News & Notes

by Chris Shreve

Arizona Starts Charging Grid-Connection Fees for Solar Rooftops

In a decision that could have far-reaching impacts on the solar industry, the Arizona Corporate Commission (ACC) voted in November to allow the state’s largest utility to charge a monthly fee to customers who install photovoltaic panels on their roofs.

In a 3-to-2 vote, the ACC instituted a charge of $0.70 per kilowatt on future customers of Arizona Public Service Company (APS) who install rooftop solar panels. The monthly charge went into effect January 1, 2014, and the utility estimates it will collect $4.90 per month from a typical rooftop solar customer.

Under the state’s net-metering arrangement, APS is required to buy solar at full retail value from customers with rooftop panels. In making its decision, the ACC determined the current net-metering program creates a cost shift, causing nonsolar utility customers to pay higher rates to cover the costs of maintaining the electrical grid. The fixed charge does not increase APS revenue but instead will “modestly reduce” the impact of the cost shift on nonsolar customers, according to the company.

“The Arizona Corporation Commission has taken an important step in reforming the state’s net metering policy,” said Don Brandt, APS chairman, president, and CEO. “The ACC determined that net metering creates a cost shift. We applaud the ACC for cutting through the rhetoric and focusing on how the cost shift impacts non-solar customers.”

Opponents of the decision, though, fear the extra fee will discourage rooftop installations and stifle the state’s private solar industry.

“The changes the ACC adopted completely ignore the benefits that rooftop solar brings to our state,” said Will Greene, Sierra Club’s organizing representative in Phoenix, and one of nearly a thousand rooftop solar supporters who rallied outside the ACC hearing. “Their decision stands to raise major roadblocks that will threaten the growth of our clean energy economy—and its nearly 10,000 direct jobs.”

Arizona ranks first among the states in solar jobs per capita and is home to more than 250 solar companies. Over 138,000 households in Arizona are currently powered by solar energy, and the number is rising. Rooftop solar applications have surged in recent years, with APS receiving 500 per month in 2012, double the 2011 rate. The utility estimates 200,000 or more customers
could be net-metered in 10 to 15 years.

Because of this growth, APS had proposed more radical changes to the state’s rooftop solar policy. It wanted to cut by more than half the price at which it buys back excess electricity from rooftop solar customers (the ACC rejected this proposal), as well as charge a monthly fee of about $8 per kilowatt. Arizona’s ratepayer advocate, the Residential Utility Consumer Office (RUCO), recommended a monthly charge of $1 per kilowatt that would incrementally increase to $3 per kilowatt as the market allowed.

Thus, the $0.70 charge represents a compromise. “Just like any negotiation, there was give and take,” RUCO director Pat Quinn told Greentech. “There are things in the settlement that will protect all utility customers.”

The compromise ensures net metering will be preserved, and the $0.70 charge will remain constant until APS’s next rate case in 2016.

The net-metering debate, however, continues, as up to a dozen states are considering charges for solar rooftop owners. And in September, California approved legislation that would allow regulators to approve fees of as much as $10 a month for customers with solar installations. It came on the heels of a California Public Utilities Commission analysis that found the state’s net-metering policy will cost California’s nonsolar customers $1.1 billion a year by 2020. Critics of the study say it doesn’t consider all of the benefits of distributed generation, including the avoided costs of building additional power plants, public health benefits, and job creation.

Report Shows Strong Solar Jobs Growth

The U.S. solar industry has added 24,000 workers since 2012, according to a report from the Solar Foundation. The National Solar Jobs Census 2013 shows that solar industry employment grew by 20% between September 2012 and November 2013. During that same period, average employment in the national economy grew by only 1.9%.

“This is an exciting time for the solar industry in the United States, made even more clear by the latest industry job figures,” Secretary of Energy Ernest Moniz said in a statement. “To support a growing workforce and a new generation of clean energy leaders, the Energy Department is providing training and education opportunities for engineers, utility workers and students, as well
as supporting projects across the country to ensure America’s continued leadership in clean energy innovation.”

In the utility-scale market, the DOE’s Loan Program financed the first five utility-scale PV projects larger than 100 MW in the United States, helping to prove the technology is viable and cost-effective at a large scale.

And the DOE’s SunShot Initiative, which partners with industry, universities, communities, and the Department’s national laboratories, is halfway to its goal of making solar energy cost-competitive with traditional energy sources by the end of the decade. Today, PV modules cost about 1% of what they did 35 years ago, and 6 out of 10 major U.S. homebuilders now offer PV as a standard available feature in new construction.

The U.S. solar industry currently employs 142,000 Americans throughout the supply chain. For more industry research, including the Solar Foundation’s 2013 solar jobs census report, go to www.tsfcensus.org.

U.S. Military Accelerates Deployment of Clean Energy Technologies

Clean energy technology deployment is accelerating across military installations in the United States, according to a new report from The Pew Charitable Trusts. The report, titled Power Surge, examines how the Department of Defense (DOD) is using private-sector capabilities and financing to obtain advanced energy systems. Energy-saving and efficiency projects at military installations more than doubled from FY2010 to FY2012—from 630 to 1,339—and the number of renewable energy projects increased from 454 to 700 during the same period.

“The Department of Defense has a long history of embracing energy challenges and has been at the forefront of innovation,” said John Warner, a former U.S. senator and secretary of the Navy and senior advisor to the project. “And so it is today that we find America’s armed forces in the midst of the transition to renewable power and efficiency technologies that help ensure a stable, diversified, and continuous supply of electricity.”

Ensuring access to reliable sources of energy without interruption is a top priority for the U.S. military, which spends $4 billion annually on energy to operate its bases. To lower energy costs and enhance security, the report says, the U.S. Army, Navy, Air Force, and Marine Corps have initiated policies to boost clean energy installation in the near and long terms.

Private-sector financing is essential to this effort, which comes in the midst of cuts to the DOD budget. To reduce up-front costs, the military will rely heavily on energy savings performance contracts and utility energy service contracts to upgrade its infrastructure. According to the Pew report, an estimated 80% of future DOD renewable energy projects will be financed through power purchase agreements that rely on private developers to finance, build, and maintain projects.

Pew’s research also showed that strong energy goals and policies—including those set by the DOD—are “driving deployment of advanced energy goods and services,” such as on-site renewable energy generation and independent microgrids.

But the military has struggled in the recent past to meet federally mandated renewable energy targets. The Energy Policy Act of 2005 required all federal agencies to get 5% of their energy from renewable sources in FY2012; however, the DOD managed only 4% (with the army at a dismal 0.5%). The goal rises to 7.5% in FY2013 and to 20% in FY2020.

Judge Decides Solar Is Most Cost-Effective for Minnesota

An administrative law judge has recommended a 100 MW solar project to meet Minnesota’s near-term electricity generation needs, choosing Geronimo Energy’s Aurora Solar Project over several natural gas alternatives. The January ruling could result in a sevenfold increase in solar power for Minnesota.

“It’s the first time that solar’s gone head-to-head with gas facilities in this sort of a proposal and has received this sort of a recommendation,” Geronimo vice president Betsy Engelking told the SCTimes.

In fact, it is the first time Minnesota has used a competitive bidding process for a major power generation project.

The state’s public utilities commission (PUC) initiated the process in early 2013 after forecasting Minnesota would need 150 MW of additional generating capacity in 2017, with a potential increase to 500 MW by 2019.

The PUC received proposals from Calpine, Geronimo, GRE, Invenergy, and Xcel Energy, and ordered a trial-like proceeding to force the companies to compete on price. Three of the proposals called for new gas-fired turbines. Meanwhile, the Minnesota legislature established a new solar energy mandate that obliges Xcel, the state’s largest electricity provider, as well as other utilities, to acquire 1.5% of their retail sales from solar energy by 2020.

Judge Eric L. Lipman concluded Geronimo’s solar proposal was “the most reasonable and prudent alternative,” and in combination with GRE’s short-term capacity credit proposal, offered the greatest value to Minnesota and Xcel’s ratepayers.

“In the near-term, these proposals offer competitively priced energy generation; at firm prices; the fewest new environmental impacts; and significant protections against the imposition of project cancellation costs,” wrote Lipman.

Geronimo’s plan is to build 31 solar energy farms across 700 acres of land on property adjacent to Xcel substations. If the Aurora project is built (it still needs PUC approval), Xcel likely would purchase the power under a long-term agreement, according to the Minneapolis Star Tribune.

Judge Lipman called the procurement process an important turning point in Minnesota’s energy resource planning. “Since 1991, Minnesota has had a statutory preference in favor of renewable energy sources. Yet, that preference is overridden when the nonrenewable source has a lower total cost,” he wrote. “Notwithstanding the statutory preference, it seemed that nonrenewable energy sources always won the head-to-head cost comparisons. Not anymore.”

Obama Sets New Sustainability Goals for Federal Agencies

In a December 5 memorandum, President Obama set new targets for the federal use of renewable energy. Saying the federal government must “lead by example,” the president directed that 20% of total electricity consumed by federal agencies must come from renewable sources by 2020.

According to the memo, federal agencies are already “well on their way” to meeting sustainability goals set forth in a 2009 executive order. Under the Obama administration, agencies have reduced their annual greenhouse gas emissions by more than 15%, totaling 7.8 million metric tons.

To ensure the new target is reached, the president outlined yearly benchmarks for renewable energy consumption: 10% in FY2015, 15% in FY2016 and FY2017, 17.5% in FY2018 and FY2019, and 20%
in FY2020 and beyond.

The president also directed agencies to update their building-performance and energy management practices, listing several improvements to enhance efficiency and reduce waste, including the installation of energy and water meters at agency buildings, and the recording of performance data in the EPA Energy Star Portfolio Manager.

Court Orders DOE to Stop Collecting Yucca Mountain Fees

The legal wrangling over nuclear waste disposal fees, for the moment, appears to be over. On November 19, the U.S. Court of Appeals for the District of Columbia Circuit ruled the annual fee must be suspended until the secretary of energy either chooses to comply with the Nuclear Waste Policy Act or until Congress enacts an alternative waste management plan.

The ruling is a continuation of a 2012 case in which the court held the secretary had “an affirmative obligation” to determine if the fee was adequate, and was given six months to conduct a new fee assessment. In the current decision, the court concluded the DOE had failed to conduct an adequate assessment, and ordered the secretary to submit to Congress a proposal to change the fee to zero.

The DOE’s argument for not complying with the law rested on its belief that an adequate fee assessment is not possible. The Nuclear Waste Fund currently totals about $30 billion, and according to the DOE’s calculations, the final cost of disposal could be anywhere from $2 trillion more to $4.9 trillion less than the amount in the fund. Because the range is so great, the DOE argued, it could not determine whether the fees are inadequate or excessive. The court rejected that argument, writing that “[t]he Secretary may not comply with his statutory obligation by ‘concluding’ that a conclusion is impossible.”

The DOE further argued that it had been put in a catch-22 position because the court, in its previous opinion, said it was unreasonable to use Yucca Mountain as a proxy to estimate disposal costs. The catch is that the DOE, by law, is not allowed to consider an alternative to Yucca Mountain. But the court said the government’s problem “is of its own making” and it could have used Yucca Mountain’s costs if it were still pursuing the site, “but it cannot have it both ways.”

In a statement following the decision, Charles Gray, executive director of the National Association of Regulatory Utility Commissioners, praised the outcome: “Today’s decision from the court is great news for consumers of nuclear power. Nuclear utilities and their consumers have paid more than $30 billion since the early 1980s for the construction of a nuclear-waste repository. These consumers have upheld their end of the deal, but unfortunately all they have to show for their investment is a hole in the Nevada desert.”

Yet that hole in the desert has not been ruled out. In a related case, the D.C. Circuit Court of Appeals ruled in August that the Nuclear Regulatory Commission (NRC) must resume its review of the DOE’s license application for Yucca Mountain, consistent with the provisions of the Nuclear Waste Policy Act. In response, NRC chairwoman Allison Macfarlane ordered the agency to complete a safety evaluation report, the NRC’s key determination of the technical merits of the Yucca Mountain application. The 2014 Omnibus Appropriations bill, the legislation that will provide funding for the entire federal government, ensures the NRC can use $13 million in carryover funds to continue the review. A final licensing decision for Yucca Mountain would require additional steps beyond completing the safety report, but the NRC said it does not have sufficient funds to complete them.

Boulder Moving Ahead with Municipalization

The city of Boulder, Colorado, is moving forward with a plan to create a local electric utility that would use more renewable energy than its current provider, Xcel Energy. In November, voters supported a ballot initiative that would boost municipal utility creation, and defeated a second initiative that would have made municipalization
more difficult.

Ballot Question 2E, submitted by the Boulder City Council and passed by a two-thirds margin, limits the amount of debt obligations the city can incur to acquire Xcel’s assets to $214 million. An opposing issue, Ballot Question 310, was supported by Xcel but defeated by an almost identical two-thirds vote. It would have amended the city’s charter to give Boulder voters the final say on the amount of debt a city-owned electric utility could issue, and would have limited the utility’s service area to the city limits.

An October editorial in Boulder County Business Report found flaws in both initiatives: “As it is, both ballot measures are faulty. [Issue] 2E does not create a cap on the cost of municipalization, only on the bonded indebtedness tied to certain aspects. [Issue] 310 creates a perpetual power for voters to approve any utility debt limit, a restriction that would hamstring any municipal utility.”

Nonetheless, Boulder is moving ahead with municipalization, a process that began as far back as 2005 when the city appropriated funds for a “municipalization task force” to look into options for severing ties with Xcel, a multistate utility whose energy mix at the time included roughly 80% fossil fuels. In 2011, Boulder voters approved language for a municipalization charter, to which the new provisions in 2E will be added.

“We are pleased with the results of today’s election concerning the municipalization ballot items,” said Heather Bailey, Boulder’s executive director of energy strategy and electric utility development. “The additional requirements set by 2E will address concerns about the unknown amounts of acquisition and stranded costs associated with forming a local utility and help define the path the community would like us to take towards creating the electric utility of the future right here in Boulder.”

An early 2013 report from the Boulder City Council concluded that a shift to a municipal utility company could lower utility rates for all sectors over an estimated 20-year span while reducing greenhouse gas emissions by more than 50% through an increase in renewable energy production.

Xcel, however, has opposed municipalization from the start, saying it is better equipped to help the city reach renewable energy targets. The company has also said it is unwilling to sell its assets, meaning the city would have to condemn them by eminent domain. The company questioned the value Boulder has put on the utility’s assets as well.

“In passing 2E, Boulder voters have made it clear that they want to limit how much the city can borrow to create the municipal utility,” the company said in a prepared statement. “While we supported Measure 310, we don’t see how the city can acquire Xcel Energy’s electric utility for the $214 million cap set by 2E.”

Boulder is undeterred. On January 6, the Boulder Daily Camera reported that City Manager Jane Brautigam had sent a letter to Xcel CEO David Eves, notifying him of the city’s intent to acquire parts of the utility’s electric system. The letter of intent is a legal requirement in case Boulder decides to condemn Xcel property in the city and convert it to its own use.
Xcel issued a brief written statement in response to the city’s action:

“Xcel Energy has received Boulder’s notice of intent to acquire, which is under review. We continue to believe that we can help Boulder achieve its goals better, faster and cheaper by working together instead of Boulder attempting to take over our business.”

As we go to print, the saga continues. On January 28, Xcel filed a request with the Colorado Public Utilities Commission to limit the amount of money—in the form of rebates and subsidies—Boulder residents can receive to make energy efficiency improvements.

Xcel runs several energy efficiency and solar rewards programs, which are paid for by all of its customers, but Boulder customers are more likely to take advantage of them, the utility said.
“While the company is very reluctant to limit these valuable programs, we do not believe it is appropriate for our customers outside of Boulder to subsidize any newly formed Boulder municipal utility,” said Xcel vice president Jerome Davis in a written statement. “While costs are paid for by Xcel Energy customers, the benefits would go to the new municipal utility, once it is formed.”
Xcel said the changes it has requested would only apply to new participants in the programs, and that existing contracts or requests for rebates already in the pipeline would not be affected.

National Low-Income Energy Organizations Merge

In November, the National Fuel Funds Network (NFFN) and National Low Income Energy Consortium (NLIEC) announced they had merged into a single entity, the National Energy and Utility Affordability Coalition (NEUAC).

The new organization is a broad-based coalition dedicated to heightening awareness of the energy needs of low-income energy consumers. In a statement, NEUAC outlined several goals, such as formulating and advancing low-income energy policy, providing information and technical assistance in the creation and development of fuel funds, and promoting the development of statewide and regional fuel funds networks.

The initial NEUAC governing board consists of 28 current NLIEC and NFFN board members representing utilities, energy suppliers, nonprofits, and fuel funds. Skip Arnold of Energy Outreach Colorado and John Rich of the Mid-American Assistance Coalition are NEUAC’s co-presidents. The coalition will also have a nonvoting advisory board.

NEUAC will continue to conduct the two signature events held by its predecessor organizations: LIHEAP Action Day and the National Energy Affordability and Utility Conference.

Remembering Alan E. Silverstein

by Steve Cowell

When Alan Silverstein of Stockbridge, Massachusetts, died on January 20 after a long fight with cancer, the sustainability movement in America lost a real leader. Alan Silverstein was one of the true pioneers in the movement to foster an environmentally sustainable society. For more than 30 years, starting in 1978, he and his wife, Laura Dubester, worked at the Center for EcoTechnology (CET). He served as co-director of CET with Laura from 1987 until he retired in 2011 to focus on his battle with cancer.

For CET, Alan designed and managed many innovative energy efficiency programs. One of the first was a 1986 pilot program in Northampton, Massachusetts, in partnership with CSG and Massachusetts Electric, that demonstrated energy efficiency could be a reliable alternative to building new power plants. He also worked on the Energy Star Homes program and the Leadership in Energy & Environmental Design (LEED) for Homes program. He produced workshops, trade shows, regional forums, and events, and spearheaded community initiatives.

Alan was a key leader in the founding of several organizations that have led the energy efficiency movement. In 1981 Alan co-founded Energy Federation, Inc., which helps people and organizations purchase conservation products; he served on its board until his death. In 1984 he co-founded Conservation Services Group, which designs energy efficiency programs for homeowners.

In addition to energy efficiency, Alan was a leader in the recycling movement. As a member of the Massachusetts Recycling Task Force, he helped to develop a statewide recycling strategy.

New York Set to Launch Green Bank

On December 9, New York Governor Andrew M. Cuomo announced $210 million in initial funding for NY Green Bank, an idea he proposed a year ago in his 2013 State of the State address. The initial funding combines $165 million redirected from other programs and approved by the Public Service Commission, and $45 million from the Regional Greenhouse Gas Initiative.

The green bank’s objective is to mobilize the private sector to finance clean energy projects, create jobs, and promote sustainability across the state. It is expected to open for business and offer its first financial products in early 2014.

“New York’s Green Bank will target existing market barriers which currently prevent the widespread deployment of clean energy,” said Richard Kauffman, chairman of energy and finance for New York State. Those barriers include the limited appetite of banks to lend to the clean energy sector; federal policy uncertainty; and the fact that the capital markets that do exist for clean energy are underdeveloped and not widely used.

“The Green Bank is just one component of the state’s new chapter on energy policy that focuses on enabling self-sustaining private markets and reducing dependence on subsidies,” said Kauffman.

New York State spends approximately $1.4 billion annually to incentivize clean energy. Despite this level of spending, the state is not realizing its clean energy goals. One reason is that approximately 80% of this amount is disbursed in one-time-use subsidies to help individual projects.

The green bank, therefore, will not be in the subsidy business, but rather will earn a return on investments, recycle that capital into new clean energy projects, and ultimately create a fully self-sustaining $1 billion support system for the clean energy finance market.