When Tim Edmonson moved to Castle Rock, the one thing he wanted on his new home was solar panels. He thought it was the right thing to do and that it would save money. Edmonson still thinks rooftop solar is the right thing. But he fears he may not save under proposed rates by the Intermountain Rural Electric Cooperative.
The proposal — which after customer protests is already under revision — would cut the residential credit for solar electricity and add a new charge based on peak demand.
“It completely changes the economics (of solar panels),” said Edmonson, 35, who moved to Colorado from Minnesota in July.
Still, faced with a growing pace of solar installations, the current rate structure would lead to a huge subsidy to solar-equipped homes, IREA officials say.
“As solar grows, it becomes unsustainable,” IREA general manager Patrick Mooney said.
Still, after criticism from customers, the IREA board is slated to meet before the end of the month to consider changes to its proposal — including exempting current solar homes from the new rates.
The battle in this swath of Colorado — IREA’s service territory stretches from the Eastern Plains to the mountains — is part of a larger war going on across the nation between utilities and the solar industry.
“There are cases in 30 states where utilities are challenging distributed solar,” said Rick Gilliam, regulatory policy director for Vote Solar, an advocacy group. “It is an industrywide effort.”
The Colorado Public Utilities Commission has also been holding meetings on the net-metering costs for Xcel Energy, the state’s biggest utility. Xcel executives have said that net-metering credits overstate the value of rooftop solar to the system.
IREA’s Mooney said the cooperative’s proposed rate changes are aimed at keeping the system viable and the books balanced.
“We do have a business to run, and we are struggling just like everyone else,” Mooney told solar homeowners at an IREA board meeting Tuesday.
The cooperative’s solar homeowners are not convinced.
“IREA makes it hard,” Edmonson said. “They don’t offer any incentives. When I spoke to solar installers and they heard I was in IREA, there were moans and groans.”
IREA, however, offers one of the highest credits in the state for rooftop solar electricity put on the grid — the so-called net-metering credit.
The number of rooftop units in the cooperative’s service area has doubled this year to about 650. IREA is the state’s largest co-op, with about 148,000 customers.
“It isn’t costing us a lot now,” Mooney said. “We act now so we don’t have tens of thousands of installations that we can’t unwind.”
The cooperative’s proposal also cuts at the solar industry, which has been making sales in IREA territory, which includes parts of Arapahoe, Adams, Douglas, Elbert, Jefferson and Park counties.
“IREA is discriminating against its solar customers,” said Nate Watters, a spokesman for SolarCity Corp., the country’s largest solar installer.
Solar households in unincorporated areas of the service area now pay 12.3 cents for each kilowatt-hour of electricity they get from IREA.
In incorporated areas, the charge is 11.3 cents a kilowatt-hour.
By state statute, the utility has to credit solar homes the same residential rate for each kilowatt-hour they put on the grid.
Under the proposed rate change, the retail rate and the net-metering credit, just for solar customers, would drop to 6.5 cents a kilowatt-hour.
A “demand charge” — $7 a kilowatt for the top 15-minute peak use — would be added to the bill.
IREA estimates that this would be an average charge of $9.30 to the monthly bill.
The utility’s customers aren’t so sure.
In addition to solar panels — installed at a cost of $19,000 after tax credits — Edmonson has a Nissan Leaf, an electric vehicle.
“It is our primary car. Our gasoline auto sits in the garage for weeks,” said Edmonson, who now worries that charging his Leaf, even in the middle of the night, will give him a high peak rate.
“It looks like it could add $50 onto my monthly bill,” Edmonson said.
The use of a demand charge on solar customers is a new device being used by utilities.
People’s Electric Company, in St. Paul, Minn., has initiated one that is being challenged at the state Public Utility Commission.
“If utilities choose this tactic, there will be more conflict with customers,” said John Farrell, energy director at the Minneapolis-based Institute for Local Self-Reliance.
The Salt River Project, an Arizona utility with nearly 1 million customers, adopted a $50-per-month demand charge in February.
In March, SolarCity sued Salt River for anti-competitive behavior.
Before the demand charge, Salt River was averaging 300 applications for solar arrays a month. In the past six months, there have been 89, Vote Solar said.
SolarCity has not yet decided what it will do if IREA adopts a demand charge, company spokesman Watters said.
Cass Zebroski, 39, signed an agreement with SolarCity to put panels on his Roxborough home in the hope of cutting his electric bill.
Zebroski is a fireman with the West Metro Fire Protection District, his wife is a Jefferson County social worker and they have two boys, ages 5 and 7.
“With a family, you try to make every saving,” Zebroski said.
The investment — $1,000 with the option of buying the system — has paid off, Zebroski said. Instead of paying IREA about $100 a month, Zebroski pays SolarCity $60 to $70 a month for electricity, plus a $10.30 service fee to the utility.
But if you add in the demand charge, Zebroski said he’d be paying more than if he had no solar panels.
The economics also don’t look good for Parker resident Norman Pozner, 73, who invested about $35,000 in a solar array to meet his home’s electric demands.
“I feel energy costs are going to go up,” said Pozner, a retired businessman.
Under the current rates, the payback period on Pozner’s solar array would be nine years. Under the proposed rates, it could be 40 years.
“I may not live to recover the costs,” he said.
The demand charge is a more accurate way of recovering the cost of the system, IREA’s Mooney said. “More utilities will be using demand charges.”
Large businesses have demand charges so a utility can ensure the infrastructure a big electricity user needs. But these businesses also can better manage their electric use.
“I am not a business,” said Parker resident Sarah Mann, 53. “I am going to cook dinner when I get home from work. … I’m not moving it to some other time.”
Mann said she is concerned not only about the proposed charges but what they may mean for her home’s value.
She has a 25-year lease with SolarCity, which sells her electricity generated by the panels on her roof at about 8.8 cents a kilowatt-hour, compared with 11.3 cents from IREA.
But if her cost of electricity goes up, she’ll be locked into a lease that will make it harder to sell her home, Mann said.
Under the lease, SolarCity also collects any net-metering credits from IREA at 11.3 cents a kilowatt-hour.
“It’s why SolarCity is fighting. It is a sweet deal for them,” said IREA’s Mooney. “It is the same reason we can’t let it continue.”
After nearly three hours of public comment during its Tuesday meeting, the cooperative board decided to revise its proposal.
There was a consensus that existing solar-array owners need to be exempted from rate changes for at least some period.
“We need to do something to help these people,” said board member James Dozier.
The way the demand charge is calculated may also be modified, Mooney said.
Board member William Kempe said the proposed rate structure needed to be modified because it didn’t make it “viable to put in solar.”
The board will have a working session this month to go over possible changes, Mooney said. The next official board meeting is in July.
In the meantime, SolarCity has put on hold all solar projects in IREA territory, such as the one Greg Sorge was set to have installed at his home in Bennett.
Sorge, 47, has three big horses and two miniature horses and was hoping to use the panels to help heat the barn and stock tank.
“We have some huge electric payments in the winter, up to $350, and we were hoping the solar panels would help even it out,” Sorge said. “But now I don’t know what’s going to happen. It is frustrating.”
Mark Jaffe: 303-954-1912, mjaffe@denverpost.com or twitter.com/bymarkjaffe
