In a unanimous ruling, the Arizona Court of Appeals has officially vacated the discriminatory solar-specific grid charge levied against Arizona Public Service (APS) rooftop solar customers. The court threw out the fee after determining that the Arizona Corporation Commission (ACC) violated procedural due process by adopting the mechanism without proper public notice or a fair hearing.
The original grid access charge was discontinued by the Commission itself in 2019, after regulators found the utility had not shown that solar customers cost more to serve. Representatives on the Arizona Corporation Commission who voted for the new version of the fee in 2024 said they had no idea how it would affect bills.
Arizona’s Attorney General Kris Mayes, said solar customers were “blindsided by a rate hike the public was never told about.”
At no time did the utility officially propose the solar-specific fee, and the public notice for the rate case said nothing about it. The three-judge appeals panel that vacated the charge said that because it never moved through the proper process, it cannot stand as is.
The local utility is currently attempting to raise this fee further – more than doubling it – in a current, ongoing rate case.
Vote Solar, the Arizona Solar Energy Industries Association (AriSEIA), the Solar Energy Industries Association, the State of Arizona, and two individual solar customers — Diane Banet and Michael Self — appealed the Arizona Corporation Commission’s (ACC) decision approving fees that were applied only to rooftop solar customers. A key detail of the ruling is that the fees themselves weren’t ruled on; only the way they were implemented.
Those appealing contended, “that the proceedings that culminated in the Commission’s decision to authorize the solar-specific charges were conducted in violation of due process, and that the rehearing did not cure the due process violation.” The court agreed, and vacated the fee.
A fundamental driver of the case is that the ACC, at the close of the 2019 Rate Case, directed Arizona Public Service (APS) to “specifically analyze and identify the services that it provides to residential solar customers” compared with non-solar customers. APS never delivered that analysis.
After reviewing the studies, the Commission determined, “The evidence of record . . . makes it clear that APS does not truly provide additional services and does not use additional equipment to serve residential solar customers.”
Even so, the Commission approved a solar-specific charge, setting it at about 1.15 times the system-average increase — roughly 15% above non-solar residential rates. Commissioner Anna Tovar dissented, citing the due process concerns.
The court noted that APS never asked for a solar-specific fee during the rate case. When the administrative law judge asked whether APS was proposing to modify its rates based on its cost-of-service study, the utility’s witness responded, “No, I do not believe so.”
The fee originated with the administrative law judge hearing the case, Sarah Harpring, not with APS. In her recommended order, Harpring proposed a charge based on solar customers’ “site load” — reflecting the reserve capacity APS keeps on hand in case rooftop systems fail — calling it “just and reasonable.”
The implementation of the solar fee effectively delivered a double-whammy to clean energy customers: it tacked a 15% surcharge onto an already steep 22.8% general rate hike.
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