Rochester Public Utilities proposes new solar fee, solar users raise equity concerns

ROCHESTER, Minn. (KTTC) – Rochester Public Utilities is addressing inflationary pressures by increasing rates and fees in its 2026 budget plan, including a new fee for customers with solar panels.

RPU plans to impose a grid access fee to customers with solar panels for the demand those users put on the grid. The utility will charge $2.40 per kilowatt for residential systems starting January 1, if approved. Small general service systems will be charged $2.31 per kilowatt each month as well.

The grid is an interconnected network that delivers electricity from producers to consumers.

Evin Lantz invested more than $26,000 to install solar panels on his Rochester home to make his home more efficient. On average, his 9.2-kilowatt system produces about $84.

“I think that at the time RPU certainly understood the investment I was making, the value of my capital going into the system, how it would benefit everybody,” Lantz shared.

With the new grid access fee, Lantz will be charged an additional $22.08 per month, bringing his monthly net production to $64. It will now take 321 — 26 years — to break even on his investment. The life expectancy of his system to 25-30 years.

RPU General Manager Tim McCollough explained the grid access fee ensures all customers contribute to grid maintenance costs.

“Solar customers were contributing little to nothing towards the grid maintenance and the grid access fee,” McCollough said. “It takes an extensive amount of investment to maintain those systems.”

McCollough explained he can relate to the changes coming to solar users on a personal level. He used to also be a solar user in a former jurisdiction and sized 100% of his electrical load, paying only $1 a year. McCollough said he recognized the demand his system put on the grid and imposed a fee on himself.

“I was sitting on the other side of that rate as the utility professional, understanding that it costs money to maintain the grid,” McCollough said.

City Council Member and RPU Board Member Patrick Keane said there is a cost to being the “back up” for solar customers who still use RPU energy at times.

“We were subsidizing some of the solar users by adding minor costs to the non-solar users. By utility rules, we don’t ever want to be doing that,” Keane said.

Keane said state law prohibits public utilities from subsidizing within or across rates.

With growing solar adoption, RPU said it faces $250,000 of unrecovered fixed costs each year. RPU became aware of the cost shift during a 2023 rate study but waited to implement changes.

“I actually fought against this when it first came up at RPU. I didn’t think it was worth it,” Keane said. “Back on that equity piece of saying what about the other 98% of people that aren’t doing it? Are they actually paying more because of the solar fields?”

Lantz said he doesn’t disagree with costs to maintain grid infrastructure but believes solar investments slow the growth rate of energy costs for everyone.

“Why not leverage people within the community that are willing to put their own money into the pot to help you meet that goal?” Lantz questioned.

Lantz shared he wants fair utility rates for everyone and doesn’t want RPU to stop incentivizing people to use less power.

Despite the new fee, RPU said it remains a strong supporter of solar.

RPU has a meeting Tuesday to finalize its budget. As part of the new budget, water rates will increase by 9% and electric rates by 4%.

If RPU passes the budget as proposed, it goes to Rochester City Council for final approval in early December.

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