Wind turbine owner forces statewide review of utilities' tacked-on fees

The wind turbine in Alan and Kris Miller's backyard sent reverberations across Minnesota on Thursday.

The couple, who live outside Stewartville, Minn., installed the 140-foot-high turbine in 2011 to power much of their small hobby farm. Then their electric utility tacked on a $5-per-month charge for having it, and Alan Miller wrote a letter complaining to state regulators.

That blew open a controversy leading to the Minnesota Public Utilities Commission's decision Thursday to order all of the state's more than 100 electric utilities to report whether they charge similar fees. It's the first step in what could become a broader investigation of whether the fees are fair.

"I'm happy, but not elated," said Alan Miller, who will get back all of his money, about $90 plus interest, after People's Energy Cooperative agreed to drop the fee and offer refunds to him and 31 other customers hit with them after they installed solar panels or wind turbines.

Miller, a retired metal finisher, isn't elated because the battle over such fees isn't over. Under a new law that cooperative and municipal utilities pushed in the 2015 state Legislature, the fees likely will come back — if power companies can justify them to regulators.

Now, the worry by Miller and other renewable energy advocates is that anyone considering solar or wind power won't invest until it's clear what, if any, extra fees they'll have to pay their utility.

"They have no idea what the fee is going to be," said David Shaffer, general counsel for the Minnesota Solar Energy Industries Association, a trade group. "Maybe it is going to be $5 and maybe it is going to be $85 — until they know, they can't make an informed purchasing decision so they choose not to buy."

The fears of fees as high as $85 stem from an Iowa cooperative utility's proposal to significantly increase charges to customers who install new solar or wind generators. Of the five Minnesota utilities known to have such fees, Oronoco-based People's was the highest at $5 per month.

During the five-month inquiry into the People's fee, regulators learned of the fees at the other utilities, including Connexus and Xcel Energy. On Thursday, the PUC voted 4-0 to declare People's fee illegal, but made no decision about any others.

Utilities have long been concerned about the cost of serving people who generate their own power and send excess watts to the grid, offsetting most or all of their electric bills under a state-mandated policy called net metering. Although such customers rely on the grid, they pay little or nothing to their local utility to maintain it. Utilities say that solar and wind customers also create modest administrative expenses for extra meter reading and billing.

But renewable energy advocates say the feared cost-shifting is minimal, if it exists at all. They say small-scale clean energy offers many pluses that need to be counted, including no greenhouse gas emissions and no transmission costs and line losses from distant power plants.

Under a state law that took effect July 1, co-ops and municipal utilities are allowed to charge such fees only if they can show through cost studies that they are fair. That work is now underway, said Jim Horan, general counsel for the Minnesota Rural Electric Association, which represents the state's 44 electric co-ops.

Asked about the prospect of a prohibitive $85 monthly fee for self-generatng customers, Horan said, "I can't imagine it would be that high." He said utilities plan to work with renewable energy advocates on a fair way for utilities to recover their fixed costs from net metered customers.

"It will really be some innovative ratemaking," he added. "We are working as fast as we can on it. We want to make it as collaborative as possible. We don't want to drag this out because we are very aware of the uncertainty for our members."

Alan Miller, who sparked the investigation, said he decided nearly five years ago to invest $75,000 in the wind turbine because he wanted cleaner energy. He said other people want the same thing.

"When my grandsons ask me, 'Granddad, what did you do to help when our climate was changing?' I will be able to look them in the eye and say, 'I did everything I could,' " Miller told the PUC.

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