Bills before Minnesota governor could affect solar fees

Spring arrived in Minnesota today, promising more temperate weather and brighter sunshine. Unfortunately, clouds are forming on the horizon for the state’s solar industry.

The state’s solar advocates are anxiously watching the state’s governor’s mansion today, where Gov. Mark Dayton could sign a bill that would remove the Public Utility Commission’s (PUC) authority to regulate the state’s six  generation-and-transmission cooperatives (G&Ts). In essence, the bill would allow electrical co-ops to set their own fee structures without state oversight, if the co-op board pass its own resolution allowing it to do so.

Currently, according to its  the PUC’s website, it regulates the service areas and complaints about co-ops’ service standards and practices, but generally not rates. Under the new legislation, co-ops could free themselves from even that oversight, allowing them to charge solar consumers arbitrary fees without check. Solar consumers who want to challenge such fees would be forced into third-party arbitration instead of going before the PUC. Mandated arbitration often functions like a private court system, with an unreasonable bias toward the corporation in the case, according to the Harvard Business Review. 

Unless Dayton vetoes the bill, mandated arbitration would become the way disputes between solar consumers and Minnesota’s electrical co-ops resolve fee disputes, and the PUC would be powerless to intervene. Section 3, Subdivision 11, Clause C, reads:

The Public Utilities Commission shall limit its investigation in Docket No. 16-512  determining whether the methodology used by cooperative associations to establish a fee
under section 216B.164, subdivision 3, paragraph (a), complies with state law.

In other words, the municipal co-op would have almost unlimited power to set its own fees, as long as the PUC determines the methodology used to determine the fee complies with state law. Solar advocates believe such wide discretion opens the door to fee abuses, especially turning solar consumers into a separate rate class subject to fees. The Solar Energy Industries Association (SEIA), which has been criticized in the past for not taking enough interest in state-level policy issues, urged Dayton to veto the bill.

“Under Gov. Dayton’s leadership, Minnesota has transformed into a national leader in solar energy with nearly 3,000 solar jobs in the state,” said Sean Gallagher, SEIA’s vice president of state affairs. “HF 234/SF 141 risks slowing that progress. This bill would enable cooperative utilities to target solar customers with unfair fees and limit their ability to fight back, making it more difficult for Minnesota residents to go solar.”

Gallagher added that SEIA is seeing this trend across the country, where electric utilities are seeking to undermine regulatory structures that would prevent them from charging solar customers special fees to which no other ratepayers are subject. Utilities often justify such charges on the grounds that solar customers, because of the nature of the energy source (i.e. solar customers often consume the electricity produce) do not pay for grid upkeep and other maintenance issues. At least 16 state-level studies and one national study belie the utilities’ contention.

The legislation reveals a split in the state over support for solar. Last month, legislators introduced a bill that, if passed, would raise the Minnesota’s Renewable Energy Standard (RES) to 50% by 2030, and Xcel reported that it had brought 32 MW of solar gardens online as part of a larger project to bring 96 MW of community solar to the Minneapolis/St. Paul area. The utility also announced aggressive solar-expansion plans by 2030.

Parallel to these bills, however, are the bill on Dayton’s desk and legislation passed by the Minnesota House of Representatives and making its way through the Senate would eliminate the popular “Made in Minnesota” solar incentive. Originally passed in 2013 to run for 10 years to boost the solar industry in the state, the program costs $15 million per year. Opponents of the programsay the rewards aren’t worth the outlay. The incentive gives residents installing panels manufactured in-state can qualify for subsidies based on the energy they generate.

According to the Minnesota governor’s office, the Next Generation Energy Act (NGEA), which created the state’s current renewable energy mandate of 25% by 2025, has created more than 15,000 clean energy jobs and contributes more than $1 billion in economic activity in Minnesota every year.

It’s also worth noting that despite utility-led efforts to impose fees on solar customers, utilities haven’t won many state-level battles over the issue before public utility commissions.

Minnesota consumers are served by 45 distribution co-operatives and  six G&Ts. They are are Basin Electric, Dairyland Power, East River Electric, Great River Energy, L&O Power and Minnkota Power. All six are members of Touchstone Energy, a group of electrical co-ops primarily located in the Great Plains’ states.

According to the Minnesota Rural Electric Association (MREA), co-ops employ about 3,200 people in Minnesota and operate the largest distribution network in the state with more than 148,000 miles of electric distribution lines. MREA also claims that’s more than Xcel Energy’s Minnesota operation or the three private power companies in Minnesota combined.

Cooperatives range in size between 1,900 to more than 129,000, cover 85% of the geographic area in Minnesota and supply over 14.7 billion kWh per year (about 18% of the state’s total kWh sold) or about $1.5 billion in revenues, MREA reports.