Big industry, utilities win on energy legislation in Minnesota

Iron mines, electric utilities and the biofuel industry came out winners in energy-related measures passed at the close of the Legislature.

But people with rooftop solar panels now face fees from municipal and cooperative electric companies, which convinced lawmakers that homegrown generators don't pay their fair share of the power grid.

The energy measures, contained in agriculture and energy-jobs bills, are now before Gov. Mark Dayton, who said Tuesday he was still studying them.

The appearance of the energy-jobs bill just minutes before the session's close on Monday rankled some legislators, including Rep. Rick Hansen, DFL-South St. Paul, who urged Dayton to veto it as bad process.

"What a joke — it comes over with a couple minutes to spare," said Hansen, who added that he refused to join other legislators who voted on an amended bill that many hadn't read.

In the end, the contentious energy provisions were dropped in late negotiations, including Rep. Pat Garofalo's proposal to end some of the state's solar subsidies. Garofalo, R-Farmington, who chairs the House energy and jobs committee, said the lateness seemed little different from past sessions.

Xcel Energy Inc. successfully lobbied for a measure that could bring steady rate hikes for its 1.2 million electric customers, and reward the utility for improved environmental gains and customer service. The measure allows the state Public Utilities Commission to set utility rates for a five-year period.

Legislators also offered relief to northern Minnesota iron mines by allowing lower electric rates for such "trade-exposed" businesses. Low world steel prices have hurt iron mines, forcing some to lay off workers or cut hours.

But the job of setting those rates was left to the PUC. Lowering rates for one class of customer inevitably means others must pay more to cover a utility's fixed costs. "Who is looking out for the little old ladies in Duluth?" asked Rep. Melissa Hortman, DFL-Brooklyn Park.

But Garofalo said those customers, mostly served by Minnesota Power, will lose if the mines don't survive. "If the mines close, everyone's rates skyrocket," he said.

Clean energy advocates, including Hortman, criticized the legislation that allows co-ops and municipal utilities to charge fees to customers who generate solar and wind power. Some of those customers don't pay utility bills because a billing system called net metering offsets all their power usage with generated energy.

By charging a monthly fee, the utilities want to recoup expenses to serve those customers. Jim Horan, counsel for the Minnesota Renewable Electric Association, said he expects the fee would be about $2 to $5 per month. He said he doesn't think it will discourage customers from installing solar panels.

Earlier versions of the House energy legislation had provoked an outcry from clean energy advocates. "Mercifully, the worst was left behind," said Michael Noble, executive director of Fresh Energy, a St. Paul nonprofit that has promoted renewable energy and conservation.

Noble said that in his two decades of watching energy legislation, he has not seen such a breakdown. In the end, only powerful interests, including utilities and big industries, ended up winning, he added.

One other energy winner at the Legislature was the biofuel industry — but in an agriculture bill separate from the energy-jobs measure. The Legislature created a new incentive for cellulosic biofuel, including fibrous parts of the corn kernel and the green part of the corn plant, as well as wood waste, grasses or even sugar beets. Renewable chemical producers also are eligible.

Great Plains Institute, a nonpartisan nonprofit, helped build consensus among environmentalists and the industry for the policy, which is similar to the assistance offered to early corn-ethanol plants in the 1990s.

Amanda Bilek, government affairs manager for the group, said the incentive is about 20 cents per gallon for cellulosic or corn-fiber ethanol and renewable chemicals, payable for 10 years. The $2 million appropriated for the biennium is enough to start one or two such ventures, she said. Eventually, the Legislature will be asked to appropriate additional amounts, she added.

David Shaffer • 612-673-7090 Twitter: @ShafferStrib