Evaluation will be part of a municipal utility business plan
By Laura Snider Camera Staff Writer
Posted: 05/21/2011 10:36:22 PM MDT

Xcel Energy’s Boulder customers — who make up 5 percent of the utility’s electricity sales — take proportionally greater advantage of the company’s energy-efficiency rebates and solar energy incentives than Xcel’s other Colorado customers.

City of Boulder staffers and their consultants are now considering how much it will cost to replace those programs — both of which are paid for by riders on the electricity bills of all customers — if the city were to break from Xcel and start its own municipal utility.

As of last November, 21 percent of all the photovoltaic capacity installed under Xcel’s Solar Rewards program, which offers a combination of financial incentives, was put up in Boulder, according to numbers provided to the city by the utility last year.

The money used to pay for the Solar Rewards incentives comes from the Renewable Energy Standard Adjustment, a 2 percent charge applied to all customers’ electricity bills. That’s about a $1 charge for a residential customer using 500 kilowatt-hours of electricity in a month.

In 2009, 7 percent of Xcel’s total energy-efficiency rebates — for measures such as adding insulation and upgrading furnaces — were given to Boulder customers at a total cost of about $1.2 million, according to a consultant’s report provided to City Council earlier this month. The money for those rebates comes from the Demand Side Management Cost Adjustment, which equals about 50 cents for a residential customer using 500 kilowatt-hours in a month.

David Driskell, executive director of community planning and sustainability for Boulder, said the city has asked its consultants to look at how the city could provide similar incentives to those provided now by Xcel and how those city-run incentives might be structured.

For example, if Boulder were to start a municipal utility, the city would likely lump together rebates and incentives now offered by Xcel with similar programs offered by the city’s Climate Action Plan programs, which are now funded by the city’s carbon tax. Voters approved the tax in 2006, and it equals about $2.45 a month for a customer using 500 kilowatt-hours.

“We’ve asked consultants to look at what we’re broadly calling a public purpose program fund,” Driskell said. “The number we’re looking at right now is about 3 percent of operating cost would go to those programs. We’ll see what those numbers look like, and we could go up from there.”

City consultants are also studying what it would cost the city to create a “buy-out fund” to take over incentives that are scheduled to be paid out by Xcel over the years to come. For example, when Xcel restructured its Solar Rewards program earlier this year, some of the incentives that used to be paid up front for new solar systems are now paid over time as the system actually produces power.

Finally, city consultants are considering what it would cost to pay a “competitive rate” for the electricity generated by privately owned solar systems within the city.

All of the consultants’ findings will be plugged into a larger business plan for starting a municipal utility that will be presented to the City Council at its June 14 study session. The City Council decided last year not to renew its 20-year franchise agreement with Xcel Energy. The council may ask voters in November to approve the creation of a municipal utility.

Blake Jones, president and chief executive officer of Boulder-based Namaste Solar, said he’s glad that the city is including solar incentives as it plans for the possible creation of a municipal utility.

“We would hope that, whatever the direction the city decides to go in, it would include a strong solar incentives program,” Jones said. “It’s critically important to our business.”

Over the last couple of years, Xcel has scaled back its Solar Rewards program, which began in 2006. The solar industry has complained that Xcel ratcheted down the program abruptly and without warning, which made it difficult for businesses to plan.

“We think that Xcel has done a poor job of administering the program, and we think the city would do a much better job,” Jones said.

While Xcel has reduced its solar incentives, the company is expanding its programs aimed at reducing energy demand. Xcel spent about $55 million on its electric demand-side management programs for its Colorado customers in 2010, according to Shawn White, Xcel’s manager for energy efficiency marketing in Colorado. This year, the company plans to spend $68.5 million, and in 2012, Xcel plans to increase its investment again, White said.

Driskell said it may well be possible for a city-run utility to ramp up both energy-efficiency rebates and solar incentives over time because Boulder could choose to place any profits the utility makes back into those types of programs.

“A publicly owned utility isn’t looking to make a profit,” Driskell said. “It’s looking to achieve a set of goals.”

Xcel’s programs by the numbers:
$1.2 million Amount Xcel spent on rebates for its Boulder customers in 2009. This does not include money Xcel spends to offer discounted compact fluorescent lightbulbs.
80 percent Portion of that rebate money that goes to businesses.
1,688 Number of solar systems in Boulder that were installed through Xcel’s Solar Rewards program.
10 megawatts Total capacity of those systems.
$55 million Amount Xcel spent on programs to reduce electricity use in 2010.
$68 million Amount Xcel proposes to spend this year.

Contact Camera Staff Writer Laura Snider at 303-473-1327 or sniderl@dailycamera.com.

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