## Facts

- Minnesota enacted a community-solar-garden (CSG) statute intended to ensure small, nonutility-scale customers could access solar resources through subscriptions to a shared solar facility and receive bill credits.
- The CSG program functioned as an alternative to Minnesota’s competitive-bid process that applied to larger, utility-scale solar development.
- Northern States Power Company, doing business as Xcel Energy (Xcel), obtained Minnesota Public Utilities Commission (PUC) approval for a CSG plan.
- The initial PUC order allowed colocation (multiple CSGs at one site) but did not set numerical limits on colocation.
- When Xcel opened the program in December 2014, it received a surge of applications; Sunrise Energy Ventures, LLC (Sunrise) submitted 100 applications within the first hour.
- Xcel became concerned that large, utility-scale developers were using the CSG program’s benefits in a way Xcel believed conflicted with the legislature’s design for the program.
- Xcel also raised concerns about the distribution-system effects of interconnecting large volumes of colocated generation and the risk of shifting costs to nonparticipating customers.
- Xcel asked the PUC to impose a one-megawatt (MW) colocation cap, under which a single developer’s colocated applications would be processed only if, in the aggregate, they did not exceed 1 MW.
- Xcel entered a partial settlement with multiple solar providers (but not Sunrise) that set (1) an aggregate 5 MW limit for certain already-approved colocated CSGs and (2) an aggregate 1 MW limit for other colocated CSG applications.
- The PUC approved a modified CSG plan that incorporated the settlement’s colocation caps.
- The PUC also allowed Xcel to refuse interconnection for a project if estimated interconnection costs exceeded $1 million.
- Sunrise sought judicial review, including a claim that the $1 million interconnection-cost limit conflicted with the Public Utility Regulatory Policies Act of 1978 (PURPA).

## Issues

1. Whether the PUC acted within its statutory authority, and supported by the record, when it approved colocation caps for Xcel’s CSG program.
2. Whether the PUC’s authorization for Xcel to refuse interconnection when costs exceeded $1 million conflicted with PURPA.
3. Whether the PUC could incorporate terms from a partial settlement agreement that Sunrise did not join.

## Decision

- The court affirmed the PUC’s modified CSG plan.
- The court upheld the PUC’s approval of colocation caps as a permissible program condition in light of the CSG statute’s purpose and the PUC’s regulatory role.
- The court rejected Sunrise’s PURPA-based challenge to the $1 million interconnection-cost limitation.
- The court held the PUC was not barred from relying on a partial settlement where the PUC evaluated the outcome and the objecting party had an opportunity to present objections in the agency proceeding and on review.

## Legal Principles

- Courts give substantial deference to a public utility commission’s technical and economic judgments and will not overturn commission action absent legal error or action that is unsupported by the record or is arbitrary and capricious.
- Where a statute establishes a regulated program and assigns oversight to the commission, the commission may set reasonable program conditions to effectuate the statute’s purpose and address operational and rate impacts.
- A state commission order is not preempted by PURPA absent a demonstrated conflict with PURPA’s requirements; disagreement with a commission’s cost-allocation or interconnection approach does not alone establish conflict preemption.
- An agency may approve outcomes informed by partial settlements if it independently evaluates the resulting terms and ensures non-settling parties have notice and a meaningful opportunity to be heard.

## Conclusion

In re Northern States Power Co. affirmed the Minnesota PUC’s decision to modify Xcel’s community-solar-garden program by adopting colocation limits drawn from a partial settlement and by allowing Xcel to decline interconnection for projects exceeding a $1 million cost threshold, rejecting Sunrise’s statutory, procedural, and PURPA-preemption challenges.


In re Northern States Power Co., 2016 WL 3043122 (2016)