Volume 08-4 ~ April 4, 2008
No More Cap and Trade Principles
Green Economy and Green Jobs Move
Utilities, Landlords, and Tenants
Senate Passes Five Energy Bills
No More Cap and Trade Principles
Legislative committees this week advanced cap and trade bills that focus on reports and studies, but not principles. With the Minnesota Chamber on one side and the Isaac Walton League on the other side, Senator Ellen Anderson amended her bill SF 2818 in her own environment and energy budget division directing reports and studies regarding potential economic impacts and state spending options from the revenue of a regional cap and trade program. No attempt was made to reinstate a section requiring the Governor’s Accord to adhere to various principles, including the principle that all credits be auctioned rather than issued as allowances.
Senator Anderson’s amendment also just saved us $575,000 in a new utility assessment to finance the studies and for the Midwestern Governors Association. Instead, the money to implement the bill will come from a previous assessment on Xcel – we Xcel customers are glad to contribute. With everyone in agreement on SF 2818, the bill moved to the full Senate Finance Committee, which has set the bill for hearing on April 9. A summary of the bill is in the MREA Legislative Bulletin for March 20, which can be found on our website at www.mrea.org, in the “Legislative Center”.
The six principles of a regional cap and trade program were deleted by the full House Finance Committee on Friday from HF 3195, by Rep. Kate Knuth. The amendments also revised the funding for the studies. The funding for HF 3195 is now the same as that described above for the Senate bill and is the same as contained in the House omnibus finance bill (HF 1812). The bill now goes to the House Ways and Means Committee. The key portions of both HF 3195 and SF 2818 now read the same, and there is no opposition to either bill – although some legislators and environmental groups are unhappy with the removal of the six principles.
Green Economy and Green Jobs Move
Last week we mentioned the attention the Legislature is giving to green jobs and the green economy. That attention continued this week in the House Omnibus Finance bill, HF 1812. This bill includes the policy language and the funding for these green endeavors. We described the coordination of economic development and environmental policy for green jobs in our last report, March 31, as we also did for the action plan and policies of the green economy transformation task force. The funding for these two ventures is from a previous assessment on Xcel and from last year’s assessment on all utilities, for a total of $400,000 over the upcoming two years. HF 1812 is on its way to the Senate. The Senate versions of the bills, SF 3539 and 3540, are still stand-alone bills in the Senate Finance Committee.
Last week we reviewed the Senate Omnibus Tax bill, SF 2869, as it left the tax committee. The bill included the utility personal property tax class rate increase, the removal of the utility generation exemption from the statewide property levy, but did not include GRE’s personal property tax exemption for the Elk River peaking plant. This week the full Senate passed the bill in the same form regarding those provisions. The bill will now lay on the Senate table in wait for the House omnibus tax bill, which has not yet been acted on in the House tax committee. The good news is that the separate GRE tax exemption bill, SF 3546, is scheduled for hearing in the tax committee on Tuesday, April 8. Also good news, although very speculative good news, is the continuing strong rumor that the House tax bill probably will not include the utility tax increases.
A nice tidbit of interest is that utility property taxes payable in 2008 are down 18% compared to 2001.
Utilities, Landlords, and Tenants
Tenants currently have a limited right to pay a utility bill that a landlord has not paid. SF 2909 revises this law in a number of ways. The bill has passed both houses, but in different forms, and it is now in conference committee. Here is a summary breakdown:
· A utility does not have to post disconnect notices in a residential building, but some do so on their own or by city ordinance. If a utility does post a disconnect notice in a residential building, then the notice should provide specific information for the tenants. This specific information is spelled out in SF 2909. The bill now, unlike previous versions of the bill, does not require utilities to post notices – that is a subject for next time.
· If a tenant intends to pay the utility bill for the landlord, then the payment should be for current charges for the most recent billing period, rather than the total outstanding bill, that is, no arrears payment. If the utility restores or continues service, it must do so for at least one billing period.
· In a residential building with less than five units, one of the tenants may become the bill payer and “customer of record”. A tenant can do this only once a year.
· A landlord may reestablish service in her name if she pays the total bill, including arrears, or enters into an acceptable payment agreement.
The third committee deadline was on March 28. That means the finance committees of both houses need to start moving full speed ahead. A good number of bills are of interest to electric co-ops. Here is a quick summary of the action. The Senate Environment and Energy Finance Committee moved SF 3096 to the full finance committee. As amended, the bill contains the following provisions:
· Establishes the Governor’s small renewable energy initiative, including a microenergy loan program to local units of government. (SF 2949)
· Establishes an energy improvement financing program for state government and for local units of government. Program eligibility, financing agreements, and qualifying projects are spelled out. Some geothermal energy improvements might fit in as qualifying projects. Utility CIPs spending on any of these projects may count towards a utility’s 1.5% energy savings goal. (SF 3096)
· In a separate bill, SF 2749, establishes a wind energy aggregation program. Because it has become difficult, if not impossible, to purchase wind equipment in small quantities, the rural wind energy board (formed last year) will set up a system to coordinate and arrange umbrella sales arrangements for groups of individuals, C-BED developers, school districts, and other small-volume purchasers. These individuals and entities, as a group, with the help of the board, will hopefully be able to place large orders for wind facilities with manufacturers. $100,000 funding to the Department of Commerce comes from Xcel’s renewable energy research fund set up last year.
The House Finance Committee passed six energy bills, some the same as mentioned above. Here is the list:
· The cap and trade bill, HF 3195, described above.
· HF 3669 establishes an energy improvement financing program for state and local governments. We mentioned the same provision above in the Senate companion bill, SF 3096. In HF 3669 (and will also do so in SF 3096), we were able to remove some pesky language about an “energy improvement project” having the authority to be involved in “generating, transmitting, or distributing” renewable energy. The bill now moves to the House Floor.
· The wind energy aggregation program, HF 3343, the companion to SF 2749 described above. Unlike the Senate bill, the House version provides that up to $100,000 annually may be assessed on utilities to carry out this aggregation program. George Crocker thanks you for your help. Clearly, the different funding mechanisms will need to be settled.
· HF 3729 establishes a Legislative Energy Commission in place of the Legislative Electric Energy Task Force. It’s not just electricity any more, but natural gas, oil, propane, and more. And a legislative commission has more authority than a task force. The commission will evaluate the energy policies and practices in the State and “the degree to which they [energy policies] promote an environmentally and economically sustainable energy future.” The new LEC will also monitor the RES and CIP programs, as well as review and recommend legislation. The LEC must hold hearings on various issues, such as Xcel’s IRP, transmission projects, and the conservation spending program. Gee, it still looks like “electricity” to me. Where does the “energy” fit in? The $250,000 annual assessment is on all “energy” providers. A minor detail, the assessment language could have been interpreted to allow the assessment of both G&Ts and distribution co-ops (same for the munis), and Rep. Bill Hilty was open to a clarifying amendment to ensure that that will not happen. The Senate companion bill, SF 3605, is in the Senate Finance Committee.
· The language of HF 3401 was moved into its companion bill, SF 2706, before being advanced to the House Ways and Means Committee. The amended SF 2706 requires the DOC, using $500,000 utility assessment funding, to contract with the U. of M.’s Center for Sustainable Building Research to develop and implement energy-efficient performance standards for new or reconstructed commercial and industrial buildings. These standards must meet prescribed carbon emissions reductions. Utilities also must develop CIP programs that result in energy savings that meet the building standards, and spending for this program counts toward the 1.5% energy savings goal. All this will be known as “Sustainable Building 2030”.
· HF 3661 creates a process for the State to develop policies to attain its greenhouse gas reduction goals, passed last year and the reason for the controversy over the cap and trade program. First, by November 1 of each even-numbered year, the DOC and PCA will issue a report on the “most recent and best available evidence identifying the level of reductions already achieved and the level necessary to achieve the reduction goals.” As a follow up, the DOC and PCA each year shall propose legislation appropriate, if any, to achieve the reductions. The bill also includes provisions relating to automobile air conditioner refrigerants. The Senate companion bill, SF 3337, passed the Senate Floor last week, and that bill contains a list of GHG reduction principles – not like the kind found for the cap and trade program. HF 3661 is on its way to the House Floor.
Senate Passes Five Energy Bills
In addition to the Omnibus Tax Bill, SF 2869, the Senate passed five bills concerning utilities, energy, and climate change. Here is a listing:
· SF 3089 provides that strategic tree planting can count for a limited period toward the CIP spending goal. Its companion bill, HF 2946, is on the House Floor.
· SF 3337, as already mentioned, creates a coordinated process for reducing greenhouse gas emissions and includes “principles” for doing so. Its companion, HF 3661, is moving to the House Floor.
· SF 2996 extends the definition of biomass to include sludge, wastewater effluent, or related products in the context of the renewable energy standard, integrated resource planning, and the CIPs allowance.
· SF 2775 requires utilities to give notice to a city, if requested, when a residential customer is disconnected. See more info in our earlier reports. The companion bill, HF 3229, is in the House Finance Committee.
· SF 3341 provides for the voluntary inventory of energy used by businesses. Its companion, HF 3718, is on the House Floor.
The Minnesota State Board of Electricity is proposing to adopt the 2008 edition of the National Electrical Code (NEC), in place of the 2005 NEC. The Board intends to adopt the new code without a public hearing unless 25 or more persons request a hearing. Detailed information on the changes made to the NEC is available online in two documents. The addresses are www.nfpa.org/assets/files/PDF/ROP/NEC2008ROP.pdf and www.nfpa.org/assets/files/PDF/ROP/70-A2007-ROC.pdf . For more information on the proposal, see the State Register, 31 March 2008, page 1808. The State Register can be found on the website for the Minnesota Bookstore at http://www.comm.media.state.mn.us/bookstore/stateregister/32_41.pdf .
Our hearing isn’t getting any better, but we are quite certain it was a legislator, not a lobbyist, who said something like “Let’s move ahead with this bill and not take time to think.” But it probably was a lobbyist who said that doing it right is no excuse for not meeting the schedule.