A fairer, cleaner Minnesota energy future means pragmatic reforms — now

Editor’s note: The Reformer is publishing dual commentaries as Minnesota lawmakers consider changes to the state’s net metering law. Read the competing commentary here.

As Minnesota continues its clean energy transition, the policies guiding it must be rooted in fairness, sound economics and the realities of how our electric grid operates. Unfortunately, some recent arguments against reforming Minnesota’s outdated net metering laws rely more on ideology than understanding — and risk harming the very communities we all want to support.

First let me explain what net metering is and why it’s become so controversial. Net metering — instituted in the 1980s — allows owners of rooftop solar systems to get credit for the excess electricity they send back to the grid. That credit is given at the full retail rate — the same rate other consumers pay for power that includes not just energy, but the cost of delivering it: the poles, wires, substations and 24/7 reliability.

Imagine a customer selling produce to their local grocery store at the same price they see on the shelf. No grocery store would survive without any margin to pay for employees, maintenance, taxes, etc. and neither can a not-for-profit electric cooperative. We understand in the short term the deal is great for the produce-selling customer, but in the long run, it will hurt the entire community when the grocery store is forced to close or raise prices.

This isn’t about opposing solar. The electric cooperatives and municipal utilities pushing for pragmatic net metering reform support solar power and consumer choice. We are not-for-profit, democratically elected utilities that exist to serve our member-owners — not outside shareholders. But when disproportionately wealthy rooftop solar owners are paid above-market rates for the energy they don’t use themselves, those costs don’t disappear. Those costs are shifted, or paid by everyone else, including families who can’t afford solar panels or who rent their homes.

Furthermore, utility-scale solar is being built at a rapid pace because it’s more efficient and less expensive than rooftop solar. Larger, more strategically placed solar power will do much more to help Minnesota’s clean energy transition than expensive decentralized generation. We’re doing our part to achieve the state’s mandated carbon-free by 2040 goal, but we have an obligation to our member-owners to meet this target in the most efficient, cost-effective manner possible.

Some in the for-profit solar industry deny that this cost shift exists or argue it’s too small to matter. But the reality in rural Minnesota tells a different story. One small electric cooperative recently encountered a situation where a solar developer proposed a large system whose retail credit for power produced would exceed more than 10% of the cooperative’s annual operating margin. That’s money intended to reduce electricity bills and maintain reliable service for all members — not a windfall for developers looking to exploit policy gaps.

This is exactly why Minnesota’s net metering law needs reform. The policy was written in the 1980s, when solar was expensive and rare. Today, we’re proposing a simple, balanced and bipartisan update: Homeowners would still receive full retail credit for the solar energy they use themselves. But when they export excess electricity to the grid, that portion would be credited at a fair, market-based rate — one that reflects the actual value of that power to the grid, not an inflated retail price.

It’s a targeted fix that ensures solar owners are fairly compensated, without shifting unnecessary costs onto their neighbors. It doesn’t eliminate net metering; it modernizes it. Furthermore, when solar systems are sized appropriately for a home’s needs, it leaves more room on the grid for additional installations and benefits more consumers.

Critics have tried to paint this reform as an attack on solar or a cash grab by utilities. That’s simply untrue. Again, cooperatives and municipal utilities are not-for-profit — our mission is affordability and reliability for the communities we serve. The modest grid access fees we sometimes charge help recover the basic costs of safely connecting solar systems to the grid, but they don’t begin to cover the ongoing financial imbalance created by outdated net metering laws.

It’s imperative we act now to modernize this outdated policy and minimize disruptions to Minnesota’s existing solar industry. We understand that for-profit solar developers are concerned about how these changes might affect their bottom line. But by addressing these issues today, we can avoid the kind of drastic measures seen in states like California — where billions in regressive cost shifts prompted aggressive action.

We share a genuine passion for solar and want to work alongside reputable developers to strengthen the grid. But passion cannot justify policies that leave others to foot the bill. Instead, let’s create a fair system where consumer-owned, not-for-profit utilities and solar developers can work together to deliver a clean, affordable and reliable energy future for everyone.