighttime, several energy-intensive appliances running at once), they buy power from SRP.

However when customers generate some of their own power, they don't pay the same amount of the fixed costs of enhancing and maintaining the grid as other customers, even though they use the grid to both buy and sell electricity.

The video below helps explain this issue:

FAQs about self-generation and renewables

Choose any link to get answers to your questions about solar and the Customer Generation Price Plan.

Self-generation

What is a self-generation customer?

Self-generation customers do not purchase all of the energy they use from SRP. These customers produce some on their own. Today most of these customers use rooftop solar. When these customers produce more energy than their home is using at that moment, they sell the extra back to SRP. When their home is using more energy than their panels can produce (cloudy days, nighttime, several energy-intensive appliances running at once), they buy power from SRP. Whether buying or selling electricity, these customers still use the grid, our network of power plants, poles, lines, transformers and advanced digital meters.

What new rules did SRP approve regarding self-generation?

All new self-generation customers will receive service under a new price schedule called the Customer Generation Price Plan, or E-27. This price plan breaks the elements of electric service into the same categories as SRP's commercial customers. This structure will allow for the introduction of new technologies, as they develop, such as load controllers and energy storage. The details of the E-27 plan are explained beginning in page 28 of the approved ratebook document is a PDF.

Why did SRP approve a new price plan for residential self-generation customers?

For years, customers paid for power based on how much energy they used. The cost of using the grid was "rolled in" to the cost of electricity through the per-kWh, or energy charge. However when customers generate some of their own power, they don't pay an equal share for the fixed costs of enhancing and maintaining the grid, even though they use the grid to both buy and sell electricity.

Under older price plans, the self-generation customer did not pay for the full amount of the fixed costs that the utility incurred to serve the customer. Those costs were being borne by other customers. This issue was addressed because of the rapid growth in residential solar installations and the fact that solar customers were making a long-term commitment based on assumptions related to dated utility price structures. Delayed action on this issue would have resulted in greater expenses for all customers.

What are the key features of the residential Customer Generation Price Plan?
  • Based on SRP's Time-of-Use plan, with the same on-peak and off-peak hours.
  • A significantly-reduced energy charge (per-kWh charge) because grid costs have been removed.
  • An on-peak grid charge that collects most of the grid costs.
  • The remaining grid costs related to connecting to the grid shift to the monthly service charge (these charges vary by the size of the home).
  • Net metering will be based on the variable charge (the per kWh charge) of the new Customer Generation Price Plan.
What is a demand charge?

The demand charge measures the monthly maximum amount of energy a customer uses in a half-hour interval during peak hours, when demand is highest.

How does the Customer Generation Price Plan work?

The price plan takes the same costs recovered in the standard time-of-day price schedule (E-26) and restructures them into three categories similar to SRP's commercial price plans.

The first category is the cost for equipment and services relating to the customer's account. These include the costs of the distribution system to service the customer's house and will be recovered in a fixed charge. This charge will vary depending on the size of a customer's electric service entrance. This is the electrical panel where power comes into the home. Most homes in SRP territory have the same 200-amp size, although very large homes may have larger capacity.

The second category is called the demand charge. This is a charge that measures the customer's use of the grid (the generation, transmission and distribution system) and is intended to recover the fixed components of cost. This charge varies depending on the customer's peak use of electricity during the peak hours of 1-8 p.m. during May-October and 5-9 a.m. and 5-9 p.m. during November-April. Similar to today's existing Time-of-Use price plan, lowering demand during peak hours can be controlled by the customer and result in a lower charge.

The third category is the energy charge. This is measured by the amount of electricity that flows through the meter. It is different from the kilowatt hour charge in other price plans because it recovers only the variable cost of producing the energy (mainly fuel and purchased power costs). Since they are captured separately in this price plan, the fixed costs have been removed from the energy charge. The result is the energy charge per kWh is considerably lower.

Specifically, how will the overall bill change for new solar customers?

Depending on how customers manage their use, they can continue to save money every month. If they were to do nothing (make no changes in behavior, technology or not orient their solar system west facing to better align with peak demand), they would spend about $50 more to reflect the fixed charges they currently avoid under existing price structures.

To the extent solar systems are oriented in a manner that reduces demand during on-peak periods, customers can save through a reduced demand charge which is proportional to SRP's cost savings. Customers can also reduce demand by installing load controllers, using battery technologies, and by shifting load to off-peak periods.

How will current self-generation customers be impacted?

The way existing self-generation customers (primarily solar at this time) are billed will not change for 20 years from the day the system connected to their home was commissioned.

How will new self-generation customers be impacted?

New self-generation customers who have provided SRP with a signed solar contract signed after Dec. 8 will be placed on the new price plan effective with their April 2015 bill.

These changes sound like solar customers are being penalized. Why?

SRP did not impose new costs, but rather we restructured the price for new rooftop solar customers to be in line with what non-solar customers pay for the same services.

Isn't the monthly service charge the same as a demand charge?

The monthly service charge helps pay for recurring costs that include billing and collections, metering, customer service and a portion of the distribution system that is connected to your house. These charges are fixed and don't change with the customer's usage pattern.

The demand charge includes costs that are dependent on the maximum amount of electricity a customer demands during peak times. An analogy is the capacity of freeway systems. Think of transmission and generation like lanes on the freeway, which are built to accommodate maximum (peak) amounts of traffic (demand).

Will net metering continue?

Yes. Solar customers will still be able to net the amount of energy purchased against the energy sent back to the grid. The credit will be for the energy charge, consistent with the new components of the price plan.

How will these changes affect the rooftop solar industry?

It is up to the rooftop solar industry to provide products that are competitive with the true cost of producing and delivering electricity.

Does the Customer Generation Price Plan apply only to solar customers?

No. The price plan is intended to send the proper price signal to customers so that they may employ technologies of their choosing. Solar customers are currently those who are primarily impacted, but other technologies such as fuel cells may be viable in the future and would also be placed on the Customer Generation Price Plan.

Does this mean SRP no longer supports solar energy?

No, SRP supports solar energy. To date, SRP has committed to more than $150 million in incentives to help customers install solar. We also have made significant investments in community-scale solar installations here in Arizona, and we have a Community Solar program that allows residential and commercial customers to tap into that energy without having to install panels on their rooftop. SRP has also entered a contract to purchase output from a 45-megawatt solar plant to be constructed in the East Valley in 2015. SRP's goal is to acquire solar at the best possible price to benefit all of our customers.

Sustainable resources

Why is SRP pursuing energy efficiency, solar, wind, geothermal and other renewable projects?

SRP's Board set a goal to meet 20% of our retail sales with sustainable resources by 2020. This includes energy efficiency measures. As our country's energy mix continues to evolve and technology in this area continues to improve, it's the right thing to do for the future.

Does SRP expect to meet the sustainability goal?

Yes, we are on track to meet the goal of 20% by 2020 and have exceeded our annual goal every year since 2007.

What kinds of renewable projects is SRP supporting?

SRP has a mix of renewables such as wind, solar, geothermal and biomass energy, hydropower, conservation and energy-efficiency measures. We expect to spend $216 million this year and $228 million next year for sustainable sources and programs.