Board Reviews Changes to Cogeneration Statute
During the 2017 Legislative Session the Minnesota Legislature passed and the Governor signed a provision that reduces duplicative regulation on your electric cooperative. This local democracy legislation returns some balance to the regulatory process, ensuring decisions that impact member-owners of cooperatives are made locally by your elected board of directors. While electric cooperatives are already locally regulated in most areas, this legislation made an important clarification, one that will allow for innovation in response to member’s needs and wants for years to come.
The legislation impacts the distributed generation section of statute and brings it in line with the rest of Minnesota Statute as it applies to rates, fees and charges of electric cooperatives. Electric cooperatives still must follow the law as laid out by the legislature in this section. The provision that the legislature recently passed and the Governor signed allows for cooperatives to adopt the authority implementing this section of statute (Minnesota Statute 216B.164). To do so a cooperative has to pass a resolution adopting this authority and adopt rules implementing this section of statute.
The municipal utilities in Minnesota have had similar authority in Minnesota for over 30 years. With the passage of the provision, the legislature affirmed the value of local decision making for rural electric cooperatives across Minnesota. As your locally owned cooperative we know that local decision making can result in rates and services that reflect our community’s needs while assisting in keeping administrative costs down.
At the June board meeting the Redwood Electric board of directors had their first discussion concerning the adoption of this authority. Directors and staff will be reviewing the applicable law (MN 216B.164) and discussing a resolution and rules implementing the section of statute. The board plans on reviewing the subject over the next couple of meetings with a final decision at the September board meeting. The purpose of this change is to secure local decision-making, not to substantively change the way your cooperative interacts with distributed generation. Redwood Electric will post the proposed rules, policy and contract information on the Renewable Energy page on our web site. If you are interested in this change please contact us with your concerns or plan to attend the meeting in person.
Draft Documents being considered by the Board:
Before you purchase a renewable energy system we strongly encourage you to read our Interconnection Policy (below) and speak with us. Your system can not be connected to the grid until it passes state inspection and interconnection is approved by Redwood Electric Cooperative. Failure to contact us from the beginning could lead to unexpected costs and delays in interconnection.
Thinking of a Renewable Energy Investment?
Before you make a big investment in a wind turbine or solar panels do your homework and ask lots of questions. If given expected performance numbers by a salesman, check them with your own numbers. What do they claim for kWh output? How does that line up with actual results from similar projects? Sales claims of kWh production that don't match what historically has been seen can make a big difference in pay back and what you hope to see out of your project. What’s been claimed and what happens in reality can be disappointing. Is the system UL pre-certified? Ask for a UL certificate. If not, you could incur added costs. Learn about the company or individual you’re dealing with. How long have they been in business? Check with the Minnesota Better Business Bureau about possible complaints and issues with the company. Don’t forget about us here at Redwood Electric Cooperative. You can’t connect to the grid without us. Get us involved before you sign a contract to purchase a turbine or solar panel to avoid possible issues. Just because you bought a turbine doesn’t mean you can hook it to the grid. It has to meet Minnesota state electrical codes and be inspected by a state inspector. REC has to have the capacity to handle the project on its lines or you could be faced with significant costs. Visit the Minnesota Department of Commerce web site (http://mn.gov/commerce) for information on wind and solar energy. As a member owned cooperative, Redwood Electric Cooperative is here to help its members whether it is through education or completion of your renewable energy project.
Distributed Generation (DG) Grid Access Fee Goes In Effect June 1st
Redwood Electric Cooperative will be implementing a DG Grid Access Fee on distributed generation facilities that are interconnected on or after June 1, 2016. The fee will not apply to current distributed generation facilities or to facilities interconnected before June 1, 2016.
In 2015 the Minnesota legislature sought to return a level of fairness to how the electric distribution grid is paid for by authorizing electric cooperatives and municipal utilities to charge a cost recovery fee on distributed generation facilities (wind, solar, etc.). At its February Board meeting, Redwood Electric Cooperative Board of Directors voted unanimously to implement the fee starting June 1, 2016. The fee will allow Redwood Electric Cooperative to recover some of the cost shift that occurs between distributed generators and the rest of the membership.
There is a fixed cost to deliver electric power to our members; the poles, the wires, the equipment and people that get the power to you and keep it reliable and safe. This fixed cost is recovered in two ways, through a monthly fixed charge and as a portion of your kWh rate. Putting some of the fixed cost within the kWh rate was done on the assumption that the more energy a member used the more demand they put on the grid and the more they should pay to maintain it. Distributed generators demand as much (or more) from the grid than the rest of the membership. But, because they offset some or all of their energy usage they no longer pay their fair share to maintain the grid.
Investing in distributed generation is a big decision with a lot of questions about financing, return on investment, interconnecting with Redwood Electric Cooperative and the expected life of the system. In order to assist our members who are weighing this option, we are more than happy to answer questions you have. Our website has a copy of our distributed generation policy and interconnection application. You may also contact us at 507-692-2214 or toll free 888-251-5100.
How is the DG Grid Access Fee calculated?
The DG grid access fee seeks to recoup that portion of the fixed costs of serving the distributed generator that are included in the kWh rate. The fee is applied per kW of installed distributed generation that exceeds 3.5 kW. The monthly fee is $3.97 per kW. For example an 8kW solar array will pay a fee on 4.5kW (8kW – 3.5kW). The monthly fee in this example would be $17.87 (4.5kW x $3.97). This fee has a maximum of $37.00/month. The fee will be updated at the beginning of each year and can change each year.
When will the DG Grid Access Fee take effect?
Any distributed generation facility over 3.5 kW interconnected on or after June 1st, 2016 will be subject to the cost recovery fee. The fee will not apply to facilities interconnected before June 1, 2016.