An Arizona Court of Appeals panel has once again rejected an attempt by Arizona Public Service to charge customers with rooftop solar panels an additional monthly fee. The court found that state regulators failed to give opponents a fair chance to challenge the charges before approving them, and that APS never demonstrated solar customers actually create higher costs. The ruling wipes out the extra fee, though regulators can hold another hearing if they provide opponents a better opportunity to make their case.
The Arizona Corporation Commission initially approved the fee as part of an APS rate increase in 2024, permitting the utility to charge solar customers an additional $2 to $3 each month. APS said the fee would cover what it described as "extra costs" for supplying electricity to those homes when their panels fail or don't produce sufficient power. The Court of Appeals first blocked the charge in June after determining regulators hadn't allowed opponents to argue against it before approval. APS and the commission requested the court reconsider, pointing to a rehearing the commission held in December 2024 where pro-solar groups could present their position. The commission kept the fee in place after that hearing.
The Court of Appeals found the commission still didn't provide opponents "a full and fair opportunity to contest the solar-specific charges," according to the ruling. The court highlighted a decision by the administrative law judge who oversaw the hearing to stop testimony from an economist representing the Arizona Attorney General's Office, which had opposed the fee. APS spokesperson Ann Porter said the company intends to appeal to the Arizona Supreme Court, stating "APS would like additional review so that we can ensure appropriate rates for residential customers with rooftop solar."
The decision comes as regulators continue grappling with how to handle customers who generate their own electricity while still relying on the grid for backup power. Utilities argue these customers don't pay their fair share for maintaining the infrastructure they use when the sun isn't shining, while solar advocates contend that rooftop panels actually reduce strain on the grid during peak demand hours. The court's ruling doesn't settle that debate—it simply says APS hasn't proven its case and that opponents weren't given adequate opportunity to challenge the utility's claims. The commission can retry the issue with proper procedures, but for now, solar customers won't see the extra charge on their bills.