Xcel Energy Cuts Solar Incentives, House Rebuts with HB 1228

Editor's Update (Wednesday February 24, 2011, 3:35 PST): Ecopolitology reports House Bill (HB)1228 has been voted down by the Colorado House Committee on Agriculture, Livestock & Natural Resources.

On February 17, 2011 Xcel Energy, Inc. (NYSE: XEL), Colorado’s largest investor-owned utility, announced that it was suspending the solar energy incentive application process and cutting the associated rebate.

The cut, effective immediately, reduces incentives from $2.35 per watt to $2.01 per watt.

Xcel is also asking the Colorado Public Utilities Commission (CPUC) to officially lower rebates to $1.25 per watt, a move that would halve their original value. This would result in $3,000 to $4,000 in additional costs for those still wanting to install a residential solar power system. It is also the second time the utility has roused ratepayers to wrath; the first, when it proposed charging a rooftop solar connection fee.

Solar companies, installers, and peripheral suppliers were outraged by the news, as evidenced by a report from the Boulder Daily Camera quoting the head of the Colorado division of the Solar Energy Industries Association (SEIA), Neal Lurie, as saying the cuts would cause a fundamental destabilization of the solar marketplace.

Blake Jones of Namaste Solar (Boulder) was even less forgiving, calling the cuts the solar industry’s “worst nightmare”, and saying they would cause the death of the state’s emerging solar industry, not to mention the roughly 5,300 associated jobs created since Xcel initiated its Solar Rewards Program in 2006.

The Governor’s Energy Office (GEO) responded to the news cautiously, walking a thin line between political truth and harsh reality. Xcel, known throughout the state as the Public Service Company of Colorado, serves 1,325,284 customers (as of 2005; more recent figures are unavailable).

That kind of customer base is the elephant in the room, politically speaking, and the GEO’s attempt to find middle ground – by saying it hypothetically supports incentive reductions but also wants a “predictable and transparent” payment schedule – likely failed to make friends in either camp.

It seems like karma, or perhaps merely serendipity, that – while Xcel prods the PUC to approve a further cut – the Colorado House is voting on HB 1228 (Wednesday, February 23). The results of that vote have not been released as of this writing.

This bill proposes the state conduct a study to determine if distributed renewable generation (read small-scale solar, wind and geothermal) can help defray the “green” job losses inevitable under Xcel’s proposed cuts.

Introduced by State Senator Gail Schwartz (D-Dist. 5) and Representatives Edward Vigil (D- Dist. 62) and Tom Massey (R-Dist. 60), the bill -- officially known as HB 11-1228 – directs the state’s department of economic development to commission a privately-funded study of distributed generation which would prove that small-scale renewable energy projects like rooftop solar create jobs and provide economic impetus to communities.

Based on demonstrated success in Germany and Spain, the best method would be via feed-in tariffs, or FiTs. Unfortunately, FiTs are seen as costly, and ratepayers fear them. Utilities share that fear, and add their own -- that distributed renewables create unpredictable instability. 

The fear may be unwarranted. A recent study by the National Renewable Energy Laboratory (NREL) demonstrates that FiTs do not increase electric rates, and the larger the geographic area from which renewable energy is extracted, the less they affect the integrity of the grid.   

Most impressive, based on a new book called World on the Edge (and featured by the Earth Policy Institute), replacing fossil-fuel energy sources with renewables, for electricity and heat alone,  would remove 3,210,000 tons of CO2 emissions, or 25 percent of baseline greenhouse gas emissions for 2006.

Image credit: Greentech Law Blog