Andy Rathbun, St. Paul Pioneer Press, Published March 14 2014
Minnesota PUC approves method of setting a value on solar energyST. PAUL – A decision this week by Minnesota’s Public Utilities Commission soon could change the way Minnesotans get credited for the solar energy they produce.
The commission voted 3-2 Wednesday to adopt a Minnesota Department of Commerce-developed method of calculating the value of solar energy. The method soon could be used by public utilities, such as Xcel Energy, to determine a value-of-solar tariff – a new rate that would be used to credit its solar-energy-producing customers.
The new methodology is expected to be formalized by April 1 with a written decision by the commission. No other state in the country has a formal methodology for determining the value of solar energy.
“I am very pleased the Public Utilities Commission approved our department’s Value of Solar Methodology, making Minnesota the first state in the nation to take this big step forward – one we believe gives consumers and utilities an alternative way to expand solar energy in Minnesota,” Commerce Commissioner Mike Rothman said in a statement Thursday.
Since 1983, Minnesota utilities have had to credit customers at the net metering, or retail, rate for the energy they produce with most photovoltaic systems.
Utilities have claimed that the rate is unfair, as it fails to consider the infrastructure costs they incur in developing and maintaining the power grid.
Solar advocates, on the other hand, say that while net metering compensates solar generators for electricity they produce, making it an important part of the industry’s economics, it does not factor in things like the environmental and health benefits of solar energy.
Legislation signed into law in May gave the Department of Commerce the job of developing a value-of-solar methodology, and meetings were held with a variety of stakeholders to examine the costs and benefits of solar energy.
Public utilities will have the option of using the new methodology to calculate a value of solar tariff. A utility must bring the tariff before the Public Utilities Commission before it can go into effect, and the tariff, which cannot be below the net metering rate for the first three years, must be recalculated annually by the utility and approved by the commission.
It’s generally expected that the new methodology will put a value of solar tariff higher than the net metering rate, said Rick Gilliam of the national solar energy advocacy group Vote Solar.
Whether public utilities will choose to adopt the new rate remains to be seen. An Xcel Energy representative said Thursday that the company will wait to comment on the new methodology.
“We look forward to reviewing the commission’s written order and will comment on the decision through the commission’s formal process after the order is issued,” Mary Sandok, media relations manager for the utility, said via email.
Carrie Cullen Hitt, senior vice president of state affairs for the Solar Energy Industries Association, said her general impression is that the new methodology is a good outcome and progress for the industry, but she would like to see other factors incorporated.
She said it’s also unknown how the new value of solar power will affect the solar industry.
“We want to see if it actually works and drives the market,” Cullen Hitt said. “It’s anticipated that it will, but it hasn’t been done before at this level.”
The Pioneer Press is a media partner with Forum News Service.