Power Company and Solar Garden Subscribers Clash Over Proposed Billing Change

(KNSI) — A requested change by a power company on how bill credits are calculated for solar garden subscriptions could cost taxpayers millions.

The solar garden program was created by the Legislature in 2013. It allows ratepayers to subscribe to third-party solar operations. Subscribers then get a bill credit from Xcel Energy for what it must take from the gardens. The Public Utilities Commission is considering converting bill credits from the applied retail rate (ARR) to the value of the solar rate (VOS). In an email sent from Xcel Energy to KNSI News, it says the change would save all customers $48 million, but critics say it would do so on the backs of local governments.

St. Cloud and Sauk Rapids are among the dozens of cities, counties, and school districts that would need to pony up more under the proposal.

St. Cloud was one of the earliest to jump on the solar bandwagon. Public Utilities Director Tracy Hodel told KNSI News Xcel needed them to get things going. “They really targeted government organizations and school districts and things like that as their anchor tenants. At least 20% of the garden [are anchor tenants]. They need to have so many anchor tenants to move forward where the investors will be able to construct these community solar gardens.”

Hodel feels it’s unfair to rewrite the rules halfway through the game because governments are counting on those savings over the life of a contract. “I think it’s punishing the people that really did the work, took the effort, did all the financial analysis and ran through the numbers to work with their boards and their councils to say, ‘Hey, this is a great thing for our community.’ And it’s unfortunate that they’re proposing some drastic changes to those terms.”

St. Cloud’s earliest contracts are locked in at fixed rates, guaranteeing them some savings, which it has used in the past to build some of its 14 city-owned solar gardens, like the one on top of the water treatment plant at Hester Park. But the change would affect the deals adopted in the last few years.

Hodel is concerned for groups who were late to the solar game. “There are communities and a lot of government agencies that will potentially lose money with this drastic change in a 25 year agreement. We’re just not understanding how you can sign an agreement and they are able to change the terms in such a short period of time like this.”

St. Cloud ran the numbers and said they would have lost about $700,000 in savings in 2023. Over the life of its current 20-year contracts, they estimate losing about $20 million in savings.

If the new credit formula is passed, Sauk Rapids will also be dealt a blow. They have two solar garden contracts, and one will be impacted. The deal has 18 years left on the 25-year ARR contract. While they haven’t done the math to figure out how much it will cost the city, Public Works Director Todd Schultz is bewildered that the state is considering this. “It’s unfortunate that the Legislature would create a program like this for its local governments and then, just seven years into it, change the rules after its local governments are contractually obligated based on the legislation that they actually created.”

Xcel says it has raised concerns about the solar garden program’s cost compared to other market solar options for years, and the bill credits were instrumental in getting community gardens started, but over the years, other solar options have become cheaper or more cost-effective. According to the utility, community solar gardens make up approximately 30% of fuel costs, which all customers pay regardless of their participation in a solar program. However, solar gardens only generate only about 4-5% of its energy.

By reducing the solar garden bill credits, Xcel claims the average residential customer would save between $1.28 and $12.31 a year. Without changes, the program will cost $329 million in 2024. Xcel says 93% of that will be paid by ratepayers, with the average residential customer coughing up about $7 a month in 2024, compared to $4 in 2022.

The final decision is up to the PUC. St. Cloud and Sauk Rapids have joined other agencies in signing a letter opposing the new rate.

___