By Rep. Paul Anderson
One area of policy that hasn't received much public attention so far this legislative session has been “energy.” Various bills have been introduced and heard during committee meetings, but it wasn’t until two weeks ago that the omnibus energy bill, (HF 956), was put together. It contains several items that are concerning to those who pay for what we sometimes take for granted. I’m speaking mainly about electricity.
The bill, introduced by Energy Committee Chair, Melissa Hortman, increases our state’s Renewable Energy Standard (RES). It would carve out an additional mandate that 4 percent of our electricity must come from solar. This is in addition to our current law which requires 25 percent renewable energy by the year 2025, which in fact will also ramp up to 40 percent renewable by the year 2030.
While most would agree that “green energy” is good, there is an increased cost that goes along with it. The funding mechanism for the solar mandate is a 1.33 percent sales tax imposed at the wholesale level on all electricity sold in this state. In addition, officials here in St. Paul are to come up with something called the “value of solar,” which is an attempt to arrive at the value of this new solar energy that power companies must purchase (and then re-sell to their customers). No doubt, it will carry a higher value than what is presently given to electricity.
If this measure becomes law in its current form, we will see higher electric bills. The 1.33 percent sales tax means that all electric customers in the state will subsidize the installation of solar panels. Some of these could be very large, as the “net-metering” level at which power companies must purchase excess power would increase by 25 times, going from its current 40 kw up to 1000 kw. That’s a huge increase, one that could have a far-reaching impact on all electricity providers, but especially our smaller, rural systems.
Another effect of this legislation, if it becomes law, would be to encourage one kind of solar installation to the detriment of another. This legislation pertains only to photo-voltaic solar (those systems which produce electricity), and does not contain any incentives for solar thermal. Solar thermal installations are those that use the sun to heat water and can be installed in homes for hot water heating as well as in larger commercial applications. We even have one such business in this immediate area: “Solar Skies” in Alexandria, manufacturers of systems that have been installed around the world.
This bill is still a work in progress, as amendments were offered in a recent committee meeting to exempt rural electric cooperatives and municipal systems from the 4 percent solar mandate and the sales tax on wholesale electricity. Even still, the large increase in net-metering to 1000 kw could be problematic for our smaller, rural systems. They would probably need to upgrade their distribution lines and transformers to handle these larger systems, and then pay full retail or an even higher “price of solar” for the electricity produced by these systems. Those costs would be passed on to all their customers.
We are talking about large sums of money here that would be raised if this bill becomes law. The 1.33 percent sales tax on the wholesale price of electricity would hit large, industrial customers very hard. It’s estimated that the bigger taconite processing plants on the Iron Range would be hit with additional charges of around $1 million per year, just for the additional sales tax.
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