Eligibility and Availability
Net metering is available to investor-owned utility and electric cooperative customers who generate electricity using solar, wind, hydroelectric, geothermal, biomass, biogas, combined heat and power, or fuel cell technologies.* A net metering facility must be located on the customer's premises.
System Capacity Limit
The Arizona Corporation Commission (ACC) has not set a firm kilowatt (kW)-based limit on system size capacity; instead, systems must be sized to not exceed 125% of the customer’s total connected load. If there is no available load data for the customer, the generating system may not exceed the customer’s electric service drop capacity.
Aggregate Capacity Limit
The ACC has not set an aggregate capacity limit for all net-metered systems in a utility’s territory. The utility must instead demonstrate to the ACC why such a cap should be allowed. Under the ACC rules, each utility must file an annual report listing the net metered facilities and their installed capacity for the previous calendar year.
Net Excess Generation
Net metering is accomplished using a single bi-directional meter. Any customer net excess generation (NEG) will be carried over to the customer's next bill at the utility's retail rate, as a kilowatt-hour (kWh) credit. Any NEG remaining at the customer’s last monthly bill in the annual true-up period will be paid to the customer, via check or billing credit, at the utility’s avoided cost payment.
For customers taking service under a time-of-use rate, off-peak generation will be credited against off-peak consumption, and on-peak generation will be credited against on-peak consumption. The customer’s monthly bill is based on the net on-peak kWh and net off-peak kWh amounts. Any monthly customer NEG will be carried over to the customer's next bill as an off-peak or on-peak kWh credit.
The ACC requires that net metering charges be assessed on a non-discriminatory basis. Any new or additional charges that would increase an eligible customer-generator's costs beyond those of other customers in the rate class to which the eligible customer-generator would otherwise be assigned must be proposed to the ACC for consideration and approval. The utility has the burden of proof in any such proposal.
In December 2013, in response to an application from the Arizona Public Service Company (APS) to address cost shifting, the ACC ordered a $0.70 per kW charge for all residential distributed generation systems installed on or after January 1, 2014.** The charge does not apply to customers with systems installed by December 31, 2013. APS is required to file quarterly reports with the number of new distributed generation installations per month, the size of those installations in kW, and the revenue collected from customers through the lost fixed cost recovery charge. The ACC's decision may be found here. Other utilities have also proposed additional charges for customer-generators.
*Salt River Project and municipal utilities do not fall under the jurisdiction of the Arizona Corporation Commission, and are therefore not subject to the state net metering rules.
**The charge applies specifically to "distributed generation" systems, not "net-metered systems". However, as net metering only applies to systems located on the customer's premises, the charge will affect net metering customers. The charge only applies to APS customers.