Omnibus energy bill could be rare win for rational energy policy

It is refreshing to see that the Senate has advanced an energy omnibus bill, SF 2393, which faces some budget realities and energy realities at the same time.

The bill reforms Minnesota’s net metering policy. It would also sunset the Renewable Development Account, which is a fund paid entirely by Xcel Energy for storage of spent nuclear fuel casks and subsidizes residential solar panels. The bill would sunset Minnesota’s community solar program in 2028. The bill would also define some wood waste and biodiesel power generators as carbon-free as well as hydroelectric dams of any capacity.

The bill is supported by the Minnesota Rural Electric Association, which “represents 50 nonprofit rural electric cooperatives serving 1.7 million Minnesotans.” The MREA describes the bill as updating “outdated legislation designed to help launch the solar industry in the 1980s,” and notes that the current net metering process is “outdated, expensive, and inequitable.”

This is because net metering programs usually require utilities to pay retail rates for electricity produced by consumer solar panels, which is higher than it is worth on the market, and raises costs on non-solar customers that must pay also to maintain the grid. Evidence from California suggests that net metering does shift costs from solar customers to non-solar customers. The fairness issue is only exacerbated considering that the median income of households that installed solar in 2023 was $115,000 per year compared to the U.S. median of $75,000 per year.

The solution? “Rooftop solar owners should be paid for the avoided fuel cost,” rather than the retail rate. The omnibus energy bill would set compensation at the “avoided cost” standard for systems in electric cooperative and municipal utility territories that apply for grid connections after December 31, 2026. Existing solar installations will continue to be paid at retail rates, as would territories served by public utilities like Xcel Energy or Minnesota Power, but it’s a promising start for aligning incentives.

This bill could be a rare win for rational energy policy from the DFL, with DFL Sen. Nick Frentz and Sen. Tou Xiong cosponsoring the bill. However, “the energy omnibus bill likely isn’t yet in final form,” and House Democrats “may be less supportive of those provisions.”

Let’s hope that most, if not all, of these better policies survive.