B. Policy Outlook and Industry Support

Due to restrictions on the price tag of the overall energy bill, Congress capped all tax incentives for all energy technologies for two years in the energy bill.  However, SEIA will work to expand the solar incentives this fall during the development of the tax extenders bill.  In addition, we are working at the state level to develop incentives that complement these federal credits and open up more markets for solar. 

The network of support we have built - your resources and experience - will be critical as we work to extend the tax credits.  We urge all members to continue your involvement in SEIA's legislative efforts, and to encourage those companies that are not yet members to join SEIA.  All companies in the U.S. solar industry have a stake in extending the federal credits, and all those companies should be actively working with the association to strengthen our industry.

C. Frequently Asked Questions (FAQ) on the Solar Tax Credits

This FAQ sheet should answer many of the questions facing companies in the solar energy industry about the federal solar tax credits.   While we have to be very clear that SEIA cannot offer you tax advice, which can ultimately only come from your tax professional , this document should provide some initial guidance based on the legislative text. 

In the coming weeks, SEIA will be working with the IRS to obtain formal guidance on these issues, and will keep you informed about the forms and procedures you will need to claim this valuable credit.  All materials will be available Monday on SEIA's new and improved website at www.seia.org .

The original legislation is enclosed as an attachment .  We encourage you to send questions to us at info@seia.org , so that we can obtain clarity on these key issues for you as soon as possible.

Business Credit vs. Residential Credit

	Old Incentive	New Incentive	Credit window	Cap	Eligible technologies
Business credit	10%	30%	1/1/06 - 12/31/07 at 30%; reverts to permanent 10% thereafter	No cap	PV, CSP, solar hybrid lighting, solar domestic water heating (excluding pool heating)
Residential credit	None	30%	1/1/06 - 12/31/07	$2,000 per system/ for each solar technology	PV, solar domestic water heating (excluding pool heating)

1.  What are the dates of the credit?  Is it applicable to existing systems? 

The credits become available for systems that are "placed in service" -activated - between January 1, 2006, and December 31, 2007.  If the installation is on a new home, the "placed in service" date is the date of occupancy by the homeowner.

Systems that have already been installed are not eligible.

2.  What about systems that have been purchased but not installed?

Should you sell a system and even start work this year, but do not complete "original installation" of the system or "place it in service" until Jan. 1, it will qualify for the credit.

3.  Can this credit be applied to capacity additions?  (i.e. I have a 1.5 kW system and I want to add 1.5 kW more.)  Similarly, can I apply this credit to used equipment going into a new installation?

This is not entirely clear at present.  However, the language would suggest that both scenarios are allowed - the credits apply to the amount of expenditure on solar energy property in a given year.  SEIA will work with the IRS to develop regulations favorable to the solar industry.  We will pass on additional information as it becomes available.

4. How does the residential cap on expenditures operate?

An individual can take the 30% credit up to a $2,000 cap for photovoltaics, while also taking the 30% credit up to a separate $2,000 cap for solar water heating.  The credit may be carried over to future years.

Business entities have no cap on the total credit amount, provided they have a sufficient tax liability.  Businesses have 20 years in which to take the credit.

5. How does the credit work with existing state credits or utility incentives?

The credit applies to the basis remaining after any state or utility incentives available to the taxpayer have been taken.  

Example: a $10,000 system that receives $5,000 in state incentives would be eligible for a $1,500 Federal credit.)

6. Are there any changes to the business solar tax credit other than percent?

The business solar tax credit will continue to be administered as before; all that has changed is the percentage increase to 30%.  Operation and legal technicalities of the business credit are well established.  An accountant or tax professional familiar with these rules should be able to inform you on any specific issues.

7. Why are the incentives for only two years?  Can they be expanded?

Congress capped all tax incentives for all energy technologies for two years in the energy bill.  SEIA will work to have these incentives expanded this fall during the development of the tax extenders bill.  In addition, we are working at the state level to develop incentives that complement these federal credits and open up more markets for solar.

D. Summary of Other Key Provisions in the Energy Bill

Below, please find a basic summary of other relevant provisions in the Energy Bill.  Contact Colin at cmurchie@seia.org with any questions on these provisions.

Title II - Renewable Energy
201	Resource Assessment  -  DOE to complete an assessment of the available renewable resources in the US .
202	REPI (Renewable Energy Production Incentive) - per-kWh Production Tax Credit - style incentive to municipalities, tribes, rural co-ops and others unable to take the conventional PTC.  No specific authorized funding level.
203	Federal Purchase Requirement - requires Federal agencies to acquire a specified percentage of their electricity (3% in 2007 rising to 7.5% by 2013) from renewables.  Double credit for production on Federal or tribal lands or buildings.
204	Federal Photovoltaics Purchase - Secretary of Energy to procure at least 150 MW of PV over 2006 - 2010 timeframe for use on Federal buildings.  $50 - $60M / year authorized.
206	Residential Rebate Program - DOE to offer rebates with some restrictions to homeowners who purchase PV, small wind, or biomass energy (high-efficiency woodstove) equipment under low income weatherization assistance program.  No specific authorized funding level.
207	"Sun Wall" at DOE - authorizes one time $20M expenditure for construction of photovoltaic "Sun Wall" project at DOE headquarters.
209	Rural Electrification Grants - $20M authorized annually for transmission and generation construction - including renewables - for rural electrification purposes.
241	Insular Areas Energy Security - DOE / DOI to develop plans for island energy security & disaster hardening.  Includes some provision for distributed solar.
Title IX - Research and Development
921	Distributed Generation R&D - ca. $240M / year authorized to be expended on distributed generation research.
924	Portable Power Demonstrations - Distributed generation R&D to include demonstrations of portable power projects & university partnerships.
925	Electricity Reliability -  R&D programs to include studying integration of residential and distributed generation.
931	Renewable Energy R&D - authorizes $631M in renewable energy R&D for 2007, rising to $852 in 2000.
935	Solar Energy R&D - $140M in 2007 rising to $250 in 2009 for solar R&D.
934	Concentrating Solar Power Research - specifically authorized by Congress.
935	Solar & Renewables on Public Buildings - ca. $40M each year of solar budget to be used for 40% Federal cost share of solar, other renewable generation on public buildings.
Title XII - Electricity
1251	Net Metering - State utilities commissions to consider requiring net metering within two years; not explicitly retail rate; requirement for consideration waived if legislature or state PUC has ruled on it previously.
1252	Time Based Rates - State utilities commissions to consider requiring time based rates within two years; requirement for consideration waived if legislature or state PUC has ruled on it previously.
1254	Interconnection - State utilities commissions to consider requiring IEEE 1547 - based interconnection within two years; requirement for consideration waived if legislature or state PUC has ruled on it previously.
Title XVIII - Studies
1827	Costs and Incentives for Metered Passive Solar - DOE to perform a study on comparative price and incentive levels of metered passive solar vs. photovoltaics.

 

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The following document dealing with Docket No. 05R-112E (Amendment 37 Rule making process) SUPPLEMENTAL REPLY COMMENTS was submitted yesterday (June 15, 2005) to the Colorado PUC on behalf of CoSEIA by our attorney, Gary Nakarado.  

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF COLORADO IN THE MATTER OF PROPOSED RULES ) IMPLEMENTING RENEWABLE ENERGY ) Docket No. 05R-112E STANDARDS 4 CCR 723-3 )  

SUPPLEMENTAL REPLY COMMENTS OF THE COLORADO SOLAR ENERGY INDUSTRIES ASSOCIATION  

The Colorado Solar Energy Industries Association (CoSEIA) requests that the Colorado Public Utilities Commission (Commission) accept the following supplemental reply comments on the Notice of Proposed Rulemaking (NOPR) mailed on March 29, 2005 in the captioned docket. While CoSEIA has joined the Core37 group lead by Western Resource Advocates in their reply comments, CoSEIA, as the trade association for Colorado 's renewable energy industry, believes that its members have a unique perspective from which to provide the Commission comments in its effort to develop the enabling rules and regulations to implement Amendment 37 ("Rules").

CoSEIA's members stand virtually alone before the Commission as participants with real world experience in the Colorado market for solar energy technologies, and as participants in this proceeding with actual experience in the design, construction, sales and service of solar energy equipment in the Colorado market. As a result no group has more to lose from an unwise implementation of Amendment 37 (on the basis of relative economic impact to their very livelihoods) than the mostly small businessmen and women who make up the majority of the membership of CoSEIA.

Thus, based on its members' experience both in the Colorado and other markets both national and international, CoSEIA wants to provide comments meant to encourage the Commission in those directions likely to enhance the market-based success of the Commission's implementation of Amendment 37, and to provide caution where a failure to understand the potential impact of a huge monopoly provider given the unfettered freedom to make it's own rules as requested by the primary utility subject to these rules- Xcel Energy, Inc. ("Xcel") a Minnesota Corporation-could decimate the relatively modest market that has existed in Colorado prior the passage of Amendment 37. Indeed, such harm caused by the manner and schedule of implementation clearly unintended by the citizens of Colorado has already begun, as most potential solar customers have decided to postpone their purchase of our products until they are assured of receiving whatever benefits may be provided under Amendment 37.

I. What Was Intended By The Citizens of Colorado Passing Amendment 37?

In its Initial Comments ("Comments")on staff's proposed draft rules, Xcel often claims difficulty in understanding the meaning of the language of Amendment 37, the Colorado statute enacted as a result, and the draft language proposed by staff in this proceeding. For example, Xcel states on page 2 of its Comments, in part,

"many sections of this statute are ambiguous, making implementation of the statute by Public Service and other utilities a very complicated proposition. Through our proposed rules, we have suggested reasonable interpretations of the statutory language that will foster wise utility spending of the one percent rate increase that the people of Colorado voted to pay for renewable energy. However, because of the complexity of this law, Public Service is still wrestling with many practical problems in implementing this mandate. Public Service reserves the right to supplement these comments, and to offer rule changes, as the issues created by Amendment 37 are debated in this docket."

(Emphasis added)

Statutory construction is a common task of the Commission and all participants in legal proceedings. One of the most important sources of understanding of the meaning of statutory language-beyond the plain meaning of the language-is "legislative history." Fortunately, the citizen's of Colorado in Amendment 37 expressly approved in section 1 of the text of Amendment 37 precisely what will be of great utility to the Commission- SECTION 1. Legislative declaration of intent, which provides:

"Energy is critically important to Colorado 's welfare and development, and its use has a profound impact on the economy and environment. Growth of the state's population and economic base will continue to create a need for new energy resources, and Colorado 's renewable energy resources are currently underutilized.

Therefore, in order to save consumers and businesses money, attract new businesses and jobs, promote development of rural economies, minimize water use for electricity generation, diversify Colorado's energy resources, reduce the impact of volatile fuel prices, and improve the natural environment of the state, it is in the best interests of the citizens of Colorado to develop and utilize renewable energy resources to the maximum practicable extent."

We believe Xcel's opposition to the inclusion of the language of Section 1 in the Rules is misguided, and such opposition to respecting the expressly stated legislative intent is likely a major cause of much of Xcel's apparent inability to understand the meaning of the requirements of Amendment 37. We strongly encourage the Commission to support staff's suggestion in Option 1 to include the language of Section 1. Legislative Declaration of Intent.

To highlight the specific objectives of Amendment 37 expressly stated by the citizen's of Colorado, we state below the specific objectives for the adoption of renewable energy requirements because we believe these objectives are highly relevant and in some cases dispositive in answering any questions regarding the meaning and proper implementation of Amendment 37 to be discussed herein.

Objectives of Amendment 37 Stated In the Declaration of Intent, and stated as the reasons "it is in the best interests of the citizens of Colorado to develop and utilize renewable energy resources to the maximum practicable extent."

•  To save consumers and businesses money,

•  Attract new businesses and jobs,

•  Promote development of rural economies,

•  Minimize water use for electricity generation,

•  Diversify Colorado 's energy resources,

•  Reduce the impact of volatile fuel prices, and

•  Improve the natural environment of the state.

II . The Clear Meaning And Policy Implications Of Public Service's Opposition To Amendment 37 And Its Continuing Belief That The Solar Mandate At The Heart Of Amendment 37 Is "Too Expensive"

After proclaiming its longstanding advocacy for "cost effective renewable resources," Xcel attempts to justify its opposition to Amendment 37 by reiterating its opinion that the solar mandate imposed by Amendment 37 is "too expensive." Quoting the paragraph in full from page 3, Xcel states:

Second, Public Service expressed concern that the solar mandates in

Amendment 37 were too expensive. We still believe this to be true. With the Retail Rate lmpact limit, the practical impact of the solar mandates is to require the utility to spend a large portion of the funds available for renewable energy on the very small amount of megawatt hours generated by solar facilities.

(Emphasis added)

What does this mean? Apparently despite their conflicting statements that their customers have spoken, Xcel has not accepted the passage of Amendment 37 as the law that must be followed according to its terms and intent. Rather, in the remainder of its arguments, assertions, and nothing if not brazen draft rules, Xcel attempts to convince the Commission to give it the "flexibility" to in effect let it write its own rules, in order to "wisely spend the Amendment 37 increase" by urging the Commission to "enact rules that give utilities the flexibility to obtain renewable energy in a cost-effective manner. We urge the Commission to avoid rules that would artificially limit our opportunities to find the best deals that the renewable energy market can offer."

And how does Xcel suggest that it would ".wisely spend the Amendment 37 increase"? By asking the Commission to ignore the plain meaning of the statute that, of the renewable generation mandated by the law " AT LEAST 4% SHALL BE DERIVED FROM SOLAR ELECTRIC GENERATION TECHNOLOGIES. AT LEAST ONE-HALF OF THIS 4% SHALL BE DERIVED FROM SOLAR ELECTRIC TECHNOLOGIES LOCATED ON-SITE AT CUSTOMERS' FACILITIES." Rather, on page 21 of its Comments, Xcel proposes the following:

Based upon Public Service's current estimates of the differences in

the costs of solar and non-solar renewable technologies, Public Service recommends that a utility be deemed to have complied with the three Renewable Energy Standards so long as the utility spends at least 10% of the approved budget for the Compliance Period on Eligible Renewable Energy from On-Site Solar Systems and at least 20% of the approved budget for the Compliance Period on Eligible Renewable Energy from solar technologies (including On-Site Solar).

This is a proposal that in the factual circumstances which exist today, and which are known to Xcel, is at best misleading. As noted in the Core37 Reply, "in presentations made as recently as April of this year, Xcel has indicated that it has already acquired sufficient resources to achieve this standard through 2010, and is in negotiations for additional resources that will result in compliance through 2014." Given those factual circumstances, it is disgraceful in the extreme that Xcel would argue to spend only 20% of the available cap on solar technologies even though solar technologies represent 100% of its mandated obligations at least through 2014! Unless this proposal is some form of corporate civil disobedience based on Xcel's continuing belief that meeting its obligation of the solar mandate is "too expensive" CoSEIA urges the Commission in the strongest terms to reject this implementation of a "safe harbor" budget.

While flexibility may often be a good thing, and can be especially useful when allowing private sector organizations to use their ingenuity and the creativity inherent in the marketplace to meet clear objectives-that is not what is being requested here. Rather, the practical effect of the "flexibility" requested by Xcel would be to ignore the clear objectives of the 4% solar mandate contained in Amendment 37, and allow Xcel to ignore the law with no danger of penalties because in its wisdom it continues to believe solar technology is too expensive.

There is a related point that might be examined here, which is that throughout the Reply Comments, the draft rules, and it's general approach to the implementation of Amendment 37, Xcel attempts to cloak itself in the language and concepts of the free market, thereby attempting to convey the overall sense and conviction that as a large and successful business, the people of Colorado and the Commission can rely upon its long experience in the electric utility business, its past reputation for public spirited contributions to the community, and overall electric industry competence to do the right thing, and to do it knowledgably and skillfully.

With due respect to Xcel's knowledge and experience operating as a public utility, nothing in the history of regulated monopolies suggests that such an assertion is true! Similarly, it is very important to remember, particularly when so much trust is placed in the market place today to achieve the public good that such trust is based on the assumption of a free and competitive market place, and xcel is a large monopoly protected by the laws of the state of colorado from retail competition. There is no free and competitive marketplace in colorado for the provision of retail electric service.

T herefore, it is incredibly important to the small businesses and even medium size businesses who are members of CoSEIA that the Commission not rely on a non-existent competitive marketplace for electricity to ensure fairness and the benefits of competition. In fact, a very good argument can be made that given the incentive structures in place and applicable to Xcel, and in the absence of aggressive audit and review of performance and the expectation of significant potential penalties, Xcel's most profitable course of action would be to spend all the money available to it pursuant to Amendment 37 and receive in return as little renewable energy as possible, thereby continuing to sell as much traditional energy as possible through it's system and minimizing any potential threats of a "disruptive technology.¹ " Even more frightening with the increasing misused concept of management's "fiduciary duty" to maximize "shareholder value," at the expense of the common good, there are doubtless serious corporate counsel who would argue that it is a breach of the management of Xcel's fiduciary duty to their shareholders if they do not seek to minimize both the cost and the effectiveness of their performance under the obligations of Amendment 37. Only clear and enforceable rules, with penalties that are certain to be applied upon violation, and the expected value of which are more costly than compliance can have the effect of "incenting" a rational economic actor to carry out the wishes of the people of Colorado. This conclusion would be reached whether the decision maker was a fan of classical economics or public choice theory, or subscribed to The Nation or Law & Economics.

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(1) A disruptive technology is a new technological innovation, product, or service that eventually overturns the existing dominant technology in the market, despite the fact that the disruptive technology is both radically different than the leading technology and that it often initially performs worse than the leading technology according to existing measures of performance. The term disruptive technology was coined by Clayton M. Christensen and described in his 1997 book The Innovator's Dilemma

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This conclusion in turn leads to extremely strong arguments against much of what Xcel requests in its Comments and draft rules, and for what has been recommended by Core37, including:

•  For an independent administrator

•  For annual compliance reviews

•  For flexibility only within the strict requirements of clear and enforceable rules, third party administrator, and the annual compliance reiview.

•  Against allowing lengthy compliance periods

•  Against safe harbor provisions enabling Xcel to ignore and circumvent the clear meaning of Amendment 37.

III. The Clear Statutory Requirement of an "Individual Compliance Year" Rather Than Xcel's suggested "Four Year Compliance Periods "

As part of its overall effort to convince the Commission to provide utilities subject to Amendment 37 with as much "flexibility" as possible, to minimize the possibility of penalties ever being assessed whatever their performance, and to delay any requirements as long as possible, Xcel suggests that the Rules utilize " Four Year Compliance Periods."

CoSEIA believes this would be reversible error on the part of the Commission as the plain language of the statute, as amended in 2005, with full participation of Xcel in the legislative process, provides for "AN INDIVIDUAL COMPLIANCE YEAR" in the very paragraph that requires "Rules necessary for the administration of this article including enforcement mechanisms necessary to ensure that each qualifying retail utility complies with this standard, and provisions governing the imposition of administrative penalties. Colorado Revised Statute 40-2-124(1)(i) now provides (2005 amendment shown in CAPS)

(i) Rules necessary for the administration of this article including enforcement mechanisms necessary to ensure that each qualifying retail utility complies with this standard, and provisions governing the imposition of administrative penalties assessed after a hearing held by the commission pursuant to section 40-6-109. THE COMMISSION SHALL EXEMPT A QUALIFYING RETAIL UTILITY FROM ADMINISTRATIVE PENALTIES FOR AN INDIVIDUAL COMPLIANCE YEAR IF THE UTILITY DEMONSTRATES THAT THE RETAIL RATE IMPACT CAP DESCRIBED IN PARAGRAPH (g) OF THIS SUBSECTION (1) HAS BEEN REACHED AND THE UTILITY HAS NOT ACHIEVED FULL COMPLIANCE WITH PARAGRAPH © OF THIS SUBSECTION (1). Under no circumstances shall the costs of administrative penalties be recovered from Colorado retail customers.

(Emphasis Added)

There are other sound reasons and arguments that support the use of an annual compliance period, including:

•  Using the earliest hard data available, as soon as it is available, in reviewing the progress of the implementation of Amendment 37 will provide the Commission with the quickest and most effective opportunity to make adjustments in the implementing regulatory regime. While it is unlikely that whatever the ultimate determination of the Commission is in this proceeding will be the best possible for the people of Colorado, the critical element to converging on the best possible regulatory framework is for the Commission to review progress frequently, as soon as possible, and with full flexibility retained BY THE COMMISSION, to make appropriate adjustments. This approach will enable the Commission to avoid many of the potential Worst Case Scenario's set forth in the penultimate section of these Supplemental Reply Comments.

•  Use of "four year compliance periods" will increase the likelihood that major, thus more costly and more controversial and much more difficult for the Commission, adjustments and or administrative penalties will be required.

•  Earlier and more frequent administrative reviews will allow quicker and likely smaller adjustments in response to market information gained in the process.

IV . The Misdirected Approach Of Defining The Requirements Of Amendment 37 As Expenditures Rather Than The Measures Of Success Specified By The Statute.

The rules adopted by the Commission should require measures of meeting the objectives of Amendment 37 - not activities or expenditures as set forth in Xcel's proposed section 3654(j). The amendment was not passed to increase expenditures on renewable energy, it was passed to increase the percentage of renewable energy generated and used in our economy. The most significant lesson that has been learn in renewable energy policy in the last three decades is to measure and incent what is sought-production-not expenditure, except where administrative costs would be prohibitive.

•  Providing Xcel With The Right To Essentially Write Its Own Rules, To Avoid Substantive Review Of Its Performance Until 2011, And Only Every Four Years Thereafter, And To Avoid The Potential Imposition Of Penalties Through Mere Expenditures Rather Than Achievement Of The Objective Standards Set Forth In Amendment 37, Will Greatly Increase The Likelihood That The Commission Will Be Faced With Substantial Criticism For Having Allowed The Implementation Of Amendment 37 To Develop Into "WORST CASE SCENARIOS"

While CoSEIA believes that the technical and legal facts and arguments presented in these comments are more than sufficient basis for rejecting those proposals of Xcel addressed, as contained in its various submittals in its Reply Comments and Draft Regulations, CoSEIA also wants to illustrate some of the results that would be permissible under the Xcel proposals. We believe that the results described below, permissible under the proposals of Xcel and in most cases safe from any potential penalty, would be unacceptable outcomes in the view of the people of Colorado and likely the legislature, and certainly the hypothetical "reasonable man or woman" who voted for Amendment 37.

Worst Case Scenario # 1

No Renewable Energy Generation Built in Colorado . Xcel creates a new subsidiary in Texas called Xcel Solar. As part of a "cost cutting" program Xcel transfers excess staff from throughout its system, presently consisting of 10, 650 total employees,² to Xcel Solar. Xcel Solar, on behalf of Colorado entity subject to Amendment 37 contracts with off-shore suppliers for photovoltaic panels and other necessary equipment and in 2010 spends 20% of the cap limit in 2010 on a single PV installation "onsite" installation under a contract with the Airport Authority at the Dallas-Ft. Worth Airport using only its own employees. Xcel's Colorado subsidiary acquires all RECs of the installation in a private contract for Colorado Amendment 37 purposes. No penalty, no Colorado jobs or business, no Colorado development.

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(2) All Xcel facts obtained from current public web site data. See www.xcelenergy.com.

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Worst Case Scenario # 2

Same as # 1, but Xcel enters into contract with DIA as its Colorado customer to construct a single showcase PV installation, to meet its "onsite" and offsite solar mandate, constructs using its own employees, and thereby fully meets the onsite solar mandate.

Worst Case Scenario #3

No Solar Generation in Colorado , But More Than Enough Total Renewable Energy Generation In The Form Of Wind Acquired. Under the guise of its right to exercise flexibility in its wise investment of it's 1% cap each year, Xcel continues to acquire cost effective (under normal traditional utility least cost planning principles) wind generation with 80% of its "budget" and spends the other 20% of its "budget" in acquiring Solar RECs in Nevada from "customers" of its Solar Division, and because of competition for RECs, appears to exceed the cap on expenditures. Xcel relies on proposed 20% "safe harbor" to avoid penalties.

Worst Case Scenario # 4

No Colorado Businesses or Employees Are Involved In Xcel's Plan To Carry-Out Its Obligations Under Amendment 37, And No Renewable Energy Generation Is Constructed In Colorado Through 2010. Xcel notes in the Commission review that takes place in July of 2011 that by acquiring the necessary wind and Solar RECs from out of state, and perhaps from out of country wind providers, it has minimized the cost of Amendment 37 to its ratepayers, and has violated nothing in the rules adopted by the Commission or the statute. It dismisses any reference to the Legislative Intent in Amendment 37 relating to " attract new business and jobs, promote development of rural economies, minimize water use for electricity generation, diversify Colorado 's energy resources" as irrelevant and not reasonably related to its obligations under Amendment 37.

Worst Case Scenario # 5

Xcel invests its 20% "solar budget" through 2010 to use its own employees to in the design, installation and operation of solar generation technologies on and offsite at a cost that is 150% higher than could have been obtained using competitive bids and Colorado 's indigenous solar industry. Assuming that the cap is exceeded, under proposed 3654(j) Xcel avoids any penalties at its Four Year Compliance Period review in July of 2011 by

•  Noting it met the 20% expenditure safe harbor

•  Claiming good faith efforts in utilizing its own "utility grade" personnel who were necessary to avoid significant reliability issues.

•  Noting that Colorado 's independent solar energy industry was free to compete in the marketplace

Worst Case Scenario # 6

Believing that any expenditure on solar energy technologies is "unwise" due to the relative cheapness (in short-term costs) of coal generation, and that the potential success of such a potentially disruptive technology is a strategic threat to its business model, largely based on large central station power plants, Xcel simply ignores the solar obligations of Amendment 37, but points to its more than sufficient total wind production over the four year period, such wind production on traditional least cost planning principles. Unable to act until July 2011, the Commission imposes the maximum "administrative" fine in its history.

Worst Case Scenario # 7

Same as # 6 but Xcel puts most of its efforts into the appearance of trying very hard to do the right thing because of its "obligation to serve", and to ensuring that the efforts toward renewable generation it does make are sufficient to avoid any potential penalties. Unable to act until July 2011, the Commission considers the imposition the maximum "administrative" fine in its history-but is unsure of its authority to enforce a multimillion dollar fine as an "administrative penalty" in the absence of clear rules (with a formula basis rationally grounded in the consequences of non-performance) in existence for the full period of non performance.

Worst Case Scenario # 8

Public Service Company of Colorado 's (PSCO's) overall approach to date has been to oppose the creation of significant penalties and to oppose the Commission's prescription of detailed requirements that might lead to the imposition of any such penalties. Rather, PSCO argues in general for the "flexibility" to develop its own plan for compliance, to minimize reporting obligations, and to postpone the effective date of clear objective requirements through the use of inappropriate "rolling averages." COSEIA wishes to warn the Commission in the strongest possible way of the likelihood that if it should acquiesce in adopting PSCO's wish list of non accountability in creating the regulatory framework for Amendment 37, it is virtually certain to be faced with a request for the non imposition of penalties sometime after the first failure for which the rolling averages might apply on the grounds that PSCO used its "best efforts" and otherwise made a "good faith" effort to meet its obligations, but due to the fault of others, or no one, it was unable to meet the Amendment 37 requirements. For an example of precisely this occurrence for similar reasons in Nevada see " Nevada utilities seek break for failing "green power" mandate" dated April 2, 2005 , Las Vegas Review-Journal

Worst Case Scenario # 9

In 2011, After Reviewing Xcel's Performance Through The First "Four Year Compliance Period" and finding that the Solar Mandates Had Not Been Achieved, The Staff And Commission Express A Strong Direction For Xcel To Utilize The Independent Solar Businessmen And Women In Meeting Its Obligations Under Amendment 37 Unfortunately, as a result of continuing uncertainty as to when any available rebates or other incentives might begin, and how individual citizens might qualify for such rebates, followed by Xcel's announced intention in 2009 to build a "showcase" "onsite" PV installation for the entity operating Denver International Airport that would fully meet its solar mandate obligations using its own employees, no such independent small businessmen and women can be found. By completing the construction and thus meeting the expenditure safe harbor, Xcel meets its Amendment 37 obligations and Colorado 's indigenous Solar Industry has been destroyed.  

VI. Conclusion

In these difficult and confusing regulatory times, coupled with a growing dichotomy at the national level about the appropriate role of government in regulating business conduct, the Commission is urged to utilize all of the traditional and reasonable regulatory tools available to it to create a regulatory environment to carry out the mandate of Amendment 37 that is:

•  Reasonably based on the rational expectations of the likely behaviors of parties to the necessary transactions

•  Utilizes regulatory incentives and penalties that can be expected to result in the desired behaviors

•  Minimizes transaction costs and regulatory burden where possible by eliminating the potential for likely need of enforcement action

•  Obtains information through feedback mechanisms as early as possible and adjusts the regulatory mechanisms as quickly as reasonably possible to respond to such market based feedback in order to meet the objectives of Amendment 37 as effectively as possible.

CoSEIA thanks the Commission for the opportunity to provide these Supplemental Reply Comments and looks forward to providing additional testimony from the independent businessmen who make up its membership at the hearing.

Dated this 15 th day of June, 2005. Respectfully submitted,

Jon Klima
President
Colorado Solar Energy Industries Association

 

Gary L Nakarado #9113
24657 Foothills Drive North
Golden , Colorado , 80401
Telephone 303-638-1672
Fax: 720-294-0008
Email: Gary@Nakarado.Com
Attorney for: Colorado Solar Energy Industries Association

 

April 02, 2005
Nevada utilities seek break for failing `green power' mandate
ASSOCIATED PRESS

LAS VEGAS (AP) - Nevada 's two largest utility companies have asked state regulators to exempt them from fines for failing to meet the state's renewable energy requirements last year.

Nevada Power Co., which serves southern Nevada , failed for a second straight year to satisfy the 2001 state law that requires it to get 5 percent of its power from renewable sources.

Sierra Pacific Power Co., which serves northern Nevada , satisfied the 5 percent requirement because of existing contracts with geothermal power plants, but failed to meet a requirement that 5 percent of its total supply come from solar power.

In addition, the utilities reported they did not issue a request for renewable energy proposals last year.

The 2001 state law requires the utilities to gradually increase their use of renewable energy until 2013, when they must produce 15 percent of their energy through solar, wind or geothermal sources.

In a report obtained by the Las Vegas Review-Journal, the utilities said they signed 17 long-term contracts for renewable energy or credits for renewable energy from new sources. Of those, the Public Utilities Commission has approved 14.

Nevada Power of Las Vegas and Sierra Pacific of Reno had planned to meet most of their renewable power requirements by contracting with renewable power plants that would sell all of their output to the utilities.

"However, within months of having obtained commission approval of the initial contracts, several developers began to report difficulties in bringing their projects on line," the utilities said.

The utilities said four contracts were terminated and delivery of power from five other projects will be delayed by one year or more.

The utilities reported success with a program that offers rebates to residential customers who install solar power panels at their homes and encourages solar projects at nonresidential buildings.

Last week, a Nevada Senate committee recommended passage of a bill that would reward Nevada Power and Sierra Pacific for helping customers install renewable energy products in their homes.

The bill would give the utilities credits toward conservation obligations for every kilowatt hour saved through renewable energy measures.

The bill is the result of the 2001 legislation that beefed up renewable energy requirements for the utilities.

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Information from: Las Vegas Review-Journal, http://www.lvrj.com

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The following letter was forwarded to the Colorado PUC on March 21, 2005.

CoSEIA Comments to the Colorado PUC Regarding Amendment 37 Rule Making

The Colorado Solar Energy Industries Association (CoSEIA) represents Colorado 's solar energy equipment suppliers, installers, manufacturers, and developers. We are business oriented, represent both large and small companies, and are distributed throughout the entire State of Colorado. 

Local industry participation and leadership is essential in crafting realistic and productive Renewable Energy Standard (RES) rules. The Legislative Intent statement in Amendment 37 (A37) stated plainly that the people of Colorado want not just more renewable energy, but renewable energy that would create more jobs and economic development. Section 1 of the Full Text of the Initiative stated:

SECTION 1. Legislative declaration of intent:

Energy is critically important to Colorado 's welfare and development, and its use has a profound impact on the economy and environment. Growth of the state's population and economic base will continue to create a need for new energy resources, and Colorado 's renewable energy resources are currently underutilized.