Around the Minnesota Capitol, Xcel Energy is the corporation that need not speak its name.
Consider the legislation passed last month, allowing “a public utility” to “construct, own and operate” a natural gas power plant in Becker, a small town in central Minnesota.
“A public utility,” you say? In case there was any confusion, Xcel Energy CEO Ben Fowke made clear what was at stake in a February conference call with Wall Street investors.
Fowke mentioned the gas plant to inspire optimism among analysts, saying Xcel was banking on the fast-track approval to burst through regulatory hurdles that usually stand in the way.
Not that they needed a reason to believe. In the same call, Fowke reported Xcel’s fourth-quarter 2016 profits of $227 million. Headquartered in downtown Minneapolis and operating in seven states, Xcel is the biggest utility in Minnesota. As a “regulated monopoly,” its only real competition is weather. An unseasonably warm winter, which cut heat consumption, had skimmed a bit of the company’s riches.
Last fall, the Public Utilities Commission (PUC) reached an agreement with Xcel to shut down its two coal-burning facilities in Becker by 2026. The plants discharge more greenhouse gases than any other site in Minnesota.
At the same time, the PUC offered encouraging words about Xcel’s natural gas plan, but required the utility to explore options that might affect the plant’s size. Could renewable energy be used to fill coal’s void? Could cuts in consumer use lessen demand? (Picture the Wall Street guys hanging up their phones and cursing.)
Publicly, Xcel agreed to play ball with the PUC. Behind closed Capitol doors, however, the energy giant changed the rules of the game.
Bills authored by two Becker-area Republicans, Rep. Jim Newberger and Sen. Andrew Mathews, gave Xcel authority to build the gas plant “at its sole discretion,” removing state regulators from the decision. Costs related to the plant — estimated at $800 million for the facility and $200 million to build a gas line — will be passed on to ratepayers. (Read: You.)
Xcel can even petition the PUC to reap bonus payments as an “incentive to complete the project at or under the forecasted costs,” a nifty bit of back-end padding on an already sweet deal.
The legislation was opposed by a rare coalition: environmentalist hippies, consumer advocates, big industrial companies that spend hundreds of millions on energy... and pastors. Dozens of faith leaders signed a letter calling the bill a “blank check,” noting that rate increases to fund the plant would “disproportionately hurt low income communities.”
That coalition had strength in numbers — just not inside the Capitol, where it counts. Xcel employs nearly 50 lobbyists.
A bipartisan, mostly Republican House majority passed a version of the bill within a week of Xcel’s investor call. The Senate soon fell in line.
With the deal all but done, the Institute for Local Self-Reliance threw a Hail Mary. The nonprofit, which advocates for consumer and eco-friendly economics, produced a short, pithy video, in the hopes of convincing Gov. Mark Dayton to veto the bill.
The video parodies a recent Xcel TV ad. Essentially, it is an Xcel ad, but with more honest audio dubbed in as voiceover.
“Guess what’s in this box,” says a cheerful Xcel representative. “No, don’t. I’ll just tell you.”
“A massive fossil fuel power plant,” the voiceover cuts in. It goes on to note the Becker facility would “cost ratepayers over $5 billion in the next 20 years,” making it a “win — if you’re an Xcel shareholder.”
The Institute distributed the video through social media. Whether it reached the governor’s attention is unclear. It certainly got Xcel’s.
On February 24, the nonprofit got a letter from Merchant & Gould, a Minneapolis law firm specializing in intellectual property. The letter claimed the Institute engaged in “clear copyright and trademark infringement,” and demanded it cease and desist immediately.
Sharon Sandeen, a professor at Mitchell Hamline School of Law, says copyright cases are very “fact-specific,” but the Institute probably had a good shot at defending its tape.
The video was obvious parody and not made for profit, helping the Institute’s case. But you “can’t guarantee” a judge’s ruling. Or a lawsuit’s cost.
The Institute gave in to Xcel’s bullying and pulled the video. The nonprofit employs all of 15 people across three states. A loss in court would’ve destroyed it.
Says John Farrell, director of the Institute’s “democratic energy” team: “Xcel was, unfortunately, perfectly successful in getting us to take [the video] down when it mattered.”
If it would’ve mattered at all. Dayton signed the bill on the last day of February, saying it brings “immediate certainty” to plant workers in Becker.
In a statement to City Pages, Xcel spokesman Randy Fordice said Xcel supports “free debate and the free expression of ideas,” but must defend against “misuse of our intellectual property.” The Becker plant is simply about Xcel’s wanting “cleaner, more renewable forms of energy.”
And cutting out the PUC? “Lawmakers,” Fordice wrote, “are frequently part of the decision-making process.”
Expect it to happen ever more frequently. If Xcel gets to build a $1 billion plant at its “sole discretion,” don’t expect its fleet of lobbyists to ever demand anything less from lawmakers.
Minnesota should take cues from the meddling ad Xcel’s lawyers so disliked, and introduce a dose of honesty. Stop calling Xcel a “regulated monopoly.” That first word just became obsolete.
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