Community Based Energy Development (C-BED) Legislation in Minnesota

By Paul Gipe


Minnesota’s State Senate passed a bill with the C-BED proposal in May, 2005. The measure passed the Assembly on May 19, 2005 and has since been signed by the Governor. As of early 2006, electric utilities in Minnesota were filing their C-BED tariffs with the state’s Public Service Commission.

In North America, Minnesota is the only jurisdiction with experience using a standard offer contract for small renewable power projects since California’s SO4 contracts of the 1980s. The program was limited to wind energy and targeted specifically at farmers. The program was initially limited to 100 MW, and project size was capped at 2 MW. After the first 100 MW was reached the cap was increased another 100 MW.

Minnesota’s program was reconsidered this legislative session (2005) for several reasons: its dependence on the state budget process breeds uncertainty, its project size limit is too low for modern wind turbines, and the program is limited only to wind energy. Importantly, the premium payment coupled with the Xcel’s fixed-tariff were insufficient to drive development without the federal Production Tax Credit. Thus, development follows the boom and bust cycles resulting from the federal program.

Minnesota has an active and effective public interest community–the nearly 600 MW of wind development in the southwestern corner of the state is due directly to intervention by state NGOs (Nongovernmental Organizations) in nuclear waste proceedings–and in concert with farm groups and state legislators from farm districts have proposed several new strategies for fostering community wind development.

Note that profitability with these tariffs is wholly dependent on very favorable tax treatment. Favorable tax treatment can be problematic.

The proposal that gained the most interest was a “Community Wind Tariff.” Such a tariff would apply to all load serving entities in the state not just the Xcel franchise. The tariffs would apply to all load serving entities (utility companies) until such time as they fulfill their renewable energy obligations under the Minnesota Renewable Energy Objective. The Energy Office of Minnesota’s Department of Commerce supported the Community-Based Energy Development (C-BED) tariff with fixed-prices and standard contract terms.

Bills supporting the C-BED proposal were introduced into the Minnesota assembly. The bills originated with wind energy-developer Dan Juhl (DanMar & Associates) and longtime renewable energy activist George Crocker (North American Water Office).