CUB joins Xcel proposal seeking to protect renters

Published November 24, 2021

In recent months, CUB has been hearing from consumers (and other consumer advocates) about a new problem affecting some Minnesota renters. Some landlords of multi-unit residences are taking over their tenants’ utility accounts by putting the accounts in the landlord’s name, while continuing to pass utility costs on to the tenants. As a result, tenants are losing their eligibility for consumer protections (such as those afforded through the Cold Weather Rule) and energy affordability programs (such as POWER On). Loss of eligibility for affordability programs can cause some tenants’ monthly utility bills to increase substantially. For some tenants, the extra money they are spending on their utility bills has led them to get behind on rent payments—and even face eviction. 

The buildings in question are multi-unit, multi-metered rental properties: i.e., buildings with multiple rental units where tenants in each unit were previously billed separately for their electricity usage by Xcel Energy. The landlords have switched tenants’ Xcel accounts out of the tenants’ names so that the landlords now pay the Xcel bills, but they re-bill tenants through a third-party billing provider. In many cases, the landlord also subscribes each unit to a community solar garden (CSG).

It seems tenants are not always given a choice in this arrangement, and some suffer substantial harm as a result. It also appears that some landlords have a financial interest in the CSGs that they are subscribing their buildings to. 

In order to deter landlords from switching tenants’ accounts to the landlord’s name for this purpose, we recently signed onto a proposal Xcel Energy filed with the Public Utilities Commission (PUC) recommending that the PUC approve a change to the rules dictating how CSGs operate. 

Overview of community solar gardens

A CSG is a subscription-based solar array that is “shared” by multiple subscribers. Minnesota law requires Xcel Energy to purchase a certain amount of energy produced by CSGs each year. Once Xcel purchases that energy, it is added to the energy Xcel otherwise distributes to customers through its distribution grid. Those who “subscribe” to a CSG pay a monthly subscription fee to the developer operating the CSG and, in return, each subscriber receives a credit (essentially, a portion of the payment Xcel makes to purchase the energy produced by the CSG) on their Xcel electricity bill. When a CSG subscription works as intended, the amount the consumer pays to subscribe to the CSG is less than the amount Xcel credits to his/her bill, allowing the consumer to save money on monthly electricity costs. 

Subscribing to a community solar garden can be a great way for Minnesotans—both renters and homeowners—to support renewable energy resources and save money on their energy bills. Though, as with any financial commitment, it is important for consumers to do their homework before signing a CSG subscription agreement. This resource is a good place to start.

Overview of Xcel’s energy affordability programs

Xcel’s energy affordability programs offer discounts on energy bills to qualifying customers. For example, low-income households that receive electricity from Xcel Energy may be eligible for the POWER On program. Customers enrolled in POWER On pay a set amount for their electricity each month that is based on the customer’s household income. Each time that payment is made, Xcel applies a POWER On discount to the customer’s bill. These discounts can be significant – and very important to customers struggling to make ends meet. There are also discounts available for seniors and individuals with disabilities. These programs are distinct from the Energy Assistance program.

The problem

When a landlord takes over a tenant’s utility account to subscribe to a CSG, that tenant is no longer Xcel’s “customer of record.” Tenants who are not Xcel customers of record lose their eligibility for POWER On and the consumer protections described above. For some tenants, this means that any benefit they receive through the landlord’s participation in a CSG is quickly overshadowed by the benefits and protection the consumer loses through that arrangement. For example, a tenant might receive a $4.50 monthly credit through their landlord’s CSG subscription but also see as much as a  $70.00 monthly increase to their utility payment when they lose their POWER On discount. The net result is a monthly electricity bill that is higher—sometimes significantly higher—than what the tenant is accustomed to paying. 

This has led to some tenants suddenly finding themselves unable to keep up with their utility bills and/or rent payments. In some instances, those tenants face eviction.

The proposed (partial) solution

In order to try and address this problem, CUB (along with Energy CENTS Coalition and Mid-Minnesota Legal Aid) recently signed onto a proposal Xcel filed with the PUC to change the rules surrounding how CSG subscriptions operate. If the PUC accepts the proposal, the amended CSG rules would, essentially, prohibit landlords of multi-unit, multi-metered rental properties from holding CSG subscriptions on behalf of tenants’ apartments. (However, landlords of multi-tenant buildings that have a single utility meter-- and thus a single Xcel account for the entire building -- would continue to be permitted to hold CSG subscriptions for those properties. Renters would also continue to be able to individually subscribe to CSGs, so long as the Xcel account and CSG subscription are both  in the renter’s name.) We believe this would help deter landlords from switching tenant accounts to the landlord’s name in ways that are harmful to certain tenants. 

We have received mixed feedback on the proposal. Most (if not all) of those who have responded to the proposal share our concern over low-income renters losing eligibility for energy affordability programs and have expressed interest in helping to address that issue. However, several commenters have expressed strong opposition to the proposed changes to the CSG rules.

One of the main arguments opponents raise is that the proposed CSG rule changes are overly broad. Opponents argue that the rule changes would prevent tenants who want and choose to live in rental units where landlords assume tenants’ utility accounts from enjoying the benefits of CSGs. Several commenters also object to what they see as unfair targeting of the CSG program when the underlying problem (tenants losing eligibility for consumer protections and affordability programs) is not fully addressed merely by making a change to the CSG rules.

While we may not agree with all arguments raised in opposition to the proposal, we are currently working with some who have raised criticisms to better understand their concerns. We are also assessing whether we think amendments to the proposed CSG rule changes may be appropriate. Additionally, we have always known that more actions may be needed. The CSG rule change can be done fairly quickly, and we believe quick action is necessary. But we are talking with others about additional methods of tackling the underlying problem. We, and others interested in this issue, will be filing reply comments on December 6, 2021. We hope that the PUC will schedule a hearing on the proposal soon thereafter.

Keep an eye on our blog for further updates on this issue and, as always, feel free to reach out to us at 651-300-4701 or at info@cubminnesota.org.