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Xcel Energy Solar Energy Fee, Subsidy, or Penalty

Xcel Energy Solar Energy Fee, Subsidy, or Penalty

Posted 2 years ago in the Solar Business category by Nate Lew
Xcel Energy, an investor-owned utility operating in Colorado with headquarters in Minneapolis, Minn., plans to charge residential customers who install solar panels after April, 2010 a monthly user fee.

Tom Henley, Xcel Energy spokesman, said at one time that the fee would level the playing field for electricity users who don’t have solar panels and are, as a result, subsidizing connectivity fees for solar users.

These solar users sometimes have large-enough solar installations that they use no Xcel-generated electricity in a given month and therefore pay no electrical fees, though they still pay about $8 for billing and meter reading. Such systems are rated at about 9 kilowatts and deliver about 1,000 kilowatt-hours per month, or enough to serve the average American residence.

The fee, which Henley estimates will cost Xcel solar customers an extra $1.90 per month, would not be assessed against existing solar users, but would apply – if approved by the Colorado Public Utilities Commission – to all new installations, and would be paid to Xcel even if said customer used no Xcel-generated electricity in a given month.

In other comments, Henley appeared to contradict himself by suggesting that some new solar customers who used a sufficient amount of electricity each month would never have to pay the fee. In other words, the fee begins to sound like a penalty for using renewable energy rather than allowing Xcel Colorado – whose generation mix comprises 54 percent coal (not counting Comanche 3, a new coal-fired, 750-megawatt unit) – to provide a more polluting version.

In fact, no Colorado users pay extra to fund solar connectivity fees, which are currently funded from Xcel’s operating budget. Granted, it’s not a huge amount, but it does send a message, and one that solar companies find offensive. For example, Colorado Solar Energy Industries Association (CoSEIA) Executive Director Beth Hart labels the fee a “misplaced charge” and notes that Xcel failed to include the benefits of solar to the electrical grid in their cost analysis.

Other members of CoSEIA are concerned that, if approved, the fee might be much higher, since it would be based on the highest monthly amount of electricity withdrawn from the grid in a year, based on 2.6 cents per kilowatt-hour.

The fee, according to Henley, covers the cost to Xcel of having to make sure the energy is available to solar users, even if they don’t use it – a sort of electrical availability insurance policy that singles out solar energy users who are actually helping Xcel meet its state-mandated renewable portfolio standard, or RPS.

These RPS are, for investor-owned utilities, 5 percent of retail electricity sales through 2010, rising to 10 percent in 2011.

The Public Utilities Commission will hold a hearing on the subject on Wednesday, Aug. 5. Currently, such grid-access user fees are currently illegal in California. If passed, it will be the first rule of its kind in the United States to penalize renewable energy users for grid connectivity.

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