Sandro Sacerdoti
CRES Boulder County Chapter
As an update to our blog post of July 23, 2015 concerning the Colorado Public Utilities Commission’s (PUC) review of existing net metering rules for utility customers with solar panels, on August 26, 2015 the PUC decided to leave the current net metering rules unchanged and close the proceeding. The PUC’s written decision has yet to be published.
Under current PUC net metering rules, utility customers with solar panels connected to the grid earn a credit against their electricity bills equal to the retail price of the electricity their solar panels produce. The PUC rules govern utilities in Colorado, such as Xcel Energy (the largest investor-owned utility in the state) and Black Hills Energy, that have been granted a monopoly to provide electricity to customers within a designated service area. Municipalities that manage their own electricity utilities (of which there are 29 in Colorado, including Fort Collins, Longmont, and Colorado Springs) and electricity cooperatives are not governed by the PUC and set their own net metering rules.
Utilities across the country, many of which own power generating facilities, such as coal power plants, derive a significant portion of their profits from those facilities. These utilities have become concerned with potential competition from so-called “distributed generation” by residential and commercial solar panels. Many utilities including Xcel are seeking to reduce net metering credits, which are set by regulators, and increase fees for solar adopters connecting to the grid in order to reduce the incentive or make it uneconomic for home and business owners to produce their own power from solar panels. Currently, most residential and commercial solar installations do not include an electricity storage component (batteries) to provide power generated by the solar panels after the sun sets, and therefore homes and businesses with solar must still be connected to the grid for electricity from twilight to morning. In search of a more populist argument than protecting profits, utilities have argued that allowing solar customers to reduce their electricity bills through net metering shifts the cost of maintaining the grid and large power plants to non-solar customers. However, utilities have had difficulty showing convincing numbers and methodology to support this argument, but it has gained traction.
The PUC proceeding opened in March 2014 in response to Xcel having sought to reduce net metering credits to customers. Over 18 months, four panel hearings and multiple rounds of comments, the PUC heard from Colorado state and municipal agencies, Xcel, Black Hills Energy, and a number of solar advocates and businesses including the Colorado Solar Energy Industries Association (COSEIA), Western Resource Advocates, the Vote Solar Initiative, RES Americas, SolarCity, and concerned citizens including BCRES Steering Committee Member Leslie Glustrom (appearing in her individual capacity).
As explained by PUC Chairman Joshua Epel at the final hearing, the PUC made its determination to keep net metering rules unchanged based on a number of factors, including, among other things, that Xcel acknowledged net metering was not currently causing it an earnings loss (only 1% of Xcel customers have solar) and the PUC’s desire not to wade into a political battle which is consuming many states and which the Colorado legislature has not yet entered.
Of the three PUC members, Chairman Epel and Commissioner Pamela Patton indicated interest, during discussion at the final hearing, in Colorado maintaining its position as a leading state in solar, which provides benefits to Colorado residents including jobs and health benefits from reduced pollution. However, Commissioner Glenn Vaad stated that he would be in favor of significant reductions to net metering credits in light of certain news articles he had recently read, without reference to the evidence presented to the PUC during the 18 month proceeding, panel hearings, and comments from interested parties. All three Commissioners agreed no action should be taken at this time.
Challenges to Colorado net metering rules will likely be made again in the future, but the solar industry considers the recent PUC decision to be a significant win for the near term. In a news release, COSEIA Executive Director Rebecca Cantwell called the decision “a positive outcome for Colorado customers with or without solar.”
Sandro Sacerdoti is a corporate transactional lawyer specializing in renewable energy and cleantech startups, mergers and acquisitions, finance, and project finance. He joined the Boulder County chapter of CRES in 2015. Sandro has been involved with renewable energy, energy efficiency, and environmental non-profits for many years and is a judge for the Cleantech Open, an accelerator for cleantech startups.
