Massive Settlement Resolves Key Colorado Solar Issues

Reprinted with permission by the Colorado Solar Energy Industries Association (COSEIA)

We are pleased to let you know that we have reached a comprehensive settlement with Xcel Energy and nearly two dozen other parties on key issues that will affect the Colorado solar market for years to come.

The deal, which Xcel says is the largest of its kind in Colorado history, was filed August 15 with the Colorado Public Utilities Commission and must be approved by regulators following testimony and hearings. If approved, our intense summer-long negotiations will  resolve scores of issues raised by three different major cases filed by the utility.

While the COSEIA was not fully satisfied with the outcome of all the issues we debated for months, we decided to join in the settlement on all three dockets because we believe that on balance, the settlement represents a number of very positive developments for all parts of Colorado’s solar industry. We also think it represents a better outcome than we would likely get through months of costly litigation before three different administrative law judges. A total of 22 other parties — from big industrial users to advocates for the environment and low income Coloradans — are joining.

Among the most important aspects of the settlement for COSEIA is a much more formally defined stakeholder process including four different groups that will continue to work on these complex issues and recommend additional action. We hope these groups will give us greater insight and provide more accountability for utility practices. Documents filed with the settlement can be found here.

Here are key issues in each of the cases and what is included in the settlement agreement:

Phase II Rate Case, Proceeding No. 16AL-0048E

Grid Use Charge

Xcel had proposed a new fixed charge for all residential and small commercial customers based on their electricity usage. The utility agreed to drop this proposal in exchange for intervenors looking favorably on decoupling. COSEIA has filed to intervene in the decoupling  proceeding, in which Xcel seeks to eliminate its financial incentive for selling more electricity.

Net Metering

Xcel agreed to a key principle for COSEIA: Customers who are net-metered will have equivalent treatment regardless of whether they are participating in Solar Rewards, and Xcel will not propose any new tariff that would alter this treatment prior to the next rate case. Xcel also promises to stop sending notification letters to net energy metering (NEM)-only customers concerning the possibility of future tariff changes, and to automate the application process for NEM-only customers.

Time of Use Rates

A trial of residential time of use rates will begin early next year, allowing residential customers to “opt in” initially, with the current plan calling for the rate to transition to the default rate in 2020, while allowing for review and evaluation. The rates would be contingent on approval of Xcel’s recently-filed proposal to roll out new advanced meters, and on a review of how well the trial period worked.

Time Periods:

On Peak:       2 PM through 6 PM (weekday, non-holiday)

Off Peak:       9 PM through 9 AM

Shoulder:      All Other Hours

The Proposed Rates are as follows:

Note: Adjustments including the ECA adjustment which varies by quarter but has been in the $0.02 -$0.03/kWh range also add to the rates below.

Summer                     Winter

On Peak:                  $0.13814                   $0.08880

Shoulder:                 $0.08420                   $0.05413

Off Peak:                  $0.04440                   $0.04440

Net Metering Time of Use

COSEIA and other solar parties scored a win with the agreement that  extra energy generated by solar systems in a given month can be rolled over as a monetary credit that recognizes the value of the energy at the time it was generated. The credit will be used to offset the bill for consumption the next month and can continually roll over. Those who have elected to cash out extra production will still have that option.

Commercial Rates

COSEIA worked hard to protect the interests of the commercial solar market. Xcel had proposed closing many commercial rates, but the settlement will instead include  a revised SPVTOU (Secondary Photovoltaic Time-of-Use) which is geared toward commercial solar customers who are awarded RECs in the Medium Solar Rewards program.

COSEIA was able to negotiate double the Medium Capacity for the next 3 years (24 MW/year compared to the current 12 MW/year) at REC prices higher than Xcel proposed. Additionally, new construction will be eligible based on load forecasts.

Other rates will close to new customers on January 1st, including the SGL rate for solar customers.

Batteries and Storage

Xcel had proposed a separate “auxiliary service” for batteries, but dropped that plan. The settlement includes language clarifying that energy storage paired with solar is eligible for net metering, provided conditions are met. Energy storage systems will be allowed on the same side of the production meter as a PV system, provided that the storage system is charged exclusively by the solar system. Only the production recorded by the production meter will be eligible for REC incentives.

Production Meters

Production meters will still be required for all net-metered customers, but those who are not participating in Solar*Rewards will no longer have to pay for them. Instead, the costs will be assessed to the utility and funded through the renewable energy account.

Residential Demand Rate Pilot

A pilot of a “Residential Demand – Time Differentiated Rate” will also be conducted, and additional REC payments to encourage some solar customers to try the rate will be included.

2017-2019 Renewable Energy Plan (Proceeding No. 16A-0139E)

Solar Rewards Capacity

The settlement provides the following capacity targets, in megawatts, for the Solar Rewards program. Small Option B is reserved for participants in the demand rate pilot described above, to be rolled into the general program if not used by those participants.

 

Program

2017 Capacity 2018 Capacity 2019 Capacity Total RES Capacity
Sm Opt A 24 24 24 72
Sm Opt B 9 18 24 51
Medium 24 24 24 72 Commercial
Large 6 10 14 30 Commercial

REC Levels

Here are the REC levels (per KWh) for the small program:

Year Option A Option B
2017 $0.005 $0.0500
2018 $0.005 $0.0475
2019 $0.005 $0.0350

These are the Medium Program REC levels (per kWh):

Year Medium
2017 $0.0475
2018 $0.0425
2019 $0.0375

For the Large Program, RECs will be determined through a competitive solicitation process, with the company awarding RFP bids each year. The Large program, to give C&I customers an option for systems larger than 500 kW, has not been offered since 2012.

Community Solar Garden acquisition levels were set in the settlement at these levels, in MWs:

Year 2017 2018 2019 Total
Minimum 15 15 15 45
Maximum 30 35 40 105
100% Low-Income CSGs 4 4 4 12
Combined Maximum 34 39 44 117

Negative RECs

Parties to the settlement agreed to leave unresolved the question of whether negative REC price bids are appropriate from a legal or policy standpoint.
Low-Income Solar

The settlement includes the first major commitment to provide more solar to low-income customers. Xcel agrees to partner with the Colorado Energy Office to create a low-income solar program that will install up to 300 rooftop systems in the next three years. Additionally, Xcel will solicit through the RFP process up to 4 MWs of solar gardens that commit to provide 100% of their energy to qualified low-income customers. And Xcel will take over the 5% low-income carveout now required of CSG developers.

Solar Connect (Proceeding No.16A-0055E)

General Parameters

The settlement changes the name to Renewable Connect, and authorizes the new solar resource at up to 50 MW. Customers can subscribe for up to 100 percent of their energy month-to-month, or for terms of 5 years or 10 years.

Costs

The bill charges and bill credits for the project are projected to make it a premium product for at least the first several years, though the cost will depend on what is bid to build the solar farm and what Xcel agrees to in a Power Purchase Agreement.
Program Marketing

To address the anti-competitive concerns raised, Xcel agreed to provide a common web site landing page for all voluntary renewable energy programs where customers can access information  on all programs. Personnel working on other solar programs will generally not work on Renewable Connect, and various other  provisions are intended to allay other anti-competitive issues that arise.

Stakeholder Groups

COSEIA believes that one of the most important aspects of the settlement is the creation of several stakeholder groups – open to all settling parties – that will provide much more regular interaction for resolving issues with Xcel. These groups will begin by meeting quarterly and will  identify and address issues leading to additional actions in support of this settlement including actions which may require approval of the PUC. The groups identified in the settlement and given specific tasks include:

  • Distribution Grid and Interconnection Stakeholder Group
  • Future Voluntary Renewable Programs Stakeholder Group
  • Existing Voluntary Renewable Programs Stakeholder Group
  • Pilot and Trial Program Stakeholder Group

We will need COSEIA member participation in these groups to ensure they lead to the actions we all desire. We’ll keep you posted as this process unfolds and are happy to try to answer your questions.