After the years of inconclusive resource planning, months of contested case proceedings, and days of oral argument, discussion and review that led to today’s deliberations, the Minnesota Public Utilities Commission (“Commission”) unanimously decided not to decide. The ultimate question before the Commission was what capacity needs had been determined in the record and what should be done to fill that need on Xcel Energy’s system. At the turn of the new year, the Administrative Law Judge’s (“ALJ”) answers to these questions made national news by finding that the solar bid provided the best value for ratepayers (see our blog on that here). The ALJ made his determination, in part, based on new modeling done at the request of the Commission given the significant changes in circumstances that had occurred since docket was opened (e.g., Xcel Energy acquired 750MW of new wind and Minnesota passed a Solar Energy Standard). In light of the changed circumstances and uncertain need, the ALJ recommended selection of the solar resource that was independently “needed” by statute, a capacity bid that could be added as necessary to bridge for any further shortfall, and then conduct a more thorough analysis for the longer-term needs. Today the Commission instead chose to rely primarily on the original need determination that opened the docket, accept the ALJ’s findings only to the extent they were consistent with their own findings, and direct Xcel to negotiate with everyone proposing to build something and report back.
Despite the above, the decision is a significant step forward for solar. This was the first time a solar proposal had competed directly with natural gas in a resource acquisition process and, despite significant pressure from the Department of Commerce to shuffle the solar bid off into a separate, solar-only proceeding, the Commission confirmed today that the solar bid was welcome at the big kids table.
Look for a forthcoming Order that includes something like this:
In order to meet reliability and adequacy requirements and to comply with MN energy policy statutes, direct Xcel to separately negotiate power purchase agreements with Geronimo Energy, Calpine, Invenergy and develop pricing terms for Black Dog 6 to address the overall Xcel system needs identified in this record and the March 5, 2013 Integrated Resource Plan Order and determine which resources best meet system needs and are in ratepayers’ best interests.
Find that negotiated terms that shift risk or unknown costs to ratepayers are not likely to be reasonable. Find that bidders shall be held to the prices and terms used to evaluate each bid for purposes of cost recovery from Xcel ratepayers. Ratepayers will not be at risk for costs that are higher than bid or for benefits assumed in bids that do not materialize. If actual costs are lower than bid, the bidders should be allowed to keep those savings.
Require that power purchase agreement provide terms that sufficiently protect ratepayers from risks associated with the non-deliverability of accredited capacity or energy from the projects as proposed.
For more information, please contact Drew Moratzka or Sara Bergan.