Minnesota Public Utilities Commission

Staff Briefing Papers Meeting Date: May 9, 2013 ......................................................... Agenda Item # ___ ______________________________________________________________________ Company: Docket Nos. All Electric Utilities Subject to Minnesota Statutes 216B.1691 E999/M-12-958 In the Matter of Commission Consideration and Determination on Compliance with Renewable Energy Obligations and Renewable Energy Standards E999/CI-03-869 In the Matter of Detailing Criteria and Standards for Measuring an Electric Utilitys Good Faith Efforts in Meeting the Renewable Energy Objectives Under Minn. Stat. 216B.1691 E999/PR-11-189 In the Matter of a Renewable Energy Certificate Retirement Report for Compliance Year 2010 E999/PR-12-334 In the Matter of a Renewable Energy Certificate Retirement Report for Compliance Year 2011 Issue(s): 1) What action should the Commission take on the REO-RES plans filed by electric utilities? 2) What, if any changes should the Commission take on the content of future RES reports? 3) What action, if any, should the Commission take on the cost impact of the RES?

Staff:

Michelle Rebholz ............................................................. 651-201-2206 Susan Mackenzie ............................................................ 651-201-2241

______________________________________________________________________ Relevant Documents

Commission, Notice Regarding Filing Obligation ............................. September 12, 2012

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Dairyland Power Cooperative, Biennial Compliance Report ................ October 19, 2012 Interstate Power and Light, Report (Trade Secret) ................................ October 22, 2012 Missouri River Energy Services, Biennial Report ...................................October 22, 2012 East River Electric Power Cooperative, Inc, Comments ....................... October 22, 2012 Heartland Consumers Power District, Report........................................ October 22, 2012 Central MN Muncipal Power Agency, Report ....................................... October 22, 2012 Otter Tail Power Company, Report (Trade Secret) ............................... October 22, 2012 SMMPA, Compliance Filing ....................................................................October 22, 2012 Xcel Energy, Compliance Filing ........................................................... October 22, 2012 MRES, Comments on Biennial Reporting ............................................. October 22, 2012 Basin Electric Power Coop, Compliance Filing .................................... October 23, 2012 Minnesota Power, Report (Trade Secret) .............................................. October 23, 2012 MN Municipal Power Agency, Comments ..............................................October 24, 2012 L&O Power Cooperative, Compliance Filing ........................................ October 31, 2012 Great River Energy, Report ............................................................... November 14, 2012 MN Municipal Power Agency, Compliance Filing (Trade Secret) ..... November 15, 2012 Department of Commerce, Legislative Report ..................................... January 15, 2013 Dairyland Power Cooperative, Comments ........................................... February 19, 2013 Department of Commerce, Comments ............................................... February 19, 2013 Department of Commerce, Comments-Additional ............................... February 25, 2013 Northwestern WI Electric, Compliance Filing ........................................... March 6, 2013 MN Large Industrial and Chamber, Joint Comments................................. March 6, 2013 Minnkota Power Cooperative, Compliance Filing ..................................... March 12, 2013

____________________________________ The attached materials are workpapers of the Commission Staff. They are intended for use by the Public Utilities Commission and are based upon information already in the record unless otherwise noted. This document can be made available in alternative formats (i.e., large print or audio tape) by calling (651) 296-0406 (voice). Persons with hearing or speech disabilities may call us through Minnesota Relay at 1-800-627-3529 or by dialing 711.

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Background In 2001, Minnesotas renewable energy objective statute, Minnesota Statute 216B.1691, was first passed. Modifications to the statute were made in later years. In 2003, a requirement was added that utilities file reports with the Commission and that the Commission detail the standards and criteria for judging a utilitys good faith efforts to meet the objective. The Commission began setting those criteria in a June 1, 2004 Order, which set reporting requirements for utilities to demonstrate their efforts to comply with the statute. Significant modifications were made to the statute in 2007, including the addition of a Renewable Energy Standard (RES) to accompany the already-existing Renewable Energy Objective (REO). The statute in its current form requires all 16 utilities subject to the REO-RES to file with the Commission a report showing its compliance with the statute and its plans for complying in the future. By statute, these plans must be submitted to the Commission every two years.1 The statute further states that the Commission must investigate utilities compliance with the statute.2 As listed later in these briefing papers, staff will discuss the time period covered by this docket. Beginning in 2008, the Commission memorialized its process for receiving these biennial reports and for fulfilling its statutory duty to investigate compliance with the statute.3 The Commission required utilities to file, by November 15 of every other year, a report with specific content to satisfy the reporting requirement under the statute. The Commission made findings of compliance in its 2008 and 2010 biennial compliance dockets. This docket represents the Commissions third biennial renewable energy compliance docket. Attachments The Attachments to this report are: Attachment 1: Possible Modifications to Biennial RES Reporting Requirements (Both Redlined and Clean Versions) Attachment 2: Department Comments, 2010 and 2011 REC Retirement Dockets Attachment 3: REC pricing data (TRADE SECRET and Public Versions) Biennial RES Reports All sixteen utilities filed their reports. Staff refers the Commission to the reports for details, but provides a brief summary of the highlights of each report. In general, each utility documented its compliance for the past two years and anticipated meeting the RES for at least the near future; some reported they would be able to meet the standard for 2025 with their existing portfolio.

1 2

Minn. Stat. 216B.1691, subd. 3. Minn. Stat. 216B.1691, subd. 7. 3 Prior to the 2008 Order, findings of compliance were being made in resource plan dockets. However, this presented a problem since not all 16 utilities file resource plans and resource plans have not always been processed on a two year cycle.

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Reports ranged in size from 3 pages to 30 pages. The difference in length did not indicate a problem, since some utilities have already met their RES obligations through 2025 and therefore would need less explanation of their plans to meet future RES milestones. In Docket E999/CI-03-869, Order Issued November 12, 2008, the Commission clarified what should be in the REO-RES reports. In general, the REO-RES statute identifies some items that utilities must report on, and in the November 12, 2008 Order, the Commission reiterated the reporting requirements it first listed in a June 1, 2004 Order in the same docket.4 The Commission issued a Notice reminding utilities of the content of the reports. (Attachment 1 lists those current requirements and possible edits to those requirements.) This biennial proceeding covers the years 2010-2011, which marks the last two years of the REO (Renewable Energy Objective) and its good faith effort standard of seven (7) percent.5 For 2012 and going forward, the RES (Renewable Energy Standard) will apply.6 The RES portion of the statute states that utilities shall generate or procure to meet the percentages outlined in the statutes, which currently are: 2012 2016 2020 2025 12 percent 17 percent 20 percent 25 percent

For Xcel, the percentages are: 2012 2016 2020 18 percent 25 percent 30 percent

Dairyland Power Cooperative (12 pages) Dairyland filed a helpful narrative of their efforts to comply and the diversity in types of renewable energy they have acquired. At page 4, Dairyland stated it currently has sufficient resources in place to meet its entire renewable obligations in all states where it operates through at least 2025. It also stated that price is an issue, as is capacity. Missouri River Energy Services (9 pages)
4

The June 1, 2004 date of the Order has some significance; these reporting requirements were established before the Midwest Renewable Energy Tracking System (MRETS) was created and used by the utilities, which tracks renewable energy credits (RECs). This will be discussed in more detail in a later section on changing reporting requirements. 5 Staff generically uses the abbreviation RES to mean the renewable energy obligation or renewable energy standard throughout these briefing papers. 6 Under the REO, a utility was required to make a good faith effort to procure renewable energy in the amounts set by statute. Under the RES, the utility is mandated to procure the correct amount of renewable energy, receive a modification or delay of the RES by the Commission, or face financial penalties or other adverse action by the Commission.

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MRES stated that it can meet the RES through 2017 with current renewable resources. At page 5, it provided a helpful table of its projected surplus/deficit for future years. MRES does not envision any obstacles to meeting the RES, as listed on page 2 of its report. East River Electric Power Cooperative, Inc. (9 pages) East River documented its compliance with the RES. It cited possible obstacles to meeting the RES in the future as federal tax policy, environmental compliance, transmission, and administrative costs for small renewables. Interstate Power and Light (20 pages) IPL stated it has no plans for construction of new facilities or procurement of PPAs, but will need to take some action to meet 2025 compliance of 25 percent. IPL also noted, at page 4, that if an industrial customer were to enroll in its green pricing program, the enrollment could affect the number of RECs IPL has available. Heartland Consumers Power District (5 pages) Heartland signed one 20 year PPA which will satisfy all milestones of Minnesotas RES; Heartland sees no obstacles to meeting any portion of the RES. Central Minnesota Municipal Power Agency (6 pages) CMMPA detailed its compliance with the RES. The Agency currently has no concerns regarding obstacles to meeting the RES. In response to a staff e-mail, CMMPA clarified that given its current renewable portfolio it projects compliance through 2027. Southern Minnesota Muncipal Power Agency (13 pages) SMMPA stated at page 5 that it should be able to comply into the 2020 timeframe. At page 6 it provided its narrative of its resource mix. At page 7, it analyzed the added cost of renewables. It used two methodologies for determining the added cost of renewables. First, it looked at a with and without renewables case using the current IRP (2006). The IRP modeling case, over the 15 year planning horizon, showed a potential benefit of the RES of approximately $900,000 annually, but the modeling was completed prior to the lower prices in the MISO market (brought about by a combination of the recession and lower natural gas costs). SMMPAs second methodology compared the contractual cost of acquiring wind resources compared to what SMMPA receives from the MISO LMP market for injecting that energy into the market. The market approach calculated an annual cost to SMMPA members of $10 to $12 million annually. SMMPA stated that the market approach was a shorter real-time assessment which is not capable of assessing the costs and prices over the longer term life of the generating resource. SMMPA stated that both approaches have their limitations. Minnesota Municipal Power Agency (10 pages) MMPAs report responded to all questions asked in the Commissions notice. MMPA stated it has not encountered obstacles in meeting the RES, but in the future, MMPA is concerned that transmission may not be available or that the MISO interconnection process will continue to cause both schedule and cost

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uncertainty, creating risk for interconnection projects. In response to a staff e-mail, MMPA stated that given its current REC portfolio (assuming certain load growth assumptions) it would be able to comply through 2020. L&O Power Cooperative (3 pages) L&O has a long term all-requirements power supply contract with Basin and WAPA; RES requirements will primarily be met through these contracts. L&O purchased RECs for the purpose of resale to its member distribution cooperatives for a green pricing program; L&O did not list the sale or purchase pricing, citing confidentiality. Basin Electric Power Cooperative (5 pages) At page 2, Basin stated it currently has sufficient resources in place to meet its entire renewable obligations through at least 2022. Basin does not envision any obstacles to meeting the Minnesota RES at this time. Basin also listed other sources of renewable energy it has acquired but are not considered renewable under Minnesotas RES. Minnesota Power (17 pages) At page 4, MP stated it has the resources to meet the RES through 2012; when other approved projects achieve commercial operation in 2013, MPs renewable portfolio will reach 18%. Currently planned and priority projects will increase their renewable energy to 22%, and the Company will use resource planning activities to finalize renewable projects to meet the remaining 25% milestone. MP included a trade secret version of its report which included non-public data related to planned projects. Great River Energy (10 pages) GRE provided a narrative of its renewable energy mix and provided Tables 2, 3, and 4 at pages 6-7 of its report showing its historical compliance and planned 2012 compliance. As to compliance in the future, GRE states at page 7 that it has added renewable resources ahead of the RES. GRE listed potential obstacles to meeting the RES as the decline in load growth, the cost of renewables, transmission capacity, and the potential ending of the PTC. GRE cited the following potential solutions to these obstacles: economic development could lead to increased load growth, the possibility of renewable resources becoming more cost competitive, and CapX2020 providing additional transmission capacity. Otter Tail Power (30 pages) OTP provided historical information on the RES and its efforts to comply. At page 12, it stated that the Company expects to meet the RES requirements out to 2026. In addition, OTP is seeing significant customer interest in owning wind generation. OTP stated it does not see any substantial obstacles to meeting the RES, but at pages 13 and 14 of its report it cited potential obstacles and solutions also listed in other reports, such as transmission, the PTC and retail sales uncertainty. Xcel Energy (9 pages)

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Xcel provided tables at pages 3 and 5 of its report showing generation type (owned versus purchased) and retail sales compared to Minnesotas RES requirement. At page 5, Xcel states it believes it has enough renewable resources to comply through at least 2020.7 Xcel cited potential obstacles to meeting the RES, many of which were mentioned in other utilities reports, such as the cost-effectiveness of wind energy, transmission, and PTC uncertainty. Xcel also mentioned that as the percentage of wind energy on the system increases, there is concern over the effects on reliability of integrating wind with its other resources. Northwestern Wisconsin Electric Company (3 pages) NEW provided actual data for its 2010 and 2011 compliance years as well as plans to ensure future compliance. NEW noted it does not own any generation so its ability to meet the RES will depend upon the availability of renewable generation. Minnkota Power Cooperative, Inc. (4 pages) Minnkota provided a list of the cooperatives it serves in Minnesota. Minnkota stated that as of year end 2011, it had wind generation that accounted for approximately 30% of its members retail sales. Minnkota has not encountered any obstacles in meeting the RES. The organization also listed the number of RECs sold in 2010 and 2011. Department Comments (Legislative Report) The Department reviewed the utilities 2011 reported Minnesota retail sales and the RECs retired in a January 15, 2013 filing which also serves as the Departments biennial report to the legislature.8 As listed on Table 1 at page 7 of its January 15, 2013 comments, the Department concluded that the utilities complied with the RES for 2011. The Department also estimated the ability of the 16 utilities to comply with the 2012 RES. As listed at Table 2, page 8 of its comments, the Department estimated that the utilities would be able to comply for 2012. No party disagreed with the Departments conclusion of compliance. Staff comment

In Docket E002/M-12-1132, Xcel indicated it would be selling some specific biomass RECs. The Commission made no finding in that docket as to Xcels RES compliance. 8 When the Commission established this biennial compliance process, it timed it to coincide with the Departments th legislative report, due January 15 of every odd-numbered year. The Departments legislative report serves as its comments in this process and as the report to the legislature, avoiding duplication. The Department separately looks at each utilitys annual REC retirement report, which is currently a spreadsheet showing that a utility has retired the appropriate number of RECs for a given calendar year. The two most recent Department reviews of those reports are attached as Attachment 2.

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Because of the 16 utilities participation in MRETS, the determination of compliance for an individual year is simple, uniform, and transparent.9 The Department has reviewed 2011 compliance and estimated 2012 compliance and staff agrees with the Departments review and conclusion. Staff notes that this finding of compliance assumes that each utility has correctly calculated its retail sales for the relevant years. At times, there have been disputes over how to calculate retail sales. For example, in the Commissions last biennial docket, the Department disagreed with how Minnesota Power was calculating its retail MWh; the utility was excluding its wholesale sales to distribution companies that ultimately sold that energy to end users. The Commission agreed with the Department that retail sales needed to include these transactions because they resulted in retail sales.10 In Docket 12-334, the docket listing the actual REC retirements for 2011, GRE stated that its interpretation of that previous Commission Order it can remove member wholesale sales and could have retired 22,626 fewer RECs. In addition, GRE stated that it has a long-term agreement directly with a nonmember, Willmar Municipal Utilities (WMU), and did not include its sales to WMU when determining its renewable energy obligation for 2011. Staff notes that the Department filed a letter in that docket recommends that the utilities have complied with the 2011 requirement. The Department also discusses in its letter why it believes GRE is in compliance. No other party commented on the issue. The Departments letter is contained in Attachment 2. Staff notes that in the last biennial docket, Docket E999/M-10-989, the Commission and Department reviewed the 2 years preceding the year in which the docket was opened. That is, the docket was opened in 2010, and the Commission made a finding of compliance for years 2008 and 2009. The Commissions Order in Docket 10-989 found the sixteen utilities in compliance for years 2008 and 2009, but did not discuss compliance with 2010 since the docket was opened in 2010 and year end data for 2010 was not yet available. Staff has attached the REC retirement data and Department letter as part of Attachment 2 and recommends that a finding of compliance also be made for 2010. While there has not appeared to be any dispute over 2010 compliance, staff recommends that the Commission still make a finding of compliance for 2010 simply in the interest of covering each years compliance as part of these reviews.11

With MRETS, utilities create Renewable Energy Credits (RECs) when they generate one MWh of renewable energy. Under previous Commission decisions, these RECs can be banked and have a shelf life for the year they are generated plus an additional four years. Utilities simply retire a given number of RECs to represent compliance in a single year. Prior to the use of MRETs, the Department and Commission examined renewable compliance in resource plans. Parties debated the appropriate allocation method for utilities (since many utilities operated in more than one state, allocation methods needed to be used to determine how much of a utilitys renewable energy counted towards Minnesotas requirement) and other issues that took up time in comments and Commission Orders. See, for example, the Commissions Order on August 9, 2006 in Docket E017/RP -05-968, where the Commission found OTP in compliance with the REO for 2005 and 2006 and directed the use of the vintage allocation method. 10 Docket No. E999/M-10-989, ORDER FINDING UTILITIES IN COMPLIANCE AND CLARIFYING REQUIREMENTS FOR REPORTING WHOLESALE ELECTRICITY SALES, Issued May 13, 2011. 11 In the Commissions first biennial REO-RES review docket, Docket 08-1163, the Commission made a finding on compliance with 2007. In 10-989, the Commissions second biennial REO-RES docket, the Commission made a finding of compliance with 2008 and 2009. Therefore, it would be consistent with past practice to make a finding of compliance with 2010 and 2011. The Commission has also, in both 08-1163 and 10-989, looked forward 2 years to see if the utilities appear to have plans in place to comply with future years, but has still taken a look back and

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Staff also recommends a finding that the utilities appear to be making reasonable efforts to meet the upcoming two years. This finding was made in the previous biennial docket and the reports filed in this proceeding indicate that utilities are taking appropriate efforts to meet the RES going forward. One piece of information requested in this years and past years reports is REC sales and purchases and the price paid in those transactions. Staff has compiled the REC sales disclosed in the reports and provided them as TRADE SECRET Attachment 3. Staff notes that some utilities provide all of their sales and some have only disclosed transactions related to the Minnesota RES. There are benefits and drawbacks to either approach. Staff believes that the Commission's responsibility is to ensure that REC trading activities are well documented so that ratepayers, who provide the financial support and are the intended beneficiaries of the REC market, can clearly see when REC trading occurs and on what terms. This transparency is needed to assure that the price ratepayers pay is reasonable and allows the Commission to monitor market development, reliable price discovery, speculation and arbitrage. Pricing information is not available through M-RETS. Therefore, requiring utilities to report on pricing will provide insight into the price creation process in the M-RETS REC market. The objective is both a functioning REC market and a successful RPS implementation. REC trading information will also tell the Commission to what extent utilities are relying on decoupled REC purchases to meet RES requirements and how many surplus RECs are in the market. This will help the Commission to understand how utilities are managing their REC portfolios and at what cost. Minn. Stat. 216B.1691, subd. 2b, allows utilities to request modification or delay in the RES based on cost to ratepayers. Understanding REC pricing will help the Commission to evaluate requests for modifications or delays. In addition, if utilities request a share of the proceeds from REC sales, the Commission must have sufficient reason to evaluate these claims, including baseline pricing at zero or some other level. Comments on streamlining RES Reporting Staff also solicited comments on whether the RES biennial reporting requirements should be streamlined. Because the reporting requirements were set by Order, staff generally could not revise them; however, staff at the Commission and Department met and worked on a Notice issued at the start of this proceeding to provide a central location for all the information requested.12 Staff has presented the comments on streamlining reporting into the chart below, including staff comment on each recommendation.

made actual findings of compliance in the biennial dockets even when it has said previously that a utility appears to have plans to comply with a particular year. To be in compliance for a given year, a utility must retire RECs in MRETS. 12 During previous biennial compliance dockets, Commission staff had issued a notice requesting certain information in the reports and Department staff also issued Information Requests (IRs) requesting information. To avoid more than one request for information, Commission and Department staff coordinated their requests in advance so that the Commission notice avoided the need for separate IRs.

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Date 10/22/2012

Utility East River

Comments Uniform set of questions for utilities to answer.

10/22/2012

IPL

Prefers 4th quarter reporting. Also, 87% of RES requirements are attributable to 3 utilities (p.6 of comments). Consider abbreviated reports for the remaining 13 utilities. Consider spreadsheets plus short description of new developments/plans to satisfy requirements in the long term.

10/22/2012

SMMPA

MRETS is robust; would be helpful if filings could be consolidated to avoid duplicate filings. Some thought could be given to DOC/PUC staff simply reviewing MRETS retirement accounts to ensure sufficient RECs have been retired.

10/22/2012

Xcel

Filing the info on obstacles, obligations in other states, additional renewable resource acquisitions is duplicative of whats filed in an IRP. Actual sales, generation, RPS obligations, purchased/sold RECs should be filed in the annual REC report.

10/22/2012

MRES

Eliminate the annual REC compliance report, just file biennial report. In addition, earlier deadline of June 1.

10/22/2012

MP

10/24/2012

MMPA

Current process provides important info for PUC, stakeholdersno modifications proposed. A single document should list all the data

Staff Observation Staff has worked towards ensuring there is a uniform set of utilities to answer, and believes the notice for this years biennial proceeding has accomplished this. Setting up two different sets of reports would vary from East Rivers interest in having a uniform set of questions. As to a spreadsheet, other states such as Wisconsin use a spreadsheet to review compliance and one has been developed for the utilities annual REC compliance reports. A Commission proceeding to some extent would still be necessary to preserve transparency. For example, members of the public may not be familiar with MRETS to track RES compliance but could review utilities RES reports in edockets. Only 9 of the 16 utilities subject to the RES now file traditional IRPs, so the Commission cannot rely on the IRP process as the exclusive vehicle for determining RES compliance. In addition, IRPs are not necessarily completed every two years, and it may be difficult for stakeholders interested only in REC compliance to track an entire IRP proceeding. The Commission and Department use the annual REC retirement report as the basis for the finding in this biennial docket. ---

This appears to be consistent

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2/19/13

Dairyland

2/19/13

DOC

2/25/13

DOC

required in the biennial RES reports; requirements should be reviewed to ensure they are still relevant; redundancy should be removed; review for clarity of meaning and expected result. Agree with MMPA. Remove good faith effort items, should have single document, see if anything is superceded/obsolete, remove redundancy, remove ambiguities/enhance clarity. File biennial info at same time that annual REC retirement reports are filed (June 1), plus info in Attachment 1 to 9/12/12 PUC notice should be submitted. Annual RES Compliance Filing (Annually by June 1) Total Minnesota Retail Sales and the RES requirement in kWh for the compliance year. The name of the M-RETS Retirement Account used for compliance, and the total number of RECs retired. An accounting of the number and price of any RECs bought/sold during the compliance year. Information for Biennial Reporting (By June 1, in even numbered years) Status of the utilitys renewable energy mix relative to the RES Efforts taken to meet the RES Obstacles encountered or anticipated in meeting the RES Possible solutions to the obstacles Any other State Renewable Standards or Objectives to which the utility is subject. Any renewable generation facilities expected to become operational during the upcoming year, the type of facility, and the capacity and capacity factor of each facility. (That is, eliminate items #5-11 related to the 6/1/04 Order in 03-869, plus most items in the 11/12/2008 Order in 03-869. Requirements from 12/3/2008 should stay in place.)

with the DOC proposal, and is what staff is attempting to address in this docket.

This appears to be consistent with the DOC proposal.

DOC proposal is specific and contains actionable recommendations that would streamline reporting while still providing valuable information to the Department and Commission.

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Staff notes that the Departments February 25, 2013 proposal appears to be consistent with most of the comments of other parties. Most notable is that the proposal would eliminate many of the reporting requirements retained from the Commissions June 1, 2004 Order in Docket 03-869, which was issued prior to the establishment of and reliance on M-RETS. Attachment 1 shows how the biennial reporting requirements would change in light of the DOC proposal. Staff supports the DOC proposal. Staff offers three additional options to add to the reporting requirement. First, the RES statute requires the Commission to investigate compliance with the RES so the Commission must ensure it has received the right information to verify that compliance. The statutes requirement for utilities to provide their plans, activities and progress in meeting the RES suggests a forward-looking component of a utility report (as well as a forward-looking component of Commission review).13 However, the statutory requirement to provide plans, activities, and progress is general; some clarification on what type of information constitutes plans, activities, and progress would benefit parties and the Commission. Staff found MRESs table at page 5 of its report helpful to quantify compliance status going forward. MRES Table Quantifying Projected RES Compliance

Table 8f Projected MN sales Year 2012 2013 2014 2015 (MWh) 1,274,887 1,390,611 1,417,035 1,443,081 RES 12.00% 12.00% 12.00% 12.00% Projected RES Needs (MWh) 152,986 166,873 170,044 173,170 Projected *Resources (MWh) 414,857 416,874 404,667 388,991 Projected Surplus/Deficit (MWh) 261,871 250,000 234,622 215,821

*Current year generation from Worthington, Marshall, Odin, Rugby and Hancock Wind projects
plus eligible inventoried REC's from previous years

In addition, staff found it helpful when utilities stated in their reports what year they were in compliance through with their existing renewable portfolio. Many utilities already provided this information in their reports. Staff also recommends that unbundled REC pricing data be provided in the biennial reports. Staff supports adoption of the Departments recommended changes to the reporting requirements and the three additional items staff recommends here. In short, the effect of the revised reporting requirements would be to: 1) eliminate the ordering paragraphs that require long narratives of general efforts to comply; 2) place more focus on the REC retirement data and a small amount of data that projects going forward compliance; 3) emphasize a shorter but more focused narrative on efforts to comply.
13

Minn. Stat. 216B.1691, subd. 3(a).

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Another reporting requirement which the Commission may choose to retain, given concerns over the cost of renewable compliance (which will be discussed in more detail later in these briefing papers), is a modified version of Ordering paragraph (H.2 from 6/1/04 order, page 21), which could instead require utilities to file the following in their biennial reports: Demonstrated reasonable efforts to adequately protect against undesirable economic impacts on ratepayers, including, but not necessarily limited to keeping the customers bills and the utilitys rates as low as practicable, given regulatory and other constraints. Staff observes that while the existence of MRETS has eliminated or reduced the need for many of the previously-established reporting requirements, MRETS does not have data on the effect of the RES on utilities bills, so retaining this reporting requirement is not duplicative. To revisit the original purpose of these biennial RES reports: The Commission is required by statute to investigate compliance with the RES; Utilities are required to file reports with the Commission every two years on their compliance with the RES; The Department is required by statute to file a report with the legislature every two years on utility compliance with the RES, so as to avoid duplication of reporting, the Commission established its biennial process to coincide with the timing of the Departments review; This review cannot be delegated to resource plans, because only 9 of the 16 utilities subject to the RES file traditional IRPs, and IRPs do not necessarily occur every two years; There is an advantage to the Commission and stakeholders to be able to review each of the 16 utilities compliance in a single generic docket.

Reviews of renewable resources will also be reviewed in resource plans simply as a function of resource plans. In addition, because the RES statute establishes a percentage of renewable energy that must be procured each year (through the retirement of RECs), each of the 16 utilities already file a brief report showing that they have retired the proper number of RECs for the preceding calendar year.14 Staff believes that both Commission and Department staff are sensitive to utilities concerns over reporting requirements and have attempted to compile reporting requirements that meet the Commission and Departments statutory duties but are not overly burdensome to the utilities. Staff observes that it is still necessary to outline what should be in the biennial reports for consistency and certainty since the renewable energy statute only identifies very generally what topics should be in reports and utilities have asked the Commission to make this clarification. Staff estimates that if Attachment 1 is adopted, duplication will be reduced or eliminated and more certainty would be introduced into the reporting requirements. Staff notes that the suggested edits to the reporting requirements changes the list of reporting requirements from 3 pages to 1 pages.

14

Minn. Stat. 216B.1691, subd. 7. Because the RES is based on the percentage of retail sales for a calendar year, the year must first end before a utility can calculate its MWh for Minnesota, and then determine how many RECs it must retire. May 1 is the retirement date set by the Commission, and is based on the fact that utilities want to confirm the retail sales for the preceding calendar year.

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Finally, in the Commissions past two biennial RES compliance proceedings, the Commission has generally made findings of compliance on the past two years plus a finding that for the next two years, utilities appear to have plans to comply with the RES. Staff recommends that this practice continue as it makes clear the result of the biennial compliance process. Large Power Intervenor and Chamber Request Regarding Cost Impact of RES The Large Power Intervenors and the Chamber (Joint Business Intervenors, or JBI) filed comments on March 6, 2013, within the reply comment period established by the Commission. JBI noted that on October 25, 2011, the sixteen utilities submitted reports in compliance with new legislation, Minn. Stat. 216B.1691, subd. 2e, requiring information on the cost impact of the RES. The matter was assigned Docket No. 11-852 (852 docket). The Commission did not establish a comment period in the 852 docket to offer input on the utilities reports and has not scheduled a hearing on JBIs request to have additional analysis of those reports. JBI proposed that RES cost impact analysis could as an alternative be incorporated into the Commissions biennial docket. JBI also specifically proposed the following analysis: Increasing amounts of wind resources in a utilitys generation portfolio has the inevitable impact of introducing more volatility and risk, which needs to be discussed and monetized in the utilities reply comments to more realistically estimate the impact of activities to meet RES; With respect to the historical analysis, utilities should calculate actual costs by comparing the savings from the wholesale market (derived by summing the product of hourly output and hourly market prices) against amounts recovered for activities to comply with RES (e.g., amounts are recovered in the RES rider and transmission cost recovery rider, as well as cycling costs included in O&M for existing resources); With respect to the future analysis, utilities should address the limitations of the current modeling software via the following analyses: Use alternative models that include power flow as a supplement to address the issue of curtailment and capture costs of additional transmission infrastructure; Use chronological models to accommodate wind variability more accurately and conduct sensitivity analysis to identify the variance of wind generation; Exclude unrealistic assumptions, such as a non-existent carbon price adder, from any model; and Monetize fuel price variability risk.

JBI also noted that this supplemental analysis could be required in the 852 docket, or the biennial REORES docket, stating: There, utilities are required to include in their reports a discussion of any obstacles encountered or anticipated in meeting RES. Cost could be such an obstacle, which is the focus of the RES Impact Analysis Docket and is listed as the first justification for modifying or delaying RES in another part of the RES statute.[footnote omitted] Other

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obstacles may include some of those listed above by JBI wind variability, price variability, etc. In either case, combining review could streamline the reporting process on two very related issues compliance with RES and the cost of complying with RES. So although the RES impact analysis is technically limited to occur during resource planning, JBI believes it would be reasonable (and probably more efficient from an administrative perspective) for the Commission to read the RES statute as a whole to allow the RES impact analysis to be addressed in the REO/RES Docket.15 Staff Comment: JBI Proposal on Cost Impact Staff agrees with JBI that from an administrative point of view, cost impact of the RES could be analyzed in the biennial docket. The RES cost impact legislation passed in 2011 required all 16 utilities to file initial cost impact information, with updates in resource plansbut as noted previously, only half of the utilities subject to the RES file resource plans. In contrast, the Commission has always expected some level of ratepayer impact information in the biennial RES reports, which applies to all 16 utilities. In fact, the Commission has specified in two separate Orders, both of which are still in effect, that cost impact information should be filed in the biennial filings: in the Commissions June 1, 2004 Order in Docket 03869 setting up what utilities should report on in terms of compliance with the REO, the Commission included ratepayer impact as one of the topics. And again in March 2010, the Commission reiterated in another Order in 03-869, issued March 19, 2010, that it would use certain general methods to track the rate and reliability effects of the REO and RES.16 As JBI notes, cost could be an obstacle to meeting the RES. Utilities filed their cost impact reports as required by the new legislation, in October 2011 in Docket 11852 and have updated that information in resource plans. It does not appear that the 2011 legislation designated resource plans as the exclusive venue for RES cost impact information. The most practical reading of the legislation and the Orders together is that since resource plans are forward-looking documents, the RES cost impact information filed in those dockets would be forward-looking and subject to the thorough individualized review familiar to resource plans, while historical or current cost information could be filed in the biennial filings.17 Not only has JBI requested that ratepayer impact information be filed in biennial reports, but it also recommends the specific type of analysis that should be performed. As SMMPA noted in its biennial report, there are advantages and disadvantages to different methods: using the wholesale market as a comparison may provide accuracy on immediate rate impact, but only for short periods of time, not over the life of the renewable facility, while using a forward looking approach may provide a look over the life of the facility but may result in some inaccuracies since going forward costs are an estimate of what will happen in the future. There is likely not one single method that will capture all of the information the

15 16

JBI 3-6-2013 comments, page 4 (pages not numbered). At ordering paragraph 8 of that same order, the Commission stated it favors forward-looking, long term cost information when analyzing the rate impact of future compliance with the RES. At Ordering Paragraph 9, the Commission clarified that stakeholders could request cost information relating to the RES in resource plans. 17 Staff offers this solution as a procedural solution and has not estimated the resources needed for review of this information. In addition, staff defers to the Commission to the extent that this is a policy decision.

Staff Briefing Papers for Docket # E999/M-12-958 on May 9, 2013

Page 16

Commission and stakeholders would need to determine the cost impact of the RES and determining the right way to gauge the RES impact would likely be the subject of thorough debate. Because JBI raised this issue during the reply comment period, no one has commented on JBIs proposal in this docket. Although staff has the authority to issue Notices, staff seeks guidance from the Commission on whether to issue an additional Notice Seeking Comments on this topic. Staff also notes that the Commission could issue a decision on utility compliance with the RES for the years in question and then continue to pursue JBIs proposal through additional comments. Legislation is pending that would require the Commission to establish standards for determining RES cost impact; the Commission may choose to monitor whether this legislation passes before soliciting additional input at this time. Decision Options I. Requirement to File Report A. Find that Dairyland Power Cooperative, Interstate Power and Light, Missouri River Energy Services, East River Electric Power Cooperative Inc, Heartland Consumers Power District, Central Minnesota Municipal Power Agency, Otter Tail Power Company, Southern Minnesota Municipal Power Agency, Xcel Energy, Basin Electric Power Cooperative, L& O Power Cooperative, Great River Energy, Northwestern Wisconsin Electric, Minnkota Power Cooperative, Minnesota Power, and Minnesota Municipal Power Agency have complied with the requirement of Minn. Stat. 216B.1691 subd. 3(a) by reporting on their plans, activities, and progress with regard to REO-RES. OR; B. Make some other finding. Compliance with the 2010 and 2011 renewable energy objectives A. Find that the 16 utilities enumerated above and subject to Minn. Stat. 216B.1691 have complied with the 2010 and 2011 objectives of seven percent. OR; B. Make some other finding. Future Compliance A. Find that the 16 utilities subject to Minn. Stat. 216B.1691 have submitted what appear to be reasonable plans to meet the renewable energy standards for 2012-2014. This finding does not imply that particular generation projects are counted under the REORES statute, but is a general finding that the plans filed by the companies demonstrate planned compliance, subject to confirmation of individual project eligibility through normal regulatory processes. OR; B. Make some other finding. Streamline Reporting Requirements A. Adopt the Departments February 25, 2013 recommendation to streamline reporting requirements, as reflected on Attachment 1. B. Adopt the Departments February 25, 2013 recommendation to streamline reporting requirements as reflected on Attachment 1, modified to require: i. the year through which the utility can maintain compliance with its current renewable portfolio, and ii. a chart showing projected compliance for the current year plus three (3) upcoming years, which projected Minnesota sales in MWh, the RES percentages for those years, projected RES needs, projected resources in

II.

III.

IV.

Staff Briefing Papers for Docket # E999/M-12-958 on May 9, 2013

Page 17

V.

MWh (or RECs), and projected surplus or deficit in MWh. (Staff Recommendation) iii. Any unbundled REC sales or purchases for the two preceding calendar years, including the number of RECs sold or purchased and the price paid for the RECs. (Staff recommendation) C. Retain a modified version of Ordering paragraph H.2 from the Commissions June 1, 2004 Order in Docket 03-869, also reflected on Attachment 1. (Staff alternative drafted to reflect JBI interest in ratepayer impact information in biennial compliance dockets) Additional Review of Ratepayer Impact of RES A. Direct staff to issue a Notice seeking comments on the issues raised by the Joint Business Intervenors in their March 6, 2013 reply comments after the legislative session has ended, if no legislation is passed requiring the Commission to establish criteria or standards on the cost impact of the RES. (Staff note: if legislation is passed requiring the Commission to establish standards, the Commissions standard practice is to issue a Notice as a response to the legislation.) B. Take other action.

Staff Recommendation Staff recommends adopting Decision Option I.A, II.A, III.A, and IV.B.

Attachment 1, Docket E999/M-12-958

Edited Version of Current Reporting Requirements and New Proposed Requirements

Department edits in black Staff suggested edits in red Staff interpretation of JBI recommendation in blue June 1, 2004 REO Reporting Requirements (Ordering Paragraph 11: footnotes omitted) 11. In their biennial filings demonstrating compliance with the renewable energy objectives, utilities shall address the following two sets of criteria, which the Commission will use in evaluating their compliance with the "good faith efforts" standard set by statute: A. Demonstrated commitment to a specific plan. Each utility must file a plan that reasonably details the steps to be taken to reach the renewable energy objectives, with an accompanying timetable. B. Demonstrated financial commitments to build facilities or to purchase energy to meet the renewable energy objective, including but not limited to project financing; purchase and ordering of equipment; and expenditures to hire construction firms if needed. C. Demonstrated commitments to construction of physical infrastructure to meet the renewable energy objectives, including but not limited to ordering equipment; hiring construction firms; and/or contracting for a Renewable energy objectives site. D. Demonstrated legal and contractual commitments to purchase or build the facilities to meet the renewable energy objectives, including but not limited to contracts for sites on which to build; contracts for labor and equipment; arrangements for insurance and liability etc. E. Demonstrated commitment to meet regulatory requirements in timely fashion,

including but not limited to federal, state, county, township and municipal permitting and any other regulatory obligations, such as filed plans for facility construction in the Commissions biennial transmission planning process under Minn. Stat. 216B.2425. F. Demonstrated commitment to transmission access for the renewable energy objectives facilities, including but not limited to initiation or participation in transmission studies or provision of interconnection and transmission service for these facilities. G. Demonstrated commitment to openness and transparency. This requires full public access to all non-proprietary information relating to meeting the renewable energy objectives, including but not limited to actions taken for financial commitments; construction of physical infrastructure; legal and contractual commitments; compliance with regulatory requirements; and transmission access. H. Demonstrated reasonable efforts to adequately consider technical feasibility and to protect against undesirable impacts on system reliability and undesirable economic impacts on ratepayers, including, but not necessarily limited to, the following factors: 1. Maintaining or improving the adequacy and reliability of utility service. 2. Keeping the customers bills and the utilitys rates as low as practicable, given regulatory and other constraints. 3. Minimizing adverse socioeconomic effects and adverse effects upon the natural environment. 4. Enhancing the utilitys ability to respond to changes in the financial, social, and technological factors affecting its operations. 5. Limiting the risk of adverse effects on the utility and its customers from financial, social, and technological factors that the utility cannot control.

Relevant Ordering Paragraphs from November 12, 2008 Order in 03-869 2. The Commission clarifies that each utility subject to Minn. Stat. 216B.1691 must file its own individual biennial compliance report. 3. Northwestern Wisconsin Electric Company shall comply with the reporting requirements of Minn. Stat. 216B.1691. Northwestern Wisconsin Electric Company shall file the information it has supplied to the Minnesota Office of Energy Security under the time lines set forth herein and shall file its biennial compliance filing under the time lines set forth herein. At its discretion, the company may file the renewable energy compliance information it has provided to the Wisconsin Public Service Commission as the biennial compliance report required under this order. 7. Beginning with the next biennial reporting cycle, utilities shall file their biennial compliance reports at the same time they file their biennial reports with the Minnesota Office of Energy Security, but in no case later than November 15 June 1 in even numbered years of the year in which those reports are due. These reports shall be filed as miscellaneous tariff filings under the Commissions rules of practice and procedure. 8. Biennial compliance reports shall contain at least all of the information set forth below: a. the information required under the order issued in this case on June 1, 2004; b. all information submitted to the Office of Energy Security for use in preparing its biennial legislative report; c. total Minnesota retail sales in megawatt hours for each year relevant to compliance; d. an accounting of all renewable energy being provided by a utilitys own generating facilities and being provided through purchase power agreements; e. an accounting of what portion, if any, of the renewable energy identified in part d has been allocated to meet the renewable energy requirements of other states or the requirements of green pricing programs; f. historical compliance information and plans for ensuring ongoing and future compliance; g. a description of whether and how the transmission service queue maintained by the Midwest Independent Transmission System Operator is or may be a factor affecting compliance. 9. Biennial compliance reports shall be clearly labeled, and preferably labeled REO-RES Compliance Report. 10. Biennial compliance reports shall include sections addressing the four categories of information required by statute: a. the status of the utilitys renewable energy mix relative to the objective and standards;

b. efforts taken to meet the objective and standards; c. any obstacles encountered or anticipated in meeting the objective or standards; and d. potential solutions to the obstacles. Utilities shall also include in their reports: Any other State Renewable Standards or Objectives to which the utility is subject; Any renewable generation facilities expected to become operational during the upcoming year, the type of facility, and the capacity and capacity factor of each facility; Through what year the utility is in compliance with the Minnesota RES given its current renewable portfolio; A table showing projected compliance for the current year plus the next three years showing the utilitys projected Minnesota sales in MWh, the RES percentages for those four years, the projected RES needs in MWh for those years, projected resources in MWh, and projected surplus or deficit in MWh;1 and Any unbundled REC sales or purchases for the two preceding calendar years, including the number of RECs sold or purchased and the price paid for the RECs.

See Table 8f at page 5 of MRESs biennial compliance report in this docket for an example.

Attachment 1, continued Clean Version of Department Revised Reporting Requirements (Re-ordered for clarity and organization only) 1. The Commission clarifies that each utility subject to Minn. Stat. 216B.1691 must file its own individual biennial compliance report. 2. Northwestern Wisconsin Electric Company shall comply with the reporting requirements of Minn. Stat. 216B.1691. Northwestern Wisconsin Electric Company shall file the information it has supplied to the Minnesota Office of Energy Security under the time lines set forth herein and shall file its biennial compliance filing under the time lines set forth herein. At its discretion, the company may file the renewable energy compliance information it has provided to the Wisconsin Public Service Commission as the biennial compliance report required under this order. 3. Beginning with the next biennial reporting cycle, utilities shall file their biennial compliance reports at the same time they file their biennial reports with the Minnesota Office of Energy Security, but in no case later than June 1 in even numbered years. These reports shall be filed as miscellaneous tariff filings under the Commissions rules of practice and procedure. 4. Biennial compliance reports shall be clearly labeled, and preferably labeled REO-RES Compliance Report. 5. Biennial compliance reports shall contain at least all of the information set forth below: a. total Minnesota retail sales in megawatt hours for each year relevant to compliance; b. an accounting of what portion, if any, of the renewable energy identified in part d has been allocated to meet the renewable energy requirements of other states or the requirements of green pricing programs; c. Biennial compliance reports shall include sections addressing the four categories of information required by statute: a. the status of the utilitys renewable energy mix relative to the objective and standards; b. efforts taken to meet the objective and standards; c. any obstacles encountered or anticipated in meeting the objective or standards; and d. potential solutions to the obstacles. d. Utilities shall also include in their reports: i. Any other State Renewable Standards or Objectives to which the utility is subject; ii. Any renewable generation facilities expected to become operational during the upcoming year, the type of facility, and the capacity and capacity factor of each facility;

iii. Through what year the utility is in compliance with the Minnesota RES given its current renewable portfolio; (staff recommended addition) iv. A table showing projected compliance for the current year plus the next three years showing the utilitys projected Minnesota sales in MWh, the RES percentages for those four years, the projected RES needs in MWh for those years, projected resources in MWh, and projected surplus or deficit in MWh;2 (staff recommended addition) v. Any unbundled REC sales or purchases for the two preceding calendar years, including the number of RECs sold or purchased and the price paid for the RECs; (staff recommended addition) vi. Demonstrated reasonable efforts to adequately protect against undesirable economic impacts on ratepayers, including, but not necessarily limited to keeping the customers bills and the utilitys rates as low as practicable, given regulatory and other constraints. (Addition based on JBI comments)

See Table 8f at page 5 of MRESs biennial compliance report in this docket for an example.

Attachment 2
Department Comments in Dockets 11-189 and 12-334
REC

Retirement Dockets

85 7th Ptace East, Suite 500

5t. Paut, Minnesota 55101-2198

www.commerce,state.mn.us

657.296.4026 F^x 651.297.7959 An equal opportunity emptoyer

October 10,201I

Burl W. Haar
Executive Secretary Minnesota Public Utilities Commission l2l Seventh Place East, Suite 350 St. Paul, Minnesota 55101

RE:

Docket No. E999R-l l-189

Dear Dr. Haar: On April I l, 201I the Minnesota Public Utilities Conrmission (Cornmission) issued a Notice of Renewable Energy Certificate (REC) Retirement Process and Cornpliance Report for 20l0. The Notice required entities subject to Minn. Stat. $2168.1691 (RES Statute) to file a rcport detailing their compliance with the RES Statute by June l,20ll. For 2010, Minn. Stat. $2168.1691, subcl.2 requires utilities other than Xcel Energy to make a gooclfaith effort to obtain at least seven percent of their Minnesota retail sales frorn renewable energy sources. Minn. Stat. $2168.1691, Subcl. 2 (b) requircs Xcel Energy to obtain l5 percent of its retail sales from renewable energy sources. The Comnissior.r's Decernber 3, 2008 Orcler in Docket No. E999|CI-04-16rc1 and November 12,2008 Order in Docket No. E999|CI-03-869 set forth aclclitional reporting requirements for RES compliance.

Utilities have filed their 2010 compliance reports. The Minnesota Departrnent of Commerce (DOC) rcviewed these filings and verifed that utilities have compliecl with the 2010 RES requirernent. Attached to this letter is a Table summarizing each utility's compliance.
The DOC is available to answer any questons the Cornmission may have. Sincerely,

/s/ SUSAN L. PEIRCE

Rate Analyst

sLP/jr
Attachment

In the Matter of a Commission Investigation into a Multi-State Tracking and Tlacling System fol Renewable Energy Credits, Third Order Detailing Criteria and Standards for Deterrnining Cornpliance under Minn. Stat. $2 I 68. l69l and Setting Procedures for Retiring Renewable Eneryy Credits, Decernber 3, 2008 , Docket No.

E999tct-04-t616. In the Matter of Detailing Criteria and Standards fol Measuring an Electlic Utility's Good Faith Effolts in Meering the Renewable Energy Objectives under Minn. Stat. $2168.1691, Ordel Setting Filing Requirements and Clarif,ying
P'ocedures, November 12, 2008, Docket No. E999/CI-03-869.

SUMMARY OF 2OIO MINNBSOTA RBS COMPLIANCB

2010 MN RBS

Retail Sales

lMWhs)
Basin Electric

Requirement (7o)
77o 77o
7Vo 7Vo 7Vo 7Vo 7Vo 7Vo

RBS Req.

(MWhs)
33,204 22.419
55.954

RECs Retired (MWhs)

33,205 22,420 55,954 22.713
750,861 46.015

CMMPA Dairvland Power East River Electric GRE Heartland Interstate Power L&0 Power Minnesota Power Minnkota MMPA Missouri River Energy
NW Wisconsin * Otter Tail Power SMMPA Xcel Enersv Total
Services

474,338 320.275 799,339

324,157

22,691
750.857

10.726.524 657,345
851,731

46,014

s9.62t
17.200 673,186 106.874 94,942 76,643
39

59,678
17.201

245,718 9-616.945
1.526.772 1.356.3r 1

77o
7
%

673,186

7Vo

l,og4,9ol
5s2
2.108.349 2.925.587 31.877.522

77o
7Vo

t06.874 94.942 76,644

77o 77o 157o

147.584 204.761 4.781.628

7.093-647

147.584
204.792

4.78t.629
7.093.698

64.906.366

'FThe Cornrnission's Novcnrbcr 12, 2008 Orcler in Dockct No. 8999/CI-03-869 allows Northwcst Wisconsin to subnlit a copy of its Wisconsin conrpliance report to clenronstrate its conrpliance with the Minnesota RES.

division of

B5 7th Place East, Suite 500, St. Paul,

MN 5f

01-2198

main: 651.296.4026 tty: 651.296.2860

fax
Minnesota Departmenl of Gommerce

651.297.7891

www.energy.mn.gov

December 20,2012

BurlW. Haar
Executive Secretary Minnesota Public Utilities Commission l2l7th Place East, Suite 350
St. Paul, Minnesota 55101-2147

RE: Comments of the Minnesota Department of Commerce, Division of Energy

Docket No. 8999/PR- 12-334
Dear Dr. Haar:

Resources

April 10,2012 the Minnesota Public Utilities Commission (Cornrnission) issued a Notice of Renewable Energy Certificate (REC) Retirernent Process ancl Cornpliance Report for 201 l. The Notice requirecl entities subject to Minn. Stat. $2 l68. 169 I (RES Statute) to file by Jr"rne I ,2012 a report cletailing their cornpliance with the IES Statute for the year 201 l.
On

Minn. Stat. $2168. 169 I , subcl. 2 requires utilities other than Xcel Energy to make a goocl faith effort to obtain at least 7 percent of their Minnesota rctail sales fi'om renewable energy sources by the end of 2010, while Minn. Stat. $2168.1691, Subcl.2 (b) requires XcelEnergy to obtain l5 percent of its retail sales frorn renewable energy sources by the end of 2010. I In the Commission's March 19,2010 Orcler in Docket No.8999/CI-03-869, the Commission clarifiecl that the RES stanclarcl is to be applied in every year going forward until the standarcl changed. Consequently, the RES standarclfor20l I is l5 percert forXcel and 7 percent forallother utilities. The Commission's December 3,2008 Order in Docket No. 8999/CI-04-16162 and Novernber 12,2008 Orcler in Docket No. 8999/CI-03-869 set f'orth additional reporting requirements for RES cornpliance.

I These anounts increase to I 2 perccnt ancl I 8 perrent, respectively, lor thcse entitics tor the 20 I 2 cornpliancc year. In the Matter of a Cornrnission Investigation into a Multi-State Tracking ancl Tracling System f'or Renewable Energy Credits, Third Ordcr Detailing Criteria ancl Stanclalds for Deternlinirrg Cornpliancc under Minu. Stat.
2

$2168.1691 andScttingPlocedureslorRctilingRencwableEnergyCreclits,Decernber3,2003,DockerNo. E999tCt-04-t6t6. In thc Matter of Detailing Clitelia and Standards fol Measuring an Electlic Utility's Good Faith Efforts in Meeting
the Renewable Energy Objectives under Minn. Stat. $2168.169 Plocedures, November 12, 2008, Docket No. E999/CI-03-869.

l,

Orcler Sctting Filing Requirenents and Clarifyirrg

BurlW.
Page2

Haar December 20,2012

The following utilities have filed their 201

I compliance rcports:

o o o o o o . o o o o o o r . o

Basin Electric Cooperative (Basin), Central Minnesota Municipal Power Agency (CMMPA), Dairyland Power Cooperative, East River Electric Power Cooperative (East River), Great River Energy (GRE), Heartland Consumers Power District, Interstate Power and Light (IPL), L&O Power Cooperative, Minnesota Municipal Power Agency (MMPA), Minnesota Power (MP), Minnkota Power Cooperative,

Missouri River Energy Services, Northern States Power. d/b/a Xcel Energy (Xcel), Northwestern Wisconsin Electric Company. Otter Tail Power Company (OTP), and Southern Minnesota Municipal Power Agency (SMMPA).

The Minnesota Department of Commerce, Division of Energy Resources (DOC) reviewecl these filings ancl verified that utilities have complied with the 201I RES requircment. Attached to this letter is a table and brief narrative summarizing each utility's compliance with the RES Statute. The DOC is available to answer any questions the Commission may have. Sincerely,

/s/ SUSAN L. PEIRCE Rate Analyst

sLP/jl
Attachment

Summary of 2011 Minnesota RES Compliance through Retirement of Renewable Energy Credits (RBCs)
2011

MN

RES

RBS Req.

Retail Sales (MWhs)

Basin Electric
568,250

Requirement
(7o)
7
o/o

(MWhs)
39,777

RBCs Retired (MWhs)

39,777

Above/(Below) RBS Reouirement

0 0
3

CMMPA Dairyland Power East River

Electric

319,698 787.874 334,034

10,597,425

Jo/o

22.379

22.379
55, l 54

7lo
7o/o 7o/o 7o/o

55,t5r
23,382 741.820
45.837
59,277

GRE**
Heartland
Interstte Power

6s4.818
846,818

23,403 749.410 4s,838

s9,277 16.876
709, I 68

2t
7.590
0 0 0
0

7Vo 77o
7o/o

L&O Power
Minnesota Power Minnkota

241.073
10,130,969 1,542,022 1,382,808 1,226,901

16,875
709, I 68 107,942

77o
7
o/o

MMPA Missotri River Enersv Services NW Wisconsin'i' Otter Tail Power SMMPA Xcel Enersv

96.791 85,883
32 t46.01 3

107,942 96.191 85,884

146,0

7 o/o 7 o/o 7 o/o 7

o/o

0 -32
0

450 2.08s.902 2.929.414 31,788,268

65.436.274

t3

20s,058

205,059
4,768,241

l5o/o

4,768,240 7,123,601

Total

7,131,218

'rThe Commission's November 12,2008 Order in Docket No.8999/CI-03-869 allows Northwest Wisconsin to submit a copy of its Wisconsin compliance report to clemonstrate its compliance with the Minnesota RES. On May 8,2012, Northwest Wisconsin submitted its Wisconsin Renewable Portfolio Standard (RPS) compliance information inclicating that it retired24,084 RECs or 14.48 percent of its Wisconsin sales.

*xln its Compliance Report, GRE indicated that it rctired 22,626 RECs associated with wholesale sales by two of its menbers, Connexus ancl Lake Country Power. In each case, Connexus and Lake Country Power resold the renewable energy to another distribution cooperative. In addition, GRE stated that it hacl wholesale sales to Willmar Municipal Utilities under a Participation Power agreement for which it clid not retire RECs. GRE inclicated that the sale to Willmar was not part of an all-r'equirernents contract and, consequently, GRE does not believe it is required to retire RECs for its sales to Willmar. GRE's sales to Willmar would require the retirement of an additional 15,040 RECs.
The Departrnent has reviewed GRE's comments ancl believes that GRE is not required by Minn. Stat. $2168.l69l to retire RECs related to the wholesale sales by Connexus and Lake Country, but is required to retire RECs related to its sales to Willmar. Minn. Stat. $2168.1691, Subd. 2a(a) states:

Each electric utility shall generate or procure sufficient electricity generated by an eligible energy technology to provicle its retail consurners, or the retail custolners of a clistribution utility to which the electric utility provicles wholesale electric service, so that at

least the following stanclard percentages of the electric utility's total retail electric sales tcl retail customers in Minnesota are generated by eligible energy technologies by the end of the year
inclicated... In the case of GRE's sales to Connexus ancl Lake Country Power, the Cooperative correctly retired RECs for its wholesale sales associatecl with the retail sales of these two distribution cooperatives. However, in adclition, GIE retired IECs associatecl with wholesale sales rnade by each cooperative to other clistribution cooperatives. The statute states that the RES obligation only applies to the "retail customers of a distribution utility to which the electric utility provides wholesale electric service". Consequently, the Department conclucles that the RES statute does not require GRE to retire RECs for the wholesale sales macle by Connexus ancl Lake Country
Power.

The Department also would distinguish GRE's wholesale sales to Connexus ancl Lake Country Power fiom Basin Electric Cooperative's wholesale sales to East River Cooperative ancl L&O Power. Uncler Minn. Stat. $2168.1691 Subcl. I (b), an electric utility is definecl as "er public utility provicling electric service, a generation ancl transnission cooperative electric association, a rnunicipal power agency, or a power clistrict." Iloth East River ancl L&O Power are wholesale power supply cooperatives serving other clistribution cooperatives, ancl consecuently meet the clefinition of an electric utility subject to the RES requirement. In contrast, Connexus and Lake Countly Power are distributiou cooperatives, ancl thus are not subject to the RES requirements. In the case of GRE's wholesale sales to Willmar, Willmar is a municipal utility serving retail cLlstome. Consequently, GRE's wholesale sales nleet the clefinition of "the retail custorners of a clistribution utility to which the electric utility provides wholesale electric service". The Department conclncles that the net irnpact of CRE's REC retircment associatecl with the two wholesale transactions is that it retirecl 7,586 more RECs than requirecl (22,626 retired for Connexus/Lake Country - 15,040 not retirecl for Willrnar) , ancl is therefbre in compliance with its RES recuirernents.

/Jl

Attachment 3, Docket E999/M-12-958

PUBLIC VERSION REC Sales and Price

Utility Minnkota Northwestern Wisconsin Electric Company

Interstate Power and Light Otter Tail Power Company SMMPA

REC Sales or Purchases 2010: 1,092,896 sold 2011: 1,155,000 sold All RECs acquired have been part of a wholesale power agreement in which the RECs came as part of the total energy purchased. 24,000 purchased Trade Secret 3 purchases of RECs; no sales.

Price Not disclosed N/A

MMPA L&O CMMPA Great River Energy Xcel

Minnesota Power

Dairyland Power Cooperative

Missouri River Energy Services East River Electric Power Cooperative, Inc. Basin Electric Power Cooperative Heartland Consumers Power District
1

[TRADE SECRET DATA EXCISED] Purchased 46 RECs [TRADE SECRET DATA EXCISED] Purchased [TRADE SECRET DATA EXCISED] No RECs purchased in 2011 for MN RES compliance. No RECs allocated to Minnesota have been sold. Has not bought or sold any MRETS RECs from September 2010 to the present. DPC has entered into some forward renewable certificate sales contracts and intends to account for the sale in the years the certificates are physically transferred to the purchaser. No purchases or sales at the wholesale level. 32 RECs purchased in 2010 and 83 RECs purchased in 2011 for resale to member distribution systems Since September 2010 3,378,492 RECs were sold to non Basin Electric members Not provided

[TRADE SECRET DATA EXCISED] [TRADE SECRET DATA EXCISED] $.10/REC-$.225/REC (none have been retired for MN RES)1 [TRADE SECRET DATA EXCISED] Not provided. [TRADE SECRET DATA EXCISED] [TRADE SECRET DATA EXCISED] Not provided

N/A

N/A

N/A Not provided; East River considers sale/purchase prices to be confidential. Not provided; Basin considers sale prices to be confidential. Not provided

Filed in Docket E999/PR-12-334, May 31, 2012.