The headline in any utility rate case will always be how much customers’ monthly bills might be expected to change. But as the electric system continues to become even more sophisticated, the number of critical issues decided in each rate case continues to grow. Here are six under-the-radar rulings in Minnesota Power’s rate case, decided by the Public Utilities Commission in late January, that Fresh Energy pursued to help drive northern Minnesota towards a clean energy economy.
1) The Boswell Coal Plant: Minnesota Power proposed stretching the depreciation of the Boswell coal plant all the way out to 2050. Though this is strictly an accounting technique, it could have been used as an argument to extend the useful life of the plant. With the realization that it’s unlikely that an aging coal plant will be cost effective over that period of time, Fresh Energy and our partners opposed the extended depreciation and proposed securitization instead. Securitization has been used as a financial tool by utilities in other states as a way to take advantage of low-cost renewables and energy efficiency while writing off older assets that would be more costly to operate. The decision in this case was to have Minnesota Power in the next two years analyze how securitization could work for Boswell—key first step in exploring new options for transitioning aging plants into retirement.
2) Monthly Customer Charge: Part of your utility bill changes every month based on how much energy you use. Another part of it, the monthly customer charge, stays flat whether you’re blasting your air conditioning or wintering in Florida. The lower the monthly charge, the more opportunities you have to save money by saving energy—which is what Fresh Energy continues to advocate for in Minnesota. Thankfully, the Public Utilities Commission agreed and ruled against any increase for that fixed fee for residential customers.
3) Green Pricing Program: Minnesota Power proposed a green pricing program that essentially allows customers to pay a slight premium in order to get all of their electricity from renewables. If that program sounds familiar, it’s because it largely mirrors Xcel Energy’s Windsource program. Fresh Energy pushed for the pricing itself to be transparent and fair, but also for any green pricing customers to be exempted from paying the standard fuel clause on their monthly bill. In short, if you’re paying a premium for a certain type of fuel, you shouldn’t also be paying for a different type of fuel you aren’t using. The Public Utilities Commission agreed in regards to the fuel clause and will help determine the overall pricing at a later date.
4) Solar Capacity Credit: Capacity fundamentally refers to the potential electricity a utility’s electricity generation system can provide. A utility has to demonstrate their ability to provide both capacity (potential electricity) and then the ability to deliver the electricity itself when it’s needed. As more renewable resources get added to the grid, the capacity credit that is assigned to those systems becomes even more important. Minnesota Power proposed a solar capacity credit based on the regional Midcontinent Independent System Operator surplus capacity auction—something that is almost never used, and therefore does not reflect accurate market prices—when valuing a solar system’s capacity value to the grid. Fresh Energy countered that the capacity value should at least be based on similar capacity transactions Minnesota Power has actually made—for example a bilateral capacity deal with a third-party provider such as Manitoba Hydro. Though the number is not significantly higher, it sets a stronger precedent for planning numbers to mirror real market values. The Public Utilities Commission agreed.
5) Time of Use Rates: Minnesota Power has had a pilot program to offer time of use rates to its customer for several years. Essentially, this allows people to pay lower prices when demand is low and higher prices when demand is high. Though it did not specifically make a ruling regarding these rates in this case, the Public Utilities Commission agreed that discussion of expanding this program should continue in its own docket—a position Fresh Energy supported.
6) Decoupling: As part of Minnesota’s leadership on rate design that encourages energy conservation and savings, Fresh Energy proposed a full decoupling program to help Minnesota Power continue its strong performance on energy efficiency. Unfortunately, no other parties—including Minnesota Power—agreed to explore moving this proposal forward and therefore, the Public Utilities Commission ruled against it. This is a small setback for what had been a long run of success for decoupling proposals in Minnesota. Fresh Energy will continue exploring options for how to move this policy forward in northern Minnesota.
