Thursday, August 20, 2009

Fighting over Solar Subsidies

The Arizona Corporation Commission through APS levies a tax on homeowners to fund solar incentives. The tax on homes is $3.17 a month. Businesses pay a larger tax. (I know, this is called a tariff by the ACC, but from an economic standpoint, it is a tax.)

Now the debate is how to divvy up the money that they have to spend. Note that this is a political debate. This isn't about efficiency or consumer preferences which would be sorted out in a free market. This is about which constituency gets the government subsidy.

The debate has flared because, although APS has plenty of money from the tariff, including the $3.17 residential customers pay each month, the company is required to divide some of the funds between rebates to homeowners and business owners.

APS said it has so many applications for big solar arrays on businesses that it won't have enough money in that program this year for commercial projects at schools.

It has a separate pot of money from the tariff to give solar rebates to homeowners, and APS expects to have lots of that money left over at the end of the year because residential installations are not as popular as anticipated, especially during the recession, officials said.

As with most solar installations, the school projects aren't cost-effective without rebates from the utility and the federal government.

Read the article to get an idea of what each constituency is fighting for.

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