News of the week

October 29, 2024

Owatonna Public Utilities celebrates 100 years

On October 10, Owatonna Public Utilities (OPU) pulled out all the stops to mark its centennial in delivering municipal utility services. Marge Madson, pictured above, has been an employee of OPU for more than half that time—she's been serving Owatonna's ratepayers for a whopping 52 years!

Want to know more? We will have full coverage of the OPU celebration and more photos in the December issue of The Resource.

Minnesota group of municipals and co-ops again fails to secure GRIP grant funds

On October 18, a grant consortium that included 64 utilities, MMUA, MREA, and the University of Minnesota, received notification that its request for some $217 million did not score high enough to receive round two funding through the Grid Resilience and Innovation Partnership (GRIP) grant program. Applying under topic area one, the group had proposed a series of strategies that would have delivered increased grid reliability and resilience by innovatively pairing new technology solutions with traditional tools. These improvements were expected to benefit consumers and specifically target areas with severe wind and tornadic activity. ​This is the second disappointment for many in the consortium.

As had occurred in round one, the Department of Energy (DOE) received requests for substantially more projects than the available funds would cover. According to the letter DOE provided, "This process was highly competitive, with funding requests totaling over 10x the amount of available funding for Grid Resilience Grants." As a result, most applicants received similar rejection letters. Projects that were successful tend to be located in areas highly prone to hurricanes and wildfires. The GRIP funds awarded will also cover some transmission-related projects.

Utilities that serve Minnesota were not completely out in the cold. Ottertail Power will receive $19.6 million toward a $49.4 million program called Innovative Distributed Energy Automation (IDEA). Other funded collaborative transmission projects will also impact Minnesota to some degree. See a full list of the awards here. DOE will hold an informational webinar regarding the program and projects awarded on Wednesday, October 30 beginning at 11:00 am central time. Registration is required. Learn more here.

PUC approves MP plan to lower customer rates

On October 24, the Minnesota Public Utilities Commission (PUC) approved a settlement agreement with Minnesota Power (MP) to reduce rates for customers in early 2025.

In November 2023, MP requested a rate increase of 12 percent, but the PUC only approved an interim rate increase of 8.6 percent. That went into effect for customers in January 2024.

The final approved rate reflects an increase of just 4.9 percent for residential and small business customers, meaning they will see a slight decrease in their monthly bills. These customers will also get a one-time bill credit recognizing a refund resulting from the difference between what they have been paying and the now-approved rate.

At the same meeting, the PUC approved a return on equity of 9.78 percent for MP's shareholders. Commissioners also limited how much money MP can collect from customers to pay salaries for its ten highest-paid executives at $1.5 million per year. See in-depth coverage here (paywall) or top-line coverage here (free).

IRS grants automatic six-month filing extension for elective pay/direct pay refunds

The Internal Revenue Service (IRS) has granted an automatic six-month filing extension to eligible organizations that are making elective payment elections (also known as direct pay). The six month extension will give organizations time to file Form 990-T, Exempt Organization Business Income Tax Return.

As noted, the extension is automatic, and filers will receive it whether they request it or not. Elective pay can be a powerful tool for utilities to access full-value tax credits for qualifying clean energy projects. It was passed into law as part of the Inflation Reduction Act (IRA) of 2022. Learn more here and here.

Are you innovating?

At last week's Beneficial Electrification League (BEL) conference in Minneapolis, municipal utility leaders including MMUA CEO Karleen Kos and Shakopee Public Utilities General Manager Greg Drent spoke on panels related to sensible ways of moving forward with the transition to increased electrification.

Following the meeting, Matt Grimley, a research fellow at the University of Minnesota reached out to Karleen with the following question: Have you seen or heard of any municipal utilities in Minnesota that are taking on emerging technologies, partnering with start-ups, or working with technological innovation in any way?

The MMUA team has since shared our thoughts with researcher Grimley—but there is always more to tell. If you are innovating or you have specific reasons you are not doing any of the things mentioned, please email Karleen Kos so the information can be shared with policy makers and researchers.

PUC orders Xcel to refund customers affected by 2011 Sherco failure

On October 16, the Minnesota Public Utilities Commission (PUC) ordered Xcel Energy to pay $58 million in total costs to ratepayers affected by the November 19, 2011, shutdown of Sherco Unit 3 near Becker, Minnesota. The shutdown was caused by the failure of a turbine at the plant.

An Administrative Law Judge determined the failure of Sherco’s Unit 3 was due to improper operation and maintenance by Xcel. As a result, the failure of the turbine cost ratepayers as Xcel worked to purchase power on the market.

The decision comes as Xcel reached a settlement with the original equipment manufacturer, General Electric, in the last few years. The settlement allowed for the PUC to move forward in 2022 with assessing Xcel for its improper maintenance of the turbine. Read more here.

Minnesota metro cities increasingly use franchise fees toward climate and sustainability goals

Cities in Minnesota's metropolitan area around Minneapolis and St. Paul—together with cities across the country—are increasingly using franchise fees for projects related to local climate and sustainability goals. These fees are charged to non-municipal electric and gas companies for the ability to use public rights-of-way.

In 2021, 13 percent of the country’s municipalities used franchise fees for these purposes, and the number is growing. Communities in Minnesota have used these fees to make local investments that save residents money and promote a cleaner environment. Some of these efforts have included fleet electrification, weatherization, solar panels, sustainability planning, efficiency measures, and tree planting efforts.

To learn more, click here.

What should MMUA focus on in the 2025 legislative session?

MMUA members have an opportunity to weigh in on potential issues for focus during the 2025 legislative session.

On Friday, October 25, MMUA convened a Zoom meeting of the Government Relations Advisory Group (GRAG). More than 30 hometown utility professionals from around the state, together with joint action agency representatives, met to discuss the hottest topics that have emerged so far and to exchange ideas about how MMUA should prioritize its advocacy in the coming year. The group will reconvene in November, after the election, to finalize the list of topics that will be presented to the MMUA Board of Directors for its input in December.

Anyone who has suggestions for, or concerns regarding, possible legislation is encouraged to email Kent Sulem. Check the November issue of The Resource for more information on MMUA's early work with joint action agencies and others to prepare for what promises to be an interesting post-election session.

Want to get involved? If you are not currently engaged in MMUA's Government Relations Advisory Group (GRAG) and you would like to stay in-the-know, please email Bill Black. The GRAG typically meets via Zoom each Friday at 10:00 am during the legislative session.

Registration is open!

Funding opportunities

Energy improvements in rural or remote areas

This Energy Improvements in Rural or Remote Areas (ERA) funding opportunity provides support for rural and remote communities to build clean energy projects that benefit their communities. By federal definition, this program is open to communities with fewer than 10,000 people.

The goals of the program are to: 

1. Deliver measurable and sustained benefits to people who live in rural or remote areas by funding replicable clean energy projects that lower energy costs, improve energy access and resilience, increase economic opportunity, and/or reduce environmental harm. 
2. Demonstrate effective rural or remote energy system approaches using climate-resilient technologies, business structures that promote economic resilience, accessible and appropriate financing mechanisms, and/or best practices in community leadership and engagement, and workforce development. 
3. Build clean energy knowledge, experience, capacity, and self-reliance in rural and remote parts of America.

Concept papers are due by February 27, 2025, and full applications are due by August 28, 2025. To learn more about these grants click here. To learn about federal energy funding for rural and remote areas, check out this guide.

MPCA planning grants for stormwater, wastewater, and community resilience

The Minnesota Pollution Control Agency (MPCA) is soliciting project proposals to distribute $750,000 for climate planning projects to communities across Minnesota. This funding provides an opportunity for these communities to assess vulnerabilities and begin planning for the effects of Minnesota’s changing climate in three areas:

• How to increase resilience to stormwater and reduce localized flood risk.

• How to improve the resilience of wastewater systems.

• How to reduce human health effects and adapt community services, ordinances, and public spaces to the changing climate.

Applications are due by Thursday, November 14. To learn more, click here.

Minnesota Department of Commerce issues RFP for its electric grid resilience grant program

The Minnesota Department of Commerce issued an RFP for grants available to community-owned municipal utilities, cooperatives, and power agencies. A total of $5.3 million will be available, with maximum grants of $250,000. There are no match requirements. Proposals are due November 19, 2024.

MMUA held an informational webinar on Tuesday, September 17 and Tuesday, September 24.

• Download the RFP here
• Review slides from DOC's webinar here
• Review slides from MMUA's September 17 webinar here
• Review the recording of MMUA's September 17 informational webinar here
• Review slides from MMUA's September 24 webinar here 
• Review the recording of MMUA's September 24 webinar here 

MMUA will again provide members with assistance in preparing their grant requests by hosting webinars and making team members available for consultation. Contact Karleen Kos or Blaine Chaulklin for more information.

Looking ahead

Save the date:

2025 Legislative Conference

January 28–29, 2025

DoubleTree by Hilton Saint Paul Downtown

MMUA’s Legislative Conference is one of the municipal utility community’s primary opportunities to inform and influence state lawmakers. This year’s event will occur near the start of the session. This is prime time for getting ahead of the push for final committee action and to lobby for a bonding bill adequate to meet utility infrastructure needs.

The conference will include engaging presentations from a diverse array of industry and legal experts. Topics will cover a variety of local government issues, MMUA’s administrative and legislative priorities, and more.

On Tuesday afternoon, attendees will head to the Hill to meet with their representatives. The MMUA Government Relations team encourages you to start making appointments now to meet with your local Senators and House members. We will cap off the day with a legislative reception at the DoubleTree, providing MMUA members the opportunity for further conversation with lawmakers.

Registration will open in late November 2024. Check the event page on MMUA's website for additional details.

As always, thank you for your association with MMUA and your commitment to delivering excellent service through locally owned utility assets in your community. Have a great week!

Karleen Kos

Chief Executive Officer

Direct: 763-746-0701 / Cell: 813-675-7589

kkos@mmua.org | www.mmua.org

Hometown services. Hometown strengths. Hometown solutions.