DFL-controlled energy committees in the House and Senate have labored this month on omnibus legislation designed to address concerns about climate change and to boost Minnesota’s renewable energy industry.
Shortly before the Easter/Passover break, the Senate Environment and Energy Committee marked up and passed its omnibus energy policy bill. Sponsored by the committee’s chair, Sen. John Marty, DFL-Roseville, the bill addresses many of the same policy initiatives as the House counterpart, which was authored by Energy Policy Chair Melissa Hortman, DFL-Brooklyn Park. But the chambers will have many differences to haggle over in the coming weeks before a final bill is sent to Gov. Mark Dayton.
Marty’s bill went from his committee to the Senate Environment, Economic Development and Agriculture Finance Committee. Hortman’s bill has passed out of her committee and is awaiting a hearing in Ways and Means.
At the moment, lobbyists on all sides of the issue have points to cheer and bemoan.
Renewable energy advocates have pushed especially hard for new policies and programs that would lead to more solar power generation in the state. The centerpiece of those efforts has made it into both bills, though in diminished form. An initial proposal to require for Minnesota utilities to generate 10 percent of their power from solar sources by 2025 has been knocked down to 4 percent in both the House and Senate. The key difference: In the House version, rural electrical cooperatives and municipal utilities, which have contended they would have difficulty paying for the added capacity, are exempted from the standard, which would apply only to investor-owned utilities. (The Senate bill requires municipal utilities and coops to generate 2 percent of their power from solar sources by 2025, while the investor-owned utilities would be subject to the 4 percent requirement.)
Joel Johnson, director of government affairs for the Minnesota Rural Electric Association, said his group has many concerns about the bill but is happy with how the House has dealt with the solar standard.
“We were really appreciative of Rep. Hortman’s willingness to work with us on our concerns,” Johnson said.
Lynn Hinkle, director of policy development for the Minnesota Solar Energy Industries Association, noted that the differences between the two chambers on the solar energy standard leaves a lot of room for future work in committee and conference committee.
“There’s a pretty significant difference in the bills. We’re hoping that gives us an opportunity to work something out as well,” Hinkle said.
Legislators and officials in Gov. Mark Dayton’s administration have spent more than a year discussing ways to overhaul a long-standing state program designed to encourage small businesses and homeowners to generate electricity on their properties. State law has allowed utility customers who generate their own renewable energy onsite to sell any excess energy to the utility and get paid at the retail rate. The program is known as “net metering,” and the Dayton administration has sought to increase activity among such mom-and-pop producers by raising the cap on their energy sales to utilities from 40 kilowatts of capacity to 1 megawatt. Marty’s bill adopts that Dayton target, while the House’s proposed increase is significantly lower.
As to what utilities must pay for this energy, a proposal to end the retail-rate standard is advancing in different forms in both chambers. In its place, the bills would institute a newly configured rate for purchasing excess solar energy, based on a calculation that takes into account the value of the solar to utility and the ratepayer.
The House bill refers to its rate as the “rate of solar.” The Senate calls its rate an “alternative tariff.”
Business interests and utilities have signaled a willingness to support a new rate for solar. But they are also wary about the proposals that have advanced. Johnson and Ben Gerber, the Minnesota Chamber of Commerce’s energy policy manager, object to the proposal because the bills’ language does not allow the rate to decline below the retail rate.
“We recognize that solar has a value,” Gerber said. “But the way the value of solar is written is that it can never be lower than retail. But that’s not the true value of solar. The value of solar is whatever it is. You can’t put a floor or ceiling on it.”
The bills reflect the reality that policymakers can’t expect to reach the stated goals for solar generation without a significant subsidy. Both bills feature funding schemes aimed at getting small solar producers off the ground. The House bill includes an assessment of up to 1.33 percent of a utility’s gross annual retail electricity sales. Qualifying solar module owners could receive payments for up to 20 years, in the House proposal.
The Senate bill would have utilities contribute 1 percent of their gross electric sales to be spent on production incentives. The Senate bill also utilizes some funds from the Renewable Energy Fund.
‘Made in Minnesota’ push
There’s also a solar industry incentive that’s prominent in the bills known as the “Made in Minnesota” program, which is a priority for Senate Environment, Economic Development and Agriculture Finance Chair David Tomassoni, DFL-Chisholm. The program would provide incentives for Minnesota-based solar panel makers. To date there are only a few solar manufacturers in Minnesota, including Silicon Energy’s plant in Mountain Iron, which lies in Tomassoni’s district. The House and Senate have differing Made in Minnesota proposals, with the Senate’s being more robust.
The Made in Minnesota program’s fate will hinge on whether lawmakers view it as a safe investment of taxpayer dollars or a gamble on unproven technology. Hinkle said Made in Minnesota is written as a performance-based incentive to allay those concerns.
“What this is doing is shifting away from the upfront incentives to a performance-based incentive. You don’t get money, you don’t get an incentive unless the solar module performs,” Hinkle said.
While the House is more conservative than the Senate on the solar energy standard, the opposite is true when it comes to a proposal to expand the long-term Renewable Energy Standard (RES) first passed in 2007. Renewable energy groups, in particular Wind on the Wires, have been pushing to increase the RES to stipulate that 40 percent of the power sold by Minnesota utilities must be generated from renewable sources such as wind and solar by 2030. The original RES legislation targeted 25 percent from renewables by 2025.
The 40 percent proposal remains intact in the House bill. The Senate takes a more cautious approach by creating a “renewable integration study” that would examine issues related to achieving 40 percent by 2030 while maintaining the stability of the electrical system. The Senate study also proposes to analyze moving the RES to 45 percent and 50 percent.
Joe Sullivan, regional policy manager for Wind on the Wires, said the issue was studied before the original RES was enacted. It concluded at the time that achieving the goal required more transmission capability. With transmission needed for a variety of reasons at the moment, Sullivan said, increasing the RES is warranted. (The municipal and electrical cooperatives are exempted from it in the House bill.)
“Our feeling is that the wind integration study in 2006 answered the question that you can integrate higher levels of renewables if you build transmission,” Sullivan said. “The way we look at it is, now is a good time to do 40 by ’30, and we know there is going to be more transmission that’s needed. We like the House approach.”