Xcel pays $6M to premium customers of its green-tariff program

Xcel pays $6M to customers

Xcel Energy has paid nearly $6 million to premium subscribers of its Windsource program, a green tariffs program that was born in 2003.

The pay-off was due to the falling prices of wind energy, and to the upcoming wrap up of the subsidy. It is expected to be another payment next year, before the program ends.

The nearly 70,000 subscribers are all from Minnesota. As for now, they are receiving the benefits of backing wind energy nearly 17 years ago, when the Windsource program allowed them to offset their electricity with wind, in exchange for a premium tariff of $9 extra per month.

As wind prices dropped to a historic low from June 2018 to April 2020, the rate of Windsource was fixed. When the program started, customers paid a $2 premium rate per 100 kilowatt-hours. As prices fell, the rate was fixed to $1, which proved to be still excessive.

Green tariffs programs are designed to be revenue-neutral, so, the exceeding income from Windsource had to be paid back to customers.

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Xcel & Renewable Connect

According to experts, these programs, designed to support clean energy by premium users who paid an extra rate per month, in exchange for offsetting their electricity with wind, are no longer valid as federal tax subsidies have gone up, and prices down.

With renewable gaining competitiveness against fossil fuels, and broader innovation from producers, green tariffs programs will tend to disappear.

“What this indicates to me is what has become of green pricing is that in more and more of these programs the underlying logic of charging people more for energy that should cost less cannot persist indefinitely, especially when you have more and more customers signing up,” said Andrew Butts, the founder of the Green Neighbor Challenge, quoted by Energy News.

Nevertheless, and with the model of programs like Windsource, other green tariffs programs have been implemented, attracting a wide number of subscribers. Xcel, in fact, will transition Windsource customers to another program when the first one ends. The program will be called Renewable Connect, and it will include solar and wind, with a commercial customer emphasis.

It already has a list of 400 waiting customers and 3,200 participants, not counting the Windsource ones. Xcel predicts a need for an additional 230 MW of capacity to meet the demand, so these new programs may serve well to finance the growth.

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