Senate Finance Committee recommends passage of House File 2442 after amendment; committee debates community solar sunset and budget changes

Senator Friends on Thursday asked the Senate Finance Committee to recommend passage of House File 2442, the energy omnibus, which the committee approved as amended by an A31 amendment on a 6-5 roll-call vote.

The bill, as amended, makes targeted appropriations to the Department of Commerce and the Public Utilities Commission (PUC), alters the way a pre-weatherization program is funded, authorizes new one-time grants from the Renewable Development Account (RDA) totaling $20 million, and includes a provision that sunsets the community solar garden program in 2030.

The bill matters because it packages fiscal changes and some policy decisions that affect Minnesota energy programs and ratepayers. Sponsors said the measure seeks to fund Commerce and the PUC while reducing upward pressure on electric bills; opponents raised concerns about timing of the community solar sunset and the effect of shifting weatherization funding.

Senator Friends, the bill sponsor, told the committee the A31 amendment was being updated to reference House File 2442 and asked members to adopt the amendment. "This bill comes to you as a compromise," Senator Friends said, adding that the measure emerged from the Senate Utilities, Environment and Climate Committee with bipartisan support and that he would carry the amended bill on the floor.

Dan Mueller, nonpartisan staff who walked committee members through the spreadsheet, said the DE amendment removes a prior repeal of the Renewable Development Account (RDA) that had driven costs above the bill target. Mueller outlined the main fiscal elements: limited appropriations for two Commerce divisions (Energy Resources Division and the Petroleum Tank Release Board); a $500,000-per-year operating adjustment from the petroleum tank release fund for Commerce; PUC operating increases that are intended to be recovered through assessments; and an RDA one-time adjustment tied to a February forecast correction.

Mueller summarized agency and program-level amounts included in the amendment. He said the bill includes a transfer change for the pre-weatherization program: "The base amount for this program is $13,200,000, but now it lowers that transfer down to $1,119,000," and the amendment, he said, produces an estimated $4 million net savings to the general fund for the biennium. He also outlined PUC increases (operating adjustments, technology and maintenance, a tribal liaison FTE, and three natural-gas planning FTEs) that are shown in the fiscal spreadsheet but are structured to be recovered through assessments.

The amendment also directs $20 million of new RDA expenditures across several projects, according to the spreadsheet walkthrough. Items listed in the DE amendment include: extension and added support for the University of St. Thomas microgrid program (an extension from FY25 and an $800,000 base increase in FY26), a green-hydrogen project in St. Cloud, an anaerobic-digester project, a Como Zoo geothermal system allocation, $5 million to the University of Minnesota for green ammonia research, $3 million through the Pollution Control Agency for emerald ash borer biomass work, and a $2 million one-time transfer to a geothermal planning account.

On policy, the bill contains a provision that sunsets the community solar garden program in 2030. Senator Friends said the program helped establish Minnesota’s solar market but now imposes above-market costs on nonparticipating ratepayers in some utility territories. "We want clean, renewable energy. We simply want to do it without an involuntary obligation of Xcel Energy ratepayers," Senator Friends said, arguing the program’s above-market cost (which he said recent reporting shows at about 14¢ retail versus roughly 5¢ wholesale) shifts expense to customers who are not subscribers.

Several members questioned the sunset and the underlying cost analysis. Senator Pappas said he believed the Department of Commerce study found net benefits; Senator Friends responded that he found the study biased and that the attorney general had raised concerns about impacts on non-subscribing customers. Senator Champion and Senator Mohammed asked about timing and impacts on projects that are not yet online; Friends said he would meet with members and constituents and reiterated the compromise that led to the 2030 sunset.

On budget compliance and mechanics, committee members asked whether the bill met the finance committee’s target. Mr. Mueller said the amendment returns the bill to the assigned target by removing the previous RDA repeal and by converting the pre-weatherization direct appropriation to a transfer with a lower amount. Mueller also highlighted language capping certain grant-administration fees ($100,000 for Commerce-administered RDA grants and $25,000 for PCA-administered grants) in the DE amendment.

The committee approved the motion to recommend passage of House File 2442 as amended by roll call, 6 ayes and 5 nays. The committee recorded the tally as 6 ayes and 5 nays. Ayes (recorded): Senator Marty; Senator Friends; Senator Mohammed; Senator Pappas; Senator Whitland; Senator Murphy. Nays (recorded): Senator Dames; Senator Drayheim; Senator Howe; Senator Jasinski; Senator Pratt.

The committee asked staff to make technical and conforming changes before the bill moves to the floor. Committee leaders and staff indicated they may schedule additional finance hearings later in the session for capital and pension-related bills.