Unsure about net metering? Here’s a primer for debate

APS seeking to change system for solar customers

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Arizona Public Service Co. is seeking to change the practice of net metering, where rooftop-solar customers receive credits for electricity they send to the grid. The Arizona Corporation Commission will review the utility’s proposal for solar customers’ bills next month.
Stacie Scott/Republic
The Republic | azcentral.com Mon Oct 28, 2013 6:55 PM

The term “net metering” sounds complex, but it’s simply a system in which customers with solar panels on their houses get credit for the electricity they send to the power grid. They use those credits to offset the electricity they buy from the utility at night or when their panels are not making enough electricity to meet their needs.

Here are some common questions and answers about the system:

Question: Why is net metering important?

Answer: Electricity must be used when it is generated unless it has battery storage. Batteries are expensive, so most urban houses tied to the power grid don’t use them. Without net metering, solar customers only would be able to power their own appliances during daylight hours when their panels generate electricity. They wouldn’t have a way to capitalize on the power they make but don’t use immediately.

Q: How does net metering affect solar customers’ bills?

A: Solar customers accrue credits for each kilowatt-hour of electricity they generate during daylight hours that gets sent to the grid. At night, those customers rely on the utility grid to supply them with power. At the end of the month, they are billed on the amount of kilowatt-hours they took from the utility minus the kilowatt-hours they sent to the grid.

Customers with a large enough solar array can offset all of their electricity use and see bills as low as $22 a month, reflecting just a few basic fees. However, this does not include the money they pay to either lease or buy their solar panels. Officials from SolarCity Corp. have said that their average customer saves $5 to $10 a month on their combined utility bill and lease.

Q: What happens at the end of the year if solar customers still have leftover credits for kilowatt-hours of electricity they generated?

A: Throughout the year, credits that customers accumulate can roll over from month to month. So excess credits from solar power generated in March might be used to offset a big June bill. In December, Arizona Public Service Co. pays the customers for any remaining credits at about 3 cents per kilowatt-hour. This is much less valuable than the credit they get throughout the year on their bills, which can offset electricity costing 15 cents per kilowatt-hour. For most solar customers, the end-of-the-year figure is about 500 kilowatt-hours, or $15, and it can come in a check or as a bill credit. The 3-cent figure reflects the avoided cost of fuel in a power plant that otherwise would have been used to generate that power.

Q: Why does APS want to change net metering?

A: APS officials say that because solar customers pay less money to the utility, they push the costs of maintaining power lines and power plants on to non-solar customers.

The costs of such upkeep are included in the cost of a kilowatt-hour of electricity, and solar customers don’t buy many kilowatt-hours. The utility has proposed changes that would add $50 to $100 to the average solar-customer bill.

Q: What do solar companies say?

A: Most rooftop-solar-installation companies dispute the “cost shift” that APS officials say occurs between solar and non-solar customers. They contend that because rooftop solar reduces the strain on the power grid, it defers the need to buy new power lines and power plants, saving all customers money. The solar industry and APS have produced competing reports analyzing the financial implications of net metering.

Q: What’s next?

A: The five elected members of the Arizona Corporation Commission, which regulates utilities in the state, is expected to review the proposals from APS, the commission staff and other parties at a meeting on Nov. 13-14.

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