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Some improvements, but legislature’s energy bill is still bad for rural Minnesotans

Published May 24, 2017

On Monday, the legislature sent a revised omnibus jobs and energy bill to Governor Dayton, including this year’s energy policy provisions.

The bill, SF 1456, was the result of negotiations among legislative leadership and the Governor. However, DFL conference committee members reported that the bill contained some items that the governor had expected would be deleted, including elimination of the Conservation Improvement Program (CIP) for small utilities.

The Governor has not yet publicly stated whether he will sign or veto the bill. CUB would support a veto in order to remove the harmful CIP language. This bill contains essential government budgets — including economic development, housing, and many other non-energy items — so a version of it must pass and be signed by Governor Dayton before July 1. If the governor vetoes this bill, the legislature would have to continue overtime work to avoid a partial government shutdown.

The bill passed on Monday is an improvement to the previous version, but it still leaves consumers worse off — particularly people in rural Minnesota. As a follow-up to CUB’s May 4 analysis of the previous energy bill, here is an update on the policies that we are following most closely.

What’s in:

* Exempting small utilities from the Conservation Improvement Program. Cooperative utilities with fewer than 5,000 members and municipal utilities with fewer than 1,000 customers will no longer have to offer conservation rebates and incentives to their customers, nor try to meet a 1.5% annual energy savings goal.

CUB strongly opposes this provision. People in rural areas should have access to these programs, just like people in larger cities. The programs help consumers reduce energy usage, save money, and reduce emissions, and they help the utility save money, because it’s often cheaper to conserve than to purchase the energy that would have otherwise been used.

Taking away co-op and municipal utility customers’ ability to take solar complaints to the PUC. If cooperative or municipal utility customer has solar panels or other generation at their property, the utility can charge them an extra monthly fee — but that fee has to be in line with state law. If the customer thinks the fee is too high and doesn’t comply with the law, they can bring a complaint to the PUC. This bill removes customers’ ability to take complaints to the PUC. Co-op customers instead must have complaints resolved by third-party mediators. It’s unclear what recourse, if any, is now available to municipal utility customers.

Governor Dayton vetoed similar language as a stand-alone bill, and this bill still leaves customers with no fair and accessible protection from being overcharged, which will discourage people in rural areas from getting solar panels.

Setting a state goal that electric rates be 5% below the US average. Affordable energy is CUB’s goal, but this language isn’t drafted in an effective way. The focus on rates instead of total costs could prompt utilities to shift more costs to fixed monthly fees on bills — which customers can’t control by conserving energy. And we don’t want utilities to put of needed investments or stop good innovation to keep rates low in the short term, because this could be much more expensive in the long run.

* Increasing consumer protections in the residential Property Assessed Clean Energy (PACE) program. PACE programs let people pay back energy improvement loans through their property taxes. In Minnesota, PACE has been working well for commercial properties, and CUB is interested in it as an option for homeowners, too. However, consumer protections are needed before PACE loans are sold to residential customers. The bill puts residential PACE on hold until consumer protections can be put in place, and names CUB to a task force to address the issue.

What’s out:

* Prioritizing large business rates and status quo energy jobs. Economic growth and jobs are important considerations — but this language would have prioritize low utility costs for business above residential affordability, large businesses over small businesses, and status quo energy jobs (e.g. in expensive coal plants) over jobs in the renewable and efficiency industries or other businesses that would benefit from cheaper, cleaner power generated by other sources. We are happy the language has been removed.

* Eliminating certificate of need for large renewable energy projects and pipelines. Without certificate of need, Minnesotans would have be on the hook for expensive, decades-long investments without knowing whether those investments are actually cost effective. Renewable energy is an excellent resource for consumers, but these provisions would have eliminated a significant protection for customers of monopoly utilities. It is good for utility customers that they have been removed.

Author: Annie Levenson-Falk

One Response to "Some improvements, but legislature’s energy bill is still bad for rural Minnesotans"

  1. GypsyCowboy Posted on May 25, 2017 at 8:16 am

    The approach to the conservation improvement program should shift the goal measurement from 1.5 % reduction to measuring the cost per kWh saved. There are investments being made with the $/kWh saved 100 times (plus) over the cost of a kWh.
    In regard to the cost of a kWh being 5% below the national average, although honorable sounding, is ridiculous … particularly in a regulated industry …
    The issue with the fixed fee for solar panel owners is that it does not address the the real problem which is found in the administrative rule requiring utilities to pay retail rates for excess generation … The solar panel owner should earn a return equivalent to the utilities average cost of generation … The current rule is nothing more than a subsidy paid for by other customers.

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