An Arizona Court of Appeals panel has declined to reinstate an extra fee that Arizona Public Service wanted to charge customers with rooftop solar panels, rejecting requests from both APS and the Arizona Corporation Commission to reconsider its earlier ruling striking down the charge. The decision keeps in place a June ruling that found the fee was approved without giving opponents a fair chance to fight it.
Court Sticks With Its Due-Process Finding
The fight traces back to 2024, when the Arizona Corporation Commission approved the solar-specific charge as part of a broader APS rate increase, according to KJZZ. The charge would have allowed APS to bill solar customers an extra $2 to $3 per month, which the utility said covered the added cost of supplying backup power when rooftop panels fail or underperform. The Arizona Court of Appeals blocked the fee in June, and this latest order keeps that outcome in force after APS and the Commission both asked the court to reconsider.
In its June decision, the court found that regulators had not allowed opponents a real opportunity to argue against the fee before it was approved, and that APS had never provided evidence showing solar customers were actually responsible for higher costs. The Arizona Court of Appeals memorandum decision stated plainly that “the initial proceedings that led to the Commission’s approval of a solar-specific charge in the Rate Decision did not comport with due process.” The court further noted that APS had not even asked for a solar-specific increase in its rate case, pursuing instead a uniform increase for residential customers.
December 2024 Rehearing Didn't Fix the Problem, Judges Say
APS and the Commission had argued that pro-solar groups got their chance to be heard during a Commission rehearing held in December 2024, after which the Commission voted 3-1 to reaffirm the grid access charge. The Arizona Corporation Commission says Commissioner Tovar dissented in that vote while Commissioner Marquez Petersen was excused. But the appeals court rejected the argument that the rehearing fixed anything, finding that opponents still had not received a full and fair opportunity to contest the solar-specific charges. Part of the problem, the court found, was that an administrative law judge had cut off testimony from an economist who was serving as a witness for the Arizona Attorney General's Office, which had opposed the fee throughout the proceedings.
The court's memorandum decision called the provisions adopting the underlying cost-of-service study and authorizing the solar charges “void from inception,” and it vacated an additional 15% charge that had applied to both legacy and non-legacy residential solar customers. Judges ordered the Commission to either hold a due-process-compliant rehearing or scrap the solar-specific charge altogether — an option the Commission still has available going forward, though no new rehearing date has been confirmed.
Attorney General's Office Calls It a Win for Solar Customers
The Arizona Attorney General's Office framed the ruling as vindication for residential rooftop-solar customers, saying the court vacated a surcharge that had been adopted without proper notice and that the Commission's later rehearing failed to cure that violation. It marks the second time regulators have tried and failed to make a solar-specific charge stick — the Commission previously rejected a similar APS proposal in 2019 after finding the utility had not supplied supporting evidence, the same gap that doomed this latest attempt.
APS spokesperson Ann Porter said the company wants additional review to ensure appropriate rates for residential rooftop-solar customers, adding that APS remains committed to safe, reliable service and fair rates for all customers. Per an APS spokesperson, the utility plans to appeal the decision to the Arizona Supreme Court. A Corporation Commission spokesperson said the ruling is under review by the agency's Office of General Counsel, which provides legal services to the Commission.
