Look for big decisions on energy in 2014

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Last Tuesday, Governor Dayton appointed Dan Lipschultz to the Minnesota Public Utilities Commission. It was big news in the energy policy arena because, for the first time, Minnesota has a Commission with a majority of members committed to creating a prosperous low-carbon electricity system.

At Fresh Energy, our policy work doesn’t solely take place at the Minnesota Legislature—and our work doesn’t end once a bill becomes a law. Energy policy is developed and honed each day through ongoing administrative and regulatory actions across the state—through city councils, administrative bodies, and regulatory agencies. Additionally, when the legislature approves smart energy policies—of which many were passed in 2013—the law doesn’t immediately go into effect. Once legislators leave the Capitol for the year, implementation of Minnesota’s new laws often trickles through any number of decision-making bodies, often requiring hearings, stakeholder processes, and public comment periods. This can take years of additional policy work, and Fresh Energy’s policy experts are involved to the very end

Much of Fresh Energy’s policy work touches Minnesota’s Public Utilities Commission (PUC) at some point—whether it’s retiring and replacing coal-burning power plants with clean energy, making solar more accessible for more Minnesotans, or making it easier for utilities to invest in efficiency—and big decisions are pending at the PUC in 2014. (Not familiar with the PUC’s role in Minnesota’s energy system? Check out our Energy 101.)

In order to give you a taste of our ongoing work, here’s a sampling of the work on the PUC’s plate in early 2014.

N MINNESOTA, SOLAR BEATS NATURAL GAS

In 2013, the Minnesota Public Utilities Commission required Xcel Energy to seek project bids to meet new demand for electricity in the coming years. Ultimately, one solar project and a suite of gas plants were proposed by several companies. Geronimo Energy proposed a 100-megawatt solar project that would cost approximately $250 million. The gas plants were proposed by Xcel Energy at the location of a retiring coal plant, and by Calpine Corporation and Invenergy at other locations.

On December 31, an administrative law judge ruled that the solar project was best for Minnesota consumers for a host of reasons. This groundbreaking ruling now goes before the Minnesota Public Utilities Commission for a final decision, which we can expect as early as next month.

THE REAL COSTS OF ELECTRICITY PRODUCTION

Back in the early 1990s, Fresh Energy supported a law that requires the PUC to account for the total cost of electricity generation in its electricity planning—including health and environmental costs. Now, the PUC is required by law to update the health and environmental costs it first adopted 17 years ago (and still uses in electricity resource decisions). As you can imagine, these numbers need updating in order to reflect the enormous health and climate costs of coal-burning power plants.

On October 9, Fresh Energy—together with partners at the Minnesota Center for Environmental Advocacy and several other clean energy organizations—filed a motion asking the PUC to update the real costs of health and environmental damages caused by fossil-fueled power plants. On December 19, the PUC voted 4 to 1 to support Fresh Energy’s petition to update these values. The outcome of this work will have significant consequences for Minnesota’s coal-burning power plants, improving the economics of cleaner energy sources.

Over the next few months, the Minnesota Pollution Control Agency and Minnesota Department of Commerce will determine the scope of the work, after which the PUC will refer the matter to the Office of Administrative Hearings. An administrative law judge will then provide the PUC with a recommendation on the appropriate new range of cost values for electricity planning.

DETERMINING THE FUTURE OF SHERCO 1 AND 2

In December 2013, following months of focused advocacy by Fresh Energy and our partners, the PUC voted unanimously to require Xcel Energy to analyze retirement of Sherco 1 and 2 by 2020 as part of its next Integrated Resource Plan—a document that explains how Xcel intends to meet customer needs and state environmental requirements over the next 15 years. In the months prior to the PUC vote, Fresh Energy helped generate nearly 11,500 comments to the PUC from Minnesotans supporting the replacement of Sherco with clean energy. Xcel’s proposed plan is due July 1, 2014, but must be approved by the PUC. That proposal will also be open to public comment this summer.

MOVING AHEAD ON SOLAR

COMMUNITY SOLAR
Last year, Minnesota’s legislative leaders adopted the strongest set of solar policies in the Midwest—including a clear legislative framework for community solar projects. As required by the new law, Xcel Energy filed its draft community solar implementation plan with the PUC on September 30, 2013. Since a public comment period ended on November 6, the PUC is now reviewing Xcel’s proposed plan and will approve, disapprove, or modify it based on whether it complies with statutory requirements.

VALUE OF SOLAR
Along with a community solar framework, Minnesota also passed the nation’s first value of solar statute. Under the new policy, public utilities will be allowed to start offering a value of solar tariff in 2014, under which the utility would buy solar power from small- and medium-sized solar projects (under one megawatt) at a rate that reflects the value of that power to the utility, customers, and society. The Department of Commerce accepted comments on the proposed solar rate methodology until December 10, 2013 and will now submit a recommended methodology to the PUC by January 31, 2014. After receiving the methodology from the Department, the PUC will approve, modify with the approval of the Department, or disapprove the methodology within 60 days. At that point, public utilities will be allowed to offer a value-of-solar tariff if they so choose.

INCREASING THE EFFICIENCY OF MINNESOTA’S BUILDINGS

Buildings account for nearly 40 percent of energy consumption and carbon emissions in the country. Measures like benchmarking—measuring and comparing a building’s performance to other, similar buildings—and the disclosure of buildings’ energy use have proven to be effective in increasing energy efficiency, even without major building renovations. Easy access to the energy consumption data of buildings and the ability to share that information is key to this kind of success. But at times, methods like strict aggregation—compiling information in a way that restricts some identification—can obstruct the effectiveness of this kind of data. It’s important that aggregation protect personal information but work with policy goals.

Recently, Minnesota was slated to have the strictest data aggregation in the country (called the 15/15 rule) because of a privacy docket proposed by Xcel Energy, a policy that would hamper the effectiveness of the disclosure process and decrease the level of efficiency that could be achieved. The Minnesota Public Utilities Commission (PUC) held a hearing on this proposal on May 27, 2013 and decided that more information is needed, recommending that a stakeholder group be convened to address the issue. The Customer Energy Usage Data (CEUD) Workgroup has been meeting regularly since September 2013, determining the appropriate use and limitations on use of CEUD while balancing customer privacy and the state’s energy goals.

A BETTER BUSINESS MODEL FOR MINNESOTA UTILITIES

In 2013, both CenterPoint Energy and Xcel Energy filed rate cases—the regulatory process through which utilities set electricity prices—that include a tool that helps separate the amount of energy a utility sells from the revenue it makes to cover fixed costs. This policy is known as decoupling. Decoupling removes the financial disincentive that makes utilities justifiably wary of energy efficiency and ensures that utilities collect the revenue authorized by the PUC—no more and no less. Xcel’s decoupling proposal, if approved by the PUC, won’t take effect until 2015. Currently, Fresh Energy is actively advocating for the policy in both rate cases.

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