PUC denies Xcel's request to purchase gas power plant

Published September 27, 2019 The Minnesota Public Utilities Commission has unanimously denied Xcel's request to purchase the Mankato Energy Center power plant. The PUC agreed with CUB that Xcel failed to show that spending $650 million was in the public interest and, crucially, that the utility was attempting to sidestep crucial regulatory processes in place to protect consumers from this type of overspending. CUB's statement on the decision is below. FOR IMMEDIATE RELEASE September 27, 2019 Contact: Annie Levenson-Falk, annielf@cubminnesota.org, 612-568-5707

Consumer advocate applauds denial of Xcel request to purchase gas power plant

MN Public Utilities today denied proposal for $650 million purchase

[SAINT PAUL] The Citizens Utility Board of Minnesota (CUB) applauds today’s decision by the Minnesota Public Utilities Commission (PUC) to deny Xcel Energy’s petition to purchase the Mankato Energy Center (MEC) natural gas power plant, after the utility failed to show that the expenditure would be in the public interest.

“Today, the PUC agreed with CUB and many other parties that this purchase was not in customers’ interest. For Xcel to spend $650 million of ratepayer dollars to purchase the plant would present too much cost and too much risk,” said Annie Levenson-Falk, CUB’s executive director. “MEC will continue to provide power, regardless, but customers will not have to pay more for electricity that’s under contract today.” Large industrial consumers, the state Department of Commerce, the Office of the Attorney General, and other parties also opposed the purchase. Commissioners cited a lack of evidence that the purchase showed net benefits for customers and the environment, the possibility that the plant could close early and leave customers with a multimillion-dollar stranded asset cost, and too many other uncertainties in the case. Commissioners also found that Xcel had tried to skirt crucial consumer protections by proposing to buy MEC outside of its Integrated Resource Plan (IRP), the statutorily required 15-year electricity plan that is currently under consideration. “It’s an inappropriate bypass of the IRP process,” said Commissioner Matt Schuerger. In the IRP, continued operation of MEC can be fit into the full picture of other power plants, wind, solar, energy storage, and other resources, to find the mix that is most in the public interest. Considering a single plant outside of the full picture, without a full comparison to other options and the overall electricity need, leaves customers at risk of over-paying. Additionally, commissioners found, Xcel had not complied with the requirement of Minnesota law to demonstrate that renewable energy options could not be equally cost effective and reliable before adding fossil fuel generation. “It did not meet the renewable preference statute in my opinion,” said PUC Chair Katie Sieben. Today’s decision is not expected to affect MEC’s operation. The two generators at the plant will continue to operate under contracts through 2026 and 2039. Xcel has stated that it will form an unregulated, private affiliate company to purchase MEC, avoiding additional costs or risks for customers. The PUC’s decision today allows Xcel’s regulated utility to propose again to purchase MEC in its IRP, though it is unclear if Xcel will do so. The Citizens Utility Board is studying Xcel’s proposed Integrated Resource Plan and conducting its own modeling. Next month, CUB will release an alternative Consumers Resource Plan, laying out an electricity plan that is less expensive for customers and lower emitting than Xcel’s proposal. The plan will be shared with the public on October 15, 6:00-7:30 p.m. at the Wilder Foundation in St. Paul.

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The Citizens Utility Board of Minnesota (CUB) is a nonprofit advocate for Minnesota’s utility consumers. CUB advocates for affordable and reliable utility service and clean energy for Minnesota residents and small businesses. For more information, see cubminnesota.org.