Debate over demand charges is a quagmire of misinformation

April 22, 2016
Nogales International
Chuck Schmidt

Recently, a little known and highly misunderstood concept has come to be the focus of several hearings throughout Arizona.  I am speaking of the demand charges proposed by UNS electric in Mohave and Santa Cruz Counties. 

While it has been wonderful to see so many citizens come forward on the subject, it has also been disheartening to hear the misinformation, unsubstantiated claims, and scare tactics being told to people about implementing demand charges.  I support demand charges and I also support going solar.

Current net-metering consumers who do not have rooftop solar must pay their own regular utility rates PLUS share the financial burden that rooftop customers avoid[1]. Getting rid of net-metering takes this burden off lower-income Arizonians.                   

Another misconception is that moving to a system of demand charges will kill our solar industry, this is simply untrue. Opponents like to use Nevada as a cautionary tale; however they fail to disclose the full story.

When Nevada changed its net metering policy earlier this year, Vivint Solar, SunRun, and Elon Musk’s SolarCity fled the state and boycotted them to restore net-metering. They also pressured consumers by telling them they had to install before the change to demand charges. When you look at the decreased number of installations immediately after demand charges took effect, it wasn’t because solar companies couldn’t install…it’s because they were holding their services for ransom.

In truth, moving to a new rate design will compel solar vendors to change their business model from chasing subsidies to competing. If some players refuse to adapt, new players will enter a free market where competition creates better products and lower prices for consumers.

Most consumers will actually save money on demand charges.  It is insulting when the opposition claims that everyday people do not possess the ability to understand demand charges. It’s as simple as being aware. Typically the highest demand times for power are 5pm-9pm Monday through Friday[2]. You can still use basic electricity and by waiting to do that load of laundry till later, you can save money by not ‘demanding’ extra electrons during peak times.

I am pro-solar. I have lived in Arizona for 20 years with my family and have chosen to make it our home. I am proud of our state. I believe that we should be leading the way in solar usage…but using a fair and sustainable business model. The only way to do this is by moving to demand charges.


Chuck Schmidt is the President of Market Freedom Alliance. Learn more about him here.


[1] http://www.wsj.com/articles/big-solars-subsidy-bubble-1440975764

[2] http://www.srpnet.com/prices/home/tou.aspx