Minnesota utility regulators Thursday slapped Xcel Energy with a rare $1 million fine for a bevy of complaints over delays in connecting solar projects to the electricity grid.

Almost all of the roughly 120 complaints were filed by St. Paul-based All Energy Solar in 2019. A solar trade group said All Energy's grievances reflect longstanding and costly interconnection problems with Xcel for the entire industry.

Minneapolis-based Xcel, the state's largest electric utility, has acknowledged shortcomings. But it argues that the big batch of complaints should be rolled into one.

The Minnesota Public Utilities Commission (PUC) unanimously disagreed with Xcel's assertion but split on whether to immediately hit Xcel with the $1 million fine.

"The penalty happens automatically," said PUC Chairwoman Katie Sieben, who voted along with commissioners Matt Schuerger and Joe Sullivan to implement the fine now. Commissioners John Tuma and Valerie Means voted against the penalty, saying the PUC should wait to see if Xcel improves before fining it.

The debate stems from a 2019 standard that Xcel, the solar industry and clean-energy groups all hoped would improve the state's interconnection process. Instead, it has led to more complaints.

Minnesota has three main types of solar power: large projects contracted directly with big utilities; smaller "community solar gardens" created by independent developers; and even smaller individual residential and commercial arrays, often on rooftops.

The interconnection problems have been with community solar gardens — which number over 300 — and other smaller projects.

In December 2019, All Energy Solar, one of the state's larger solar developers, filed 128 PUC complaints against Xcel on behalf of individual customers, accusing the utility of "systemic failure."

At least one other developer filed a complaint, and the Minnesota Solar Energy Industries Association has said in regulatory filings that many more developers have had similar problems.

There has been "industry­wide exasperation" with Xcel on connecting to the grid, David Shaffer, the trade group's executive director, told the PUC Thursday.

All Energy's barrage of complaints dented Xcel's 2019 "quality of service plan," an annual regulatory report that chronicles customer beefs with everything from outages to bills. The grievances put Xcel over its allowed threshold of 363 complaints for 2019, the trigger for the $1 million fine.

Matt Harris, Xcel's lead assistant general counsel, told the PUC Thursday that "real concerns" have been raised in developers' complaints. "I would understand if the commission felt we dropped the ball here."

Xcel said it has resolved the 2019 All Energy Solar complaints, which the company contends should not count toward its service-quality plan. The plan was never intended to include interconnection issues, which have their own review process, Xcel said.

Plus, Harris said that All Energy's complaints are similar. "How do you make the [service quality plan] stay meaningful when you have a developer who can file over 100 complaints about the same issue?" he asked the PUC.

Michael Allen, All Energy's chief executive, told the PUC Thursday that each complaint was specific and that his company has continued having problems with Xcel's interconnection process since 2019.

Several clean-energy groups supported All Energy and the solar industry before the PUC, as did the cities of Minneapolis and St. Paul and the Minnesota Citizens Utility Board, a ratepayer advocacy group. All of them also called for Xcel to be fined $1 million.

"It is the only currently available pathway to hold the utility accountable," Shaffer said.

Tuma, the PUC commissioner, wanted to delay the fine because it would be "a hammer to make sure Xcel follows through."

"I am hoping they come up with a solution," he said.

But Schuerger said he was "confused with the need to retain our hammer." The fine pertains only to 2019, and if Xcel doesn't improve and racks up more complaints, then it could be fined again.

"I am assuming Xcel would like to avoid a second penalty," Schuerger said.

Mike Hughlett • 612-673-7003