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APS Statement Regarding The Arizona Corporation Commission Staff’s Recommendation On Net Metering Reform In Arizona

The Staff report makes it clear that the current net metering structure is not fair for all customers and must be changed. We can now move forward with productive discussions on the best solution for customers. The Staff report comes less than a week after the release of an important study by the California Public Utilities Commission that provides additional insight into the cost shift caused by net metering.

Staff’s recommended alternatives are a starting point but don’t go far enough to fix the fairness issue. We stand by our initial proposal and we look forward to working with the commissioners, staff and other stakeholders on developing the right solution for our customers. We need to act now. This issue will get worse for customers and harder to solve the longer we wait to address it.

Excerpts from Staff’s recommendation:

“With increasing levels of DG penetration, the potential of shifting costs from customers with DG systems to those customers without such systems becomes apparent. As more customers offset a portion of their monthly bills by using energy produced by their DG systems, they purchase less energy from the utility. Because residential rates are typically designed to recover much of the utility’s fixed costs through volumetric energy rates, DG customers effectively pay less of these fixed costs.”

p. 6, lines 14-15

“The magnitude and significance of this cost shift increases as more and more DG systems are added to the utility’s system.”

p. 6, lines 21-22

“Arizona is not unique in confronting the NM cost shift issue. Several other states that have experienced relatively rapid penetration of customer-sited DG have recognized the cost-shift issue and addressed it in varying ways.”

p. 13, lines 7-10

Copyright Business Wire 2010

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