New APS Rates and the Value of a “Grandfathered” Solar Home

More and more people are adding solar to their homes every year. However, over the past few years, there has been increasing concern over utility rate changes and their potential to reduce the financial benefit solar homeowners see on their utility bills. After a major shift to demand-based pricing from SRP last year, APS’s now seeking to change how customers are billed. If approved by the Arizona Corporation Commission this summer, homeowners under the new APS rate plans will no longer be able to enjoy a bill that only consists of basic service charges. Instead, a demand fee will also be applied to the monthly bill.

On the good side, APS has generously offered a grandfather clause to all existing solar homeowners and any homeowner who installs solar before the new rates take effect. In short, the grandfather clause states that any current solar customer and any customer who submits a solar reservation on or before July 1, 2017, will be allowed to remain on the current and more favorable rate plans for the next 20 years. But wait, it gets better! The grandfather clause is tethered to the meter on the property, not just the current homeowner. As such, it can be passed along to a new home buyer during a sale.  

Here are samples of actual grandfathering letters:

• Current Customer Solar Letter
• Future Customer Solar Letter 

You may be asking yourself, "Why is this so important?" Can you imagine if you were to put your solar home up for sale and the potential buyers were forced into a new solar plan that wasn't as friendly and had entirely different variables? The existing solar energy system on the house would have been designed and optimized for an entirely different rate plan, so in all likelihood, the new owner would see different savings than you experienced while living in the home. By tying the grandfather clause to the property rather than the owner, APS will enable home sellers to pass more favorable solar rates to potential buyers. 

Below is a snapshot of solar home sales in Maricopa County from 2013 through the first half of 2016. Unfortunately, data can only be pulled beginning in 2013 because, before that year, there was no field in the Multiple Listing Service (MLS) to mark that a home had solar. Currently, solar homes account for about 2.4% of the total market share, but that number is growing rapidly as buyers become more aware of the significant financial and environmental advantages of owning a solar-powered home.

With a growing audience for solar, APS’s grandfather option is a major selling point because it allows future home buyers to participate in rate plans that will no longer be available to the general public after this summer. So even if you’ve not yet installed solar on your house, or think you might sell in five years, locking into today’s more favorable solar plans will be a genuine advantage when it’s time to sell.

Of course, this is all contingent on the real estate industry catching up to today’s solar reality. Many home buyers understand that solar saves money and like a solar home. Still, solar is also a relatively new concept for the real estate industry. Most agents are not solar savvy and have very little knowledge about solar works. If you have a solar home and need to sell, we encourage you to select a real estate agent who has knowledge and experience selling solar homes. 

Homes with solar installed before July 1, 2017, will be considered a diamond in the rough, which can be marketed to potential buyers. A home buyer cannot buy a home, put solar on it, and see the same financial savings as an existing solar home. Homeowners should capitalize on their ability to lock into today’s rate structures, not only for the savings they will see immediately but for the long-term resale value of the home. 

The ACC is expected to vote on the APS rate case this summer. If approved, the plans are expected to be effective July 1, 2017.  If you’ve been considering solar, now is the time to act if you want to take full advantage of the solar grandfather clause and lock into today’s more favorable plans. 

With the 26% solar tax credit decreasing again at the end of this year, going solar now will ensure the biggest and fastest return on your solar investment. Contact us today to start your solar project and lock in this lucrative solar incentive before it decreases again.