Volume 08-6 ~ April 22, 2008
It’s Baacckk!! Just when you thought it was safe to go to St. Paul, a horribly ugly creature unexpectedly raised its head – an omnibus energy policy bill. The creature was formed, of all places, in a finance committee. House Energy Committee Chair Bill Hilty and the House Finance Committee cobbled together about eight energy policy bills into SF 3337. The bill includes HF 3843 requiring utilities to include a small percentage of the 25% renewable energy standard (RES) to be mostly small, customer-owned solar energy.
MREA, GRE, and other utilities oppose a solar “carve out” in the RES because of the precedent set for all sorts of future carve outs that are far removed from the least-cost renewable resource. And the solar percentage might be small today, but the creature’s appetite is never satisfied – witness the 10% renewable energy objective, which just a few years ago was deemed by enviroes as extremely aggressive. Solar advocates generally cite 2.0% of the RES as the goal, while the currently proposed 0.0125% is obviously a teaser or “loss leader”. Last year, C-BED advocates asked first for a 50% and then a compromised 25% carve out. The Legislature then was not in the mood for special carve outs, and the Senate Energy Committee earlier this year defeated the solar carve out bill, SF 3528.
Other items in the new House omnibus energy bill include the following:
· Delete an exemption for utilities in the eminent domain law to share appraisal information with landowners. (HF 2632)
· Require the development of a coordinated process for State policies to achieve the greenhouse gas reduction goals. (HF 3661 and its companion bill SF 3337, which is now the vehicle for this omnibus House energy bill.)
· Allow IOUs to recover certain MISO transmission charges through an automatic adjustment clause; allow the PUC to approve utility spending for renewable energy storage facilities, along with transmission; allow IOU automatic cost recovery for renewable energy facilities that the PUC finds appropriate; and exempt certain wind and solar facilities from needing a PUC certificate of need. (HF 3977)
· Modify the utility notification process for transmission line (HVTL) siting to give all local governments along a proposed site an additional four months notice. The local government can then request a local hearing, but may not adopt a local construction moratorium. (HF 3717)
· Permit utilities to include certain solar projects up to 5% of allowable CIP spending and DG projects, with expanded cost-effectiveness standards. The bill also sets up a solar rating and certification laboratory. (HF 3698) We like this part because it allows utilities to obtain solar energy where and when it makes sense with an incentive, not a mandate.
· Allow as a pilot project the “strategic” planting of trees and shrubs around a home or building to reduce heating and cooling needs as CIP spending. (HF 2946)
· Require the Rural Wind Energy Board (through the Office of Energy Security, the OES) to aggregate the purchase of wind turbines and other wind system equipment for sale to small wind developers and local units of government that cannot purchase small quantities in the market due to current strong demand. (HF 3343)
· A few other energy provisions which are not of direct interest to electric utilities.
Clearly, although we can live without any of them, there are some provisions in SF 3337 that are positive for utilities and their customers. But as always, the hateful thing about omnibus bills is the lumping of the good with the bad so that everyone comes away mad. The bill passed out of the Finance Committee on a vote of 14:8:2, with Rep. Jeanne Poppe, from Austin, as the only DFLer to vote against the bill because of the solar carve out provision.
In the last two years, we have seen a few bills and amendments on the House Floor concerning nuclear energy, especially on deletion of the prohibition of the PUC to issue a certificate of need for a nuclear power plant. This past Friday the House energy committee and the biosciences and emerging technology committee conducted a joint informational hearing on the state of nuclear technology, plant design and safety.
No nuclear bills or regulatory proposals were discussed, but there was plenty about the dangers and potential disasters with nuclear power and waste storage. Yet, there was an even larger portion of the hearing that was positive about the improved technology and about the need for nuclear energy to help future reliability, affordability, and combat climate change.
Of particular interest to those with a science and engineering bent were presentations by the U.S. Department of Energy’s Program Manager of Nuclear Power and the Nuclear Energy Institute’s Senior Director of New Plant Deployment. Here is one interesting projection they presented: Nuclear power currently provides about 19% of our electrical generation mix. Because of projected growth, nuclear power capacity needs to double (50%) by 2030 to provide about 25% of our generation mix. All other technologies – coal, gas, hydro, renewables, and others – will need to increase by 30% to fulfill the demand in 2030.
The hearing presented quite a contrast to a hearing last year when a bill proposed that a study be conducted on the electrical power system without any technical or engineering material. Or this year, when a legislator offered an amendment to study the potential for nuclear power, another legislator offered a counter-amendment that the study could be conducted only when or if Congress repeals the federal Price-Anderson Act concerning utilities’ nuclear liability.
SF 2818 is on the Senate Floor for consideration and HF 3195 is on its way to the House Floor. As amended, the cap and trade bills now focus on reports and studies. MREA accepts, if not outright supports, the current bills. Last session we strongly argued that the Legislature should look at costs and economic impacts before acting. It is a year later, or a year too late, but now we are getting our cost and impact studies. Most observers now consider the bills non-controversial, although some argue that the whole idea of cap and trade program is a disguised energy tax that makes any study just a waste of time and money.
In previous reports, we indicated how this session is going wild on utility assessments, especially on the big, bad nuclear power utility. The limit, however, is SF 3830/HF 2527. This bill had an “informational” hearing recently, which at this point does not seem to have traction, but will so next year. The bill proposes that the Pollution Control Agency establish a low-carbon fuel standard to reduce the carbon intensity of transportation fuels. Guess who pays the PCA to do this? As a customer of Xcel Energy, I protest paying in my electric bill for issues pertaining to transportation fuels. But what do I know in the big scheme of $935 million state budget deficits! And besides, as one senator once remarked on the Floor, “Mr. President, before I give you the benefit of my remarks, I’d like to know what we’re talking about.”