Xcel Energy Puts Rooftop Solar in Jeopardy in Colorado

Rooftop solar is helping Colorado families, schools and businesses take charge of their power supply and their electricity bills like never before. This private investment in rooftop solar is helping build a cleaner, safer and more resilient energy supply for all Coloradoans. And the state’s largest power provider, Xcel Energy, is apparently not too happy about it.

The Colorado arm of Xcel just proposed a plan that would soon make solar a bad deal for customers in its service territory. Xcel is using shady math and backroom tactics to try to roll back the state’s successful net metering policy, which allows solar customers to get credit on their energy bills for power they deliver to the grid.

This is becoming a familiar story: utilities are using rate design proposals to destroy the customer economics of going solar in an attempt to prevent more of their customers from being able to generate their own power. Instead of engaging in a thoughtful conversation about how the solar industry and Xcel can work together to make rooftop solar an important and a more valuable part of their power supply mix, Xcel is simply trying to get rid of what they see as competition – customer generated solar power.

Xcel issued this anti-net metering proposal last Wednesday, July 24th as part of its annual Renewable Energy Standard Compliance Plan (Plan). Here are the details:

Step 1: First, Xcel wants the Public Utility Commission (PUC) to allow them categorize net metering as a subsidy, and a big one at that. It is important to note that Xcel wants to calculate this ‘subsidy’ by counting each and every kilowatt- hour (kWh) of solar produced from rooftop systems, and multiplying it by a rate that Xcel has internally calculated (see Table 1 below for the exact ‘subsidy’ rates Xcel is proposing). They aren’t just targeting energy exported to the grid; they all looking at all the energy a solar customer produces, even the energy that is used onsite at a customer’s house to serve their load. This is similar to Xcel saying that when a family’s kids go off to college and that household uses less energy, or when a home-owner installs energy efficient windows, that the reduction in energy usage should be counted as lost revenue that Xcel is entitled to collect.

Xcel’s net metering rollback proposal is based on an study done in-house at Xcel that looks at the costs and benefits that distributed solar brings to Xcel’s grid. Neither the public nor the PUC has reviewed the final study. Vote Solar was a member of the technical review committee of this study, so we know from first hand- experience that the utility was not interested in meaningful public input on the study parameters or the methodology used to conduct the study. It is no surprise that a study shaped entirely by the utility serves the utility’s motives.

Distributed, local rooftop solar delivers innumerable grid benefits, which Xcel is unfairly discounting in their study. Public comments on this study — and we certainly have some comments to share — aren’t due into the PUC until August 30th. We find it disappointing that Xcel’s net metering rollback proposal presents the findings from that flawed study as unquestionable facts.

For residential customers Xcel is claiming that they are entitled to recoup about 6 cents per kWh for all solar produced by residential customers. Given that retail rates for residential customers are about 10.4 cents, Xcel is essentially claiming the value of residential solar is about 4 cents per kWh. For commercial customers the ‘subsidy’ is much lower at 1.5 cents per kWh.

Table 1: Xcel’s internally calculated net metering subsidy calculations

Step 2: Next Xcel wants to be able to recover the money they are losing when their customers reduce their energy bills when they go solar from a fund specifically designed to allow Xcel to invest in renewable energy to meet the state’s renewable energy standard. The fund is called the “Renewable Energy Standard Adjustment Fund” (RESA fund), and it is capped at 2% of each ratepayer’s annual electricity bill. The master plan here is that Xcel could then show what a bad deal distributed rooftop solar is compared to other renewable resources like wind and utility-scale solar. Xcel knows that there is a limited pool of funding available each year in the RESA fund, and thus accounting for net metering in this pool immediately limits the amount of funding available for other renewable energy projects, including wind and utility-scale solar.

Step 3: Here comes the sly part. The third part of its plan, which Xcel is intentionally vague about in an effort to ward off criticism from the solar industry and solar consumers, is to dramatically reduce the net metering bill credit arrangement in their 2014 rate case, or through a legislative change. Although Xcel does not explicitly layout the third part of its plan in this proposal, when asked if net metered customers will be responsible for paying for this ‘subsidy’, it answers cryptically, “No, not at this time.” Or, in another part of the Company’s testimony they say of their plan: “This transparency will not change immediately who pays for the [subsidy].” (See Karen Hyde’s testimony in docket 13A-0836E).

We’re all smart enough to see this proposal for exactly what it is –an attempt to make rooftop solar less attractive to Coloradans, thus slowing down the adoption rate of this clean, local, distributed, and importantly customer-controlled energy resource.

We disagree with Xcel’s conclusions in its solar costs and benefits study, and more importantly we see their proposal as an unacceptable start to the conversation about net metering and potential reform ideas. While that conversation should happen, Xcel’s proposal should not be considered until the public and the PUC can thoroughly evaluate the underlying data Xcel is using to justify this anti-rooftop solar proposal. We believe that Xcel’s current solar costs and benefits study does not recognize the tremendous value that rooftop solar delivers to Colorado.

We should remember what is at stake in this conversation. Rooftop solar is helping to build a cleaner, safer and more resilient energy supply for all Coloradoans. It’s creating a vibrant new energy economy: 275 solar companies employ 3,600 Coloradoans throughout the state. It’s making Colorado a solar leader: CO ranks 5th in the nation for the amount of solar power installed. And it’s what Coloradoans want: Polling conducted earlier this year showed that a majority of Colorado voters agree that it’s important to have clean energy powering their homes (60%).

Vote Solar is a non-profit grassroots organization working to fight climate change and foster economic opportunity by bringing solar energy into the mainstream.