The Minnesota Legislature’s recent session on energy policy was relatively subdued, with only a narrowly focused energy bill passing into law. Despite the limited legislative output, several key issues were debated.
One area of focus was the reform of Net Energy Metering (NEM) and Community Solar Gardens. While major changes to these programs were made in 2024, discussions continued among interest groups. Rural electric cooperatives and municipal utilities argued for reduced compensation for NEM projects within their service areas, claiming that NEM customers do not contribute adequately to infrastructure costs. Solar advocates disputed this claim, pointing out that rural customers often have multiple meters billed at different rates and that solar installations can benefit various operations on a property.
Community solar gardens also highlighted divisions within the Democratic-Farmer-Labor (DFL) party. Senate DFL members advocated for significant changes or elimination of the program, while House DFL members worked to preserve it.
Data centers were another topic addressed late in the session, including during a special session. Lawmakers considered water use concerns unique to Minnesota’s context and directed the creation of a special tariff for data centers and other large users. This would allow utilities to offer clean energy tariffs and ensure that large customer costs are not shifted onto general ratepayers. The debate followed Amazon’s decision to cancel plans for a Minnesota data center after the state Public Utilities Commission denied a waiver related to distributed generators.
Virtual power plants (VPPs) received attention when the House Energy Finance and Policy Committee held a hearing on establishing requirements for a VPP tariff through the Public Utilities Commission. Although no action was taken, further discussion is expected next year. Key questions include whether utilities should own VPPs or if non-utility-owned options should be supported. Xcel Energy plans to file its own VPP proposal in October.
Efforts to repeal Minnesota’s Right of First Refusal (ROFR) law for new transmission projects continued for a third consecutive session. ROFR laws remain contentious throughout the Midwest; neighboring states such as Iowa have seen similar debates, with Iowa’s Supreme Court overturning its initial ROFR law last year.
Looking ahead, some policy experts argue that promoting competition—such as repealing ROFR laws—could lower costs and improve transmission line construction across Minnesota. They suggest allowing large electricity consumers like data centers to procure power directly from competitive suppliers could reduce risk for ratepayers by shifting generation costs onto those customers instead of spreading them statewide.
A recent “State-by-State Scorecard on Electricity Competition” from R Street Institute gave Minnesota a D-, recommending lower barriers for distributed energy resource providers and more opportunities for non-utility offerings.
The session was also marked by tragedy: On June 14, Speaker Emerita Melissa Hortman, her husband, and their dog were killed in an attack that also wounded State Sen. John Hoffman and his wife; both survived their injuries. Hortman had been an influential figure in state energy policy as former chair of the House Energy Policy Committee and chief author of Minnesota’s solar standard and community solar laws passed in 2013. Her leadership helped preserve consumer choice in electricity providers through community solar programs.
“Her leadership on energy matters was invaluable in ensuring customers did not lose the opportunity to choose alternative providers of electricity through the community solar program,” one advocate said about Hortman’s legacy. “I was lucky enough to know her and to have several meetings with her to discuss energy matters for Minnesota. She leaves a long legacy of achievement and an even longer list of people, including myself, who will miss her.”
