Arizona’s Salt River Project Utility Challenged On High Rooftop Solar Rates

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The Center for Biological Diversity took legal action in Arizona federal court this week to challenge the Salt River Project, an Arizona utility, in its ongoing rate discrimination against residential solar customers who had their rates bumped up 60% in 2015.

“SRP is violating the Equal Protection clause because its anti-solar electricity rates have no rational basis,” the Center stated in its amicus curae, or friend of the court filing, in the US District Court of the District of Arizona. The Equal Protection Clause is a clause within the text of the Fourteenth Amendment to the United States Constitution. The clause, which took effect in 1868, provides “nor shall any State […] deny to any person within its jurisdiction the equal protection of the laws,” explains Wikipedia.

SRP claims the anti-solar rates are necessary to recover the unique “cost of serving rooftop solar customers,” the brief notes.

This solar rate battle in Arizona has been ongoing for years. In response to the 2015 rate increase, rooftop solar customers in April filed a proposed class-action suit against the utility for the discriminatory rates that penalize them for installing renewable energy, the Center says. The utility then filed a motion to dismiss the suit, arguing that public power companies are shielded from antitrust laws. The amicus brief filed in court by the Center this week opposes that utility motion.

“The Salt River Project’s discriminatory rates unlawfully punish customers who embrace clean energy and protect Arizona’s air quality,” said Jean Su, the Center’s energy director, in a statement. “Old-school utility monopolies are dragging down renewable energy and propping up dirty fossil fuels. These schemes are doing terrible damage to our health and our planet’s future.”

The Center’s brief also challenges the utility’s argument that it is immune from antitrust liability. “SRP also suggests that that as a ‘public electric utility and natural monopoly’ subject to a regulatory ratemaking statute, it is automatically empowered to take action with ‘anticompetitive effects’ free from antitrust liability,” the Center brief says. “SRP is mistaken,” it adds.

The filing also states that the power utility’s obstruction of rooftop-solar deployment unlawfully stamps out clean energy competition and undermines the very public-interest objectives that utility monopolies were created to serve.

In 2015 SolarCity, later acquired by Tesla, challenged the utility’s discriminatory rates on similar antitrust grounds. The company took the case to the Supreme Court after a lower court rejected its request to dismiss it. But it reached a settlement with Tesla before the Supreme Court hearing, and the discriminatory fees were left in place, says the Center.

The 2018 agreement between SolarCity and SRP dismissed the lawsuit, but SRP agreed to purchase a 25 megawatt/100 MW-hour battery energy storage system from Tesla. The system will be installed at the Agua Fria Generating Station in Glendale during the first quarter of 2021.

SRP agreed in the SolarCity settlement to initiate a three-year pilot program for solar and non-solar customers to collect information on potential modifications to future rate plans the utility may submit to the Arizona Corporation Commission.

SRP also agreed to initiate a customer storage incentive program which would provide incentivizes to residential customers to purchase energy storage systems. This program was designed to be available for up to 4,500 customers, providing up to $1,800 for the installation of the systems, which could include Tesla products.

In Arizona, air conditioning use peaks during the day and distributed generation helps reduce costs of running more expensive and polluting natural gas plants to cover peak usage periods. “Climate change is already making Arizona’s heat waves deadlier,” said Su in a statement. “It’s critical that the courts stop these outdated monopolies from abusing the law to boost dirty energy and further heat the planet.”

The Solar Energy Industries Association notes that, “Arizona is one of the sunniest states and has huge potential for its solar market. While the state solar industry has tremendous growth opportunity, due to public debates about the benefits of solar, imposition of a net metering charge in 2014 and elimination of incentives, the market has been turbulent.”

The association adds, “SEIA is working with local stakeholders and policy makers to encourage stability and transparency into policies, so that the market can recover from this market disturbance and continue to grow.”

The Center is an Arizona-based non-profit environmental organization dedicated to the preservation, protection and restoration of biodiversity, ecosystems, and public health. The Center has more than 1.5 million members and online 
activists nationwide, including more than 890 members and over 15,000 supporters who live in SRP service territory.

SRP providse electricity to approximately 1 million retail customers in a 2,900-square-mile service area that spans three Arizona counties, including most of the Phoenix metropolitan area.