5.5 ERMUSR 04-12-2011 - Laserfiche WebLink

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~riv~~ WAPA and the RES Background The 2007 `Next Generation Act" established a renewable energy standard (RES) that requires investor-owned utilities, generation & transmission (G&T) cooperatives and municipal power agencies to produce electricity from renewable resources in the following percentages: 7 percent by 2010, 12 percent by 2012, 17 percent by 2016, 20 percent by 2020, and 25 percent by 2025. The Minnesota Office of Energy Security (OES) has allowed the reduction of total retail sales used to calculate the RES requirement for wholesale systems by the amount of power sold directly to distribution municipal utilities by the Western Area Power Administration (WAPA). This reduction is based on the concept that hydropower provided by WAPA already met the renewable requirement and the power is sold separately, before the agency provides supplemental power. The Northern Municipal Power Agency (NMPA) is comprised of ten Minnesota municipal utilities and two North Dakota municipal utilitiee. Some years ago NMPA entered into an agreement to pool resources for rate making purposes with Minnkota Power Cooperative, a G&T cooperative serving rural electric cooperatives in both Minnesota and North Dakota. This "Joint System" agreement provides that the municipal utility members of NMPA and the cooperative members of Minnkota also contribute their WAPA allocations to the combined system pool of resources. Staff of the OES has taken the position that the renewable energy requirement of the joint system could not be reduced by the amount of the WAPA allocation to its members because the allocation was pooled. This interpretation, which disallows the WAPA allocation reduction because it was pooled, unfairly penalizes one group of WAPA customers. Aggregated WAPA allocations should carry the same weight in Position Statement establishing RES retail sales levels for a municipal power agency or a G&T cooperative as allocations given to individual distribution utility members. Legislative Action Bills have been introduced in both houses of the Minnesota Legislature that clarify the RES law. HF 220 (Rep. David Hancock, R-Bemidji) and SF 113 (Sen. John Carlson, R•Bemidji) allow wholesale power euppliers to use aggregated WAPA allocations for the purpose of establishing total retail sales under the RES mandate. MMUA Position MMUA supports the passage of HF 220/SF113. The electricity allocation from WAPA, however it is ultimately distributed, is still a renewable resource originally allocated to municipal members of NMPA and cooperative members of Minnkota, and should be included in the process of establishing the retail sales level for RES compliance. 8 / 2071 State Position Statements