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Provisions to help protect ratepayers added to Xcel’s power plant bill

As CUB supporters know, a bill at the legislature this year would allow Xcel Energy to build and own a new natural gas power plant, bypassing any of the usual regulatory review, and making Xcel customers foot the bill. CUB has won significant ratepayer protections in the version of the bill that will come before the Senate tomorrow.

The bill as originally written gave Xcel license to build a power plant at the size it proposed, and put ratepayers on the hook for all costs, whatever they were.

At 1:00 p.m. Thursday, the Senate Energy and Utilities Committee will hear an amended version of the bill (SF 85/HF 113). The amendment affirms the Public Utilities Commission’s (PUC) prerogative to approve only the costs that are “reasonable and prudent,” and it provides for a basis for determining what those reasonable and prudent costs are. [Update, 2/9/17: The new bill language can be found here.]

Under the amended version, there are important steps:

1.  Integrated Resource Planning, an every-other-year public process at the PUC. Investor-owned utilities go through this process to forecast electric need over the next 15 years and determine the best plan to supply that electricity. The public, Attorney General, Department of Commerce, and advocates like CUB can weigh in, and the plan must be approved by the PUC.

This process can be used to build a public record of how much power Xcel needs, and how much it should cost to build a power plant to meet that need. A budget submitted by an independent evaluator can be an additional piece of evidence.

2.  The Rate Case, where investor-owned utilities get approval of what they can charge their customers. The rate case is where Xcel will make the case that it should pass along construction costs (and its rate of return) to its customers. We believe that if Xcel spends more than it should on the plant – for example, if it builds a larger plant than necessary or goes over budget – the PUC can and should limit how much of those costs Xcel can pass onto its customers.

This happened recently, after Xcel spent more than double its estimate to refurbish the Monticello nuclear plant. The Commission looked carefully at whether that spending would result in cost-effective generation, and in the end denied Xcel’s rate of return on the investments that were over budget.

Decisions about specific utility investments like this are complicated, and should be handled through regulatory processes that have worked for decades. While CUB does not support legislating the construction of a new power plant, we were able to win important provisions that should help protect consumers in this instance.

Your calls to legislators and the governor were crucial in winning these additional protections. Thank you for making your voices heard.

Author: Annie Levenson-Falk

5 Responses to "Provisions to help protect ratepayers added to Xcel’s power plant bill"

  1. Michael Stoick Posted on 02/06/2017 at 11:42 am

    Thanks for the message. Two questions
    1. Do you need us to attend the committee meeting on Thursday to show support?
    2. What can we do out in the Becker community to promote renewable energy production and other supporting business operations to provide opportunities for working families in and stabilize the tax base as the coal plants close.
    Thanks

  2. Kristen Eide-Tollefson Posted on 02/06/2017 at 11:57 am

    Thanks to Mike for his great question 2. This is what the legislature should be focused on, not short circuiting the PUC process.

    What are provisions that can be made to support the transition, retraining and placing of workers, to support Minnesota and increase economic activity for its citizens — particularly in communities like Becker — for renewable and sustainable business.

    Does anyone have language for this kind of legislative initiative or know if there is something that has already been put into place. The only think I know are the provisions requiring Xcel to create worker transition plans and funding for the nuclear plants.

  3. Annie Levenson-Falk Posted on 02/06/2017 at 3:13 pm

    Yes, #2 is a great question. I’m encouraged by Xcel’s report that no one will lose their job due to the two coal generators closing. Quite a few large power plants are reaching the ends of their useful lives in Minnesota, and the tax base question will be a relevant issue not just for Becker but possibly for other areas as well. We should look to learn from local areas that have successfully handled the transitions of other industries.

    Matt, on your first question, the committee hearing was last Thursday. Apologies if you just saw the update in today’s email newsletter; our newsletter can’t keep up with the pace of scheduling at the legislature. For the most up-to-date news, please follow us on Facebook (www.facebook.com/cubmn) or Twitter (@CUB_MN).

  4. […] advocates in the state were able to amend this bill and win important provisions. According to the Minnesota Citizens Utility Board (CUB), “The amendment affirms the PUC’s prerogative to approve only the costs that are […]

  5. Alan Muller Posted on 02/13/2017 at 2:16 pm

    Does this mean that MN CUB is supporting this bill with cosmetic additions? I do not see any improvements of substance on these bills.

    Note that bogus-IRP already happens, but advocates have failed to demand anything meaningful out of this process.

    Likewise, rate cases also happen, although Xcel is making a lot of progress in getting rid of them. Advocates have mostly failed to take meaningful positions in these processes.

    See, for example: https://alanmuller.com/integrated-resource-planning-and-why-doesnt-minnesota-have-it/

    I’ve been expecting little from CUB but trying to reserve judgement. Looks like the stripes have now been displayed. Just more back-door giveaways instead of for real advocacy.

    Alan Muller

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