On March 1, Holy Cross Energy (HCE) informed its customers that the Glenwood Springs-based cooperative’s electricity-rate structure was being significantly modified. The first round of the new rates, which are to be rolled out over a period of three years, are set to take effect starting Sept. 1. In addition to an overall increase in rates, the rate structure itself is being overhauled, and this has generated opposition from advocates for residential and commercial rooftop solar-power generation.
The new plan
The most significant change involves the energy charge — until now a single item on electric bills — that henceforth will be split between the cost to HCE of the electricity itself and the “delivery charge” (i.e., the cost of the infrastructure needed to supply that power to its customers). Another major change will be the implementation of a “peak demand charge” for all customers (currently only being levied for large residential and large commercial customers); based on a formula derived from a measured power usage in a 15-minute period between 4 and 9pm sometime during the month, customers will be assessed $1.25 per kilowatt, increasing to $3.75 per kilowatt in 2025.
One final rate change will be an increase in the flat-rate “membership fee” (formerly called the “customer charge”), which covers HCE’s “administration and overhead.” It will jump from $12 to $16 per month and increase to $25 monthly in 2025. One other billed item, the “WeCARE Fee,” designed to “fund energy efficiency and conservation measures as well as renewable energy generation,” will remain the same: 2% of the total electric bill.
Speaking with The Sopris Sun, Jenna Weatherred, HCE’s vice president for member and community relations, said, “The [HCE] board worked on [the rate restructuring] for quite a while, basing it on a model that was created in 2018 and updated yearly to determine a direct assignment of costs based upon a member’s impact on the system.” She contended that separating the delivery charge from the energy charge was “a sound business practice in which we will charge and compensate all members the same amount for the energy they use or put back on the grid through net metering,” and stated that the intention of the rate restructure is to ask that each member pay only for the energy and parts of the system they use each month.
Among the reasons given by the co-op on its website for the new rate structure is that it “creates a more equitable cost allocation across our membership … allow[s] us to better manage the financial aspects of the transition to a clean energy future … [and allows HCE] to remain in the bottom 1/3 of utility rates in the state.”
Impact on solar customers
The new rate structure, regarding the energy cost component, will have a significant impact on HCE customers with smaller (generally, rooftop) solar installations. Until now, solar customers have been allowed to “bank” any excess generated electricity that is returned to the grid through a system called “net metering” (created by a 2008 state law): any surplus customer-generated power above what was received from the grid has been used to offset the energy charge, often resulting in no monthly charge. However, once the delivery charge is split off as a separate item, that cost will no longer be eligible for this credit and will have to be paid by the solar customer.
The state law, as well as federal tax credits, were enacted to encourage homeowners and businesses to make the significant investment in rooftop solar installations. They were offered the incentive of drastically reducing their electric bills and thus, over time, recouping that initial cost. But, as Rich Clubine, owner of solar installer Active Energies Solar in Avon, and Mike Kruger, president and CEO of the Denver-based solar advocacy organization Colorado Solar & Storage Association (COSSA) have pointed out, the added delivery charge (along with other rate hikes) could be a game changer for rooftop solar power. They believe this will end up being a strong disincentive for adding solar installations in the future, and both are thus strong opponents of the HCE rate-restructuring plan.
HCE has offered two options for reducing the delivery charge for solar customers for up to 10 years: either maintaining the combined energy and delivery charges on customers’ bills to continue receiving the full credit for energy generated, or receiving a one-time $250 rebate credit per installed kilowatt that can be applied to the delivery charge going forward. The offer, however, applies only to existing customers; any new solar projects that have not been approved for installation by Sept. 1 will not be eligible for the offer.
Clubine, whose company was the installer of solar systems during the Solarize Garfield County campaign in 2021, told The Sun, “I think they’re a great company, but this time I think they made a mistake.” He continued, “I think eventually we will get to a system like this [splitting the energy charge] but we need widespread solar panels and battery storage” before implementing such a plan.
He pointed out that by losing the full amount of the energy charge, customers contemplating installing a solar system would see the projected payback period for their investment go from between eight and 12 years to more like 22. Weatherred acknowledged that longer payback time but said that it could be reduced to about 14 to 15 years by adding battery storage, noting that HCE offers attractive incentives for bundling battery storage with a solar installation. Clubine and Weatherred both agree that battery storage is the wave of the future, but the installation costs are still many additional thousands of dollars.
Clubine reiterated, “We have a great partnership with [HCE].” He continued, “I have built up my business and now have 30 employees with good paying jobs with great benefits,” with much of that work being in association with HCE. However, he warned, “If [HCE’s new rate plan] undercuts solar adoption, this could undercut companies like mine.” His belief is that the final, most difficult, 10% of what HCE needs for its goal to be 100% carbon-free by 2030 “has to be local [solar power].”
COSSA’s Kruger, while echoing the concerns Clubine has raised, also has focused on the legal aspects of HCE’s decision to separate energy and distribution charges, claiming to The Sun that, legally, HCE “can’t unbundle” the energy charge. In an email, he further discussed the state law and added, “HCE’s unbundling of its kWh energy rate has no practical or financial impact on any of its customers, except for those that are customer generators who take net energy metering service. As such, the rate is discriminatory and violates CRS 40-9.5-118(2)(c), which requires electric cooperatives to ‘provide net metering service at nondiscriminatory rates.’”
Detailed information on HCE’s proposed rate restructuring can be found on its website at www.holycross.com/rates (in English and Spanish), which includes instructions on how HCE members can write comments on the changes. Weatherred concluded, “I believe we got it right, and we want to hear from people if they disagree.” Written comments will be received through Sunday, April 30.