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Solar outlook cloudy: House, Senate differ on energy standards

Charley Shaw//May 3, 2013

Solar outlook cloudy: House, Senate differ on energy standards

Charley Shaw//May 3, 2013

The 4 percent solar standard in the Senate bill, sponsored by John Marty, above, was knocked down to 1 percent before being approved by the Senate Environment, Economic Development and Agriculture Finance Division. (Staff photo: Peter Bartz-Gallagher)

After 10 days of limbo and behind-the-scenes talks at the state Capitol, legislation to boost the state’s solar power industry has passed out of House and Senate committees.

Environmental groups have spent the session pushing state lawmakers to set a requirement for electrical utilities to generate 4 percent of their power from solar sources by 2025. That proposal, coupled with financial incentives to help achieve the goal, has been opposed by several utility groups. On Thursday morning, the House Ways and Means Committee passed the 4 percent standard on a 15-13 vote that saw two DFLers join committee Republicans in opposition. The standard in the Senate bill, sponsored by Environment and Energy Committee chairman John Marty, DFL-Roseville, was knocked down to 1 percent before being passed by the Senate Environment, Economic Development and Agriculture Finance Division on a party-line vote.

Marty made the concession to win approval after the committee came to an impasse on Earth Day, April 22, in the face of industry opposition.

“I wish we could be more aggressive. Having said that, I feel there is a lot of good stuff in the bill,” Marty said.

Environmental groups were immediately disappointed to see the standard reduced. Steve Morse, executive director of the Minnesota Environmental Partnership, noted that the bill not only contained a diminished standard, but also lacks incremental increases on the way to reaching the 2025 goal.

“This is disappointing,” Morse said. “This is quite frankly unacceptable as a final bill. I’m hoping the Senate can work on it as we go forward. It doesn’t create the jobs and clean energy economy of the future.”

A number of energy advocates noted that gradually ramping up the standard before 2025 is important, because a federal tax incentive is scheduled to expire in 2016.

Rural/urban divisions over standard

The tense committee hearings over utilities policy have stood in sharp contrast to the impassioned speeches that energy advocates and Gov. Mark Dayton have made regarding climate change and the need for legislation to foster alternatives to coal and natural gas. Advocates gathered at the Capitol on Earth Day for a rally in the Capitol rotunda, where Dayton called for the state to move toward entirely eliminating the use of coal.

The energy bills sponsored by Marty and his House counterpart, Energy Policy Division chairwoman Melissa Hortman, DFL-Brooklyn Park, were both given Earth Day hearings, but the mood in committee stood in contrast to that of the rally. The House bill did not receive a vote in Ways and Means at the time, because it was missing a fiscal note. The opposition from utilities voiced in front of the Senate Environment, Economic Development and Agriculture Finance Division prompted the panel’s chairman, Sen. David Tomassoni, DFL-Chisholm, to hold off on a vote.

After 10 days and Thursday’s successful party-line vote, Tomassoni said the changes muted but did not eliminate concerns among utilities.

“I think we’re in the situation where people are saying ‘I like it, but …’ When you get to that situation, you’ve got a good compromise,” Tomassoni said.

The energy bill has the tendency to split DFLers along rural/urban lines. The solar standard drew opposition from rural electrical cooperatives and municipal utilities, who said the expansion would significantly increase costs. To address their concerns, co-ops and municipals were exempted from the standard in both bills. The Senate bill also exempts large power consumers in northern Minnesota, such as paper mills and taconite mines.

The Senate’s position sets up a showdown in conference committee with the House, where the Ways and Means Committee on Thursday passed the 4 percent solar standard to the floor. Hortman said Minnesota should join the 16 other states that have enacted solar standards.

Regional concerns were evident in the House vote, as DFL Reps. Jeanne Poppe of Austin and Tom Anzelc of Balsam Township crossed party lines in dissent. Poppe said her district has co-ops, municipal utilities and investor-owned utilities, and that the bill affects the customers of the investor-owned utilities while carving out the others. That means some people could see their electrical rates go up due to the costs of complying with the bill’s requirements, even as their neighbors don’t see increases.

“It just is an unequal playing field,” Poppe said. “Energy and electricity are critical issues for growing in all of Minnesota and certainly in rural Minnesota. I do think there’s potential for good growth and good outcomes. I just think this bill isn’t ready for that.”

Business opposes solar push

Business interests are opposed to the solar requirement as well as other provisions in the bill. Ben Gerber, the energy policy manager for the Minnesota Chamber of Commerce, said the solar standard shouldn’t move forward because the costs of putting the increased generation on the system aren’t known.

“We really are opposed to any sort of standard, especially when there hasn’t been any study to look at the cost impacts,” Gerber said.

The House and Senate also differ considerably over how to provide funding for solar incentives. Earlier this session, energy advocates rolled out a proposal that included a gross receipts tax on utilities of up to 1.33 percent. Neither the House nor Senate bill includes the tax as it was initially proposed. The Senate uses $10 million from the Renewable Energy Development Fund, which consists of Xcel Energy money, for solar incentives. The House requires utilities to use up to 1.33 percent of their sales to go to solar projects of their choosing. Hortman said her incentive is different from the original tax.

“Instead of taking 1.33 percent of [the utilities’] money and bringing it into state government and paying it out to their customers, we’re saying: You run the program, and you get to say no at a certain point,” Hortman said.

A lobbyist for Xcel Energy, the state’s largest investor-owned utility, testified that the incentive in the House bill would amount to about $40 million a year for the company. Gerber said the outcome would be the same as the original tax proposal, because the resulting cost would fall on rate payers.

“It’s the same thing, essentially, as a tax,” Gerber said. “It’s just that [the state] isn’t levying the tax. They’re making the utilities the bad guy here.”

The bills also take a stab at overhauling an existing incentive called net metering, which encourages homeowners and small businesses to install solar panels by allowing them to sell any excess power they generate to the utility. Utilities, in turn, are required to pay retail rates for that power. The Minnesota Division of Energy Resources, which is part of Dayton’s administration, has proposed to increase the cap on the amount of net-metered solar power that utilities must buy from 40 kilowatts to 1,000 kilowatts in hopes of increasing the volume of solar energy produced in Minnesota. (The bills keep the standard for co-ops and municipal utilities at 40 kilowatts.)

At present, the solar standard that energy advocates launched earlier this session can’t pass in the Senate and appears dicey in the House. But the prospects of significant energy legislation aren’t being discounted by either foes or allies because of the support of Dayton, who prominently featured the issue of climate change in his State of the State address. Will Steger, the Arctic explorer who has been a vocal supporter of energy legislation this session, is widely believed to have Dayton’s ear.

To consider the energy bills dead would be to consider Dayton’s stated positions as merely lip service, which many lobbyists and advocates don’t assume to be the case. In fact, when Dayton addressed the Earth Day rally, he regarded this year’s legislation as a small part in his vision for renewable energy.

“I would like to see Minnesota — after this session and after the Marty-Hortman legislation passes — set a goal eliminating all power from coal-fired power plants,” Dayton said.

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