Solar coalition wants to put equity front and center in Xcel’s Minnesota rate case
As Minnesota regulators weigh a proposed 21% electricity rate increase by Xcel Energy, a new voice is at the table.
The Just Solar Coalition is an alliance of solar developers, community organizers, environmental groups, faith leaders and others who share an interest in expanding access to clean energy and its economic benefits.
The coalition formed in 2014, but this is the first utility rate case in which it sought and was granted “intervenor” status. That means its members — primarily small nonprofits with limited staff and resources — can participate in proceedings alongside the larger consumer and environmental groups that typically provide counterarguments at the Public Utilities Commission.
With that formal seat, the coalition hopes to persuade state regulators to consider equity and justice as the regulators decide how much additional money they should allow Xcel to collect from its Minnesota customers.
“We think that the increase of 21.2% is an overreach by Xcel,” said Julia Nerbonne, executive director of Interfaith Power & Light, a faith-based clean energy group that organized the coalition. “For middle- and higher-income Minnesotans, this may not seem like a big deal, but it is a big deal for a lot of low-income people in Minnesota.”
Xcel has said it needs capital to meet its target of transitioning to 100% carbon-free electricity by 2050. In its rate case, the utility cites the need for investments in renewable energy and its distribution grid, as well as continued expenses related to its two nuclear power plants. It’s also seeking a bigger budget to improve customer service and prepare for transportation and heating electrification.
The rate hike would help pay for the addition of 6,000 megawatts of renewable energy and battery storage over the next 15 years and to modernize an aging grid that will have to absorb more distributed energy generation.
Greg P. Chamberlain, Xcel’s regional vice president for regulatory and government affairs, last year wrote in testimony to regulators that “our vision — and plan for achieving it — assures safe, reliable, clean and affordable electric service while at the same time creating opportunities for [customers] to benefit from new technologies and services.”
Interfaith Power & Light created the Just Solar Coalition with several partners. The organization focuses on creating access to clean energy for all income levels through education, policy work, and building solar projects such as a community solar garden in North Minneapolis. The 10-member coalition includes groups working on climate and environmental issues such as Honor the Earth, Climate Generation, the Sierra Club North Star Chapter and the Rural Renewable Energy Alliance.
Xcel wants to increase profit
The Just Solar Coalition argues that the increase is too severe for many customers, especially low-income ratepayers suffering higher costs due to inflation. They question the utility’s grid investment plan and justification for increasing its return on equity for investors.
Based on data Xcel provided the commission, the coalition’s analysts estimate the rate hike would increase electric bills by $140 to $240 annually and flat fees would jump 15% to 18%, hurting customers who use less energy. Xcel wants its return on equity to jump from 9.06% to 10.20%, which has also led to criticism from the coalition and other intervenors.
Residential customers would pay a disproportionate share of the rate bump compared to commercial customers, the coalition argues, and it believes Xcel’s grid investment plan locks in outdated technology.
Some of the coalition’s arguments are shared among several advocacy groups, including the Citizens Utility Board, the Energy CENTS Coalition, the Minnesota Center for Environmental Advocacy, and Fresh Energy (publisher of the Energy News Network). Other advocacy groups also want a more equitable rate that considers the ability of low-income customers to pay. Many question Xcel’s proposal to raise the return on equity and the increase in fixed rates for residential customers.
What differentiates the Just Solar Coalition has been to bring together organizations that otherwise would not have the staff time or financial resources to participate. For example, no other organization represents religious concerns, a national solar group or a community solar garden developer focused on underrepresented communities. The coalition wants more diverse voices to be heard at the commission and has acted during the rate case to promote that cause.
Xcel has been holding meetings to gather customer input on the rate increase. In October, the first month it conducted public comment sessions, none were held in St. Paul or Minneapolis. The Just Solar Coalition brought the issue to the attention of the Public Utilities Commission.
A spokesperson said Xcel “erred in not initially including Minneapolis and St. Paul for public hearings” and confirmed meetings were added. Xcel had to reschedule another virtual gathering to Dec. 9 after suffering technical problems during an earlier one.
Joshua Lewis, climate justice organizer with Minnesota Interfaith Power & Light, said the coalition knocked on more than 2,500 doors in North Minneapolis and St. Paul’s Frogtown, both disadvantaged neighborhoods, to get residents to sign petitions against the rate increase and to encourage their testimony at the commission’s events.
“These are people living paycheck to paycheck and are most vulnerable to these increases, and it [the meeting times] makes it much more difficult for them even to participate, to get their voices to be heard,” Lewis said.
Just Solar Coalition members say they believe their participation matters. Will Kenworthy, Vote Solar’s Midwest regional director, said coalition members expressed frustration with their representation in regulatory proceedings. “Participating as a party in the proceeding gives you a lot more access and makes your voice much stronger in the decision-making process,” he said.
Alice Madden, who works for the energy democracy group Community Power, said she must be selective when deciding whether to expend the resources necessary to testify in commission cases. Rate cases are expensive and time-consuming. However, through the coalition Community Power believes it will have a louder voice at the commission.
Timothy DenHerder-Thomas, general manager of the solar developer Cooperative Energy Futures, helped found the coalition to promote equity and justice in the clean energy industry. He said Cooperative Energy Futures could have obtained “intervenor” status but having an impact would have been challenging.
“I think a rate case is complex and onerous,” he said. “It’s different from most other dockets. And you really have to have intervenor status to be in most of the process, which is much more time and financially intensive than most dockets.”
The coalition wants the commission to begin looking at rate cases through equity lenses, a conversation that is happening in several other states, as well. A 2021 study by the Institute for Market Transformation found that 10 states require equity to be part of regulatory decisions. In November, the Michigan Public Service Commission ruled in a DTE rate case that it now expects utilities to incorporate equity into their spending and investment decisions.
Minnesota’s regulators could require the same, said University of Minnesota associate professor Gabe Chan, an energy expert at the Humphrey School of Public Affairs. Chan, who testified on behalf of the Just Solar Coalition, argues that federal and state statutes have long required that regulators use the rationale of “just and reasonable rates” when deciding rate cases.
The commission “definitely has a lot of flexibility to think about what just and reasonable means,” he said.
Regulators always deem utility rate issues as contested cases and assign an administrative judge to collect testimony and data. The Public Utilities Commission continues to hold hearings on Xcel’s rate case. Chan said rate cases typically resolve in a “settlement” between the groups opposing the increase and the utility.
Next year the commission will review the rate case. It has already granted Xcel a preliminary increase of 6.4% this year and will decide by June 2023 how much more the utility will receive.