State further restricts PUC oversight of electric co-ops

The omnibus jobs and energy legislation signed by Gov. Mark Dayton will remove utility regulators' authority to settle customer disputes with electric co-ops — a measure the governor earlier vetoed as a single-issue bill.

The new law will diminish the Minnesota Public Utility Commission's oversight of the state's 45 electric co-ops, which are mostly in rural areas. But it does allow the PUC to finish an inquiry into fees that the co-ops have been charging to customers with solar-panel arrays. The PUC is looking at whether the methodology behind the fees complies with state law.

With the legislation signed Tuesday, "basically the co-ops will be able to do whatever they want to," said David Shaffer, an attorney for the Minnesota Solar Energy Industry Association, a trade group. "I don't feel the consumer protections that have been put into place will be effective."

The co-ops argued that they are owned by their customer-members, who elect directors, so stricter PUC oversight would take away power from the consumer. The PUC "can't second-guess what a co-op has already decided," said Jim Horan, a lawyer for the co-op trade group Minnesota Rural Electric Association.

The PUC has long had minimal oversight of co-ops, focusing on investor-owned utilities.

Last summer, though, the PUC opened a review of monthly grid connection fees — which ranged from $7 to $83 — after fielding complaints from co-op customers who wanted to install their own solar-panel arrays.

The co-ops say the solar fees are needed to cover their fixed costs. Renewable energy advocates say the fees can make rural, residential solar economically untenable.

Under the new law, co-op members can't take complaints about their co-ops to the PUC. Instead, the co-op member and co-op must mutually agree on a mediator to help solve the issue. The co-op must pay 90 percent of the mediation cost; the member, 10 percent.

But a "mediator has no real authority, and there is no enforcement mechanism to mediation," said Allen Gleckner, director of energy markets at Fresh Energy, a renewable energy research and advocacy group based in St. Paul.

Horan said mediation is more efficient than going through an administrative process with the PUC.

Dayton had vetoed a similar measure in March after indicating he would quash bills that he perceived as weakening the PUC's authority. The earlier stand-alone legislation had passed by large measures in both the House and Senate.

Mike Hughlett • 612-673-7003