MPUC Approves Multi-Year Rate Case Settlement, Opens Docket to Develop Performance Metrics

Yesterday, the Minnesota Public Utilities Commission (“MPUC”) approved a settlement between Xcel Energy and various intervening stakeholders, to resolve the revenue requirement issues in Xcel Energy’s pending multi-year rate increase.  The MPUC appeared to struggle with accepting the settlement in lieu of the full evidentiary record it is used to on financial issues.  Nonetheless, it ultimately agreed with stakeholders’ assessment that the deal was in the public interest, as well as an opportunity to break Xcel’s cycle of continuous rate cases over the last decade or so.

As part of the MPUC’s effort to get comfortable with the settlement, it resolved to open a new docket to develop and potentially apply performance metrics to Xcel Energy’s rates during the pendency of the approved multi-year rate increase.

In addition to approving the settlement, the MPUC addressed various revenue allocation and rate design issues.  With respect to revenue allocation, the MPUC deviated from prior practice of approving one class cost of service study (“CCOSS”), and using that MPUC-approved CCOSS as a starting point for revenue allocation.  Instead, the MPUC broadly commented on the various CCOSSs proposed by parties in the case and then chose a revenue allocation before any further in-depth discussion of the CCOSS or making any particular determination on the CCOSS.

The resulting table of increases by class for 2016 appears below:


Class Increased Revenue (000s) % Apportionment $ Increase (000s) % Increase
Residential $1,135,268 36.74% $63,812 5.96%
C&I Non-Demand $108,512 3.51% $3,063 2.90%
C&I Demand $1,818,873 58.86% $65,964 3.76%
Lighting $27,695 .90% $1,834 7.09%
Total $3,090,348 100% $134,673 4.56%


The MPUC further determined that the same percentage apportionment would be applied to the rate increases in 2017, 2018, and 2019. The MPUC then went on to rate design, making some minor changes to interruptible service and retained the existing residential fixed customer charges.  The MPUC concluded by making several specific determinations on the CCOSS.

A written order detailing the MPUC’s decision will follow.

Behind the Meter Energy Storage Gets a Boost in California

On April 6th, the energy storage market received a boost in California when state regulators authorized $196 million in new rebates for customers who install onsite (behind the meter) energy storage systems.


The change occurs under the California Self Generation Incentive Program (“SGIP”). SGIP provides a financial rebate to energy customers who install new qualifying technologies that meet all or a portion of the customer’s on-site electricity needs. Qualifying technologies include wind turbines, waste heat to power technologies, pressure reduction turbines, internal combustion engines, microturbines, gas turbines, fuel cells, and advanced energy storage systems.

SGIP was established in 2001 and has been one of the longest-running and most successful distributed generation incentive programs in the country.  As of December 2016, SGIP has funded 2,178 completed projects representing over 450 MW of rated capacity. An additional 312 projects representing over 178 MW of rated capacity are in process towards completion.

A Win for Behind the Meter Storage

In 2016, a new California law authorized an increase in the total SGIP budget from $83 million per year to $166 million per year. On April 6, the California Public Utilities Commission (“CPUC”) formally approved this increase for years 2017, 2018, and 2019, raising the total SGIP incentive budget authorized through 2019 to $566,692,309.

The big winner in the decision was the behind the meter energy storage market. The CPUC allocated 85% of the new funds toward energy storage projects, with the remaining 15% allocated to renewable generation projects. That means the California energy storage market will receive a boost of $196 million over the next three years. In terms of the specific details, 90% of the allocation for energy storage projects must be used for projects greater than 10 kilowatts (“kW”) in capacity, with the remaining 10% available for projects less than or equal to 10 kW.

The win reflects the intent of the SGIP program to facilitate the state’s achievement of climate change goals through driving transformation of the energy system. Specifically, the decision finds that as “the proportion of renewable electricity on the grid increases, energy storage can play an increasingly important role in meeting California’s climate goals… and [i]ncentive programs can help facilitate market transformation.” This type of thinking represents continued leadership by California in the field of energy storage policy.

Next Steps

Applications for the new SGIP funding will be accepted beginning on May 1, 2017. Applications can be submitted through a portal on the SGIP portal page available here.


BLM Directed to “Try Again” on NEPA Analysis for Echanis Wind’s Transmission Line: Greater Sage-Grouse Remains Key Issue for Project Development Despite USFWS Decision Not to List Under ESA

In the continuing saga of the Echanis wind project in Eastern Oregon, U.S. District Court Judge Michael Mosman on April 18 vacated the Bureau of Land Management’s (BLM)’s Record of Decision (ROD) on a right-of-way grant decision under the Federal Land Policy and Management Act for a 230-kV transmission line conveying power generated from the wind project proposed for development on private land on the north side of Steens Mountain. The wind project would include between 40 and 69 wind turbines near Diamond, Oregon.

The case was before Judge Mosman on remand from the Ninth Circuit, which instructed Judge Mosman to vacate the BLM’s ROD unless he found it advisable that the ROD remain in place. The Ninth Circuit’s 2016 opinion followed Judge Mosman’s initial decision to grant the BLM’s motion for summary judgment. Judge Mosman had ruled that the BLM had adequately considered the impact of the project on fragmentation and connectivity of sage-grouse habitat, but the Ninth Circuit’s decision reversed that decision based on its determination that the BLM’s environmental review under the National Environmental Policy Act (NEPA) did not adequately assess baseline sage-grouse data during winter at the proposed project site. Continue Reading

Updates to Energy Related Bills in the 2017-2018 California Legislative Session

In our first post, the Stoel Rives’ Energy Team provided a summary of energy related bills introduced by California legislators during the first half of the 2017-2018 Legislative Session. Provided below is a summary of changes to bills we have been following, as well as a list of energy related bills not included in our previous entry. We will continue to monitor and update all energy related bills as the legislative session proceeds.

Amended Bills

AB 35 (Quirk, D): Residential and nonresidential buildings: energy savings program.  
STATUS: Introduced December 15, 2016;
amended March 23, 2017.

  • AB 35 was previously drafted to require agencies implementing energy efficiency programs to establish metrics and collect and use data systematically across those programs to increase the performance of those programs in low-income communities.
    • As amended, AB 35 now proposes changing the State Energy Resources Conservation and Development Commission’s program to achieve greater energy savings in California’s existing residential and nonresidential building stock by adopting an update to the program at least once every five years instead of every three years.

AB 655 (O’Donnell, D): California Renewables Portfolio Standard Program.    
STATUS: Introduced February 14, 2017; amended March 23, 2017.

  • The California Renewables Portfolio Standard Program requires the CPUC to establish a renewables portfolio standard requiring all retail sellers, as defined, to procure a minimum quantity of electricity products from eligible renewable energy resources, as defined, so that the total kilowatt hours of these resources sold to their retail end-use customers achieves 25 percent of retail sales by December 31, 2016, 33 percent by December 31, 2020, 40 percent by December 31, 2024, 45 percent by December 31, 2027, and 50 percent by December 31, 2030. The program additionally requires each local publicly owned electric utility, as defined, to procure a minimum quantity of electricity products from eligible renewable energy resources to achieve the procurement requirements established by the program. Further, existing law provides that a facility engaged in the combustion of municipal solid waste is not an eligible renewable energy resource, except as regards to generation before January 1, 2017, from a facility located in Stanislaus County prior to September 26, 1996.
    • This bill would provide that a facility engaged in the transformation of municipal solid waste is an eligible renewable energy resource, and can earn renewable energy credits, if it operates, on an annual basis, at not less than 20 percent below the permitted emissions of air contaminants, or toxic air contaminants concentration limits, for the facility and the operator of the facility has reported its emissions to the applicable air pollution control district or air quality management district for a period of not less than five years, as specified.

Continue Reading

Generator Receives Another Shot at Obtaining CAISO Congestion Revenue Rights

On April 4, 2017 (NextEra Desert Center Blythe, LLC v. FERC, Case No. 16-1003 (“NextEra”)), the DC Circuit issued a decision remanding back to the Federal Energy Regulatory Commission (“FERC”) orders denying NextEra Desert Center Blythe, LLC’s (“NextEra”) complaint against the California Independent System Operator Corporation (“CAISO”) regarding the allocation of congestion revenue rights (“CRRs”) under the CAISO tariff. The DC Circuit’s ruling was narrow, based on finding ambiguity in the relevant contract and tariff provisions where FERC determined there was none. The court’s decision highlights the importance of addressing potential regulatory cost recovery options in a FERC-jurisdictional contract. Continue Reading

Maryland Passes Bill to Allow 30% State Income Tax Credit for Energy Storage

In what some commentators are calling the first of its kind, Maryland’s legislature has passed a bill that would allow taxpayers to claim a state income tax credit equal to 30% of the installed cost of an energy storage system.  The bill would cap the credit amount at $75,000 for a commercial installation or $5,000 for a residential application and would define “energy storage system” as any “system used to store electrical energy, or mechanical, chemical, or thermal energy that was once electrical energy, for use as electrical energy at a later date or in a process that offsets electricity use at peak times.”  See Maryland S.B. 758.  This means that more than just battery storage technologies will be eligible for the credit.  The credit would not be refundable, so a taxpayer could not receive a refund check for any credit amount in excess of tax liability.  Moreover, a taxpayer could not claim any unused credit amount on a previous or future year’s state income tax return.

To claim the credit, a taxpayer would have to apply for and receive a tax credit certificate from the Maryland Energy Administration, which would review applications on a first-come, first-served basis.  The bill would authorize the issuance of tax credit certificates allowing up to only $750,000 in total credits each year.  The bill will become law if signed by Governor Larry Hogan and would apply to systems installed on or after January 1, 2018, and before the end of 2022.

A Model for Other States to Follow?

Though relatively modest, Maryland’s income tax credit program could expand and serve as an important early model for incentives targeted at the growing energy storage industry.  This is a potential trend to watch as states evaluate how best to spur improvement in their energy infrastructure.  We will continue to follow this act and similar developments affecting the energy storage industry closely.

California Community Solar Forum Points to Need for Reforms

The community solar program in California is off to a slow start. The reasons for this slow start were discussed at a solar developer’s forum held by the state’s major utilities and policymakers on April 5, 2017.

Background on Community Solar in California

California’s community solar program is formally known as the Enhanced Community Renewables (“ECR”) program. The ECR program is part of the larger Green Tariff Shared Renewables (“GTSR”) program. The GTSR program was signed into law in 2013, and final program rules were adopted in May 2016. Together, these programs require the California investor-owned utilities (“IOUs”) to procure 600 megawatts (“MW”) of new renewable energy.

Under the ECR component of the program, customers can enter into agreements directly with third party project developers to purchase new clean energy generated by a project located in their community. ECR projects are limited to sizes between 500 kW and 20 MW.

As we recently reported, the IOUs held their first request for offer (“RFO”) last fall, which sought to award power purchase agreements (“PPAs”) for 170 MW of new renewable energy from ECR projects. However, very few bids were submitted in the solicitation, and ultimately no PPAs were awarded. The developer forum was intended to discuss some of the reasons for this lackluster performance. Continue Reading

CPUC and CEC Announce Joint Policy Forum on Future of Retail Electricity in California

Today the California Public Utilities Commission (CPUC) and California Energy Commission (CEC) announced that they will hold a joint forum on May 19, 2017 to discuss the future of retail electricity in California.

According to the announcement, by around 2025, over 80% of all electricity customers of the state’s three main investor-owned utilities (IOUs) will be receiving some form of alternative electricity service. Primarily, this refers to customers participating in a Community Choice Aggregation program, installing rooftop solar, participating in Direct Access, or joining a community solar project. The retail policy landscape is changing organically as a result of declining prices for solar, energy storage, and other dynamics in the marketplace, rather than by the conscious choice of policymakers, according to the announcement.

As a result, the forum is intended to allow policymakers to grapple with some of the implications of these changes. The agenda will address a wide range of issues, including:

  • Principles to guide future regulatory and legislative reforms;
  • The current state of customer choice programs in California;
  • The IOUs’ “vision for the evolution of retail electricity choice and their role in its provision”; and
  • What customers want and consumer protection issues.

It will be particularly interesting to hear how the IOUs see their future role in a market where more than 80% of customers receive some form of retail electricity service from an outside provider. In point of fact, the IOUs have been discussing this future for many years. However, framing these changes as a near-term necessity that is being driven by outside forces seems to lend more immediacy to the discussion planned here. Furthermore, attendance is expected from the CPUC, CEC and Legislature, signaling that these issues have the attention of key decision-makers.

The event will be webcast. You can access the webcast here.

If you wish to attend in person, you are encouraged to register in advance due to high interest and limited space. Here is a link to RSVP.

California Court of Appeals Upholds California’s Cap-and-Trade Program

On Thursday, a 2-1 decision by the Third District Court of Appeal in Sacramento upheld California’s program to reduce carbon emissions. California’s controversial and signature cap-and-trade program creates a firm limit on carbon emissions and auctions allowances that permit companies to release greenhouse gases into the atmosphere. Covered entities are generally large emitters of greenhouse gases, who under the program must surrender emissions allowances or offset credits to cover their emissions, or face monetary penalties or other negative consequences. Auctions are a key component of how California expects to meet its targets to reduce emissions to 1990 levels by 2020, and 40 percent below 1990 levels by 2030. Continue Reading

California Lawmakers Introduce Clean Peak Standard Legislation

Two new bills, similar in concept but differing in approach, seek to align renewable energy output with peak electricity demand. Currently, the California Renewable Portfolio Standard (RPS) requires investor-owned utilities to procure 50% of total retail sales of electricity from renewable energy resources by 2030. If enacted, the bills would expand the RPS from a clean energy procurement mechanism to include, for the first time, the procurement of non-fossil fuel based capacity resources. Continue Reading