20/20 Initiative could be costly

September 2006

It appears the voters in the City of Grand Forks will have the opportunity in November to create a mandate for renewable energy in the city. A group called the Citizens for Affordable Renewable Energy (CARE) has been circulating a petition calling for this issue to be placed on the general election ballot in November. The plan is called the 20/20 Initiative. The voters will be asked to vote “yes” to amend the Grand Forks Home Rule Charter to ensure that 20% of the electricity purchased in the city comes from renewable sources. That percentage is increased to 30% by year 2030.

Nodak is one of two electric power suppliers franchised in the City of Grand Forks. The other is Xcel Energy. If this measure passes, we will need to comply with the mandate in order to have our franchise renewed. As this issue comes up for a vote, it will be our job to provide factual information to the voters about the Initiative. No doubt one of the questions asked will be whether or not this action would have a significant effect on the price of electricity for the residents of Grand Forks. While the honest answer to the question is, we don’t know, we can at least describe what some of the challenges will be to comply with the renewable requirement if passed.

One of the most problematic features of the Grand Forks Inititive is that it creates a mandate that renewable energy be delivered to a specific location, namely Grand Forks, without consideration to cost. Many utilities today, including Nodak’s wholesale supplier, Minnkota Power Cooperative, are generating a small portion of their energy with renewable sources with very little, if any, effect on their retail rates. However, if utilities were required to generate 20 or 30 percent of their energy with renewables, the rate impact would probably be more than most consumers would appreciate. Most research indicates that the public is generally interested in renewable energy even to the point they are willing to pay more for their electricity if it is generated with renewables. The question, of course, is how much more are they willing to pay and are they willing to establish a mandate, which may drive the cost up a little more than they had anticipated.

If this proposal does reach the ballot in Grand Forks in November, the voters will be making a decision that carries a lot of uncertainty. They will not know the final cost of meeting this requirement in 2020 and 2030. They will not know if the cost will have an adverse effect on their electric rates, and if so, the significance of the added cost. Even though there is a growing interest in renewable energy, this proposal will put the voter in a difficult position to cast an intelligent vote.