Minnesota PUC Resolves REC Ownership Issue

The Minnesota Public Utilities Commission (PUC) recently resolved a dispute over who owns renewable energy credits (RECs) when the power-purchase agreement (PPA) is silent, according to law firm Stoel Rives LLP.

Following the establishment of an REC tracking system for Minnesota, Xcel Energy asked the PUC to clarify ownership of RECs associated with 46 wind, biomass, hydro and landfill-gas facilities totaling 467.5 MW. These PPAs were written before the concept of RECs existed.

The PUC resolved the dispute partially in favor of Xcel and partially in favor of the generators by dividing the disputed PPAs into two categories: 1) PPAs signed under 1978 federal Public Utilities Regulatory Policy Act (PURPA) and 2) PPAs signed under Minnesota’s 1994 wind and biomass mandates.

For the PURPA contracts, the PUC decided that the generators are the rightful owners of RECs because they had only been paid avoided costs with no premium for the electricity that came from renewable sources.

Regarding the wind and biomass mandate PPAs, the PUC favored Xcel and decided that the utility had acquired ownership of the RECs, unless the generator can make a showing that the PPA is not silent on REC ownership. For this category, the PUC reasoned that Xcel had contracted to buy electricity that would meet specific renewable mandates. Without the RECs, the electricity would not satisfy the renewable mandates.

The PUC exempted from its decision two PPAs close to being privately settled and 13 PPAs that were already privately settled.

SOURCE: Stoel Rives LLP

 

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