Worth Watching at the Colorado PUC For the Week of March 12, 2014

In case you hadn’t heard, distributed solar power is being attacked across the country and Colorado is no exception. The Colorado Public Utilities Commission is beginning to look closely at how to value net metering in the State and the decision will impact whether you get to have solar on your roof if you’re staying tied to the grid and what that power is worth. Xcel started this fight last summer and it’s just starting to get going this spring.

In June of last year, Xcel filed their compliance plan regarding what kind of renewable energy they expected to buy for 2014. They dropped a paragraph midway through the filing that was the opening salvo in this battle:

“Our Recommended Plan also incorporates our efforts to start a dialogue about the need for and the equity of the incentives in the on-site solar program. In particular, we seek to transparently show the impact of the incentive net metering provides to customers that install PV systems, and to discuss the equity of that incentive. We seek to discuss the prospect that the net metering incentive either needs to be ramped down over time or that other rate design solutions must be explored to address the incentive net metering provides for future installations.” (PSCo’s VERIFIED APPLICATION FOR APPROVAL OF 2014 RENEWABLE ENERGY STANDARD COMPLIANCE PLAN, filed July 24, 2013, p. 2)

Xcel went on to say that if their valuation of net metering is accepted, they’ll continue to grow their distributed generation network at a pace that’s above the required acquisition. If their valuation is not accepted, they’ll ramp down their acquisition dramatically to the bare minimum.

For context in the pricing debate, the current price for power on the PJM wholesale market (back East) is around $47 per MWh, or $0.047 per kWh. In the Four Corners area, the five year average price for 2008-12 was $42.69 per MWh, or $0.043 per kWh. Energy on the spot market is energy of last resort for when long term planning fails or power needs peak above what was expected, so it’s likely the some of the most expensive power. Most power is obtained under long term contracts, which will be cheaper per unit, but this gives an idea of scale.

Xcel is proposing that net metered customers who own their own systems will get paid $0.02 per kWh in the beginning of the program and as more systems come online they’ll reduce that payment to $0.00125 per kWh. If you lease your system through a third party, that payment will remain consistent at $0.00125 per kWh.

Shouldn’t the power generated on your roof used primarily to power your house be more valuable than… well, almost nothing?

As of May 31, 2013 Xcel had about 160.0 MW of installed retail distributed generation online and operating. They get on average 414 applications per month for the small scale distributed generation (think the panels on your house) and about 84 percent of those are third party systems (Namaste, SolarCity or REC Solar, for instance). There is plenty of demand for these programs.

Yesterday at the weekly meeting, they scheduled the initial hearing on this issue. The PUC is graciously allowing all the parties, with Xcel starting, three hours, including a break, to determine the scope, purpose, expected results, and structure of the net metering battle. That hearing will take place on April 9 – keep an eye on this space for updates.