Senate passes legislation that could diminish PUC oversight

Legislation that critics say would diminish state regulators' oversight of electricity co-ops was approved by the Senate Thursday.

The House passed similar legislation last month, and — like the Senate — by a comfortable margin. But Gov. Mark Dayton last month indicated he could veto bills perceived as weakening the authority of the Minnesota Public Utilities Commission.

The PUC already has minimal oversight over the state's 45 electric co-ops, whose directors are elected by members. But last summer, the PUC opened a review of grid connection fees that the co-ops had begun charging for new residential solar arrays.

The review was triggered by complaints from some co-op customers who claimed the monthly fees — ranging from $7 to $83 — were a disincentive to install solar panels. The co-ops say the fees are needed to cover their fixed costs.

As originally written, the co-op legislation would have outright killed the PUC's solar fee investigation. The bills were amended, though, after Dayton said he "would not accept any bill that limits or weakens the [PUC's] authority."

That statement came last month when Dayton announced he would sign legislation allowing Xcel Energy to build a large gas-fired power plant in Becker — even though Xcel had been criticized for making an end-run around the PUC. Dayton said the Becker plant was of "critical" economic importance.

The Senate Thursday voted 39-26 to adopt the co-op legislation, while the House last month passed it by a vote of 89-37. Both bills would allow the PUC to complete its investigation, limited to the co-ops' fee-setting methodology. If that methodology doesn't comply with state law, the PUC can recommend necessary changes.

But opponents of the legislation said the PUC couldn't order any changes. Rather, the co-op or an "independent third party" would resolve any dispute over fees. "No matter what the PUC rules, the co-op can handle it the way it wants to," said Matt Privratsky of Fresh Energy, a St. Paul-based advocacy group for renewable energy.

Jim Horan, attorney for the Minnesota Rural Electric Association, said the co-ops would have to "take into account whatever the commission determines." If the PUC pans how the fees are charged, "we would have to reimburse the charges and start over," Horan said.

Mike Hughlett • 612-673-7003