The Republican controlled Minnesota House of Representatives has passed three bills, HF 113, HF 234, and HF 235, all designed to slam the brakes on renewable energy.
HF 113. In an unprecedented move, by passing HF 113, the Legislature gives Xcel permission to build a super sized natural gas plant in Becker, Minnesota and specifically lets Xcel bypass the Public Utilities Commission (PUC), the agency that protects rate payers.
In a January 11, 2017 order, Commission Ruling Xcel 2015 IRP 1 11 2017 , the PUC told Xcel that while there would be need for additional resources in the 2025-2030 time frame and a likely need for approximately 750 MW of intermediate capacity, it said it doubted the usefulness of Xcel’s forecasts beyond their 5 year action plan and concluded that, in the rate payers interest, it was too early to make final decisions about those additional resources.
Xcel didn’t want the PUC to answer the questions of size or timing so it came to the legislature and asked for and got a 786 megawatt plant.
Xcel will recover its cost through electric rates. So the more they spend, the better for profits and shareholders. And the worse for rate payers.
Xcel estimates that the plant will cost $800 million and that doesn’t include the cost of a new pipeline or lines. In a legislative committee Xcel would not speculate on the cost of the pipeline or lines needed. Others have estimated $200 million. However, the only pipeline with enough capacity is 100 miles to the south. In addition the soils close to the proposed location are very vulnerable to groundwater pollution likely making pipe installation even more costly. So a $200 million estimate for the pipeline construction is likely much too small.
The Independent Statistics and Analysis section of the US Energy Information Administration projects a steady increase in the cost of natural gas over the life of this plant (30 to 40 years) at an average of 2.1% percent a year and of course that compounds. Since Xcel wants a 786 MW plant that will mean that Xcel will be spending roughly $52m a year on natural gas. That is sending $52 million a year out of Minnesota to create jobs in other states, not Minnesota.
As bad as that is, the legislature is permitting Xcel to hire a so-called independent evaluator to forecast the cost of the plant and then, if Xcel comes in under that cost, it will get a bonus. And who pays the bonus? Rate payers, of course.
Here we have the equivalent of a gas tax increase and the Republicans are proposing the biggest base possible–a larger fee/tax than may be needed so Xcel will get the biggest fee/tax possible to give to shareholders.
While it is very likely that the PUC would have authorized a natural gas plant in Becker, it is equally likely that the plant would have been much smaller and supplemented by wind generation that is already cheaper or solar that also might be cheaper by the time the extra capacity is needed.
It is impossible to understand why rural legislators voted for this bill. The supplemental wind or solar generation would have been built in their districts and provided much needed additions to their property tax base.
Xcel should not be surprised if rate payers are super angry because they have to pay higher electric rates than necessary because the monopoly that serves them got a green light for those rates by going to the legislature for a billion dollar plus earmark.
HF 234. In 2015, the Minnesota legislature passed a law in the wee hours of session that allowed electric coops to charge new fees to residential customers who wanted to put solar on their roof or to farmers who wanted a small wind turbine.
The legislation didn’t say the coop could charge any fee it wanted. There were three conditions: (1) the fee would be for fixed costs that were not already collected; (2) the fee needed to be reasonable; and (3) the fee needed to be based on a recent cost of service study.
There were complaints to the PUC that the new fees being imposed by the electric coops were too high and unreasonable. The PUC opened an investigation specifically asking the question: do the fees meet the requirements set in law or are the fees designed to capture lost revenues or are the fees deigned so that residential and small farm solar or wind no longer make economic sense?
HF 234, as introduced, said that coop customers could no longer complain to the PUC. Rather coops themselves would settle complaints. And the bill shut down the PUC investigation.
Before it was passed, the bill changed so that customers could ask for a mediator and the investigation could go forward.
However the underlying problems with the bill remained. Mediation is voluntary and if it doesn’t work, the customer who thought the coop was charging more than the law allowed wouldn’t be able to appeal to the PUC but only to the coop that set the fee in the first place.
A coop becomes a judge of itself. Worse, since the coop is now taking over the role of the PUC, it would be able to say that an appeal was made in bad faith or is frivolous and then the coop could collect the coop’s legal expenses. What customer would appeal under those circumstances? That would be far too risky.
While the investigation of the methodology used by coops to impose new fees will go forward, that, by no means, insures that the coop will apply a new methodology correctly. So, coop customers have only two recourses: mediation with the coop as final decision maker or go to district court, a very expensive option.
This bill sets a major road block for wind and solar. Solar installers defined those roadblocks in committee and in a final plea in a letter distributed on the House floor by Rep. Alice Hausman.
Metro residents can choose to put solar on their roof without big and possibly changing fees.
With HF 234, many in rural Minnesota will not have that same opportunity.
HF 235. If the Republican Caucus wanted to finish killing off solar in Minnesota how would it best go about it? It would pass HF 235. HF 235 dissolves the Renewable Development Fund and repeals the incentive payment to owners of solar panels that are “Made in Minnesota.”
The Renewable Development Fund was established as part of the agreement that allowed nuclear waste storage tanks on Prairie Island. Currently Xcel’s payment is about $27m a year. Since 2014, about $15m of the RDF has provided rebates to homeowners and small businesses that install solar panels that are made in Minnesota.
HF 235 puts the money from the RDF into another fund without the renewable restriction that was fundamental to the agreement 20 years ago. The money is now, in effect, just a slush fund.
If the RDF were no longer restricted to promoting renewable energy according to the original agreement, Xcel could rightly argue they should stop paying into the fund and that is exactly what an amendment to HF 235 did, phase out the funding.
The generating capacity of solar in Minnesota was next to nothing in 2007. In 2015 it was more than 25 megawatts and is projected to have reached 250 megawatts in 2016.
Since 2014, the Made in Minnesota solar program has funded 1,045 projects for 15 megawatts of generating capacity. There are now four solar manufacturers in Minnesota. The Department of Commerce estimates that Made in Minnesota has created 495 jobs with an additional 1,485 jobs projected by 2023.
Average annual wages in clean energy were more than $71,000 in 2013 – the statewide average for all jobs is about $51,000. Overall, Minnesota workers in the clean energy economy earned more than $1 billion in wages in 2013.
Minnesota has made a good start down the road to creating renewable energy and renewable energy jobs. The RDF fund and Made in Minnesota were critical to jump starting the new industry. HF 235 is more than a road block. This bill pulls the construction workers off the job.