TEP cuts solar power incentives

Oct 13 - McClatchy-Tribune Regional News - Dale Quinn The Arizona Daily Star, Tucson

Anyone who installs a rooftop solar system through the end of 2011 will get less money in upfront incentives from Tucson Electric Power Co. than those who installed one earlier this year.

The Arizona Corporation Commission decided Tuesday that the power company's upfront incentive for rooftop systems should be set at 75 cents per watt for the rest of the year.

And it could stay at that level into next year if commission members agree with their own staff.

The commission had approved an upfront incentive for TEP of $2 per watt for 2011. But in September, TEP notified the state's utility regulator and local installers it had run out of that cash.

"Our solar incentives were very popular," said Joe Salkowski, a TEP spokes-man. "We had a crush of applications in the first week of September, and when we finally did end the program, we had accepted more reservations than we had the budget to fund."

Those applications already accepted by the power company will be funded at the $2 per watt level, Salkowski said.

TEP had notified the Corporation Commission it had suspended its residential incentive program after taking $1.64 million in applications above the budgeted amount. The power company will pay for those incentives using money from various portions of its renewable energy standard tariff budget, Salkowski said.

Through the renewable energy standard tariff, utilities collect a surcharge from customers and use it to pay for alternative energy sources under requirements from the Corporation Commission to increase renewable power production.

When it comes to paying for the upfront incentive for the rest of the year at 75 cents per watt, Salkowski said that cash will come from money that was allocated to help pay for larger commercial-scale solar systems. Those systems are paid based on their performance rather than with an upfront incentive.

That fund has $1.2 million left, and Salkowski said it won't be depleted by the end of the year. Slightly less than half of the money will go to pay for the upfront incentives, Salkowski said.

For next year's upfront incentive, TEP has proposed a rebate amount of $1.75 per watt, but the Corporation Commission staff wants to set it lower.

In a memorandum, the staff recommended keeping TEP's upfront incentive at 75 cents per watt into next year.

"Staff believes that the next few months can provide an opportunity to test whether a significantly lower incentive level can generate business in TEP's service area," the memo says.

That way, the commission staff says, "More systems can be installed for the same amount of money."

Contact reporter Dale Quinn at dquinn@azstarnet.com or 573-4197.