Major changes coming to a Minnesota renewable energy fund

Minnesota Gov. Mark Dayton last week approved a jobs and energy bill that will make major changes to a renewable energy fund that was created in 1994.

The bill will allow the Xcel Energy-managed Renewable Development Fund to be used to help towns dealing with closure of biomass plants, as well as end the Made In Minnesota solar manufacturing program, which received $15 million in annual funding. Republicans argued the program was too costly and did not create many solar manufacturing jobs.

Rep. Pat Garofalo, the Republican chair of the House energy committee, called this year the “most meaningful” energy session since 1994, when the legislature passed a law requiring Xcel money to pay into a fund in return for the right to store spent casks at Prairie Island Nuclear Generating Plant.

The fund traditionally focused on renewable energy projects and research. The legislature, however, will allow some of the funding to help three communities – Benson, Hibbing and Virginia — facing closure of two biomass plants.

They will receive $54 million in payments over a number of years. The money may at least ameliorate the loss of jobs caused by the plant closures.

Xcel had been required by the 1994 law to develop biomass-produced power. Two projects that were created to fill that mandate were the Laurentian Power Authority in northern Minnesota and Fibrominn LLC in Benson.

Laurentian used logging debris while Benson employs poultry waste as fuel.

Rick Evans, vice president of regulatory affairs at Xcel, told legislators that buying from those plants added 5 percent to the utility bills of larger industrial customers and 2.5 percent to residential customers.

The law allows Xcel to end the biomass contracts. “Biomass has not panned out like we thought it would,” Garofalo said.

It’s likely the money will be used by the communities affected by the biomass plant closings for job retraining, economic development and other issues.

Also, the city of Duluth could get as much as $15 million for a steam plant conversion, even though Xcel is not the city’s electricity provider. Clean energy advocates agree the project is a good one but contend the money should come from a bonding bill and not the renewable fund.

The Duluth project will reduce emissions much more than the $175 million that the fund would have been spent on the solar panel manufacturing program, Garofalo contended.

Though Xcel does not serve the Duluth area the renewable fund has been used for projects outside the utility’s footprint in the past, Garofalo said, as long as they were “beneficial to the entire state.”

Xcel’s Solar Rewards program that promotes rooftop solar also will receive additional money from the fund, with an additional $25 million in spending that will be spread over the next five years, Garofalo said.

Gov. Dayton signed the bill in the face of a government shutdown, despite being critical of the provisions.

“This bill essentially rewrites that [1994] agreement by allowing Xcel Energy and the Legislature to have direct control of the RDF, while significantly obligating these funds over the next several years for non-renewable energy uses,” Dayton wrote in a letter to legislators.

Matt Privratsky, government affairs specialist for Fresh Energy (which also publishes Midwest Energy News) said the omnibus bill requires a legislative signoff for all projects – a power the legislature did not have before.

That will likely introduce politics into a process that previously involved Xcel, an independent board and regulators, he said.

Xcel will first determine what projects will get funded and submit those to the PUC. The legislature will vote up or down on the entire project slate.

“It’s absolutely a bad move for Minnesota’s energy economy,” Privratsky said.

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