Monday, July 6, 2015

Xcel Allegedly worried about rate increases from a larger than expected Community Solar program

It would be a fair assessment to say Xcel does not want community solar developments to attain the scale advantages of utility-scale solar while at the same time getting the more favorable financing terms that come with being classified by regulators as a smaller scale community solar installment. The big talking points that Xcel’s lawyer repeated at the PUC on 6-23 is that co-locating lots of megawatts is “utility scale” solar rather than the community scale solar the state legislature intended and that any utility-scale solar projects should be subject to a competitive bidding process.

Now let’s have a little fun with some of the logical contradictions:

1: Something interesting that I observed first hand is that different people have different definitions of what qualifies as utility scale solar depending on whose interests they serve. At the June 23rd hearing, I heard one solar developer say that anything under 10 MW is distributed generation and anything above 10 MW is therefore utility scale. Then I heard Ben Gerber from the Minnesota Chamber of Commerce who supported Xcel’s 1 MW cap say to the PUC that anything more than 1 MW is utility scale solar. Well which is it?

2: This would not be the first time, the Chambers of Commerce spokespeople have offered double standards. When I attended Xcel’s rate increase hearing last year, Todd Klingel from the Minneapolis Regional Chamber of Commerce was the only speaker aside from Xcel who actually supported Xcel’s nearly 10.4% multi-year rate increase proposal, saying that too many people take energy for granted. But when it came to Community solar on Tuesday, Ben Gerber from the Minnesota Chamber of Commerce said even a 1% rate hike from Community Solar can be a huge increase and burden for the large users they represent.

3: Ben Gerber from the Chamber said such increases from community solar are unnecessary because Xcel could do solar for half the cost. Xcel says they are separately developing large “utility scale” solar projects at lower cost than solar gardens; 7¢ per KWH versus 14¢ per KWH Xcel says they can develop utility-scale projects for about half the price because they have to pay roughly twice as much for power generated by community solar gardens as compared with typical competitively-bid utility-scale projects. Should we just leave it up to Xcel to do most of the solar if they can do it for cheaper?
Well, In a June 1st filing Xcel stated that it will not build any additional utility solar until 2025 or later once it meets the 1.5% mandate

 Regardless, Xcel says they do not want these community solar gardens to be done resembling utility scale. The message from Xcel is that community solar program has the potential for a cost shift of more than $100 million onto nonparticipating customers on the rate side.  
They say that doing so has the potential for a cost shift of more than $100 million onto non- participating customers on the rate side.
 The Xcel Regional Vice President said they want a 1 MW aggregate size limits on CSGs with the intention of minimizing extra costs that would be passed on as a 1% to 1.5% rate hike paid entirely by Xcel customers who choose not to participate.  It is interesting how the same utility who filed for 10.4% multi-year rate increases just last year warns that leaving collocated CGS uncapped will be too costly on rates. Contrast that sensitivity as far as not wanting to force non-CSG customers to subsidize utility-scale CSG projects with how Xcel requested a near 10% rate hike largely to cover the cost overruns of their Monticello nuclear plant.  The Star Tribune reported Xcel was wanting their customers to pay them to make profits on over $400 million in cost overruns on top of their customers rather than shareholders paying the entire $400 million.    
Nevertheless, Xcel’s position was that the 1 MW aggregate limit has to be there in order to stop these supposed cost shifts. And then they asked the PUC to adhere to their role in protecting the public interest and “ratepayer” interest.

To paint a more accurate picture, here are the estimations I heard during the 6-23 hearing. If the 912 MW in co-located CSG applications were capped at a 1 MW limit, they project 100-200 MW to be built and a .5% estimated residential rate increase. With a 5 MW size limit, they project 500-600 MW of total MN projects and a 2% estimated residential rate increase. If the size limit was 10 MW they project 800 MW to be built with a 2.8% estimated residential rate increase.

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