Incentives for Developing Locally-owned Wind in Minnesota American Public Power Association 2006 Business & Financial Conference September 19, 2006

About the Speaker Asst. Commissioner for Renewable Energy Fifteen years experience in variety of key staff positions  Governor’s Office; MN Dept. of Commerce; MN Public Utilities Commission; MN Office of Attorney General; MN House of Representatives and MN Senate

Presentation Overview General Comments REPI Program ( ) REPI plus Xcel ( ) Standard Offer C-BED program (2005 to present)

General Comments Minnesota targets incentives towards locally-owned energy projects These provide the optimum mix of benefits to Minnesotans Most comprehensive community energy program in the country

Renewable Energy Production Incentive Established in 1995 Pay 1.5 cents per kwh for 10 years for eligible projects Energy must produced by locally-owned wind project with a capacity of 2 MW or less Capped at 100 MW Only a handful of projects before the year 2000

REPI Plus Xcel Standard Offer In 2000, the MN Dept. of Commerce and Xcel Energy developed a standard offer for locally-owned small wind projects Xcel agreed to pay 3.3 cents per kwh for 20 year contracts Projects qualified for REPI as well  4.8 cents per kwh for the 1 st 10 years  3.3 cents per kwh for the last 10  Plus federal PTC

REPI Plus Xcel Standard Offer (cont.) 100 MW cap met in 2002 Additional 100 MW of REPI authorized in 2003 All 200 MW fully subscribed (with a waiting list) by the end of 2004

Community-Based Energy Development Policy-makers wanted to extend REPI again, but the state had significant budget deficit Without $$, needed to be creative Created “C-BED” tariff in 2005 No size limitation

Community-Based Energy Development (cont.) C-BED tariff allows the utility to pay a front-end loaded rate  A higher rate in 1 st 10 years of a 20-yr contract  In exchange for a lower rate in the later years Results in a rate similar to REPI plus Xcel standard offer

Governor Pawlenty’s C-BED Goal 800 MW of C-BED wind by 2010 An est. $1.2 billion clean energy investment in our rural communities Xcel has committed to 500 MW

Governor Pawlenty’s C-BED Goal (cont.) Contracts for ~400 of C-BED wind signed or being negotiated by MN utilities MN should have a total of ~1500 MW of wind capacity installed by the end of % of this total will be locally- owned projects

C-BED Lessons Learned C-BED projects are much harder to arrange than traditional wind projects  But provide more benefits  A few utilities are working hard to work through difficulties  Developers are sharing information & expertise Looking at policies to address these issues & get more utilities committed to C-BED

Contact Information Mike Bull Assistant Commissioner Renewable Energy & Advanced Technologies Minnesota Department of Commerce 85 7th Place East, Suite 500 St. Paul, MN Fax