Co-op distributed generation tariffs in question

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Co-op distributed generation tariffs in question

June 13, 2016

During its weekly open "Agenda Meeting" on Thursday, June 9, the Minnesota Public Utilities Commission (PUC) held its first discussion regarding an objection filed by Fresh Energy and the Environmental Law & Policy Center against the PUC's possible approval of revised distributed generation tariffs filed by fourteen electric cooperatives 9. The objection's main argument was that new monthly fees included in the tariffs to recover the utilities' fixed costs were inappropriate, or unlawful. The co-ops based their fees a 2015 law change explicitly allowing cooperative and municipal utilities to charge such fees to customers who have distributed generation facilities under 40 kW so long as the fees are "reasonable and appropriate for that class of customer based on the most recent cost of service study." Minn. Stat. 216B.164, subd. 3 (a)

On May 12, the commission published a "Notice of Comment Period" requesting public comments regarding questions it posed in the notice about how the Commission ought to proceed. MMUA filed comments suggesting that the scope of any proceedings should be limited to tariffs that have actually been filed and not include those that might be filed later, particularly any established by municipal utilities because the law allows their local governing boards - and not the PUC - to approve them so long as the municipal utility has met certain requirements. Briefing papers prepared by PUC staff for the commissioners for the meeting make it clear that tariffs and fees by municipal utilities are not a target of the present proceedings.

The Commission on Thursday asked questions of Minnesota Rural Electric Association's representative who spoke on behalf of the 14 co-ops and also asked questions of two representatives from Meeker Electric Co-op which is involved in a separate but closely related customer complaint docket before the PUC. The discussion among the five commissioners and MREA focused on what authority the PUC should exert over the fees within the co-op tariffs. Should the commission determine whether each fee complies with the statute and either approve it or remand it to the co-op board? Should the commission calculate exactly what each fee should be? Should the commission determine whether just the methodology that all these particular co-ops used to calculate their fees complies with the statute? Are "fees" synonymous with "rates," and, if so, who determines whether they are "reasonable and appropriate" - the PUC or local rate-making co-op boards? How far should the PUC look into a utility's cost of service study to determine whether fees are truly related to fixed costs?

Discussions like Thursday's normally result in the commission issuing an order based on motion from one of the commissioners based on staff option recommendations and agreed to by a majority vote of commissioners. The full official order will be written by staff and issued in the coming days. However, it is clear that the commission agreed it will "open a generic investigation into the appropriate methodology or methodologies for establishing cooperative DG fees, and review and determine whether the specific fees filed by the cooperatives comply with Minnesota Statutes Section 216B.164."

It is possible for a customer of a municipal utility to petition the PUC to resolve a dispute with his utility over its distributed generation tariff as did customers of the 14 co-ops above. Resolution of any such hypothetical dispute would potentially involve findings made by the PUC during the proceedings to come in the present co-op docket. Therefore MMUA will remain vigilantly involved in those proceedings and apprise members of the MMUA Government Relations Committee and Distributed Generation Task Force of significant developments.

The PUC proceeding is docket # 16-09.

Please feel free to direct questions or comments to Bill Black at bblack@mmua.org or 763-746-0708.