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Power struggle
by Stephanie Hemphill, Minnesota Public Radio
May 17, 2005

Supporters say, if passed, the Omnibus Energy bill will make it much easier to build wind power generators in Minnesota (MPR file photo)

Summer is on the way, and once people start turning on their air conditioners, the risk of electric power blackouts increases. A bill in the Minnesota legislature is designed to reduce that risk. The Omnibus Energy bill is a compromise between power companies and some environmental groups. It's designed to encourage utilities to build transmission lines, and it would boost local investment in wind energy. But critics say it would turn too much control over to the federal government.

Duluth, Minn. — The electric grid -- in Minnesota and across the country -- is fragile.

Ten years ago the federal government deregulated the wholesale electricity market.

Utilities can now deliver power to customers halfway across the country. But sometimes all that traffic overwhelms the system.

In the last few years, utilities have built new power plants. But they haven't added much in the way of transmission lines, to get the power from the plant to the cities where people use it.

It's like having a strong healthy heart pumping lots of blood, but also hardened arteries unable to handle the flow.

Xcel Energy's Judy Poferl says investors are reluctant to put money into new transmission lines because it takes years before the investment pays off.

"And what this bill does is allow us to collect 'real time' those costs as they're incurred," she says, "As opposed to deferring them until the facility comes into service."

The bill allows for automatic rate increases on customers' bills to help pay for high voltage lines -- even while they're being built.

"That removes a significant hurdle for us, and provides a good incentive for us to undertake these needed investments," Poferl says.

In return for those automatic rate increases, environmental groups gained a new strategy for encouraging wind power.

George Crocker from the North American Water Office was one of the negotiators. He's excited about a provision in the bill that's designed to help small local wind developers get the capital they need to build wind mills. Utilities would pay higher rates up front, and lower rates toward the end of a 20-year contract.

"Once you have the power purchase agreement from the utility at a price that enables the project to cash flow, you can go to the financial markets and the banks and get financing," Crocker says.

Crocker says anyone could put up windmills -- local governments, farmer co-ops, school districts. He says two-thirds of Minnesota has enough wind to make a windmill pay.

But some other environmental activists are disappointed with the bargain. They're unhappy with a provision in the bill that allows Minnesota utilities to spin off the transmission end of their business. They could create a new company that would be subject to federal regulatory control.

Paula Maccabee is with a coalition of groups called Citizens United for Responsible Energy. She says that change would remove Minnesotans from the decision-making process.

"The farther we get away from the grassroots and the community, the less our concerns -- whether they be renewable energy or the location of power lines -- the less our concerns are going to matter," Maccabee says.

Deregulation has unified the electric grid, from the east coast to the Rocky Mountains. Maccabee says that makes everyone more vulnerable to large power blackouts. And she says it's even more important for Minnesotans to have a say in power system decisions.

"If there's a big coal plant constructed in Iowa or South Dakota, Minnesotans breathe that dirty air, and we get higher rates of asthma," she says.

So Maccabee doesn't want to give up control at the state level.

The bill also shifts control over location of power plants and siting of transmission lines from the Environmental Quality Board to the Public Utilities Commission. Staff from the EQB would move to the PUC. But Maccabee says the PUC so far hasn't adequately addressed the environmental and health impacts of power plant decisions.

Senator Ellen Anderson of St. Paul is one of the chief sponsors of the bill. She says Minnesota should find a way to incorporate concerns about mercury pollution and fine particle pollution in its decision-making.

"We need to do a better job of that, regardless of who's in charge of the process," Anderson says. "We need to do a much better job."

Anderson says she'll keep an eye on how the legislation is implemented, and if there are problems, the law could be changed.

The Minnesota Senate already passed the bill. A vote is expected in the House later this week.