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House Energy Cmte: RES Yes

As V recently summarized, the Minnesota House Energy Committee has passed the same Renewable Energy Standard bill as the Senate did recently. I summarized much of the RES testimony here.

Listen to the committee hearings via MP3 - look for Mon, Feb 12. You can also find the video archive here.

As Representative Peterson (author of the bill) noted, this will be the most aggressive RES in the country for states with comparable energy markets - meaning pretty much everyone but California. Once the whole House approves this and Governor Pawlenty signs it, it will require all Minnesota utilities except Xcel to generate 25% of their electricity from eligible renewable sources by 2025. Xcel Energy will generate 30% by 2020.

Before the committee dealt with the actual bill, Chairman Hilty indulged a private citizen by the name of Don Dane to some loony testimony. I'm new to this, but if there is a Committee Chair more indulgent than Chair Hilty, I sure would not want to sit in on it.

Don Dane, retired mechanical engineer generally proclaimed his scientific ignorance (for which he was later commended by Representative Beard). As V noted, he proclaimed coal to be an alternative energy that could supply the whole world with $.50 per gallon gas for hundreds of years. An added benefit of this strategy is that we would put the Middle East countries out of business and stop terrorism! w00t.

As a commenter to V's post noted, his testimony appears to have been inspired by the work of Fred Singer and Dennis Avery. They have a book entitled Global Warming Every 1500 Years that appears to be well-regarded among climate change flat-earthers.

The Real Climate blog discussed this line of reasoning a few months ago.

The existence of climate changes in the past is not news to the climate change scientific community; there is a whole chapter about it in the upcoming IPCC Scientific Assessment. Nor do past, natural variations in climate negate the global warming forecast. Most past climate changes, like the glacial interglacial cycle, can be explained based on changes in solar heating and greenhouse gases, but the warming in the last few decades cannot be explained without the impact of human-released greenhouse gases. Avery was very careful to crop his temperature plots at 1985, rather than show the data to 2005.

Perhaps the best point is this:

Natural and human-induced climate changes both exist. Studying one does not imply disbelief in the other.

One of the other Don Dane points is that the carbon accumulation in the atmosphere does not correspond exactly to temperature changes. Carbon dioxide accumulation at times follows temperature increases. Real Climate dealt with that question here.

The reason has to do with the fact that the warmings take about 5000 years to be complete. The lag is only 800 years. All that the lag shows is that CO2 did not cause the first 800 years of warming, out of the 5000 year trend. The other 4200 years of warming could in fact have been caused by CO2, as far as we can tell from this ice core data.

Representative Beard seized upon his testimony to question the "fad" of global warming and misconstrue the testimony of Betsy Engelking from Xcel Energy. He claimed that for "every kilowatt of wind you build, ya gotta have something to back it up." This is not true though you do have to have some backup ready and this is one of the functions of MISO.

He suggests that low wind availability several weeks ago caused the tightness in the spare capacity on those cold days when utilities asked people to reduce consumption. Engelking had testified that the shortage was due to both planned and unplanned outages in other facilities (both coal, I believe). His concerns about wind are overblown and his attention to detail quite poor.

He wraps up with: "In about six or seven years, this fad too shall pass and we'll be on to something else."

Representative Peterson noted that this is not a fad and noted the testimony of experts in the previous weeks. I get a kick out of Representative Magnus' attempts to equate the testimony of a retired mechanical engineer who read a book with people who have spent decades studying climate.

I am not an expert in climate issues nor mechanical engineering but if I stood before a House Committee to testify about building codes in skyscrapers because I read a Petroski book, I hope they would laugh at me.

On to the amendments! Note that Peterson wanted no amendments so they could pass the bill using the same language as the Senate and avoid the delay of a conference committee to work out the changes.

Representative Westrom introduced several amendments relating to C-BED and other issues but they were all shot down. He later discussed his desire to extend the University's IREE (Initiative on Renewable Energy and the Environment) funding from 2008 to 2020 with an increase. 3 cheers for that!

Representative Magnus passed out some research from the Republican Caucus in which he noted his concerns regarding the validity of the background information they were using to put the bill together. He again misrepresented the testimony of Michael Noble about Minnesota "falling behind." Noble was very clear that our REO is in the middle of the pack for its aggressiveness but that Minnesota's installed wind capacity is 4th in the country.

Magnus then stated his concern that Minnesota needed a comprehensive long range plan. He is concerned about doing this on a piecemeal basis and putting off C-BED (community development) and CIP programs (conservation and efficiency) until later because time has a habit of running out unexpectedly.

In the end, it all came down to a voice vote and it sounded like only a single person said no. The bill now goes to the Ways and Means Committee.

House passes RES!

So I'm sure that Mitchell will post an extended recount of what happened at the hearing today, once he feels better and has a chance to listen in, but I will post the basics now.  Peterson did choose to adopt the Senate language, and despite the efforts of Westrom (4 amendments) and Hackbarth (1 amendment), he and Hilty were successful in getting it passed through committee - with only one nay (wasn't in roll call, so I can't say for sure, but I think it was Hackbarth...).  We are days away from a RES (that begins in 2010)!

In other news, there was one testifier at today's hearing, and boy was he interesting...  A retired mechanical engineer who wanted to know why Minnesota legislators were squandering taxpayer dollars on "renewable energies" when it was obvious that global warming isn't human caused (it's part of the "normal 1500 year cycle" and has something to do with water evaporation.. didn't understand that part very well).  Instead of focusing so much on renewables, we should be spending money on alternative energy -- his stellar example was gasoline from coal (yes, you read that right - coal), which apparently can be generated at 50 cents per gallon.  Why the man thought that coal, a fossil fuel, was alternative is beyond my comprehension.

More House RES Testimony

While the Senate has voted overwhelmingly to approve S.F. 4, calling for a strong renewable energy standard for Minnesota, the House continued to hear testimony on it in the Energy Committee on Wednesday, 7 Feb. I attended, having heard they would hear ammendments to bill H.F. 4 but Representative Westrom (the Republican lead and former Chair of the committee) could not make it. Thus, they heard more testimony and pushed off ammendments for Monday.

Before going over the House testimony, I wanted to note the 4 Senators who voted against the RES. Senators Hann, Ingebrigsten, Pariseau, and Skoe all voted against passing S.F. 4. Given the amount of work that went into creating a strong compromise bill, it is too bad it could not leave the Senate unanimously. My previous RES coverage is available here.

Betsy Engelking from Xcel Energy presented their position and answered many questions. Before she could start though, Representative Peterson again reminded everyone that he is annoyed at the Senate's version and people testifying should keep their focus on HR 4.

Betsy started by discussing the varied and confusing requirements levied at Xcel by the legislature. I hadn't realized the wording of the original mandate to Xcel - that it ordered Xcel to purchase 425 MW of wind generation by a certain date. They fulfilled that with 10 year contracts. Xcel is under no obligation to renew those contracts and they start coming up soon.

I expect this is one of the reasons S.F. 4 removed the many different requirements on Xcel and folded them into one - 30% by 2020. This change freed up some 1125 MW of wind that could not previously be counted under the REO language to count toward the new standard and eases Xcel's burden somewhat while giving them full credit for their wind investments.

Xcel is aiming to have 1300MW of wind capacity installed by the end of this year. However, there is a question as to how much of that Xcel can own. They are currently building a 100MW wind farm. Some legislation, aimed at encouraging community investment (pre-dating the C-BED (Community-Based Energy Development) framework) said that Xcel could not own more than 100 MW of wind generation but it was unclear if that language applied to everything or just the 300 MW mandate that it added to Xcel's total mandates. So Xcel wants that language cleaned up so it can own more wind (when I read it the passage last year, I thought it only applied to the 300MW but I ain't no lawyer).

Interestingly, Xcel believes it will hold to its 2003 carbon dioxide emissions on its 30% by 2020 path. This is hardly going to stop global climate change, but it means that Xcel will not be increasingly its emissions.

In the period for questions and answers, Engelking discussed the recent cold snap and Xcel's call for consumers to limit their power usage due to tight availability of electricity. Representative Beard asked about the state of the grid, saying he had read that they had less than 4% spare capacity at times.

Engelking replied that they were caught in the middle of planned upgrades and an unexpected problem with one of the boilers at the Sherco unit (a huge coal plant). This is what left them with unexpectedly low spare capacity when the cold snap hit.

This would have been a great time for her to cast doubt on the plan to add so much wind onto the grid but she did not take it.

Beard went on to say he did not see the final purpose of this bill - was it for jobs? GHG reduction? Local economic development? And then he went and noted that they were all sitting there putting carbon dioxide into the air. What that has to do with anything, I'm not sure - I think most people were confused as to what human respiratory systems have to do with requiring additional renewable electricity on the grid.

For those who are not aware, there is a natural balance of GHGs in the world. GHGs are constantly being released and transformed in a continuous cycle. Human activity (from massive reliance on fossil fuels) has overwhelmed this process by releasing too many GHGs. Thus the point of controlling climate change is not to stop all GHG emissions but to return the natural system to a balanced state.

Toward the end of the meeting, Peterson made a plea for the Committee to pass the RES. He noted that they could pass it with a party-line vote but he did not want it to come to that. To that end, he asked that they set aside the C-BED issues until later and focus on passing an RES now.

On Monday, 12 Feb, the House Energy Committee will deal with amendments to H.F. 4 and we'll see what happens next.

House RES Testimony

As many of you are aware, the Minnesota Senate's Renewable Energy Standard has been passed out of committee unanimously last week. Soon the entire Senate will act on it.

Meanwhile, the House Energy committee has taken the RES up. They are considering Representative Peterson's (DFL 20A) H.F. 4 bill which mirrors the language of S.F. 4. I discussed this language when observing the Senate's observations. You can listen to mp3 files of the Minnesota House Energy Committee meetings. This is quite convenient - I hope the Senate adopts similar information technology to encourage transparency.

The House has spent the better part of 2 sessions hearing testimony on H.F. 4 and will begin dealing with amendments and the link on Wednesday afternoon. As a result of the deal struck in the Senate committee, most of the stakeholders agreed to push the House to adopt the language of the Senate.

The testimony in front of the House Committee seems to reflect this. I may be mistaken, but the language of those testifying against the RES seems to have moderated as they say they believe it will be possible to meet a 25% by 2025 standard. However, the House Committee members have refused to roll over.

Former Chair of this committee, Representative Torrey Westrom (R 11A) seems to pursuing an anti-RES strategy based upon the marketing strategy called FUD (used famously by Microsoft against Linux). Fear, Uncertainty, and Doubt.

By spreading questionable information about the drawbacks of less well known products, an established company can discourage decision-makers from choosing those products over its wares, regardless of the relative technical merits.

Do not forget that Westrom's Committee did not allow a renewable energy standard to leave committee.

Representative Westrom's main tactic has been insinuating in several questions that the RES will not help rural Minnesota because it does not cover community development issues. This is a red herring because both the Senate and the House are hearing that as a separate issue. Yet Westrom has returned to this point even after being assured by the Chair that the committee will be visiting community ownership of wind. He actually went so far as to demand an answer as to what would happen if the Leg passes a strong RES but doesn't do anything for community ownership issues - as though this were not a major priority for both the DFL and the Pawlenty Administration.

Representative Westrom does not seem interested in the fact that coal plants offer far less community development prospects - especially when they are built in South Dakota (Big Stone I and II) for Minnesota demand. Strikes me that even if the Leg were to collectively get dementia after passing the RES and forget to deal with community-based energy development, rural Minnesota would still be considerably better off than under the status quo of coal and imported power.

Representative Magnus (R 22A) joined Westrom in challenging Fresh-Energy's Michael Noble. He tried to suggest Noble had downplayed Minnesota's place in wind power when he noted that the REO is in the middle of the pack in terms of the amount of renewable energy it demands. Magnus talked about Minnesota's commitment to wind (because we have the 4th highest amount of installed capacity in the country) and actually seemed to imply that Noble was impugning Minnesota by noting how many other states are more ambitious in their standards. Given Noble's role in forcing Minnesota to require wind development, Magnus' comments seem unnecessarily hostile and out of line.

Lest this is perceived to be a rant against one party, I have to note the obvious anger of bill author Peterson directed at Franklin from the Chamber of Commerce who had the temerity to reference the amended language of S.F. 4. It would seem that Rep. Peterson is upset at the outcome of the Senate Energy Committee because he feels he could have created a stronger bill in the House and forced more concessions from utilities. As it is, the media coverage of the Senate bill have largely focused heavily on Senator Anderson and not on Representative Peterson.

At any rate, he spoke harshly against Franklin and said he should respect the bill in front of the committee. Franklin was responding to a direct question from a Representative at the time and was defended by other members of the committee but it shows how seriously Peterson considers his bill and also suggests he may be unlikely to look favorably upon ammendments to square his bill with the new S.F. 4.

We'll see what happens in the next committee hearing on Wednesday afternoon.

The Chamber of Commerce reminded committee members that even seemingly minor rate increases are recieved differently by companies that pay thousands (or hundreds of thousands) for electricity per year whereas residential customers may pay only hundreds. He also noted that the Chamber of Commerce is working on a conservation program to encourage energy efficiency.

RES Analysis

The potential new RES is now available online. Many are calling it the most aggressive Renewable Energy Standard in the country, but such absolute comparisons are difficult (and ours is not law yet, it has to go through the House and conference committee). California has an RES of 20% by 2010 and a goal of 33% by 2020.

Regardless, this is certainly a massive step foward thanks to the hard work of many people. Senator Anderson has pushed for an RES for many years and deserves much of the credit. Governor Pawlenty's new energy package certainly also had a hand in making it so strong.

Let's dive right into it.

The renewable energy standard says that utilities must create a certain percentage of the electricity they sell from eligible (renewable) technologies by a certain year. Xcel has once again been singled out for more aggressive responsibilities but in a different way than as under our current Renewable Energy Objective. The objective has been increased to 7% by 2010 rather than an objective of 5% by 2010 as under current law.

After 2010, there are several standards (this is all utilities aside from Xcel). 12% by 2012. 17% by 2016. 20% by 2020. 25% by 2025.

Now we get to Xcel. Xcel continues to have a standard rather than an objective. However, its many wind project requirements under the Prairie Island deals (made in exchange for increasing temporary nuclear storage at the site) will now count toward its requirement. Currently, those projects do not count toward Xcel's standard. Counting them is now justified due to Xcel's greatly increased obligations.

For Xcel: 15% by 2010, 18% by 2012, 25% by 2016, and 30% by 2020! Given that Xcel sells some 50% of all power sold in Minnesota, this standard is a tremendous achievement.

Xcel is mandated to use wind for 25% of its generation in 2020. This sort of technological lock-in can be dangerous to write into statute though as the ultimate goal is not to produce wind so much as it is to reduce greenhouse gas emissions. Currently, wind is the most economical way to do that and this requirement will make sense so long as that remains true. If other eligible technologies have a massive technological or economical leap, this language will have to be modified or Xcel will waste its ratepayer's money.

As everyone expected, eligible hydro has a new ceiling of 100MW. Larger hydroelectric facilities will not count toward the renewable requirement. They have dropped the language that would have made old hydro ineligible. Greenpricing has also been axed so I guess I'll have a couple extra dollars a month.

The offramp language is more robust but also gives the PUC less decision-making power. Previously, the language said the PUC "may" modify or delay the standard if certain conditions are met but it now reads that the PUC "shall" modify or delay the standard.

Nonetheless, the PUC has been given a strong set of criteria by which to judge if a utlity merits a delay or modification (look halfway down the post). The Committee finishes the compliance section with a warning to the PUC and a requirement that a utility must file a plan to meet the standard if it requests a delay.

When considering whether to delay or modify implementation of a standard obligation, the commission must give due consideration to a preference for electric generation through use of eligible energy technology and to the achievement of the standards set by this section.

The bill requires the PUC to develop the credit trading program (well on the way - MRETS) and credits cannot be treated differently based upon the state in which they were generated. All utilities must work with this system.

Of course, we still want to encourage energy development in Minnesota:

The commission shall take all reasonable actions within its statutory authority to ensure this section is implemented to maximize benefits to Minnesota citizens, balancing factors such as local ownership of or participation in energy production, development and ownership of eligible energy technology facilities by independent power producers, Minnesota utility ownership of eligible energy technology facilities, the costs of energy generation to satisfy the renewable standard, and the reliability of electric service to Minnesotans.

On to the House!

MPR coverage. Pioneer Press coverage. My RES chain of posts begin here.

Energy Committee OKs RES

Minnesota is one step closer to an official Renewable Energy Standard today after the Senate Energy Committee moved S.F. 4 out of committee and onto the Senate floor (at time of publishing, bill was not yet updated in the Senate system). This post follows my coverage of the RES/REO discussions.

The bill is different than anticipated - Loon Commons has a brief comment about it.

It looks like Xcel will continue to be held to a different reqirement - 30% of all power by 2025 and other utilities will have a standard of 25% by 2025.

You can watch the 36 minute committee hearing online via the klunky Senate system. Look for the row for Thursday, 1 Feb, 2007.

Chair Prettner Solon noted that the stakeholder group came to a strong agreement.

What came out of this, with the stakeholders that were involved, with the exception of one municipal utility who is not able to support this, have agreed on the language and have agreed that they will not offer amendments; they will not lobby against it; and that they will advocate for this position in the other body also.

I'm hoping that we have a good solid bill that we can move foward. And I thank you all.

Judging from the post at Loon Commons, I'm curious if they left some environmental groups behind also. Given the sudden change in the targets and dates, I would not be surprised if some environmental orgs were disappointed.

There was an interesting situation in the committee where Senator Vandeveer (first term Republican from District 42) attempted to offer an amendment that would increase the standard by 1% in 2017 (or 2018, I forget). He offered little justification for an amendment which clearly was unneeded and against the spirit of the entire process that far.

In the end, Senator Anderson and Senator Dibble prevailed upon him to withdraw the amendment and he complied. I figured out why they have these committee meetings during the day - I think they are trying to rival drama on TV.

Nonetheless, we appear to be heading to a better outcome than we hoped 8 months ago. I will link to the bill as soon as it is available and provide more details.

RES Draft Bill

I have been meaning to post about last week's RES discussions in the Senate Energy Committee. My home internet has been broken for a week and Comcast has proven uninterested in fixing the problem. At any rate, I will now continue my continuing coverage of renewable energy legislation in the Minnesota Senate.

The time is ripe and the Committee appears poised to vote on the resolution on Thursday, Feb 1. These notes come from the Committee meeting on Thursday, Jan 25 (Real media video, Windos Media Video, and mp3 audio).

The Senate Committee will be voting on (and approving) S.F. 4. Behind the scenes, the committee has convened stakeholder meetings to work out a compromise bill that the committee will then pass. I have a draft from last week's agreement but it has undoubtedly been refined since. I think we have a basic idea of what the committee will pass though.

If all goes to plan, the bill will be S.F. 4, but don't bother reading the text of that bill now because the committee will adopt a "delete all" amendment that rewrites the entire bill with language selected to assure passage and broad agreement.

It will be a 25% standard, requiring all utilities in Minnesota to generate 25% of the electricity they sell in the year 2020 from renewable resources.

At this point, it still looks like they will remove the biomass set asides although there are some people that are still fighting such action. Under the current REO, utilities must use biomass for part of their generation. This has proved difficult and costly without enough of a benefit to justify keeping it. It is also hobbled by the way it is written - though intended to be .5% of all energy sold, it actually requires utilities to generate .5% of 10% of their sales. Whoops. No Senator has yet appeared willing to keep this biomass language.

The standard targets are 11% by 2013, 15% by 2015, and 25% by 2020. Utilities may bank excess renewable generation in one year to use for future years.

The draft I have still disallows old hydro (put into service before 1975) - which will apparently take 200MW of Xcel hydro from being allowed to being disallowed. This provision is justified by supporters because the point of the RES is to create new, carbon-neutral generation sources rather than reward old generation facilities.

There is an interested provision on technologies based upon fuel combustion that says it can only count toward the standard if it was constructed with new source performance standards or uses best available control technology for that type of facility. This limits co-generation units to those which are least polluting.

The RES bill will offer substantially more offramp provisions than the Senator Anderson's original proposal. There is a section that gives the PUC power to decide if it needs to modify or delay a standard if it is in the public interest to do so (for reasons of reliability, technical concerns, or major rate impact) if there are significant reasons to do so.

It then includes language which says "the commission shall modify or delay" obligations if there are issues beyond the utilities' control. Note that the PUC has not choice in this matter, it must grant a delay or modification if this situation arises. The reasons are

  1. delays in acquiring sites or routes or due to rejection of necessary siting or other permitting approvals;
  2. delays, cancellations, or nondelivery of necessary equipment for construction or commercial operation of an eligible energy facility; or
  3. transmission constraints preventing delivery of service.

I am guessing that these clear offramps were needed to ensure broad approval of the ambitious 25% by 2020 standard. While some are worried about the increased offramps, I really don't think they matter in the long run. Whaaaa? Well...

The point of the RES is to force utilities to invest in carbon-neutral electricity generation. Just by passing this legislation, the state sends a message to the market that Minnesota is committed to the wind market. Utilities will know what is expected of them. If they are not meeting their obligations in 5-7 years, when the consensus will be even stronger that carbon emissions are a problem, they will incur the wrath of the legislature and public.

The compliance penalty will have a ceiling of the cost of complying with the standard. I thought this was odd, but commenter Jesse reminded me that this penalty will levied against the company whereas the cost of complying with the standard can be recovered from ratepayers. Additionally, the PUC can first order the utility to construct facilities or buy credits. Ideally, the penalties will never be required anyway.

The bill then deals with transmission, saying that utilites must work with MISO to develop a plan to ensure the grid can handle the coming load from so much wind generation.

The final provision deleted green pricing. This bothers me becuase I like having the option of forcing utilities to deliver 100% green power to customers willing to pay extra. But this is most likely a worthwhile tradeoff given the strong standard.

Once the committee sends this bill out of committee, we'll see what happens in the full Senate. I hope to follow the House deliberations on their RES closely as well in order to see how closely the two agree.

Again, this discussion is based on a draft bill. I look forward to the final wrap-up after the vote on Thursday.

The new RES will require all electric utilities to participate in the PUC approved credit tracking system (MRETS). This is an important step for an effective tracking program.

The committee will next be dealing with C-BED (Community-Based Economic Development) issues and the CIPs (Conservation Improvement Programs).

RES/REO Testimoney

This story continues the string of posts following the Senate Energy Committee and its deliberations about strengthening the current Renewable Energy Objective (that utilities supply 10% of their electricity from renewable sources by 2015) or replacing it with a Renewable Energy Standard (stronger language to require compliance).

Tuesday, 23 Jan saw more testimony and no deliberations (Real Media video or Windows Media video). Committee counsel John Fuller reported on progress by the stakeholder group that is trying to reach compromises. He noted that nearly everyone agrees that they should eliminate the biomass set-aside in order to fully allow the market to choose which renewable energies are best suited to supply electricity. Similarly, everyone seems okay with changing the upper hydro limit from 60WM to 100MW. Qualifying "small" hydro will likely become bigger.

He defended the idea of giving the PUC authority to impose a penalty that would equal the cost of compliance. He argued that this would encourage compliance, but I think that is a poor argument. A penalty larger than cost of compliance strikes me as a penalty. Ideally, it would never have to be assessed, but it clearly sends a stronger message to utilities - especially when the language in Senator Tomassoni's bill (the one the Minnesota Municipal Utilities Association - MMUA - is pushing) says the penalty can be up to that amount. This means the penalty could also be below it.

He also added that the PUC's requirements and responsibilities should be clear and uncomplicated. This will reduce confusion and allow for more accurate planning by the utilities.

Several people (mostly from industry, utilities, and the Chamber of Commerce) testified against a standard, saying an objective is preferable to a standard due to its flexibility. There has been a lot of discussion about the "offramp" provisions of the standard and whether it is sufficiently flexible to prevent catastrophe in the face of unintended consequences in a time of rising steel prices, tight transmission planning, changing production tax credit policy, and the years it takes to order turbines in a time of high demand.

Bill Grant (head of Izaak Walton League of America) spoke on behalf of Clean Energy Minnesota. He gave a strong presentation in defense of a 25% by 2020 standard. A reason for creating a standard is to draw the wind industry into Minnesota. He argued that a standard offers a much stronger signal to the market than an objective.

As he spoke, I couldn't help but think of players in the wind market and their motivations. If choosing where to build factories and create jobs, why would you pick Minnesota, with its flexible objective when you have more than 20 states with full standards? Of course, Minnesota's objective will likely site more turbines and projects than other states that have standards (many of which are far less ambitious than Governor Pawlenty's proposal), but I have to believe those executives want to tie themselves into a location that requires wind in the strongest possible language.

One of Grant's strongest arguments - and one that has not been discussed in front of the committee to my knowledge - is that a high standard gives the utilities strong incentive to lower demand. If they have a 25% requirement of power sold, they will have to build fewer turbines if they encourage their consumers to conserve. Less power sold overall means fewer new generation facilities. If utilities were to actually work to lower demand, it would make the renewable sources we build go further and actually reduce greenhouse gas emissions rather than merely keeping them steady (as one of our diligent contributors has noted several times). This also fits within Pawlenty's plan to reduce demand growth across the state.

He also noted ironically that many of the utilies had argued in previous years that 20% by 2020 was too ambitious and they could not do it. Now they are saying they can but anything beyond that is too much. A person from the utility later claimed their argument was more nuanced - that they just wanted to wait for the wind integration study to be completed. My recollection comes closer to Grant's, so I tried to locate some form of historical record from previous Senate Energy Committees and testimony. However, the Senate's web site does its citizens a disservice by offer to little information in too disorganized a format. If anyone else has any hard evidence of what has been said in previous years, please let us know.

My favorite moment came when Greg Oxley, from MMUA) encouraged the legislature to require the PUC to act more promptly on issues of transmission. Janet Gonzales from the PUC said these processes take time because they are complex and the PUC wants to do work that will hold up in court. If they were to rush it, it may end up costing more and require more time. At any rate, Oxley said something about how nothing ever gets done without a deadline. Senator Olseen then asked him about that comment. He noted that this was why he supports a standard - the utilities need a deadline to bring more renewables into the system. This is one of those moments that make attending committee meetings entertaining.

I have not heard any changes to Chair Prettner Solon's desire that the committee vote on the RES/REO bills by next Tuesday so I hope Thursday will actually feature discussion and parliamentary pranks rather than 2.5 hours of trying testimony that mostly repeats what we have heard.

REO - Good Faith Effort

Minnesota's Renewable Energy Objective requires utilities to make a "good faith effort" to generate 1% of the electricity they sell in MN from renewable sources in 2005. Every year after that, they must add an additional 1% of capacity - capping out at 10% by 2015. This REO will be revised by bills currently under consideration in the legislature.

The 'objective' is unique among states. Many other states have renewable electricity standards. They require utilities to meet the requirements.

Depending on your point of view, the "good faith effort" language of the statute is either a weakness or strength. The 'strength' arguments lies in its flexibility - they are afraid complying with a standard may raise prices too quickly or hurt a utility that is struggling with already declining demand. Those who see it as a weakness are afraid utilities will be able to easily escape the requirements.

As the 'objective' is required for Xcel due to other provisions in the statute, some have incorrectly interpreted the language as meaning it is not required for other utilities. It is. However, interpreting 'good faith effort' is difficult. Until now. Sortof.

The Minnesota Department of Commerce recently released "The Next Generation Renewable Energy Objective" which doubles as the required DoC report on the REO and Governor Pawlenty's proposal for an energy plan. The DoC website now offers the Next Generation Report and I have a pdf of the page that explains the MPUC Criteria and Standards for REO Compliance.

To meet the 'good faith effort' objective, the utility must have:

  • Demonstrated commitment to a comprehensive and specific plan to meet the REO, which details the steps to be taken to reach the renewable energy objectives, with an accompanying timetable
  • Demonstrated financial commitments to build or to purchase energy to meet the renewable energy objective, including project financing; purchase and ordering of equipment; and expenditures to hire construction firms if needed
  • Demonstrated commitments to construction of physical infrastructure to meet the REO, including ordering equipment; hiring construction firms; and/or contracting for REO sites
  • Demonstrated legal and contractual commitments to purchase or build the facilities to meet the REO, including but not limited to contracts for sites on which to build; contracts for labor and equipment; arrangements for insurance and liability; or, in the case of contracts for purchases to meet the REO, a negotiated power purchase agreement
  • Demonstrated commitment to meet regulatory requirements in timely fashion, including all permitting and other regulatory obligations
  • Demonstrated commitment to transmission access for REO facilities, including the initiation or participation in transmission studies or provision of interconnection and transmission service for REO facilities
  • Demonstrated commitment to openness and transparency, including full public access to all non-proprietary information relating to meeting the REO
  • Demonstrated analysis of each project's technical feasibility and its potential for negative impacts on reliability and rates, including:
    • Maintaining or improving the adequacy and reliability of utility service
    • Keeping the customers' bills and utility's rates as low as practicable
    • Minimizing adverse socioeconomic effects and adverse effects upon the natural environment
    • Enhancing the utility's ability to respond to changes in the financial, social and technological factors affecting its operations
    • Limiting the risk of adverse effects on the utility and its customers from financial, social and technological factors the utility cannot control.

Clearly, this good faith objective is not quite as murky as many of us feared. Nonetheless, the question is how the these guidelines will be evaluated. There is still a substantive difference between good faith effort and actually meeting the requirement.

As of now, most utilities are complying with the REO - something that may change as more renewables are required. Afterall, it only currently requires 2% of energy to come from eligible sources.

The DoC report for 2006 noted that one company - Missouri River Energy Services (MRES) - was not in compliance with the 2% objective but had nonetheless met the 'good faith objective' requirement. The docket for this case is publicly available.

The Commission found:

The Commission finds that MRES is in compliance with the non-biomass portions of the renewable energy objectives in 2005, and MRES made a good faith effort to comply with the nonbiomass objective in 2006.

Compliance with the renewable energy objectives statute is an ongoing process, not an event, but at present MRES appears to be substantially on track to meet the statutory requirement that by 2015 it generate ten percent of retail sales with eligible renewable technologies

Given MRES's agreement to purchase biomass generated energy and/or green credits, the Commission also finds that, in 2005 and 2006. MRES made a good faith effort to comply with the biomass objective portion of the REO statute, although it was not able to meet the biomass objective.

The biomass stuff may be moot anyway because several bills under consideration will remove the biomass mandate portion of the objective. Regardless, this offers a window into the "good faith" language of the statute.

If anyone has the time to investigate this MRES case, you may find more interesting information. Thus far, I have only given the doc a cursory glance and could not tell if MRES changed its plan or convinced the commission that it would meet the mandate after the commissions expressed doubts.

RES Update

I have been meaning to write something about the 18 Jan, 2007 Senate Energy Committee meeting. Minutes are not posted as of now, but will be linked to from that page when they are available. I don't think they have made an audio version of the hearing available, but you can stream video of it (Real Media format or Windows Media Player format).

I previously analyzed two of the RES bills that are under discussion in the committee. There are two others. Committee Counseler John Fuller created a really handy spreadsheet that shows how each of the four bills differ and where they agree (pdf). I want to thank him for making that available to us.

For those unfamiliar with a Renewable Energy Standard or Renewable Energy Objective, both require utilities to generate a certain percentage of the electricity they sell within MN from renewable sources. The standard provides more stringent penalties for failing to meet the requirements; the objective requires a good faith effort to meet it.

Committee Chair Prettner Solon has suggested that these bills will be merged into a single bill based on stakeholder agreement. It would appear that they will delete-all of S.F. 4 (Anderson's bill) and create a new whole new RES or REO proposal based on the pieces of the existing four. They will use S.F. 4 out of deference to Senator Anderson who has worked on this issue for 6 years. A group of stakeholders is meeting to guide this process.

I'm not really sure how this all works; Senator Dibble was also a bit concerned and wanted to make sure the Committee would still discuss the big issues. I think the idea is for the stakeholders to work behind the scenes to make it easier for the committee to create a popular, effective bill.

The rest of this post will cover the discussion in the committee as the bills were officially introduced and my thoughts on the issues that each brings up. Don Davis wrote an article for The Forum news about these bills also.

Senator Anderson introduced S.F. 4 first. She noted that mandating renewable energy helps the economy, saying it creates 40% more jobs per unit of energy when compared to fossil fuels. Later she said Minnesota lost 1000 good jobs on the Iron Range because a wind company chose Pennsylvania instead because it had a more aggressive standard than us. Also, Minnesota imports more electricity than any other state (apparently 1000 MW from Canada (Manitoba Hydro) and 1000 MW from the Dakotas alone).

Anderson tackled the big question in front of the committee - objective or standard? Minnesota's current "objective" is unique; many other states have embraced the standard. She noted that her bill features an "offramp" which I'll quote:

The commission must delay or modify the standard for an electric utility if it finds that
compliance with a standard is not in the public interest because compliance will either
produce undesirable impacts on the reliability of the utility's system or on the utility's
ratepayers or if it finds that compliance is not technically feasible.

Those who say that a standard is too inflexible often fail to note that the PUC can excuse a utility which has good reasons for failing to meet the requirements. Anderson suggested that the "good faith effort" language of the REO is too lax and difficult to interpret. The Department of Commerce objects to this, saying they have defined what a good faith effort is - more on that debate in a later post.

Senator Anderson's last argument for the word 'standard' argued that the "word in law" matters. The very word 'standard' sends a clear signal to wind developers that Minnesota will be a reliable market for them.

One of Anderson's other changes with S.F. 4 is to limit eligible renewable facilities to those built after 1974. She justifies this, saying we need to reduce emissions, stimulate jobs, and avoid disadvantaging some utilities over others.

Senator Anderson finished by saying this will not cost ratepayers more. It will save them money in the long term because "we all know the cost of coal will go up." This relies upon Congress creating either a cap & trade program for carbon emissions or implementing a carbon tax. Though she didn't phrase it in these terms, she was basically saying that those the wind strength may be variable, its cost is not. The fuel for wind turbines will remain zero cost for the life of the turbine.

Anderson's bill was followed by S.F. 129, introduced by Senator Tomassoni. Because the committee is hearing only RES specific provisions now, they are only discussing sections 2-7.

I feel that this is the weakest bill by a considerable margin, despite being a standard rather than an objective. First, I'll summarize Tomassoni's comments.

He started by pushing for the IGCC coal plant, saying that even with renewables, we still need coal and IGCC lends itself well to sequestion (capturing the carbon dioxide emissions and storing them deep underground). Greg Oxley, from the Minnesota Municipal Utilities Association then argued that utilities cannot meet 25% by 2020. He said they don't have enough transmission or time to build the needed amount.

To those who say we cannot make 25% by 2020, I refer you to John Tuma's post on Loon Commons which essentially reminded the committee that no one thought we could hit the moon in 10 years when Kennedy told us we were going to.

Tomassoni's bill suffers from many weaknesses and I hope it is mostly ignored when the committee puts together the final RES/REO proposal. Weaknesses include:

  • Instead of a list of eligible renewable technologies, it says all renewable energy technologies may be counted. Thus, the PUC will have to decide if hydrogen produced by natural gas counts as being renewable or not (for example). This is not a good idea.
  • 20% by 2020 is too lax. If we are not going to push as hard as possible, let's use Governor Pawlenty's 25% by 2025.
  • My favorite: the penalty for noncompliance cannot be more than the amount the utility would have expended to meet the requirements. This is not an incentive to meet the requirements. Penalties should exceed the cost of compliance (though we need an offramp like the one proposed by Anderson).
  • Finally, this bill significantly limits what evidence the PUC can use when considering the offramp provision - giving a big advantage to the utilities.

Committee Chair Prettner Solon next introduced one of her bills, S.F. 145 and Mike Bull, Deputy Commissioner for the DoC discussed it. Like S.F. 129, this is an omnibus bill and the committee is only looking at sections 2-8 currently.

Bull noted that this is the most progressive energy package ever by a Minnesota Senator - something to which Anderson later agreed. She and Bull actually complimented each other several times as the committee exuded bipartisan vibes.

At any rate, Bull noted that the Governor would prefer signing an omnibus bill but recognizes the committee will do as the committee will do. This bill calls for a 25% objective by 2025 with a fine of $.05 per kilowatt/hour of unmet requirements when utiliies do not meet the good faith effort bar. The PUC may count large hydroelectric sources if absolutely necessary (large hydro is usually not counted due to the damage to surrounding ecosystems). Compliance fines would be used to fund renewable energy projects in Minnesota.

Senator Dibble questioned what new generation would be if the Governor's proposal is implemented because it counts renewable sources built before 1975. The committee is supposed to be informed how this breaks down - essentially, the question is how many renewable MW MN has from before 1975.

Chair Prettner Solon then introduced S.F. 74 - an objective with blank % to be met by blank. The idea is to figure out the max we can do and fill in the blank with those numbers. It also allows the PUC to increase the requirement for some utilities who are better poised to add renewable capacity than others. This is a unique idea though I wonder if the PUC would actually do that.

The other major unique provision for this bill is that it allows utilities that go above and beyond the required CIP (Conservation improvement programs - these are intended to reduce electricity demand) to get credit toward their objective requirement. This could be tricky in practice to measure.

Wow. That was fun. Another exciting Saturday night for me. If you read this far, thank you. There will be more coming eventually.

CERTs conference summary

The MN CERTs conference was held on Tuesday and Wednesday this week...

 

MN CERTs Local Energy / Local Opportunities

Article Photo

On January 17, 2007 the Minnesota Clean Energy Resource Teams (CERTs) held their annual conference, Local Energy/Local Opportunities, in St. Cloud. CERTs is a program that is funded by several state agencies, private foundations and the University of Minnesota. Here is a brief description of the program from the CERTs web site:

“The Clean Energy Resource Team project is your opportunity to play a role in shaping energy conservation and renewable energy implementation for your region of Minnesota. A growing number of Minnesotans envision an energy future built on using energy wisely and generating energy from local renewable resources like wind, solar, biomass, and even hydrogen from renewable sources. By relying more on community-scale renewable energy resources and energy conservation, communities can help prevent pollution and create local economic development opportunities.”

CONTINUED HERE

 

Accident at Monticello nuclear plant

The Star Tribune reports that a minor accident occurred recently at Xcel's Monticello nuclear plant. Apparently a control box broke lose from its support beams and fell about a foot onto a pipe carrying radioactive steam. No leaks were detected in the pipe as a result. Interestingly, the plant had been running for a record 637 consecutive days without a shutdown. Most plants run for 12 to 18 months before being shutdown for routine maintenance and refueling. Xcel officials deny that this created a risk.  

The Nuclear Regulatory Commission has notified managers at four other nuclear plants around the country of similar age and design to check for this problem.

George Crocker of the North American Water Office is quoted as saying market forces are pushing utilities to push their plants to the limit. That's an interesting question but I'm not cynical enough to buy it just yet. Utility officials must be wary of negative publicity as any small accident gets reported in the news - much more so than other industries that work with hazardous substances. It seems to me that they would avoid taking shortcuts that might jeopardize safety.

RES Thursday

The Senate Energy Committee is preparing to debate whether it will beef up the Renewable Energy Objective (requiring utilities to make good faith efforts toward providing x% of their power from renewable technologies) or a Renewable Energy Standard (mandating utilities provide x% of power from renewable energies).

These bills will be discussed in Room 123 of the Capitol at 3:00 on Thursday, 18 Jan, 2007.

According to the Senate Energy Committee schedule they will discuss S.F. 4 and S.F. 74 as well as S.F. 145 and S.F. 129. I have not had a chance to review the 2 latter bills, they appear to be more all-encompassing bills that will establish either a standard or objective while dealing with many other issues as well.

Currently, there are 3 RES/REO-only bills under consideration although 2 of them appear identical to me. I stared at S.F. 4 and S.F. 113 for a good 10 minutes and could not detect any difference between them. Both bills create a RES. The 3rd bill is S.F. 74 and that would beef up the REO.

The Senate bills each change the requirements on small hydro. Previously, hydroelectric generation had to be below 60MW in order to count toward the REO. The new REO or RES would change that to hydroelectric sources below 100MW. The REO and RES both do not count Xcel's mandates from the Prairie Island deals as progress toward the requirement. This remains a signficant additional burden on Xcel which is already the largest purchaser of wind power in the U.S.

The existing statute told the Public Utilities Commission (PUC) to weight different renewable energies (so 2 solar credits might equal 1 wind credit) but that will be scrapped in any impending legislation. The PUC found those instructions cumbersome and lacking proper direction.

The bills revise Minnesota Statute 216B.1691. Let's look the beefed up REO first - S.F. 74.

The new REO requires 5% from eligible sources by 2010. From there, 11% is required by 2013, 15% by 2015, and 25% by 2020.

As before, the PUC has the authority to excuse a utility from meeting the REO if it would cause major problems (like increase rates too much).

The commission must delay or modify the standard for an electric utility if it finds that
compliance with a standard is not in the public interest because compliance will either
produce undesirable impacts on the reliability of the utility's system or on the utility's
ratepayers or if it finds that compliance is not technically feasible.

Subdivision 7 covers the compliance issue:

The commission must regularly investigate whether an
electric utility is in compliance with its standard obligation under subdivision 2a and if
it finds noncompliance must order the electric utility to construct facilities or purchase
credits to achieve compliance. If an electric utility fails to comply with an order under
this subdivision, the commission must impose a financial penalty on the electric utility
in an amount of five cents for each kilowatt hour the electric utility is out of compliance
with its standard obligation.

5 cents per kilowatt hour seems a fairly steep penalty. I could have sworn I heard 5 cents per megawatt hour in an energy committee meeting, but there it is in text. The difference between this new REO and an RES seems minimal given the financial penalty for not meeting. However, there is certainly more room to maneuver under the language of "good faith effort" rather than the RES demands.

The other major bill for consideration is S.F. 4, establishing a Renewable Energy Standard. If I am reading this correctly, it essentially maintains the REO until 2010, then uses the "thou shall" language instead of the "good faith effort" language after that to meet the same goals as above - 11% is required by 2013, 15% by 2015, and 25% by 2020.

As with the REO, the RES ends with a 5 cent per kilowatt hour penalty for each that it is out of compliance.

Given the similarity of the bills, I expect that the debate in the Senate Committee and later on the floor will be over why an RES is necessary when the current REO appears to be working and the new REO will nearly have the same penalties as the RES will.

Update: The RES thread continues with this post.

Coal rush runs into some hurdles

NPR had a story this morning talking about the rush to build coal plants in the U.S. and around the world. Apparently, costs have rapidly increased in recent months due to material and human resource shortages. Engineering firms with the knowhow to design new plants are maxed out at the moment, largely due to all the building going on in China. The article mentions one utility in Kansas that has seen the capital cost estimate for a new coal plant rising from $1 billion to $1.4 billion in just 18 months.

The article also discusses how the possibility of a future carbon tax is giving state regulators pause before approving new coal plants. All of this should at least give added incentive for utilities and regulators to consider renewable energy and conservation, which is good news.

Senate Energy Committee Meets

The Minnesota Senate Energy Committee (technically, Energy, Utilities, Technology and Communications Committee) met on Thursday for the first time. It will regularly meet on Tuesdays and Thursdays from 3:00 - 4:30 in Room 123 of Capitol.

The new chair is Yvonne Prettner Solon (DFL 07). Ellen Anderson, the previous DFL chair has moved to chair the Finance - Environment, Energy and Natural Resources Budget Division Committee. The meeting started with the requisite round of introductions. Several members admitted to being science geeks - something I was rather surprised by. Have we computer geeks so normalized 'geekhood'?

Chair Prettner Solon started with a number of the questions she expected to deal with in the future. The one I found most interesting was the question of the ideal amount of renewable generation we want in the system. I have focused for so long on getting more, I never really gave much thought to how much is enough...

At any rate, Chair Prettner Solon outlined a rough schedule for passing an REO or RES. Two bills are scheduled to be discussed on Thursday, 18 January. They will discuss S.F. 4 and S.F. 74. Both relate the RES/REO. If no one else checks them out in depth, I will do so before Thursday. Chair Prettner Solon hopes to vote on the bills by 25 January or earlier if possible.

The PUC representatives announced that the M-RETS (Midwest Renewable Energy Tracking System) request for proposals is due today and they hope to have the renewable credit tracking program running by July. As a software geek, I wish them well but never expect software to be delivered on time.

There was some talk about the recent WindLogics study of integrating wind power into the grid. While the costs are remarkably low for integrating up to 25%, the study did not include any costs resulting from increasing transmission capacity. Thus, the study is still good news for wind, but hard work remains.

Assistant Commissioner Mike Bull from the Department of Commerce reported on the current status of the renewable energy objective (REO) in Minnesota. Overall, the news is good but his study is incomplete. The DoC will release a report on 16 Jan that has the full results of who is complying.

The news on the REO is quite good overall as Bull reported that the utilities that provide more than 90% of power in Minnesota have been found to be in compliance and an additional 7% are in review. He also noted that there is a misconception that the REO is voluntary. He said it is required but also noted that some utilities have more difficulty that others based upon their changing demand (rate of increase or decrease).

Update: Loon Commons has a post discussing MEP's view on the Committee

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