Federal and State Updates — CEO Column November 2019

Daniel Carlisle

Numerous proposals are making their way through the House and Senate in  Washington, D.C. that have the potential to impact Minnesota electric cooperatives. I have been monitoring these and other legislative actions. The following is a summary of a few of these issues.

Section 48A Tax Credits
In 2005, Congress established the Section 48A investment tax credit to support highly efficient new and existing coal-based generation technologies. This bill was modified in 2008 and the requirements to be eligible for carbon capture and sequester projects were greatly changed. Cooperatives are seeking a change to this language so as to incentivize carbon capture efforts on new and existing coal plants.

Affordable Clean Energy Rule (ACE)
On June 19, 2019, the EPA released its final rule to replace the 2015 Clean Power Plan. Cooperatives generally support this new ACE rule, which directs states to develop standards of performance for individual power plants by applying a prescribed list of technologies that constitute the Best System of Emission Reduction (BSER) and which also recognizes the investments cooperatives have already made in their facilities to reduce CO2 emissions.

Leech Lake Land Transfer–Role Protection
The Leech Lake Band of Ojibwe are pursuing a bill that would return approximately 11,760 acres of land in Cass County from the Chippewa National Forest Service back to the Leech Lake Band. This land was taken from members of the Leech Lake Band between 1948 through 1959. Cooperatives in Northern Minnesota have electric distribution lines on these lands and, on occasion, have had difficulty gaining adequate access to perform routine maintenance and vegetation management on these distribution systems. Cooperatives support the objective of this proposed legislation but seek amended language to ensure proper access to its distribution system for maintenance purposes.

In addition to the above federal actions, a multitude of state issues exist that we are monitoring.

Department of Labor and Industry–Wiring Affidavits
The State of Minnesota, though the Department of Labor and Industry, is interpreting a statute to require the payment of $36 and filing of a wiring affidavit by the cooperative when we upgrade load control receivers with new technology. This has the potential to cost Todd-Wadena Electric Cooperative members $198,000 in fees to be paid to the state. The impact of this statute statewide is roughly $9 million dollars in fees for Great River Energy Cooperatives. Cooperatives, who utilize master electricians to perform these upgrades/changeouts, believe statutory exemptions exist that excuse inspection and payment of this fee. Discussions with state Department of Labor and Industry officials are ongoing, but whether or not a compromise can be reached remains to be seen.

GRE Rate Formula
There are 28 electric cooperatives that are part of the Great River Energy (GRE) family that purchase all or a fixed amount of their wholesale power from GRE. GRE, in turn, is one of 51 transmission providers that belong to the Midcontinent Independent System Operators (MISO). MISO oversees and regulates access to the electric grid and pricing for electricity from Manitoba down to Louisiana. Heat, cold, grid congestion, and other factors have an impact on the price that GRE pays for wholesale electricity from MISO. This, in turn, also impacts the formulaic price that distribution cooperatives, like Todd-Wadena, pay for electricity. There is currently discussion and much analysis being done regarding the ways the formulaic price we are paying for electricity gets calculated. Specifically, the price components related to transmission charges (fees paid, in part, to use another utility company’s wires to deliver electricity through them) are being evaluated and proposals are being developed to update and change the applicable formulas. Todd-Wadena currently has the lowest charge per kW of all 28 co-ops in the GRE family. It is possible that this may change in the future. We are actively involved in this process and remain mindful of our obligation to provide safe, reliable, and affordable electricity to our members.

The future will undoubtedly bring new, and equally important, challenges to our cooperative. We will continue to do our best to stay abreast of these issues and to communicate with our members about them.

Daniel Carlisle