Winona wants solar subsidy restored or city may sue PUC

If something appears too good to be true, it probably is, particularly if the something has anything to do with green energy. That’s turned out to be the case for the city of Winona, along with more than 700 municipalities, counties, school districts and others that jumped on the community solar garden bandwagon a few years ago.

Participants were promised huge savings on their Xcel utility bills in the state-approved program, as described by the Winona Post.

In 2017, the city of Winona, as well as Winona County and WAPS [Winona Area Public Schools], signed 25-year contracts with Minneapolis-based company SolarStone to subscribe to a small-scale solar power plant called a “solar garden.” Subscribers pay for a portion of the plant’s electricity produced over the contract period while energy from the solar garden is sold to Xcel Energy, and subscribers receive a credit on their Xcel utility bills. Then, the idea is that those credits are worth more than the cost to subscribe, saving customers money. The city of Winona signed an additional 25-year contract in 2019 with Minneapolis-based company GreenMark.

The lucrative program was designed to help get the fledgling solar power sector off the ground. But its cost soared to some $330 million with Xcel ratepayers footing more than 90 percent of the bill.

Winona and other entities evidently failed to realize the generous rates they signed up for could be revised by the same outfit that approved them in the first place, the Minnesota Public Utilities Commission. In February the PUC did just that, out of sudden concern for the Xcel ratepayers subsidizing the program, according to the agency’s news release.

Since that time, the customers on the temporary rate have received a benefit increasing at a more rapid rate than the societal value of the energy production as measured by the VOS [Value-of-Solar] rate. Over the years, the temporary rate compounded, creating a growing gap between early CSG subscribers and newer customers. The Commission acted today to protect ratepayers from these escalating costs and provide an equitable credit for all subscribers.

The lower rate will reduce the utility bills of Xcel ratepayers $30 million in 2024, an estimated $40 million annually thereafter. At the same time, the unexpected change eliminates millions of dollars in anticipated savings for 740 participants around the state, reducing Winona’s financial return alone by 50 percent.

Instead of saving the city nearly $2.9 million, after the rate change, Winona’s deal with GreenMark would only save the city $1.2 million over the next two decades. The city of Winona would have only saved roughly $920,000 under Xcel’s initial rate change proposal, according to Winona Natural Resources Sustainability Coordinator John Howard.

It may not exactly be a bait and switch by state regulators, but that won’t stop city officials from putting up a fight for a share of a green energy deal that was always too good to be true, except for the solar developers behind it.

The city of Winona plans to ask the PUC to reconsider its rate change decision. If the PUC does not reconsider, it would open the door for a subsequent legal challenge, according to city of Winona Attorney Chris Hood. At the City Council’s March 18 meeting, it agreed to allocate $7,500 to help investigate and pursue a formal challenge to the rate change.