Xcel, solar firms spar over net metering
Those in the solar industry believe the move could set solar back in Colorado by years and cost the state jobs.
“If their proposal goes through, I think eventually it would mean either the end or a drastic reduction of our business operations in Colorado,” Blake Jones, co-owner and chief executive of Boulder-based Namaste Solar Inc., said recently.
Net metering is the way customers with solar panels are credited by their utility for the electricity their home systems produce. If a home produces more electricity for a given time than it uses, that customer is granted credits on his bill for times when his home is using more than it produces.
For homes that produce more energy than they consume over the long term, those customers might never pay an electric bill – and there lies the rub for Xcel. Even if solar customers are producing more energy than they consume, they still benefit from use of the transmission grid to bring them power at night or in the winter when their solar panels are producing less. In the daytime, when their panels are producing too much electricity for the home, those customers benefit by the excess energy being carried away.
The result is that nonsolar customers end up bearing the entire cost of maintaining the distribution system and adding capacity as the population grows. The debate is whether the benefits solar customers provide to the grid – and thus to non-solar customers – outweigh the costs.
In its 2014 Renewable Energy Standard, or RES, compliance plan filed with the Public Utilities Commission last month, Xcel asks the PUC to clearly identify the value of the net metering benefit solar customers receive in order to start a discussion about whether that benefit is too large. The proposed plan does not change net metering for 2014 but would track net metering for new solar customers.
“I think the idea is that we start the discussion and figure out how to do this fairly for all customers,” said Karen Hyde, Xcel’s regional vice president for rates and regulatory affairs. “We haven’t made a judgment about who should pay for (the distribution system). We’re just saying we should start to talk about it.”
Various incentives and tax rebates have helped the solar industry grow as state and federal governments have tried to encourage the use of green energy over fossil fuels such as coal that provide much of the nation’s energy. But solar advocates believe reducing benefits such as net metering, which is in place and free in 43 states, would make solar unaffordable for many customers and thus halt the growth of the industry before it is ready to wean itself off such incentives.
A residential solar system in Colorado, according to Jones, ranges in cost between $10,000 and $30,000 before incentives, depending on the size of the home and energy consumption.
“For them to claim that they’re just trying to start a conversation … I think it’s really inappropriate and a really scary thing for the future of the solar industry in Colorado,” Jones said.
In 2009, Xcel proposed a minimum bill for solar customers, an idea that was shot down because of backlash from the solar industry. In response, Xcel conducted a study based on 2010 solar-generation characteristics to examine the net-metering benefit. That study, filed with the PUC in May, has become much of the basis for Xcel’s current plea to have the PUC take a look at the incentive.
Xcel acknowledges that solar customers provide benefits to the grid such as reducing strain on the transmission system and reducing the need for added capacity and new power plants, thus preventing rate increases. But the company contends that those benefits are outweighed by the costs related to distribution, transmission and generation capacity in serving solar customers.
Most solar customers don’t pay Xcel the 10.5 cents per kilowatt-hour retail rate for electricity because of net-metering credits. Xcel, in its study filed with the PUC, estimates the benefit of those customers to the grid to be 4.6 cents/kwh in 2014. Xcel believes the net-metering incentive for solar customers is the difference between those numbers, or 5.9 cents/kwh. That number multiplied by the total kilowatt-hours generated by solar customers is what Xcel believes the net-metering incentive to be in total dollars, the amount passed on for nonsolar customers to collectively pay.
But those in Colorado’s solar industry question the methodology of Xcel’s net-metering incentive calculation, as well as the study used to arrive at the calculation.
“Our concern here is that they’re basing their analysis and their statements on a study, the process of which we have real concerns with,” said Edward Stern, executive director for the Colorado Solar Energy Industry Association. “I think the most important thing is that we’re using good numbers to have this conversation.”
Before Xcel would be allowed to track the net-metering incentive and try to place a value on it, the PUC must approve Xcel’s RES plan. The PUC would also have to approve the methodology for calculating the net-metering incentive. Hyde said the PUC could determine its own way of calculating the incentive.
Hyde said she doesn’t expect any decisions from the PUC until early 2014, leaving plenty of time for debate in the meantime.
“We feel like we’ve fairly assessed it and put it out there for discussion,” Hyde said. “If (solar advocates) can show where we have erred in our quantifications or left anything out … that’s a good discussion to have. But until we’ve put it out there in the public venue, you can’t have the discussion. And I think they shouldn’t shy away from that discussion.”
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