Friday, February 23, 2007

Minnesota Renewable Energy Standard Signed Into Law

New Aggressive Standard Sits Well With Xcel, Minnesota's Largest Utility

[From Wind Energy Weekly/AWEA:]

Culminating two weeks of rapidly unfolding events, Minnesota Governor Tim Pawlenty (R, picuted left), on February 22 signed into law a renewable energy requirement for 25% of the electricity produced by the state’s utilities to come from renewables by 2025.

Earlier in the week, the state House of Representatives passed the bill in a decisive 123-10 vote that had strong bipartisan support. The legislation also received overwhelming support in the state Senate, passing by a 61-4 margin earlier this month (see Wind Energy Weekly #1227). Depending on load growth and assuming that the entire “Renewable Electricity Standard” (RES) is reached through the deployment of wind power, it is expected that the state will need between 5,500 MW and 6,300 MW in new wind projects.

“This Renewable [Electricity] Standard blows open the door to a new electricity industry that will bring thousands of jobs and pump billions of dollars into Minnesota’s economy,” said Michael Noble, executive director of Fresh Energy, a Wind Energy Works! coalition member and non-profit organization that works to lead a transition to a clean energy system. “It makes economic and environmental sense to create 25% of our electricity . . . and aggressively look at the options available to create global warming solutions in our state.”

The law specifies incremental benchmarks for utilities, with Xcel Energy’s RES ultimately reaching as high as 30%: 15% by 2010, 18% by 2012, 25% by 2016, and 30% by 2020. All other utilities, meanwhile, have a requirement of 7% by 2010, 12% by 2012, 17% by 2016, 20% by 2020, and 25% by 2025.

Xcel Energy, one of the entities that worked with the bill’s authors during its development, said that overall, the RES is a good piece of legislation. “We think it strikes a good balance between pursuing an aggressive wind standard and protecting our ratepayers,” Rick Evans, the director of government affairs for Xcel Energy in Minnesota, told Wind Energy Weekly.

Explaining how stakeholders had “a lot of discussions [with state officials] about “what could go wrong,” Evans said his company specifically liked the fact that any challenges in meeting the RES were to be taken to the Minnesota Public Utilities Commission (PUC), which he called “the right place to go” to address such issues. The legislation allows for the possibility of the targets to be delayed, but only if the PUC determines that it would be in the public interest to do so; further, the bill includes language to ensure that various roadblocks would not indefinitely delay or prove fatal to implementation of the RES for any utility. For example, transmission constraints and delivery issues would be one legitimate reason for utilities not hitting RES targets; however, in that event, utilities would be required to move forward in the regulatory and construction process for the needed new transmission.

While highlighting the importance of what he called “ratepayer safeguards,” Evans made clear that, “We think we can accomplish this [RES].”

I guess adding the flexibility of being able to ask the Public Utility Commission to delay targets if they become too challenging to meet secured Xcel Energy's support for the Renewable Energy Standard. I'm a bit concerned about the level of flexibility this adds to the standard (policies have to have some teeth to them to ensure compliance), but having the state's largest utility on board throughout the process must have been instrumental in securing the kind of overwhelming support recieved by the MN RES. This policy practically flew through both the House and the Senate!

MN now jumps to the front of the pack of clean energy states, with perhaps the most aggressive ramp up rate for new renewables of any Renewable Energy Standard policy.

With any luck, Oregon will be snapping at their heals by the end of the year, although passing our RES is shaping up to be a bit more of a fight than the MN RES. Oregon's Governor Kulongoski has proposed a 25% by 2025 Renewable Energy Standard which will be right behind Minnesota's new policy in terms of the rate at which it requires Oregon's utility's to add new renewable energy sources to their mix.

I'm working hard at the Renewable Northwest Project to pass Oregon's RES. For more information on the Oregon RES, head to www.poweringoregonsfuture.org...

6 comments:

Anonymous said...

Hello WattHead,

Thought I'd wade in the it was not the flexibility mechanism that made the difference in the MN RES, but it enabled us to get near unanimous support. Its insider baseball why we needed to add it--key committee chair was the factor.

The flexibility mechanisms in the Minnesota Renewable Energy Standard were reasonable. There is a heavy burden on the utility if it applies for a delayed implementation, and it would not be agreed upon lightly. Most utilities expressed strong confidence that they would never apply for a delay, but the ramp-up rates in years 2012 and 2016 were aggessive---combining Xcel's rate and the others means that MN will have 21% by 2016, and 25% by 2020, and the utilities just want the comfort that if things are beyond their control, there is 'some place to go.'

As for it "flying through" in 2007, readers should know that in 2006 we won in the democratic senate by a vote, and then 2 switched at the buzzer, giving a 36-30 win. There was not even a hearing in the Republican House on RES from 2001 to 2006. Many candidates ran for office on passage of the RES and with 19 freshman democrats in the House, and the governor changing his position in a wonderfully nuanced way---last year, he was for an "objective" not a standard, and this year he was for an "objective" with financial penalties for non-compliance, saying 'theres no difference between my objective now and the Senate standard', opponents had no refuge.

The election and public opinion polls showing 90% support, and two third 'strong support' also helped do the trick. In the end, the IBEW, the Steelworkers, the Farmers Union, the faith community, serious business leaders not from EE/RE sector joined the usual suspects----it was quite a coalition.

Hail Senator Ellen Anderson and Representative Aaron Peterson, chief authors.

Michael Noble, Fresh Energy, executive director and Clean Energy Minnesota Steering Committee Member

WattHead said...

Michael,

Thanks for the great insight into the process in Minnesota. I just started following the progress of the RES this year, and have little insight into it's history.

Sounds like things really shaped up quite ideally in MN for the RES this year! My congratulations on being able to build such an effective and broad coalition of supporters. We are working on the same kind of coalition building here in Oregon and things are shaping up quite nicely as we progress. The results in MN are encouraging, and I hope we can put together all the ingredients here for not just passage of the Oregon RES, but broad support!

Cheers,

Jesse Jenkins
http://watthead.blogspot.com

Anonymous said...

Watch us work in MN! Now that we have the Renewable Energy Standards, we are working in the legislature to pass other measures to make the standards possible and economically successful for the state, especially the Global Warming Mitigation Act, which is working onto the floor of both the House and Senate despite misinformation and coal campaigns!

Becca said...

Hi there! Just found your site today, very interesting. I'm working with a non-profit (www.earthaction.org) right now that has a curent campaign on renewable energy. I know that Minnesota also just introduced HF 3537, to call for a system based of Germany's successful model of feed-in tarrifs. I'm excited to see how this model can possibly be implemented in the states. (For more information, you can go to our site and click on current campaign.) Thanks for the interesting read.

-Becca Olstad
www.earthaction.org

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