Volume 08-10 ~ May 20, 2008

Legislative Session Ends
No Utility Tax Increase
GRE Receives Exemption
List of New Laws
Bills Not Passed

Legislative Session Ends

The 85th Legislature ended on time, near midnight on Sunday, May 18.  There is no talk of a special session at this time, although there are a few candidates for calling one, like the Northwest-Delta merger.    While the media headlines focused on transportation, health care, the $935 budget deficit, property tax relief, the Central Corridor light-rail line, and a new state park, our focus during the last few days were on the tax bill and an energy conservation bill, both of which turned out well for us.  Of equal importance is what did not happen during the last few weeks of session.  All-in-all, the session turned out well for electric co-ops and for utilities generally.  If the point of comparison is the 2007 session, well, then, the 2008 session was spectacularly successful.  But it is always difficult to get too comfortable, knowing that in 2009 we will again face climate change reductions and costs, feed-in tariffs, and renewable energy carve outs.

No Utility Tax Increase

Utilities dodged the personal property tax increase again this year, and we hope this is the end of the issue caused by the new utility property valuation rules.  While both the Senate and House omnibus tax bill proposed an increase to the utility “class rate” percentage of 2.0% to offset losses from the new valuation rules, the Governor’s insistence on no tax increase prevailed.  MREA, along with other utilities, signed two letters to the Governor during the session pleading our case again -- as we did against the 2007 tax bill.  Governor Pawlenty in 2007 and again this year offered the cities and counties “utility valuation transition aid”, but that was turned down in favor of a percentage increase to the class rate applied to the market value of utility property.  The final omnibus tax bill, however, does include that utility valuation transition aid, paid by the Department of Revenue from a general fund appropriation.   We greatly appreciate the Governor’s support.   (See HF 3149, article 6, section 10.)

GRE Receives Exemption

It’s almost like Christmas!  No utility tax increase and Great River Energy got what it asked for – a property tax exemption for its new Elk River natural gas peaking power plant.   Steps are already well underway at the Public Utilities Commission for the plant’s certificate of need and siting approval.

List of New Laws

Below is a brief list of new laws of direct interest to electric co-ops.  A few details on each bill can be found in previous reports (which are on our website) and a complete review will be available in our end-of-session report.  Legislative summaries are also available on the legislative website – www.house.mn and www.senate.mn.

• Cap and trade studies, including economic and revenue impacts,  and legislative participation in the Governor’s GHG emissions reduction Accord -- the so-called Green Solutions Act.  See Chapter 340 of the 2008 Session Laws (HF 3195).
• Omnibus energy bill on greenhouse gas reduction policy development process, transmission cost adjustments, cost recovery for renewable energy storage, eminent domain appraisals, solar energy promotion and projects may count toward CIPs savings goal, wind and solar certificate of need exemption, new Legislative Energy Commission in place of LEETF and utility assessments, transmission line notification and meetings, wind energy aggregation program, study of property rights related to wind energy development, solar rating and certification laboratory, and more.  See Chapter 296 (SF 3337).
• State and local government grant and loan programs for energy conservation programs, micro energy loan program for small-scale renewable energy, utility participation in programs may count toward CIPs savings goal, coordination of energy and environment policy with economic development policy, green economy report on grant and loan programs to determine the potential to advance the green economy, and a green jobs task force to develop a statewide action plan “to optimize the growth of the green economy”.  See SF 3096 – no chapter number yet available; also see HF 1812, article 6, sections 11-12.
• In response to the home foreclosure crises in some cities and some property damage caused by frozen water pipes, utilities must provide notification of disconnections if requested by cities during the cold weather period.  See Chapter 253 (SF 2775).
• Procedures for state agencies to assist communities and electric co-ops to recover from natural disasters.  See Chapter 247, section 7 (HF 2904).
• Modify the rights of tenants to pay landlord’s utility bill.  See Chapter 313 (SF 2909).
• Counties can participate in C-BED projects on a wholesale basis.  See Chapter 303 (HF 3585).
• Utility customer payment arrangements for arrears.   See Chapter 162 (HF 3368).
• Development of building energy usage performance standards – Sustainable Building 2030.  See Chapter 278 (SF 2706).
• Livestock, including dairy, investment grants for, among other things, digesters and equipment used to produce energy.  See Chapter 297, article 1, section 1 (SF 3683).   $1.0 million is appropriated for the grant program.
• Business Energy Accountability Act, a voluntary program for businesses to track type and amount of energy usage.  See HF 4223.
• Utility boiler plant operators’ provisional license and labor contracts.  See Chapter 309 (SF 3140).Linemen and state electrical code license.  See Chapter 337, section 12 (HF 3034).
• Resolution to the Governor to prepare a plan of response to meet the challenges of Peak Oil.  See HF 995.

Bills Not Passed

Some bills that did not pass are positive bills that we could support, such as tax credits for renewable energy, rather than utility subsidies.  Consider the solar advocates’ prescribed Four Pillars of “Cost Effective” Solar Energy:  High utility payments per kwh, low or no cost interconnection, net metering, and tax incentives and grants.  Besides needing to take a class held somewhere in Europe on the new economics of cost effectiveness, we were pleased that at least one of the pillars did not come out of the pockets of co-op members.  Negative bills and amendments are often of such artistic and creative wonderment that they are always the real “fun” part of the legislative process.  Some are even specially imported from Europe – California is not good enough anymore.  Unfortunately, many such expensive ideas that did not make it this year will return in 2009.  

• Most of the bills described above that did become law this year were initially quite controversial and were later amended to be acceptable.  The county C-BED law, for example, began in 2007 as a bill that could have allowed counties (read Hennepin) to transmit and distribute renewable energy retail and provide off-site distributed generation, notwithstanding the electric service area law.   Here is a short list of the good, the bad, and the really ugly.
• Cap and trade program principles and directives.  See the original HF 3195/SF 2818.
• Feed-in tariffs for small renewable energy.  “Feed-in” is a German import meaning a utility rate payment to cover the total cost and profit of small renewable energy facilities.  HF 3537/SF 3877.
• Solar energy carve out in the renewable energy standard.  HF 3843/SF 3528/SF 3337.
• Restrictive arrears payment arrangements and medical equipment connections.  See the original HF 3368/SF 3081 – and you should have seen the early drafts!
• Delete the nuclear power plant moratorium.  SF 2545/SF 2630 and many House amendments.
• Wind energy production tax deduction and small wind tax credit.  HF 3127/SF 2587 and HF 3177/SF 2657.  And solar equipment tax credit.  HF 3137/SF 2974.
• Research and development tax credit for energy and environment.  HF 3939/SF 3155.
• Create a new Department of Energy.  SF 3034.  Instead the Governor created the Office of Energy Security (OES), headed by Edward Garvey, within the Department of Commerce.
• Limit the use of natural gas as a power plant fuel; no PUC certificate of need for natural gas power plants.  HF 3880/SF 3483.
• Assaulting a utility employee or contractor [or lobbyist] is a gross misdemeanor.  HF 3995/SF 3757.

Finally, we heard from Dilbert that a company supervisor was giving advice to his employees, but, unfortunately, a legislator overheard the comments and has been applying them to the legislative process:   “No one will believe you solved this problem in one day!  We’ve been working on it for months.  Now go act busy for a few weeks and I’ll let you know when it’s time to tell them.”