Centerpoint Official says addressing problem landlords is outside of the scope of the Clean Energy Partnership

At Tuesday’s Energy Vision Advisory Committee (EVAC) meeting, I witnessed a pattern of how 2 officials from Centerpoint handled the issue of renter’s rights which needs to be addressed and called out quickly.

THE UTILITIES INTEND TO MINIMIZE OUTREACH TO RESIDENTS OF MULTI-FAMILY BUILDINGS

Renter’s rights became relevant to the conversation when a presenter from Centerpoint was introducing their new multifamily energy efficiency program they launched jointly with Xcel. He first reiterated that the program is not open for tenants to apply to because they consider the building owner/ landlord to be the decision maker. That is something we already knew about the program. But what he said next was to flat out declare that “We are going to be minimizing outreach to residents” unless the building owner already participates in the program.

THE MAIN DILLEMMA WITHIN AN INNOVATIVE NEW PROGRAM

Of course it is only fair and basically necessary to involve the landlord/ building owner when doing deep retrofits like adding insulation or replacing the boiler in a building they own. The issue is that there are a lot of landlords that will not willingly engage in the multi- family energy efficiency program. For particularly problematic landlords, energy audits could play a dual role as an inspection that uncovers a whole host of additional violations in their apartment buildings. For landlords who honestly do want to invest in energy efficiency but need a bit of extra support, the new streamlined multifamily program sounds like a helpful offering. The catch is that landlords have to ask for the program in order for tenants to reap any benefits from it and there is no guarantee they will actually use this program.

CENTERPOINT OFFICIAL SAY ADDRESSING PROBLEM LANDLORDS IS OUTSIDE THE SCOPE OF THE CLEAN ENERGY PARTNERSHIP

Matt Kazinka from the EVAC brought up that very same point and requested the utility program offer a hotline which tenants of unresponsive landlords could call. Another official from CenterPoint then responded that "bad landlords are an important issue, but are outside the scope of the Clean Energy Partnership." He probably meant to say problem landlords are outside of Centerpoint's role in the Clean Energy Partnership as opposed to the partnership overall. He added that it is the role of the state to regulate activity regarding problem landlords. Matt then responded by saying that the Clean Energy Partnership also involves the city, which has regulatory authority. The point Matt brings up only reinforces the entire founding thesis of the partnership, that the City and the Utilities can accomplish much more when they work in collaboration than if they work separately. 

I recall the Centerpoint official saying that he had not talked with Xcel about the problem landlords issue in reference to the multifamily program. While his words are not proof of a deliberate decision to diminish the role of renter’s rights in the partnership, his words about not talking to Xcel about the issue indicates renters issues are not being regularly addressed in the Partnership’s Planning team. His reaction to perhaps being caught off guard by the challenging issue was one of passing the buck onto government bodies instead of expressing it as a purpose from which to partner with that government body.  

EVALUATING THE SCOPE OF THE PARTNERSHIP

Let’s take a look at the big picture on what the Clean Energy Partnership is intended to achieve so we can push back against any proposed reductions in the Partnership’s scope.

 The definition statement on the Clean Energy Partnership’s own webpage http://mplscleanenergypartnership.org/about/) explicitly says: "The Minneapolis Clean Energy Partnership (CEP) is a new approach that partners the City of Minneapolis in a unique way with Xcel Energy and CenterPoint Energy, its electric and gas utilities, to help the City reach its Climate Action Plan and Energy Vision for 2040 goals."

If we look at the Energy Vision for 2040 (see https://cleanenergypartnership.files.wordpress.com/2014/12/mpls-energy-vision-9-3-13.pdf) it explicitly says:

"In 2040, Minneapolis’s energy system will provide reliable, affordable, local and clean energy services for Minneapolis homes, businesses, and institutions: sustaining the city’s economy and environment and contributing to a more socially just community."

Upon evaluating these statements about contributing to a more socially just community, we have grounds to ask a big question. How could it possibly be outside of the scope of the Clean Energy Partnership to help tenants hold problem landlords accountable for participating in opportunities to save energy?

Partnership board members from the city ought to remember the city budget public hearing last December 10^th. The dozens of community members who spoke in favor of restoring full funding for the Minneapolis Clean Energy Partnership all stayed on message by speaking on behalf of racial equity & economic justice at the same time. It is easy to make the case that taking action on renter energy issues is where the rubber hits the road as far as applying that promise of equity.

But having made that point, what pro-active solutions can we propose?

EQUITABLE ACCESS TO ENERGY DATA

Perhaps the biggest piece of leverage the Clean Energy Partnership could help give to tenants is equitable access to energy data.   Just because doing actual significant energy improvements to a multifamily building has to go through building owners, does not mean that merely getting an energy audit should have to go through the building owners. That might be the most easily fixable shortcoming of the multi-family energy efficiency program currently offered. When the landlord/ building owners are the only ones who have access to the energy audit reports, it means the tenants are left without the energy data they need to hold their landlords accountable in court if the building performance is indeed below standards.  

INCLUDE ENERGY EFFICIENCY IN INSPECTION STANDARDS

Another clue on a pro-active solution involves the suggestion Matt had already made for a phone line for tenants to call. Tenants should be aware that they could call 311 for City Housing inspectors. The problem is that when the city inspectors come, they typically just send a report to the same landlord who is not addressing the problem and the issue gets buried instead of fixed. Then tenants call a different person for the same reason and the cycle of inequitable access to energy data continues. In addition, so many city inspectors are good at checking for certain code violations, but have sadly little focus or training on energy efficiency beyond that. That is why we have so many problem landlords that apparently get away with big atrocities resulting in disturbing energy waste, while so many conscientious landlords are micromanaged about comparatively frivolous tree-trimming and yard issues.

So here are 2 key questions.

* Can we ask the City for housing inspectors to actually be conscientious of energy conservation standards like they are with so many other much more minor and less consequential details?

* Can we ask the utilities or CEE to make energy audit reports accessible to tenants so that they could landlords accountable if they are being negligent? 

RESOLVING THE SPLIT INCENTIVE

A key reason why we need elaborate new energy efficiency programs and a clean energy partnership in the first place is because of a particular split incentive problem. The split incentive is when tenants are responsible to pay energy utility bills while only the owners are authorized to do significant energy efficiency upgrades. Because of this split incentive, it can be difficult to get the message across to landlords why the new multifamily energy efficiency program would be a good use of their money. Having said that CEE has done a lot of research on how to best message the energy efficiency participation among landlords and can be great guidance on that point.

Resolving the split incentive problem was in fact one of the highest hopes I have had while advocating for the formation of the Minneapolis Clean Energy Partnership in 2014.

When the city and the utilities can finally when they work together and combine their strongest assets on regulatory authority, energy data and incentives, then we have an institutional path to resolve the split incentive issue.

OUTREACH AND ORGANINZING AMONG TENANTS

It is also worthwhile to take a look at the Centerpoint official’s statement that “We are going to be minimizing outreach to residents” as it relates to community engagement being one of the three necessary components of the partnership (along with data and policy). Nick Mark from Centerpoint flat out admitted that community engagement is stuff the utility folks just don’t know how to do/ not their forte. While it is good to be honest about admitted areas of weakness, that is the reason why we have a partnership in the first place. Just because community outreach to tenants is not the role of utility staffers in the multifamily energy efficiency program, it does not exclude Community Power or an outside group of organizers from stepping in to fill that role. Will there be money put toward this role, or will the utilities try to get people to do outreach for them for free? Things have a way of not getting done when it is put on the backs of volunteers. 

Organizing among tenants is perhaps the most obvious method to incentivize landlords to respond to opportunities to save energy. If just one tenant asks for sensible repairs on an individual basis, a problematic landlord can get away with taking a dismissive “you are nothing to me” approach. But when the tenants organize, then a normally non-responsive landlord has to respond. 

Timeline of Xcel's Community Solar Garden Delay Tactics.

In September 2013, Xcel brought forth some program rules that were in blatant violation of legislative intent. It was a proposal to cap community solar to 20 megawatts of capacity through 2015. Their additional tactics included various ways to reduce compensation for community solar subscribers, and therefore limit market demand for the program. Xcel also rejected a helpful tool the state legislature offered to them, the “value of solar” payment mechanism. That required the Commission to use it precious time to craft an alternative payment that would allow community solar projects to be financed.

The Public Utilities Commission eventually resoundingly rejected Xcel’s proposed plan. But the whole ordeal ran the clock on six months of public comment and debate. The PUC then gave Xcel another month to file a revised program, and an additional two months for public comment as a result of having to start over. Xcel then came up with a low-ball offer on community solar rules. That successfully delayed the program opening by at least nine months. In the meantime, Xcel helpfully produced a full animation video called “Solar Done Right” which subtlety suggested that solar is done most economically at “large scale” as opposed to distributed generation or community solar.

The PUC erred on the side of trusting Xcel with their next order they issued.

The interconnection rules the PUC set gave community solar projects extended time to connect to the grid if Xcel delayed, but offered no consequences if and when the Xcel acted too slowly.

In September 2014, the PUC finally approved Xcel’s modified plan. Thus far Xcel had succeeded in drawing out the clock 15 months after the State Legislature approved community solar.

But then just a few weeks later, Xcel brought forth their next delay strategy. It involved filing comments raising concerns about the “co-location” of community solar projects.

The PUC’s comments that April approved of the concept of solar gardens sharing grid connection location, with an additional PUC statement of support following in September. Xcel’s own comments in June were in agreement with the PUC.

At first, Xcel said it would accept these applications as long as “each solar garden must have its own metering, its own program application and separate interconnection agreements.” However, Xcel’s comments ended up being a confusion tactic for developers since it injected uncertainty into the process of how projects would queue up for grid connections.

During this time period, community solar developers kept asking Xcel for clarification on how they would treat big business subscribers as subscribers to multiple solar gardens. In two separate replies in November, Xcel replied unhelpfully, “We believe there is no need for additional clarification.”

Finally, on December 12^th 2014, the program officially opened and Xcel started taking applications. But only week prior, Xcel launched another confusion tactic that led several CSG developers to feel duped. Despite earlier comments to the contrary, Xcel now said that developers who had jumped into the grid connection queue before the program opened could keep their spot in line.

Once the program opened, Xcel’s strategy was to slow the program by fanning the flames of uncertainty. Despite attempts to inject uncertainty, Xcel received over 400 applications for 400 megawatts of community solar projects, 20 times the capacity they had proposed to allow by the end of 2015.

In February of 2015, CSG developers said they still lacked clarity about the multiple location issue which Xcel had refused to clarify in November. So the CSG developers, were left with no method to identify decent grid connections before submitting their application, nor a way to see their place in line. Again, the Commission was forced to step in to provide some guidance while Xcel was offering new ways to curtail the amount of new solar capacity from the flood of CSG project applications. In March, Xcel made another attempt to lower compensation for CSGs. and strategies to curtail the amount of new capacity from solar projects. On both issues, the PUC held firm and would not change their order.

In response, Xcel on April 28^th launched a dramatic tactic to shrink community solar by 80%.

 announced they would take unilateral action to dismantle all community solar projects owned by the same developer that shared a grid connection, within 30 days. That move was in direct opposition to the previous PUC order.

Xcel’s reply comments to the PUC in May hinted at their motivation: “The strongest evidence of the program’s dysfunction is the volume of applications that have been received which neither the Company nor the Department [of Commerce] anticipated before the program was launched.” In addition Xcel admitted in their revised 15-year resource plan, filed on October 2^nd, that they only expect just 20 megawatts of community solar by the end of 2016 regardless of the fact they have over 300 megawatts of projects with completed applications).

The PUC resolved this latest tactic by approving a partial settlement between Xcel and a few smaller CSG developers. The PUC gave Xcel what they wanted by retroactively limiting co-located CSG projects to five 1-megawatt projects, with a size cap of 1 megawatt for new co-located projects. By October, 300 CSG projects that have been awaiting interconnection approval since February still have received no response. 

Xcel Energy Slow-Walking Community Solar in Minnesota

     On one hand we have seen recurring stories of Xcel Energy making impressive renewable energy promises in their 15-year integrated resource plan. On the other hand, we have seen a parallel narrative of about Xcel Energy that calls into question the reputation as a clean energy leader reputation the company has been trying to cultivate. It is a series of recurring stories on how Xcel has frustrated a massive grassroots push for Community Solar Gardens (CSGs) in Minnesota. Xcel has engaged in multiple delay tactics dating back to September 2013, shortly after Minnesota's Community Solar Garden law passed.

Minnesota's community solar program is the first time in recent history that a state allowed such a major type of competition into our monopoly-dominated energy system. CSG’s are competitive because they have the potential to help the low-income subscribers save about 5% on what they would otherwise be paying Xcel in their utility bills.

 Xcel spokespeople may offer a multitude of reasons and justifications for each delay tactic. But it does not take an expert analyst to figure out Xcel is concerned about potential competition from their own customers and worried about the spread of distributed energy generation which they can't own or control.

 According to a late August Star Tribune article that quotes several Community Solar Garden Developers, it was already apparent that Xcel Energy was running out the clock for Community Solar Gardens to get built by the end of 2015 before the snow flies. Some developers who filed their proposals the first day began accepting CSG applications (on December 12^th, 2014) still have yet to hear any response on whether their project has been approved. All we really need to ask of Xcel at this point is to comply with existing state regulations on how they are supposed to approve the CSG projects. Xcel is supposed to approve or deny CSG project proposals within 90 days but has already violated that multiple times. As of early October, Xcel had only approved only 6 CSG projects out of 619 proposed projects whose applications were deemed complete. Xcel's online announcement of this first community solar garden reads like a typical self-congratulatory greenwash upon awareness of their delaying hundreds of remaining project applications.

HOW THIS YEAR'S REGULATORY REQUIREMENT WAS REACHED

On Tuesday, April 28^th Xcel Energy announced they would take unilateral action to disallow co-located Community Solar Garden (CSG) projects over 1 megawatt (MW) in size, which turned into a regulatory filing with the Public Utilities Commission (PUC). Regardless of whether Xcel had a valid point in their alarmed reaction to the extensive clustering of single Megawatt CSG projects or whether the specific details of their arguments had merit or not, it definitely caused significant delay and injected a tremendous amount of uncertainty into the market. It gave many CSG developers a gold rush incentive to send in lots of applications before the rules could change. The Public Utilities Commission's eventual ruling gave Xcel Energy the retroactive size limits on Community Solar Garden projects that they asked for in exchange for requiring Xcel to provide “greater transparency and expediency” in allowing developers to move forward with construction of their proposed projects. Xcel was also required to more rapidly complete the interconnection engineering studies for connecting solar gardens to their grid. Simply put, Xcel has not been holding up their end of the deal. 

XCEL’S LACK OF TRANSPARENCY CONTRIBUTED TO DELAY

    Just a month after the June 25^th ruling, Xcel’s CEO Ben Fowke told the Star Tribune that they will keep pushing to limit rooftop and subscriber-based community solar gardens but did not explain how. Is Xcel's slow-walking of the CSG project applications indeed their untold tactic? Has Xcel been intentionally under-staffing the personnel they need to process CSG applications or to interconnect the community solar gardens? Or was the workload of processing a sheer flood of CSG applications genuinely more than Xcel expected? Was Xcel's big mistake putting engineers in charge of processing the applications instead of project managers? Regardless of the answers to these questions, one thing we do know for sure is that huge workload of CSG applications on Xcel's desk is largely a consequence of a lack of transparency on Xcel’s part even before the June 25th ruling. 

       It was not until June 4^th that Xcel released some key information about their distribution system. As a result of this lack of info, CSG developers were shooting in the dark about the best places on the grid their projects will be located. While it’s a fair argument if Xcel’s grid interconnections honestly could not absorb additional capacity from a particular proposed CSG project, it is totally unfair for Xcel to not notify project developers early on. In addition, CSG developers had to put down thousands of dollars just to find out the information they need. Developers should not have to start over and shift their site 20 yards just because of a change in permitting that could have been foreseen with more transparent information. If Xcel would have released information about the state of their grid in a timely manner, many of these project delays could have gotten this resolved long ago. This points toward a devious strategy to undermine the inputs then attack the outputs.

THE FEDERAL TAX CREDIT BUILDS URGENCY

      Another reason why CSG developers are rushing to get so many projects built is because a federal tax credit for solar expires at the end of 2016. The federal tax credit will drop from 30 percent to 10 percent for commercial solar projects and will be completely eliminated for residential installations unless the US Congress approves an extension. All of these factors combined together have given CSG developers every incentive to send a genuinely huge flood of CSG applications through the bottleneck of the apparent lack of staff capacity Xcel management has been devoting to the task.

 Xcel running out the clock on solar developers' window of time to be able to take advantage of the federal tax credit is a move which many agree would chill the market for distributed solar and undercut potential competition from their own customers. Xcel officials will probably deny that is their intent, but the behavior would be eerily consistent with a pattern of Xcel’s attempting to slow other solar incentives in the recent past, such as the Solar Rewards program and the Made-in-Minnesota Solar Panel Incentive Program.

BUT ISN'T XCEL A CLEAN ENERGY LEADER?

      To revisit the double narrative about Xcel, how could the same company that prides themselves in being a national renewable energy leader among investor-owned utilities conceivably be doing such a stonewalling effort against Community Solar? How can this possibly be consistent with Xcel Energy’s impressive renewable energy targets they set this year in their 15 business plan? Xcel’s CEO offered an explanation in the same late July Star Tribune Article, vowing to pursue utility scale solar to the effective exclusion of residential and community solar. That announcement came after a June 1^st filing when Xcel stated that it will not build any additional utility solar until 2025 or later. To cut through all the red herrings, Xcel only prefers to do renewable energy that can own and control, charge their customers for and build into their rate base.

Investor owned utilities seek to put renewable energy into their base of assets because then they are guaranteed profits by the Public Utilities Commission about a 10% rate of return on those investments. In doing so, they seek to prevent others from developing our own clean energy in other ways. Xcel fights against small-scale and locally owned wind for exactly the same reasons.

THE KEY DILLEMMA CSG DEVELOPERS FACE WITH XCEL

       If Xcel’s intent they won't admit to is indeed to run out the clock on solar developers being able to capture the benefits of the federal tax credit, then slow-walking the CSG application process is a "heads Xcel wins / tails the CSG Developers lose" type of a situation. That is the key dilemma of having monopolies in control of energy. It is also the consequence of a situation where Xcel has key information and assets Community Solar Developers need but not vice versa. If CSG developers issue a regulatory filing or lawsuit against Xcel for not holding up their end of the deal in the PUC ruling, then such a move will kick up enough uncertainty into the market to lead to even further delay. That is a vicious cycle which threatens the hard work and capital CSG developers have already invested into projects, particularly among the smaller developers who only have CSG projects in Minnesota. If Xcel continues their slow-walking behavior, then it means Xcel would rather pay the million dollars in legal fees defending themselves in court from CSG developers as long as it shrinks those 900 megawatts of proposed Community Solar down into an 80 megawatt program.

       I would love for Xcel to disprove that hypothesis about their slow-walking and follow up on a promise to expedite the installing the great back log community solar projects next year before the tax credits expire. Aakash Chandarana, Xcel regional vice president for rates and regulatory affairs, has said the delays in approving the CSG's was a dilemma of trying "to feed large amounts of electricity onto the undersized rural power grid, creating a queue of projects competing for limited connections". But we will soon find out whether they will drag their feet on the smaller, urban grid system in Minneapolis. Community Solar development for Minneapolis residents and businesses already been approved as a priority by both parties in the Clean Energy Partnership between the City of Minneapolis and Xcel. We invite Xcel to explain to developers of Community Solar projects in Minneapolis how they will meet deadlines and release all of the grid data the developers need in a timely manner. Otherwise they are being inconsistent not only with the Minneapolis Clean Energy Partnership goals they agreed to when they signed the partnership agreement but also with the PUC’s order.

IF XCEL HAS BIG PROMISES TO DO SOLAR ENERGY ON THEIR OWN, THEN WHAT IS THE PROLEM? 

      At this point, isn’t any renewable energy good and necessary regardless of how it is done? What exactly is wrong with the way Xcel prefers to do renewable energy? Large utilities in general prefer renewable energy to mimic their familiar central station power plant model as opposed to distributed generation. Otherwise, we, the energy users, not Xcel shareholders, reap the economic benefits of being power producers.

If Xcel's preference to get renewable energy fit their familiar central station model manifests as setting up utility owned solar and wind generation very distant from population centers, then Xcel customers will have to pay for the great big new transmission line infrastructure. If that is the model which Xcel intends belie its big clean energy promises, then likely fights over new transmission lines and who is going to pay for what raises the risk that Xcel will fall short of the impressive clean energy targets they promise. Other studies show how such delivery costs can cancel out the modestly better economies of scale utility-scale solar has at the point of generation. 

LOCAL RENEWABLE ENERGY IS NEEDED

        We are much more likely to get renewable energy deployed quickly enough to make a difference in environmental impacts if we simply strategically size and locate renewable energy projects to fit within the existing grid. There are huge opportunities for thousands of megawatts of renewable energy that could be sited in the existing infrastructure in Minnesota right now that would not need any new transmission because it will be much closer to the load where people are using it. Local renewable is the model which so many CSG developers are trying to manifest if they are given a chance to succeed. But it is not a model that allows the cartel energy monopoly interests to simply extract the resources and take the money.

   

Under the local renewable power model, people in the local community will be investing in the infrastructure and making a return on that infrastructure, thus producing local wealth. Local and community-owned renewable energy increases reliability, is cheaper in terms of infrastructure, and the communities who use it are bought into the project. Whenever the body politic is bought into renewable energy, we are much more likely to get enough of it in time to reverse some of these terrible environmental trends.

In addition, the more geographic diversity in the locations of solar panels, the more reliable solar energy becomes, allowing renewable energy to thrive with less need for expensive natural gas power plants that Xcel has announced plans to build in their latest IRP.

   COMMUNITY SOLAR IS ECONOMIC JUSTICE

Community Solar has value far beyond that which is reducible strictly to finance because it provides is a powerful tool for an overall democratization of energy. Community solar allows individuals and organizations to mutually benefit from the advantages of solar energy — no fuel cost, no moving parts, no emissions — without having the solar built on their own property. The power from CSG’s go onto goes onto Xcel’s distribution grid, and CSG subscribers are credited at a solar-friendly rate that results in savings of 5 percent or more on their utility bills. When community solar uses innovative and flexible financial tools such as on-bill repayment, pay-as-you-go, and revolving loan funding, solar energy dramatically more affordable and accessible to a greater number of people.

With Community Solar, we finally have an opportunity to put an end to this alienating perception of solar energy as a niche market for a few. Having a successful example of a community solar garden will tell a new story of renewable energy as a pathway out of energy poverty and prosperity circulating through the local economy. 

THE SAINT PAUL PUBLIC HOUSING AGENCY

The Saint Paul Public Housing Agency has signed on to become an anchor tenant of nearby community solar gardens to provide cost stability for their tenants. 

At the June 23^rd hearing on community solar, Louise Seeba told the PUC "This program is literally the only way that public housing can go solar. Our tenants should not be shut out of being part of green energy." 

The Saint Paul Public Housing Agency has 2500 residents in 16 high-rise housing units. So far, it is the only public housing to go solar. Seeba explained how they had to jump through lots of hoops and then the U.S. Department of Housing and Urban Development approved their community solar involvement.

Solar energy is attractive because it has no fuel costs and is a hedge against fuel price spikes. When natural gas or fuel prices inevitably spike again, utilities pass through the costs directly onto their customer base. This will leave the low-income very vulnerable once the fracking boom goes bust unless there is an alternative source of power such as CSGs ready to snap over to. 

Jon Gutzmann, executive director of Saint Paul Public Housing Agency stated “With two-to-four percent increases every other year, our utility costs have been increasing at a faster rate than our revenue. Community solar provides us with cost stability and certainty for 25 years — without having to find space or capital for on-site solar.” 

WHAT IS AT STAKE? IT’S MORE THAN A FEW SOLAR PROJECTS

 Fossil fuel interests and energy monopoly groups like the Edison Electric Institute have been using divide and conquer tactics to try to pit low-income and minority communities against advocates for solar energy options. Their most common line of attack is to unfairly and inaccurately accuse solar households of raising electricity rates for non-solar households, chiefly those struggling to pay their energy bills. They fight for a restrictive policy outcome where only people who have access to solar energy are those who can install their own solar panels on their own property so that they can paint an alienating story of solar energy as an exclusive party that only the well-to-do are invited to. The easier policies make it for low-income residents to participate in solar energy, the greater our ability to fend off these alienating divide and conquer techniques and the more powerful tools we have for the democratization of energy. We don’t want the story of Community Solar to be one of "Out of State big money interests setting up large corporate solar farm projects to take advantage of a law they wanted passed to make money".

FEAR OF RATE HIKES ARE XCEL’s BIG TALKING POINT

The big talking point that Xcel uses to shrink or slow the community solar program is that it will lead to rate increases with the potential of a cost shift of more than $100 million onto non-solar customers. Xcel’s Regional Vice President asked for a 1 MW aggregate size limits on CSGs in order to minimize extra costs that would be passed on as a 1% to 1.5% rate hike paid entirely by Xcel customers who choose not to participate. The estimations I heard during the June 23rd hearing were a .5% estimated residential rate increase due to 100-200 MW of community solar, a 2% estimated residential rate increase for 500-600 MW total and a 2.8% estimated residential rate increase from 800 MW total. To start with, Fresh Energy has done some rate and cap impact calculations that suggested Xcel was overestimating the rate impact of the community solar program onto non-solar customers.

It is important to note how the same utility which recently requested a near 10% rate hike largely to cover the cost overruns of their Monticello nuclear plant is suddenly becoming so sensitive about the supposed rate impact from residential and community solar onto non-solar customers. The Star Tribune reported back on March 6^th that Xcel was wanted their customers (rather than shareholders) to not only pay for the entire $400 million in cost overruns, but also a profit margin to Xcel on those cost overruns. Why is Xcel suddenly so concerned with the impact on energy users where solar is concerned, but has so little consideration for the much larger impacts on utility customers when their own nuclear plants are at fault?   

INTERESTING ADDENDUM: XCEL CHANGED THEIR WEBSITE:

It must have sent a shock to Xcel when large customers like Ecolab, Inc. and Macalester College announced plans to offset their entire energy consumption through solar gardens. Close to the same time Xcel Energy made quite significant changes to the language its solar garden website. It was interesting how their website in February read:

“There is no limit to the number of solar gardens which can be placed on a property, but no single garden can exceed the 1 megawatt PV system cap. While there is no program restriction on multiple gardens in one area, there could be technical limitations that could require expensive distribution system upgrades.”

Then, they vastly simplified the corresponding language in the latter version of the same website in order to make room for their pursuit of a 1 MW aggregate size limit:

“The maximum solar garden system size is 1MW AC. The system size is based on the sum of the inverter(s) maximum AC output.”

Why this change in language? Xcel claimed the original intention of the Minnesota Legislature was to have a more gradual phase-in of community solar that would be much less than the 420 megawatts in CSG applications they received the first week of their program. 

Commentary on Xcel's 2016-2030 Integrated Resourse Plan

Dear Mr. Wolf,

After personally attending 3 out of 4 stakeholder meetings Xcel Energy graciously offered in February, April and June related to their 2016-2030 IRP, I am pleased to offer my commentary which I have broken up into 4 sections.

THE CONTEXT AND SIGNIFICANCE ON SHERCO

In accordance with the IPCC figures, we must achieve at least 80% reductions in CO2 emissions by 2050, economy wide. This has been the State of Minnesota’s goal since it passed into law in 2007 with the Next Generation Energy Act. The only realistic way to achieve this goal is to (at the very least) start planning right now to the transition away from carbon intensive coal as an energy resource for electricity. The Xcel-owned Sherco coal plant is not only Minnesota’s largest CO2 emitter, but is also the 21st most carbon intensive power plant in the country according to an Environment Minnesota report. However, Xcel Energy’s preferred plan at this time is to not even create a timetable to retire Sherco before 2030. We have to recognize that the core business model of most electric utilities in general is to squeeze as many customer dollars as possible for as long as possible from sunk investments into huge central-station power facilities. Knowing this, Xcel is likely afraid that retiring Sherco 1 & 2 sooner than later would mean stranded assets and they probably have plans to keep Sherco as a bargaining chip if the case of carbon regulations adding additional pressure.

While it was inspiring to read headlines about Xcel’s big clean energy promises, making a long-term commitment to retain or continue to invest in these large­scale power plants is fundamentally incompatible with a future grid dominated by renewable wind and solar on a technical level. Since renewable wind and solar energy are variable in supply, while super-hot coal and nuclear plants produce a static electrical output that Xcel can’t change without risking expensive repairs, we need to phase out these static power plants just for a significantly high penetration of renewable energy to be feasible. From my own observation, Xcel representatives enjoy telling the public about the big plans in their IRP for dramatic increases in solar and wind energy at an affordable cost. Xcel has admitted that their wind power keeps their prices stabilized downward.

The danger is a likely scenario that Xcel will force its customers to pay for expensive upgrades to outdated power plants at the same time as paying for an emerging renewable technology grid system. The manner in which Xcel handled their 114% cost overruns on their Monticello nuclear plan makes it pretty clear that they will try to put their customers rather than their shareholders on the hook to pay off the sunken investment in the old energy system that is redundant and incompatible with a new, clean, renewable system. In that scenario, astroturf front groups who do marketing for the fossil fuel industry will try to blame the resulting rate hikes on a big lie that renewable energy is not cost competitive rather than the real reason of Xcel forcing its customers to pay for 2 redundant and incompatible systems at the same time... even though renewable energy is quite affordable in comparison to the hundreds of millions in Monticello cost overruns. From my own observation, Xcel’s CEO sounds much more amenable to phasing out central station coal plants than nuclear plants, admittingly due to the expectation of future carbon rules but also because of the sheer hundreds of millions recently sunk into their Monticello Nuclear plant. That is why it is more productive to focus on Sherco for this IPR.

SHERCO- THE IMPORTANT COMMENTARY FOR THE COMMISSION TO READ

I am aware the commission has been receiving a great deal of personal stories and well-known facts about the health & climate hazards coal fired power plants present as well as well-reasoned economic commentary on how investing in coal creates far fewer local jobs than investing the same amount into renewables. However what I think the Public Utilities Commission will find most convincing is pointing out specific observation within Xcel’s analysis on Sherco in their supplementary IRP:

• 1: On pages 14-17 Xcel’s March 16th submission on their IPR, they rank several scenarios side by side for retiring Sherco. However they do not clearly identify how much renewable energy is included in the estimations of those scenarios. Meanwhile, there is an extensive table of renewable energy runs in the index of the report. But for some reason these runs are not correlated with the conclusions they come up with for the Sherco scenarios in the main section of the report. Regardless of Xcel’s intent on organizing the data in this way, that lack of correlation makes it confusing and less than user- friendly for anyone reading the IRP or curious to learn how Xcel’s conclusions were drawn.

• 2: Even within the extensive appendix of renewable energy modeling, the runs make little sense. For instance, Xcel’s numbers for the cost of replacing Sherco with 75% wind, solar, and demand-side management (DSM) are higher than their costs of replacing Sherco with just 75% wind and solar with no DSM at all. How could DSM possibly not be cheaper than adding renewable generating capacity?

• 3: On page 14 of Xcel’s March 16th submission on their IRP, they list possible scenarios for replacing Sherco with new energy. They conclude that keeping Sherco going is the least costly option according to their current assumptions. However, Xcel’s model scenario for closing down one unit of Sherco in 2020 and another unit of Sherco in 2023 was only 2% more expensive than keeping the whole facility running beyond 2030. And to boot, even that 2% cost was derived using Xcel’s rather odd assumptions on renewable energy. They actually assume that the costs of wind energy will rise steadily, and costs of solar to stay constant which flies in the face of recent trends where industry maturation is driving costs down, especially for solar.

• 4: This goes to show that an IRP is at its most vulnerable in how very dependent it is upon the assumptions it uses to create a forecast such as future fuel costs (coal, natural gas, etc.), development costs, financing and market conditions, and policy regulations. In turn, Xcel’s preferred plan of not even setting a time table to retire Sherco is based on an additional suspicious assumption. Keeping the Sherco Power plant running through 2030 would be nowhere near the least cost option if Xcel was not able externalize the costs of greenhouse gas emissions onto the public. A big part of Xcel’s decision to not set a time table to retire Sherco is because their carbon costs are modelled at only $21.50 per ton, with alternatives scenarios plugged in for $9 and $34 per ton. In fairness, these carbon prices are in line with current proposed regulations, however many climate scientists have estimated the actual cost of carbon at $200/ton or substantially higher. While clean energy organizations have developed a Clean Energy alternative plan to Xcel's IRP using Xcel’s own data and industry-standard modeling, a question still remains on whether it will address change at the structural, systemic level. If that plan is adopted, will Xcel still receive financial rewards for activity that adds carbon into the atmosphere?

WHAT XCEL OVERLOOKS IN ITS IRP

• 1: It is hard to broadly dismiss Xcel's IRP as a whole because Xcel does not declare anything that is provably false in the IRP report. What makes this IRP a lost opportunity for something truely in the public interests lies within the omissions that Xcel does not say. They make the mistake of overlooking the extensive examples and comprehensive studies on how renewables are actually a positive factor for energy reliability and predictability of cost. Similarly, Xcel’s IRP downplays the potential for microgrids, distributed generation and energy efficiency.

• 2: Microgrids and smart technologies can help us manage renewable energy loads more efficiently and locally on a distributed energy network. However Xcel strangely defines the scope of what can be considered in an IRP to be macro-level and hence not inclusive of the micro-level smart technologies or micro¬grids. So they use this circular definition as a way to justify continued reliance on large-scale centralized power. Choosing not to talk about microgrids in the IPR has the effect of not making that solution available for consideration. That circular reasoning is wholly unfair because changes in structure on a micro level has undeniable effect on the macro level.

• 3: This IRP does not address distributed generation in a systematic way and as a result assumes a disappointingly low adoption rate of community solar and other distributed generation sources. However, MN State Law (Section 216B.2426) requires that any relevant proceeding must consider opportunities for distributed energy generation.

• 4: Xcel’s actions as a business have shown a clear preference for trying to get renewables to fit their familiar central station model over doing renewables as distributed generation. The consequence of that preference is a conclusion in Xcel’s IRP that adding close to 2,000 MW more natural gas generating capacity will be needed to back up the large-scale renewables when the wind is not blowing or when the sun is not shining along with a far less serious commitment to energy storage. That conclusion is also a result of Xcel’s IRP downplaying or ignoring the possibility of integrating micro¬grid or smart technologies that could help us displace the need for deploying extra natural gas capacity.

• In an apparent contradiction to the new natural gas capacity proposed in their IPR, Xcel CEO Ben Fowke publicly stated at the CEE Policy Forum on January 27th, 2015, that we can displace coal with renewable capacity without a mad dash to natural gas: “Coal is going to go away. It is just a matter of time and you are going to see that in that plan that we start to wean off coal…I am delighted to tell you we believe that by 2030 we can double the amount of renewables in our system to 35%... We also can reduce our coal output together with a renewable increase we can be at 40% carbon reduction by 2030. We can do that and not do the dash to gas…and be 63% carbon-free by 2030. But the best news of that is we can do that at a reasonable cost… not going to be more than 3% more expensive than going with more traditional resources.”

• 5: As far as energy efficiency, Xcel’s IRP identifies a 0.4% per year increase in energy usage from now through 2030. (Note: on a national basis, electricity use peaked in 2007 and has fallen about 6%). While substantially lower than projected growth rates Xcel used in the past, actually projecting growth in energy use indicates Xcel does not anticipate further innovations in efficiency and does not recognize that any Rocky Mountain Institute-style deeper energy use reductions are feasible.

PLEASE INCLUDE THE MINNEAPOLIS CLEAN ENERGY PARTNERSHIP INTO THE IRP

Xcel’s IRP should instead model energy efficiency as a resource and include creative to make their energy efficiency programs relevant and accessible to renters, multi-family building residents, and small businesses. The Minneapolis Clean Energy Partnership, (the first of its kind in the nation) provides guidance on such creative new energy efficiency strategies and innovative ways of financing clean energy at the municipal level. Now that the Clean Energy Partnership Board has adopted its work plan for 2015-2016, and it’s time for Xcel to finalize a version of its 2016-2030 IRP that reflects the Minneapolis Clean Energy Partnership and its significant changes to the utility’s business model. Xcel by definition has already agreed to the Partnership’s 2015-2016 work plan. As long as Xcel actually intends to do what they had already said they would do, it is hard to see any honest reason for them to say no to including the approved Partnership Work Plan into their IPR.

My understanding about the IRP process is that Xcel selects the best approach by taking into account all components which would significantly affect energy usage. Minneapolis is 13% of Xcel’s rate base in Minnesota and that is a bit too large to be dismissed as too micro scale to include in an IRP allegedly focused on the Macro scale. Nevertheless, I have heard one of Xcel’s Vice President’s recently tell the Minneapolis Clean Energy Partnership board that the scope of the IRP is too macro-scale and hence does not have the capacity to factor in municipal-level energy data considered to be micro-scale. This is the same circular reasoning previously mentioned similar to how Xcel considers microgrids too “micro-scale” to get taken seriously in a macro-scale IRP regardless of how application of the technologies can have a hugely positive effect at the macro level. At the time Xcel’s Vice President was doing a presentation to Partnership board on the most inspiring clean energy goals of Xcel’s IPR while making no voluntary mention of the Partnership Work Plan the very same board approved, until a Minneapolis City Council Member on the Board posed the question.

Assuming they fully intend to be honest energy partners with the City of Minneapolis and its energy goals, the main argument which Xcel’s Vice President put forth either exposes a fundamental circular rasoning flaw in the IRP process or the exposes need to update some seriously outdated data systems. Here are some positive reasons why the Partnership’s 2015-2016 work plan deserves to be included into Xcel’s IRP to an extent greater than marginal recognition on the side.

1) The Minneapolis Clean Energy partnership can change the game of what is possible for Xcel by combining policy levers, community outreach and energy data. The Clean Energy Partnership programs can raise participation in energy efficiency programs to higher than historic levels by making them accessible and relevant to low-income communities and groups from many cultural backgrounds that need them the most. In addition, the Partnership promised in its work plan to identify additional lending sources to finance energy efficiency and renewable energy projects. These strategies will empower Xcel to increase the number of residents and businesses participating in renewable and energy efficiency programs enabling them to exceed conservation savings and renewable generation currently projected.

2) Regardless of the specifics of the Minneapolis Clean Energy Partnership, the city-utility partnership model must be recognized as a possibility for expanding the core part of Xcel’s business model. A city and an investor owned utility who serve it can have far better tools for accomplishing our energy future, when they work together and combine their strongest aspects as opposed to the previous status quo where the city and its utility worked largely in isolation from each other. Energy efficiency programs will be most effective in reaching renters and multifamily building residents when the city can integrate its neighborhood engagement systems and its regulatory authority over housing / businesses with the utility’s programs, incentives, financing methods, and infrastructure.

Language describing each of these Work Plan items is contained on pages 11-16 of the Minneapolis Clean Energy Partnership 2015-2016 Work Plan as adopted at the May 29, 2015 Clean Energy Partnership Board Meeting (https://cleanenergypartnership.files.wordpress.com/2015/05/cep-15-16-final-work-plan-attachment-b.pdf). This language should be incorporated in its entirety in the above captioned document, as a separate chapter entitled “City/Utility Partnerships.”

Once again, thank you so much for the opportunity to share and I hope my input is helpful in bringing awareness to some key issues, Lee Samelson

A co-located article on Xcel's Community Solar Drama

Why is Community solar important and relevant?

1: Community solar gardens (CSG’s) have the potential to help the low-income save about 5% on their utility bills which is why it is competitive. The St. Paul Public Housing Agency is becoming an anchor for CSG projects because of the economic justice community solar provides. You can read more on that amazing story with this addendum.

2: However, Xcel has issued a regulatory filing with the Public Utilities Commission to try to slow the Community Solar program down. Read this addendum to learn more about the background story on CSG’s and for more details on Xcel’s filing.

3: Xcel wants to cap the aggregate size of CSGs allegedly out of concern a bigger than expected CSG program would pose rate hikes for customers and you can read more about their reasoning with this addendum here.

4: However, the signs point toward Xcel being worried about the community solar garden programs getting competitive enough to infringe upon their market share. Read this addendum to explore more about what could be Xcel’s real motivation. 

5: After this long and contested proceeding at the insistence of Xcel Energy, the MN Public Utilities Commission has imposed a limit of 5 clustered single megawatt (CSG) projects as the most that independent energy companies want to build. Read this addendum to find out more about how the MN PUC ended up ruling on the issue.

6: I personally sat through all 7 hours at the PUC hearing on community solar on June 23^rd so that I could share first-hand observations and I can attest that not all CSG developers have the same position on the co-location issue. What the PUC agreed to was a partial settlement reached between Xcel and several community solar developers that not all developers proposing projects in MN agreed with. Read this addendum to find out how their opinions differed.  


7: Xcel could make a valid point that they are friends of the Community Solar program who just do not want to see it turn into a way for big corporations to profit at the expense of smaller customers in actual communities. Xcel is probably recasting their actions as being supportive of CSG developers who are actually doing community scale solar as opposed to sneaking in utility-scale solar under the community solar banner. However Xcel hit Community Solar developers with another cloud of uncertainty by being so slow to offer developers the information they needed about the capabilities of the distribution grid. Read this addendum about Xcel’s lack of transparency.