Working group energy agreement cuts back on funding of renewables

The 2025 energy bill scheduled to be presented at Monday’s special session is considerably smaller than the products of recent sessions, but it’s not nearly as small as the “lights-on” bill passed off the House floor on May 7.

Sponsored by Rep. Patty Acomb (DFL-Minnetonka) and Sen. Nick Frentz (DFL-North Mankato), the agreement reached by the energy working group — and unveiled Sunday afternoon — adds a significant amount of policy around “securitization” that’s designed to head off the kind of skyrocketing natural gas price spikes experienced in 2021 after a Texas freeze. And it renews funding for renewable energy projects in St. Paul and Blaine.

The group was given the task of cutting $4 million in General Fund appropriations in each of the next two biennia, and the agreement would achieve that by reducing the amount being transferred to special revenue funds designed to assist with pre-weatherization.

The bill’s net General Fund spending would be $47.44 million in the 2026-27 biennium. Of that, $22.09 million would go to the Commerce Department’s energy resources division. The largest totals within that appropriation are:

• $1.92 million for community solar gardens;
• $1 million for a grant to Clean Energy Resource Teams;
• $602,000 to implement energy benchmarking;
• $530,000 to review electric transmission line owners’ plans to deploy grid-enhancing technologies;
• $378,000 for implementation of a utility’s natural gas innovation plan;
• $328,000 for a public utility’s transportation electrification plan;
• $300,000 to remediate vermiculite insulation from households;
• $154,000 for appeals of consumer complaints; and
• $92,000 for energy transmission planning along trunk highway rights-of-way.

The agreement also includes a $3.19 million distribution from the petroleum tank fund to reimburse costs incurred in responding to a petroleum tank leak.

In addition to $3.8 million in new appropriations for the Public Utilities Commission, General Fund money would also go toward an air ventilation pilot project established in 2023 ($1 million). And a reduced amount of $2.4 million would be transferred from the General Fund to the pre-weatherization account in a special revenue fund.

Renewable Development Account

Since 1999, projects in Xcel Energy service territory that employ such renewable energy sources as wind, solar, biomass, hydroelectric and geothermal have been receiving grants funded by Xcel, but administered by the state. Xcel funds the account according to a formula that charges the utility a certain amount for each cask of nuclear waste it stores at its Prairie Island and Monticello nuclear power plants.

In 2023, $110.8 million was appropriated from the Renewable Development Account, while 2024 added $15.4 million.

The appropriation from the account in this year’s energy agreement is considerably smaller: $600,000 for the 2026-27 biennium. Of that, $400,000 would go toward a grant for the University of St. Thomas Center for Microgrid Research.

Yet that project also saw a $3.2 million extension until 2027 of its original 2024 appropriation, while the appropriation for a solar array for Blaine’s National Sports Center was similarly extended (at $4.2 million).

There would also be an outlay of $200,000 from the fund to administer the “Made in Minnesota” solar energy production incentive program.

And the Department of Administration would receive $184,000 for software and administration of a state building energy conservation improvement revolving loan program.

[MORE: View the spreadsheet]

Policy

The only major policy change in the agreement would be a “Securitization” section dealing with “extraordinary events” that can lead to significant costs for natural gas customers.

Inspired by an historic Texas freeze in February 2021 that caused natural gas prices to temporarily soar, a provision of the agreement would create “extraordinary event bonds” that could help allay the costs for consumers in the event of such price spikes.

There are also clarifications of qualifications that must be met for a household to participate in the solar energy production incentive program, and that any money from that program unspent as of Jan. 1, 2038, must be transferred to the Renewable Development Account.

The bill also requires the establishment of an Energy Information Center and attendant messaging on energy conservation and efficiency.

Reaction from the legislators

All working group members who commented expressed some disappointment.

“We had three of the four caucuses quite ready to do RDA,” Frentz said. “The Senate energy omnibus came out with a 9-2 bipartisan vote. A lot of hard work by a lot of members of the Senate who thought we had real good policy in there. We got none of it. We also got no RDA.”

“We have basically nothing of the bipartisan work that we were doing over many months,” said Sen. Andrew Mathews (R-Princeton).

“I do wish that we could have come together on finding some rate relief,” said Rep. Chris Swedzinski (R-Ghent).

“I think it’s pretty sad that we’re not able to invest RDA money for the development of more renewables,” said Rep. Larry Kraft (DFL-St. Louis Park). “In Minnesota, we’re experiencing the dramatic effects of climate change, if you look at the air quality we had last week.”