Jon Johnson File Photo/Gila Herald: Graham County Electric Cooperative gets almost 3 megawatts of power from rooftop solar installations like this one in Pima.
Cooperative uses Distributed Generation Service with an annual export rate instead of net metering
By Jon Johnson
PIMA – The Graham County Electric Cooperative (GCEC) believes in a future with renewable electricity resources – it has a 386-panel, 96-kilowatt system on at its headquarters and has started a program to help the town and schools put up solar power parking structures – but, as a nonprofit, it also feels that those who have solar systems should pay into the distribution grid that is used by all.
On Dec. 21, 2016, the Arizona Corporation Commission (ACC), which regulates various utilities, including the GCEC, voted 4-1 to do away with net metering and replace it with a de-escalating annual export rate. For GCEC, the annual export rate was initialized at slightly more than 7 cents per kWh and began May 1, 2018. Customers who already had solar and were on net-metering were automatically grandfathered in for the next 20 years to keep their net metering unless they choose to opt out and switch to the Distributed Generation Service instead.
As of May 1, 2019, the annual export rate was lessened to about 6.6 cents per kWh; on May 1, 2020 it will lower to just under 6 cents per kWh, then down to about 5.3 cents per kWh on May 1, 2021; 4.8 cents per kWh on May 1, 2022, and 4.3 cents per kWh on May 1 2023.
What is an annual export rate?
The annual export rate is the credit applied against monthly cooperative charges.
While under net metering, if a customer put 10 kWh onto the grid in excess power generation during the day, and then the same customer received 10 kWh from GCEC during the night, those kilowatts were exchanged on a one-for-one basis and the customer would not have any usage charge.
Under the annual export rate, if a customer put 10 kWh onto the grid in excess power generation during the day, currently that customer would be credited at 6.6 cents per kWh, for a total of a 66 cents credit. However, if the same customer then received 10 kWH from GCEC that night, that customer would be charged the normal rate of about 11 cents per kWh, or $1.10. So, after the single day, the customer would be charged 44 cents to have GCEC hold and then transfer back the power the customer’s system generated. by 2023, the same scenario will see the customer being charged 67 cents for the day.
Basically, in such instances, GCEC acts like a battery backup for customer-owned solar systems, and under net metering did not receive any payment for doing so but under the distributed generation service does.
GCEC Manager/CEO Kirk Gray said the lowest point on the de-escalating scale (the point it reaches in 2023) is about what it costs the cooperative to purchase utility-scale solar power and transmit it to the area. GCEC subscribes to 2-megawatts of power from Apache Solar at Sunsites.
“So, that’s what our de-escalating rate on new rooftop solar does, it gets us eventually down to what it costs us for utility-scale solar power and I think that’s fair,” Gray said. “Because in that way, nobody is subsidizing anybody else . . . The bottom line is it needs to be fair to all members.”
The new rate also does away with rolling over kWh and banking them, which occurs in net-metering if a system delivers more power to the grid during the month than a customer takes from the grid. Solar owners used that system to build up kWhs during the winter and spring and then use them in the summer months when their power consumption is more than what they produce.
That also means that for those investing as much as $40,000 or more for a solar system it will take longer to recoup their money as they will not save as much as previously under net metering regulations. Depending on the size of the system, however, the extra cost annually for the majority of users could likely be as low as $250 versus those on net metering.
Gray said he foresees a future where those with solar will likely not even be connected to the GCEC grid anymore when battery storage capacity increases and comes down in price.
“Battery storage, at some point, will be a game changer,” Gray said. “That’s the big problem with renewables is being able to store that energy when it is not available and, right now, battery storage is not where it needs to be.”
No matter if you have solar or not, everyone connected to the GCEC grid pays an $11.25 monthly meter fee and also has to pay any applicable town and state taxes.
GCEC is a nonprofit and cannot operate at a profit. However, even with new mandates of using renewable resources, GCEC owes money on conventional generation and will still have to pay its debt off from existing carbon-based generation.
“The government could fix this really, really easy where we would be totally on board with renewables,” Gray said. “And that would be to give us some relief on the debt on existing carbon-based generation. Because when we are mandated to replace with renewables, then we’re stranding that generation that we still owe money on and it becomes cost prohibitive . . . We’re here to just cover costs, so we’re really, really cost conscious. But renewables aren’t going to go away and we’ve got to change the way we do business which means we have got to figure out a way to have renewables work for us.”
City of Safford keeps net-metering
Conversely, the city of Safford, which is a private utility not overseen by the ACC, has not only kept net-metering for its customers but has increased its viability.
Previously, if a solar customer produced more kWHs of power than used, the city would zero the rolled over amount at the end of the year and the customer wouldn’t receive any benefit.
As of March 26, 2018, however, the city now continues to roll those excess kWHs over until they are used by a customer during the summer months.