Xcel proposes to cut fair pay for Community Solar; violating contracts

Xcel Energy is once again proposing massive cuts in fair pay for community solar which is a foothold communities have against a future corporate monopoly of renewables. 

It is very disturbing that the MN Public Utilities Commission (PUC) is even considering such a clawback rate change proposal that would allow Xcel to unilaterally renege on their agreements and force thousands of Minnesotans who were promised lower bills by signing 25-year community solar contracts to have to pay hundreds of dollars more per year. 

 Specifically, in docket #13-867, Xcel is wanting to change the bill credit rate that subscribers to Community Solar Garden projects built from 2014 to 2018 from the Applicable Retail Rate (ARR) to the 2017 Value of Solar (VOS). There is no need to get into the technicalities of the ARR and the VOS to take a stand here because the implications are simple.

  • If the MN PUC rules in favor of Xcel, then subscribers to these early community solar projects built would face a 31%-35% drop in the bill credit Xcel is required to pay them. For example, as a subscriber to the Cooperative Energy Futures Ramp A project, I currently get a bill credit of $0.17252 per kWh. Switching to the 2017 VOS would lower that bill credit to $0.1185 per kWh which would cause subscribers like myself to pay around an extra a dollar a day for electricity or around $350 per year. 
  • This radical and dangerous proposal is a violation of contracts and is arguably illegal. For Xcel to reverse the compensation method that they have committed to paying these early Community Solar subscribers is changing the terms of a signed 25-year contract after the fact. All parties to the deals were relying on the ARR staying in place as the measure for credits for the 25 year length of contract. It would be a breach of trust that would no doubt have a ripple effect that chills trust in state and utility action across the board. Trust in both are fragile and precious. 

Xcel also tried to gut fair pay for community solar back in 2016, prompting Community Power to organize a street theater demonstration in front of Xcel's HQ and release this short video with the same title. In 2015, Community Power and Partners also organized our "Slow Walk" street theater action outside Xcel's corporate offices. Because Xcel could not legally slow-walk the approval of community solar applications, their next move in 2016 was to try to shrink their financial incentives to shrink the market for their competition. 



Here is a short summary of the additional reasons to be strongly against switching the bill credit rate for subscribers to early community solar gardens from the Applicable Retail Rate to the 2017 Value of Solar rate, as Xcel Energy has proposed in docket 13-867:   

  1. A 31%-35% drop in what Xcel pays as a utility bill credit will disproportionately harm the low to moderate-income residents as well as many cities, churches and schools who are trying to do the right thing. 
  2. Confiscating these financial benefits would unfairly penalize community solar providers who are committed to breaking down barriers for ordinary Minnesotans to participate in the clean energy economy and give preference to Xcel's corporate structure.
  3. It would tarnish Minnesota’s reputation as a reliable state for solar investment and harm the future of solar development statewide if the MN PUC grants Xcel permission to retroactively renege on contracts.
  4. Minnesota's nation-leading community solar program was already reformed to become more equitable and accessible in 2023. We need to give it a chance. 
  5. We have every reason to be skeptical when a utility lobbyist tries to undermine community solar. Similar investor-owned utilities have admitted (on the witness stand!) that their motive to fight consumer-owned solar was actually about prioritizing shareholder profits, rather than some altruistic effort to lower customer’s electric bills.
  6. Contrary to what Xcel lobbyists typically tell the PUC or the state legislature, the cost of electricity from community solar is actually quite similar to utility scale solar. Community solar delivers numerous benefits relative to utility scale solar and it is dishonest to spin a public narrative that only considers costs and does not take these benefits into account. 

To avoid confusion, one extra detail worth explaining about the VOS is that it is a complex calculation that changes each year. Currently, the VOS is around $19.09 cents per kWh. It is far higher than it was from 2017. A big reason why the 2017 VOS is outdated is that it was using the Minnesota state numbers for the social cost of carbon. The new 100% renewable electricity by 2040 law has a requirement that the state social cost of carbon has to match the federal social cost of carbon. 

See further explanations for these 6 reasons, by clicking below: 

Reason #1  A New Story of Renewable Power: Saving Money rather than Paying Extra 


These changes would impact low to moderate-income residents who subscribed to Community Solar between 2014-2018, as a win-win solution to support the renewable power economy while also being able to save money on our electric bills. Receiving bill credits under the Applicable Retail Rate enables that. Xcel’s proposal would close off the pathways for these community solar customers to be able to use their subscription as a way to save on their utility bills. It would turn community solar into just another premium product from Xcel which customers could pay just a bit extra for if they choose (in the model of WindSource). Such a move would reinforce a dangerously outdated and quite alienating perception of renewable power as being a small niche market for the affluent. We instead deserve a new story of renewable power as a pathway to prosperity. MPR News shares a key example of this new story in their article “Power to the people': Efforts to ensure equitable clean energy transition”. Community solar is currently the most viable path which enables us to provide a successful example of this new story.

Reason #2   Equity and Access 


Not only will this dangerous proposal cause disproportionate harm to low-to-moderate income community solar subscribers, as well as many cities, churches and schools. It would financially damage the community solar providers who are trying to do well by doing good- by breaking down the barriers that renters/ low to moderate income households would otherwise face to participating in the clean energy economy.

Xcel's proposal will not affect subscribers in the new version of the community solar program. However these changes could make it harder to finance community solar projects in the new program. It would very likely hamper the ability for community solar providers to get new subscribers for the new program because they may lose trust and think that the PUC may change their bill credit rates later.

If Xcel can unilaterally change the terms of their agreement to flip a consumer's solar investment from a solar savings asset to a net loss liability, then why would anyone want to sign on? If Xcel could turn customers investments in community solar from something that saves them money into something that costs them money, it will be way harder to convince new customers to invest in community solar. 

Reason #3  Don't Chill Solar Investment 


And yet, there are even higher stakes. If the MN PUC gives in to what Xcel is asking for, then it would tarnish Minnesota’s reputation as a reliable state for solar investment, and harm the future of solar development statewide. If the MN PUC grants Xcel permission to retroactively renege on contracts with existing community solar projects, then of course it would hurt solar financing in MN. That is why utility scale solar developers are also speaking in opposition here. 

When the MN PUC denied the majority of Xcel’s requested increase to their guaranteed profits back on June 1st, Xcel spokespeople responded in the next Minneapolis Clean Energy Partnership board meeting that their investment pool would dry up as a result of receiving a lower amount in guaranteed profits and that they would thereby not be able to attract enough capital from investors. In a bit of irony, Xcel is appealing a recent rate case lowering its profit margin on similar grounds. Xcel in their public statements does not want to be faced with financial uncertainty. So why is it ok to impose on some Community Solar subscribers what they say should not be done to them?



Minnesota’s community solar program is responsible more than anything else for the growth in solar energy made in the state. It was only rather recently that Xcel even became willing to invest in utility scale solar. 

Minnesota had next to no solar in 2013 when there was a successful effort to get the legislature to pass a law that allowed community solar financed by third party companies. After a slow start in its first few years, it really took off and became what is arguably the nation's most successful community solar program. 

There are 860 megawatts of community solar on Xcel's system as of December 2022, which is at least for now, is a way higher amount than the solar owned by the utility (as cited in the articleMinnesota regulators vote to move forward the third large Xcel solar project in Becker”)


Reason #4: Give the new Community Access program a chance 

What is most frustrating about the timing of Xcel’s request is that leaders in the state legislature have already listened to and addressed Xcel's stated concerns about community solar in 2023. In response, the State Legislature passed “Community Access” reforms that struck a careful balance between the stated concerns of the utility and the interests of solar companies and consumers.

What Xcel is posing to do now is to undo this careful balance for a very unbalanced outcome of essentially being granted permission to retroactively renege on contracts with earlier community solar projects.

The Community Access legislation was a response to one valid critique in how Minnesota’s community solar program unfolded. For a while, it ended up disproportionately benefiting large businesses over residential customers. This is an outcome which arguably goes against the intent of the original 2013 community solar law. 2023 finally saw the passage of Community Access legislation to correct this imbalance, making it more equitable and accessible to lower income residents. With a cap on the overall program as an apparent bargaining chip, it traded some reductions in compensation for projects serving businesses in exchange for much greater access for low-income and ordinary residential participants.

Xcel’s response to this was apparently one of “We still don’t like it so we will change the bill credit rates on past community solar gardens.”

The newly revised community solar program with community access reforms has barely event started yet. So why tweak it? Let’s see how it works and let it ride. 



Reason #5: Utilities have motivations to misrepresent costs


Xcel’s stated motivation for making this proposal is (found in a Star Tribune Article, Predictions of soaring costs spark fresh debate over Minnesota's community solar program )is that they came up with their own forecast that the cost of the overall community solar program would rise to $329 million in 2024.

They compare the cost of community solar vs. the utility scale solar (which they apparently prefer) in a manner that resembles comparing apples to oranges. They separately calculate the costs of community solar by using the locational marginal price which is the drop market price for wholesale electricity (a mix of clean and dirty electricity) traveling on MISO to assess the costs of utility scale solar. For clarification, the VOS does not have a Locational Marginal Price. The LMP and VOS are two separate and unequal pricing schedules. Electricity from community solar that is produced and delivered close to consumers can’t be compared to wholesale power delivered to the regional transmission grid that requires some additional costs to deliver to customers. The latter is a mixture of clean and non-renewable energy at any given time its price is not guaranteed.

Considering the financial incentives that monopoly utility companies have, we have every reason to be skeptical of when they make claims in attempts to undermine community solar. Investor-owned energy utilities in general receive guaranteed profits by the state for building & owning both power generation and power lines. To state it simply, community solar directly competes, on a limited grid, with the type of utility-owned power generation which yields greater profits for their shareholders.

To clarify, Xcel does not directly receive money by switching to the bill credit to the 2017 VOS. They benefit by not having anything else built on the grid which allows them to build more generation which makes them money.

The Institute for Local Self-Reliance estimated (back in 2019) that if the 500 megawatts of community solar in operation back in 2019 were owned by Xcel instead, then its shareholders would have earned over $100 million extra.



When utilities try to misrepresent the costs of community solar to serve their interests, they often leave 2 things out: They don’t account for the cost to deliver the electricity or for shareholder dividends.  

 As far back as 2016, I personally watched an Xcel Energy spokesperson trying to justify lowering the bill credit for community solar to an administrative law judge for the MN PUC by invoking the narrative that community solar causes huge cost shifts onto non-participating customers who don’t subscribe to a solar farm. The images of these 2 hearings is below (along with some tweets.)


Xcel has around 100 lobbyists who have a motive to be misleading about the costs of community solar while obfuscating the benefits of community solar in order to defend the company’s market share. If Xcel recently proposed to increase Minnesota electricity rates by nearly 22%, then how can we trust their claims that their proposals to undermine the viability of community solar are some sort of altruistic effort to lower our electric bills?

There was another utility which has admitted under oath to the Arizona Public Service Commission that their motive to fight consumer-owned solar was actually about their shareholder profits, not customers' electric bills. It can be found in this articleAPS Witness: Utilities prioritize shareholder profits over customer-sided renewables.” 

It seems more likely that Xcel's motive is to reward shareholders at the expense of more equitably distributed models for solar ownership.

Yet some of the MN Public Utilities Commissioners have apparently already bought into Xcel’s narrative that community solar is the most expensive type of solar. That is because the MN PUC asked Xcel to come up with a proposal based on that narrative and Xcel chose the 2017 Value of Solar (VOS).

I sincerely hope Public Utilities Commissioners think about this issue differently and take a net cost/ benefit perspective about community solar. This means to consider how the benefits of the community solar program outweighs the costs involved. This means taking Xcel's allegations with a grain of salt rather than presuming the narrative that Xcel states to be neutral. There is a high likelihood that the utility has ulterior motives for not giving the benefits of community solar the full recognition that they deserve.

Judging from what I saw in Xcel’s “doing solar right” commercials a number of years back, Xcel’s public narrative is that utility-scale solar saves ratepayer dollars relative to community solar. But their private motive is likely different. Deploying new solar power in a way that mimics the central station power plant model tends to make the power generation easier for utilities to own, control and rate-base.

Reason #6: Account for the Benefits 


In a study published earlier this year, the Institute for Local Self-Reliance concluded that the costs of electricity from solar projects of all sizes are quite similar whether it is utility scale, community arrays or rooftop. But local solar includes a few more benefits!  


Minnesota’s Community solar program, as it stands, delivers these benefits:

1) Pollution free power serving 3% of Xcel's sales.

2) Cutting bills for over 25k subscribers.

3) Saving public entities $1 million per year.

4) Thousands of jobs created

5) payments to mostly rural landowners

6) more equitable distribution of profits from solar

7) and more access for low to moderate-income Minnesotans.





In addition, here are some of the drawbacks to deploying solar power in a way that mimics the central station power plant model:

1) If the generation is far from the load, then it is less efficient.

2) There are resiliency and reliability risks to having power centralized such as if clouds cover up the solar array for extended periods of time. (This risk along with the others listed can be mitigated with more distributed generation).

3) If the people who live near these large facilities and are not offered community buy-in, this can cause public sentiment to unnecessarily sour on solar.

4) It concentrates profits in the hands of companies that can afford to build large generation facilities which tend to be Investor-Owned Utilities.

5) Generating power more distant from load is more likely to include the costs for adding in new high voltage transmission lines and the legal costs for citing these lines. I am worried that critics of the community solar program are not properly taking these costs into account. If any of these new high voltage transmission like projects get politically dicey, then it could pose a delay in Minnesota being able to meet its 2040 renewable electricity goals. That is unless the alternative is considered. Making it easier to add community solar at the distribution level will increase the ability for Minnesota to meet its 2040 renewable electricity goals. To that point though, Xcel’s project for a utility scale solar farm at the site of their retiring coal plants in Becker MN make sense because the transmission line infrastructure is in place.  

To conclude: We do not need to have a divisive a black-or-white, either-or argument regarding whether we should do community solar versus utility scale solar. Utility scale solar developers do not want this proposal either because it sets a precedent for reneging on contracts. Because Minnesota has a 100% renewable electricity by 2040 goal but still gets 45% of our electricity from polluting coal and gas, we need every electron of clean energy we can get. So therefore, community solar should be part of it rather than being quashed because of how some Xcel shareholders may feel about it.


We don’t have to be stuck with a conflict of interest between the utility’s customers and their legal obligation to maximize value to its shareholders.

One investor-owned utility in Vermont called Green Mountain Power became a certified B Corporation nearly a decade ago. This status means the company now has legal commitment to what is known as a triple bottom line––not just shareholder but also society, and environment. And this move has actually improved Green Mountain Power’s overall profitability.

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