MN Governor Vetoes Bill That Would Limit Rate Review Powers of PUC

On March 20, Minnesota Governor Mark Dayton vetoed a new law (Chapter 8, HF-234/SF-141) related to the regulation of municipal utilities and rural electric cooperatives by the state Public Utilities Commission (PUC).

The governor noted that the legislation could result in uncertainty for utility customers and could negatively impact economic development statewide. The State Senate had passed the bill (39-26) on March 16, following  a (89-37) House vote in February.

However, Dayton had warned early last month that he would not favor a bill that would diminish PUC oversight, saying in a letter to Speaker of the House Kurt Daudt (R-Crown), “The PUC plays an essential role in safeguarding the interests of Minnesota utility customers now and in the future. …Legislators … should know that I will not accept any bill that limits or weakens the commission’s authority to protect the interests of Minnesota’s energy consumers. I will, however, consider any serious proposal to improve the functioning of this essential public body.

Indeed, the Governor asserted that “many Minnesotans” had written to him in opposition to the bill. For example, he said, one industrial energy customer, Archer Daniels Midland, had communicated with him about its attempt to seek a fair stand-by rate from the municipal utility in the community that hosts one of its processing plants.

“ADM is planning to construct an on-site combined heat and power cogeneration plant would be highly energy- and cost-efficient,” Dayton said, adding, “The company is very concerned because the rate quoted by the municipal utility was nearly 300 percent more than stand-by rates charged by other utilities. If this legislation were to be enacted, ADM is concerned that keeping its processing plant in Greater Minnesota will no longer be financially feasible.”

In addition, he said, a family farmer had gotten in touch. “One farmer used the Consumer Affairs Office at the PUC to try to mediate a dispute with his cooperative over a fee charged on his farm’s wind turbine. When that informal process did not resolve the issue, he was able to have an independent review completed by the PUC. That proceeding resulted in the fee being removed from the farm.”

In a March 20 report by the Star-Tribune, State Representative Dave Baker (R-Willmar), the bill’s chief author, did not have a comment.

State Representative  Pat Garofalo (R-Farmington), a co-author of the bill,  told the local news outlet that he was “disappointed.”

“The rural communities had done everything right to achieve a bipartisan consensus on the issue,” Garofalo commented.

A common complaint handled by the PUC concerns additional fees some customers are charged after installing solar interconnection fees — ranging from $7 to $83 — have been disincentive to install sources of renewable energy. The cooperatives say the fees are needed to cover their fixed costs.

The legislation would have sent these disputes to a third-party mediator, not to the PUC. But “it does not provide any guidance on how this mediation would work,” Governor Dayton said, according to the Star-Tribune report.

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