You’ve done the research. You’ve found your solar installer, and you understand your electric usage patterns. It may seem like solar is the right decision for you now, but will it still pencil out in the future if and when net metering laws or electric rates change?
Electric utilities like GCEA are subject to inflation, supply chain issues, and other rate pressures just like any other industry. As a result, our rates will undoubtedly adjust over time. This is often an argument in favor of rooftop solar. The idea being, you can lock in your energy costs with an up-front investment or purchase contract. However, you should also consider that net metering laws are beginning to be revised across the country, and there is a good chance revisions may also occur in Colorado during the life of your solar system investment. Potential legislation revisions could reduce the value of the bill credit provided within existing net-metering legislation, and this could, in turn, affect your solar system’s return on investment. Financial incentive revisions may be acceptable to you, especially if your primary solar objective is not financial.
GCEA's rate structure is also changing. Roughly three-fourths of GCEA’s costs to provide service are fixed and do not vary based on how much energy a member may use. At a high level, GCEA incurs costs in three major categories: 1) generation (variable), 2) operation and maintenance of generation and transmission infrastructure (fixed), and 3) costs of operating and maintaining the local distribution system and business functions (fixed). Variable costs fluctuate with the amount of energy delivered to consumers, while fixed costs do not.
Conversely, GCEA consumers are currently billed mostly through a variable energy charge, measured in kilowatt-hours (kWhs). For instance, our primary residential rate currently has a fixed service availability charge of $40 per month (no matter how much energy a member may use) and a variable energy charge of $0.15419 per kWh consumed. The average residential member therefore pays only approximately 28% of their monthly bill through the fixed service availability charge. As a result, a member who may reduce their kWh usage via a solar net-metering installation is able to reduce their bill by more than GCEA is able to reduce its cost.
GCEA continues to incur fixed costs in order to provide services to members with net-metered systems. GCEA is billed for the fixed costs associated with the generation and transmission infrastructure based on its monthly peak demand, which occurs most of the time within the three hours after sunset. Net-metered solar members contribute similarly to this monthly peak and its resulting costs in exactly the same way as GCEA’s non-solar members do. The current monthly service availability charge does not attempt to recover this demand cost and only partially recovers the fixed costs of operating the local distribution system.
As more GCEA members install net-metered solar systems, purchase electric vehicles, buy second homes, etc., it is important for GCEA to ensure equitable cost recovery through appropriate rate design. Accordingly, GCEA is adopting new rate structures for all members that better align with the costs we all collectively incur.
Existing solar systems will be eligible for legacy rates for a time, and the new rate structure will still be solar-friendly, but members should evaluate their decision based on the new rate structure, which will also now provide potential economic benefits for member-owned batteries.
If you have questions about net-metering or the rates to use in calculating your return on investment, please click here.