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| Coalition of Solar Companies Calls APS Fee Unconstitutional |
Coalition of Solar Companies calls APS fee UnconstitutionalBy: Rachel Leingang March 4, 2016 , azcapitoltimes.com A group of solar companies wants to stop the state’s largest utility from collecting a fee from its customers because the group claims the fee could be unconstitutional. The Energy Freedom Coalition of America, a new group that includes solar company SolarCity and a few other solar companies, says Arizona Public Service shouldn’t be able to automatically increase its lost fixed cost recovery adjustor mechanism. All residential customers pay a small amount each month under the mechanism. It was approved in a 2012 APS rate case decision to allow the utility to recover fixed costs it loses due to energy efficiency and distributed generation programs, according to the utility’s website. Fixed costs include infrastructure needs, wires, substations and transformers.
APS has increased collections from the mechanism annually since its approval. In its first year, the utility collected about $5 million, followed by $25 million in its second and $39 million in its third. Starting in March 2016, it proposes to collect $46 million through the recovery mechanism. For a typical residential customer, the charge amounts to 34 cents each month, according to APS filings. The terms of the settlement agreement reached in the 2012 rate case decision allow APS to reset the mechanism annually. In filings last month, the coalition asks the Arizona Corporation Commission to issue a stay of the recovery mechanism pending an upcoming Arizona Supreme Court decision. Last year, the Arizona Court of Appeals ruled a different adjustor mechanism, the system improvements benefit, was unconstitutional. In that case, the judges decided the benefit, which was used by water companies to increase rates between rate cases for infrastructure needs, didn’t meet the Arizona Constitution’s requirement for determining fair value when setting utility rates. At the time of the ruling, the Residential Utility Consumer Office, which brought the case against the improvements benefit, said the court’s decision could have “pretty broad implications.” “Certainly, there could be other mechanisms out there that could be in danger,” RUCO Director David Tenney said at the time. The commission asked the Supreme Court to review the case. Oral arguments are set for March 22. The coalition wants the commission to hold off on increasing the recovery mechanism until the Supreme Court decides on the improvements benefit case. The group also wants the commission to set up a process for what will happen to other adjustors if the Court of Appeals ruling is upheld. Coalition attorney Court Rich argues the two mechanisms are “substantially similar,” and that the court ruling “casts substantial doubt on the constitutionality of the LFCR (lost fixed cost recovery).” In a filing on Feb. 24, the coalition also says the commission and APS could potentially see a lawsuit if they continue to seek an increase to the LFCR. The group also argues APS could be made to refund the money it has collected from customers so far through the adjustor. But, in a response to the coalition’s filing, APS says the charges made by the coalition “reflect a profound misunderstanding of the LFCR, Arizona law and perhaps ratemaking itself.” Additionally, APS attorney Thomas Loquvam argues, the coalition shouldn’t be allowed to intervene in the docket in the first place since the group wasn’t a part of the settlement agreement, adding that APS would be “severely prejudiced” should the coalition be allowed to intervene. Loquvam also said case law wouldn’t allow for any sort of refund of any money collected through the mechanism since it was a properly authorized rate when approved. The utility also says there are “vast qualitative differences” between the system improvements benefit and the lost fixed cost recovery mechanism. Loquvam said the best approach is to wait for the Supreme Court’s decision. In a response to APS, the coalition agrees that the best idea is to wait for the decision. In the meantime, the coalition says, the commission should stay APS’s application to increase the LFCR. If the Court of Appeals ruling is upheld, the LFCR increase should be denied, the coalition says. The group also wants the commission to set up a meeting to decide what the procedure would be to analyze the adjustor if the Court of Appeals ruling stands. “To act otherwise is to risk engaging in action with notice that such action may be unconstitutional,” Rich wrote. An administrative law judge with the commission will have to decide whether the coalition can intervene in the matter. |