Solar industry representatives are attacking Xcel Energy Colorado’s just-announced proposal to change net energy metering. They've called it a threat to hundreds ofsolarbusinesses, thousands of solar jobs and tens of millions of dollars in solar investments.

“It was done with only the appearance of [having solicited] our advice and counsel,” explained SolarCity Policy Director Meghan Nutting, speaking for The Alliance for Solar Choice. “Throwing out a proposal like this is essentially declaring war on the solar industry.”

The Xcel proposal on net metering to the Colorado Public Utility Commission (CPUC) came out of its in-house study on the costs and benefits of distributed solar generation.

The study “significantly undervalues solar’s capacity benefits and the avoided transmission costs, and there is no valuation of solar’s ancillary services benefits,” said VoteSolar’s Annie Lappé. “And they proposed a hard and fast fixed net metering charge from that faulty analysis.”

“It’s an overreaction,” Xcel Energy VP Karen Hyde said of the solar industry’s response. “We want to have an open debate in the best forum we know of, the CPUC, about the net metering incentive -- whether it’s the right amount, who should pay for it, those sorts of things.”

Despite the proposed reduction of the customer benefits of net metering, Hyde noted, Xcel proposed no cutbacks in solar installed capacity for 2014.

Hyde expects the filing to start a dialogue about the costs and benefits of rooftop solar.

"There is a contribution of solar rooftop generation to our peak," she said, "but our system load peaks substantially later than the midday solar peak, when people start coming home from work but businesses are still operating."

That was the largest part of solar’s value, according to Xcel’s study.

“We gave solar credit for that, though It isn’t going to avoid the need for a power plant,” Hyde said. “We determined that rooftop solar does not avoid investments in transmission and distribution, in part because we still have to serve part of the load and in part because the peaks are different. We did determine that solar avoids line losses on the distribution system, because it is closer to load, and we credited solar for that.”

Hyde said she wasn’t sure what ancillary services solar could provide. “It would be great if they give us some specifics.”  

Hyde speculated that even with significantly more solar on the Xcel system, the benefits attributed to it by the study would not significantly change. “Over time, as you add solar, it will avoid building other generation, but we have quantified that in our assumptions.”

When residential solar owners get the $0.104 per kilowatt-hour retail rate for the electricity their systems send to the grid, Hyde said, that benefit is approximately $0.059 per kilowatt hour more than the benefit solar adds, and it is paid for by non-solar owning customers.

“There are just and reasonable rates where one group of customers pick up the costs for another,” Hyde noted. “Rural and urban customers are charged at the same rate.” Xcel’s intention, she insisted, is transparency about who is picking up the costs.

“We don’t agree that net metering is an incentive," Nutting said. “It is a fair credit for generation. Maybe the retail rate is rough justice, but solar customers who generate electricity for the grid should get credit for it.”

“It is time to start recognizing the net metering incentive as an incremental cost of customer-sited solar,” Hyde testified to the CPUC, “and to include that cost in the RESA.”

The Renewable Energy Standard Adjustment (RESA) fund is one of two places spending for renewable incentives can be entered, Hyde explained. Shifting the costs of net metering to the RESA fund is one of the proposed changes. “It is neutral to customers the way we proposed it,” Hyde said, “and it doesn’t change the amount of money available of other renewables.”

Xcel is allowed to collect no more than 2 percent of the customer bill to pay for incentives, but the law allows customers to owe it, in the RESA fund, for incentive expenditures.

“Even with the net metering incentive for new installations,” Hyde said, “the addition to the RESA fund for 2014 is only $2.6 million for all incentives.”

 The RESA fund rules are complicated, Hyde acknowledged, “but it shouldn’t impact the amount of money we are able to spend for wind or utility-scale solar. They are becoming quite cost-effective for us.”

 But it will make more transparent the money spent on “our most expensive renewable resource, which is rooftop solar,” she added.

“We want to have a debate about what the most cost-effective ways are to use our customers’ money and about what our goals are,” Hyde said. “I’m perplexed why they are opposing the debate. They should be welcoming it.”