By Phoenix Business Journal

Arizona Public Service Co. filed its plan last week to implement renewable energy production into its portfolio for next year and beyond in a move that will hike the amount of money it invests, but lower the individual incentives for solar.

The plan, filed July 1 with the Arizona Corporation Commission, dedicates $96.4 million in 2011 to funding renewable energy through incentives for rooftop and commercial systems, as well as construction of its own power plants.

Eran Mahrer, the utilityâ¿¿s director of renewable energy, said the plan would allow APS to exceed the stateâ¿¿s mandates for producing renewable power as a portion of its portfolio in a five-year time frame.

The plan includes a number of ways of dealing with the onslaught of requests for incentives on rooftop solar systems, both at the residential and commercial level. APS has dropped its incentives twice in the past six months, and is overbooked for its program for this year.

⿿The customers have become accustomed to the solar value proposition,⿝ Mahrer said.

To deal with the residential side, the utility is proposing a series of decreases based on the amount of applications it receives. Under the plan, the current incentive of $1.95 per installed watt would drop to 90 cents over time.

Those systems approved through APS now can get an incentive of nearly $10,000 on a 5-kilowatt system. At the end of the program, the same system would get about a $5,000 incentive.

That funding stream would start in October, a period for which APS already has more than 7 megawatts of applications and $13 million in funding from requests already in the system, according to the APS website that tracks the stats.

APS also is planning for a ⿿rapid request⿝ program that would give customers an incentive of $1 per installed watt to allow people to avoid waiting for the higher rates and get the incentive nearly immediately.

APS also is preparing a new home incentive that will run slightly higher than its average for regular installation as the utility looks to bring more solar online in new and existing homes.

To bolster its commercial solar work, APS is splitting off schools and government incentives, giving that sector $27 million a year for the next three years. Schools received a boost recently from an ACC decision to allow solar companies to sell them power as a third party without being regulated as a utility. The category used $20 million in 2009 for systems and already has been allocated $15 million so far this year, Mahrer said.

Schools and government systems will still receive incentives the same way commercial systems do: through a performance-based incentive. A project may receive a total incentive, but it would be paid out over a period of 10 to 20 years based on the systemâ¿¿s power output.

APS also is raising the amount it will pay for commercial systems over the life of its program by $100 million, to $670 million. The utility also is planning to spend about $16 million on various solar programs and power procurement programs, Mahrer said.

The increase in money spent under the plan, however, would require an increase in the monthly fee charged to homeowners and businesses, according to the filing and APS officials. Residential customers would see an increase from $3.60 to $4.05 per month in their renewable power adjuster. Lower-use businesses will see their fee rise from $128.70 to $150.53 under the plan, and large commercial and industrial usersâ¿¿ fee would rise from $386.19 to $451.60.

The plan requires ACC approval and may not be voted on until August at the earliest.

Copyright 2010 American City Business Journals

Copyright 2010