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Xcel backs off “solar penalty”

Solar panels installed in Boulder, Camera file photo

Boulder County is filled with solar companies — Namaste Solar, Simple Solar, Lighthouse Solar, and the list goes on — and it didn’t take long for the area’s entire community of pro-PV people to organize against Xcel Energy when the utility proposed a rate hike for new solar customers.

Xcel got so many complalints, in fact, that it withdrew its request before solar advocates could flood a public meeting planned for Wednesday.

Read the Camera’s story below, or check out the Wall Street Journal’s take on Xcel’s “solar penalty” here and the Journal’s follow-up post here.

Xcel Energy has backed off its proposal to raise rates on new solar customers — for now.

The solar fee hike was part of a larger increase in electricity rates that Xcel is asking for to recover the cost of bringing a new coal-fired generator on line in Pueblo.

Xcel dropped the solar fee — which would have charged solar-panel owners for the costs the utility says are associated with their homes being hooked up to the grid — because the proposal “caused significant customer confusion.” But the company isn’t ready to give up on the idea altogether.

“We still believe we’re on the right side of the discussion here,” said Xcel spokesman Mark Stutz. “But sometimes, being on the right side of the discussion isn’t enough.”

The proposed solar fee was based on the principle that it costs Xcel money to maintain a grid connection — and keep a reserve of electricity available — for solar-panel customers even when the customers are “net zero” during a year, ultimately producing as much electricity as they use.

“Even if you net out in a year, it’s immaterial,” Stutz said. “We still have to maintain the delivery systems to get electricity to the house when you’re not generating yourself.”

Solar advocates in Boulder, who helped organize a quick and vigorous opposition to the proposal, cheered Xcel’s short-term decision, but took exception to the utility’s reasons for its change of mind.

“We are not excited that they believe that we are confused,” said RJ Harrington, director of legislative and regulatory affairs for Boulder-based Simple Solar.

Employees at Simple Solar clearly understood the proposal, Harrington said. They just disagree with Xcel about whether it’s necessary or even fair.

The heart of Xcel’s argument in favor of the fee is that solar customers are getting a free ride, enjoying the benefits of grid backup without paying for it. Solar energy supporters, on the other hand, say that the benefits of having solar panels scattered on rooftops across Colorado — a concept called distributed generation — are greater than the costs.

“We are concerned that Xcel still doesn’t seem to recognize the benefits of distributed generation,” Harrington said.

Solar panels can help reduce the utility’s peak demand in the summer when air conditioners are running full throttle, and solar customers allow Xcel to add renewable energy generation to its portfolio without having to build a new transmission network, solar advocates say.

Studies performed at other state utilities seem to bear out the solar industry’s claim. A study released in January by Arizona Public Service compared the benefits and the costs of small-scale solar generation and found that “solar distributed energy brings value to Arizona Public Service in both the near term and, increasingly, over time.”

“The winning business case for solar distributed energy in Arizona is a combination of hard, quantitative facts, such as the reduction of line losses, energy savings for customers, and reduced or deferred capital expenditures,” the study said. “But it also includes softer, qualitative benefits such as increased job opportunities for installers, a more sustainable environment, and as yet unquantifiable benefits that will likely become economic in the future, such as the value of carbon.”

In Colorado, no such study exists, but on Tuesday, the Governor’s Energy Office announced its intention to launch a comprehensive analysis of distributed energy so that the Public Utilities Commission, which regulates Xcel, can make an informed decision on the costs and benefits of distributed generation in the future.

“I commend Xcel for reconsidering this proposal,” Gov. Bill Ritter said in the news release that announced the new study. “We appreciate Xcel’s concerns about the cost of distributing power and maintaining the electric grid, and we will work with Xcel to study these issues moving forward.”

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