For years, our community has tried to work with our provider, Xcel Energy, to meet our energy and environmental needs. The investor-owned utility’s response has always been the same: Xcel cannot do for Boulder what Xcel cannot do for everyone.

Yet, now as Boulder takes a hard look at the possible creation of a city-owned electric utility, Xcel wants the Colorado Public Utilities Commission to allow discrimination against its customers in Boulder. In support of that effort, Xcel suggests we want to accomplish our goals on the backs of our neighbors. Nothing could be further from the truth.

What we are doing is exploring the possibility of creating our own electric utility, a move that could involve acquiring Xcel’s system within our city limits. This would give us authority we don’t have currently to tap the competitive market and address our goals. If we take this action, Boulder alone will be responsible for the costs. We do not expect Xcel customers in other parts of Colorado to fund this enterprise for us.

As you might imagine, Xcel isn’t enthusiastic about our possible municipalization. The utility collects more than $110 million a year from Boulder customers. The company has pledged to fight the city and, in recent months, has followed through by asking the PUC to allow Xcel to limit the access its Boulder customers have to incentive and rebate programs such as SolarRewards, Windsource and others. We believe this is premature and retaliatory. Perhaps more importantly, it is a violation of Xcel’s obligations under state law.

Xcel is a regulated utility. A core rule for regulated utilities — ever since the railroads, more than 100 years ago, gave special rates to their best customers, leaving everyone else to pick up the slack — is that all “similarly situated” customers must be treated alike. If customers in Denver get electricity at a certain rate or access to programs, the utility must provide the same to its customers in Aurora, in Louisville — and in Boulder.

So what about the argument that other customers might be left footing the bill for certain programs if Boulder customers leave? If the city decides to purchase Xcel’s system, we will participate in at least two processes that are designed to ensure that Xcel and its remaining customers are treated fairly. The first is in state court, where the question will be the value of Xcel’s electric system in Boulder. The second is before federal regulators, who are responsible for determining whether — and how much — the city must pay to cover investments Xcel has made to serve Boulder.

Even Xcel, in a recent PUC filing, acknowledged that expenditures to date will be covered in a state condemnation proceeding. There is very little risk associated with allowing Xcel’s Boulder customers to continue their participation in incentive programs until a final decision has been made.

It is important to realize that Xcel’s rebates only cover some of the costs to customers who decide, for example, to install solar panels. Residents and businesses pay the remaining costs at their own expense. Because of these customer investments, Xcel has had to purchase less coal-fueled electricity. This has reduced the need for more, costly generation facilities and prevented additional rate increases for customers throughout Xcel’s territory. This should be encouraged.

Boulder has a long history of working with regional economic, government and nonprofit partners to make a positive environmental difference. Nothing about our current exploration suggests this commitment is going to change.

In fact, we are excited to share what we learn.

Boulder City Manager Jane S. Brautigam is the Boulder city manager. Matthew Appelbaum is the mayor of Boulder. To read more about the issue, visit www.Boulder EnergyFuture.com.

House Bill 1315, sponsored by Rep. John Becker, R-Fort Morgan, but backed by Gov. John Hickenlooper, a Democrat, would change the mission — and the name — of the Governor’s Energy Office. The agency, first created as the Office of Energy Management and Conservation in 1977, was reborn as the Governor’s Energy Office under Ritter, a Democrat, in 2007 as the administration’s spearpoint for promoting the “New Energy Economy.”
Under Ritter, the office focused heavily on renewable energy sources, primarily wind and solar, but also concentrated on weatherization. Ritter touted successes like expansions of wind turbine factories and solar panel manufacturing, though Republicans often complained the agency ignored the state’s substantial oil and gas industry.

Becker said that under the bill, the agency would be renamed the Colorado Energy Office and would be “a balanced energy office for the state of Colorado.”
“Colorado is a true hub for all sources of energy,” Becker said.

The bill specifically changes the agency’s mission from promoting renewable energy sources and energy conservation to encouraging all sources of energy development. The bill specifically scrubs the term “New Energy Economy” from the law governing the agency, replacing it with language that says the state will promote energy solutions “that include traditional, clean and renewable energy sources in order to encourage a balanced energy portfolio.”
A similar reorganization of the energy office backed by Hickenlooper failed last year.

Ritter, who now heads the recently created Center for the New Energy Economy at Colorado State University, declined comment on the bill.
The legislation also creates two separate pots of money in the office — one from severance tax on oil and gas production and for use to promote traditional energy sources, and the other from the state’s general fund and for promotion of renewable sources.

Environmental groups had concerns about the fact that funding for renewable energy promotion would now be subject to an annual appropriation by the legislature rather than having a stable funding source. But supporters said severance tax money shouldn’t subsidize renewable energy.
Rep. Matt Jones, D-Louisville, didn’t like the bill.

“I’m really concerned that we’re backing off of the thing that’s made this office successful,” Jones said, arguing the state would be “diminishing our brand” as a leader in the renewable energy industry.

Still, the House Agriculture, Livestock and Natural Resources Committee approved the bill on a 11-2 vote, with Jones and Rep. Su Ryden, D-Aurora, voting against. The bill, co-sponsored by Sen. Pat Steadman, D-Denver, now goes to the House Appropriations Committee before it can proceed to the full House.

Tim Hoover: 303-954-1626 or thoover@denverpost.com

This unprecedented growth was spurred in part by declining installed solar photovoltaic (PV) system prices, which fell 20 percent last year on the back of lower component costs, improved installation efficiency, expanded financing options, and a shift toward larger systems nationwide. In addition, the anticipated expiration of the U.S. government’s 1603 Treasury Program, which ended Dec. 31, 2011, drove developers to commission projects before the end of the year.

The report also provides an update on the concentrating solar power (CSP) market. While no new concentrating solar thermal electric capacity was brought online in 2011, a total of 10 concentrating photovoltaic projects came online. The year also saw meaningful construction progress on a number of projects with some capacity expected to come online later in 2012 and a surge in 2013. Today, more than 1,000 MW of CSP are under construction, enough to power 200,000 homes.

As of year-end 2011, cumulative PV capacity in the U.S. reached nearly 4,000 MW and cumulative CSP capacity topped 500 MW. Together this represents enough solar capacity to power nearly a million households.

“In 2011, the market demonstrated why the U.S. is becoming a center of attention for global solar,” said Shayle Kann, Managing Director of GTM Research’s solar practice. “It was the first year with meaningful volumes of large-scale PV installations; there were 28 individual PV projects over 10 megawatts in 2011, up from only two in 2009. Furthermore, the market continued to diversify nationally; eight states installed more than 50 megawatts of solar each last year, compared to just five in 2010. These are all indicators of a vibrant market.”

The latest U.S. Solar Market Insight report found 800 MW were installed in the commercial sector in 2011, led by the California and New Jersey markets, compared to 758 MW of utility PV and 297 MW of residential installations. Utility-scale project installations, primarily across states in the Southwest, nearly tripled 2010 totals. In the residential sector, California installed 114 MW, with New Jersey, Arizona, Hawaii, Pennsylvania and Colorado each contributing meaningfully to the residential total.

According to U.S. Solar Market Insight, 2012 will be another strong year for the PV industry, with installations of more than 2,800 megawatts forecasted. Beyond 2012, the report forecasts installations to continue their ascendancy at a compound annual growth rate of 30 percent through 2016.

“The solar industry is the fastest growing industry in America for the second year in a row. What we are seeing in the U.S. is that policies are working to open new markets and remove barriers for solar,” said Rhone Resch, president and CEO of SEIA. “The industry is now poised for years of multi-gigawatt growth and the creation of tens of thousands of new jobs. But we face a number of challenges that have the potential to slow this growth. That is why SEIA now coordinating the industry’s federal and state policy initiatives to present a unified, cohesive voice for the solar industry.”

A separate report on 2011 growth of U.S. solar heating and cooling technology is expected midyear.

2011 Q4 U.S. Solar Market Insight key report findings:

-PV installations grew 109 percent in 2011 to reach 1,855 MW, which represents 7 percent of all PV globally, up from 887 MW and 5 percent of global installations in 2010.

-Cumulative PV capacity operating in the U.S. now stands at 3,954 MW.

-There were 28 individual PV projects over 10 MW completed in 2011, up from only two in 2009.

-Eight states installed over 50 MW each in 2011.

-Installation totals in 2011 increased in 18 of the 23 states covered in detail.

-Weighted average PV system prices fell 20 percent in 2011 as a combined result of lower component prices, improved installation efficiency, and a shift toward larger systems.

?There were over 61,000 individual PV systems installed in the U.S. in 2011, bringing the total number of operating systems in the U.S. to more than 214,000.

###

About Solar Market Insight:
The U.S. Solar Market Insight: Year in Review 2011 report (www.greentechmedia.com/research/solarinsight) is the most detailed and timely research available on the continuing growth and opportunity in the U.S. The report includes analysis of photovoltaic (PV) and concentrating solar power (CSP) technologies, identifying the key metrics that will help solar decision-makers navigate the market’s current and forecasted trajectory.

About SEIA:
Established in 1974, the Solar Energy Industries Association is the national trade association of the U.S. solar energy industry. Through advocacy and education, SEIA and its 1,100 member companies are building a strong solar industry to power America. As the voice of the industry, SEIA works to make solar a mainstream and significant energy source by expanding markets, removing market barriers, strengthening the industry and educating the public on the benefits of solar energy. www.seia.org

About GTM Research:
Greentech Media delivers research and analysis in the business-to-business greentech market. Using an integrated platform, we produce high quality products, whether it is industry news, market research or networking events. GTM Research, the research arm of the company, produces in-depth market reports and is the publisher of PV News, a monthly solar market tracker. Greentech Media is headquartered in Boston, MA, with operations in New York, NY, San Francisco, CA and Munich. For more information, visit www.greentechmedia.com.

Background Resources:
U.S. Solar Market Insight: 2011 Executive Summary: www.seia.org/galleries/pdf/SMI-YIR-2011-ES.pdf

Info on purchasing the full U.S. Solar Market Insight: Year in Review 2011 report: www.seia.org/cs/research/SolarInsight

For the original version on PRWeb visit: www.prweb.com/releases/prweb2012/3/prweb9280185.htm

Last fall, Boulder voters narrowly passed ballot initiatives 2B and 2C. The initiatives came in response to Xcel’s continuing commitment to coal-fired electricity, inability to bring on renewable energy at a sufficient level and ongoing rate increases. Furthermore, decisions last year to make public participation at the Public Utilities Commission (PUC) — the government agency that regulates the monopoly utility — even more difficult, demonstrates the need for a transparent and democratically accountable alternative. The city now has the authority and funding to move forward with the creation of a municipal utility, but only if we can do so while meeting criteria meant to safeguard costs, reliability and environmental objectives.

In the letter, Mr. David Eves, CEO of Xcel Energy’s Public Service Company of Colorado, mentions that, as a result of last fall’s election, we will see an additional 2 percent added to our electricity bill, about one dollar per month for an average household. Mr. Eves neglects to mention that Xcel initiated its own rate increases over the past year that amounted to an increase of four dollars per month for an average household. It is Xcel — not our city’s consideration of a municipal utility — that is the most significant source of rising rates.

In fact, Xcel’s rates have gone up 20 percent in the last four years, largely due to increasing costs associated with fossil fuels. In 2009, Xcel opened the largest coal-fired power plant in Colorado, costing almost a billion dollars. Yet Xcel has seriously underestimated the costs of coal. According to Xcel’s own data, coal costs have risen much faster than its projections: increasing 5-10 percent each year, not less than 2 percent per year as typically projected by Xcel. But it is ratepayers, not Xcel, who carry the risks of this imprudent decision. While Xcel is guaranteed a staggering rate of return on that billion dollar coal plant, we the rate payers will be left to pay the rising cost of coal to fuel it.

In an era of corporate welfare and bank bailouts, this is yet another concrete example of a corporation socializing its risks, while privatizing its profit. A local municipal utility — one that is democratically accountable to its ratepayers — will serve Boulder better than a perversely regulated corporate monopoly.

Just as it did days before last November’s election, Xcel implied in its recent letter that it will punish Boulder by excluding ratepayers in our city from renewable energy and efficiency programs. But as long as Boulder remains with Xcel, it would be illegal for the monopoly utility to discriminate against Boulder. Both the city attorney and a PUC spokesman have clarified the illegality of such action. It is, quite transparently, a bully’s scare tactic.

Mr. Eves concludes by saying that Xcel would like to continue to serve Boulder. In exchange for that service, the company takes about $10 million in profits out of Boulder every year. No doubt, this profit is a sufficient incentive and one that Xcel appears to feel entitled to. In fact, the prospect of losing Boulder compelled Xcel to fight an aggressive campaign against 2B and 2C last year. Opponents of the initiatives spent nearly $1 million, 10 times the amount of proponents. Over 99 percent of that $1 million came directly from Xcel.

Mr. Eves is speaking out of both sides of his mouth. On the one hand, he is saying that Xcel wants to be Boulder’s friend and “continue to serve” Boulder. On the other hand, his company has threatened to eliminate renewable energy programs in Boulder and says that “the time to negotiate” is over, thus making contentious court proceedings likely. All of this bears a striking resemblance to the behavior of an abusive partner at the end of a relationship: “Stay with me, or I will make your life miserable.” Of course, that provides the most striking evidence yet that the partner never did have your best interests at heart. Such is the case with Xcel Energy. Xcel has the discretion and the resources to make this split as amicable and as painless as possible. Their decision to pursue the opposite approach counts as confirmation that separating from Xcel is in our community’s best interest.

Kate Clark and Brian Bernhardt live in Boulder.

Boulder, Colorado has been on my solar radar for a number of years. It’s one of the cities that I covered in 2009 when part of my job was tracking solar rebates. They were generous then—around $3/watt… less so now. But those generous rebates and other factors have created a beautiful and inspiring solar community, although it’s not a perfect solar world.

The last time I was in Boulder was about 20 years ago. Since then, it has grown from a progressive University and renewable energy research town (NREL is there) to an upscale, progressive, outdoorsy Denver suburb and bedroom community of about 100,000 people. For those in the San Francisco Bay area, think Burlingame with snow and lots of visible solar roofs.

Beyond the solar visibility, the town is just flat-out eco-friendly. There are bike lanes everywhere here. Some are in the roads and other paths are hidden behind homes in a tree-lined bike alley system. Although I arrived just after a December snowstorm, I continued to see Boulderites using those bike lanes, and as the snow melted, their numbers increased. (I’m told that the warmer months are especially filled with local bike commuters.)

Boulder’s commitment to the bicycle lifestyle despite potentially harsh weather is reflective of its commitment to solar and renewable energy. Yes, there’s snow, but that hasn’t dampened residential solar too much, though I do have one solar friend who wishes someone would create a device that could cost effectively remove snow-covered panels more automatically.

Beyond its residents, the City of Boulder has committed to 1.7 megawatts of solar, and their installs are very public. They can be seen on recreation centers and even on a huge municipal building on Boulder’s main shopping district, Pearl St. Here’s a shot of the public recreation center with rows and rows of solar thermal collectors.

The city’s installs are a great symbol of green energy commitment, but that wasn’t enough for Boulder residents. Though you have to credit Xcel’s initially generous rebates for part of Boulder’s solar boom, some residents thought the investor owned utility became half-hearted once they approached Colorado’s mandated RPS quotas. Many saw Xcel starting to get in the way of distributed solar (and growing solar jobs and businesses) through abruptly slashing rebates, attempting to limit net metering, or impose new solar interconnection fees.

Rather than constantly battle Xcel through the Public Utility Commission, petitions, and protests, Boulder residents recently voted to unplug Xcel and create their own municipal utility. Although residents were warned that their utility costs could rise as a result, Boulder citizens nevertheless decided to become energy independent with an emphasis on green power, though it wasn’t a unanimous decision. The new Boulder utility’s goal is to create an energy mix of 84 megawatts of natural gas with a mix of 40 megawatts or more of rooftop solar power, and about 55 megawatts of wind, thereby reducing the city’s coal power needs to zero.

I can’t tell you how common it was for me to see solar panels on so many homes. Many homes I saw had solar hot water panels as well as solar PV, despite solar thermal incentives being less. So, how did Boulder become such a robust solar town?

In some ways, Boulder’s rapid solar growth is a reflection of today’s solar PV consolidation. Initially generous incentives from Xcel, combined with a state RPS, and the introduction of the residential 30% Federal ITC inspired this already green-minded community to demand lots of solar.

New installation companies were born to meet the demand, and that competition drove prices down — way down. In 2009 — before modules prices hit their lows of today — it was not uncommon to see installed residential prices at around $5/watt, or even in the $4’s. Today, my solar friends tell me it’s still in that range.

That kind of lowest-priced competition was great for consumers, but not sustainable for new under capitalized solar businesses, and I’m told that several installers have closed their shops. Nevertheless, their installs remain.

From a marketing perspective, my solar friends tell me that neighbors greatly influenced each other. That is, once one house on the block went solar, neighbors became curious and got a quote for themselves, and then eventually installed their own, often with the same company.

It’s unclear whether Boulder’s success can be repeated in larger cities. This is by no means a formula, but in summary, here are the points that seem to have contributed to Boulder’s solar growth:

A green-minded community. Boulder’s citizens were already progressive and open to green energy. That’s not to say that less progressive communities aren’t also open to solar, but far more customer and community education is needed than for Boulder.
A green-minded state. States with a renewable portfolio standard (RPS) compel utilities to act. Clearly, Xcel responded to the letter of the law, providing generous rebates at first. However, their perceived reluctance to go beyond the law’s requirements made the majority of their citizens vote for their own utility. That’s very difficult for any community, especially larger cities. Nevertheless, Boulder made it possible. We’ll have to see how their green aspirations compare to the reality of owning and operating their very own green municipal utility.
Generous rebates and incentives. Studies have shown that solar has to make financial sense to be adopted. Cities may not need $3/watt rebates with the recent fall in solar module prices, but every incentive helps, and Boulder has a lot of them. For now, these subsidies are still needed for rapid solar growth and states, cities, and utilities need to support them as they did in Boulder.
A committed local government. Though libertarians may disagree, it’s a lot easier to change our energy habits when local governments lead by example. Not only does the city incentivize solar for its citizens, but Boulder has also installed solar for its own energy needs. In many ways, visible solar panels are advertisements by themselves. They make viewers curious and ask themselves if they can go solar too. Typically, the answer is yes, but these people might never asked that question without seeing the city’s example.
Competition that lowered prices. There’s no doubt that competition dramatically lowered prices compared to other states; however it wasn’t sustainable when rebates were abruptly reduced. The recent consolidation of installers has allowed the strongest companies to survive, and now it remains to be seen if these survivors can thrive in Boulder. There are still plenty of empty roofs, but prices must stay competitive, especially without the generous incentives.
Federal Incentives. Until 2016, even if Boulder’s local rebates diminish or disappear, Boulder and the rest of the U.S. will still have a 30% Federal Investment Tax Credit to offset the initial cost, as well as provide solar leasing companies a way to provide residents with a low up front cost option. Right now this is a must to keep solar growing in Colorado and elsewhere, especially now that 1603 Treasury Grant Program has expired. If PACE programs could get back on track, that couldn’t hurt either.
It really was inspiring to travel through Boulder and see so many solar roofs in such a concentrated area. There may be more solar installed here in Los Angeles, but the city is so spread out, it requires a sharp eye to catch a solar roof.

I’m sure there’s much more to learn about Boulder’s success and mistakes, so feel free to take a trip and see it for yourself. You’ll not only see a great solar community, but the food is first class and the complete strangers that I met were extremely friendly and helpful to a visiting and some times lost L.A. visitor.

Know of any other hot solar communities like Boulder? (Recently, RenewableEnergyWorld.com blogger John Farreil cited Gainsville, Florida for its FiT program.) Please share in the comments section below and let us know what was behind the growth. I’m looking forward to seeing how other cities are UnThinking Solar.

Tor Valenza a.k.a. “Solar Fred” advises solar companies on marketing, communications, and public relations. Contact him through UnThink Solar or follow him on Twitter @SolarFred.

Solar Energy

The information and views expressed in this blog post are solely those of the author and not necessarily those of RenewableEnergyWorld.com or the companies that advertise on this Web site and other publications. This blog was posted directly by the author and was not reviewed for accuracy, spelling or grammar.

The Colorado Public Utilities Commission today denied Xcel Energy’s request for an interim rate increase of $100 million.

Xcel had estimated that it would suffer at least a $50 million revenue gap if an interim electricity-rate increase was not approved by the commission.

The commission said Xcel failed to demonstrate that it would be adversely impacted by maintaining current rates during the six-month period while its request for a $141.9 million rate increase is fully reviewed.

“I view this in a simplistic fashion,” said chairman Joshua Epel. “There is one key term, ‘adverse.’ There has to be a true adverse impact. I don’t feel there is a demonstration of adverse impact.”

Karen Hyde, Xcel’s vice president of rates and regulatory affairs, said the interim hike was necessary.

“Obviously, we are very disappointed. We outlined what the negative impact would be as of Jan. 1, and we are sorry the commission didn’t recognize the adverse impact of the delay in rate relief,” said Hyde.

The commission is expected to issue its written ruling by Jan. 20, but the ruling is likely to come out sooner, said Terry Bote, spokesman for the commission.

A 2010 law passed by the legislature allows the PUC to consider interim rates if the utility shows it will be adversely affected by the revenue deficiency during the time period required to hold hearings on the suspended rates. Xcel Energy had asked that the interim rates be implemented by Jan. 21.

Consumer advocates, some of Colorado’s biggest companies, senior citizens and utility regulators opposed Xcel’s bid for the no-hearing, interim hike.

During Wednesday’s regular commissioner’s meeting, no one spoke on behalf of the interim increase or against it.

Commission staff briefly outlined Xcel’s position and the position of opponents. The consensus among those who opposed the interim hike was that Xcel failed to show how it would be hurt financially by waiting for a full rate-case hearing.

The PUC staff also opposed the interim rate request and challenged the $100 million figure, saying that no more than $52 million should be considered in the interim increase.

Mark Jaffe: 303-954-1912 or mjaffe@denverpost.com

ALAMOSA — Alamosa’s recreation center will soon be partially powered by the sun.

Custom Solar completed a 101-killowatt solar project this week that will provide a portion of the power needs for the rec center. Custom Solar Owner Willie Mein, PE, said the system would be turned on in about a week, on January 6.

The approximately $360,000 project employed many local individuals and companies while under construction in the last month, and Mein said he was impressed by the quality of workmanship afforded locally.

“People were motivated to work. It was great to see,” he said.

“We hired over a dozen local folks to help us with the installation.”

He said the competence of the local work force was outstanding.

Mein called Jessie Lopez with Lopez Electric the project’s “most valuable player,” and said he hoped Custom Solar can work with Lopez Electric on additional projects in the San Luis Valley in the future. Custom Solar is currently bidding on another local solar project and hopes to return.

Mein also praised Justin Clark who performed many tasks on the project including running heavy machinery.

“He was our guy on the job in the field.”

Custom Solar rented a great deal of equipment from J&J Rentals locally and appreciated doing business with American Electric, Monte Vista Cooperative, Southwest Ready Mix, Alamosa Lumber, Big R and others.

Mein also praised a crew out of Crestone run by Jason Anderson.

Mein was also impressed by the professionalism and accessibility of the city staff.

“The city manager and building inspector have all been outstanding,” Mein said. “It’s our experience as contractors and solar installers the permitting process can be very difficult and we found it to be really accommodating here. It’s been a breath of fresh air to work with the local city government. They have been fantastic, accessible, service oriented, reasonable, nice and available. It couldn’t have gone better.”

The project itself provided some challenges with cold weather during construction in the last four weeks, and a trench had to be dug 1,000 feet from the solar installation site behind the ball fields to the rec center, but the local work force and construction community more than made up for any difficulties, Mein said.

The 442 photovoltaic panels encompassing 17 arrays are set up on a 100×325-foot area. Total capacity of the system is 101.66 KW which can produce 172,374 kilowatt hours per year at a retail value of $20,685, by Mein’s conservative estimate.

Environmentally, this project takes the place of 15,250 pounds of coal on a monthly basis and prevents a great deal of carbon dioxide and harmful chemicals from entering the atmosphere and 10,675 gallons of water from being consumed.

“I am a believer in solar,” Mein said. “It’s why we do it.”

Custom Solar, headquartered in Boulder, has been in business about four years and installs both residential and commercial systems. The project for the Alamosa recreation center is the first the company has constructed in Alamosa “and hopefully not our last,” Mein said. “We are looking at some other projects.”

Although this system will not provide all of the rec center’s power needs, it will help, Mein explained.

The City of Alamosa had initially considered a solar parking structure like a carport in a portion of the recreation center parking lot. It would have provided some of the rec center’s power needs as well as a covered area for outdoor events. Mein said that was a novel idea and he would still be interested in pursuing a project like that. As financial arrangements progressed, the project evolved from a parking structure to a separate solar array. Custom Solar remained as the solar installer.

Mein commended Mayor Kathy Rogers and the rest of city council for not scrapping the project but moving forward with an alternative.

Custom Solar owns the solar facility but the city has contracted to purchase the power generated from it.

Posted: Wednesday, Dec 28th, 2011
BY: Ruth Heide, Courier editor

Corrections and clarifications: The original version of this story misreported the number of minutes of outages that have been avoided thanks to the installation of the smart grid. The actual number is 28,000 minutes per feeder, and one feeder serves about 2,500 customers. The original version of this story also attributed a statement to former city councilman Steve Pomerance that was incorrect because the reporter gave Pomerance the wrong figure for customer minutes out. Finally, this story said that MetaVu, the company that evaluated the smart grid for Xcel, characterized some of the lessons learned in Boulder as mistakes. MetaVu never used the word “mistake” in its report to refer to the lessons Xcel learned through the smart grid project.

Xcel Energy officials say the company has finished its SmartGridCity project in Boulder, and now they are asking the Public Utilities Commission for permission to recoup the project’s full cost by charging Colorado ratepayers another $16.5 million.

“SmartGridCity has not only provided us with a wealth of useful information that we are currently using in the development of our grid modernization approach, it is set up so that it will continue to provide us with valuable information as we test new technologies and cost-savings concepts,” said Michael Lamb, Xcel’s managing director for business, in testimony filed with the PUC.

When Xcel Energy began its project to build a demonstration smart grid in Boulder in 2008, the utility estimated that its contribution to the cost of the grid would be $15 million and that investors would fund the rest of the project.

But over the next couple of years, Xcel’s portion of the costs ballooned to about $45 million. At the end of 2009, Xcel asked the PUC for permission to increase customer rates across Colorado to recoup those costs.

Earlier this year, the commissioners ruled that Xcel could recover $27.9 million of its costs, but they said Xcel could not recoup an additional $16.5 million until Xcel “demonstrates to our satisfaction that it has completed the unfinished aspects of the (SmartGridCity) project.” Xcel also agreed to cap the total amount that the company could charge customers for the SmartGridCity project to $44.5 million.

Explaining their decision, the commissioners wrote, “We are concerned whether (SmartGridCity) is today slated to achieve enough of its potential to justify its higher-than-anticipated costs. … We believe that, in a very real sense, the project is still in the development stage and that (Xcel) has not yet fully evaluated the capabilities of (SmartGridCity) nor has the company assured us that those capabilities will likely be realized.”

In mid-December, Xcel Energy filed hundreds of pages of documents that seek to show that the utility has both finished the project and evaluated its capabilities.

As part of the project, Xcel installed monitoring devices on 4,600 transformers and four substations that serve Boulder. The utility also upgraded 24,000 meters — or about half of all meters in Boulder — and installed 200 miles of fiber-optic cable to allow the components of the grid to communicate with one another.

Xcel notes that, while the smart grid has improved the utility’s ability to serve Boulder, the improvements may not be immediately obvious to customers, who tend to associate smart grids with “customer-facing” devices, such as gadgets that can deliver real-time energy-use data or allow customers to program when certain devices in their homes turn on.

Lamb said the customer perspective was “completely understandable,” but he said that Xcel has found the market for in-home devices that would take advantage of the smart grid to be immature.

From the utility’s perspective, the smart grid has allowed the company to improve service. For example, the smart grid has allowed Xcel to reduce the number of “customer minutes out” by 28,000 annually per feeder — each of which serves about 2,500 customers — and reduce outage durations by 382,000 minutes across the smart grid service area. Before the smart grid, Xcel had to pinpoint outages based on phone calls from customers, but now the utility can remotely “ping” monitoring devices in Boulder to tell where the outages are. The “smart” monitoring devices also allow the utility to proactively reroute power around trouble spots.

Smart grid customers who are served by Xcel feeders that were upgraded to automatically reduce the voltage between the substation and the customer’s home or business also saved an average of $18 a year on their bills. And the smart grid has essentially eliminated voltage fluctuations in Boulder, reducing complaints about such situations from between 30 and 50 a year to zero.

Former Boulder city councilman Steve Pomerance, who has followed the issues surrounding Boulder’s smart grid, said Friday that he agrees there is some value to SmartGridCity.

“Yes, there’s value — the question is, ‘How much?’” Pomerance said.

Pomerance argues that the smart grid costs more than it’s worth, regardless of small increases in reliability or service.

“Would you pay 50 million bucks to do that?” he said. “There is nobody in the universe who would even pay a tenth of that to accomplish that.”

Pomerance also questions the wisdom of installing an expensive fiber-optic cable for communication purposes rather than relying on radio transmissions or the Internet. And in general, Pomerance said Xcel would have done better to launch a smaller and less expensive smart grid demonstration project.

Xcel Energy admits that the lessons learned from the smart grid include what worked as well as what didn’t work. For example, Xcel officials said that in the future, the company would try to take full advantage of existing communications channels — from cell networks to radio transmissions — before installing more cable.

And Xcel learned that it may not make business sense to upgrade all customers’ meters to “smart meters,” since the existing meters already allow for automatic meter-reading that doesn’t require a human meter reader. Xcel also learned that, in most cases, it makes sense to replace components of its distribution system with “smarter” components only when the components have reached the end of their lives.

MetaVu, a company hired by Xcel to evaluate the smart grid’s value, said in a report that lessons learned in Boulder represent a value to all of Xcel’s 1.36 million Colorado customers.

“The project informed both capabilities (Xcel) should consider, but just as importantly, those that it may want to disregard, at least presently,” the report reads. “In doing so (Xcel) may have avoided hundreds of millions of dollars in investments, and associated rate increases, that would have created insufficient value for customers relative to costs.”

Xcel also mentions in its filings that the November election in Boulder — when voters approved two measures that give the city permission to break from Xcel and start a municipal utility — should not affect the company’s ability to recoup its costs.

“We and our customers have obtained significant value from the project through what we have learned from it,” the document reads. “The Boulder vote does not negate that. If Boulder goes forward with its municipalization efforts, it is likely to be a three- to five-year process, giving us time not only to complete ongoing pilot (projects) but also to undertake new ones.”

City of Boulder staffers are aware of the filings, but the city has not decided whether to file its own responses to the document.

“The city is aware that Xcel has made this filing with the PUC and is reviewing the documents submitted,” said city spokesman Patrick von Keyserling. “No decision regarding whether to intervene will occur until our review is completed.”

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

Xcel Energy wants to raise an extra $142 million next year, with the money coming from another $4 a month on the average family bill and $5 on small businesses.

So that’s where the money would come from; the question is, where would it go?

That rate increase will cover costs such costs as $3.1 million for new equipment on power plants to curb mercury pollution, $400,000 for an employee-recognition fund and salary increases of 2.5 percent to 4 percent for workers.

There are dozens of costs and charges in the 10,000 pages of testimony and charts Xcel has filed with the Colorado Public Utilities Commission in support of the rate request.

All together, they would allow Xcel up to a 10.75 percent return on its investment. Currently, Xcel gets 10.5 percent, although it has said in the past that it rarely achieves that high a return.

“I don’t know if anyone in this economy can expect a 10.75 percent return,” said Bill Levis, executive director of the state Office of Consumer Counsel, which represents consumers in rate cases.

“There are a lot of elements in this rate request,” Levis said. “It would be the third increase in three years, so we are looking at everything carefully.”

Xcel’s rates have increased by $391 million since 2007, raising bills by about 20 percent.

Xcel filed the rate request with the PUC in November and it will be subject to a lengthy review and public hearings.

If approved, the rate hike would give Xcel total revenues in the state of $1.6 billion next year.

But Xcel is also seeking an immediate $100 million interim rate request that would go on bills in January.

That request could — under a clause in the 2010 Clean Air-Clean Jobs Act — be granted by the PUC without a hearing or public comment.

“The clause says the PUC may grant an interim increase, it doesn’t say it shall,” Levis said.

If the PUC was to grant such an interim rate hike, it would be a first in Colorado. If the final increase is less than $100 million, Xcel said it would give customers a credit.

“We have made $760 million in investments and we have costs to recover,” said Karen Hyde, a vice president with Xcel subsidiary Public Service Company of Colorado.

While the last rate case was in 2009, and went into effect in 2010, it was based on 2008 costs, Hyde said. “So we are catching up on four years,” she said.

Some of the key elements in the rate request include:

• $52.6 million to pay for absorbing 300 megawatts of generation that Xcel had been selling to Black Hill Energy. Xcel planned as early as 2004 to let the wholesale power contract lapse and use the power for its customers. But it’s taking on the costs of paying for that power generation at a time when it already has excess capacity.

• $13 million for the initial expenses of retiring coal-fired power plants around Denver to cut air pollution under the Clean Air-Clean Jobs Act.

• $23 million for additional property taxes for the new power plants and facilities the utility has built.

• $9.7 million for a program to cut down trees killed by the pine bark beetle infestation that threaten some of the company’s 18,100 miles of transmission lines. The dying trees are an ongoing problem, according to the company.

• $16 million in pension obligations to Xcel employees.

Among the other items in the request are a number of environmental, renewable-energy and energy-efficiency initiatives. There is a $3.2 million increase in the cost of chemicals to control other pollutants, such as sulfur dioxide.

Xcel is also seeking $2.3 million for an experiment that combined solar energy and coal at its Cameo plant near Rifle.

The $4.5 million project, done with Abengoa Solar, the U.S. subsidiary of Spanish company Abengoa SA, used a solar heating system to cut coal consumption by preheating the water with concentrating solar mirrors spread over 6.4 acres.

After the experiment, the aging Cameo coal plant was closed.

The rate request also includes $284,000 for a research project to develop energy storage — in essence a battery — which could store renewable energy.

In an e-mail protesting the rate request, one customer, Elouise Ohlson, said she was frustrated because Xcel keeps promoting energy and cost savings but still keeps raising rates.

“There is nothing to be gained here if they keep asking for and getting rate increases,” Ohlson said.

“My suggestion is to take into account middle-class incomes that do not increase or may be so low they do not keep up with the cost-of-living increase,” Ohlson wrote. “Another suggestion is to advise Xcel Energy to reduce incomes of the high- end executives.”

Mark Jaffe: 303-954-1912 or mjaffe@denverpost.com

Xcel’s proposed $142 million rate hike *

$52.6 million

To cover the expiration of a wholesale power contract with Black Hills Energy

$31 million

Depreciation charges on new facilities and for retiring old facilities

$23.2 million

Additional property taxes on new facilities

$23.1 million

for operating and maintenance costs on Xcel’s power distribution system

$16.4 million

in pension expenses

$13 million

to retire old coal-fired power plants to cut pollution under the Clean Air-Clean Jobs Act

$9.7 million

to cut down trees killed by pine bark beetles that threaten power lines

$24 million

in various charges and projects

* These cost increases are partly offset by $51 million in additional revenues, tax credits and lower borrowing costs