In a clean energy Minnesota, markets and utility regulation both matter

Posted by Mike Bull  |  Date March 11, 2016

In a recent Star Tribune commentary, former state legislators Amy Koch and King Banaian suggest that “conservative policy can harness clean energy” by letting tech markets alone drive action. While we agree on many key points — including that increasing our reliance on clean energy is good for Minnesota energy consumers — we don’t accept the vision that market forces alone can provide all the answers to Minnesota’s complex energy needs.

To be clear, we welcome the Conservative Energy Forum weighing in on Minnesota’s energy future. It is exciting to see the increasingly shared understanding that our best future lies in renewable energy and energy efficiency. We wholeheartedly agree with Koch and Banaian that the tremendous drop in the cost of wind and solar energy, and energy efficiency technologies like LED lighting, are a fantastic boon to Minnesota energy consumers. The market is surely evolving, and its evolution is opening new doors for progress — but it’s not doing it alone. Regulation and policy matter.

Well-regulated utility companies still rank among our state’s most powerful mechanisms to ensure the best public policy outcomes. Minnesota’s well-crafted utility policies for renewable energy and energy efficiency have actually created the market opportunities for wind, solar, and energy efficiency technologies that Koch and Banaian applaud. These policies, in concert with others around the country, have driven tremendous reductions in the cost for wind, solar, LED lighting, and other technologies, resulting in huge benefits to Minnesota consumers.

Rather than something from which consumers should be liberated, the regulatory structure advanced by these guidelines ensures our public policy goals are met and exceeded. As market forces provide price discipline and innovation, we also need regulatory policies for well-run electric utilities to provide top-notch consumer services such as universal access to electric service, environmental improvements, and long-range planning to ensure reliable, affordable electric service.

Although our electric utilities should proactively step up to the opportunities of cost-effective clean energy technologies, the deregulatory vision offered by Koch and Banaian would shift oversight of electric service away from professional, trained regulators. If the market alone were king, entities backed by Wall Street investors could cherry pick customers and services without restraint, capturing needlessly high profits at potentially lower qualities of service.

Electricity is an essential, life-sustaining element of modern life, with profound public implications from both its generation and use. Electric utilities were created to achieve the benefits of electrification and they have been, and will continue to be, very successful and necessary to that mission — but they must be regulated in the public interest.

It’s worth celebrating the growing recognition of clean energy as Minnesota’s best choice for the future, ensuring cost effective and reliable energy for all Minnesotans. It’s also worth celebrating how our state’s current energy framework smooths the pathway for markets and utility regulation to keep pulling together in the same direction. Clean energy policies:

• Allow customers to control their energy bills through energy efficiency, not only reducing utility system costs but providing more than $4 in benefits for every dollar spent.
• Offer our cheapest source of new energy generation through wind power — and the cost of solar has likewise fallen 53 percent since 2010.
• Act as an economic driver in Minnesota with huge potential upsides as an industry and in people’s everyday lives.
• Prevent all sorts of pollution and waste while opening the doors to a cleaner natural environment, better public health, clearer water, and better quality of life.

As Minnesota continues to move forward on clean energy, we and others will continue our work to align the incentives of electric utilities with the public policy goals our state policymakers have wisely adopted. And when our strategies align directly with market forces, it’s within the thoughtful context of promoting an electric system that benefits the public interest — not the concentrated interest of a relative few, but all of us.

So rather than working to eliminate or weaken the powerful levers of Minnesota’s regulatory structure, we concentrate on opportunistically fostering market opportunities within it. We look forward to collaborating with the Conservative Energy Forum toward that goal, with all parties striving for the highest common outcomes for all.
 

Mike Bull is director of policy and communications at Center for Energy and Environment. This post was co-authored with Beth Soholt, executive director of Wind on the Wires.