Renewable Development Fund (RDF)

Xcel Energy’s Renewable Development Fund (RDF) was created in 1999 pursuant to the 1994 Radioactive Waste Management Facility Authorization Law (Minn. Stat. § 116C.779). Originally, Xcel Energy was required to donate to the fund $500,000 annually for each dry cask containing spent nuclear fuel being stored at the Prairie Island nuclear power plant, amounting to about $9 million annually. Subsequent legislation, enacted in May 2003, extended nuclear-waste storage at Xcel Energy’s Prairie Island plant and increased the amount Xcel must pay toward the development of renewable-energy resources to $16 million annually for as long as the utility’s Prairie Island nuclear plant is in operation and $7.5 million for each year the plant is not in operation. In addition to the contributions made by Xcel Energy, the fund is financed by Minnesota and Wisconsin electric customers. To date, the Renewable Development Fund program has committed to funding more than $118 million for projects to identify and develop new or emerging renewable energy sources. 

The above payment rate is in effect until there are 32 casks stored at the plant (scheduled to happen in 2012). Legislation passed in 2010 (S.F. 3275) will go into effect at this time, which requires Xcel to contribute $500,000 per cask annually. The current schedule for casks storage is:

2011: 27-29 casks
2012: 30-32 casks
2013: 33-35 casks
2014: 36-38 casks
2016: 39-41 casks
2017: 42-44 casks
2019: 45-47 casks

In May 2007, S.F. 2096 amended Minn. Stat. § 116C.779 after Xcel petitioned the Minnesota Public Utilities Commission (PUC) to begin dry cask storage at Monticello, a second nuclear power plant. Under this legislation, Xcel is required to contribute $350,000 towards the fund for each dry cask storage device containing spent fuel at the Monticello plant for as long as the plant remains in operation and $5.25 million annually for each year the plant is not in operation. Xcel’s petition for dry cask storage at Monticello (which continues to operate) has been approved according to the following schedule:

2008: 10 casks
2013: 20 casks
2016: 30 casks

Therefore, Xcel’s annual contribution to the RDF was increased from $16 million to $19.5 million during 2008 and will increase again to appoximately $24.5 million in 2013 and $26.6 million in 2014.

Up to $10.9 million annually must be allocated to support renewable energy production incentives through January 1, 2021. Of this amount, $9.4 million supports production incentives for electricity generated by wind-energy systems. The balance of the $10.9 million sum (up to $1.5 million annually) may be used for production incentives for on-farm biogas recovery facilities, hydroelectric facilities, or for production incentives for other renewables. Unspent portions of this allocation from any calendar year may be used for other purposes allowed under this fund (see Funding Allocation section). In addition to the $10.9 million annual allocation for renewable energy production incentives, 2009 Minnesota legislation required Xcel to send an additional $5 million annually to fund a grant for the University of Minnesota’s Initiative for Renewable Energy and the Environment (IREE). 

Funding Allocation
Funds in the RDF account may only be used for the following purposes:

• To increase the market penetration of renewable electric energy resources in Minnesota at reasonable costs
• To promote the start-up, expansion, and attraction of renewable electric energy projects and companies within Minnesota
• To stimulate in-state research and development into renewable electric energy technologies
• To develop near-commercial and demonstration scale renewable electric projects or near-commercial and demonstration scale electric infrastructure delivery projects if those delivery projects enhance the delivery of renewable electric energy

Preference must be given to development of renewable-energy projects located in Minnesota, but a small number of projects located in other states have been funded. Renewable energy technologies eligible for funding typically include wind, biomass, solar, hydro and fuel cells. Funding is generally split between new development projects that result in the production of renewable energy, and research and development. Expenditures from the RDF may only be made after approval by order of the PUC upon a petition by the public utility.

Project Selection and Examples
The RDF is administered by the Renewable Development Board, which originally consisted of two representatives from Minnesota’s environmental community, one representative from the Prairie Island Indian Community, and two representatives of Xcel Energy’s ratepayers, one representing commercial/industrial customers and one representing residential customers. However, S.F. 2181 specifies that Xcel is only required to include ratepayer representatives on the board, but may include other parties. Awards have historically been given to projects supporting the research and development of new renewable energy sources and energy production for wind, biomass, solar, hydropower, biofuels and coal gasification. Examples of the number of projects and total awards for each of the four RDF funding cycles are listed below.

• First Funding Cycle (2001): 19 renewable energy projects awarded nearly $16 million in funding
• Second Funding Cycle (2005): 29 renewable energy projects awarded nearly $37 million
• Third Funding Cycle (2007): 22 renewable energy projects awarded nearly $23 million
• Fourth Funding Cycle (2014): 29 renewable energy projects awarded $42 million

Xcel must submit an annual report to the legislature by February 15 describing the projects funded by the RDF. In addition, the projects receiving funds from the RDF must supply a written report detailing the project’s financial, environmental, and other benefits.