Solar: ‘CSU will lose money’
By Dick Standaert
(Editor's note: The column below is an edited version of a presentation by Standaert, a Westside resident, at the City Council hearing April 9 on Springs Utilities establishing a 20-year Community Solar Garden Bill Credit program. Council later approved the measure.)
It appears that City Council is about to approve a $23 million deal that will require Colorado Springs Utilities (CSU) to purchase electricity generated by new solar gardens for 16 cents per kilowatt hour when CSU can produce comparable power from its existing coal and natural gas plants for 2-3 cents per kilowatt hour and purchase it on the open market for about 3.5 cents. At the present time, CSU sells electricity to residential ratepayers for about 11 cents per kilowatt hour, and about 4.5 cents per kilowatt hour to large businesses and industrial users. If council approves the solar garden expansion, CSU will lose money on every solar garden transaction and electricity rates will have to go up for all customers.
The solar garden program exists because certain customers want a portion or all of their electricity generated by wind or solar but they aren't willing to buy it for what it costs.
Solar vendors want a subsidized solar garden program because they can't produce electricity for what it's worth in a competitive market.
City Council appears ready to jump and commit ratepayers to a deal that will subsidize the customers and solar vendors. The deal is so good that the customers are being told by the solar vendors that their electricity costs will go down and their payout will be about 13 years. The solar vendors will use a federal subsidy and proceeds from the sale of solar panels to produce a return on their investment. The solar customers and the vendors are guaranteed a profit. CSU will be forced to increase electricity rates on all ratepayers to pay for the handout.
None of this is necessary.
CSU has about 200 megawatts of excess generating capacity and can meet any anticipated peak load. Based on its 20-year strategic and tactical plan - the 2012 Electric Integrated Resource Plan (EIRP) - CSU will not need any additions to its base-load capacity until 2025.
CSU has, and will meet, the mandated renewable portfolio standards that 10 percent of the electricity it generates by 2020 and beyond, until 2022, will be without the addition of any more renewables.
The EIRP delayed including solar until 2023 in all but one of the portfolios. That one, which included solar, had 25 percent higher costs than the least-cost portfolio. Solar is too expensive to compete against less costly methods of generating electricity.
Other than the financial impact, the 10 megawatt program will be insignificant in CSU's generating portfolio. The solar garden program will only provide about 0.4 percent of the electricity consumed by CSU customers.
The proposed bill-credit program is the only scenario that has been presented. This program appears to have been reached without any bid process, no free-market alternatives and no input from ratepayers. We don't know how much money is being left on the table or what alternatives are possible. Unlike the EIRP process, this program lacks transparency, financial rigor and a defensible recommendation.
Expanding the solar garden program, along with this rate schedule change, will enable a relatively few individuals, businesses and institutions to profit at the expense of all ratepayers. Instead of benefitting all, the city-owned utility will pick winners and losers. Instead of applying the least-cost principle to manage CSU, it appears that unnecessary cost increases may be approved.