Utilities Commission postpones decision on Xcel solar rebate

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After two hours of clarifications, assertions, and a Chairman securing a rental car in the middle of the hearing, the Colorado Public Utilities Commission decided to hold further hearings on March 11 and, if necessary, March 18, regarding the status of Xcel Energy’s proposal to reduce its Solar Rewards program from $2.01 per watt to $1.25 per watt.

The hearing came in the midst of complete freeze of the program by Xcel, which cited a 3-megawatt cap that had already been reached.

The Colorado Solar Industries Association’s advocate Susan Perkins, of Perkins Environmental Law, outlined their position in her opening statement. COSEIA wants the rebate turned back on, immediately.

“Xcel’s actions on Feb. 17 brought the success story of the solar industry to an abrupt halt,” she said. “Why is this so? It’s so because the market is effectively frozen.”

On Feb. 17, Xcel announced a reduction in the Solar Rewards program from $2.35 per watt to $2.01 per watt. Twenty-four hours after the announcement, Xcel froze the program because it had reached its cap for applications.

Under Xcel’s new proposal, the rebate rate would fall from $2 per watt to $.25, and the REC payment of $.01 per watt would increase to $1.

Perkins referenced a few solar companies’ plans to lay off employees and downsize as a result of the freeze.

COSEIA asked the Public Utilities Commission to order Xcel to reinstate the rebate under the Feb. 17 adjusted rate ($2.01 per watt) and to deny the utility’s request to reduce the rebate to $.25. In addition, Perkins and COSEIA asked the PUC to continue to oversee Xcel’s rebate ratcheting-down process.

Under Xcel’s proposal, the CPUC would no longer have jurisdiction to oversee the bulk of the program’s payout, which would be in renewable energy credits and not in rebates, allowing Xcel, according to Perkins, to reduce the amount arbitrarily without seeking outside approval.

Xcel’s Assistant General Counsel David McGann agreed that the rebate program should be restarted as well, but cited inflated costs due to the current rate.

“We are on a trajectory this year to spend $90 million dollars [on the Solar Rewards program],” said McGann. “And if we were to adopt COSEIA’s proposal, we would be overshooting those numbers by a significant factor.” The estimate was later estimated at $200 million. “If we’re only collecting $50 million a year from customer bills, we’ve overshot those collections by five times if we implement COSEIA’s proposal.”

McGann came to that figure by adding the $90 million already paid and the projected $200 million the company estimated it would have to pay if the program remained at previous rates.

According to Zacks Investment Research, Xcel’s total revenue last year was $10.3 billion. The utility is, after all, a for-profit business.

“Mrs. Perkins talked about sustaining the solar industry,” said McGann. “We are all attempting to realign the incentives so we can sustain the industry—that’s all we are doing.”

McGann said he is encouraged by the fact that the other parties are willing to work toward compromise, but he warned the commission not to enforce COSEIA’s proposal as is.

But COSEIA is advocating for an immediate decision, citing the negative effects the frozen rebate has had on the Colorado solar industry.

Commission Chairman Ron Binz, who chaired the hearing over the phone (he was visiting his mother on her birthday—hence the rental car business), questioned both parties as to the jurisdiction of the PUC to expedite adoption of either proposal.

“Everybody seems to be united in the belief that we must do something quickly,” he said. “I’m asking, how much due process you believe is required to take either of the actions that are being proposed right now?”

The general consensus from both Perkins and McGann was that the PUC should, but they weren’t sure if it could.

All the groups discussing Xcel’s proposal, including the Governor’s Energy Office—which was not taking either side—agreed that expediency was the biggest issue, and stressed that every day the Solar Rewards program remains frozen is detrimental to the industry. McGann agreed.

The roadblock is the discrepancy between what COSEIA is asking for and what Xcel is proposing. In addition, both PUC commissioners present, Jim Tarpey and Matt Baker, said that the factual differences on both sides needed to be settled before any decisions are to be made.

While both parties seemed receptive for an interim decision regarding the Solar Rewards program rate, Perkins warned that issuing a temporary rebate would not necessarily help. She said that if customers recognized that the rebate would change in the future, they would most likely wait until a final rate was decided before installing a solar system, effectively keeping the industry frozen.

The Commission set a new meeting date of next Friday, March 11, for additional comments and asked that both sides use the time to get their facts in line and possibly meet to work out a compromise.

Xcel Energy spokesperson Michelle Aguayo was cautiously optimistic about the March 11 hearing.

“I think we’re encouraged by what happened today,” she said. “We have some timelines and some deadlines we need to meet, but we’re encouraged.”

Aguayo said the utility is open to meeting in the middle.

“I think what you heard today shows that we have a willingness to talk,” she said. “We’ve already contacted COSEIA to work on a resolution to this. We’re trying to come up with the best solution possible as soon as possible.

Neal Lurie, executive director of COSEIA shared Aguayo’s optimism, but for different reasons.

“The commissioners reinforced that there was a sense of urgency,” he said. “The fact that they are willing to make decisions in a matter of days is encouraging.”

But even waiting a week can do serious damage, he said.

“We were obviously looking for resolution sooner than that,” he said. “What’s most important to us is that these issues are able to get the light of day.”

Lurie said that COSEIA’s goal is getting to the point where the industry can drive down costs and create jobs, something that’s difficult when the rebate remains frozen.

“In this interim period of uncertainty, it’s almost impossible to do that,” he said.

But Jim Burness, chief operating office of SolSource, a Colorado-based solar installer, was not excited to go another week without the rebate.

“I’m disappointed that the PUC didn’t take definitive action,” he said. “Even a week, with the constant hemorrhaging, can do a lot of damage.”

Burness said he was glad the PUC didn’t accept Xcel’s numbers at face value, but didn’t share Lurie and Aguayo’s optimism for the upcoming continuation of the hearing.

“I think the PUC could have done a lot more than they did today,” he said. “And I see the biggest challenge is that there is zero trust of Xcel in the solar community now, and it’s hard to negotiate when there’s no trust.”

Pictured: Although today's hearing was on the quiet side, Feb. 25's protest of Xcel was not.