Minnesota utility regulators' oversight of the state's electricity co-ops would be curtailed further under legislation that took another step forward Tuesday.

The Minnesota Public Utilities Commission (PUC) has long had minimal purview over the state's 45 electric co-ops, which supply power to hundreds of thousands of Minnesotans, mainly in rural areas.

But last summer, the PUC opened a review of grid interconnection fees that co-ops had begun charging for new residential solar arrays. The inquiry was triggered by complaints from some co-op customers who claimed the new fees were an economic disincentive to install solar.

The co-ops argue the fees, which can vary from $7 to $83 a month, are necessary to cover their fixed costs.

A bill passed Tuesday by the Senate Energy and Utilities Finance Committee — by a vote of 6-4 — would kill the PUC's review of co-op solar fees. Similar legislation has already passed the House energy and Ways and Means committees and will go to the floor. The Senate bill will now go to that body's main finance committee.

Minnesota electric co-ops are owned by their customers, who elect the co-ops' boards of directors. Since co-ops are accountable directly to customers, they don't need to be "second-guessed" by the PUC, Jim Horan, an attorney for the Minnesota Rural Electric Association, told the Senate energy committee.

"We are member-owned, and our members make their own decisions," said Linda Laitala, a director of East Central Energy. East Central is a co-op based in Braham, which is in Isanti and Kanabec counties.

Opponents of the bill argued that co-op customers have nowhere to go if they're at loggerheads with their co-op.

"What they are trying to do is eliminate my desire for an independent review," said Glen Jacobsen, an assistant Renville County attorney who is planning to install a solar array on his farmland in Bird Island.

Allen Gleckner, director of energy markets at Fresh Energy, told the committee "this is a classic case of the fox guarding the henhouse." Fresh Energy is a renewable energy research and advocacy group based in St. Paul.

A law passed in 2015 allowed co-ops to institute grid connection fees on new residential solar array.

The dispute here over the fee is part of a national debate that's risen over the popularity of residential solar. Essentially, electricity providers worry that lost revenue from residential solar will erode their business model. In Minnesota, the issue is acute with co-ops, since they cover more sparsely populated areas.

Co-op costs have fewer customers than investor-owned utilities like Xcel Energy, which serve cities and larger towns. The average number of customers per mile for co-ops is said to be six compared to 38 for investor-owned utilities.

Mike Hughlett • 612-673-7003