Minnesota court rejects appeal by wind developers over PUC decision

Deferring to the expertise of the Minnesota Public Utilities Commission, the state Court of Appeals on Feb. 9 rejected an appeal from several community-based wind project developers of a commission decision to approve four large wind projects (total of 750 MW) chosen by Northern States Power d/b/a Xcel Energy.

The community wind developers, called the “relators” in the court decision, challenged the commission’s approval of Xcel petitions to acquire wind-powered electricity, arguing that they were entitled to a contested-case hearing and that the commission’s approval is inconsistent with Xcel’s statutory obligation to make reasonable efforts to fulfill its renewable-energy requirements using community-based energy-development projects.

Relators are Minnesota-based wind-power companies, formed to develop community-based energy-development (C-BED) projects on land owned and farmed by member-owners. Relators’ wind projects qualify for C-BED status under a state statute that was enacted to provide rural communities with the opportunity to share in the economic benefits of large energy-production projects.

In February 2013, Xcel solicited bids for up to 200 MW of wind power. This request for bids was precipitated in part by Xcel’s need to acquire additional wind power to comply with state renewable-energy standards. The standards require Xcel to produce 25% of its electricity from wind power by 2020. Xcel must also submit a renewable-energy plan to the commission specifying how it will meet its renewable-energy requirements.

Xcel initially screened the bids by calculating the levelized cost of each project and setting a $29 per megawatt-hour (MWh) cutoff. Sixteen projects came in below the levelized-cost cutoff. Relators’ C-BED projects were among the initial 57 bids, but none fell below the $29/MWh threshold. The closest C-BED bid was $29.55/MWh. After further review, Xcel petitioned the commission to approve four projects, representing a total of 750 MW of wind power. Xcel believed this large acquisition was warranted due to its need to acquire significant wind resources to comply with the renewable-energy standards, and due to historically low prices.

Relators objected to the proposed acquisitions on the ground that Xcel did not make a reasonable effort to fulfill its wind energy needs through C-BED projects. Relators also asked the commission to refer the matter to the Office of Administrative Hearings for a contested-case proceeding. In December 2013, the commission approved Xcel’s proposals, concluding that they represent a reasonable and prudent approach to meet Xcel’s obligations under the state’s renewable-energy standards.

“This court will affirm an administrative agency’s decision unless its findings, inferences, conclusions, or decisions are: (a) in violation of constitutional provisions; or (b) in excess of the statutory authority or jurisdiction of the agency; or (c) made upon unlawful procedure; or (d) affected by other error of law; or (e) unsupported by substantial evidence in view of the entire record as submitted; or (f) arbitrary or capricious,” said the Feb. 9 court ruling. “A party challenging an agency’s findings must establish that they are not supported by the record evidence. If an agency engages in reasoned decision-making, we will affirm, even if we may have reached a different conclusion had we been the fact-finder. We presume that an agency’s decision is correct, and defer to an agency’s conclusions in its area of expertise. An agency is also presumed to have the expertise necessary to decide technical matters within the scope of its authority, and deference is extended to any agency decision-maker ‘in the interpretation of statutes that the agency is charged with administering and enforcing.’”

The ruling later added: “On this record, we conclude that there was a sufficient basis for the commission to find that Xcel implemented a fair and competitive bidding process that afforded relators a reasonable opportunity to compete for Xcel’s business. Relators may be disappointed by the outcome of that process, but there is no basis to conclude that C-BED projects were entitled to special consideration or that they were improperly prevented from participating in the open, competitive process.”

The relators include Ecos Energy LLC, Summit Wind LLC, Jeffers South LLC, Greenhead Wind LLC, Garvin Wind LLC, Gadwall Wind LLC, Watowan Wind LLC, Hurricane Wind LLC and Highwater Wind LLC.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.