BISMARCK -- State utility regulators sent a strong message to Xcel Energy on Wednesday that they are unwilling to let the Minneapolis-based company charge its North Dakota customers for solar energy projects designed to meet a Minnesota mandate.
The North Dakota Public Service Commission voted 3-0 to deny Xcel's application for an advanced determination of prudence (ADP), finding that the proposed solar power isn't cost-effective and would raise costs to North Dakota customers without corresponding benefits.
It's the first time the commission has denied an ADP, which gives companies assurance that they will be able to charge customers for the cost of new generation.
"We have got to draw the line for North Dakota consumers," Commissioner Brian Kalk said.
Xcel applied in November for an ADP for 187 megawatts of solar power from three projects planned near the Minnesota cities of Marshall, Tracy and North Branch. Xcel estimates the projects would provide enough power for more than 41,000 homes.
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The projects aim to meet a 2013 Minnesota legislative mandate that requires the company to generate 1.5 percent of its electricity from the sun by the end of 2020.
David Sederquist, Xcel's regulatory affairs manager for North Dakota, said Wednesday's denial wasn't a surprise, as PSC members had previously made their opposition known.
The solar power and its costs were to be shared by the five states served by Xcel: Minnesota, North Dakota, South Dakota, Wisconsin and a small part of Michigan.
So far, North Dakota is the only state to push back, Sederquist said.
"The other states at this point are still on board with those resources, and we expect to recover those costs in our other states," he said.
Commission Chairwoman Julie Fedorchak said Xcel was "really clear" that the solar energy isn't needed to meet customer demand and isn't a least-cost option but rather was simply necessary to comply with the mandate.
"I don't believe North Dakota customers should have to pay for the result of policies in a state that they didn't have a say in passing," she said.
But Sederquist said he "definitely wouldn't say that it's not needed."
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"We're taking a conservative approach to meeting need in the future. We have projections that would indicate we've got enough to meet that, but we still need to have enough solar to meet that requirement. It's a little bit of a balancing act," he said, adding projections can change.
Commissioner Randy Christmann was harsher in his criticism, saying he has "great sympathy" for Minnesota residents bearing the costs of their leaders' decisions.
"I think they're terrible ideas, and the way a lot of people seem to be fleeing Minnesota for North Dakota, it seems that a lot of their citizens think so too, but if they want to do it, it's fine with me," he said. "But nowhere in the federalism concept does it suggest that you get to shift the costs of your ideas over to the neighboring states, and that's exactly what they're attempting to do with this."
Sederquist said Xcel will now assess its options, which may include asking the Minnesota Public Utilities Commission if the solar energy targeted for North Dakota could instead be allocated to Minnesota.
Sederquist wouldn't disclose the cost of the solar projects, saying that information is a trade secret. Construction on all three projects is expected to start late this year. They will be in service before 2017, when a federal 30 percent investment tax credit for solar energy drops to 10 percent, Sederquist said.
Reach Nowatzki at (701) 255-5607 or by email at mnowatzki@forumcomm.com .
