BUSINESS

SRP ads, PR for solar rate hike topped $1 million

Ryan Randazzo
The Republic | azcentral.com
Court Rich, a lawyer for The Alliance for Solar Choice, speaks during a Salt River Project meeting Feb. 26, 2015.
  • SRP records indicate the company geared up for a major debate over its solar rate hike.
  • The company spent more than %241 million on ads and public relations related to the hike.
  • One SRP executive referred to solar advocates as "the enemy" in a personal e-mail.

Salt River Project spent about $1.7 million on advertising in three months as it tried to drum up support for a rate hike that included a controversial increase on solar fees.

Financial records and e-mails obtained from the utility show the company geared up last year for an intense debate with solar advocates, whom one SRP executive referred to as "the enemy" in an e-mail to public-relations consultants. The company says the phrase was used in jest.

The SRP board of directors approved the increase Feb. 26. It averages 3.9 percent and includes a hike in the basic service fee and a new rate plan for solar customers. In addition, the changes will cost new solar customers an additional $50 a month if they don't change their energy habits, according to SRP.

SRP's solar rate hike followed a similarly contentious political battle involving neighboring utility Arizona Public Service Co. in 2013 in which that utility spent millions. While considering that solar rate hike, one of the Arizona Corporation Commission regulators requested that APS disclose what it was spending on advertising, lobbying and other expenses to influence the decision.

SRP is not regulated by the five-member Arizona Corporation Commission. Its elected board votes on rate increases and supervises management of the water and power provider. The Arizona Republic requested documents related to advertising and marketing during the rate-hike process to make a comparison.

SRP reports that $907,000 spent in December, January and February paid for ads related to the "price process" and $776,293 paid for ads not related to the proposed rate increase. Those included campaigns that highlighted SRP's donation of free electricity for the Super Bowl game Feb. 1 in Glendale.

Other campaigns not related to the price hike included advertisements for time-of-use price plans and bill-management options, according to SRP.

APS' parent company, Pinnacle West Capital Corp., spent $3.7 million on advertising and other communications while the Corporation Commission was considering an APS request to change its solar subsidies in 2013, according to the information provided to regulators.

APS made its official filing for the solar rate changes in July 2013, with regulators voting in November. SRP has a much quicker process for rate increases, which is laid out in state law. The utility's announcement came in December, and the vote was in February.

SOLAR AT A PEAK

Customers frequently question why the electric companies advertise at all when they don't compete for customers. SRP officials anticipated questions about advertising and addressed the topic in a question-and-answer document distributed in December with information on the proposed increase.

"As a community-based, nonprofit utility, our communications, including paid media, are designed to educate and inform customers about a variety of topics including: ways to save energy, discounts and rebates, billing and payment programs, electric and water safety, water conservation, investments to improve reliability, and customer service enhancements," SRP said in the Q&A.

SRP also increased its $15,000 monthly retainer to public-relations firm HighGround Public Affairs Consultants for several months to $23,000 a month to assist with the rate hike. In November, the cost was $38,000, including $15,000 for polling to ensure SRP would communicate the rate hike precisely.

"As you know, the price process was a complex subject, and SRP wished to be accurate and precise in communicating its proposal," SRP spokesman Scott Harelson said. "Electricity service and pricing is technical and therefore difficult to explain, and so, choosing words that effectively convey that complicated information is critical."

SRP paid HighGround about $300,000 from January 2014 through the rate hike's conclusion in February, according to financial records.

SRP's director of customer programs Lori Singleton wrote to HighGround President J. Charles Coughlin while out of town on business Dec. 9, after the solar fees were proposed and the deadline passed to apply for solar in SRP territory under the old rate schedule.

The subject line of the exchange was "The Solar Tax Issue."

"Hold the fort down ... feeling restless while the enemy is preparing for attack!" she wrote.

Harelson said the message is not reflective of SRP's views.

"The e-mail in question was in the context of a personal nature and in jest, and does not represent Ms. Singleton's personal position or that of SRP," he said. "In fact SRP, and Lori Singleton in particular, have worked closely with the solar companies for many years to help align their objectives with SRP's programs and initiatives, and have been instrumental in developing the solar industry in SRP service territory."

He said Singleton was not referring to the solar industry as the enemy.

"(She) was referring in general to the criticism she likely expected ... and from the various other issues she would be dealing with," he said.

HighGround officials and communications workers inside SRP also tracked a petition organized by the Vote Solar organization in Boulder, Colo., that opposed the solar rate hike, and similar initiatives by the Sierra Club that brought hundreds of protesters to some of the public hearings on the rate hike.

They meticulously tracked mentions of solar and rate hikes throughout Arizona media, even taking notice when the Arizona State University student publication the State Press wrote an opinion article opposing SRP's proposed solar fees.

E-mails between HighGround and SRP indicate that in January, they collaborated on an opinion article with the intent of putting state Rep. Frank Pratt's name on it. But an SRP executive, Molly Greene, decided not to submit it to Arizona media under the name of the Casa Grande Republican.

"He has done enough," she wrote. "Let's get someone else to step up."

SRP officials said the op-ed piece was never published.

Pratt filmed a 30-second advertisement for a new solar-power plant in Florence that was announced in November just ahead of the proposed solar rate hike. SRP, which will buy power from the plant, posted the video to YouTube.

SRP officials long have maintained that it is more cost effective to purchase power from large solar plants rather than from individual rooftops, because the scale of large power plants allows for significant cost savings.

SRP rarely discloses the price it pays from commercial power plants, but when it announced the deal with the Sandstone Solar Power Plant, the price of the electricity was highlighted.

SRP officials said they would pay an average of 5.3 cents per kilowatt-hour for electricity from the plant. This is less than the approximately 10 cents per kilowatt-hour that residential customers receive in credit when SRP buys the excess power from their solar panels.