Cheaper energy, or cleaner? Legislators torn

The Minnesota Legislature is pushing energy policy in two different directions this year. Some legislators are trying to make energy cheaper, while others want to make it cleaner.

There's no consensus about what Minnesota's energy problems are, let alone how to solve them.

Republicans and some DFL lawmakers in the House say electricity has become too expensive. They point to environmental regulations that could make prices go up even more and hurt Minnesota's industries.

Meanwhile, Gov. Mark Dayton and DFL energy leaders in the Senate say the way we make electricity is too dirty. They say fossil fuels pose risks to both the climate and Minnesotans' pocketbooks.

The DFL-controlled Senate has been looking at bills that would boost efficiency and renewable energy. Sen. John Marty of Roseville, chair of the Senate Environment and Energy Committee, is pushing Dayton's proposal to increase the state's renewable energy standard. That would force large utilities to produce 40 percent of their electricity through renewable sources by 2030.

Marty said the legislation could help the state exceed the emission reduction targets set by the federal government.

"It's something that's creating lots of Minnesota jobs," Marty said. "It's doing surprisingly good things for ratepayers of Minnesota, and it's cleaning up the environment and addressing climate issues."

The Minnesota Department of Commerce says the costs of increasing renewable energy to 40 percent would be modest and wouldn't hurt reliability. But Republicans in the House don't agree that the cuts would be modest.

For them, the cost of electricity is paramount. The House Energy Policy Committee even has a new name and new mission under Republican leadership: the Job Growth, Energy Affordability Policy and Finance Committee.

"On a bipartisan basis, you're seeing the focus on energy policy move away from just being cleaner to being cleaner and cheaper," said Republican Rep. Pat Garofalo of Farmington, who chairs the committee. "That issue of affordability is something that touches all corners of the state, whether it's mining, forestry, manufacturing. It affects everything."

That's something DFL lawmakers from the Iron Range are concerned about. Last week they learned the taconite plant near Keewatin will idle production and lay off more than 400 workers. Energy costs weren't cited as the reason for the shutdown, but industry officials have said lower electricity costs in Minnesota would help them be more competitive in a global market.

DFL Rep. Tom Anzelc of Balsam Township asked Garofalo and the members of his committee to "see it in their hearts" to change how electricity rates are distributed, giving big industrial customers some relief.

"Please understand that the global market situation has been with us in cycles before, and we're hoping that it too shall pass," he said. "But energy costs are something we can directly impact, and you can do it this legislative session."

Gov. Dayton's top energy official told the committee the governor is open to finding a way to reduce industrial electric rates, with certain provisions — like making sure rates don't go up for low-income Minnesotans.

So there appears to be room for common ground on electric rates. The short list of other possibilities for common ground includes legislation promoting natural gas vehicles; changes to how utilities are regulated; and fixes to a state subsidy program for solar energy.

For Garofalo, any sweeping changes to energy law will have to meet his "cleaner and cheaper" test.

"Right now we're still in the planning phase, trying to figure out what the best option is," he said. "The purpose is not to pick winners and losers in technology; the purpose is to make sure we have the cleanest energy that is also the most affordable. So if we have a more cost-effective way to reduce pollution than current law, I don't understand why we wouldn't do it."

A lot goes into electricity rates. Duluth-based Minnesota Power has raised rates to move away from coal and clean up existing plants. Xcel Energy has spent more than it expected to upgrade its nuclear plants. Statewide, transmission lines and other infrastructure are old and need replacing. And the prices of oil, coal and natural gas, as determined by the global market, are also in play.

On top of all that, the amount of electricity Minnesotans use has been fairly flat, while overall emissions aren't shrinking very fast. So should Minnesota be doing more to reduce them?

"I think the jury's out on that," said Rep. Jim Newberger, R-Becker. "I'm not in this to argue about global warming, or climate change. I'm strictly looking at this from an energy point of view."

Newberger's district is home to Sherco — one of the largest coal-fired power plants in the Upper Midwest. He's sponsoring a bill that gives the Legislature power over any state plan to reduce emissions.

The states must come up with their own plans, or the U.S. Environmental Protection Agency will do it for them. Newberger said that requiring legislative approval is one of several energy measures he's introduced aimed at ensuring affordability and reliability for Minnesota electricity customers.

"You have to know that your home's going to be warm, the lights are going to come on, you'll be able to cook your food and drive to work and so forth," he said. "Let's settle the urgent needs first, and then we'll have those conversations about the environment later.

"Do I believe we need to protect the environment? Absolutely. But that's a long, protracted conversation that's ongoing."

One conversation that's not happening at the Capitol is what to do about climate change. DFL Rep. Jean Wagenius of Minneapolis sits on the energy committee and says House Republicans won't even talk about climate change — the problem she says should be driving decisions about energy.

"We're in a time when they're pretending it doesn't exist," she said. "And if you pretend it doesn't exist, then you don't have to do any problem-solving."

Don't expect to see a solution this legislative session to that fundamental disagreement over the state's energy problems. The question is whether lawmakers can find meaningful changes that members of both parties can support.

6 energy bills to watch at the State Capitol

Legislative approval for state emissions reductions

A rule the U.S. Environmental Protection Agency will publish this summer requires each state to come up with a plan to reduce greenhouse gas emissions from power plants in an effort to address climate change. Minnesota's target is expected to be about 40 percent. A stakeholder group is working on identifying ways to reduce emissions that can be easily implemented. But some lawmakers want to see the plan and sign off on it. Opponents say that could delay the process or result in the EPA forcing a plan on Minnesota. The bill is expected to pass the House with Republican and some DFL support.

New coal-fired power for Minnesota customers

Under Minnesota's 2007 Next Generation Energy Act, no new coal-fired power plants can be constructed in the state, and no new coal-fired power can be imported into the state. North Dakota government officials and coal-dependent utilities sued Minnesota over this law. Minnesota lost the first round but has appealed. The bill, which several Republicans support, would make the lawsuit go away by eliminating the "import" requirement.

Increased renewable energy and conservation standards

Current law requires Minnesota's largest utilities to generate 25 percent of electricity from renewable sources by 2025. The Senate omnibus energy bill includes a provision that increases renewables to 40 percent by 2030. The bill also sets a 2 percent annual energy conservation goal instead of the current 1.5 percent goal. The increased renewable energy standard is backed by DFL Gov. Mark Dayton.

Energy costs relief for industry

Lawmakers from both parties are concerned about rising energy rates for energy-intensive industries, such as mining, manufacturing and forestry. Officials in Dayton's administration have said they are open to changes under certain conditions. This proposal is worth watching, because it could mean higher electricity rates for middle- and upper-class Minnesotans and the commercial sector.

Lifting ban on new nuclear plants

Republican lawmakers have proposed lifting the state's ban on new nuclear plants as a way to allow for more carbon-free energy. No utilities are proposing new nuclear plants, but Xcel Energy, which owns the state's two existing plants, says it makes sense to leave the option open. DFLers say nuclear energy is too expensive and point out there's still no permanent solution for dealing with nuclear waste.

Money to study state's energy future

The Legislative-Citizen Commission on Minnesota Resources, which makes recommendations on how to spend state lottery money, sent the Legislature a list of projects that included $1 million for the Legislative Energy Commission to analyze Minnesota's energy sources with an eye toward maximizing efficiency and renewable energy. House Republicans took that project out of the bill. Gov. Dayton scolded them for it, so expect a fight over that one as the House and Senate work out their differences.