As the state ranked second in the United States for solar rooftop installations, how do Arizona's policies on solar affect the rest of the country? During today's OnPoint, Arizona state Sen. Debbie Lesko (R) discusses the need to protect consumers in rooftop solar lease and purchase agreements and weighs in on attempts in Arizona to increase grid access fees and reduce rates for excess energy for rooftop solar customers. She also explains what steps her state is taking to prepare a compliance mechanism for U.S. EPA's Clean Power Plan.
Monica Trauzzi: Hello and welcome to OnPoint. I'm Monica Trauzzi. With me today is Arizona state Sen. Debbie Lesko. Senator Lesko, thank you for joining me.
Debbie Lesko: Thank you.
Monica Trauzzi: Senator, a range of solar issues are being debated in your state, a state that is ranked second in the U.S. in solar. This year the Arizona Legislature unanimously passed and the governor also signed into law a piece of legislation that you sponsored that seeks to protect consumers who are considering rooftop solar lease finance and purchase agreements. What does this law do for consumers? Why was it needed?
Debbie Lesko: It protects consumers of rooftop solar system leases and finance agreements. It's needed because in Arizona we have -- we're -- as you said, we're the second-highest rooftop solar installation state, and as that has grown and developed, consumers started having problems. You know, some solar installations worked out very well for customers, but others did not, and it became a growing concern. So our attorney general's office was receiving escalating complaints. Our auditor general did a warning to school districts that were installing these saying, "You know what? Some of these systems are not getting the amount of power that they were promised to give."
So then I -- in the middle of this I got a call from constituents of mine in their mid-80s, and they signed up for a 20-year solar lease. And they said, "Debbie, please help us." They had to move into an independent living center because of their health and they couldn't sell their house. They tried to sell it. They showed it to 149 different people over a year's time, and nobody wanted to take on the liability. There were 17 years left on this lease and they were having a really hard time. So eventually they've sold the house, but they had to pay down the lease payments in order to get a buyer to buy it. And that's what really got me involved, and the more and more I got involved in this, the more and more concerns that I saw popping up. And that's why it's so important. It's a growing industry. It's a viable industry. But there are some good players and there are some bad players, and people need to know what they're getting into.
Monica Trauzzi: So you don't just have concerns in Arizona; you also recently wrote a letter to the Illinois General Assembly where you point to some challenges you see associated with rooftop solar. And in Illinois during the General Assembly's spring session they considered measures that would encourage the use of solar and wind power. Why did you take that step of sending a letter of warning to Illinois?
Debbie Lesko: Because we're on the forefront of this industry. We know what's good and we know what concerns there are. And as I've said, our state has seen an increasing number of complaints, and as this industry starts growing I am increasingly concerned about the fallout from some of these unscrupulous solar companies that are promising consumers they're going to save tons of money. For instance, on some of these marketing materials that I have seen they say the utility companies are going to increase their rates by 4.8 percent per year for 20 years. That's not true. History has told us in Arizona that the average utility rate increase over the last 25 years is 1.2 percent per year. So if you're telling customers and making assumptions that utility rates are going to increase by 4.8 percent per year, or in some cases they're saying 6 percent per year, but it's really 1.2 percent per year, you're deceiving customers. And they are not getting the savings they said they were going to get.
Monica Trauzzi: Do you discourage your constituents from moving forward with solar rooftop installations?
Debbie Lesko: I don't discourage my constituents. I tell them to do their homework. And it's really difficult because what's happening is I'm talking to more and more people in my district, who most of them are senior citizens, quite frankly, that are reaching out to me, and they're getting into these 20-, 25-year leases, and they're not fully reading the contracts. So the marketer is not telling them, "You know what? Each and every year your lease payment is going to increase by 2.9 to 4 percent per year." Now when I had looked at the lease -- lease contracts, a lot of them say they are, but it's the marketer that's going about telling people. They believe the marketer. They're not doing fully their homework. It's very complicated. Some people are not getting the right number of solar panels on their roof. The inverter isn't working properly. They're not getting the output they were promised.
I had another gentleman -- very educated person, used to work for U.S. Sen. Susan Collins in Maine, and so smart guy, but he got into this. And a solar company sold him on an idea that he was going to save a whole bunch of money over 20 years. Well, it turned out he wasn't. In fact, when you add the solar lease payment along with the utility bill, he was actually paying more, quite a bit more, than he would if he hadn't had solar. And so we helped him renegotiate his agreement.
Monica Trauzzi: I want to dig into some of the other solar issues that are happening in your state.
Debbie Lesko: Sure.
Monica Trauzzi: Tucson Electric Power is now looking to pay rooftop solar users a wholesale rate instead of a retail rate for their excess energy. This follows Arizona Public Service moving to increase the grid access fee from $5 to $21 per month. Do you think that these steps will serve as a deterrent to consumers to move forward and install rooftop solar?
Debbie Lesko: I don't know the answer to that. I mean, rooftop solar is popular. It's popular in our state. There's a lot of companies that are marketing it quite aggressively. I do think that it's important that the consumers that can't afford solar or choose not to have rooftop solar on their roofs aren't subsidizing the consumers that do have solar on their roof. And they are subsidizing if the solar folks aren't paying their portion for the grid infrastructure charge. And so that's an important point, and I think the more and more that I go out and educate people or others go and educate people and say, "Listen, you're really subsidizing the people that can either afford to pay these things upfront or the people that are -- decided to go into these leases," and -- you know, it's sometimes a cost shift issue. And so we need to look at it carefully.
Monica Trauzzi: And this taps into a debate that's happening across the country.
Debbie Lesko: You bet.
Monica Trauzzi: I want to move on to EPA's draft Clean Power Plan. The agency says that Arizona must cut its emissions rate by 52 percent. That's the second-highest requirement in the country among states. In November of last year a group of your Republican colleagues in the state Senate wrote a letter to EPA expressing their concerns with the Clean Power Plan. Do you agree that your state is being penalized, as the senators said, for its development of low-carbon resources? What changes are you looking for when EPA finalizes the plan?
Debbie Lesko: I'm totally in disagreement with the EPA's proposed rules, and if I didn't sign onto that letter I should have signed onto that letter. They're going to damage the economy of our state drastically. In fact, one of our major power utility companies, SRP, Salt River Project, said it's impossible to do what they have proposed to do in the timeline they have proposed to do it, which is basically eliminate all coal-fired power plants by 2020. They can't do it. It's impossible. And when they start to move over to gas-powered, which will, you know, cost money, it's going to increase the rates to the consumers. Not only will it increase electricity rates, but one of the coal-fired power plants, the Navajo Generating Station, gives most of the electricity to our Central Arizona Project which delivers the water into Phoenix area and Tucson area. Their rates are going to increase as well. This is bad for the Arizona economy. It's too fast. It's too aggressive. We need a more measured approach.
Monica Trauzzi: What types of conversations are happening within the Senate about what your state's implementation plan will look like?
Debbie Lesko: That was a little bit controversial. We have given our agency the permission to start developing a state implementation plan, but we want the Legislature to review it. So that's what we agreed on this year.
Monica Trauzzi: Wow. All right, we'll end it there -- a lot to watch. Thank you for coming on the show.
Debbie Lesko: Thank you, Monica.
Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.
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