News > CEO’s Message – October 2024

CEO’s Message – October 2024

Reforming Residential Solar Rates: Ensuring a Sustainable, Equitable and Modern Energy Future for Minnesota

This month’s CEO column was drafted in coordination with our industry partner, the Minnesota Rural Electric Association (MREA). MREA has identified net metering reform as a 2025 legislative session priority, which Stearns Electric supports. 

As new technologies and the transition to cleaner resources rapidly change our electric grid, some of Minnesota’s energy policies, such as the net metering laws, are outdated and ineffective. Minnesota’s current net metering policy requires the Cooperative to buy excess power delivered to the grid from residential and business owned distributed energy systems (i.e., solar panels) at a higher cost than we normally pay. This policy increases electric costs for all members and must be reformed to address today’s industry challenges in a more equitable and responsible manner. 

First off, the policy is outdated. Minnesota’s net metering policy was established in 1984 when solar technology was in its infancy. As the first state to implement net metering, Minnesota played a pioneering role in promoting solar energy, but it is now time to update this policy as it no longer addresses the modern energy landscape. Comprehensive reform is needed to reflect current realities and capabilities, including energy storage. 

Second, net metering is expensive. With Minnesota’s mandate for carbon-free electricity by 2040, net metering incentives have become redundant. Utilities are already charged with reducing carbon emissions; there is no reason to keep expensive incentives to achieve the same goal. Net metering forces cooperatives to pay retail rates for energy they could purchase at cheaper wholesale prices, making the policy ineffective. Additionally, generating electricity from small distributed solar systems is more costly than from larger utility-scale projects, resulting in less carbon reduction for the same investment. 

Finally, net metering is inequitable. It leads to cost-shifting, where those without distributed energy systems end up paying more to cover the costs of maintaining the grid. Those who can afford these systems are generally wealthier, leaving lower-income households to face the brunt of the cost increases. Studies show that disparity growing in Minnesota, with affluent households increasingly dominating solar installations. Reform is essential to prevent financial strain on those least able to bear it. 

Reforming net metering can enhance grid stability and reliability, ensuring that both traditional and renewable energy sources are effectively integrated and managed. 

Minnesota has the potential to become a national leader in renewable energy policy and ensure a fair, sustainable and modern energy future for all Minnesotans. Embracing reform supports renewable energy growth and facilitates the connection of solar sized to load for those who want it. Minnesota’s electric cooperatives stand ready to support these necessary reforms, advocating for policies that benefit all cooperative members and advancing our collective goal of a reliable, affordable and sustainable energy future. 

Sincerely,

Matt O’Shea
Chief Executive Officer