Regulatory work taking serious steps toward clean energy transition

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Regulatory decisions loom as we hit summer. What’s next for regulators as we continue Minnesota’s clean energy transition?

The energy and utilities industry continues to evolve by making investments in clean energy and related technologies. As customers demand new clean energy and electric utilities adopt it, new regulations and business models are also evolving. A predictable regulatory policy that values clean energy will unleash economic opportunity.

After a 2020 that saw an unprecedented pandemic and an election that changed state and federal regulatory agendas, the remainder of 2021 looks to be active for energy regulators, and for clean energy businesses. Here’s some of what CEEM is watching at key venues for clean energy business, including the Public Utilities Commission (PUC), the Department of Commerce (Department), the Federal Energy Regulatory Commission (FERC) and beyond.

 

The View from St. Paul  

Pandemic, partisan politics mean regulatory delays into 2021

The pandemic meant delays in key regulatory activities. State agencies, including energy regulatory agencies like the PUC, refocused their efforts in response to COVID-19 economic impacts. This shift in focus has resulted in significant delays in major energy regulatory cases across state agencies. Key government personnel were reassigned to directly address critical response areas. Agencies, like other workplaces, adjusted to remote working and meetings.  

The Department adjusted to new leadership after the Senate removed former Commerce Commissioner Steve Kelley in September 2020. Governor Walz appointed Grace Arnold as Commissioner in April after serving as temporary Commissioner. 

 

Utilities plan for COVID recovery, clean energy futures

Minnesota’s electric utilities plan on increasingly affordable, reliable clean energy. The integrated resource planning (IRP) process, which examines a utility’s current and planned electricity generation for the next 15 years, is the place for critical conversations about how it will all work. Xcel Energy, which announced “a vision of a carbon-free electricity system by 2050,” is in the midst of their IRP review. CEEM filed initial comments (Docket No. 19-368) in February, and we will be filing reply comments (comments on others’ initial comments) this month. The IRP has gathered regional and national attention, as stakeholders have become increasingly sophisticated in energy system modeling, offering alternative plans (see Consumers Plan from Citizens Utility Board). 

Minnesota Power also filed an IRP, with stakeholder comments due September 1 (Docket No. E015/RP-21-33). CEEM attended stakeholder workshops with Minnesota Power leading up to the filing. Minnesota Power faces particular challenges. Many communities that support legacy energy assets like coal and nuclear plants face challenges through the transition, including significant changes to local tax bases and employment. Also, the majority of Minnesota Power’s energy demand comes from highly price sensitive industrial industries, which are usually operating in highly competitive international markets. 

CEEM remains active in utilities’ future distribution system plans

 

Clean Cars Minnesota moves forward

In May, the State of Minnesota Office of Administrative Hearings completed a review of the Minnesota Pollution Control Agency’s (MPCA) efforts on reducing greenhouse gas emissions from transportation - known as Clean Cars Minnesota. The Judge found that MPCA “has the statutory authority to adopt the proposed rules, it complied with all procedural requirements of law and rule, and that the proposed rules are needed and reasonable.” 

CEEM supported the adoption of Clean Cars Minnesota rules, noting climate risk is a risk for businesses and that a movement toward low-carbon and carbon free economies is critical to showing investors, customers, employees, and stakeholders that Minnesota is open for business. We look forward to MPCA’s next steps toward implementation.

 

The View from Federal Regulatory Agencies and Grid Operators

Election brings big clean energy plans, big changes in regulatory agencies

The Biden-Harris Administration is settling in, with a focus on investments in clean energy and infrastructure. The American Jobs Plan has significant implications for clean energy business, including investments in transmission, electric vehicle infrastructure and grid resilience. 

Similarly, federal regulatory and administrative agencies, boards and commissions will work alongside policy initiatives. Prior to the election, the Federal Energy Regulatory Commission issued a landmark order to open organized regional markets (regional transmission organizations/RTOs and independent system operators/ISOs) to allow for DERs to compete as energy service providers. FERC Order 2222 allows for DERs to work together (aggregation) to access regional markets. This order signals potentially massive new market opportunities for DERs. States are not permitted to “opt out” of the market opportunities (i.e. Minnesota cannot prohibit DERs from participation in interstate markets). 

Further, policy makers at both federal and state levels are encouraging transmission expansion. The American Jobs Plan expenditures add urgency to existing efforts. The Midwest Governors’ Association (MGA) is working across state lines on energy policy. Over recent years, the MGA led an effort known as MID-GRID 2035, with clean energy transition goals, including “. . .the goal to establish a long-term transmission grid vision for the region.” This year, Minnesota Governor Tim Walz is chairing the MGA, and announced a continued commitment to address transmission issues. Further, the US Department of Energy recently announced up to $8.25 billion in loans to “enhance electrical transmission nationwide.”

Regional grid operators are also a focus, as a critical part of the clean energy transition. At the beginning of June, a bipartisan group of former FERC Commissioners recently signed a letter to encourage more regional coordination, including the creation of new regional markets, stating “To prepare the grid for a rapid evolution toward the low carbon future, we urge you to finish the job of setting up organized wholesale power markets and ensure that they flourish in all regions of the country.”

What is clear, is that energy regulators at multiple levels are turning up the heat on states. Federal activity is heating up.

 

MISO - FERC denies request to delay energy storage market rules, working groups convened on DERs

In the Midwest, the work of transmission development and market design falls to the Midcontinent Independent System Operator (MISO). With key orders looming, MISO has been working on a software change to administer their markets. The implementation led to requests to FERC, which regulates MISO activities, to delay certain clean energy market improvements. In May, FERC rejected a request to extend MISO’s deadlines for compliance related to energy storage integration. The decision is seen as a bellwether for future requests for delays- which have become more common from MISO in recent years.  

MISO convened a new Distributed Energy Resources Task Force (DERTF) to address compliance with Order 2222. The working group began meeting in December 2020, and includes significant representation from Minnesota’s companies and government agencies. This will be critical as cumulative DER capacity in the US is projected to grow to 387 gigawatts by 2025.

 

CEEM’s next steps

At CEEM we will continue to watch these changes unfold as new political and regulatory landscapes take shape. Check out our updated policy and regulatory affairs page to keep track of the latest news.