Shadow falls on Utilities’ solar subsidy program
To the dismay of solar-industry supporters and four of its own members, the new City Council voted April 23 to rescind one of the last actions by the old council - a subsidy for solar-panel sales that was to be funded by Springs Utilities ratepayers and start May 1.
Based on meeting discussion, the plan now is for Colorado Springs Utilities to provide information to help council set a new “tariff” of electric rates that will have either no subsidy or one that is more economical. The approved resolution calls for council to “implement a new tariff by Aug. 1, 2013, or as soon as reasonably possible thereafter.”
The rescinded resolution would have cost Utilities more than $23 million over 20 years, according to the city auditor. The plan was - and could still be - to expand a “pilot” solar garden plan, through which anybody (even someone whose home or business is unsuitable for panels) could benefit from the subsidy, vicariously tapping into a “garden” of panels installed elsewhere in town.
Recently elected District 3 City Councilmember Keith King, who had been chosen earlier by his colleagues as council president and who was part of the rescinding vote's five-member majority, said he had campaigned for low utility rates and “I feel I need to honor that.” He added: “Whether we have a subsidy or not is a good point, but I think we can minimize the raising of rates to a point where it does not have an adverse effect on companies like Atmel that want to compete on a national and international basis.”
King was joined in the majority by Joel Miller, Helen Collins, Andres Pico and Merv Bennett. All but Bennett were also elected in the April 2 election. Bennett, one of three holdovers from the old council, had voted for the resolution setting the original subsidy. He did not give a reason for his vote to rescind that action.
In opposition were Jan Martin and Val Snider (the two other holdovers) and newcomers Don Knight and Jill Gaebler.
The meeting was well attended, with dozens of speakers from the public.
The city auditor had estimated the impact of the rescinded plan to be about $3.62 a year on residential rates and $13,195 on industrial users. But a spokesperson for Atmel Corporation, describing it as the city's largest private consumer of electrical energy, has predicted Atmel's costs in the range of $75,000 a year, saying they would be difficult to absorb at a time when the company needs to cut back to be competitive.
One cost-saving possibility for the future tariff, as pointed out by John Romero of Utilities, is a reduction in the subsidy from 16 cents a killowat hour (KWh) to 13 cents. At the April 9 public hearing when the original resolution was approved, a solar installer had told council he would be fine with that amount.
Romero also revealed at the April 23 meeting that Utilities had recommended a subsidy rate format called “cost of service” that would have cost the city up to $1.5 million less. But the old council rejected that idea, going for the “blended” rate preferred by solar industry representatives. This was confirmed at the meeting by Martin, another council hold-over. “It came as a recommendation from the industry,” she said, during an exchange with Romero.
During his presentation, he stated another previous Utilities suggestion - also not adopted by the old council - which was to seek a formal request for proposals (in which solar businesses could make offers on a subsidy plan and Utilities could select the most cost-favorable).
Martin reiterated her previous stance that supporting the solar industry is key to the city's economic future. Saying that the previous council had worked on the issue for eight months, she commented that “it's a little frustrating and difficult to think that within one meeting the new council has the knowledge to even consider overturning this at this point.”
She was joined by Gaebler, another new council-member, who, upon hearing Romero's presentation, remarked that what he said sounded better than what the old council had approved. But she then added her belief that the old council had done a comprehensive job of studying the issue and that its action has “put us on the map” in a favorable way for solar. Twice she used the word “capricious” to describe the new council's action and feared that the new resolution “will effectively kill solar in our community.”
In response, Council-member Miller pointed out that the old council had actually taken a special vote to ensure that its resolution would be finalized before the new council took office. Otherwise, the vote would have occurred two weeks later with the new council.
He also said he had a problem with the way the old council had reached its decision. The process, as he understood it, was that one council member had done the bulk of the negotiating with the solar industry. “That wasn't an open process, and that's a concern to me,” he said.
Testifying at the April 9 hearing, Miller had urged the old council to hold off on its vote.
At the April 23 meeting, he noted another point about the resolution's timing: With no other meeting scheduled before May 1, the new council had to act now if it wanted to prevent the subsidy-impacted rate structure from taking effect.
Another offshoot of passing a new resolution before May 1 is that it did not need to be legally advertised, as “there are no adverse impacts to customers,” the resolution states.
Also, no customers had signed up yet for the subsidy plan, meeting testimony brought out.
The “no adverse impact” point was disputed by David Amster, owner of Sun Share, a solar business credited with working the closest with members of the old council. He charged that the new resolution would cause an “adverse impact on our customers.” He also called it “unethical,” and said the effect would be an “increased cost of capital” that “would force us out of Colorado Springs.”
Martin added the point that the previous vote only established the subsidy-related tariff for the first year, after which council could change it.
Also taking that side was District 1 Councilmember Knight, although he prefaced the position by admitting his belief that “the past council waived some parliamentary procedures” and that he would have favored a resolution leading to “the rest of the story” (what had not emerged from the April 9 public hearing). But the new resolution goes too far, by becoming “a discussion on the subsidy itself,” he charged. In any case, “a deal's a deal,” he said, with the terms changeable in 2014 or '15.
But Romero pointed out that a change at that time would present its own problems because the solar industry would likely have customers by then who might not like getting cost realignments.
Councilmember Snider has previously spoken in favor of the solar industry, but used his comment opportunities at the meeting to decry the way the new resolution effort came together. As council president, King had contacted each member about the idea, but Snider criticized how it worked out - saying the language had changed. And, when Miller introduced a resolution amendment at the start of the meeting, stating the intent for a “new tariff,” Snider termed it “unconscionable.”
King apologized for the language change, saying it came about in working with the City Attorney's Office, but Snider was unappeased, saying that “if this is going to be a coming attraction for this council, it's going to be a long council. I question that kind of leadership.”
Questioning the entire concept of the solar subsidy was Councilmember Pico, who said he supports solar gardens, but not when it involves “dipping into ratepayers' pockets.” Responding to Amster's pledge to seek ways to break free of subsidies after the first three years, Pico said that solar has been getting subsidies for 30 years but still needs them and “I don't see a path” to that changing.
This led to an exchange with Martin, in which she asserted that oil and gas industries receive “pretty significant subsidies.” Pico said that while it's true that there are some, “it's a huge difference in magnitude” when compared to solar.
State mandates, as well as Utilities' own “Energy Vision,” require the enterprise to use renewables for certain percentages of its energy. But there is no current urgency to do so, notes one “whereas” portion of the resolution. Utilities is “compliant with the Colorado State Renewable Portfolio standard through 2022 and with the renewable energy portion of the Colorado Springs Energy Vision through 2017,” it states.
Elsewhere in the resolution, it is noted that the auditor has recommended changes in expanding the gardens and that the “solar industry expects the cost for solar generation to decline in the near future while increasing generation efficiency, thereby greatly improving the economics of solar generation in the next few years.”
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