The Colorado Solar and Storage Association (COSSA) has filed a legal appeal seeking to overturn a recent rule change from the Colorado Public Utilities Commission (PUC) that COSSA claims would cut the bill credits received by community solar subscribers.
At issue is a revision to the rules, which would allow utilities to deduct a demand-side management cost adjustment (DSMCA) fee from the bill credit community solar subscribers receive. COSSA, the state’s solar industry trade association, and other solar advocates have been unsuccessfully fighting the change since December 2019, when it was first proposed by Public Service Company of Colorado — aka Xcel Energy. The court case appears to be a final, last-ditch effort.
After the commission turned down COSSA’s petition for a rehearing and reconsideration of the rule change, the association filed the appeal in the Colorado District Court in Denver on Sept. 28. So far, COSSA is not talking about the case, but following the arguments for and against the change though the docket at the Colorado PUC presents a complicated story.
Colorado was one of the first states in the country to pass community solar legislation, back in 2010, promoting shared “community solar gardens” for individuals and organizations that, for a variety of reasons, might not be able to put panels on their own roofs or premises. The law was recently updated, but its provisions for calculating the bill credits community solar subscribers receive have remained unchanged. Residential subscribers receive a “net metering credit” minus the utility’s transmission and distribution costs for “delivering to the subscriber’s premises the electricity generated by the community solar garden.”
The DSMCA fee is one of those seemingly small add-ons to utility bills that actually provides millions of dollars to Colorado’s investor-owned utilities, Xcel and Black Hills Energy, for a range of energy efficiency and demand response programs. For example, an Xcel Energy brochure on 2020 residential rates pegs the fee at about .2 cents per kWh. That money goes into residential energy efficiency and demand response programs that, according to a recent report from Xcel, totaled $23.7 million in 2019.
Whittling away at community solar
COSSA’s argument against deducting the fee from community solar bill credits is pretty straightforward. Energy efficiency and demand response programs — however effective and desirable — are not involved in delivering electricity from a community solar project to subscribers. Further, the new rule does not grandfather in existing community solar subscribers who signed on to projects based on certain expected savings, introducing uncertainty into the market.
Xcel gave no reason for the change when it first proposed it. However, arguments developed since then — by Xcel, Black Hills and other stakeholders — rely on cost-shifting claims often used against net metering, the bill credits residential solar owners receive for excess power they produce. According to a brief from Western Resource Advocates, an environmental nonprofit, since demand-management programs reduce overall demand on the system, they benefit all customers and can broadly be construed as delivering electricity.
Excluding the DSMCA fee from the bill credit means community solar subscribers do not pay their fair share of the cost of these programs, thereby shifting the expense to other customers.
The counterargument from COSSA is that the DSMCA fee is not currently deducted from residential net metering compensation, and community solar customers already pay the fee. A filing from the policy nonprofit Vote Solar raises further concerns that allowing a deduction for the DSMCA could open the door for still more whittling away at community solar compensation.
According to the filing, both Xcel and Black Hills are anticipating an increase to the DSMCA for their transportation electrification plans. Xcel’s plan calls for an additional $102 million between 2021 and 2023, which, Vote Solar said, could raise residential DSMCA fees by 37%.
In 2016, Colorado set a model of cross-industry collaboration for the nation, as 26 stakeholders spent weeks in a conference room, hammering out a historic settlement on time-of-use rates and other issues related to solar market growth in the state. The current standoff and its still uncertain outcome clearly call for all stakeholders to once again sit down, talk with each other and find a better way forward.
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