On Thursday, February 2, 2017, MCEA Clean Energy Program Director Leigh Currie testified in front of the Minnesota Senate Energy Committee. Below is a transcript of the testimony she gave, which outlines our concerns about the hasty replacement of Xcel's coal plants, Sherco 1 & 2, with natural gas.
WRITTEN BY: Leigh Currie, MCEA Clean Energy Program Director
"Mr. Chairman, members of the committee, my name is Leigh Currie, I am a staff attorney at the Minnesota Center for Environmental Advocacy and I primarily practice at the Public Utilities Commission [PUC]. I represent several Clean Energy Organizations at the PUC including Fresh Energy, Sierra Club, Wind on the Wires, and MCEA. With me today is Allen Gleckner from Fresh Energy, also available to answer questions from the committee. MCEA and the clean energy groups I represent oppose the Senate File 85. We have two primary concerns with this bill. The first is the precedent that it sets, and the second is that it prioritizes shareholders over the public interest of the State of Minnesota.
This bill is bad precedent. Xcel Energy is a monopoly. We have a system in place to ensure that the public interest is protected from monopolies. The system includes checks and balances. The PUC can only act within the authority delegated to it by the Legislature. Within its authority, the PUC can exercise its judgment based on the record built before it. If there were an argument that the PUC acted outside of its authority or abused its discretion, there is a mechanism to challenge that within the judicial branch. But that is not the argument being made today. Nobody is making that argument. Instead, Xcel is asking you to do the PUC’s job for it.
Just three months ago, I sat in front of the Commission with Xcel Energy arguing about its resource plan and I listened to Xcel Energy ask the PUC to please allow it to move forward with a certificate-of-need process. Exercising its discretion, the PUC did what it always does when it determines there is a need for a new resource—whether it’s wind, solar, natural gas, an unspecified fuel type—it authorizes the utility to either go forward and issue an RFP or apply for a certificate of need. In this case, the PUC did what Xcel asked it to do and authorized Xcel to go forward with the certificate of need. The PUC and Xcel both understood that a certificate-of-need proceeding is required by state law and that there was sufficient time to determine the exact parameters of the plant. The PUC in this process considered two years’ worth of record development and arguments from the parties and determined that there were gaps in information, there was out-of-date information including the demand forecast, and there was inaccurate information in the record. And it determined that there was time to finalize the exact parameters—the precise nature—of this gas plant through the state-required certificate-of-need process. What the PUC did in this proceeding is exactly what the law states it must do and what Xcel asked it to do.
Allowing Xcel to opt out of this system of checks and balances because it might not get exact parameters of the plant that it asked for once the right information is in front of the PUC, is sending the wrong message. This bill, unlike the [Metropolitan Emissions Reduction Project] MERP statute, does not create a statutory framework in order to achieve a policy goal. The MERP statute was a framework in order to achieve emission reductions. Those projects had to be vetted and approved by the PUC. That’s not what’s happening here. There is no identified goal here. This is simply a bypass lane around the PUC for a one-time, $1 billion project. It’s nothing more.
The second concern is that the project itself—the $1 billion, one-time investment—prioritizes shareholders over ratepayers. The way this bill is written—even as amended—to approve the billion-dollar project puts shareholder interests ahead of the public. If this bill were actually about jobs or regulatory certainty then you would see language in the bill about jobs. But it’s not about jobs. It’s about a $1 billion, one-time project. There would be no need to bypass the PUC or a certificate of need in order to have a gas plant on site at Becker and have the certainty and the jobs that the community deserves and is looking for.
If this bill does pass, you’ve locked in a $1 billion investment that is not needed for 10 years. In the IRP process it was clear that Xcel’s system is currently over capacity. The first coal unit at Sherco shutting down in 2023 does not trigger the need to build anything. It’s the second unit shutting down in 2026 that triggers a need for something to be built. The reason the bill in front of you doesn’t simply guarantee a gas plant or simply guarantee jobs at the end of a certificate of need, which is legislation that could be in front of you if those were the real concerns, is because the size of the plant is key to Xcel. The reason the size of this plant is so important is because the size of the plant equals the size of the investment and the size of the investment equals the size of the return. And that goes to shareholders at the expense of ratepayers.
As you’ve heard Xcel, and others, agree, this bill (even as amended) gives Xcel the sole discretion to build a 786 MW gas plant that it proposed in the last IRP. Or, in its sole discretion, Xcel could propose a different size in a future IRP. Xcel claims that its ratepayers will be protected because it has to go through a rate case. But the risk seems to be minimal that a plant authorized by the Legislature would be deemed to be unreasonable by the PUC. So I don’t think there’s a balancing of the risk and I think it prioritizes shareholders over the public interest.
So my clients and I are here to ask you today to respect the system that has been built and that we have in place to protect the public against the interests of the shareholders of a monopoly. This bill doesn’t do that. Thank you for your time, and I’m happy to answer any questions."