Electrical Energy: Affordability and Competitive Pricing Working Team
Monday, September 19, 2011
4:00 – 5:30 p.m.
Members Present: Bright Dornblaser, Stacey Fujii, Doug Larson, Ryan Pulkrabek, Bruce Sayler, Joe Sixta, Linda
Taylor
Staff Present: Annie Levenson-Falk, Daniel Negron
Phase I - overall purpose: Convene citizens/stakeholders to define key characteristics for Minnesota’s electrical
system in the long term, in a way that lays the foundation for developing and advancing recommendations.
Meeting outcomes:

Make progress on our draft report
1. Review and negotiate agenda
2. Review and update report
Suggestions:

Draft needs more structure

Suggestion that the externalities paragraph be re-written.
Direct Changes to draft:

First sentence of draft needs to be revised making affordability and competitive pricing complimentary to
each other. (“distinct but related”)

Page one, paragraph 3, sentence 2, either delete or link to paragraph 5.
o
We know what the inputs are

On page one, paragraph 4, the first sentence needs to be expanded upon.

On page 1 paragraph 4 sentence 2: “must become and stay transparent and must adapt”
o

Not sure the problem is a lack of transparency; may be a lack of interest in the information
On page one, paragraph 5, change the first sentence to start we “With the electrical system, there are…”
Add infrastructure investments to the list of costs.

Page 2, 1st full paragraph, sentence 3, change all costs to “Affordability is”

Page 2, 1st full paragraph, sentence 4, change to “but can be measured” rather than “is less difficult to
define when thought of.” We may also want to add that other metrics can also be used to measure
affordability.

Page 2, paragraph 2, sentence 1 and 2: It is accurate that MN consumption exceeds this amount
(average residential apartment consumption is about 300-400 kWh). Rather than “to maintain our current
standard of living in MN, much greater amounts of electricity are needed” say “average consumption in
MN exceeds that amount.”

Page 2, paragraph 2 sentence 3 change to “Through greater conservation and efficiency, people may
need less electricity in the future (i.e. 2040) even though they may be paying more per unit.”

Page 2, paragraph 3, sentence 1 change to “A continued balance exists between what the individual
family, small business, or corporation could spend and should spend to meet basic needs and to allow
continued economic growth while bringing equal access, stability, and reliably to the entire system.”

On page 3, the first paragraph, which is continued from the previous page, remove the final sentence in
the paragraph.

Move Externalities paragraph on page 3 to page one under general info rather than the discussion of
competitive pricing

Under number 1 in externalities replace “price” with “cost.” Add that MN electricity doesn’t cost more than
places that offer similar quality of life.
o
Acknowledge that electricity prices alone aren’t what business decisions are based on. Also
highly trained workforce, outdoors, quality of life, etc.

Under point 2 in externalities change to “…income spent in electricity is relatively predictable and
consistent.”

Under externalities delete point 3. We are talking about “competitive pricing” as in prices that make
Minnesota competitive with other places, not in terms of competitive markets.

On page 3, delete the paragraph that begins “regarding market structuring.”

On page 3, under Findings/Where we are currently, the second point, change to “percentage of average
household” and maybe mention that it is relative.

On page 3 under Findings/Where we are currently, the third point, change “seems unaffordable” to
“Affordability is strained”.

On page 3 under Findings/Where we are currently, finish sentence with “…several ways to measure
affordability and competition.”

Issues involving deregulation can be moved to “issues to consider in subsequent phase” paragraph.
Missing from Draft, other discussion:

Add the externalities that are included in the costs as well as mentioning the costs involved.
o
As government applies new regulations, some externalities are becoming internalized. Recognize
this trend and that it’s likely to continue and needs to be done thoughtfully, because it will affect
affordability/competitive pricing
o
Don’t say all externalities should be internalized. Use more balanced terms

Paragraph that starts with “Pricing externalities” to the first page.

Acknowledge that infrastructure investments are required in MN
o
Extent varies by utility, but Xcel alone is talking about $1 billion per year for the next 5-6 years.
Huge amount, will have a big effect
o
Needed investment in infrastructure to serve MN customers

Cross-subsidization – commercial/industrial subsidize residential consumers

Make mention that we cannot predict rates but that they may go up.

o
MISO predicts rates to go up
o
Other things are happening that could have ameliorating effect, e.g. natural gas price stabilizing
o
Don’t try to predict
o
We do not need to address this in the draft
Draft needs to better state the vision.
o
It is in there in a couple places but should be called out more clearly
o
This line from the draft is very close: “ensure economic growth can occur while bringing equal
access, stability, reliability, and predictability to the users of the entire system.”

Mention the idea of it being affordable to the environment.
o
Affordability = households, businesses, individuals can afford in economic terms, we can live with
it in environmental terms

Acknowledge the potential economic and technological chaos that could be coming
o
Ex: Technological improvements could make distributed generation as affordable as today’s
electricity. Challenge is that you still need grid infrastructure for the one day that demand is high
and distributed generation doesn’t meet it
o

How do we reorganize economics of entire industry?
Also mention the idea of unit price vs. price affordability – focus on bill, not price per kWh
In findings, summarize high level of data from research
3. Next steps and evaluation
Agreed on this timeline to complete work:
 Based on feedback from September meeting, we rewrite draft (Annie writes) by 9/26
 Ask for member feedback on draft before 10/3
 We write new draft by 10/10
 Discussion at October 10th meeting - this will be our final meeting
After final meeting, all four working teams’ drafts will be synthesized into a single document. This will be the
foundation for Phase 2, to start early next year, in which we’ll develop recommendations.
Evaluation:
Score range: 4.5 – 5
Score average: 4.75