Minnesota Considers Changes in Utility Tariffs

As it begins the process of reforming distributed generation (DG) tariffs administered by the state's electric utilities, the Minnesota Public Utilities Commission has modified certain aspects of the DG tariffs proposed by the state's three largest utilities - Minnesota Power, Otter Tail Power Company, and Xcel Energy. Much of the commission's focus centered on the imposition on DG customers of a new fixed monthly charge, which will range from $1.40 to $8.00 per month, depending on a customer's specific service conditions. 

The fixed DG fees were variously referred to in the tariffs as "customer charges," "metering charges," or "service charges," but they all were designed to be collected on top of the fixed monthly charges paid by every customer. The utilities maintained that because there are additional costs involved in measuring and reconciling a DG customer's usage versus output, the new DG-specific monthly charges are necessary to capture the associated extra metering, billing, labor, and other costs incurred in serving a customer with self-sited generation capabilities. 

The commission cautioned that at the present time, it was doing no more than entering its technical findings, which it said should enable it to make progress while it investigates the entire range of DG fees. The commission noted that its inquiry will include evaluating the proper methodology for calculating the level of DG charges as well as weighing competing methods of collection - i.e., whether via separate tariffs or an individual interconnection agreement. 

As to the modifications initially okayed by the commission, they encompass certain changes in design to ensure that monthly fixed customer charges for net-energy-billed customers are limited to incremental costs of service for each type of customer. Given those incremental cost terms, the commission rejected utility proposals that would have permitted the companies to require all DG customers, regardless of their size and capacity, to install separate "production" meters for measuring the generator's total output, including any portion consumed at the customer's premises. 

The commission explained that under existing rules, only those customers whose generation output exceeds 40 kilowatts (kW) can be ordered to install a special production meter. And, the commission found, the utilities had failed to show that the 40-kW threshold was no longer reasonable. 

The utilities had argued that a universal production meter requirement would offer several benefits, foremost of which was the ability of such meters to measure the amount of "hidden load" on the system. According to the companies, it is crucial for ensuring system reliability that they be aware of those DG load factors, particularly during times when many DG units suddenly go offline. The utilities also claimed that the production meters were critical to their ability to substantiate compliance with Minnesota's Renewable Energy Standard and Solar Energy Standard. 

Despite dismissing those arguments, the commission said it recognized that the utilities had put forth legitimate reasons for wanting to install production meters on DG projects, regardless of their size. At the same time, though, the commission held that it could not authorize that move immediately. It stated that important considerations, such as who will bear the cost of the meters and in what situations, needed to be further developed. Re Minnesota Power et al., Docket Nos. E-015/M-16-204 et al., May 22, 2017 (Minn.P.U.C.).