(This article was written for the communications department of Aquila, Inc., an energy company based in Kansas City, Mo. This was part of a series of articles that appeared on Aquila’s internal website in 2006.)
Wednesday, August 02, 2006
To: Call Centers
From: Communications and Stakeholder Outreach, (Rod Perlmutter, (816-xxx-3399)
Questions & Answers for Call Centers about the proposed Colorado electric RESA
Aquila’s 92,000 Colorado electric customers may see a one percent adjustment in their utility bills starting September 1, 2006.
On Monday, July 31, Aquila submitted a request to the Public Utilities Commission to add a Renewable Energy Standard Adjustment (RESA) to electric bills starting September 1.
The proposed RESA will pay for the Aquila Rebates and Incentives for Solar Energy (ARISE) program, which provides financial incentives for Aquila electric customers who install photovoltaic (PV) systems – equipment which converts sunlight into electricity. Those incentives can save Aquila customers thousands of dollars in installation costs.
Q) How much is the proposed RESA?
A) The RESA will be a one percent increase on each electric bill. The RESA is calculated on each electric customer’s usage before taxes.
Q) How will the proposed RESA cost the average Colorado customer?
A) Under Aquila’s proposed RESA, the average residential customer would receive an increase of approximately $7.68 annually, or about $0.64 per month. An average small business customer would receive an increase of approximately $62.70 annually, or about $5.23 per month.
The funds received from this tariff, which will total $1.48 million in 2007, will be used solely for the purpose of complying with Colorado’s renewable energy standard.
Q) Is the RESA official yet?
A) No, Aquila requested in on July 31, and the commission is expected to rule on it before the end of August. However, it is possible that the commission could delay its decision, which would mean the RESA will not go into effect Sept. 1.
Q) How will the RESA appear on Colorado electric bills?
A) Each bill will have a line item labeled “Renewable Energy Standard Adjustment”.
Q) What does RESA pay for? How will Aquila use the money?
A) The proposed RESA will pay for the Aquila Rebates and Incentives for Solar Energy (ARISE) program, which provides financial incentives for Aquila electric customers who install photovoltaic (PV) systems – equipment which converts sunlight into electricity.
Q) What is The Aquila Rebates and Incentives for Solar Energy (ARISE) program?
A) The Aquila Rebates and Incentives for Solar Energy (ARISE) program is part of Aquila’s ongoing commitment to developing renewable energy. Also, it is our response to Colorado’s Amendment 37, an initiative passed in 2004 which mandated that utilities meet several minimum requirements for generating or selling renewable energy starting in 2007.
Q) I want to install a solar energy system on my house or business. How much money could a Colorado customer save using the Aquila Rebates and Incentives for Solar Energy program?
A) According to a Colorado Renewable Energy Society estimate, a three-kilowatt PV system installed on a typical 3,000-square-foot house would cost about $27,000. That price could be reduced as much as $15,000 under the Aquila rebate program.
Incentives could be thousands of dollars higher for larger homes and businesses.
Q) Is the Aquila program just a rebate?
A) No. Aquila’s program provides a two-part incentive to qualifying customers:
- Direct rebates for equipment and installation costs, based on the PV system’s rating.
- Renewable Energy Credits (REC), which are primarily based on the environmental attributes associated with renewable energy generation.
For PV systems up to 10 kilowatts, the REC would be paid in a one-time lump sum. For systems from 10 kilowatts to 100 kilowatts, the REC would be an annual payment.
Q) How much is the combined rebate and financial incentive?
A) The rebate is based on a declining incentive structure. The size of the financial incentives depends on when applications are approved. The first customers to apply and qualify for the incentives received the highest rebates. Later customers who qualify will still receive rebates and financial incentives, but they may be at a lower rate.
Q) Why have I never heard of the Rebates and Incentives for Solar Energy (ARISE) program?
A) Press releases announcing the Rebates and Incentives for Solar Energy (ARISE) program were distributed to the news media in late June. Articles about this program appeared in some newspapers, including the July 1, 2006 edition of The Pueblo Chieftain and stories on the McClatchy-Tribune Business News service.
Q) Who gave Aquila the right to charge Colorado customers for the cost of developing a solar energy program?
A) The voters of Colorado did when they approved Amendment 37 in 2004.
Q) What is Amendment 37?
A) In 2004, Colorado voters approved Amendment 37, which requires that utilities develop renewable energy resources.
The law applies to each provider of retail electric service that serves more than 40,000 customers. The law mandates that utilities meet several minimum requirements for generating or selling renewable energy:
- For 2007 through 2010, 3% of its retail electricity sales;
- For 2011 through 2014, 6%;
- For 2015 and after, 10%.
Of these percentages, at least 4% shall be derived from solar electric generation.
Of that solar generation, half (2% of total) must by on-site at customer’s facilities.
In other words, under Amendment 37, in 2007, 0.06% of all of Aquila’s retail electricity in Colorado must come from on-site solar electric generation.
The law also mandates that utilities establish a system of tradable renewable energy credits (RECs) and solar credits (SO-RECs). It also requires that energy providers offer a standard rebate offer of a minimum of $2 per watt for the installation of eligible solar electric generation. The law also mandates the use of net metering.
Q) Why can Aquila increase electric rates to pay for this solar program?
A) The same voter initiative that mandated that utilities develop renewable energy programs also mandated a way in which utilities could pay for them.
Under Amendment 37, Colorado utilities can impose surcharges of up to 1% on customer electric bills to recover the costs of implementing renewable energy programs. The money collected in that surcharge must be maintained in a separate account to be used only for renewable energy programs. Surcharges can not be enacted until they are approved by the Colorado Public Utilities Commission.
Q) How does photovoltaics work?
A) Photovoltaics, also known as “PV,” produce electricity from the sun. The solar “cell” is the basic building block of PV technology. Solar cells are wired together to form a PV module. PV systems begin with the solar module. Modules gather solar energy in the form of sunlight and convert it into direct current (DC) electricity. The more sunlight they receive, the more electricity they produce. Solar modules are the heart of the PV system. In essence, they are the power generators.
To convert DC power to alternate current (AC) power, the type of electricity used in your home, a device called an inverter is used. Depending upon the size of the PV system, inverters may be mounted by the PV manufacturer right on the back of a PV module. Inverters may also be wall-mounted separately from the PV system, but within close proximity to the solar panels.
Q) How does net metering work?
A) Your electric meter spins forward when electricity is flowing from Aquila into your home. The meter spins backward when power is flowing from your home back to AquilA) That is, if more electricity is generated through a PV system than your home requires, the excess energy flows back to Aquila’s electric grid system, which turns your electric meter backwards. At the end of the month, you are billed only for net consumption – the amount of electricity consumed less the amount of electricity distributed back to Aquila’s grid.
Q) What happens if the sun doesn’t shine?
A) Your PV system will continue to produce electricity during cloudy weather, although the total amount will be reduced. Power will automatically be provided through Aquila at night or during inclement weather.
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