Colorado regulators keep solar cap intact for Xcel Energy

The Colorado Public Utilities Commission kept intact an Xcel Energy (NYSE: XEL) plan in the state to limit a solar rebate program for homeowners.

The PUC dismissed an appeal filed by the national trade association Solar Energy Industries Association (SEIA) and the Colorado chapter to reconsider its ruling that places a cap on its Solar Rewards program.

The program for this year effectively ended taking new applicants on July 2 as the utility argued for a reduced cap on the amount of solar homeowners could be added to its system to take advantage of a rebate program.

The organizations had argued for a higher cap of 50 MW. The PUC agreed with the utility that the costs had gotten excessive. In May, the commission trimmed the solar rewards program and capped the number of solar installations in part to address a $32m deficit in the fund that finances the program.

The PUC approved the plan in May, capping the amount of solar-generated energy the utility could buy through its SolarRewards program at a total of 39 MW a year in 2012 and 2013.

As of July 2, under the reduced incentive program, Xcel no longer offered homeowners an up-front rebate for purchasing solar. Previously it offered a rebate of $2.01 per watt in addition to a net-metering rate. It now offers homeowners installing net-metered solar systems a rebate of 15 cents per kWh produced by the system. For systems under power-purchase agreements or leases, it offers 10 cents per kWh produced. The prices will fall both this year and next to 11 cents per kWh produced for customer-owned systems and 7 cents per kWh produced for third-party owned systems toward the end of 2013.

COSEIA Executive Director Neal Lurie did not expect the decision to come out the way it did. “I was surprised by the PUC’s comments. At a time of rising coal costs, the PUC missed a good opportunity to diversify our energy sources and spur local economic development in a fiscally responsible way,” he said.

Xcel has previously tried to reduce the incentive program in March 2011.

“Since the 2004 passage of Amendment 37, Colorado has enjoyed a vibrant solar energy market spurring nearly $1 billion in clean tech investment, deploying 200 MW of solar, and creating thousands of quality jobs at more than 400 Colorado companies,” said Carrie Cullen Hitt, vice president of state affairs at SEIA.

The commissioners also capped the amount of money Xcel could advance into a special fund to help pay for renewable energy at $25.7m in 2012 and $4.5m in 2013.