A community solar project in St. Cloud, Minnesota. Credit: New Energy Equity
On August 4, the Minnesota Court of Appeals affirmed the Minnesota Public Utilities Commission (PUC) 2024 ruling to retroactively alter bill credit rates on community solar gardens (CSGs). The Minnesota Solar Energy Industries Association (MnSEIA) said the move undermines the compensation paid to subscribers and is a violation of statutory limits, contract law, and developers’ reasonable expectations.
The new opinion will require all CSG subscribers receiving the applicable retail rate (ARR) as their community solar credit to move to a value of solar (VOS) credit rate. The VOS is approximately 20 to 30% lower than the ARR.
“The CSG program plays a vital role in providing relief to Minnesota families in the face of rising energy bills and is an important tool to help Minnesota meet our rigorous carbon-free goals,” said Logan O’Grady, executive director of MnSEIA. “This decision harms ratepayers who relied on and planned for the cost savings community solar provided and makes financing and developing clean energy projects in Minnesota more expensive and risky.”
The contracts promised solar garden developers and subscribers ARR-based bill credits for 25 years — terms approved by the PUC in 2014 and 2016. Affidavits show the shift threatens financing agreements, may cause defaults and undermines investor and subscriber confidence. Changing the contracts violates the U.S. and Minnesota Constitutions’ Contracts Clauses due to substantial impairment with no legitimate purpose and sends the signal to the marketplace that legally binding contracts can be violated in Minnesota.
“Subscribers were promised bill credits that would keep pace with their electricity bills, based on the rates in place when they signed up. But under the VOS, those credits no longer rise with retail rates — meaning customers will fall further behind as costs increase. By siding with the PUC and Xcel Energy, the Court of Appeals has chosen to hurt both CSG subscribers and the companies that have invested hundreds of millions in private capital to serve them,” said Kevin Cray, VP of existing markets and regulatory affairs at the Coalition for Community Solar Access.
This decision will have far-reaching financial consequences for thousands of Minnesotans, including local governments, school districts, and nonprofits that subscribed to community solar based on 25-year contracts. Cities like St. Cloud, St. Paul and Maple Grove stand to lose millions in expected savings — funds they had planned to reinvest in core services and climate goals. School districts such as Big Lake, Rocori and Winona Area Public Schools report that lost savings may force budget cuts that directly affect students. Cooperative Energy Futures, a community-owned solar developer serving predominantly low-income households, anticipates losing over half of its member-subscribers from the affected gardens, with some families facing over $500 in lost annual savings.
MnSEIA, CCSA and their members and partners are exploring all options to protect Minnesotans’ rights and ensure clean energy remains affordable, accessible and contractually sound.
News item from MnSEIA