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APS Seeks Rate Increase, Opening Lane for Solar to Rise

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Last month, Arizona Public Service company (APS), announced it would seek a new $184 million rate increase. According to the formal request submitted to regulators, the proposed hikes would raise rates for the average household bill by 5.4%. This announcement comes just 2 years after APS raised rates by 4.5% in 2017. Increasing electric rate projections opens up a lane for solar to emerge as an alternative.

APS to hit customers with rate increases


APS raising rates


In July, the Arizona Corporation Commission ordered APS to undergo a rate case after 2 years of customer complaints over the company’s prices. When casting her vote on ordering the rate case, Commissioner Sandra Kennedy declared, “the people of Arizona are sick and tired of being sick and tired.” The final vote in favor of the case was 5-0. 


At the time, AZCentral noted that though the initial reason for the case was in part due to concerns about the company’s prices being too high, that the result of the case could actually lead to higher prices yet. The proposed increases would cost average consumers using 1,020 kw hours of electricity per month an additional $7.50. That rate would of course increase during the summer when usage is higher and decrease during the winter months. 


The deal has not yet been finalized and according to Phoenix Fox 10, customers would likely not see any changes on their bill until late 2020. In their request, APS cited its investments in creating clean and renewable energy and improving infrastructure as the need to pull in $184M. The company’s rate case program manager Drew Schroeder commented on the pending case stating that, “The rate case is our opportunity and bring forward receipts and ask for recovery of those investments.”


This request comes amidst several controversies involving APS including two heart related deaths as a result of power being shut off during the summer for late payments, and a federal investigation into the company’s spending on political campaigns. “It’s arrogant for them to be coming on the heels of all of those things and asking people for another $184 million,” said consumer advocate Stacey Champion, adding that APS already has the highest electric bills of any utility service in the state. 


Soaring electric prices




Over the past decade there has been a steady rise in electric prices. According to the Energy Information Administration, electric rates have increased 15% in the last 10 years. In just 2019 alone, EIA projects that the electric rate increase for residential users will be 1.2%. Across the globe demand for electricity has increased. In 2018 global demand rose by 4%. In Texas, which has seen huge spikes in temperatures during the summer of late, the Electric Reliability Council of Texas warned that as demand continues to rise, price rises will follow. 


While energy prices have gone up, during the same time, prices for solar have gone down dramatically. According to a study from UC-Berkeley, between 2017 and 2018, the price of solar dropped 11%. Since 2010, while prices for electricity have gone up, the price of solar has plummeted by 85%. Additionally, according to Bloomerg’s New Energy Finance outlook report from this year, by 2050 the price of solar will fall by 63% compared to today’s prices.


The cost of installing solar for residential customers today is a fraction of what it was decades ago. While even just 10 years ago the cost of solar installation was around $50,000, today that price averages between $10-14,000. 


Financial benefits of switching from electric to solar


solar panels


Despite the start-up costs, consumers have financial incentives to switch to solar. Estimated savings on homes that switch to solar range from $13-20,000 over a 20 year period. The estimated average 20-year savings for a solar powered home in Phoenix is $8,000. Additionally, the same UC-Berkeley study found that adding solar panels to a home increases the home value by 3.74%.


Solar has proven to be vastly more efficient than standard electric powered homes. A huge advantage of solar is its ability to generate energy, allowing for the storage of excess energy for later use during peak hours. Switching to solar also protects consumers from unpredictable rate changes from electric companies. Those elements combined saves households tons of money on their bills. 


Today, solar is the fastest growing energy source in the world. In 2016 solar panel capacity increased by 50%. With the release of the 2018 IPCC report on climate change there has been a surge in demand for renewable energy. Yet unlike standard electricity, prices are only projected to continue going down. As prices for electricity increase, solar will soon become a highly sought after alternative. It’s also estimated that by 2030, both wind and solar energy will undercut existing coal and gas almost everywhere. 


With APS proposing yet another electric rate increase, now may be the best time to look into switching to solar. As the price of solar continues to fall while electric rates rise adding more and more to household bills, many will start to turn to solar to save money, increase efficiency, and to reduce their carbon footprint.