MAY 2013 renewable energy 20135-86525-01 staff notes renewables.pdf

8/14/2019 MAY 2013 renewable energy 20135-86525-01 staff notes renewables.pdf

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Minnesota Public Utilities CommissionStaff Briefing Papers

Meeting Date: May 9, 2013 ......................................................... Agenda Item # ___

______________________________________________________________________

Company: All Electric Utilities Subject to Minnesota Statutes 216B.1691

Docket Nos. E999/M-12-958In the Matter of Commission Consideration and Determination onCompliance with Renewable Energy Obligations and RenewableEnergy Standards

E999/CI-03-869In the Matter of Detailing Criteria and Standards for Measuring anElectric Utilitys Good Faith Efforts in Meeting the Renewable EnergyObjectives Under Minn. Stat. 216B.1691

E999/PR-11-189In the Matter of a Renewable Energy Certificate Retirement Report forCompliance Year 2010

E999/PR-12-334In the Matter of a Renewable Energy Certificate Retirement Report for

Compliance Year 2011

Issue(s): 1) What action should the Commission take on the REO-RES plansfiled by electric utilities?2) What, if any changes should the Commission take on the content offuture RES reports?3) What action, if any, should the Commission take on the cost impactof the RES?

Staff: Michelle Rebholz ............................................................. 651-201-2206

Susan Mackenzie ............................................................ 651-201-2241

______________________________________________________________________

Relevant Documents

Commission, Notice Regarding Filing Obligation............................. September 12, 2012


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Staff Briefing Papers for Docket # E999/M-12-958 on April 18, 2013 Page 2

Dairyland Power Cooperative, Biennial Compliance Report ................ October 19, 2012Interstate Power and Light, Report (Trade Secret)................................ October 22, 2012Missouri River Energy Services, Biennial Report................................... October 22, 2012East River Electric Power Cooperative, Inc, Comments....................... October 22, 2012Heartland Consumers Power District, Report........................................ October 22, 2012Central MN Muncipal Power Agency, Report ....................................... October 22, 2012Otter Tail Power Company, Report (Trade Secret)............................... October 22, 2012SMMPA, Compliance Filing.................................................................... October 22, 2012Xcel Energy, Compliance Filing ........................................................... October 22, 2012MRES, Comments on Biennial Reporting............................................. October 22, 2012Basin Electric Power Coop, Compliance Filing .................................... October 23, 2012Minnesota Power, Report (Trade Secret).............................................. October 23, 2012MN Municipal Power Agency, Comments.............................................. October 24, 2012L&O Power Cooperative, Compliance Filing ........................................ October 31, 2012Great River Energy, Report............................................................... November 14, 2012MN Municipal Power Agency, Compliance Filing (Trade Secret)..... November 15, 2012Department of Commerce, Legislative Report ..................................... January 15, 2013Dairyland Power Cooperative, Comments........................................... February 19, 2013Department of Commerce, Comments............................................... February 19, 2013Department of Commerce, Comments-Additional............................... February 25, 2013Northwestern WI Electric, Compliance Filing ........................................... March 6, 2013MN Large Industrial and Chamber, Joint Comments................................. March 6, 2013Minnkota Power Cooperative, Compliance Filing..................................... March 12, 2013

____________________________________

The attached materials are workpapers of the Commission Staff. They are intended foruse by the Public Utilities Commission and are based upon information already in therecord unless otherwise noted.

This document can be made available in alternative formats (i.e., large print oraudio tape) by calling (651) 296-0406 (voice). Persons with hearing or speechdisabilities may call us through Minnesota Relay at 1-800-627-3529 or by dialing711.


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Staff Briefing Papers for Docket # E999/M-12-958 on May 9, 2013 Page 3

Background

In 2001, Minnesotas renewable energyobjective statute, Minnesota Statute 216B.1691, was first

passed. Modifications to the statute were made in later years. In 2003, a requirement was added that

utilities file reports with the Commission and that the Commission detail the standards and criteria for

judging a utilitys good faith efforts to meet the objective. The Commission began setting those criteria

in a June 1, 2004 Order, which set reporting requirements for utilities to demonstrate their efforts to

comply with the statute. Significant modifications were made to the statute in 2007, including the

addition of a Renewable Energy Standard (RES) to accompany the already-existing Renewable Energy

Objective (REO).

The statute in its current form requires all 16 utilities subject to the REO-RES to file with the

Commission a report showing its compliance with the statute and its plans for complying in the future.

By statute, these plans must be submitted to the Commission every two years.1 The statute further states

that the Commission must investigate utilities compliance with the statute.2 As listed later in these

briefing papers, staff will discuss the time period covered by this docket.

Beginning in 2008, the Commission memorialized its process for receiving these biennial reports and for

fulfilling its statutory duty to investigate compliance with the statute.3 The Commission required utilities

to file, by November 15 of every other year, a report with specific content to satisfy the reporting

requirement under the statute. The Commission made findings of compliance in its 2008 and 2010

biennial compliance dockets. This docket represents the Commissions third biennial renewable energy

compliance docket.

Attachments

The Attachments to this report are:

Attachment 1: Possible Modifications to Biennial RES Reporting Requirements (Both Redlined andClean Versions)

Attachment 2: Department Comments, 2010 and 2011 REC Retirement Dockets

Attachment 3: REC pricing data (TRADE SECRET and Public Versions)

Bienni al RES Reports

All sixteen utilities filed their reports. Staff refers the Commission to the reports for details, but provides

a brief summary of the highlights of each report. In general, each utility documented its compliance for

the past two years and anticipated meeting the RES for at least the near future; some reported they would

be able to meet the standard for 2025 with their existing portfolio.

1Minn. Stat. 216B.1691, subd. 3.

2Minn. Stat. 216B.1691, subd. 7.

3Prior to the 2008 Order, findings of compliance were being made in resource plan dockets. However, this

presented a problem since not all 16 utilities file resource plans and resource plans have not always been

processed on a two year cycle.


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Reports ranged in size from 3 pages to 30 pages. The difference in length did not indicate a problem,

since some utilities have already met their RES obligations through 2025 and therefore would need less

explanation of their plans to meet future RES milestones.

In Docket E999/CI-03-869, Order Issued November 12, 2008, the Commission clarified what should be

in the REO-RES reports. In general, the REO-RES statute identifies some items that utilities must report

on, and in the November 12, 2008 Order, the Commission reiterated the reporting requirements it first

listed in a June 1, 2004 Order in the same docket.4 The Commission issued a Notice reminding utilities of

the content of the reports. (Attachment 1 lists those current requirements and possible edits to those

requirements.)

This biennial proceeding covers the years 2010-2011, which marks the last two years of the REO

(Renewable Energy Objective) and its good faith effort standardof seven (7) percent.5 For 2012 and

going forward, the RES (Renewable Energy Standard) will apply.6 The RES portion of the statute states

that utilities shall generate or procure to meet the percentages outlined in the statutes, which currently

are:

2012 12 percent

2016 17 percent

2020 20 percent

2025 25 percent

For Xcel, the percentages are:

2012 18 percent

2016 25 percent

2020 30 percent

Dairyland Power Cooperative(12 pages)

Dairyland filed a helpful narrative of their efforts to comply and the diversity in types of renewable

energy they have acquired. At page 4, Dairyland stated it currently has sufficient resources in place to

meet its entire renewable obligations in all states where it operates through at least 2025. It also stated

that price is an issue, as is capacity.

Missouri River Energy Services(9 pages)

4The June 1, 2004 date of the Order has some significance; these reporting requirements were established before

the Midwest Renewable Energy Tracking System (MRETS) was created and used by the utilities, which tracks

renewable energy credits (RECs). This will be discussed in more detail in a later section on changing reporting

requirements.5Staff generically uses the abbreviation RES to mean the renewable energy obligation or renewable energy

standard throughout these briefing papers.6Under the REO, a utility was required to make a good faith effort to procure renewable energy in the amounts

set by statute. Under the RES, the utility is mandated to procure the correct amount of renewable energy, receive

a modification or delay of the RES by the Commission, or face financial penalties or other adverse action by the

Commission.


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MRES stated that it can meet the RES through 2017 with current renewable resources. At page 5, it

provided a helpful table of its projected surplus/deficit for future years. MRES does not envision any

obstacles to meeting the RES, as listed on page 2 of its report.

East River Electric Power Cooperative, Inc. (9 pages)

East River documented its compliance with the RES. It cited possible obstacles to meeting the RES in the

future as federal tax policy, environmental compliance, transmission, and administrative costs for small

renewables.

Interstate Power and Light(20 pages)

IPL stated it has no plans for construction of new facilities or procurement of PPAs, but will need to take

some action to meet 2025 compliance of 25 percent. IPL also noted, at page 4, that if an industrial

customer were to enroll in its green pricing program, the enrollment could affect the number of RECs IPL

has available.

Heartland Consumers Power District(5 pages)

Heartland signed one 20 year PPA which will satisfy all milestones of Minnesotas RES; Heartland sees

no obstacles to meeting any portion of the RES.

Central Minnesota Municipal Power Agency(6 pages)

CMMPA detailed its compliance with the RES. The Agency currently has no concerns regarding

obstacles to meeting the RES. In response to a staff e-mail, CMMPA clarified that given its current

renewable portfolio it projects compliance through 2027.

Southern Minnesota Muncipal Power Agency(13 pages)

SMMPA stated at page 5 that it should be able to comply into the 2020 timeframe. At page 6 it provided

its narrative of its resource mix. At page 7, it analyzed the added cost of renewables. It used two

methodologies for determining the added cost of renewables. First, it looked at a with and without

renewables case using the current IRP (2006). The IRP modeling case, over the 15 year planning horizon,

showed a potential benefit of the RES of approximately $900,000 annually, but the modeling was

completed prior to the lower prices in the MISO market (brought about by a combination of the recession

and lower natural gas costs). SMMPAs second methodology compared the contractual cost of acquiring

wind resources compared to what SMMPA receives from the MISO LMP market for injecting that energy

into the market. The market approach calculated an annual cost to SMMPA members of $10 to $12

million annually. SMMPA stated that the market approach was a shorter real-time assessment which is

not capable of assessing the costs and prices over the longer term life of the generating resource.

SMMPA stated that both approaches have their limitations.

Minnesota Municipal Power Agency(10 pages)

MMPAs report responded to all questions asked in the Commissions notice. MMPA stated it has not

encountered obstacles in meeting the RES, but in the future, MMPA is concerned that transmission may

not be available or that the MISO interconnection process will continue to cause both schedule and cost


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uncertainty, creating risk for interconnection projects. In response to a staff e-mail, MMPA stated that

given its current REC portfolio (assuming certain load growth assumptions) it would be able to comply

through 2020.

L&O Power Cooperative(3 pages)

L&O has a long term all-requirements power supply contract with Basin and WAPA; RES requirements

will primarily be met through these contracts. L&O purchased RECs for the purpose of resale to its

member distribution cooperatives for a green pricing program; L&O did not list the sale or purchase

pricing, citing confidentiality.

Basin Electric Power Cooperative(5 pages)

At page 2, Basin stated it currently has sufficient resources in place to meet its entire renewable

obligations through at least 2022. Basin does not envision any obstacles to meeting the Minnesota RES at

this time. Basin also listed other sources of renewable energy it has acquired but are not considered

renewable under Minnesotas RES.

Minnesota Power(17 pages)

At page 4, MP stated it has the resources to meet the RES through 2012; when other approved projects

achieve commercial operation in 2013, MPs renewable portfolio will reach 18%. Currently planned and

priority projects will increase their renewable energy to 22%, and the Company will use resource

planning activities to finalize renewable projects to meet the remaining 25% milestone. MP included a

trade secret version of its report which included non-public data related to planned projects.

Great River Energy(10 pages)

GRE provided a narrative of its renewable energy mix and provided Tables 2, 3, and 4 at pages 6-7 of its

report showing its historical compliance and planned 2012 compliance. As to compliance in the future,

GRE states at page 7 that it has added renewable resources ahead of the RES.

GRE listed potential obstacles to meeting the RES as the decline in load growth, the cost of renewables,

transmission capacity, and the potential ending of the PTC. GRE cited the following potential solutions

to these obstacles: economic development could lead to increased load growth, the possibility of

renewable resources becoming more cost competitive, and CapX2020 providing additional transmission

capacity.

Otter Tail Power(30 pages)

OTP provided historical information on the RES and its efforts to comply. At page 12, it stated that theCompany expects to meet the RES requirements out to 2026. In addition, OTP is seeing significant

customer interest in owning wind generation. OTP stated it does not see any substantial obstacles to

meeting the RES, but at pages 13 and 14 of its report it cited potential obstacles and solutions also listed

in other reports, such as transmission, the PTC and retail sales uncertainty.

Xcel Energy(9 pages)


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Xcel provided tables at pages 3 and 5 of its report showing generation type (owned versus purchased) and

retail sales compared to Minnesotas RES requirement. At page 5, Xcel states it believes it has enough

renewable resources to comply through at least 2020.7 Xcel cited potential obstacles to meeting the RES,

many of which were mentioned in other utilities reports, such as the cost-effectiveness of wind energy,

transmission, and PTC uncertainty. Xcel also mentioned that as the percentage of wind energy on the

system increases, there is concern over the effects on reliability of integrating wind with its otherresources.

Northwestern Wisconsin Electric Company(3 pages)

NEW provided actual data for its 2010 and 2011 compliance years as well as plans to ensure future

compliance. NEW noted it does not own any generation so its ability to meet the RES will depend upon

the availability of renewable generation.

Minnkota Power Cooperative, Inc. (4 pages)

Minnkota provided a list of the cooperatives it serves in Minnesota. Minnkota stated that as of year end

2011, it had wind generation that accounted for approximately 30% of its members retail sales.Minnkota has not encountered any obstacles in meeting the RES. The organization also listed the number

of RECs sold in 2010 and 2011.

Department Comments (Legislati ve Report)

The Department reviewed the utilities 2011 reported Minnesota retail sales and the RECs retired in a

January 15, 2013 filing which also serves as the Departments biennial report to the legislature.8 As listed

on Table 1 at page 7 of its January 15, 2013 comments, the Department concluded that the utilities

complied with the RES for 2011.

The Department also estimated the ability of the 16 utilities to comply with the 2012 RES. As listed atTable 2, page 8 of its comments, the Department estimated that the utilities would be able to comply for

2012.

No party disagreed with the Departments conclusion of compliance.

Staff comment

7In Docket E002/M-12-1132, Xcel indicated it would be selling some specific biomass RECs. The Commission made

no finding in that docket as to Xcels RES compliance.8When the Commission established this biennial compliance process, it timed it to coincide with the Departments

legislative report, due January 15th

of every odd-numbered year. The Departments legislative report serves as its

comments in this process and as the report to the legislature, avoiding duplication. The Department separately

looks at each utilitys annual REC retirement report, which is currently a spreadsheet showing that a utility has

retired the appropriate number of RECs for a given calendar year. The two most recent Department reviews of

those reports are attached as Attachment 2.


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Because of the 16 utilities participation in MRETS, the determination of compliance for an individual

year is simple, uniform, and transparent.9The Department has reviewed 2011 compliance and estimated

2012 compliance and staff agrees with the Departments review and conclusion.

Staff notes that this finding of compliance assumes that each utility has correctly calculated its retail sales

for the relevant years. At times, there have been disputes over how to calculate retail sales. For example,

in the Commissions last biennial docket, the Department disagreed with how Minnesota Power was

calculating its retail MWh; the utility was excluding its wholesale sales to distribution companies that

ultimately sold that energy to end users. The Commission agreed with the Department that retail sales

needed to include these transactions because they resulted in retail sales.10

In Docket 12-334, the docket listing the actual REC retirements for 2011, GRE stated that its

interpretation of that previous Commission Order it can remove member wholesale sales and could have

retired 22,626 fewer RECs. In addition, GRE stated that it has a long-term agreement directly with a non-

member, Willmar Municipal Utilities (WMU), and did not include its sales to WMU when determining its

renewable energy obligation for 2011. Staff notes that the Department filed a letter in that docket

recommends that the utilities have complied with the 2011 requirement. The Department also discussesin its letter why it believes GRE is in compliance. No other party commented on the issue. The

Departments letteris contained in Attachment 2.

Staff notes that in the last biennial docket, Docket E999/M-10-989, the Commission and Department

reviewed the 2 years preceding the year in which the docket was opened. That is, the docket was opened

in 2010, and the Commission made a finding of compliance for years 2008 and 2009. The Commissions

Order in Docket 10-989 found the sixteen utilities in compliance for years 2008 and 2009, but did not

discuss compliance with 2010 since the docket was opened in 2010 and year end data for 2010 was not

yet available. Staff has attached the REC retirement data and Department letter as part of Attachment 2

and recommends that a finding of compliance also be made for 2010. While there has not appeared to be

any dispute over 2010 compliance, staff recommends that the Commission still make a finding ofcompliance for 2010 simply in the interest of covering each years compliance as part of these reviews. 11

9With MRETS, utilities create Renewable Energy Credits (RECs) when they generate one MWh of renewable

energy. Under previous Commission decisions, these RECs can be banked and have a shelf life for the year they

are generated plus an additional four years. Utilities simply retire a given number of RECs to represent compliance

in a single year. Prior to the use of MRETs, the Department and Commission examined renewable compliance in

resource plans. Parties debated the appropriate allocation method for utilities (since many utilities operated in

more than one state, allocation methods needed to be used to determine how much of a utilitys renewable

energy counted towards Minnesotas requirement) and other issues that took up time in comments and

Commission Orders. See, for example, the Commissions Order on August 9, 2006 in Docket E017/RP-05-968,

where the Commission found OTP in compliance with the REO for 2005 and 2006 and directed the use of the

vintage allocation method.10

Docket No. E999/M-10-989, ORDER FINDING UTILITIES IN COMPLIANCE AND CLARIFYING REQUIREMENTS FOR

REPORTING WHOLESALE ELECTRICITY SALES, Issued May 13, 2011.11

In the Commissions first biennialREO-RES review docket, Docket 08-1163, the Commission made a finding on

compliance with 2007. In 10-989, the Commissions second biennial REO-RES docket, the Commission made a

finding of compliance with 2008 and 2009. Therefore, it would be consistent with past practice to make a finding

of compliance with 2010 and 2011. The Commission has also, in both 08-1163 and 10-989, looked forward 2 years

to see if the utilities appear to have plans in place to comply with future years, but has still taken a look back and


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Staff also recommends a finding that the utilities appear to be making reasonable efforts to meet the

upcoming two years. This finding was made in the previous biennial docket and the reports filed in this

proceeding indicate that utilities are taking appropriate efforts to meet the RES going forward.

One piece of information requested in this years and past years reports is REC sales and purchases and

the price paid in those transactions. Staff has compiled the REC sales disclosed in the reports and

provided them as TRADE SECRET Attachment 3. Staff notes that some utilities provide all of their sales

and some have only disclosed transactions related to the Minnesota RES. There are benefits and

drawbacks to either approach.

Staff believes that the Commission's responsibility is to ensure that REC trading activities are well

documented so that ratepayers, who provide the financial support and are the intended beneficiaries of the

REC market, can clearly see when REC trading occurs and on what terms. This transparency is needed to

assure that the price ratepayers pay is reasonable and allows the Commission to monitor market

development, reliable price discovery, speculation and arbitrage.

Pricing information is not available through M-RETS. Therefore, requiring utilities to report on pricing

will provide insight into the price creation process in the M-RETS REC market. The objective is both a

functioning REC market and a successful RPS implementation.

REC trading information will also tell the Commission to what extent utilities are relying on decoupled

REC purchases to meet RES requirements and how many surplus RECs are in the market. This will help

the Commission to understand how utilities are managing their REC portfolios and at what cost. Minn.

Stat. 216B.1691, subd. 2b, allows utilities to request modification or delay in the RES based on cost to

ratepayers. Understanding REC pricing will help the Commission to evaluate requests for modifications

or delays.

In addition, if utilities request a share of the proceeds from REC sales, the Commission must have

sufficient reason to evaluate these claims, including baseline pricing at zero or some other level.

Comments on streamlining RES Reporting

Staff also solicited comments on whether the RES biennial reporting requirements should be streamlined.

Because the reporting requirements were set by Order, staff generally could not revise them; however,

staff at the Commission and Department met and worked on a Notice issued at the start of this proceeding

to provide a central location for all the information requested.12

Staff has presented the comments on streamlining reporting into the chart below, including staff comment

on each recommendation.

made actual findings of compliance in the biennial dockets even when it has said previously that a utility appears

to have plans to comply with a particular year. To be in compliance for a given year, a utility must retire RECs in

MRETS.12

During previous biennial compliance dockets, Commission staff had issued a notice requesting certain

information in the reports and Department staff also issued Information Requests (IRs) requesting information. To

avoid more than one request for information, Commission and Department staff coordinated their requests in

advance so that the Commission notice avoided the need for separate IRs.


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Date Utility Comments Staff Observation

10/22/2012 East River Uniform set of questions for utilities toanswer.

Staff has worked towardsensuring there is a uniform setof utilities to answer, andbelieves the notice for thisyears biennial proceeding has

accomplished this.10/22/2012 IPL Prefers 4thquarter reporting. Also, 87% of

RES requirements are attributable to 3utilities (p.6 of comments). Considerabbreviated reports for the remaining 13utilities. Consider spreadsheets plus shortdescription of new developments/plans tosatisfy requirements in the long term.

Setting up two different sets ofreports would vary from EastRivers interest in having auniform set of questions.As to a spreadsheet, otherstates such as Wisconsin use aspreadsheet to reviewcompliance and one has been

developed for the utilitiesannual REC compliancereports.

10/22/2012 SMMPA MRETS is robust; would be helpful iffilings could be consolidated to avoidduplicate filings. Some thought could begiven to DOC/PUC staff simply reviewingMRETS retirement accounts to ensuresufficient RECs have been retired.

A Commission proceeding tosome extent would still benecessary to preservetransparency. For example,members of the public maynot be familiar with MRETSto track RES compliance but

could review utilities RESreports in edockets.

10/22/2012 Xcel Filing the info on obstacles, obligations inother states, additional renewable resourceacquisitions is duplicative of whats filed in

an IRP. Actual sales, generation, RPSobligations, purchased/sold RECs shouldbe filed in the annual REC report.

Only 9 of the 16 utilitiessubject to the RES now filetraditional IRPs, so the

Commission cannot rely onthe IRP process as theexclusive vehicle fordetermining RES compliance.In addition, IRPs are notnecessarily completed everytwo years, and it may bedifficult for stakeholdersinterested only in RECcompliance to track an entireIRP proceeding.

10/22/2012 MRES Eliminate the annual REC compliance

report, just file biennial report. In addition,earlier deadline of June 1.

The Commission and

Department use the annualREC retirement report as thebasis for the finding in thisbiennial docket.

10/22/2012 MP Current process provides important info forPUC, stakeholdersno modificationsproposed.

---

10/24/2012 MMPA A single document should list all the data This appears to be consistent


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required in the biennial RES reports;requirements should be reviewed to ensurethey are still relevant; redundancy shouldbe removed; review for clarity of meaningand expected result.

with the DOC proposal, and iswhat staff is attempting toaddress in this docket.

2/19/13 Dairyland Agree with MMPA. Remove good faith

effort items, should have single document,see if anything is superceded/obsolete,remove redundancy, removeambiguities/enhance clarity.

This appears to be consistent

with the DOC proposal.

2/19/13 DOC File biennial info at same time that annualREC retirement reports are filed (June 1),plus info in Attachment 1 to 9/12/12 PUCnotice should be submitted.

2/25/13 DOC Annual RES Compliance Filing(Annually by June 1) Total Minnesota Retail Sales and theRES requirement in kWh for the

compliance year. The name of the M-RETS RetirementAccount used for compliance, and the totalnumber of RECsretired. Anaccounting of the number and price ofany RECs bought/sold during thecompliance year.

Information for Biennial Reporting (By

June 1, in even numbered years)

Status of the utilitys renewable energy

mix relative to the RES Efforts taken to meet the RES Obstacles encountered or anticipated inmeeting the RES

Possible solutions to the obstacles Any other State Renewable Standards orObjectives to which the utility is subject. Any renewable generation facilitiesexpected to become operational during theupcoming year, thetype of facility, and the capacity andcapacity factor of each facility.

(That is, eliminate items #5-11 related tothe 6/1/04 Order in 03-869, plus most itemsin the 11/12/2008 Order in 03-869.Requirements from 12/3/2008 should stayin place.)

DOC proposal is specific andcontains actionablerecommendations that wouldstreamline reporting while still

providing valuableinformation to the Departmentand Commission.


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Staff notes that the Departments February 25, 2013 proposal appears to be consistent with most of the

comments of other parties. Most notable is that the proposal would eliminate many of the reporting

requirements retained from the Commissions June 1, 2004 Order in Docket 03 -869, which was issued

prior to the establishment of and reliance on M-RETS. Attachment 1 shows how the biennial reporting

requirements would change in light of the DOC proposal.

Staff supports the DOC proposal. Staff offers three additional options to add to the reporting

requirement. First, the RES statute requires the Commission to investigate compliance with the RES so

the Commission must ensure it has received the right information to verify that compliance. The statutes

requirement for utilities to provide their plans, activities and progress in meeting the RES suggests a

forward-looking component of a utility report (as well as a forward-looking component of Commission

review).13However, the statutory requirement to provide plans, activities, and progress is general; some

clarification on what type of information constitutes plans, activities, and progress would benefit parties

and the Commission. Staff found MRESs table at page 5 of its report helpful to quantify compliance

status going forward.

MRES Table Quantifying Projected RES Compliance

Table 8f

Projected

MN sales

Projected

RES Needs

Projected

*Resources

Projected

Surplus/Deficit

Year (MWh) RES (MWh) (MWh) (MWh)

2012 1,274,887 12.00% 152,986 414,857 261,871

2013 1,390,611 12.00% 166,873 416,874 250,000

2014 1,417,035 12.00% 170,044 404,667 234,622

2015 1,443,081 12.00% 173,170 388,991 215,821

*Current year generation from Worthington, Marshall, Odin, Rugby and Hancock Wind projects

plus eligible inventoried REC's from previous years

In addition, staff found it helpful when utilities stated in their reports what year they were in compliance

through with their existing renewable portfolio. Many utilities already provided this information in their

reports. Staff also recommends that unbundled REC pricing data be provided in the biennial reports. Staffsupports adoption of the Departments recommended changes to the reporting requirements and the three

additional items staff recommends here. In short, the effect of the revised reporting requirements would

be to: 1) eliminate the ordering paragraphs that require long narratives of general efforts to comply; 2)

place more focus on the REC retirement data and a small amount of data that projects going forward

compliance; 3) emphasize a shorter but more focused narrative on efforts to comply.

13Minn. Stat. 216B.1691, subd. 3(a).


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Another reporting requirement which the Commission may choose to retain, given concerns over the cost

of renewable compliance (which will be discussed in more detail later in these briefing papers), is a

modified version of Ordering paragraph (H.2 from 6/1/04 order, page 21), which could instead require

utilities to file the following in their biennial reports:

Demonstrated reasonable efforts to adequately protect against undesirable economic

impacts on ratepayers, including, but not necessarily limited to keeping the customers

bills and the utilitys rates as low as practicable, given regulatory and other constraints.

Staff observes that while the existence of MRETS has eliminated or reduced the need for many of the

previously-established reporting requirements, MRETS does not have data on the effect of the RES on

utilities bills, so retaining this reporting requirement is not duplicative.

To revisit the original purpose of these biennial RES reports:

The Commission is required by statute to investigate compliance with the RES;

Utilities are required to file reports with the Commission every two years on their compliance

with the RES;

The Department is required by statute to file a report with the legislature every two years on

utility compliance with the RES, so as to avoid duplication of reporting, the Commission

established its biennial process to coincide with the timing of the Departments review;

This review cannot be delegated to resource plans, because only 9 of the 16 utilities subject to the

RES file traditional IRPs, and IRPs do not necessarily occur every two years;

There is an advantage to the Commission and stakeholders to be able to review each of the 16

utilities compliance in a single generic docket.

Reviews of renewable resources will also be reviewed in resource plans simply as a function of resource

plans. In addition, because the RES statute establishes a percentage of renewable energy that must be

procured each year (through the retirement of RECs), each of the 16 utilities already file a brief report

showing that they have retired the proper number of RECs for the preceding calendar year.14 Staff

believes that both Commission and Department staff are sensitive to utilities concerns over reporting

requirements and have attempted to compile reporting requirements that meet the Commission and

Departments statutory duties but are not overly burdensome to the utilities. Staff observes that it is still

necessary to outline what should be in the biennial reports for consistency and certainty since the

renewable energy statute only identifies very generally what topics should be in reports and utilities have

asked the Commission to make this clarification.

Staff estimates that if Attachment 1 is adopted, duplication will be reduced or eliminated and more

certainty would be introduced into the reporting requirements. Staff notes that the suggested edits to thereporting requirements changes the list of reporting requirements from 3 pages to 1 pages.

14Minn. Stat. 216B.1691, subd. 7. Because the RES is based on the percentage of retail sales for a calendar year,

the year must first end before a utility can calculate its MWh for Minnesota, and then determine how many RECs it

must retire. May 1 is the retirement date set by the Commission, and is based on the fact that utilities want to

confirm the retail sales for the preceding calendar year.


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Finally, in the Commissions past two biennial RES compliance proceedings, the Commission has

generally made findings of compliance on the past two years plus a finding that for the next two years,

utilities appear to have plans to comply with the RES. Staff recommends that this practice continue as it

makes clear the result of the biennial compliance process.

Large Power Intervenor and Chamber Request Regarding Cost Impact of RES

The Large Power Intervenors and the Chamber (Joint Business Intervenors, or JBI) filed comments

on March 6, 2013, within the reply comment period established by the Commission. JBI noted that on

October 25, 2011, the sixteen utilities submitted reports in compliance with new legislation, Minn. Stat.

216B.1691, subd. 2e, requiring information on the cost impact of the RES. The matter was assigned

Docket No. 11-852 (852 docket). The Commission did not establish a comment period in the 852

docket to offer input on the utilities reports and has not scheduled a hearing on JBIs request to have

additional analysis of those reports. JBI proposed that RES cost impact analysis could as an alternative

be incorporated into the Commissions biennial docket. JBI also specifically proposed the following

analysis:

Increasing amounts of wind resources in a utilitys generation portfolio has the inevitable

impact of introducing more volatility and risk, which needs to be discussed and

monetized in the utilities reply comments to more realistically estimate the impact of

activities to meet RES;

With respect to the historical analysis, utilities should calculate actual costs by comparing

the savings from the wholesale market (derived by summing the product of hourly output

and hourly market prices) against amounts recovered for activities to comply with RES

(e.g., amounts are recovered in the RES rider and transmission cost recovery rider, as

well as cycling costs included in O&M for existing resources);

With respect to the future analysis, utilities should address the limitations of the current

modeling software via the following analyses:

Use alternative models that include power flow as a supplement to address the

issue of curtailment and capture costs of additional transmission infrastructure;

Use chronological models to accommodate wind variability more accurately and

conduct sensitivity analysis to identify the variance of wind generation;

Exclude unrealistic assumptions, such as a non-existent carbon price adder, from

any model; and

Monetize fuel price variability risk.

JBI also noted that this supplemental analysis could be required in the 852 docket, or the biennial REO-

RES docket, stating:

There, utilities are required to include in their reports a discussion of any obstacles

encountered or anticipated in meeting RES. Cost could be such an obstacle, which is the

focus of the RES Impact Analysis Docket and is listed as the first justification for

modifying or delaying RES in another part of the RES statute.[footnote omitted] Other


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obstacles may include some of those listed above by JBI wind variability, price

variability, etc. In either case, combining review could streamline the reporting process

on two very related issuescompliance with RES and the cost of complying with RES.

So although the RES impact analysis is technically limited to occur during resource

planning, JBI believes it would be reasonable (and probably more efficient from an

administrative perspective) for the Commission to read the RES statute as a whole toallow the RES impact analysis to be addressed in the REO/RES Docket.15

Staff Comment: JBI Proposal on Cost Impact

Staff agrees with JBI that from an administrative point of view, cost impact of the RES could be analyzed

in the biennial docket. The RES cost impact legislation passed in 2011 required all 16 utilities to file

initial cost impact information, with updates in resource plansbut as noted previously, only half of the

utilities subject to the RES file resource plans. In contrast, the Commission has always expected some

level of ratepayer impact information in the biennial RES reports, which applies to all 16 utilities. In fact,

the Commission has specified in two separate Orders, both of which are still in effect, that cost impact

information should be filed in the biennial filings: in the Commissions June 1, 2004 Order in Docket 03-869 setting up what utilities should report on in terms of compliance with the REO, the Commission

included ratepayer impact as one of the topics. And again in March 2010, the Commission reiterated in

another Order in 03-869, issued March 19, 2010, that it would use certain general methods to track the

rate and reliability effects of the REO and RES.16 As JBI notes, cost could be an obstacle to meeting the

RES.

Utilities filed their cost impact reports as required by the new legislation, in October 2011 in Docket 11-

852 and have updated that information in resource plans. It does not appear that the 2011 legislation

designated resource plans as the exclusive venue for RES cost impact information. The most practical

reading of the legislation and the Orders together is that since resource plans are forward-looking

documents, the RES cost impact information filed in those dockets would be forward-looking and subjectto the thorough individualized review familiar to resource plans, while historical or current cost

information could be filed in the biennial filings.17

Not only has JBI requested that ratepayer impact information be filed in biennial reports, but it also

recommends the specific type of analysis that should be performed. As SMMPA noted in its biennial

report, there are advantages and disadvantages to different methods: using the wholesale market as a

comparison may provide accuracy on immediate rate impact, but only for short periods of time, not over

the life of the renewable facility, while using a forward looking approach may provide a look over the life

of the facility but may result in some inaccuracies since going forward costs are an estimate of what will

happen in the future. There is likely not one single method that will capture all of the information the

15JBI 3-6-2013 comments, page 4 (pages not numbered).

16At ordering paragraph 8 of that same order, the Commission stated it favors forward-looking, long term cost

information when analyzing the rate impact of future compliance with the RES. At Ordering Paragraph 9, the

Commission clarified that stakeholders could request cost information relating to the RES in resource plans.17

Staff offers this solution as a procedural solution and has not estimated the resources needed for review of this

information. In addition, staff defers to the Commission to the extent that this is a policy decision.


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Commission and stakeholders would need to determine the cost impact of the RES and determining the

right way to gauge the RES impact would likely be the subject of thorough debate.

Because JBI raised this issue during the reply comment period, no one has commented on JBIs proposal

in this docket. Although staff has the authority to issue Notices, staff seeks guidance from the

Commission on whether to issue an additional Notice Seeking Comments on this topic. Staff also notes

that the Commission could issue a decision on utility compliance with the RES for the years in question

and then continue topursue JBIs proposal through additional comments. Legislation is pending that

would require the Commission to establish standards for determining RES cost impact; the Commission

may choose to monitor whether this legislation passes before soliciting additional input at this time.

Decision Options

I. Requirement to File Report

A. Find that Dairyland Power Cooperative, Interstate Power and Light, Missouri River

Energy Services, East River Electric Power Cooperative Inc, Heartland Consumers

Power District, Central Minnesota Municipal Power Agency, Otter Tail Power Company,

Southern Minnesota Municipal Power Agency, Xcel Energy, Basin Electric Power

Cooperative, L& O Power Cooperative, Great River Energy, Northwestern Wisconsin

Electric, Minnkota Power Cooperative, Minnesota Power, and Minnesota Municipal

Power Agency have complied with the requirement of Minn. Stat. 216B.1691 subd. 3(a)

by reporting on their plans, activities, and progress with regard to REO-RES. OR;

B. Make some other finding.

II. Compliance with the 2010 and 2011 renewable energy objectives

A. Find that the 16 utilities enumerated above and subject to Minn. Stat. 216B.1691 have

complied with the 2010 and 2011 objectives of seven percent. OR;


III. Future ComplianceA. Find that the 16 utilities subject to Minn. Stat. 216B.1691 have submitted what appear

to be reasonable plans to meet the renewable energy standards for 2012-2014. This

finding does not imply that particular generation projects are counted under the REO-

RES statute, but is a general finding that the plans filed by the companies demonstrate

planned compliance, subject to confirmation of individual project eligibility through

normal regulatory processes. OR;


IV. Streamline Reporting Requirements

A. Adopt the Departments February 25, 2013 recommendation to streamline reporting

requirements, as reflected on Attachment 1.

B. Adopt the Departments February 25, 2013 recommendation to streamline reporting

requirements as reflected on Attachment 1, modified to require:

i. the year through which the utility can maintain compliance with its

current renewable portfolio, and

ii. a chart showing projected compliance for the current year plus three (3)

upcoming years, which projected Minnesota sales in MWh, the RES

percentages for those years, projected RES needs, projected resources in


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MWh (or RECs), and projected surplus or deficit in MWh. (Staff

Recommendation)

iii. Any unbundled REC sales or purchases for the two preceding calendar

years, including the number of RECs sold or purchased and the price

paid for the RECs. (Staff recommendation)

C. Retain a modified version of Ordering paragraph H.2 from the Commissions June 1,2004 Order in Docket 03-869, also reflected on Attachment 1. (Staff alternative drafted

to reflect JBI interest in ratepayer impact information in biennial compliance dockets)

V. Additional Review of Ratepayer Impact of RES

A. Direct staff to issue a Notice seeking comments on the issues raised by the Joint Business

Intervenors in their March 6, 2013 reply comments after the legislative session has ended,

if no legislation is passed requiring the Commission to establish criteria or standards on

the cost impact of the RES. (Staff note: if legislation is passed requiring the Commission

to establish standards, the Commissions standard practice is to issue a Notice as a

response to the legislation.)

B. Take other action.

Staff Recommendation

Staff recommends adopting Decision Option I.A, II.A, III.A, and IV.B.


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1

Attachment 1, Docket E999/M-12-958

Edited Version of Current Reporting Requirements and New Proposed Requirements

Department edits in black

Staff suggested edits in red

Staff interpretation of JBI recommendation in blue

June 1, 2004 REO Reporting Requirements (Ordering Paragraph 11: footnotes omitted)

11. In their biennial filings demonstrating compliance with the renewable energy objectives,

utilities shall address the following two sets of criteria, which the Commission will use in

evaluating their compliance with the "good faith efforts" standard set by statute:

A. Demonstrated commitment to a specific plan. Each utility must file a plan that

reasonably details the steps to be taken to reach the renewable energy objectives,

with an accompanying timetable.

B. Demonstrated financial commitments to build facilities or to purchase energy to

meet the renewable energy objective, including but not limited to project financing;

purchase and ordering of equipment; and expenditures to hire construction firms if

needed.

C. Demonstrated commitments to construction of physical infrastructure to meet the

renewable energy objectives, including but not limited to ordering equipment;

hiring construction firms; and/or contracting for a Renewable energy objectives

site.

D. Demonstrated legal and contractual commitments to purchase or build the facilities

to meet the renewable energy objectives, including but not limited to contracts for

sites on which to build; contracts for labor and equipment; arrangements for

insurance and liability etc.

E. Demonstrated commitment to meet regulatory requirements in timely fashion,


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2

including but not limited to federal, state, county, township and municipal

permitting and any other regulatory obligations, such as filed plans for facility

construction in the Commissions biennial transmission planning process under

Minn. Stat. 216B.2425.

F. Demonstrated commitment to transmission access for the renewable energy

objectives facilities, including but not limited to initiation or participation in

transmission studies or provision of interconnection and transmission service for

these facilities.

G. Demonstrated commitment to openness and transparency. This requires full public

access to all non-proprietary information relating to meeting the renewable energy

objectives, including but not limited to actions taken for financial commitments;

construction of physical infrastructure; legal and contractual commitments;

compliance with regulatory requirements; and transmission access.

H. Demonstrated reasonable efforts to adequately consider technical feasibility and to

protect against undesirable impacts on system reliability and undesirable economic

impacts on ratepayers, including, but not necessarily limited to, the following

factors:

1. Maintaining or improving the adequacy and reliability of utility service.

2.Keeping the customers bills and the utilitys rates as low as practicable,

given regulatory and other constraints.

3. Minimizing adverse socioeconomic effects and adverse effects upon the

natural environment.

4. Enhancing the utilitys ability to respond to changes in the financial, social,

and technological factors affecting its operations.

5. Limiting the risk of adverse effects on the utility and its customers from

financial, social, and technological factors that the utility cannot control.


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3

Relevant Ordering Paragraphs from November 12, 2008 Order in 03-869

2. The Commission clarifies that each utility subject to Minn. Stat. 216B.1691 must file its own

individual biennial compliance report.

3. Northwestern Wisconsin Electric Company shall comply with the reporting requirements of Minn. Stat.

216B.1691. Northwestern Wisconsin Electric Company shall file the information it has supplied to the

Minnesota Office of Energy Security under the time lines set forth herein and shall file its biennial

compliance filing under the time lines set forth herein. At its discretion, the company may file the

renewable energy compliance information it has provided to the Wisconsin Public Service Commission as

the biennial compliance report required under this order.

7. Beginning with the next biennial reporting cycle, utilities shall file their biennial compliance reports at

the same time they file their biennial reports with the Minnesota Office of Energy Security, but in no case

later than November 15 June 1 in even numbered years of the year in which those reports are due. These

reports shall be filed as miscellaneous tariff filings under the Commissions rules of practice andprocedure.

8. Biennial compliance reports shall contain at least all of the information set forth below:

a. the information required under the order issued in this case on June 1, 2004;

b. all information submitted to the Office of Energy Security for use in preparing its biennial

legislative report;

c. total Minnesota retail sales in megawatt hours for each year relevant to compliance;

d. an accounting of all renewable energy being provided by a utilitys own generating facilitiesand being provided through purchase power agreements;

e. an accounting of what portion, if any, of the renewable energy identified in part d has been

allocated to meet the renewable energy requirements of other states or the requirements of green pricing

programs;

f. historical compliance information and plans for ensuring ongoing and future compliance;

g. a description of whether and how the transmission service queue maintained by the Midwest

Independent Transmission System Operator is or may be a factor affecting compliance.

9. Biennial compliance reports shall be clearly labeled, and preferably labeled REO-RES Compliance

Report.

10. Biennial compliance reports shall include sections addressing the four categories of information

required by statute:

a. the status of the utilitys renewable energy mix relative to the objective and standards;


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4

b. efforts taken to meet the objective and standards;

c. any obstacles encountered or anticipated in meeting the objective or standards; and

d. potential solutions to the obstacles.

Utilities shall also include in their reports:

Any other State Renewable Standards or Objectives to which the utility is subject;

Any renewable generation facilities expected to become operational during the upcoming year, the

type of facility, and the capacity and capacity factor of each facility;

Through what year the utility is in compliance with the Minnesota RES given its current renewable

portfolio;

A table showing projected compliance for the current year plus the next three years showing the utilitys

projected Minnesota sales in MWh, the RES percentages for those four years, the projected RES needs in

MWh for those years, projected resources in MWh, and projected surplus or deficit in MWh;1and

Any unbundled REC sales or purchases for the two preceding calendar years, including the number of

RECs sold or purchased and the price paid for the RECs.

1See Table 8f at page 5 of MRESs biennial compliance report in this docket for an example.


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5

Attachment 1, continued

Clean Version of Department Revised Reporting Requirements (Re-ordered for clarity and

organization only)

1. The Commission clarifies that each utility subject to Minn. Stat. 216B.1691 must file its own

individual biennial compliance report.

2. Northwestern Wisconsin Electric Company shall comply with the reporting requirements of Minn. Stat.

216B.1691. Northwestern Wisconsin Electric Company shall file the information it has supplied to the

Minnesota Office of Energy Security under the time lines set forth herein and shall file its biennial

compliance filing under the time lines set forth herein. At its discretion, the company may file the

renewable energy compliance information it has provided to the Wisconsin Public Service Commission as

the biennial compliance report required under this order.

3. Beginning with the next biennial reporting cycle, utilities shall file their biennial compliance reports at

the same time they file their biennial reports with the Minnesota Office of Energy Security, but in no case

later than June 1 in even numbered years. These reports shall be filed as miscellaneous tariff filings underthe Commissions rules of practice and procedure.

4. Biennial compliance reports shall be clearly labeled, and preferably labeled REO -RES Compliance

Report.

5. Biennial compliance reports shall contain at least all of the information set forth below:

a. total Minnesota retail sales in megawatt hours for each year relevant to compliance;

b. an accounting of what portion, if any, of the renewable energy identified in part d has been allocated to

meet the renewable energy requirements of other states or the requirements of green pricing programs;

c. Biennial compliance reports shall include sections addressing the four categories of information

required by statute:

a. the status of the utilitys renewable energy mix relative to the objective and standards;

b. efforts taken to meet the objective and standards;

c. any obstacles encountered or anticipated in meeting the objective or standards; and

d. potential solutions to the obstacles.

d. Utilities shall also include in their reports:

i. Any other State Renewable Standards or Objectives to which the utility is subject;

ii. Any renewable generation facilities expected to become operational during the upcoming year,

the type of facility, and the capacity and capacity factor of each facility;


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6

iii. Through what year the utility is in compliance with the Minnesota RES given its current

renewable portfolio; (staff recommended addition)

iv. A table showing projected compliance for the current year plus the next three years showing

the utilitys projected Minnesota sales in MWh, the RES percentages for those four years, the

projected RES needs in MWh for those years, projected resources in MWh, and projected surplus

or deficit in MWh;2(staff recommended addition)

v. Any unbundled REC sales or purchases for the two preceding calendar years, including the

number of RECs sold or purchased and the price paid for the RECs; (staff recommended

addition)

vi. Demonstrated reasonable efforts to adequately protect against undesirable economic impacts

on ratepayers, including, but not necessarily limited to keeping the customers bills and the

utilitys rates as low as practicable,given regulatory and other constraints. (Addition based on JBI

comments)

2See Table 8f at page 5 of MRESs biennial compliance report in this docket for an example.


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Attachment 2Department Comments in Dockets 11-189 and 12-334REC Retirement Dockets


25/32

85 7th Ptace East, Suite 5005t. Paut, Minnesota 55101-2198www.commerce,state.mn.us

657.296.4026 F^x 651.297.7959An equal opportunity emptoyer

October 10,201I

Burl W. HaarExecutive SecretaryMinnesota Public Utilities Commissionl2l Seventh Place East, Suite 350St. Paul, Minnesota 55101RE: Docket No. E999R-l l-189Dear Dr. Haar:On April I l, 201I the Minnesota Public Utilities Conrmission (Cornmission) issued a Notice ofRenewable Energy Certificate (REC) Retirement Process and Cornpliance Report for 20l0. The Noticerequired entities subject to Minn. Stat. $2168.1691 (RES Statute) to file a rcport detailing theircompliance with the RES Statute by June l,20ll.For 2010, Minn. Stat. $2168.1691, subcl.2 requires utilities other than Xcel Energy to make a gooclfaitheffort to obtain at least seven percent of their Minnesota retail sales frorn renewable energy sources.Minn. Stat. $2168.1691, Subcl. 2 (b) requircs Xcel Energy to obtain l5 percent of its retail sales fromrenewable energy sources. The Comnissior.r's Decernber 3, 2008 Orcler in Docket No. E999|CI-04-16rc1and November 12,2008 Order in Docket No. E999|CI-03-869 set forth aclclitional reporting requirementsfor RES compliance.Utilities have filed their 2010 compliance reports. The Minnesota Departrnent of Commerce (DOC)rcviewed these filings and verifed that utilities have compliecl with the 2010 RES requirernent. Attachedto this letter is a Table summarizing each utility's compliance.The DOC is available to answer any questons the Cornmission may have.Sincerely,

/s/ SUSAN L. PEIRCERate AnalystsLP/jrAttachment

I In the Matter of a Commission Investigation into a Multi-State Tracking and Tlacling System fol RenewableEnergy Credits, Third Order Detailing Criteria and Standards for Deterrnining Cornpliance under Minn. Stat.$2 I 68. l69l and Setting Procedures for Retiring Renewable Eneryy Credits, Decernber 3, 2008 , Docket No.E999tct-04-t616.In the Matter of Detailing Criteria and Standards fol Measuring an Electlic Utility's Good Faith Effolts in Meeringthe Renewable Energy Objectives under Minn. Stat. $2168.1691, Ordel Setting Filing Requirements and Clarif,yingP'ocedures, November 12, 2008, Docket No. E999/CI-03-869.


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SUMMARY OF 2OIO MINNBSOTA RBS COMPLIANCB

'FThe Cornrnission's Novcnrbcr 12, 2008 Orcler in Dockct No. 8999/CI-03-869 allows Northwcst Wisconsin tosubnlit a copy of its Wisconsin conrpliance report to clenronstrate its conrpliance with the Minnesota RES.

2010 MNRetail SaleslMWhs)

RBSRequirement(7o)

RBS Req.(MWhs) RECs Retired(MWhs)Basin Electric 474,338 77o 33,204 33,205CMMPA 320.275 77o 22.419 22,420Dairvland Power 799,339 7Vo 55.954 55,954

East River Electric 324,157 7Vo 22,691 22.713GRE 10.726.524 7Vo 750.857 750,861Heartland 657,345 7Vo 46,014 46.015Interstate Power 851,731 7Vo s9.62t 59,678L&0 Power 245,718 7Vo 17.200 17.201Minnesota Power 9-616.945 77o 673,186 673,186Minnkota 1.526.772 7 % 106.874 t06.874MMPA 1.356.3r 1 7Vo 94,942 94.942Missouri River EnergyServices l,og4,9ol 77o 76,643 76,644NW Wisconsin * 5s2 7Vo 39Otter Tail Power 2.108.349 77o 147.584 147.584SMMPA 2.925.587 77o 204.761 204.792Xcel Enersv 31.877.522 157o 4.781.628 4.78t.629Total 64.906.366 7.093-647 7.093.698


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division ofMinnesota Departmenl of Gommerce

B5 7th Place East, Suite 500, St. Paul, MN 5f 01-2198main: 651.296.4026

tty: 651.296.2860fax 651.297.7891

www.energy.mn.govDecember 20,2012

BurlW. HaarExecutive SecretaryMinnesota Public Utilities Commissionl2l7th Place East, Suite 350St. Paul, Minnesota 55101-2147RE: Comments of the Minnesota Department of Commerce, Division of Energy ResourcesDocket No. 8999/PR- 12-334Dear Dr. Haar:On April 10,2012 the Minnesota Public Utilities Commission (Cornrnission) issued a Notice ofRenewable Energy Certificate (REC) Retirernent Process ancl Cornpliance Report for 201 l. TheNotice requirecl entities subject to Minn. Stat. $2 l68. 169 I (RES Statute) to file by Jr rne I ,2012a report cletailing their cornpliance with the IES Statute for the year 201 l.Minn. Stat. $2168. 169 I , subcl. 2 requires utilities other than Xcel Energy to make a goocl faitheffort to obtain at least 7 percent of their Minnesota rctail sales fi'om renewable energy sources bythe end of 2010, while Minn. Stat. $2168.1691, Subcl.2 (b) requires XcelEnergy to obtain l5percent of its retail sales frorn renewable energy sources by the end of 2010. I In theCommission's March 19,2010 Orcler in Docket No.8999/CI-03-869, the Commission clarifieclthat the RES stanclarcl is to be applied in every year going forward until the standarcl changed.Consequently, the RES standarclfor20l I is l5 percert forXcel and 7 percent forallotherutilities. The Commission's December 3,2008 Order in Docket No. 8999/CI-04-16162 andNovernber 12,2008 Orcler in Docket No. 8999/CI-03-869 set f'orth additional reportingrequirements for RES cornpliance.

I These anounts increase to I 2 perccnt ancl I 8 perrent, respectively, lor thcse entitics tor the 20 I 2 cornpliancc year.2 In the Matter of a Cornrnission Investigation into a Multi-State Tracking ancl Tracling System f'or RenewableEnergy Credits, Third Ordcr Detailing Criteria ancl Stanclalds for Deternlinirrg Cornpliancc under Minu. Stat.$2168.1691 andScttingPlocedureslorRctilingRencwableEnergyCreclits,Decernber3,2003,DockerNo.E999tCt-04-t6t6.In thc Matter of Detailing Clitelia and Standards fol Measuring an Electlic Utility's Good Faith Efforts in Meetingthe Renewable Energy Objectives under Minn. Stat. $2168.169 l, Orcler Sctting Filing Requirenents and ClarifyirrgPlocedures, November 12, 2008, Docket No. E999/CI-03-869.


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BurlW. HaarDecember 20,2012Page2

The following utilities have filed their 201 I compliance rcports:o Basin Electric Cooperative (Basin),o Central Minnesota Municipal Power Agency (CMMPA),o Dairyland Power Cooperative,o East River Electric Power Cooperative (East River),o Great River Energy (GRE),o Heartland Consumers Power District,. Interstate Power and Light (IPL),o L&O Power Cooperative,o Minnesota Municipal Power Agency (MMPA),o Minnesota Power (MP),o Minnkota Power Cooperative,o Missouri River Energy Services,o Northern States Power. d/b/a Xcel Energy (Xcel),r Northwestern Wisconsin Electric Company.. Otter Tail Power Company (OTP), ando Southern Minnesota Municipal Power Agency (SMMPA).

The Minnesota Department of Commerce, Division of Energy Resources (DOC) reviewecl thesefilings ancl verified that utilities have complied with the 201I RES requircment. Attached to thisletter is a table and brief narrative summarizing each utility's compliance with the RES Statute.The DOC is available to answer any questions the Commission may have.Sincerely,

/s/ SUSAN L. PEIRCERate AnalystsLP/jlAttachment


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Summary of 2011 Minnesota RES Compliance through Retirement ofRenewable Energy Credits (RBCs)

'rThe Commission's November 12,2008 Order in Docket No.8999/CI-03-869 allows NorthwestWisconsin to submit a copy of its Wisconsin compliance report to clemonstrate its compliancewith the Minnesota RES. On May 8,2012, Northwest Wisconsin submitted its WisconsinRenewable Portfolio Standard (RPS) compliance information inclicating that it retired24,084RECs or 14.48 percent of its Wisconsin sales.*xln its Compliance Report, GRE indicated that it rctired 22,626 RECs associated withwholesale sales by two of its menbers, Connexus ancl Lake Country Power. In each case,Connexus and Lake Country Power resold the renewable energy to another distributioncooperative. In addition, GRE stated that it hacl wholesale sales to Willmar Municipal Utilitiesunder a Participation Power agreement for which it clid not retire RECs. GRE inclicated that thesale to Willmar was not part of an all-r'equirernents contract and, consequently, GRE does notbelieve it is required to retire RECs for its sales to Willmar. GRE's sales to Willmar wouldrequire the retirement of an additional 15,040 RECs.The Departrnent has reviewed GRE's comments ancl believes that GRE is not required by Minn.Stat. $2168.l69l to retire RECs related to the wholesale sales by Connexus and Lake Country,but is required to retire RECs related to its sales to Willmar. Minn. Stat. $2168.1691, Subd.2a(a) states:

2011 MNRetail Sales(MWhs)RESRequirement(7o)

RBS Req.(MWhs) RBCsRetired(MWhs)Above/(Below)RBSReouirementBasin Electric 568,250 7 o/o 39,777 39,777 0CMMPA 319,698 Jo/o 22.379 22.379 0Dairyland Power 787.874 7lo 55,t5r 55, l 54 3

East RiverElectric 334,034 7o/o 23,382 23,403 2tGRE** 10,597,425 7o/o 741.820 749.410 7.590Heartland 6s4.818 7o/o 45.837 4s,838Interstte Power 846,818 7Vo 59,277 s9,277 0L&O Power 241.073 77o 16,875 16.876Minnesota Power 10,130,969 7o/o 709, I 68 709, I 68 0Minnkota 1,542,022 77o 107,942 107,942 0MMPA 1,382,808 7 o/o 96.791 96.191 0Missotri RiverEnersv Services 1,226,901 7 o/o 85,883 85,884 0NW Wisconsin'i' 450 7 o/o 32Otter Tail Power 2.08s.902 7 o/o t46.01 3 146,0 t3 -32SMMPA 2.929.414 7 o/o 20s,058 205,059 0Xcel Enersv 31,788,268 l5o/o 4,768,240 4,768,241Total 65.436.274 7,123,601 7,131,218 0


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Each electric utility shall generate or procure sufficient electricitygenerated by an eligible energy technology to provicle its retailconsurners, or the retail custolners of a clistribution utility to whichthe electric utility provicles wholesale electric service, so that atleast the following stanclard percentages of the electric utility'stotal retail electric sales tcl retail customers in Minnesota aregenerated by eligible energy technologies by the end of the yearinclicated...

In the case of GRE's sales to Connexus ancl Lake Country Power, the Cooperative correctlyretired RECs for its wholesale sales associatecl with the retail sales of these two distributioncooperatives. However, in adclition, GIE retired IECs associatecl with wholesale sales rnade byeach cooperative to other clistribution cooperatives. The statute states that the RES obligationonly applies to the retail customers of a distribution utility to which the electric utility provideswholesale electric service . Consequently, the Department conclucles that the RES statute doesnot require GRE to retire RECs for the wholesale sales macle by Connexus ancl Lake CountryPower.The Department also would distinguish GRE's wholesale sales to Connexus ancl Lake CountryPower fiom Basin Electric Cooperative's wholesale sales to East River Cooperative ancl L&OPower. Uncler Minn. Stat. $2168.1691 Subcl. I (b), an electric utility is definecl as er publicutility provicling electric service, a generation ancl transnission cooperative electric association, arnunicipal power agency, or a power clistrict. Iloth East River ancl L&O Power are wholesalepower supply cooperatives serving other clistribution cooperatives, ancl consecuently meet theclefinition of an electric utility subject to the RES requirement. In contrast, Connexus and LakeCountly Power are distributiou cooperatives, ancl thus are not subject to the RES requirements.In the case of GRE's wholesale sales to Willmar, Willmar is a municipal utility serving retailcLlstome. Consequently, GRE's wholesale sales nleet the clefinition of the retail custorners ofa clistribution utility to which the electric utility provides wholesale electric service .The Department conclncles that the net irnpact of CRE's REC retircment associatecl with the twowholesale transactions is that it retirecl 7,586 more RECs than requirecl (22,626 retired forConnexus/Lake Country - 15,040 not retirecl for Willrnar) , ancl is therefbre in compliance withits RES recuirernents.

/Jl


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Attachment 3, Docket E999/M-12-958 PUBLIC VERSION

REC Sales and Price

Utility REC Sales or Purchases Price

Minnkota 2010: 1,092,896 sold

2011: 1,155,000 sold

Not disclosed

Northwestern Wisconsin ElectricCompany

All RECs acquired have been partof a wholesale power agreement inwhich the RECs came as part of thetotal energy purchased.

N/A

Interstate Power and Light 24,000 purchased [TRADE SECRET DATAEXCISED]

Otter Tail Power Company Trade Secret [TRADE SECRET DATAEXCISED]

SMMPA 3 purchases of RECs; no sales. $.10/REC-$.225/REC (nonehave been retired for MNRES)1

MMPA [TRADE SECRET DATAEXCISED]

[TRADE SECRET DATAEXCISED]

L&O Purchased 46 RECs Not provided.

CMMPA [TRADE SECRET DATAEXCISED]

[TRADE SECRET DATAEXCISED]

Great River Energy Purchased[TRADE SECRETDATA EXCISED]

[TRADE SECRET DATA

EXCISED]

Xcel No RECs purchased in 2011 forMN RES compliance. No RECsallocated to Minnesota have beensold.

Not provided

Minnesota Power Has not bought or sold any M-

RETS RECs from September 2010to the present.

N/A

Dairyland Power Cooperative DPC has entered into some forwardrenewable certificate sales contractsand intends to account for the salein the years the certificates arephysically transferred to thepurchaser.

N/A

Missouri River Energy Services No purchases or sales at thewholesale level.

N/A

East River Electric PowerCooperative, Inc.

32 RECs purchased in 2010 and 83RECs purchased in 2011 for resaleto member distribution systems

Not provided; East Riverconsiders sale/purchase pricesto be confidential.

Basin Electric PowerCooperative

Since September 2010 3,378,492RECs were sold to non BasinElectric members

Not provided; Basin considerssale prices to be confidential.

Heartland Consumers PowerDistrict

Not provided Not provided

1Filed in Docket E999/PR-12-334, May 31, 2012.


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MAY 2013 renewable energy 20135-86525-01 staff notes renewables.pdf

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