Early this year, Douglas County School District signed an agreement with a New York-based company called REgeneration Finance. In it, REgeneration commits to paying another, California-based company to design, construct, operate and maintain a new 3.1-megawatt solar power project for the school district.
According to REgeneration's website, the district pays REgeneration for the solar power at a rate well below that charged by regional provider Xcel Energy. In the deal, "The school district receives a stable source of predictable, lower cost electricity while in return the third-party obtains financial benefits such as tax credits and income generated from the sale of electricity to the customer."
Bottom line: The $18.3 million system won't cost the district a penny, and it will save at least $5.5 million in power costs during the 24-year life of the contract, says Bill Moffitt, the district's executive director of facilities.
"We can't take advantage of those tax incentives and rebates that a private firm can," Moffitt says. "So this public-private partnership was really an opportunity for us to do the right thing environmentally and also save the district some badly needed operational funds."
Moffitt says at the end of the contract, the district can opt, at no cost, to have the systems removed from the 30 schools and athletic stadium where they're now under construction, have new technology installed, or continue with the same technology.
Pretty decent, right? Too bad these deals are banned here.
This year, Colorado Springs Utilities set aside $1.5 million for solar rebates. The problem is, even with a rebate, your typical church, school or other nonprofit can't afford the up-front cost of a system. For-profit businesses — which can qualify for federal grants — are the only ones that might.
Exclusivity serves best
This is why in places like Denver and Pueblo, nonprofits can enter into leases or purchase power agreements like the one in Douglas County, where they pay no cash out of pocket.
But here, City Code gets in the way. It requires that Utilities operate as a monopoly. Or, as Utilities spokesman Dave Grossman puts it in an e-mail, "Being a home-rule city with a municipally-owned utility, our community has chosen to have a single entity provide all utility services."
If a third-party utility could operate here, he says, it "could selectively provide utility service to only the most credit-worthy customers with the highest profit potential at the expense of the rest of the customers." Or, Grossman says, if residents could decide at any point to go with another provider, it would destroy Utilities' ability to plan ahead and buy the right amount of, say, coal in relatively cheap, long-term contracts.
It's not that Utilities is unaware of solar's environmental advantages; Grossman points out that its rebates are among the highest in Colorado, though they still only cover about a third of an array's cost. And in an e-mail, he adds, "Any organization — including a school district — exploring the possibility of installing a solar array should give us a call. We will work with the customer to explore various technical and financial options within the confines of City Code — much like we did with the Air Force Academy — to maximize the customer's investment."
The academy's 6-megawatt array, funded with $18 million from the American Recovery and Reinvestment Act of 2009, is a special arrangement. A private company, SunPower, is building the array for Utilities, which will sell all the power from the array to the academy.
Making a blueprint
The city's stance on power purchase agreements isn't etched in stone, and Utilities Board Member Bernie Herpin is open to learning more. "I'd certainly be willing to be part of the discussion," he says. Herpin adds such a discussion should be included in Utilities' Electric Integrated Resource Plan.
The plan, updated every five years, serves as a road map for supplying power to customers. Preparation for the 2012 plan got underway in February and will include a series of public meetings, with a final recommendation due in December. "The goal is to engage the public and find out what their priorities are regarding balance between rates, the environment and reliability," Grossman says.
The plan will look at all types of energy, their pluses and minuses. Renewable energy advocates suggest Utilities may want to invest in a lot of solar power systems if they could help delay or eliminate the need to build a new coal plant, which is viewed as a possibility after 2020.
Resident Greg Huesgen has a dog in the fight, considering he works for Complete Engineering Solutions LLC, which installs solar panels. But he says it's inarguable that if the city did more to embrace power purchase agreements, it might help nonprofits — including city and county governments — save a bundle.
"It would help our public entities to become more efficient," he says. "You reduce the overhead for our public institutions, so there's tax money available for other things. You could create, in the end, a greener image for the town. That would create that more positive vibe."
And, he says, a "positive vibe" could give birth to a robust renewables industry here, which would serve as a magnet for corporations looking to go green.
"What needs to happen in this town," Huesgen says, "is to change the mindset of our politicians to look forward and invest in the future."