Legalectric

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A state board Thursday ordered that new high-voltage power lines across the heart of south Minneapolis be buried underground but deferred the question of who should pay the extra $13.6 million cost.

The Minnesota Public Utilities Commission ordered that the twin 115-kilovolt lines requested by Xcel Energy be deemed necessary but said they should be buried under E. 28th Street.

That’s a victory for the city and a number of neighborhood representatives. They argued that an alternative route that would run lines overhead or underground along the bike-pedestrian corridor was too disruptive. “It’s a huge victory, said Soren Jensen, staff chief for the Midtown Greenway Coalition.

But the precedent-setting question of who pays will require a separate proceeding that will last several months and determine whether all Xcel customers in Minnesota will help bear the cost of burying the lines or just those in Minneapolis.

The city argued that all Xcel customers should pay because the factors arguing for burying the route are so compelling that any other route, including the greenway, would be unreasonable. Burial of the lines, the city said, should thus be considered a standard cost, borne by all customers, rather than a special accommodation whose extra costs should accrue only to Minneapolis residents. Xcel agreed with that wider-cost impact.

But the PUC wasn’t ready to make that precedent-setting decision now, telling Xcel to file its views in 30 days in a proceeding that will give other potentially affected parties a chance to comment.

“There is no precedent case just like this,” said attorney James Strommen, who argued on behalf of suburban cities in support of the city position. “The standard is not always overhead in all cases, in our view.”

At the PUC’s request, Xcel generated estimates of the amounts needed to pay off the extra cost of the buried lines. To do so in the standard five years, the per customer cost would be $12 if spread statewide, and $83.40 if levied only within Minneapolis.

Xcel estimates that the lines and two new substations at either end, at Hiawatha and Oakland Avenues, will cost $42 million. The utility will refine those costs as it does final engineering for the project; it plans to break ground later this year and start operations in 2014.

Xcel argued that since 2006, electrical demand has exceeded its capacity to reliably provide service to customers in the south Minneapolis area. Opponents argued that Xcel has further plans to bisect south Minneapolis with transmission lines, has overestimated demand and should substitute conservation measures.

The utility originally proposed that the lines be built within the Midtown corridor paralleling Lake Street somewhere between E. 31st Street and E. 26th Street. It said that a greenway route would be cheapest but that option quickly drew opposition from the recreation lobby.

However, the private contract conceals the added costs, since it’s considered “trade secret” information.

Problems arise when out-of-state investors take advantage of the lack of transparency in existing statutes, which permit wind developers and utilities to charge higher rates for locally owned renewable energy.

This is precisely what’s happening in Goodhue County.

Although the Goodhue County project may have initially qualified as a C-BED project, it has dramatically changed since it began in 2008.

Today, it may fail to fulfill the C-BED criteria, and unfortunately, the Minnesota Public Utilities Commission has turned a blind eye.

C-BED law dictates that no single qualifying owner can own more than 15 percent of a C-BED wind energy project. The Goodhue project began small and locally owned but transformed into a large wind development plan.

Instead of the financial benefits of this renewable-energy project staying in Goodhue County, they’ll likely be sent to a billionaire with a Texas address.

We have requested a Public Utilities Commission investigative hearing into the C-BED eligibility of the Goodhue project. In addition, we encourage our House and Senate colleagues to join us in calling for an examination of C-BED statutes through a legislative hearing.

Our intentions are not to attack wind energy. We aim to ensure public trust in the renewable-energy industry. C-BED must bring value in an accountable and transparent way.

As renewable-energy projects evolve, they must be reevaluated to ensure that they still meet the requirements of a C-BED project.

We have a duty to protect our citizens from out-of-state corporations taking advantage of local resources. Doing so will ensure that the additional dollars paid by Minnesota ratepayers for C-BED energy will remain in our communities.

State and local officials must work together to guarantee that only projects that are truly community-based and community-supported move forward with a C-BED status.

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In Worthington, Nancy Vaske, the general manager of the AmericInn, a landowner in the Nobles Wind Project, emphasized in a statement to Wind on the Wires (an industry trade group) the benefit her community received:

“We had many [project] employees staying at our property the entire time. All the other motels were very busy as well. All of the workers used our local restaurants, and shopped at all our stores,” she said. Worthington and surrounding communities have seen a boom in recent years due to the wind industry.

As for the energy produced, Vaske continued: “The claim that none of the wind towers will benefit the local people is not true. We will all benefit because this is helping all of us not depend on other counties for our energy needs. When I see my tower turning I think not of personal gain but of the energy we are not depending on someone else for.”

Minnesota has been a leader in wind energy development since the early 1990s.

This leadership has yielded a commitment from wind developers, manufacturers and construction companies to locate and expand their businesses in and around the state. Mortenson Construction, a Minnesota-based company, is a national leader in wind farm construction.

At a time when the state is doing all it can to attract good-paying jobs, would you have these companies take their business elsewhere?

On the matter of subsidies, readers should know that the results-based Production Tax Credit is only a fraction of the subsidy that other forms of energy production have been receiving for decades.

Businesses need a certain level of certainty in order to grow and hire. The federal government has provided such certainty to oil and gas companies for decades with permanent subsidies through the tax code. We’d like to level the playing field.

A recent study, “What Would Jefferson Do?” by DBL Investors, states that the current incentives for renewable energy “do not constitute an over-subsidized outlier when compared to the historical norm for emerging sources of energy. For example … the federal commitment to [oil and gas] was five times greater than the federal commitment to renewables during the first 15 years of each [incentive's] life, and it was more than 10 times greater for nuclear.”

Over the last decade, the wind industry has added thousands of jobs. With an extension of the tax credit, it is poised to create or save 54,000 jobs in the next four years.

Furthermore, a new study by Navigant Consulting finds that if Congress allows the tax credit to expire, major job losses will be immediate.

This not only threatens nearly 100,000 jobs the wind industry will otherwise have in the near term, but also the 500,000 jobs the Bush administration found would result if wind produced 20 percent of America’s electricity by 2030, which the industry is on track to achieve.

The Navigant study also concludes that the tax credit extension would cost about $13.6 billion but would result in approximately $25.6 billion in investment and tax revenue.

The bottom line is that wind energy in Minnesota is sound business and smart policy. It’s good for consumers.

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