Minnesota Community Solar Gardens Forecast: Partly Sunny with a Chance of Rain

Within days of its open on December 12, 2014, Xcel Energy’s Minnesota Community Solar Garden (CSG) Program had well over 300 MW worth of CSG applications submitted and by this writing nearly 430 MW.  The rush of significant application creates a question of “who’s in line first?”  That was the question before the Minnesota Public Utilities Commission (Commission) today.

As noted in our prior coverage, the Commission instructed the program to be “first-ready, first-served” and laid out specific instructions on the steps developers would need to take to complete applications and develop a garden in compliance with the program. These instructions were the result of substantial deliberation with interested parties and reflected in Xcel’s shiny new Tariff Section 9 governing the CSG Program.  The problem, however, is that any CSG  needs to interconnect to Xcel’s distribution system, and that process is governed by Xcel’s existing Tariff Section 10.  The interplay of these two tariff sections complicates the “who’s in line first?” issue by adding the question “which line?” Importantly, over 100 MW of applications destined for the CSG program were in line in the Section 10 interconnection queue before the CSG program opened last month.  A developer sought resolution of the two-queue issue from the Commission.

 After considerable discussion, the Commission essentially decided the interconnection queue should follow the CSG program queue and directed as follows:

  • CSG applications will enter the appropriate Section 10 interconnection queue and be placed or reordered in this queue based on the date and time that Xcel determines the application to be complete under Section 9.
  • For any interconnection applications already studied that require additional engineering study due to changes in the interconnection queue positions, Xcel was directed to track the additional cost incurred by re-performing parts of the engineering study and bill applicants for the parts of the study that were required to be redone due to distribution system changes.

Although it was understandably difficult for the Commission to decide at what point an application should receive a spot in line, today’s decision vests more weight in Xcel’s completeness determination – previously a ministerial task.  Furthermore, the Commission left open how CSG developers that have invested money in furtherance of Section 10 interconnection applications will receive value for that investment if they move backwards in the Section 10 interconnection queue. 

During deliberations the Commission also acknowledged that other issues are bound to percolate.  Stay tuned . . .

California Governor Pledges 50% Renewable Energy by 2030

In November 2008, former Governor Arnold Schwarzenegger signed Executive Order S-14-08, which set a 33 percent renewable portfolio standard for California by 2020.  On Tuesday, Jerry Brown was sworn in for a record fourth term as Governor of California and, during his inaugural speech, Governor Brown touched on California’s ambitious climate change policies, including a proposal for California to obtain 50 percent of its electricity from renewable resources within the next 15 years.  Citing to AB 32, Governor Brown stated:

“[W]e are well on our way to meeting our AB 32 goal of reducing carbon pollution and limiting the emissions of heat-trapping gases to 431 million tons by 2020. But now, it is time to establish our next set of objectives for 2030 and beyond.

Toward that end, I propose three ambitious goals to be accomplished within the next 15 years:

  1. Increase from one-third to 50 percent our electricity derived from renewable sources;
  2. Reduce today’s petroleum use in cars and trucks by up to 50 percent;
  3. Double the efficiency of existing buildings and make heating fuels cleaner.”

Stoel Rives will continue to monitor legislative and regulatory activity involving the California renewable energy portfolio standard.

Initial Take: Xcel Energy’s 2016-2013 Integrated Resource Plan for Minnesota

Today, Xcel Energy filed its 2016 – 2030 Integrated Resource Plan.  Xcel Energy’s proposal is fairly significant in scope – it proposes to cut CO2 emissions by 40% by 2030, add new renewable and natural gas generating resources, and lay the stage for reforming the resource planning process conistent with its framework filing and proposals from the e21 Initiative.  Specifically, Xcel Energy’s preferred plan contains the following elements:

  • Add approximately 1,800 MW of wind resources;
  • Add approximately 1,700 MW of utility-scale solar resources;
  • Add approximately 1,750 MW of natural gas peaking resources;
  • Operate the carbon-free, baseload nuclear plants through at least 2030;
  • Operate Sherco Units 1 and 2 at reduced levels through 2030;
  • Extend the life of Blue Lake Units 1-4 an additional four years through 2023; and
  • Modify the procedural review process by inviting stakeholder participation in modeling discussions prior to the traditional discovery and comment processes. 

The assumptions underlying this proposal, as well as other parties’ proposed alternatives, will be debated over the next year.

Xcel Energy Submits Framework Filing in Response to e21 Report

Today, Northern States Power Company, d/b/a Xcel Energy, submitted a filing to initiate a discussion with the Minnesota Public Utilities Commission regarding the recently released e21 Phase I Report (see our blog post here).  Key components of Xcel Energy’s proposal to begin implementing the e21 Initiative’s vision include:

  • Lead the effort to achieve carbon reduction by 40% by 2030;
  • Advance distribution grid modernization;
  • Provide customers, including energy-intensive trade exposed customers, with a platform of innovative service and product offerings; and
  • Implement a new regulatory framework.

This last point was addressed at length in the e21 Phase I Report.  There, e21 stakeholders proposed significant reform to both the integrated resource planning and rate case regulatory processes.

Minnesota Stakes its Claim as a National Leader on Energy Regulatory Reform with Release of e21 Report

Today marks the release of the highly anticipated report from the Minnesota e21 Initiative (e21 stands for 21st Century Energy System).  The Great Plains Institute assembled a diverse range of stakeholders, including utilities, ratepayer advocates, environmental advocates, and independent power producer advocates, to discuss regulatory reform in Minnesota to accomodate anticipated changes to our energy system.  The e21 Phase I Report can be found here.  A brief summary of the e21 Recommendations is as follows:

(A) Allow a multi-year, performance-based regulatory framework for utilities that wish to opt-in.

(B) Require utilities that opt into a multi-year, performance-based framework to file a comprehensive Business Plan (covering up to 5 years) consistent with a 15-year (or longer) Integrated Resource Analysis (described in (C) below).

(C) Revise Minnesota statutes to allow utilities that opt into a multi-year, performance-based framework to replace the current Integrated Resource Plan (IRP) with a 15-year (or longer) Integrated Resource Analysis (IRA) that guides the utility business plan; and allow utilities to coordinate the filing plans of the Busness Plan and IRA. 

(D) The Commission should encourage the use of pilot programs or other methods for testing and evaluating components of a multi-year, performance-based framework.

(E) The Commission should establish clear methods for determining the value of grid services and DER services.

(F) The Commission should review and adjust time-varying rates for energy services so that they send more accurate and effective price signals.

(G) Enable innovative product and service options and technologies by revising Minnesota statutes and regulations, specifically including options for energy-intensive trade-exposed industries.

(H) The Commission and Department of Commerce should use their existing authorities to achieve e21 Principles and Outcomes; and review and recommend revisions to their authorities where needed.

(I) The Minnesota Legislature should appropriate the resources necessary for the Commission and the Department to implement e21’s recommendations.

(J) The Commission and the Department should institutionalize the practice of using a collaborative regulatory process.

(K) The Commission and the Department should look for opportunities to initiate generic dockets.

(L) Initiate forward-looking stakeholder processes.

(M) Develop a transparent, forward-looking, integrated process for modernizing the grid.

(N) Identify and develop opportunities to reduce customer costs by improving overall grid efficiency. 

Legislative work and Phase II work to follow in 2015.

 

 

 

 

 

 

 

To Need or Not to Need, that is the Question: MN PUC Answers in the Affirmative

On Monday, the MN PUC addressed whether ‘tis nobler in the pocketbook to suffer the slings and arrows of the MISO market or to invest in new generating units against a sea of uncertainty.

As we noted in prior blogs, the MN PUC initiated the competitive process seeking bids to meet a claimed capacity need on Xcel Energy’s system from 150 MW by 2017 to up to 500 MW by 2019. Over the course of the proceeding, circumstances changed so drastically that it became entirely uncertain whether Xcel would have any capacity need during the relevant timeframe. Nonetheless, the MN PUC decided in March of this year that, notwithstanding the uncertainty, the record demonstrated a need for more than 300 MW by 2019. The MN PUC then found that if the parties can agree to terms that are consistent with the public interest, the Solar PPA provides an appropriate choice for meeting a portion of Xcel’s reliability and adequacy needs (and to fulfill the state’s energy policies) AND that all of the remaining thermal bids may also provide appropriate choices for the same. In other words the Commission directed Xcel to finalize agreements with all parties (or estimates for its own Black Dog project) and submit these finalized terms to the Commission for review.

After the MN PUC’s March decision, Xcel Energy filed yet another updated need assessment explaining that the company no longer expects to have a resource need until perhaps 2024. Xcel Energy also asked the MN PUC to delay action on all thermal projects as a result.

When the MN PUC began deliberations this week, it first took up the question about whether to revisit the need assessment and decided to stick with the original capacity need estimate set forth almost 2 years ago. The Commission then proceeded to oversee some modification of the Solar PPA terms but ultimately determined it was in the public interest and then went on to also find that the Calpine and Black Dog 6 terms were also consistent with the public interest. Thus at a time when even Xcel Energy is arguing it has no capacity shortfall for almost 10 years, the MN PUC authorized over 600 MW of capacity resources to move forward (71 MW solar project, 345 MW Calpine project, 209 MW Black Dog 6 project).

Furthermore, Xcel Energy’s Community Solar Gardens program opened on Friday, December 12. The MN PUC did not inquire as to the initial level of applications. Although verifiable numbers have not been publicly released, there could be a material amount of community solar gardens entering the system by 2015, which could put additional downward pressure on Xcel Energy’s capacity needs.

Xcel Announces Launch Date for its Community Solar Garden Program

Xcel announced this morning that it plans to open its Community Solar Garden program next Friday, December 12, 2014 at 9:00 AM CST. In its filing, the company attempts to clarify the “first-ready, first-served” application process it plans to follow. The company explains that Garden operators can view a time stamp marking when the application is sent to engineering to start the 30 day timeline for Xcel to determine application completeness. The company clarified that some applications may move through the system faster than others largely based on where the project resides geographically. Xcel also clarified that existing Section 10 interconnection applications that are in the engineering queue and conform to the Community Solar Garden program will retain their position in the queue.

Full details on Xcel’s filing are here (PDF). Feel free to contact us if you have any questions.

Energizing Discussion at Minneapolis/St. Paul Business Journal Offices

MSP-BIZ-Journal-EnergyI had the honor this morning to feature on a panel of experts convened by the Minneapolis/St. Paul Business Journal to discuss the topic of ”The Future of Energy.”

Moderated by John Kearney of the Minnesota Solar Energy Industries Association, the panel included Kenneth Smith, President and CEO of Ever-Green Energy, Ken Bradley, Director of Business Development for SunShare, and myself.  Our panel had a lively exchange that covered a smorgasbord of topics, including the future of utility regulation, increased reliance on renewable resources, and increased customer involvement. The MSP Business Journal plans to publish an article in December summarizing the discussion. We will be sure to share it with our blog readers when it comes out.

Minnesota Can Reliably Integrate 40% Renewables According to DOC Transmission Study

Yesterday, the Minnesota Department of Commerce issued its highly anticipated Minnesota Renewable Energy Integration and Transmission Study, which indicated that the “capacity for adding additional wind and solar up to 40% by 2030 can be reliably accommodated by the electric power system” (DOC press release here). The study stated that with relatively modest upgrades to existing transmission, the power system can be successfully operated for all hours of the year with the increases in wind and solar. For increases above 40%, additional analysis would need to be done. The study was conducted by Minnesota utilities and transmission companies in coordination with MISO and directed by the Minnesota Department of Commerce. It is the result of 2013 legislation requiring the analysis of increasing Minnesota’s renewable energy standard to 40% (and higher proportions thereafter) while maintaining system reliability.

We’ve made a copy of the DOC study available for download (PDF format).

Regulate vs. Replace: Hg Ct in MN Affirms State Commission’s Application of Mercury Emissions Reduction Statute

Last year, the Minnesota Public Utilities Commission approved investor owned utility Minnesota Power’s mercury emissions reduction plan for the 585 MW Boswell Unit 4, its largest coal-fired power plant.  Minnesota’s Mercury Emissions Reduction Act (MERA) requires utilities to prepare plans to reduce mercury emissions for the state’s six largest coal power plants.  See Minn. Stat. §§ 216B.68-.688.  For Boswell 4, which is located in Cohasset, MN, Minnesota Power submitted a plan to retrofit the unit to reduce the plant’s mercury emissions by 90% (the statutory goal under MERA) as well as reduce emissions of multiple other pollutants.

A group of environmental intervenors challenged the approval, arguing that the Commission had not adequately considered the option for replacing Boswell 4 with a natural gas plant instead of retrofitting it to reduce emissions.   Specifically, they contended that the Minnesota Pollution Control Agency (MPCA)  should have produced a full evaluation of the natural gas alternative as it had for the retrofit plan for the Commission’s consideration.  The Minnesota Court of Appeals issued a decision yesterday denying the environmental intervenors’ appeal.   The Court found that the question at issue was the statutory interpretation of MERA.  In its analysis, the Court found that upon examination of the statute as a whole, it is clear that the legislature’s intention with MERA is to regulate rather than replace coal plants.  And, as a result, MPCA was not obligated to substantively assess the prospect of retiring and replacing Boswell 4 with a natural gas facility.   Further, the Court found that, even if MPCA should have evaluated the natural gas alternative, the Commission was required by statute to approve a plan meeting the criteria set forth under MERA.  Since Minnesota Power’s retrofit plan met those criteria, the Commission was required to approve it.

The Boswell 4 retrofit project is already under construction and projected to be completed in 2016.  Decisions about investing in mercury reduction retrofits for coal plants are among the many significant resource planning decisions that Minnesota utilities will be facing in the next several years, with the Commission investigating updating the costs assigned to pollutants in the resource planning process and Minnesota regulators exploring implementation options for EPA’s Clean Power Plan.

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