DFL resolves division on permitting and community solar credits in energy legislation

Despite some late-session drama, Minnesota DFL lawmakers overcame a split within the party to pass a high priority energy permitting bill without restoring higher bill credits for community solar program subscribers.

The late-Sunday resolution will cut red tape for wind, solar and transmission projects and uphold the Public Utilities Commission (PUC) decision to shrink bill credits, despite a quiet movement last week to overturn the ruling as a stipulation for changing permit laws.

Lawmakers debated for hours Sunday about the energy legislation, which was part of a larger package that included agriculture policy and spending. That passed the Senate, but as the House approached a midnight deadline for the 2024 session, DFL leaders rolled it again into an enormous 1,400-page omnibus bill that included most remaining Democratic priorities. The omnibus bill passed quickly in both chambers with no chance for Republicans to debate.

Still, energy sector groups celebrated the fruits of their labor at the Capitol.

“Siting and permitting is among the largest roadblocks to deploying renewable projects across the Midwest, and the reforms in this package ensure Minnesota’s policies demonstrate the state is committed to meeting the clean-energy transition,” said Beth Soholt, executive director of the trade group Clean Grid Alliance.

Democrats control both the House and Senate, but the divide was between those two factions. Senate DFLers, as well as many in the power industry, backed the permitting legislation. House DFLers chose to use that as leverage in a last-ditch attempt to change community solar, a program for Xcel customers to subscribe to a shared array third-party solar operators run in return for a bill credit.

Key Senate lawmakers backed the PUC ruling, which will cut into electric savings for many cities, schools and residential subscribers in the program but save Xcel Energy ratepayers more than $600 million.

House Democrats proposed a different version of the permitting legislation, with one notable disagreement about giving the PUC more staff. Power developers and others aligned with Senate DFLers, saying it was crucial to transfer environmental review staff from the Department of Commerce to the PUC to streamline the process and permitting time.

House opposition to that idea eventually melted. The final deal included most of the Senate permitting plan, including the staff transfer.

“Our hope is that we will permit more clean energy faster,” said Sen. Nick Frentz, a DFLer from North Mankato, during a hearing to announce the agreement Friday. Frentz chairs the Senate’s Energy Committee.

The House DFL was able to add other extra staff at Commerce to help analyze energy projects, since the agency acts as a public-interest watchdog at the PUC. The bill also won’t include a study of small nuclear reactors, emerging technology some in the progressive wing of the party view skeptically because of the cost and unresolved questions of long-term nuclear waste storage.

The Legislature also agreed to other House priorities, such as: $2 million in incentives for local governments to approve residential solar projects faster with federal software; a new initiative to push “grid-enhancing technologies” that can free up space on Minnesota’s congested electric transmission system without new power lines; and $1 million for a study of the environmental and health effects of carbon dioxide pipelines.

Rep. Patty Acomb, a DFLer from Minnetonka who chairs the House’s Energy Committee, said during House floor debate Sunday the study of carbon pipelines “was important to the House to ensure that the [PUC] has the information as we embark on a potentially new industry to our state to ensure we understand the risks and the benefits that we will be seeing from that industry.”

The House also wanted and received more money and policy to boost geothermal heating. The bill also included a House and Senate-backed $6 million for a geothermal heat system at Sabathani Community Center in south Minneapolis, which needs to replace its aging twin gas boilers. Fees Xcel Energy pays to store nuclear waste in the state will fund that.

Republicans this year lamented the Legislature did not work to speed up permitting for other industries. And Sunday, they criticized the bill for other reasons, including the lost nuclear study. The GOP has pushed to lift Minnesota’s moratorium on new nuclear plants, believing extra around-the-clock power will be critical on a carbon-free grid that will rely heavily on weather-dependent wind and solar.

“If you don’t like coal, and you don’t like gas, you’re going need some other big baseload tool in your toolbox,” said Sen. Andrew Mathews, R-Princeton. “What meets all the qualifications and criteria that both your side and my side would want is nuclear.”