In re Northern States Power Co.

Minnesota enacted a community-solar-garden (CSG) statute to ensure that small, nonutility-scale customers had access to solar-energy resources. Under the statute, customers could subscribe to a central solar installation and then receive electric-bill credits for electricity generated by that installation. The CSG program was an alternative to the state’s competitive-bid process applicable to larger, utility-scale solar-development projects. Northern States Power Company, doing business as Xcel Energy (Xcel) (defendant), obtained approval from the Minnesota Public Utility Commission (PUC) (defendant) for a CSG project. The PUC order approving Xcel’s project permitted colocation of CSGs (i.e., multiple CSGs located in one place) but did not impose any limits on colocation. Xcel launched its CSG project in December 2014 and was inundated with applications from people and entities wanting to operate CSGs. Solar-energy-facility developer Sunrise Energy Ventures, LLC (Sunrise) (plaintiff) submitted 100 CSG applications in the first hour of Xcel’s program. Xcel became concerned that large, utility-scale developers were trying to take advantage of the CSG program’s benefits, which Xcel believed was contrary to the Minnesota legislature’s intent for the program to promote small-scale community solar developments. Xcel also worried that interconnecting utility-scale CSGs to Xcel’s energy-distribution system could cause problems and that the large developers’ participation in the CSG program could raise nonparticipating customers’ electricity rates. Xcel thus asked the PUC to impose a one-megawatt colocation cap on CSGs. Under Xcel’s proposal, a single developer’s colocated applications could be processed by the PUC as long as the applications, in the aggregate, did not exceed one megawatt. Xcel entered a partial settlement agreement with many solar-energy providers but not with Sunrise. The settlement agreement set an aggregate limit of five megawatts on colocated CSGs that had already been approved and an aggregate limit of one megawatt for other CSG applications. The PUC subsequently approved a modified CSG plan for Xcel that incorporated the colocation caps from the partial settlement agreement. The PUC also allowed Xcel to refuse interconnection to Xcel’s distribution system by a solar-energy provider if the interconnection costs exceeded $1 million. Sunrise sought judicial review of the PUC’s decision, arguing, among other things, that the PUC had violated the Public Utility Regulatory Policies Act of 1978 (PURPA) by allowing Xcel to deny projects based on interconnection costs.