At last minute, House DFLers quietly push to overturn major ruling on community solar

Democrats who control the Minnesota House of Representatives have quietly revived a fight about the costs and benefits of Minnesota’s community solar garden program, raising doubts about whether an unrelated bill for speeding up clean energy permits will pass.

The permitting bill is a top priority for many in the energy sector, and with less than one week left in the 2024 session, it’s now become a bartering piece tied to community solar. Behind closed doors, House DFLers negotiating an energy policy package with Senate Democrats asked to restore higher bill credits to hundreds of community solar garden subscribers as a condition for approving the Senate’s version of the permit legislation.

The Minnesota Public Utilities Commission (PUC) voted 5-0 in February to shrink those credits because it would save about $40 million a year — and eventually more than $600 million in total — for Xcel Energy customers who foot the bill even if they don’t subscribe to a solar garden.

House Speaker Melissa Hortman, DFL-Brooklyn Park, and other prominent House Democrats publicly opposed the plan to slash bill credits, which will cause many cities, schools and residential customers to lose expected savings. But the push to overturn the PUC decision came in private. The idea was not part of any bill introduced or heard at the Capitol this year.

A January letter signed by Hortman and 20 other DFL lawmakers said cutting bill credits would have “economic and public interest consequences that the Legislature would have never intended.”

It’s unclear whether the proposal will create a serious impasse since talks are still ongoing. But the offer nevertheless reflects a divide on community solar within the DFL.

Some prominent Senate Democrats had urged the PUC to cut the program’s escalating costs, including Sen. Nick Frentz, DFL-North Mankato, who chairs the Senate’s energy committee. Frentz confirmed the House offer but otherwise declined to comment.

The House has proposed its own permitting changes, though the Senate’s version has wider support, especially in the power sector. Recommendations from a PUC-convened task force that included utilities, wind and solar developers, environmental groups and state officials helped inform the legislation.

Many with interest in both policies declined to comment, including the PUC; Rep. Patty Acomb, a Minnetonka DFLer who chairs the House’s energy committee; the Minnesota Solar Energy Industries Association (MnSEIA), a prominent trade group that supports community solar, and the Laborers’ International Union of North America, which supports permitting changes and has long criticized community solar. Clean Grid Alliance, another industry trade group that wants to speed up permitting rules, did not respond when asked about the negotiations.

Dan Lipschultz, a former PUC commissioner who led the task force on permitting, didn’t comment on the solar garden politics either. But he said there is broad support for the Senate’s permitting legislation.

The Legislature created the community solar program in 2013 as an alternative to rooftop solar. It allows Xcel customers to subscribe to a shared array third-party solar operators run. In return, subscribers receive a bill credit from the utility for energy Xcel must take from those solar gardens.

The program led to a solar boom in Minnesota that outpaced what Xcel has built so far on its own, and supporters say its benefits are underappreciated. But critics argue energy from the program is far more expensive than other clean power sources, in part because of complex bill credit rules in state law and policy that have changed through time.

The PUC asked Xcel to implement a formula meant to better reflect the value of power from the smaller-scale solar projects.

The commission then approved a modified version of the utility’s proposal. Xcel and PUC staff estimated in February the decision would save Xcel ratepayers between $28 million and $30 million in 2025 and between $38 million and $41 million a year after that.

The expected cost of community solar in 2024 is $329 million in 2024, and Xcel ratepayers in Minnesota will pay 93% of that. The average residential customer will pay about $7 a month for community solar in 2024, compared with $4 in 2022.

The nonprofit Fresh Energy and Attorney General Keith Ellison wanted the PUC to cut bill credits. The solar trade group MnSEIA worried changing program rules midstream would hurt existing subscribers and gardens that typically run on long-term contracts and discourage clean power development.

The Minnesota Department of Commerce objected. And hundreds of residential customers — plus many cities, counties and school districts — also said they would lose expected savings. Some cities said they would be out millions.

About 25% of bill credits from solar gardens that switched to the new rates flow to governments; 16% go to public schools; 13% of the credits are paid to hospitals, clinics, churches and private schools, and 17% go to residential customers, according to the commerce department. Roughly 28% of bill credits benefit private businesses and other subscribers.