Arizona net metering is the public policy regarding the specific rates that local utility companies pay to clients who sell excess energy back to the state’s electric grid system. Under this system, Arizonians with solar energy systems get credited for the amount of energy they send back to the electrical grid. It is widely believed that these credits offset the amount of energy they use from the primary grid.
An article published in The Arizona Republic, a local newspaper, states that utility providers view Arizona net metering is an incentive. This is because they pay retail rates for solar energy from rooftop solar panels when they can buy wholesale power cheaply from various renewable sources. Note that if your residential solar panels generate more energy than your household needs, you can sell the excess energy to the primary grid. You can make a few extra bucks in addition to the financial savings you make if you are paying lower utility bills or no utility costs at all.
Arizona net metering
All new Arizona solar energy customers are served by reputable utilities such as Tucson Electric Power and Arizona Public Service. They are offered a credit at a low amount than what was offered through Arizona net metering. This rate is widely referred to export rate. To fully understand the difference between the export rate and Arizona net metering, you must understand the specific components of your electric bill.
The way Arizonians are credited for the electricity they sent to the electric grid and billed for power can make or break the financial incentive of installing solar panels. Adding credits via Arizona net metering for solar energy export rates can help pay for your solar energy system by reducing your utility bills every month. The specific components of your monthly electricity bill and the level of credits you get as a client with solar vary depending on the local utility provider.
Here are some of the charges that go into your monthly electric bill and how they can affect your financial return on your solar investment or energy-related savings.
These charges cover the amount you pay every month based on how much electricity your household uses. Volumetric charges are tracked using your electric meter. The moment you go solar, you will be able to offset these charges with the amount of electricity you generate from your solar panel system.
Widely known as basic service charges or monthly service charges, fixed charges are the part of the electric bill over which you do not have control. Traditionally, fixed charges are relatively low for residential property owners, which means your monthly power bill is majorly based on the amount of electricity your household uses.
Local utility companies across Arizona have sought to increase this fixed charge in recent years. This gives clients less ability to control their energy bills. For example, Salt River Project clients now pay approximately $32 per month while Arizona Public Service clients pay approximately $12 per month and fixed charges before they use electricity.
Some local utility providers have balanced out fixed charges increased by reducing the volumetric cost of electric power. Since solar energy systems reduce the need for electricity from utility companies, a high fixed charge limits the total amount of money you can save with solar energy by buying less energy from the utility company. For local utilities that are still offering Arizona net metering, lowering the overall volumetric cost of energy translates to lowering the 1-to-1 credits you are likely to receive for the excess solar energy you generate or send to the electricity grid.
Most Arizona utility companies provide time-of-use rate plans. Under these arrangements, electricity costs are high during peak hours and more affordable during off-peak hours. While the times vary depending on the utility service provider, peak hours often range from afternoon to early mornings on weekends, which is 3 p.m. and 8 p.m. for Arizona Public Service and 2 p.m. to 8 p.m. for the Salt River Project. These periods coincide with the periods of increased residential electricity demand.
Electricity power under these plans can cost property owners 2 to 3 times more during peak hours than what they pay during the off-peak period (during summer months). Having functional solar paneling and sufficient battery storage systems can help offset part of the expensive energy, particularly during peak hours. Some utility companies also provide super off-peak rates. These are the rates associated with exceptional benefits to electric vehicle owners who prefer charging their electric vehicles at home.
The demand charges
Generally, demand charges are based on the highest amount of electricity you draw at home during a specific period. Arizona utility companies were some of the first utility providers in the country to instituted demand charges for residential property owners. These charges are designed to encourage clients to lower their overall energy usage, mainly when the overall electricity demand is high.
Note that utility providers across the state may offer various rate plans that allow clients to pay less volumetric charges or time-of-use charges. This is possible if only the solar customers agree to be subject to some kind of demand charges.
For instance, Arizona Public Service solar clients under its Saver Choice Max or Saver Choice Plus programs often have electricity demand charges based on the highest amount of on-peak energy they draw during a 60 minute period every month. On the other hand, the Salt River Project solar clients have the E-27 program where they are charged depending on the highest amount of on-peak energy they draw within a 30-minute period every month.
It is essential to mention that demand charges can make up a considerable portion of your monthly utility bill. So, if your current plan includes demand charges, you should be ready to monitor your overall energy usage effectively and limit the usage of major electrical appliances. This is because most solar clients are being put on demand-based rates.
You may also want to consult with a reputable Arizona solar installer because such companies are now providing not controlling techniques such as hot water heaters or smart thermostats to help manage your household’s energy-related demand. There is also a chance of getting incentives for having such tech. For instance, SRP offers a $250 rebate to customers with load-controlling equipment.
The grid access charges
Solar property owners who are also APS clients and pay the utility’s Saver Choice plan often incur grid access charges depending on the amount of solar energy they generate. The current charge is about 0.93 dollars per kilowatt-DC, which means you will be charged for the privilege of adding solar energy back to the electricity grid. For a 5-kilowatt solar panel system, this charge would be approximately $4.65 monthly or $55.80 annually.
Solar export rates
In Arizona, utility providers develop their rate structure under the approval of the Arizona Corporation Commission. For Arizonans who get their electricity from a municipal utility provider, locally elected officials often serve this role. But if you’re part of an electric cooperative, there is a chance an elected board often sets the rate structure.
The same way utility providers set the rates you pay for electric power, they can also set the specific rates your credit for when you export solar energy back to the electric grid. The major regulated utility providers in Arizona include UNS, APS, and TEP that provide solar energy clients an export rate to compensate for the excess electric power they sent to the main grid. Note that the export rate open credits solar clients less than what Arizona net metering was offering.
Under the recent rules set by the Arizona Corporation Commission, the overall export rate at the time you shift to solar energy is locked in for a period of ten years (a decade). Every October, this export rate is scheduled to decrease by up to 10 percent and reset for every new client installing solar panels. Under these regulations, the longer you wait to install solar panels, the less the export rate will be worth, which means you will be credited less for the excess energy you send to the grid.
So, the earlier you install solar panels on your property, the better. Consult with local solar installers such as Clear Sky Solar to learn more about Arizona net metering how various components of your utility bill affect your financial savings.