John Farrell
Frustration with shortchanged public interest has been leaking out for years. This week, the commission can get it right.
John Farrell is the director of the Energy Democracy Initiative at the Institute for Local Self-Reliance.
Can five unelected commissioners adequately represent the public interest in overseeing the state’s monopoly electric companies? The members of Minnesota’s Public Utilities Commission will put this question to the test again this week. On Thursday, they decide whether to grant Xcel Energy an extension on filing its overdue resource plan explaining how the utility will meet its customers’ energy needs over the next 15 years.
The commissioners — who run the watchdog agency that oversees Minnesota’s utilities — have become unexpectedly exposed in recent weeks due to two unpopular decisions. The first granted Minnesota Power permission to build a $350 million fracked gas power plant at a direct cost to its customers. An independent administrative law judge strongly advised against the new plant, arguing that Minnesota Power failed to prove it was necessary. Three of five commissioners voted to allow the purchase anyway. The second decision approved the Line 3 pipeline replacement that would carry oil from Canadian tar sands, even though the utility failed to provide required crude oil demand forecasts. Three of five commissioners decided to allow the pipeline reconstruction anyway.
Minnesota consumers may be feeling a case of “bad gas,” if a recent protest at a Nov. 19 improv comedy show featuring two of the commissioners is any indication. The fossil fuel-induced indigestion might get worse if the commission again struggles to preserve the public interest.
On Thursday, Xcel Energy’s request for a five-month delay to its resource plan will come for a vote before the commissioners. What seemed at first an innocent proposal no longer passes the smell test. Last week, the company proposed paying $650 million (of their customer’s money) to acquire an existing gas plant, a nearly 65 percent price premium over the last buyer just two years ago. Typically, such acquisitions come out of the utility’s long-term plans — the same planning process that Xcel has asked to delay. The proposal offers rich rewards for company shareholders, who would earn a return off the company’s purchase. But since Xcel was already buying the power from the plant, buying it outright only cements its customers’ obligation to keep buying fracked gas. Conveniently, customers hold all the risk of rising gas prices, even as shareholders earn rewards just for buying the existing power plant.
Twice in the past two years, Xcel has similarly sought a runaround to public oversight of its monopoly business. In 2017, it successfully advanced legislation allowing it to build a new fracked gas power plant in Becker, despite regulators insisting that more evidence was required to prove the need. In 2018, the company sought to “de-risk” its nuclear power plants, by pushing legislation to shift the costs and risks of retrofits onto customers instead of shareholders. Regulators had rightly disallowed shareholder profits on massive cost overruns during Xcel’s last round of plant upgrades in 2014, so the bill — narrowly defeated — sought to strip this crucial accountability mechanism.
With state law granting the utility a monopoly to sell us electricity, we deserve better from Xcel Energy and from our public officials. Frustration with shortchanged public interest has been leaking out for years, leading the City of Minneapolis to consider an outright takeover of the local energy grid five years ago. This time, the commission can get it right.
In briefing papers provided to the PUC, commission staff have raised concerns about Xcel Energy’s use of lobbyists to evade the public oversight process and the company’s lack of attention to the requirements laid down in its last resource plan filing three years ago.
There’s a simple solution: deny the extension (and the bad gas plant purchase) and tell Xcel Energy to get to work on creating the long-term energy plan that Minnesotans deserve: One that relies more on low-cost renewables than risky gas and puts us back in the leadership role we’ve ceded to other states.
If the Public Utilities Commission stands up for the public and tells Xcel Energy to do its homework on time, the company will have to evaluate its gas purchases against a full range of options, including inexpensive renewable energy and energy efficiency. It will also have to explain how it can buy a gas plant today and meet its freshly announced carbon reduction goals. Hopefully, it will also keep them too busy to find new ways to undermine a public process.
John Farrell is the director of the Energy Democracy Initiative at the Institute for Local Self-Reliance.