Pain or gain?
Plan for 20-year, $23M utility solar subsidy
Despite lingering questions about priorities, costs and the precedent of long-term subsidies for privately owned “community solar gardens,” City Council moved forward - through votes at two recent meetings - on plans for a 20-year contract that would expand solar capacity and give financial incentives to industry
A public hearing on the proposal is scheduled before council April 9. Some information is available now at csu.org (click on the “solar gardens” link), with CSU and solar industry representatives working out some remaining details during the interim.
The expectation is that council will vote on the plan, which would formally add the incentive plan to CSU's electric rate schedule, that same day, once the public is done commenting.
The incentives will cost Colorado Springs Utilities (CSU), a city enterprise, about $23 million over 20 years, according to utility estimates. Rate-payers would see no increase this year, but the issue will be reconsidered in 2014, according to CSU spokesperson Dave Grossman.
The “garden” is an array of solar panels at a CSU-owned property in the south part of the city. The array would be expanded, if enough customers come forward under the plan, to increase the output to as much as 10 megawatts of power. Solar vendors (two or three are now in the area) would be able to participate on a first-come, first-served basi, he said.
CSU is not acting because of regulations or a capacity shortfall, but because of City Council direction. In fact, at one meeting, Council President Pro-tem Jan Martin scolded John Romero of CSU for not showing enough “enthusiasm.” He basically responded that he was enthusiastic, although it might not appear obvious.
The enterprise has fulfilled its legal renewable-energy mandate through 2017, according to CEO Jerry Forte; and, even with 10 added megawatts, solar energy would still supply less than 1 percent of CSU's electrical capacity, Grossman said. However, he added that there could be summer days, when that relatively small amount would help “offset peak demand.”
Based on comments at the meetings Feb. 20 and 26, the council majority believes that promoting renewable energy is a value in and of itself, without major impacts on ratepayers individually. The contract plan, modeled largely after a precedent-setting pilot garden program that began in 2011, also has won council praise for making solar power available to people whose homes can't have panels because of location, type (such as townhomes) or covenant issues.
“It will be fun to see the industry take off,” Martin said Feb. 20, when council was meeting as the Utility Board. “If we put it off [the contract], that will take away some of the momentum we've gathered.”
City Councilmember Lisa Czelatdko, the outgoing representative of District 3 (which includes the older Westside), is another proponent. She said she's been “listening to my ratepayers and constituency”; plus “I believe in a diversified portfolio.” She dismissed the subsidy criticism, saying that the city already doles out several hundred thousand dollars to some businesses, in the name of “economic development.”
The strongest council opposition to the solar garden plan has come from Tim Leigh. While expressing support of solar in general, he describes the plan in a broadly distributed e-mail as the “horrible solar garden subsidy policy decision,” suggesting that if CSU has that kind of money then it should be spent on identified stormwater needs whose cost estimates are in the millions of dollars.
April 9 will be the first (and apparently only) public hearing on the matter, although council has been discussing it at occasional meetings over the past several months. A motion with a call for a discussion-only public hearing before that date was approved, then reinterpreted otherwise at the Feb. 26 council meeting. (See story, "Motion for Second Hearing Evaporates.")
An atmosphere of haste was evident at the Feb. 20 meeting that set most of the details for the public hearing vote Feb. 26. Romero, CSU's general manager of acquisition and planning, prefaced his presentation to the council/ Utility Board with the comment, “I know you're pressed for time.” Later, after listening to Romero and other CSU personnel - as well as the owner of a local solar business - over a roughly 1 ½-hour span, City Councilmember Brandy Williams noted that it was 5:45 p.m. and questioned whether public comment should be allowed. “I know a lot of people have come to speak, but I have a feeling if we can reach a decision up here we can save us all a lot of time and space,” she said, then moved for approval.
The eventual vote was 7-2, with Leigh and Angela Dougan opposed.
Before the vote, Dick Standaert, a citizen opponent of the plan, was allowed to speak by Council President Scott Hente. In a prepared statement, Standaert noted that under the plan “ratepayers are losing money on every solar garden transaction” (because energy from coal and natural gas plants is much cheaper).
The garden plan has been the result of CSU meeting “extensively with the solar industry,” Romero told council. He explained that CSU staff had sought to negotiate what was “viable for the industry group” and also to look out for utility interests. But he did note that he had not asked for the solar vendors' expected profit margins.
David Amster-Olszewski, the head of SunShare (a vendor) made clear in his comments to the Utility Board that he didn't think CSU had been overly generous. The contract's initial agreement of 16 cents per kilowatt hour as a credit for customers (for electricity generated based on their percentage ownership of panels in the solar garden) will decrease in the years that follow. But even for the first year, he said that finding a way to work within the 16-cent rate has been an “extreme struggle” on his company's part.
The meeting did give Amster an unexpected financial favor. CSU staff had proposed a subsidy format that would have taxed a penny out of each 16 cents. Williams' eventual motion chose the industry-favored, “blended” method that let them keep the penny instead. However, her motion also required that the industry find a way to take all customers - which the solar vendors had previously said was not possible with the blended strategy (large businesses were to be left out).
A representative who said he was from the Atmel company (not a vendor) spoke about the tax question, saying that a penny might not seem like much, but for a big business paying it could add up to a large sum.
Before he spoke, Hente said to keep it short; “I'm about to lose my quorum,” Hente advised.
Westside Pioneer article