By Tom Steward | MN State News
ST. PAUL — Taxpayers already pay a high price to subsidize wind energy through billions in federal grants, loan guarantees and tax credits that prop up the “windustry”. Now the bill for state renewable energy mandates is coming due with hundreds of thousands of Minnesota electric co-op and utility customers picking up the tab.
Going green cost rural electric ratepayers in Minnesota more than $70 million last year, according to the Minnesota Rural Electric Association (MREA). The MREA represents about fifty mostly small, rural electric co-ops and utilities which serve more than 625,000 Minnesota homes and businesses.
“It’s an enormous subsidy. You have to add wind power, whether you need it or not,” said Mark Glaess, MREA executive director. “Right now we’re paying for wind we don’t need, we can’t use and can’t sell.”
The Renewable Energy Standard (RES) passed by the 2007 Minnesota State Legislature directs electric utilities to ramp up their percentage of renewable energy sales to 25 percent by 2025. Put another way, one of every four kilowatt hours must come from renewable energy by 2025. Unlike many other states, Minnesota does not exempt coops and municipal utilities from complying with renewable energy standards.To meet the state’s escalating demands, rural electric co-ops and utilities locked in long-term “take or pay” contracts to purchase power from wind farms.
The economic downturn, however, has led to a marked decline in energy demand and corresponding drop in energy prices. The sudden abundance of natural gas on the market put further downward pressure on energy prices.
The RES exists in a sort of price vacuum. No matter that coal-generated power costs considerably less than wind. Dozens of Minnesota co-ops are stuck with higher, pre-recession prices for surplus wind power which must be bought and distributed. The difference between what the wind power costs and what it resells for now adds up to tens of millions of dollars a year statewide with rural residents caught in the middle.
“It’s a well-intentioned law that did not contemplate the inexplicable law of unintended consequences because it neverconsidered resource planning to meet energy load and demand. What happens when the load goes down? Our members still have to buy it,” Glaess said. “And we’re going to have to increase rates to pay for our incumbent coal generation, which is getting smacked by the EPA (Environmental Protection Agency).”
The Minnesota Public Utilities Commission (PUC) directed electric coops and utilities to report the cost to ratepayers of complying with the RES. The top three wind loss leaders in 2011 were Great River Energy ($35 million), Minnkota ($27.5 million) and Dairyland Power ($18.1 million in Minnesota and Wisconsin combined). That’s a steep increase from 2010, when Great River Energy (GRE) reported a $22 million loss on wind energy sales, while Minnkota reported a $28.2 million loss the previous year.
“Until market prices increase, Great River Energy will likely see continued negative effects from RES compliance costs. Great River and its 28 member cooperatives urge officials to weigh the impact of further costs when considering additional regulations related to renewable energy so that our rates remain affordable,” according to the Great River Energy website. GRE expects losses to increase again in 2012 to $35 million. Continue reading at MN State News.