Carbon-free energy bill expected to pass MN Senate

DETROIT LAKES — The Minnesota Senate was expected to pass a carbon-free energy generation standard on Thursday, Feb. 2 even though it had faced concerns from locally-owned and operated public utilities.

The bill sets a timeline for public utilities across the state to ensure their electricity generation is 100% carbon-free by 2040 . The bill was passed by the Minnesota House on Jan. 26 by a 70-60 vote.

Utilities would be required to hit carbon-free power generation benchmarks over the next 17 years, which include: 80% carbon-free by 2030; 90% carbon-free by 2035; and 100% carbon-free power generation by 2040.

The new law would also require electric utilities to file carbon-free plans and progress reports every two years with the Minnesota Public Utilities Commission as they move toward meeting the new standard.

The state public utilities commission will have the authority to modify or delay the carbon-free standard if they determine: it could impact the reliability of the electric system; utilities are delayed in acquiring sites and permitting; or experience transmission constraints. They may also modify or delay the carbon-free standard if it would cause "significant" rate impacts to utility customers.

The new law also states the Minnesota Public Utilities Commission "must regularly investigate" to ensure public utilities are in compliance with the new carbon-free standard. If a utility isn't complying with the new standard, the commission may:

• order the electric utility to construct facilities.
• purchase energy generated by eligible energy technology.
• purchase renewable energy credits.
• engage in other activities to achieve compliance.

Local public utilities that fail to comply with an order from the Minnesota Public Utilities Commission may be fined the estimated cost it would take to comply with the new law. The fine may not exceed the amount necessary to construct new facilities or purchase clean-energy credits.
The new law also includes a provision in which local utilities may request a modification or delay from the state commission as long as they include a plan that would bring their facility into eventual compliance.

Detroit Lakes Public Utilities posted their concerns about the bill in a Jan. 30 Facebook post.

Vernell Roberts, general manager for Detroit Lake Public Utilities and chair of the Missouri River Energy Services board of directors, said, while 17 years may seem like a long time, it takes a lot longer than people think to build power facilities, connect them to transmission lines and send their electricity to the grid.

Detroit Lakes Tribune file photo

"It takes a tremendous amount of time to put iron in the ground and get something like this accomplished," said Roberts. He added the 2.2 miles of transmission lines needed for the power station on the south side of Detroit Lake took $250,000 and about two years to construct on a friendly right-of-way controlled by the Minnesota Department of Transportation.

Another project, connecting an electric transmission line from Big Stone, S.D., to Alexandria, is expected to take seven years, he said.

"We needed to be planning five years ago," said Roberts.

When energy policies keep flipping back and forth at the federal and state level with every election cycle, he added, it makes it hard for companies to want to invest billions into a project that may get rescinded only a couple of years later under different leadership.

Detroit Lakes Public Utilities is a member of Missouri River Energy Services (MRES), which is made up of dozens of public utilities across Minnesota, North Dakota, South Dakota and Iowa. In 2020, MRES reported 80% of its power generation was already carbon-free from a mixture of Western Area Power Administration power, nuclear, wind, solar and natural gas. The Minnesota members of MRES are also members of the Midcontinent Independent System Operator (MISO), which manages the flow of electricity across 15 states and parts of Canada.

Contributed / Missouri River Energy Services

"I took a look at the (MISO) markets on Monday and Tuesday morning, it was sunny out ... there wasn't a lot of wind, and it was a good opportunity for solar," said Roberts. "(On Monday and Tuesday) we were only getting 14% of our power supply from wind and solar."

Also during that time, he said, up to 70% of MISO market power generation was made up of coal and natural gas.

Roberts said he hoped the final bill would have support built in for public utilities that may be able to get to 93% carbon-free, but would need financial help for the last 7% that would otherwise require a 40% or 50% utility rate increase for their customers. He is also worried about the loss of local control to the state public utilities commission if they were unable to meet the carbon-free standard by 2040.

"We need a (carbon-free) off-ramp, otherwise it's not going to be affordable for our customers," he said.

Excel Energy and Minnesota Power will be taking two of their coal-fired generation plants offline in coming years, Roberts added, so now, in addition to meeting these new carbon-free standards, Minnesota will need to make up an additional 3,400MW of power generation to maintain its current levels.

It is also expected that more and more electric vehicles will need to be charged on the power grid in coming years, which requires greater flexibility to adjust power generation resources to ensure the electric grid maintains its reliability. On Dec. 23, during the last arctic cold spell, Roberts said, Detroit Lakes Public Utilities implemented emergency energy generating procedures because the electricity usage across the grid was at its capacity.

"That's only going to get worse as more of these coal resources and natural gas resources are retired," he said. "The greater the deficit, the harder it'll be to keep the lights on."

Roberts added these shortfalls are happening more during the winter months, which can be life-threatening.

Sen. Rob Kupec, DFL-Moorhead, said the Senate version of the House bill made some "tweaks" to help smaller electric utilities in greater Minnesota. Those tweaks included eliminating the cap on what could be counted as carbon-free hydroelectric power and giving smaller utilities a 60% carbon-free benchmark by 2030, instead of the 80% threshold that was included in the House bill.

"There is a lot in the bill to help with new transmission lines," said Kupec. "I feel confident that in my district that the municipal electrics are going to get there."

Contributed photo

He said he has been listening to concerns raised by locally-operated public utilities, like Detroit Lakes, and believes the off-ramps built into the carbon-free standard will be sufficient to protect those utilities and their customers from steep rate increases.

"As a meteorologist, I almost think 2040 is too late," said Kupec. "But there is a lot that needs to be done, so I think that pushing that timeline faster is a bad idea, I don't think we can do that."

He also added that Moorhead is already at 100% carbon-free power generation and Barnesville is pretty close too, so other utilities in the region should see that carbon-free is possible.

"There is an increased cost of climate change, particularly in our ag economy," said Kupec. "If you look at some of the climate models, by the end of the century, we'd hit over 100 degrees about 18 times per year ... and for agriculture, 18, 100-degree days are stressful on plants."

If the Senate passes the bill, it will go to Gov. Walz's desk where he is expected to sign the measure into law.