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Minnesota will try 'facts'-based rates for community solar

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Minnesota will try 'facts'-based rates for community solar

Overobjections from Xcel EnergyInc., the Minnesota Public Utilities Commission on July 21 saidratepayers who subscribe to community solar projects will be compensatedaccording to a formula that was created to calculate the value of distributedgeneration.

Thecommission approvedthe methodology for calculating a value of solar, or VOS, rate in 2014. At thetime, Xcel Energy said basing solar rates on "facts and objectiveanalysis" would avoid shifting the cost of electric service on to nonsolarcustomers, thereby allowing for higher levels of distributed solar generationin the state.

However,a lawyer for Xcel Energy on July 19 said the VOS methodology needs to bereworked, in part because community solar projects are being built away fromload centers where electricity is needed most. Acknowledging his own"gnawing concerns" about where the VOS may lead, Commissioner DanLipschultz nevertheless said legislators clearly intended for there to be atransition when they directed state officials to create the methodology in 2013.

"[The]developers and Xcel, if they agree on anything, the one thing … they seem toagree on is that at the end of 2017, given what we now have in the design andconstruction phase, we're likely to have around 400 MW of solar-gardencapacity," Lipschultz said July 21. "And I am sure if you got any ofthe folks who were involved in developing the legislation in a room and theywere candid with you and having a couple of drinks, they would tell you theynever in their wildest imaginations anticipated 300 [MW], 400 MW ofsolar-garden capacity" coming from this program, he added.

Subscribers to communitysolar projects receive a bill credit for the electricity generated inproportion to the size of their subscription. Currently, about 1,000 customers subscribe to 16.5 MW ofcommunity solar projects, according to PUC staff briefing papers.

Thecommission voted unanimously July 21 to apply the VOS rate for community-solarbill credits on applications filed after 2016. The commission also directedXcel Energy to annually file updated VOS rates for review by the MinnesotaDepartment of Commerce, which supports using the VOS rate for community solarbecause "that will provide more transparency into the actual developmentof the rate and will give more certainty to both subscribers and to developersas to how that rate will go forward," a department official said.

AndyBrown, the Xcel Energy lawyer and a partner at Dorsey & Whitney LLP, saidthat in light of community-solar development patterns, "We haven't reallycome to terms with those issues as they would deal with avoided cost."Xcel Energy, which wanted the commission to lower the applicable retail ratethat has been used for community solar to date, believed that it was up to thecompany to decide when to transition to the VOS rate, Brown said.

"Giventhat the company's position is that it's up to the company whether it files itor not, I mean part of me says, 'Well, if we go through the process of re-examiningit and you don't file it, what's the point," Commissioner Nancy Lange saidJuly 21.

FreshEnergy, a nonprofit that supports renewables, and the Environmental Law andPolicy Center said using VOC-based bill credits for community solar is in thepublic interest because it matches compensation for solar generation with itsvalue, according to the staff briefing papers.

XcelEnergy did not immediately respond to a request for comment on July 21. Theutility operates legally in Minnesota as Northern States Power Co. - Minnesota.