Colorado regulators reject Xcel’s proposal to add solar power

In an unusual move, state regulators on Wednesday verbally rejected a proposed agreement between Xcel Energy Inc. and three solar power developers that would have added up to 60 megawatts of “community solar” power plants in Colorado. The Colorado Public Utilities Commission (PUC) typically approves settlement agreements reached by parties in a dispute. "It’s infrequent," PUC spokesman Terry Bote agreed. "But it’s based on whether the settlements are in the public interests or not, and in this situation, the commission felt it was not in the public interest." The PUC said in a statement that “the proposed agreement was not in the public interest because it was inconsistent with certain statutes, PUC rules and previous decisions, and it was likely to raise the cost of renewable energy to customers.” A written order detailing the objections of the PUC commissioners should be issued in a few weeks. “We are disappointed by the decision, but we will need to wait on the written order before providing further comment,” Xcel said in a statement after the PUC’s verbal decision on Wednesday. Community solar projects, also known as “solar gardens,” are medium-sized solar power stations in which businesses or individuals can buy or lease solar power panels and get credit off their monthly bill for the renewable energy produced by the panels. The 60 megawatts of solar power proposed in the agreement is enough to serve the needs of 9,840 homes, or nearly all of the 11,400 homes the U.S. Census counts in Brighton. Colorado was the first state in the nation to allow community solar systems on the grid. They’ve proven popular with customers who can’t or won’t put solar power on their own rooftops. Only about 25 percent of all the homes in the United States can support solar power arrays on their roofs, according to studies. The agreement, announced February 23, was intended to settle disputes over how much community solar Xcel (NYSE: XEL) would add to its Colorado portfolio for the years 2014 through 2016 via its Solar*Rewards Community program. Parties to the agreement were Xcel, and three businesses that develop community solar systems: Clean Energy Collective, Community Energy Inc. and SunShare LLC. “We’re disappointed with the PUC’s decision,” said SunShare’s spokeswoman, Kate Laursen. “The settlement between Xcel and the other developers was made with the ratepayers’ best interests in mind,” Laursen said. The three solar companies build and operate community solar gardens and were declared by Xcel to be the three winning bidders of the company’s 2015 competitive bidding process for 29.5 megawatts worth of community solar resources, the PUC said. The PUC previously had ordered Xcel to acquire between 19.5 megawatts and 90 megawatts of community solar power by the end of 2016 — and noted Wednesday that the requirement is still in place despite the rejection of the proposed settlement. The PUC, in its statement, said it had several problems with the proposal Xcel and the three companies filed. For instance, in the proposed agreement, the PUC noted that Xcel said it would pay the companies a flat 3 cents per kilowatt hour for the Renewable Energy Credits, or RECs, produced by the solar power arrays instead of the prices the companies had bid as part of the 2015 request for proposals. The PUC said that by agreeing to a 3 cents per REC payment, instead of the lower prices the companies offered in their bidding, the overall cost of building the solar power systems would rise “by hundreds of thousands of dollars per facility,” according to the commissioners’ statement. “Rather than utilize the commission-approved competitive process, the parties filed a settlement that is not in the public interest,” PUC Chairman Joshua Epel said. The commissioners also took issue with Xcel’s proposal for using an average number for the monthly bill credits for customers who buy or lease panels in a community solar system, rather than figuring out the credit for each individual panel and customer. Lastly, the proposed agreement included a provision in the agreement that Xcel could “participate in the ownership” of up to 4 megawatts of community solar, which would be reserved for low-income customers and non-profit, 501(c)(3) organizations. Typically, additions to Xcel’s power portfolio are formally proposed to the commissioners, who review and approve or reject the project. The commissioners said that including Xcel’s ownership of community solar megawatts in a settlement agreement was “inconsistent with statutes, PUC rules and previous PUC decisions.”