What You Need to Know About the Switch from ARR to VOS
Minnesota’s community solar program—once a national model for clean energy access—is undergoing a major shift. As of spring 2025, community solar subscribers with Xcel utility have been transitioned from the Applicable Retail Rate (ARR) to the Value of Solar (VOS) rate. While this change may benefit utilities and solar developers in some ways, for many subscribers, it spells the end of meaningful savings.
What Was the Applicable Retail Rate (ARR)?
Under the original ARR model, community solar subscribers received bill credits tied to their actual utility rates. If Xcel Energy charged 14 cents per kilowatt-hour (kWh), subscribers would receive the same value in credits but pay a fixed lower rate. That meant savings would fluctuate with the retail rates.
How ARR Works:
- Under the ARR model, subscribers receive a bill credit per kilowatt-hour (kWh) that’s based on what the utility charges regular retail customers for that same electricity.
- These retail rates can include various charges: energy, capacity, transmission, riders, fuel costs, etc.
- Since many of these charges change over time, the value of the bill credits can also change from month to month or year to year.
Why It Causes Fluctuating Savings:
1. Unpredictable Rates:
Retail rates aren’t stable. They fluctuate due to changing fuel prices, regulatory adjustments, seasonal demand, and utility infrastructure investments. When these rates drop, so do subscriber bill credits—meaning your savings shrink.
2. Subscriber Savings Are Unstable:
With ARR, your solar subscription cost might be fixed (e.g., $0.10/kWh), but the credit you earn from your utility could be higher or lower depending on the retail rate at that time. In some months you save a lot; in others, hardly anything.
3. Difficult to Budget:
Families and businesses rely on predictability to manage their expenses. With ARR, it’s hard to know what your energy savings will be from one month to the next.
Why does my electricity cost so much? »
What Is the Value of Solar (VOS) Model?
The new VOS model replaces that with a fixed rate set by the Public Utilities Commission. This rate is meant to reflect the broader value of solar to the electric grid, including avoided fuel costs and environmental benefits. But in 2024, the VOS rate is significantly lower than the old retail rate—around 9–11 cents per kWh compared to 13–15 cents.
Why this Rate Change Matters
This rate change is slashing the value of solar credits for many subscribers. If you were getting $100 in credits under the old system, your new credits could be worth 20–30% less—even if your energy usage hasn’t changed. And because most subscription agreements were based on a fixed rate (not a fixed discount), this change effectively eliminates the savings that community solar was supposed to provide.
Some subscribers report that they’re now breaking even or even paying more than they would without solar.
A Broken Promise?
Many subscribers were told they were “grandfathered in” to their original terms. But Xcel and the PUC have approved rule changes that override these promises, leaving both subscribers and solar developers scrambling.
What You Can Do If You’re Not with PureSky
- Ask your provider for a new subscriber agreement and savings estimate.
- Evaluate your savings—if you're no longer benefiting, you may want to exit.
- Speak up by filing a comment with the Minnesota PUC or contacting the Department of Commerce.
This shift may simplify solar billing for utilities, but for Minnesota families who signed up expecting reliable savings, it feels like a broken deal—and one that could undermine public trust in clean energy programs.
What PureSky is Offering our Minnesota Customers
At PureSky, we believe strongly in keeping our promise to our Minnesota customers and delivering savings despite Xcel’s rate change. We’ve offered all of our existing Minnesota customers a fixed-rate savings of 10% on their share of the community solar farm. Instead of fluctuating savings, they receive predictable savings month over month. Our new customers will receive a 10% fixed-rate savings right from the get go.
Sign up for community solar with PureSky »
If you are an existing customer and haven’t yet signed up for our new fixed rate offer, it’s not too late. Simply reach out to our customer care team at customercare@pureskyenergy.com or 1-877-267-8727, and we will get you set up.
Get the facts on the rate change in our help section »
