If You Live in Arizona, Salt River Project Wants You Shackled to Fossil Fuels For Decades to Come

Remove all the empowerment. All the individual benefit and pride that comes from owning your own energy-producing resource. Remove all the financial benefit — all of the increasing opportunities for middle class families to cut energy costs, to increase property values, and to expand their economic opportunities. Remove all the added benefit of expanding US energy independence — both for the US nation and for individuals.

Remove it all, and you still end up with the staggering singular opportunity that home solar energy generation provides — to cut individual and family carbon emissions through electricity generation to net zero.

Arizona-Solar-Energy

(Solar neighborhoods like these are popping up all over Arizona. Monopoly utility Salt River Project wants to stop that through the imposition of fees. Image source: GOYO.)

It’s a staggering empowerment in that it gives each and every homeowner the opportunity to say no to a future in which the world is dragged further and further into a global warming nightmare. It’s a right. In essence, a basic human right, to be given a choice to avoid such a terrible outcome and to play a personal role in making responsible choices for the future benefit of ourselves, our spouses, our children.

And, just a few days ago, a major Arizona utility — the state-sanctioned monopoly Salt River Project — did everything they could to take that choice away from homeowners. To shackle them, for decades, to devastating, carbon-emitting energy sources.

The Salt River Project — Green Washed, Carbon Fueled

The Salt River Project is an old, mostly smoke-stack driven, utility. Having existed for more than 100 years, it now provides power for more than 1 million customers — primarily in the Phoenix metro area.

Of the power SRP generates, about 85 percent comes from dirty sources. Though hydroelectric dams are among its assets, though solar energy accounts for 120 megawatts of its generation, though wind accounts for about the same, SRP is primarily powered by fossil fuel sources. It owns stakes in nine massive fossil fuel generating stations — half of which are coal, the other half gas. As a result, SRP is responsible for many millions of tons of carbon emissions each year. All emissions it generates and dumps into the atmosphere — scot-free of costs for the harm it is continuing to inflict on the world’s atmosphere, oceans, glaciers, and weather.

Coal power plant SRP

(The Four Corners coal power plant and associated strip mine — one of many coal plants operated wholly or in part by SRP. SRP’s stifling of renewable energy adoption by homeowners would ensure the continued use of dirty plants like this for decades to come. SRP pays nothing for the harm plants like these inflict on the global climate system. Image source: High County News.)

But all this damage doesn’t come without its own share of greenwash. The Salt River Project touts goals of reaching 20 percent renewable capacity by 2020. It also hosts a home solar project which funds 12.5 megawatts of solar energy capacity for the current year (May 1 2014 to April 30 2015). A rate of adoption that would take 300 years to remove its fossil fuel generation even if energy consumption levels remained flat.

At best, given the amazing achievements of renewable energy on cost, ease of use, and access (especially for wind and solar), the energy transition efforts by Salt River Project (SRP) can be described as foot-dragging. An effort far too paltry and slow to be an effective mitigation to the damage resulting from human-caused climate change.

The glacial pace of energy transition for this massive utility is bad enough on its own. But, even worse, SRP has leveled one of the most heinous attacks on individual renewable energy ownership now ongoing in the United States. And it is with this action that it has basically nullified even the paltry progress it has made toward reducing carbon emissions from its own generation sources.

A State-Supported Monopoly Assaulting Home Solar Ownership

For as of this year, SRP has decided to levy a $50 monthly fee (we could well call it a fossil fueled tax of 600 dollars per year) on home solar owners for use of grid services. The fee directly targets home solar users for discrimination, penalizing them for their choice of power source.

The fee is so high as to have stifled solar energy adoption in the Salt River Project territory. Last year, users in the SRP grid region installed nearly 40 megawatts of home solar energy (four times that proposed by SRP). This year, installations could have hit as high as 60 megawatts or more — equaling half the total SRP solar generation capacity installed within just one year.

But rumor of the fee alone was enough to snuff out new solar adoption. The monthly rate of installation swiftly fell from more than 600 homes per month last year, to less than 10 per month this year.

Though Salt River Project is not alone in adding ‘grid maintenance fees’ for solar energy users, it is the first to set the fee high enough to stifle solar energy adoption. Other fees range from 5-25 dollars per month — well less than half what SRP charges and the net effect has not been so great as to reduce solar adoption. Arizona Public Service, for example, leveled a 5 dollar fee and home solar adoption has continued at the rate of nearly 8,000 per year in its region of control.

Homeowners in the SRP region simply have no other choice. SRP is the only grid services provider. And its policies, as a government-private partnership, are sanctioned by Arizona state legislation. SRP has thus used its monopoly status to snuff out individual solar adoption in its area of operation. And this, in itself, is an egregious stifling of the individual rights of energy choice and energy freedom.

Lawsuits, Massive Public Backlash

Salt River Project’s suppressive action is already very unpopular. At the board meeting in which solar fees were assigned an angry crowd of over 500 people gathered. As SRP announced decisions on solar fees, they were met with loud boos from constituents.

But the stifling of public solar adoption hasn’t just inflamed the grass roots — it’s also bringing some of the heaviest hitting solar corporations and public alliances into the ring. Today, Elon Musk’s Solar City Corporation joined Solar Alliance (a solar interest consortium) in suing SRP for anti-trust violations. The Solar City statement is one of historic significance and reads as follows:

Last Thursday, [SRP] approved a new pricing plan designed to punish customers who choose to go solar. Under the new plan, SRP customers who generate their own power have to pay additional ‘distribution charges’ and ‘demand charges’ that other SRP customers do not. These discriminatory penalties add up to hundreds of dollars per year, and make a competitive rooftop solar business impossible within SRP territory . . . SRP has sabotaged the ability of Arizona consumers to make this choice if they happen to live in SRP territory. We can already see the intended effects: After the effective date of SRP’s new plan (December 8 of last year), applications for rooftop solar in SRP territory fell by 96%. (Emphasis Added).

Recent filings by Solar City and Solar Alliance are likely the first of many. For SRP’s action is so egregious as to materially impact anyone who previously desired or planned to install solar, effectively removing their economic ability to do so.

Such removal of choice is anti-competitive by nature and will likely end up with SRP facing off not only against environmentalists, Tea Party activists interested in individual energy choice, solar leasers, installers, financiers and homeowners alike, but also against the US Department of Justice’s Anti-Trust Division.

Like SRP, many utilities hold but often do not so punitively wield monopoly powers over their regions of control. The current struggle by SRP to suppress home solar energy adoption highlights a potential abuse of power by many utilities going forward. Utilities are, therefore put on notice, solar energy providers and users will not be bullied by fossil fuel special interests into reducing adoption rates. Any actions to suppress adoption are anti-competitive and amoral. They will be challenged accordingly.

Links:

Arizona’s New Solar Charge ‘Unsupportable by any Economic Analysis’

Solar City Sues Arizona Utility for Antitrust Violations

Rooftop Billing Issues Far From Settled

The Salt River Project: Commons

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What Solar Panel Dumping Case Reveals About How Chinese Manufacturers Dominate Markets

Today the Federal Trade Commission ruled against Chinese solar manufacturers, finding that government subsidies harmed US companies. In the ruling, Chinese companies were assigned duties between 2.9 to 4.7 percent. The duties depended on the degree of subsidy assistance Chinese companies received. Another ruling will be made in June to determine the degree to which Chinese companies have been dumping solar panels on the US market. This additional ruling is expected to result in further duties and penalties.

The Solar Surge

These rulings and investigations come after a massive surge in amazingly cheap Chinese solar panel exports to the US since 2008. This influx, which almost everyone with any honesty is calling dumping, has resulted in average solar panel prices falling from $3 to less than $1 per watt over the same period. In fact, the lowest cost solar panels on the US market are now selling for less than 84 cents per watt. This extensive dumping has resulted in three US solar companies, including Solyndra, being forced to file for bankruptcy and has negatively affected every other US solar manufacturer.

The silver lining is that US solar energy consumers now have access to solar panels at much lower costs. And these panels are now rapidly closing the gap between fossil fuels, likely to beat coal on cost by 2015. But the rapidly falling prices may well drive all manufacturers except the Chinese out of this critical market. And this state-sponsored international monopoly may well be benevolent if not for the stark history of Chinese monopolization in other key areas. For example, Chinese state-sponsored industry moved to rapidly dominate rare earth metals and are now setting higher prices or denying access to rare earth metals altogether. Similar behavior with regards to solar panels may well prove disastrous in a world needing a rapid transition to mitigate the effects of climate change.

Government Spending/Perks Key to Chinese Dominance

So how do Chinese companies come so rapidly to dominate markets like solar? The answer is a combination of cheap loans, government payments on interest for the these loans, and predatory business practices. Cheap loans provided by the Chinese government resulted in the emergence of 700 new solar companies in China over the last ten years. In total, because of these loans, the Chinese now possess a capacity to manufacture 40 gigawatts of solar panels within one year. That’s enough solar panels to power all of New York State in just one year.

These state-sponsored loans may have provided the impetus for developing a world-dominating industry, but a number of other ‘perks’ aided the Chinese industry as well. For example, many Chinese manufacturers were able to purchase land directly from the state at 1/3 standard price levels. In addition, Chinese monopolization of rare earth metals has led to preferential pricing for raw materials feeding in to this state-sponsored industry.

But these aren’t the only advantages state sponsored Chinese companies enjoy. In addition to low interest loans provided to Chinese solar manufacturers, often the interest on these loans are paid, pro-bono, by the Chinese government.

So imagine you are a Chinese solar manufacturer. You receive nearly unlimited low interest loans from the government. You have much or all of that interest paid by provincial governments. The land for your plants is sold to you at major discounts and your raw materials are supplied to you at the lowest prices possible. This is all facilitated by the state-sponsored system. And, finally, you benefit from relatively low labor costs which give you a 3-4 percent price advantage. In fact, the other state-sponsored benefits are so great that the labor cost difference may as well be nil. In such a beneficial environment, it would require a stunning failure for you not to achieve market dominance.

Chinese Capitalize on State-sponsored Consumer Incentives

But what other benefits could a solar manufacturer in China look to gain from? Not just from the Chinese state, but from other states’ programs as well. Up until last year, the Chinese solar industry was almost entirely positioned for export. This strategy allowed them to benefit from state-funded programs that provided incentives for solar panel purchases. Already receiving so many benefits from the Chinese state, these solar exporters were rapidly able to dominate markets in Europe and the US, driving many other solar manufacturers to lay-offs and bankruptcies.

Meanwhile, the West suffers from an ideology that dramatically opposes the level of state assistance currently provided by the Chinese government. So most Western programs have been aimed at providing support for consumer purchases, not to providing seed funds for a fledgling industry, and, thus, those funds have been indirectly grabbed up by the surging Chinese solar industry.

Tariffs, Trade Barriers not Enough. Best Solution is Comparative Levels of Investment

In total, China is investing the equivalent to 90 billion dollars each year in alternative energy and efficiency. And this  investment will be enough to dramatically reduce prices for both wind and solar power by sheer scale alone. If the United States and other western governments wish to host industries that become anywhere near as competitive, they will need to provide comparative levels of direct funding, year after year. Otherwise, the Western manufacturers will fail and the key emerging solar and wind industries will be entirely ceded to the Chinese. Enacting trade barriers, penalties and tariffs would, at best, only slow the transition to Chinese state-sponsored monopolization.

 

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