House Assembles Energy Omnibus

Last week, the House Job Growth and Energy Affordability (JGEA) Committee passed its omnibus finance and policy bill.  The jurisdiction of this committee is large, so in addition to energy provisions, the bill (HF 843) includes policy and budget items related to the Department of Employment and Economic Development, the Housing Finance Agency, Explore MN Tourism, Department of Labor and Industry, Bureau of Mediation Services, and Department of Commerce.

The JGEA Committee took a non-traditional approach to assembling its omnibus.  While the Legislature was on Easter/Passover Break, Chair Pat Garofalo posted the energy policy provisions on the committee’s website and asked for stakeholder feedback (which MMUA provided).  After the Legislature returned to St. Paul on April 7, the entire bill (which the chair dubbed “150 pages of legislative awesomeness”) was released.  Over a series of three days, the committee then received public testimony on the bill.  Late Friday night, the bill was amended and passed out of committee.

By and large, this is a good bill for municipal utilities.  It contains no RES increase for any utility.  None of the utility assessments proposed in the Governor’s budget are included in this bill.  Notable provisions include:

  • The CIP program sunsets effective December 31, 2016 and a task force of stakeholders is established to develop a replacement conservation program.
  • New hydroelectric facilities over 100mW put into place after January 1, 2015 will count towards meeting the RES.
  • The 1.5% solar standard for IOUs may be met by a more affordable form of clean energy.
  • The IOU-optional “value of solar” tariff is repealed.
  • Municipal utilities and co-ops may charge a fee to net-metering customers cover the fixed costs of distributed generation.
  • All utilities may compensate net-metering customers at their avoided cost rate.
  • Municipal utility and co-op customers may choose to be compensated by retail rate bill credits, which may accumulate month-to-month but expire at year’s end.
  • The nuclear moratorium is lifted.
  • The Legislature must approve the MPCA’s 111(d) state implementation plan, and the state’s greenhouse gas reduction goals are modified to coincide with this plan.
  • IOU’s may propose multi-year, performance based rate cases (product of the e21 Initiative).
  • IOU’s may file for rate recovery for natural gas extension projects.
  • IOU’s may offer competitive rate schedules for energy-intensive, trade-exposed customers.
  • All utilities are asked to submit a report to the Legislature on statutes and regulations that lead to increased rates but no ratepayer benefit.
  • A study of the costs/benefits of creating a Public Power Authority for generation and transmission is commissioned.
  • Modifications are made to large solar energy generating system siting:  requiring a 400 foot setback from residential property, requiring the environmental review to consider the effects of the system on agricultural drainage systems, having the PUC analyze the impact of the system on airports, highways, and local comprehensive plans, and requiring local government approval before permits are issued.
  • Xcel’s Renewable Development Fund is changed to the Energy Fund within the state budget.  The use of these funds is expanded to include statewide rebates for solar/geothermal/wind/energy storage, solar incentives, rebates for electric, compressed, natural gas and propane vehicles, and various studies.  In addition to Xcel’s contributions, this fund receives a $7m General Fund Appropriation.  (Note:  During testimony, MMUA, MREA and Ottertail Power expressed concern with using Xcel ratepayer investments for programs outside their service territory as a dangerous precedent that could be expanded to include all utilities.)
  • CHP and cogeneration facilities are included in the definition of large energy facilities not subject to greenhouse gas emissions.

This week, the JGEA omnibus bill is scheduled for a hearing in the House Tax Committee.  From there, it will need to go to the Ways and Means Committee before the budget deadline of April 24.  MMUA Government Relations staff will continue to monitor this bill’s progress through the legislative process and weigh in as appropriate.

What Happens Next?

Members may wonder what will happen next, now that the House is advancing its energy provisions in a large policy and finance omnibus.  As you may recall, the Senate Environment and Energy Committee passed its energy omnibus (SF 1431) to the Senate floor in March.  Since there is no corresponding House energy policy omnibus, it is likely that Chair Marty will attempt to get the contents of his bill rolled into the budget omnibus of the Senate Environment, Economic Development, and Agriculture Budget Division (chaired by Sen. David Tomassoni).  This Division has not yet started to assemble its omnibus, but MMUA Government Relations staff will be watching the Senate closely to keep tabs on their energy policy positions.