Dive Brief:

• Xcel Energy Colorado has filed with The Colorado Public Utilities Commission for a new customer-wide rate plan that would impose a sliding scale grid-use charge of from $2.62/month for those using under 200 kWh of monthly demand to $44.79/month for monthly usage exceeding 1,401 kWh.
• The new rate plan would reduce the per-kWh charge from $0.046 to $0.0337 much of the year, though, per a previously-approved tier plan, customers using over 500 kWh/month would pay $0.0787/kWh. Xcel estimates the average monthly residential customer bill will go from $71.16 to $71.47.
• Approximately 736,000 of the utility’s 1.17 million residential customers and most commercial customers should have lower monthly bills, according to Xcel. Solar advocates argue higher fixed charges and lower volumetric rates significantly compromise the solar value proposition. 

Dive Insight:

Xcel’s proposal mirrors utility efforts across the country from seeking to recoup a greater portion of their revenues from fixed fees, rather than volumetric charges.

As energy efficiency measures and distributed generation lower load growth for utilities, fixed charges are appealing to provide a more certain way to cover flat or declining revenues.

To make fixed charges more palatable to consumers, they are often introduced along with decreases to volumetric rates and/or other charges. The reduction in volumetric rates also decreases the value of net energy metering for rooftop solar, allowing utilities to reduce alleged cost shifting between solar customers and those without residential generation. 

Solar advocates argue that their systems provide benefit to the grid and that the lower per-kWh rate in Colorado unfairly decreases the return solar owners get for exported electricity. What's more, the fixed grid-use charge would cut the overall bill savings from owning solar.

Together, the new rates would increase the payback time for a solar investment, making the decision to own solar less appealing. They would also reduce the viability of investment by funders in the solar third-party ownership finance plan.

Environmental groups argue the new rates would reduce the savings from energy efficiency upgrades and energy conservation efforts.

Cuts to net metering rates have seen solar companies exit states like Nevada, and there are early indications that similar events could unfold in Colorado. A spokesperson for Sunrun, the third-largest U.S. residential installer, told the Post the state's decision to preserve retail rate net metering last year pushed the company to open up operations in Denver. 

Colorado regulators will hold hearings on the Xcel rate proposal June 9 and June 16. Solar advocates and environmentalists are expected to protest.