More than most people, I understand the reality that elections have consequences. The fallout from last month's result--which gave Minnesota's version of the Democrat party (DFL, Democrat-Farmer-Labor) complete control of state government for the first time in a generation--has already begun.
For reasons that I will get into in Part 2, Minnesota's energy policies are likely to see some of the biggest changes as the result of moving to one-party rule.
Minnesota Public Radio aired a piece today previewing some of the environment and energy issues likely to come up before the state legislature in 2013. The incoming Chair of the House Energy Committee, State Rep. Melissa Hortman (DFL-Brooklyn Park) is quoted as wanting,
"to encourage more use of rooftop solar. She wants to make it easier for more people to get paid retail rates for solar power they produce on their rooftops. 'If you're a commercial property owner and have warehouse roofs that you'd like to put solar on and sell the power back to the utility, right now you're prohibited from doing that at the scale you might like to,' Hortman said."
Rep. Hortman is referring to Minnesota's net metering statute--section 216B.164--which allows projects of up to 40 kW sell their power back to the utility at, essentially, the same price they purchase power, the retail rate. A 40-kW system would be larger than any homeowner would care to install. However, commercial installations have grown quite large in the state.
The largest solar project in Minnesota is the 1,014-kW installation at the IKEA store near the Mall of America. The Swedish retailer's project is some 25 times the size of the largest installation now eligible for net metering.
A number of states allow for net metering of projects up to 1,000 or even 2,000 kW. Some states with larger limits place caps on the number of customers or the aggregate amount of projects eligible, in order to protect utilities and customers, for obvious reasons.
Minnesota has dozens of tiny city-owned and rural cooperative electric utilities, some with total loads of less than 1,000 kW, for all customers. If a utility's customer were to install a 1,000 kW system and be eligible to sell power at a premium, retail rate, the outcome would be instant bankruptcy for a tiny utility. One would hope that a local business or industry in a small community would be more neighborly than that. However, nothing in current statute would relieve a tiny utility of the obligation to buy unlimited amounts of power.
Even for larger utilities able to withstand the financial hit, by its very nature, net metering is a bad deal. "Excess" power from a commercial property is typically available only when that customer is not engaging in commerce: weekends and holidays. Not coincidentally, those are days when wholesale power prices are at their lowest, reflecting lower demand on "off" days. The utility would then be forced to pay premium prices at times when the power purchased commands the least value. The difference in price, of course, would be passed on to all consumers in the form of higher "retail" rates.
In a vicious circle, selling low value power at retail prices tends to force up those same retail prices, encouraging even more projects to take advantage of the ever-increasing rates.
In Part 2 of this series, I will take a look at the political pressures on legislators to make this happen.
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