A Rush to the Finish

The previous issue of The Capitol Letter noted that the Governor and legislative leaders were still negotiating an overall budget deal.  Those negotiations continued until last Friday night (May 15), when House Speaker Daudt and Senate Majority Leader Bakk announced they had reached a deal.  Governor Dayton quickly responded that he did not agree with the education target and demanded funding for universal pre-K (an additional $150 million).  House Republicans would not accept the additional education spending, and the Senate wanted to complete the work of the Session on time, so the Legislature proceeded to pass the budget despite the Governor’s objections.

Because the bodies were so far apart on the issues, the budget deal reached did not include the top priorities of either the House (tax cuts) or Senate (increased transportation funding).  The legislative leaders left over $1 billion on the bottom line so that these areas could be worked out in the 2016 Session.


No Tax Bill=No Refundable Sales Tax for Construction Materials

Since no tax bill was passed in the 2015 Session, several provisions of interest to MMUA did not come to fruition.  Unfortunately, language allowing the sales tax for construction materials purchased for a local government project to be refundable was not passed into law.  On a more positive note, the absence of a tax bill allows stakeholders and legislators additional time to discuss reforming taxation of electric generation property and potentially develop a consensus (which the current proposal does not have).

Since the Tax Conference Committee still remains open, it is likely they will continue their discussions where they left off and these provisions will again be discussed in 2016.


A Chaotic End for Energy

Despite the legislative leaders reaching agreement on spending levels for each area of the state budget, impasse remained in the jobs and energy budget.  The chairs (Sen. Tomassoni and Rep. Garofalo) were far apart on policy items and never reconvened the conference committee.  As the clock ticked towards adjournment, House and Senate leadership took over the negotiations and developed a new jobs and energy budget.  With less than an hour before Monday’s required midnight adjournment, the new bill (HF 1437) was passed off the Senate floor.

The bill contained mostly base level funding.  Of note, the $400K assessment on utilities for DER’s staff work on interregional organizations like FERC and MISO was sunsetted and no other DER assessments were increased.  The PUC did receive an additional $1.05 million to increase staff.  The bill also funded the Office of Broadband Development and provided $10.58 million for the Border-to-Border Broadband grant program.

A few energy policy positions were also included:

  • Allowing municipals and co-ops to charge a “reasonable and appropriate fee” to recover fixed costs from distributed generation customers
  • Allowing competitive rate schedules for energy intensive, trade exposed industrial customers of IOU’s
  • Multiyear, performance based rate plans for IOU’s (e21 Initiative)
  • Allowing rate recovery for IOU natural gas extension projects
  • Studying the possible move of some duties from DER to the PUC

MMUA and MREA staff worked with the Senate to draft net metering cost recovery language that could be accepted by their body, since this provision was not in their original bill.  On the floor, Senate Environment and Energy Policy Chair John Marty expressed significant opposition to this provision and offered amendments (unsuccessfully) to both weaken and remove the language.  There was quite a bit of discord on the floor regarding the process by which this bill came to be and the lack of time for Senators’ review, so the bill passed on a narrow 34-29 vote.

With mere minutes left to go in the Session, the bill was then passed by the House in 90 seconds.  Needless to say, there was no discussion of the bill’s contents.  Numerous representative refused to vote, and the bill passed 75-9.


Final Environment Bill has Many Helpful Provisions for Municipal Wastewater

After the legislative leadership announced their budget agreement, the Environment and Agriculture Conference Committee was finally convened.  Meeting Saturday night into Sunday morning, the conference committee agreed on a bill (HF 846) that included numerous provisions to rein in the MPCA on water quality standards:

  • MPCA must consult with a non-state entity to do a cost analysis of recently adopted and proposed water quality standards, which will consider the costs of meeting current standards, the upgrades and costs of meeting new standards, and the incremental improvement in water quality.  The analysis will include a sampling of 15 cities.
  • MPCA is required to do an independent peer review of water quality standards if the standard is:  estimated to cost permittees over $50 million in the first five years, uses a new model/methodology, or addresses a controversial issue.
  • Permittees are not subject to MPCA policies/guidelines if they were not adopted as a rule in accordance with the Administrative Procedures Act.
  • Until rulemaking is completed for new wild rice sulfate standards, permittees will not be required to spend money on sulfate treatment technologies.  The MPCA also cannot list waters as impaired until rulemaking is complete and wild rice waters are identified.  Rulemaking is required to be completed by January 2018, after which permits can be reopened to include limits on the new sulfate standards.

The conference committee report also includes a provision exempting utilities from the application fee to cross public lands, so long as the line/cable is under 100 kilovolts.  Other high-profile provisions in the conference report unrelated to utilities include funding to combat the avian flu, a compromise position on the Governor’s buffer strip proposal, and eliminating the MPCA Citizens Board.

This conference report was passed by both the House (83-50) and Senate (35-30) on the final day of session.


So What Happens Now?

The Governor has promised to veto the education bill, so a Special Session is imminent.  What remains to be seen is if he will veto any other budget bills.  He is currently receiving pressure from environmentalist groups to veto the environment and energy bills.  The Governor has until midnight Saturday to make those decisions, so MMUA Government Relations staff will update members on the fate of our bills once it is known.