Rep. Garofalo’s energy bill gives away too much to energy companies

Let’s say that you have solar panels on your house that produce electricity. At times, you may use more electricity than you produce, so you cut a check to your power company for the difference. At other times, you may produce more than you consume, so you’ll get a check back from the power company. Either way, you settle up. That’s fair.

Another way to do things would be to carry forward any net production you’ve created as credits on your bill. This is basically an interest-free loan to your utility company, so they’re cool with that. Pat Garofalo’s omnibus energy bill includes language that allows for interest-free loans from rate payers to utility companies:

But, it doesn’t stop there. Just look at this:

Legalized theft.

What’s also interesting is that the theft of rate payer’s energy generation credits isn’t unique to Minnesota. Similar language is popping up in bills around the country, including this one in Montana:

If, at the end of the year, I told Xcel, “Looks like I owe you $20. I’m going to cancel that with no additional compensation,” they’d shut my power off. Legalizing the inverse of that is legalized theft of energy producers’ electricity.

I can understand why utility companies that fund and write example legislation for ALEC members would find this valuable. Free electricity is a great deal if you can convince state legislators to make stealing legal.

This is just one example of the language inserted into Pat Garofalo’s energy bill guts clean energy programs in Minnesota. If you legalize theft of energy production from residential solar producers, you reduce the incentive to install panels. That’s a good thing if you’re in the pollution business, but not good for asthmatics, environmentalists, and local small business owners who benefit from increasing our ratio of energy generated from clean sources.

This post was written by Ed Kohler and originally published on The Deets. Follow Ed on Twitter: @edkohler.

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Comments (11)

  1. Submitted by Steve Titterud on 04/08/2015 - 01:33 pm.

    WHAT ELSE would we expect…

    from Rep. Garofalo except a knee in the groin to clean energy and alternative energy programs ??

    However, Rep. Garofalo thought it was a GREAT IDEA to give a billion dollars in public money to a billionaire (Vikings Stadium) so that wealthy person could enhance his team’s profits !!

    One thing about Garofalo: we know whose side he’s on, don’t we ??

  2. Submitted by Kelsey Evant on 04/09/2015 - 08:32 am.

    This is a bad thing??

    Seems to me if people size their renewable system correctly this new language won’t affect them. It will close the loophole that allows some entities from putting up renewable system for net metering compensation when there is little to no load offsetting the production.

    Keep in mind if the usage at the residence doesn’t match the generation ALL rate payers end up helping subsidize the renewable system through energy rates whether they want to or not. Note the language it for municipal and cooperatives who don’t have shareholders. Seems to me if you produce more energy than you need it isn’t fair for your neighbor to have to compensate you for the excess at a above wholesale market rate.

    • Submitted by Ed Kohler on 04/09/2015 - 01:00 pm.

      Clean energy is an investment in our health

      I suppose someone could size a system “correctly” by projecting how sunny it will be in December over each of the next 30 years compared to how much energy they’ll use in that month. Or, energy companies could simply pay for the electricity they receive from net producers.

      There already is a cap on what the state is willing to subsidize. I believe it’s 120% of a property’s consumption. Correct?

      As a state, we’re working to decrease our reliance on imported asthma and carbon spewing energy sources. What difference does it make to rate payers if the net metered energy comes from one house generating 200% of its own needs vs. 2 houses generating 100% each. Not all homes are suitable to solar production based on shade, roof alignments, etc. And, not everyone lives in homes. So why not take maximize the available south exposed roofs for locally produced clean power?

      As a state, we’ve decided that it’s worth paying more for clean energy. And, it’s good to provide small matching incentives to people for the HUGE private investments they’re making in solar energy. Obviously, not everyone agrees that pollution and environmental impacts should be variables when considering power sources. For example, coal companies in Montana who’d gladly sell us more raw pollution. But, a very very small increase in costs for rate payers who don’t have solar on their own homes, but benefit from clean, locally produced power (that also generates far more local jobs) seems like a small price to pay.

  3. Submitted by Michael Hess on 04/09/2015 - 08:47 am.

    May elect to be compensated. So in this bill the customer can decide either cash or kilowatt credit? Whats the advantage to a customer to pick the kollowat credit?

  4. Submitted by Tom Karas on 04/09/2015 - 09:03 am.

    complex

    Rep Garofalo is a complex character. Don’t be so quick to judge him on this action alone. The legislation writing process is probably and ALEC driven scheme, but now that the bill is in committee for review and input we can see where the chips will finally fall. I would suggest a call to get involved in the process is in order not just a condemnation of one person.

  5. Submitted by Anthony Walsh on 04/09/2015 - 09:20 am.

    Not a subsidy

    Exactly how is it a subsidy if the excess power is flowing into the grid?

    If the homeowner isn’t being reimbursed for excess power they generate, it’s theft.

  6. Submitted by Ed Kohler on 04/09/2015 - 01:06 pm.

    @Tom, allowing ALEC driven language into a bill seems like a pretty good reason to condemn a politician. This is just one example of the many ways that Minnesota’s clean energy businesses could be hurt by this bill. The GOP likes to say that “uncertainty” is bad for business. This bill creates a lot of uncertainty for the businesses who build and install solar systems in MN.

  7. Submitted by Sam Sheppard on 04/09/2015 - 04:02 pm.

    NUCLEAR, RECS, CARBON AND MINNESOTA

    Just a few key points to consider:

    NUCLEAR:
    42.6 A utility may include in its performance-based multiyear rate plan a request for
    42.7 an annual adjustment mechanism for costs of investments, expenses, and amortization
    42.8 in nuclear generation beyond the levels established in a utility’s most recent rate case, – It goes on to show penalties for not removing the nuclear waste, then says these utilities can pass on these penalties to their rate payers!

    This following section on REC’s blows my mind:

    Not only does the bill stipulate that all renewable energy credits, (REC’s) earned by the generator (your home, your business, etc..) will always be owned by the utility….why?

    It also goes on to say the following which you may need to read twice to really believe this is a plan…something those in charge of taking care of all of us and our state want to see happen:

    Exception for facilities that offset emissions.

    (a) The prohibitions
    62.8 prohibition in subdivision 3 do does not apply if the project proponent demonstrates to
    62.9 the Public Utilities Commission’s satisfaction that it will offset the new contribution to
    62.10 statewide power sector carbon dioxide emissions with a carbon dioxide reduction project
    62.11 identified in paragraph (b) and in compliance with paragraph (c).
    62.12 (b) A project proponent may offset in an amount equal to or greater than the
    62.13 proposed new contribution to statewide power sector carbon dioxide emissions in either one,
    62.14 or a combination of both, of the following ways:

    READ SLOWLY HERE:

    62.15 (1) by reducing an existing facility’s contribution to statewide power sector carbon
    62.16 dioxide emissions; or

    VERY SLOW HERE

    62.17 (2) by purchasing carbon dioxide allowances from a state or group of states that has a
    62.18 carbon dioxide cap and trade system in place that produces verifiable emissions reductions.

    These are almost always in the form of REC’s, Renewable Energy Credits/Certificates. 1 REC equals 1000 kilowatt hours of energy generation. They range from under $1 in some states – $0 in Minnesota mostly because of related regulations, to sometimes in the $100 or more range. But a REC is a REC….so

    First, understand this bill is mandating that

    #1 That the REC’s given to clean energy generation be given freely to the utility.

    #2 That if you are a heavy polluter, you can lower your carbon emissions by either reducing an existing facility’s contribution to statewide power sector carbon

    OR

    #3 You can go the states that have allowed REC’s to stay with the entity generating the clean power, thereby creating some real value for an entire host of people and companies, and our Minnesota polluters can buy RECs from them to offset their excessive carbon contribution.

    While at the very same time SERIOUSLY dialing back the carbon reduction goals-mandates Minnesotan’s want and are the law today.

    So we in Minnesota can’t own our own REC’s, a dirty business can change nothing if they choose….and even build other facilities producing even more excess by applying REC’s purchased from other states which have real environmental mandates in place, part of which created a REC market.

    Those states, mostly east and west coasts for now, created policies to start steering this part of the entire energy sector into a place they will never go unless they are made to go there; and the only way that happens is when it gets so bad, and so many people are so adversely affected, that one by one they elect and or yell loud enough that what needs to be done gets done.

    Put up another smoke stack, buy some REC’s for pennies on the dollar…good enough for Minnesotan’s.

    LOOK:
    A REC is a REC – those proactive states will be creating more options for their citizens as we are forced to hand over ours to our utilities…prices will go up for most of those people and companies in other states creating more wealth for them, in part because we just handed them an entire market – the Minnesota market – while we are left with nothing.

    And finally, this bill re-arranges many things but not one compares to the damage it will cause to the local solar industry. It is literally back to the 1980’s….there was no solar market then with no solar jobs.

    It would virtually eliminate the ten of thousands of jobs created in this industry, almost all being small businesses while no-one that I can find can point to one job loss in the utilities and oil and gas companies because of the little solar market that was trying to gain speed here in Minnesota. With all the hysterics, solar is still comes in around the 1% of energy produced and consumed in Minnesota.

    And lastly, once again, all the electric coops get off completely from this and in fact get more restrictions on the renewable sector.

    This energy sector as a whole have massive amounts of money and obviously a great deal of clout.

    Come on people…

  8. Submitted by Tom Karas on 04/09/2015 - 08:23 pm.

    at the committee hearing today..

    Participating in the process is always a gas. To be able to email a MN state representative at 7:11 a.m. asking if there was slot available to give testimony at the hearing that morning. Rep Garafolo replied to me at 8:14 a.m. and we worked out the opportunity. I was to be in the Cities for afternoon meetings and it just worked out. But not without respectful participation in government. I still think he has potential.
    I urged the committee members to be courageous and apply full cost accounting to their energy decisions in the legislation. If you stick to those principles, clean energy almost always comes out the smart decision.
    About RECs-
    Yes, a Renewable Energy Certificate is awarded to mark the generation of 1,000 kilo-watt hours of clean generation as Mr Shepard repeats above. But it is the value of that REC where the discussion really lies. And that was really at the root of the Value of Solar discussion – what are all the ‘other’ values that clean energy bring to the table? Jut why are New Jersey RECs more valuable than MN RECs? Good question.
    But RECs just open up a whole discussion, that should also contain clean definitions of avoided cost and PURPA, but it been a long day. Thanks folks…

  9. Submitted by Wilford Wicklund on 04/10/2015 - 02:22 pm.

    Really?

    Based on the bill text quoted, the consumer has the option to take the credit or the cash. Also, it appears this provision applies only to co-ops and municipal utilities, not profit utilities like Xcel, as the writer suggested.

  10. Submitted by Tom Karas on 04/10/2015 - 07:39 pm.

    its just legislation in progress

    Garafalo’s committee is causing a good public discussion, which is always good for energy. But for this package stay intact has as much chance as one of Sen Inhofe’s snowballs in hell. But its always good for the public to be aware of the details.
    The current business environment invoving RECs in MN is actually pretty active. For instance, if you ever put up solar panels and got a rebate from Xcel, in the fine print of that contract in exchange for the rebate you gave up the ownership of your RECs. The value of the RECs is a business valuation exercise by Xcel. They are a utility and very experienced in valuation. RECs have value and belong to the owner of the equipment until transferred.
    The RECs won’t go to the utility if equipment owners understand the valuation opportunity..

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