Senate and House Energy
This week both the Senate and House Energy Committees heard an overview from Xcel Energy on their recent Integrated Resource Plan (IRP). The major components of the Xcel IRP included closing their remaining coal plants (Allen S. King power plant in 2028 and Sherco Unit 3 in 2030), extension of the Monticello nuclear plant licensure until 2040, adding renewable resources, adding firm dispatchable resources and development of two new transmission lines at the King and Sherco sites.
House Energy
The House Climate and Energy Finance and Policy Committee heard HF3222 (Lippert, DFL-Northfield) on Tuesday. HF3222 appropriates $4.5 million from the Xcel Energy Renewable Development Account (RDA) as a grant to the city of Northfield for a pilot project that develops and deploys a distributed energy resource management system specifically for the grid in the city of Northfield. A proponent of the bill, a Northfield resident, stated that she wanted to put up a solar array on her roof, but that Xcel Energy told her she would need to pay thousands of dollars in upgrade costs.
Rick Evans, regional director of government affairs, Xcel Energy, described the developing landscape of individuals who want to add more renewables and the utility’s desire to develop large scale renewable projects as a clash of cultures. As a public utility, Xcel Energy owns, operates, and maintains a distribution grid. The utility is required to provide reliable energy at an affordable cost to all of its ratepayers. The grid was not built for private, for-profit companies to interconnect to the grid wherever they want and sell products. Developers and individuals can use the distribution grid so long as it is equipped to handle that energy. Xcel Energy must perform engineering studies to ensure that each project does not impact the grid’s ability to maintain reliability.
Xcel Energy raised concerns on HF3222. The bill specifically refers to the Northfield grid. The city of Northfield does not own the grid, nor does it maintain the distribution grid. Xcel Energy also suggested that the city of Northfield and its partner, Nokomis Energy, could apply for a grant from the RDA. By applying for a grant (rather than a direct appropriation by the Legislature), Xcel Energy could have oversight over the project and know more about the scope of the project and its impact outside of the city.
HF3222 was laid over for possible inclusion in an Omnibus Bill.
The committee heard issues related to building codes on Thursday. The Minnesota Housing Partnership provided an overview of its study entitled “A Better Building Code.” The committee also heard two of Chair Jamie Long’s bills for information. The first would create a program in the Department of Commerce and require building owners to enter energy usage data into a benchmarking tool created by the department. The second would require new construction to include electric-vehicle-ready parking spots.
Senate Transportation
The Senate Transportation Committee heard SF1602 (Howe, R-Rockville). SF1602 would impose a 5.1 cents per-kilowatt-hour tax on electric vehicle (EV) owners. This electricity tax would be collected by the utility and remitted to the Department of Revenue on a monthly basis. This electric fuel tax would mimic the gas tax and would be used for roads and bridges. According to Sen. Howe, the gas tax generates approximately $200 per vehicle annually. The electricity tax would generate approximately $300 per vehicle annually.
The gas tax is the only dedicated tax used for roads and bridges. EV owners currently pay a $75 surcharge. However, that surcharge is sent to the Highway User Tax Distribution Fund and not solely dedicated to roads and bridges. Under SF1602, the $75 surcharge would be repealed in favor of the proposed electricity tax.
The Minnesota Transportation Alliance supports SF1602. The Alliance argues that the new tax on electricity or “fuel” complies with the existing language of the constitutional amendment. It would also provide stable funding for roads and bridges into the future.
The Minnesota Department of Transportation (MNDOT) indicated the proposal raises the right questions. As EVs catch on, and as traditional vehicles become more fuel efficient, the amount of money raised from the gas tax will dwindle, so how does Minnesota maintain its roads and bridges? MNDOT suggested creating a work group to come up with solutions.
SF1602 was passed on an 8-3 vote with Sens. Scott Dibble (DFL-Minneapolis), Jen McKwen (DFL-Duluth) and Jim Carlson (DFL-Eagan) voting against. The bill was sent to the Senate Energy Committee.