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.

Chile Announces New Public Land Concessions for Non-Conventional Renewable Energy Projects

On October 1, 2014, Víctor Osorio, Chile’s Minister of Natural Resources, announced that 200 public land concessions were being made available, through a cooperation agreement with the Ministry of Energy, to Non-Conventional Renewable Energy (NCRE) projects.  The goal of the program is to use the public lands concessions to facilitate the growth of NCRE’s, all with a view to achieving Chile’s national policy of having NCREs constitute 20% of total national generation resources by 2020.

It is estimated that from March to late October 2014 the national government will have awarded or authorized 88 new concessions (i.e., 74 more than were issued by the previous government). The new concessions involve 24,868 hectares, which are projected to produce new electric capacity from solar and wind resources equal to more than 3,600 MW.  The investments in such new resources are expected to produce annual revenue for the Chilean treasury of over U.S. $ 9 million.

Regarding the government’s previously announced plans to use the land for housing, Minister Osorio said that NCRE development is not incompatible with a public-private partnership aimed at improving the quality of life.  He also said that that public housing needs are key issues that may be addressed in an upcoming meeting with the Chilean Chamber of Construction.

If you’d like more information on Minister Osorio’s announcement, please feel free to contact me.

California PUC Comissioner Michael Peevy to Step Down

Last Thursday, longtime California Public Utilities Comissioner and President Michael Peevy announced he would not seek reappointment at the end of this year, when his second six-year term with the CPUC expires. In making his announcement, Peevy issued the following statement:

I originally planned to make the following announcement at the CPUC’s regularly-scheduled Voting Meeting on October 16th, but instead I am moving the announcement to today to state that I will not seek reappointment to the CPUC when my term expires at the end of this year. Twelve years as President is enough. The Governor, of course, will make a decision as to my successor in due time.”

As Peevy notes, California Governor Jerry Brown will appoint his successor.

California’s New Streamlined #Solar Permitting Law Goes into Effect

Over the weekend, California Governor Jerry Brown signed AB 2188, which is designed to streamline the permitting process for small rooftop solar systems. The new law seeks to give California’s Million Solar Roofs target a boost by establishing a state wide “modernized and standardized permitting process.” The new law amends Section 714 of the California Civil Code and Section 65850.5 of the California Government Code to provide for the following:

  • On or before September 30, 2015, every city and county is required to adopt an ordinances that “creates an expedited, streamlined permitting process for small residential rooftop solar energy systems.” Cal. Gov. Code § 65850.5(g)(1).
  • In connection with this process, every city and county must adopt “a checklist of all requirements with which small rooftop solar energy systems shall comply to be eligible for expedited review.” Id.
  • If the city or county determines that an application satisfies the information requirements of the checklist, then the application is deemed complete. Id.
  • Once the city or county confirms that an application is complete and meets the requirements of the checklist and the ordinance, the city or county must approve the application and issue all required permits. Id.
  • If a city or county deems an application incomplete, it must notify the applicant of any deficiencies. Id.
  • Every city and county must publish the checklist and required permitting documentation on the internet and allow for electronic submittal of applications and documentation, as well as electronic signatures. Cal. Gov. Code § 65850.5(g)(2).
  • For small residential rooftop systems (10 kW or less), “only one inspection shall be required, which shall be done in a timely manner and may include a consolidated inspection,” except a separate fire safety inspection may be allowed under certain circumstances.

These reforms are designed to eliminate inefficiencies in the permitting process and drive down soft costs of solar installations. Time will tell whether these soft cost savings will be realized and – if so – whether the savings will be passed on to solar customers.

 

Minnesota Community Solar Garden Program Approved, Set to Open

The Minnesota Public Utilities Commission today issued its long-awaited Order approving (with modifications) Xcel Energy’s Community Solar Garden (CSG) Program - Solar Rewards*Community.  The Order starts the clock for the program to open no later than 90 days from issuance of the Order (mid-December) and officially plows the furrow for community solar projects in Minnesota.  It is not, however, clear that Xcel Energy will have the luxury of using the full 90 days for opening its CSG program- the Minnesota CSG Statute requires Xcel Energy to begin crediting subscriber accounts for each CSG within 180 days of the CSG plan’s approval. Stay tuned for additional details.

Our prior blogs provide more details on the program. We review the details of the Order below.

Application: Once applicants file their applications and deposits, Xcel has 30 days to confirm the application is complete and then another 60 days to accept or reject the application. Applicants initially need to include:

  • Contact information,
  • Garden information including system location and specifications,
  • Application fee ($1,200) and deposit ($100/kW)
  • Engineering documents, including one-line diagrams, site plan, and Interconnection Application

Applicants will have a full 24 months from Xcel’s completeness determination to complete the project and comply with several additional requirements including: proof of site control, adequate insurance, projection of subscriptions, and signed interconnection and CSG agreements. Continue Reading

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