Volume 08-1 ~ March 10, 2008
Topics
Cities May Ask for Utility Disconnection Notice
Christina Pierson has been MREA’s governmental affairs representative for the past seven years, doing a terrific job at lobbying, communicating, and heading up our grassroots efforts. We frequently heard praises from legislators, staff, and lobbyists alike as to how much they appreciated Christina’s fine work. Christina will be joining the Partners for Affordable Energy beginning March 10 as its executive director. She will be based in Minneapolis and will be responsible for PAE’s government relations activities related to coal-based electricity. We surely will miss her outstanding work here at MREA, and we wish her continuous success at PAE.
During the MREA Annual Meeting Legislative Day, Senate Majority Leader Larry Pogemiller seemed to tell us what will be happening with climate change bills when he said that those on the edge of the envelope will not ruin the bills and that we have many friends in the Senate. And so it is. Climate change bills (SF 2818 and HF 3195) have been amended to focus (1) on the potential economic impacts of a cap and trade program and (2) on the Governor’s Midwest Climate Change Accord in a much more neutral manner. This is a big shift away from the original bills that were very prescriptive in detailing how any cap and trade program should look, including the requirement that 100% of credits be auctioned with no allowances. There are still some changes that the Governor’s Office would like to see in order to allow complete flexibility during Accord negotiations with other Midwestern States. Some, including a good number of DFL senators, are wondering why we need any bill at all. We believe that requiring an economic impact study that does not already prescribe the conclusions of the study would be a good bill. Of course, utilities will pay for the study.
The Legislature prescribed the greenhouse gas (GHG) reduction goals in last year’s bills, reducing CO2 emissions by 30% from 2005 by 2025, and eventually 80% by 2050. SF 3337 and HF 3661 lay out a process for the State to develop policies to attain the reduction goals. In other words, the bill tells the Department of Commerce and the Pollution Control Agency to file each year a detailed plan for attaining the reductions based on a handful of principles, such as conservation, education, federal and regional coordination. This is a good bill that says let’s plan before we leap any farther, or actually places the horse before the cart. SF 3337 is on the Senate Floor.
Another big bill that did not seem to make it this week is what the Germans call a feed-in tariff for small renewable energy development – you know, the one where utilities are required to buy wholesale at 70 cents and sell retail at 10 cents, with a minimum 10% profit for the wind and solar guys and with no pesky interconnection charges. What a great way to make a living! The House bill, HF 3537, was heard twice in the energy committee this week, with MREA and GRE testifying against the proposal by Rep. David Bly (DFL-Northfield). We could not get out of the hearing without saying that non-profit co-ops find it incomprehensible that they must guarantee a profit for another entity. The last we heard, the Chair of the Energy Committee, Bill Hilty, will turn the bill into a study.
The Senate Tax Committee reluctantly removed the class rate property tax increase from the omnibus technical tax bill, HF 3201. The same provision passed last year, and the Governor mentioned the utility tax increase as one of the reasons for vetoing the bill. He was saying the same this year, that is, he will or might veto the bill if it includes the utility property tax increase. This big battle, you might recall, started when the Department of Revenue revised its rules on the valuation of utility property, saving co-ops and the other utilities a few millions here and there. The cities and counties did not like the idea of utility property being valued fairly, especially those around Becker, Red Wing, Monticello, and a few others. So, they have been strongly pushing this class rate increase to make up the difference. The cities lost this round of the battle, but the class rate increase on utilities just might show up elsewhere this year.
Speaking of taxes, Great River Energy recently asked Elk River area legislators to introduce a bill to allow a personal property tax exemption on plant machinery at the proposed natural gas peaking plant in Elk River. The same bill was passed last year but got caught in the Governor’s veto of the omnibus tax bill. Also, they are not called taxes, but assessments. With no spare money sitting in the general fund, utilities are being “assessed” to the high heavens to cover activities and programs which are in any way related to energy. And for good measure, these new assessments (indirect taxes if you will) do not apply to the cap on utility assessments. In short, utilities are viewed as an unlimited supply of indirect tax funds. One smart aleck lobbyist mentioned to Chair Bill Hilty that we utilities assume we can ignore the cap on CO2 emissions the same way that the Legislature ignores the cap on utility assessments. Bill laughed and acknowledged the point.
We never liked the county proposal to get into the wind development business because they stole or borrowed the co-ops’ well recognized old acronym for the Rural Electrification Act, and called themselves the Renewable Energy Agency. But we worked against the initial bill for other reasons, those reasons mainly being the potential for selling retail and off-site distributed generation. After many meetings during the interim and into the early weeks of this legislative session, the Metro counties and the Minnesota Rural Energy Board achieved agreement with utilities. HF 3585 and SF 3160 gives the counties explicit authority to be involved in renewable energy projects, including C-BED projects, on a wholesale basis (like an independent power producer), but specifically not on a retail or end use bases that would run counter to the service territory law.
Current law requires utilities to offer a payment agreement for the payment of arrears. A low-income consumer group initially proposed all sorts of onerous related requirements. Instead, HF 3368 and SF 3081 now simply state that the utility must consider a customer’s financial situation when working out a payment agreement. The new language also provides that no additional deposit can be charged “to continue” service to a connected customer who enters a payment agreement and is on time with payments. The bill does not prohibit the use of security deposits to “restore” or “reconnect” service.
The original bill also proposed to make a distinction between continuing or reconnecting electric service for customers on life support systems and those with medical emergencies. Because the bill might have actually helped utilities disconnect folks who try to abuse the system, those provisions were deleted from the bill. The consumer group, in this case, promoted the changes because abuse can hurt them in the long run.
Cities May Ask for Utility Disconnection Notice
During late-2007, the Public Utilities Commission and the Department of Commerce asked utilities, including co-ops, about home foreclosures, disconnections, and damage from frozen water pipes. Everyone seemed satisfied that all utilities were doing everything within their means to help make sure that a house did not become a frozen water park.
Then one of the metro television stations at the behest of the City of Plymouth ran a big story with horrid pictures of ice McMansions and tumbling neighborhood property values. Thus, with the push from the League of Minnesota Cities, we now have SF 2775 and its companion HF 3229. So, after many years of beating back reporting disconnections, we just might get sideswiped by the shortsightedness of some mortgage lenders, the resultant home foreclosure crises, and cities afraid of losing property tax value.
The original bill required that all utilities notify a municipality or water utility of any disconnections, and with this information the cities would then probably cut off the water supply at the street. This initial version morphed into the State receiving all disconnection notices which the cities could then access. That complex process did not fly. Now, and more acceptable, a city may in writing request a utility to provide disconnected addresses during the winter months if the electric service is not reconnected within 24 hours. The notification can be made electronically or other method that works best for the utility and city. Included in the current bill is a data privacy provision to hold utilities harmless.
SF 3528 and HF 3843 require that utilities achieve the renewable energy standard (RES) with a given percentage of solar power, mostly small solar. We do not like this precedent of carving out prescribed amounts of any renewable energy resource. And just as bad, the bill prohibits utilities from using the safety valve, or off ramp, under this requirement. In short, it does not matter how much the solar power costs in achieving the given percentage. The bill is to be heard in the Senate Energy Committee this coming week.
March 14 is the first committee deadline. Policy bills must be out of the policy committees for further consideration in the other house. It will be a very busy week.
Watch for more on the Green Economy Transformation Task Force (SF 3540) and the coordination of economic development and environmental green economy policy (SF 3539), both by Senator Ellen Anderson.
Someone, not Mark, said at the beginning of the legislative session: “What I need is an exact list of specific unknown problems we might encounter.” We are still working on that never-ending list.