RE: Request for Co-location Dispute Resolution for the Menke and Hauer CSG sites, Docket No. E002/M

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1 September 23, 2016 PUBLIC DOCUMENT Heather Eberhardt NextEra Energy 700 Universe Boulevard Juno Beach, Florida Martin Morud President TruNorth Solar, LLC 5239 Edina Industrial Boulevard Edina, Mr. James R. Denniston Assistant General Counsel Xcel Energy 414 Nicollet Mall, 5 th Floor RE: Request for Co-location Dispute Resolution for the Menke and Hauer CSG sites, Docket No. E002/M Dear Ms. Eberhardt and Mr. Denniston, Attached please find the decision of the Department of Commerce, Division of Energy Resources on NextEra s August 26, 2016 request for dispute resolution on the issue of co-location of its Menke and Hauer CSG sites. The Department is available to answer any questions you may have. Sincerely, /s/ SUSAN L. PEIRCE Rates Analyst SLP/ja Attachment 1

2 I. Background Information On August 5, 2016, Xcel Energy (Xcel or Company) notified NextEra (NextEra or Developer) that it considered the Developer s Menke and Hauer CSG sites to be co-located. The Menke project consists of 3 1-MW co-located CSGs located at [TRADE SECRET DATA HAS BEEN EXCISED] Jordan. The Hauer Project consists of 5 1 MW co-located CSGs located at [TRADE SECRET DATA HAS BEEN EXCISED] Jordan. On August 26, 2016, NextEra appealed a determination by Xcel that its Menke and Hauer CSG sites were co-located in excess of the 5 MW limit established by the Commission s August 6, 2015 Order in Docket No. E002/M to the Department of Commerce, Division of Energy Resources (Department). On September 6, 2016, Xcel submitted a response to SunEdison s appeal. II. Definition of Co-location In its August 6, 2015 Order, the Public Utilities Commission (Commission) limited co-located CSGs to no more than 5 MWs from any applicant at any given project site for applications submitted prior to September 25, 2015, and to 1 MW for applications submitted after that date. 1 In its December 15, 2015 Order 2, the Commission defined co-located community solar gardens (CSGs) as: Community Solar Gardens shall be considered Co-Located if they exhibit characteristics of a single development, such as: 1. Common ownership structure; 2. An umbrella sale arrangement; 3. Shared interconnection; 4. Revenue-sharing arrangements; and 5. Common debt and equity financing. Community Solar Gardens will not be considered co-located solely because the same person or entity provided tax-equity financing for the garden or garden project. 1 In the Matter of the Petition of Northern States Power Company, dba Xcel Energy for Approval of its Proposed Community Solar Garden Program, Order Adopting Partial Settlement as Modified, Docket No. E002/M , August 6, In the Matter of the Petition of Northern States Power Company, dba Xcel Energy for Approval of its Proposed Community Solar Garden Program, Order Approving Tariffs as Modified and Requiring Filing, Docket No. E002/M , December 15,

3 In adopting this definition, the Commission stated that the test allows consideration of geographical proximity, but neither proximity nor any other factor is dispositive of whether gardens are part of a single development. 3 III. Summary of NextEra s Response NextEra states that it is developing the Menke and Hauer CSGs as separate projects, and indicates that each project is located on property owned by different and unrelated landowners, with separate lease arrangements. The Menke lease was signed July 1, 2015, and the Hauer lease was signed on September 9, The Developer states each project is located in a separate zoning district requiring separate permitting from different jurisdictions. Each project is structured as a separate LLC with a single parent LLC, DG 1 Acquisition Co., LLC over each. Both projects will interconnect to the Jordan substation along the same feeder line. NextEra indicates that differences in site characteristics between the two project sites has resulted in significantly different interconnection facilities costs for each project. The interconnection facilities cost for the Menke CSG is estimated at [TRADE SECRET DATA HAS BEEN EXCISED] while the estimated cost for the Hauer CSG is [TRADE SECRET DATA HAS BEEN EXCISED]. NextEra indicates it is providing equity financing for both CSG, but states that each CSG is a separate legal entity required to stand on its own financially. NextEra also indicates that there is no revenue sharing arrangement between the two CSGs. The Developer also acknowledges that both CSGs are working indirectly through NextEra Energy Resources Acquisitions to identify subscribers. Each CSG will execute separate service agreements with each subscriber. IV. Summary of Xcel Response Xcel asserts that both CSG projects are owned by Next Era through wholly-owned subsidiaries. Both interconnect at the Jordan substation along the same feeder line. In addition, the Company states that because both projects draw from the same pool of potential subscribers and share marketing this constitutes an umbrella sales agreement. Although the two projects are separate legal entities and do not have any revenue sharing arrangement, Xcel states all income and losses are consolidated to the parent company for tax purposes. NextEra provides equity financing for both CSGs. Finally, Xcel states that the points of interconnection are approximately 0.71 miles apart, and the closest fence-to-fence distance is 0.56 miles. V. Department Finding The Department reviews co-location disputes to determine if the projects exhibit characteristics of separate unrelated developments, rather than a single development. While no single factor is determinative, based on the guidance provided by the Commission, the intent of the co-location limitation and the statutory directive that there shall be no limitation on the number or cumulative generating capacity of community solar garden facilities other than the limitations imposed under section 216B.164, subdivision 4c, or 3 Id. at 3. 3

4 other limitations provided in law or regulation, the most significant consideration is whether the projects were originally proposed as a single development or separate unrelated developments. The Department has reviewed the information provided by NextEra and Xcel and concludes that the Menke and Hauer projects are not co-located. While the two projects share common ownership through the parent, DG1 Acquisition Co., LLC, and receive equity financing from NextEra Energy Resources, LLC, ownership alone is not sufficient to determine co-location. The applications for each CSG were submitted separately, are located on property owned by different and unrelated property owners, have separate and distinct lease agreements, and require permits from different permitting authorities. While both projects connect to the same substation, the interconnection costs for both projects are vastly different. Xcel s argument that the two projects are co-located because the projects share interconnection to the same substation, and the points of interconnection are only approximately 0.71 miles apart is not reasonable. The Commission s December 15, 2015 Order defining co-location stated that the test allows consideration of geographical proximity, but neither proximity nor any other factor is dispositive of whether gardens are part of a single development. 4 If shared interconnection is defined as interconnection to the same substation, then the definition of co-location would by default become no more than 5 MW per substation per developer. The Commission s Order establishing a co-location limit of 5 MW, did not limit a developer s ability to interconnect more than one project to a substation. The Department does not find Xcel s argument that the projects share some common marketing efforts persuasive. Developers with more than one project, whether one mile or twenty miles apart are likely to develop common marketing materials to use in attracting subscribers. With respect to the Menke and Hauer CSGs, each subscriber is required to obtain a separate subscription agreement with each CSG, and there is no revenue sharing between the two CSGs. In summary, the facts demonstrate that each of these projects exhibit the characteristics of separate unrelated developments, rather than a single development, and are not co-located. Accordingly, the Department determines that NextEra s Menke and Hauer projects are not co-located. /ja 4 Id. 4

5 CERTIFICATE OF SERVICE I, Sharon Ferguson, hereby certify that I have this day, served copies of the following document on the attached list of persons by electronic filing, certified mail, , or by depositing a true and correct copy thereof properly enveloped with postage paid in the United States Mail at. Department of Commerce Public Letter Menke and Hauer Community Solar Garden Docket No. E002/M Dated this 23 rd day of September 2016 /s/sharon Ferguson

6 Michael Allen ar.com Julia Anderson n.us All Energy Solar 721 W 26th st Suite 211 Office of the Attorney General-DOC Sara Baldwin Auck sarab@irecusa.org Interstate Renewable Energy Council, Inc BRM Tower 445 St PO Box 1156 Latham, NY Kenneth Bradley kbradley1965@gmail.com 2837 Emerson Ave S Apt CW112 Electronic Service Yes OFF_SL_13-867_Official Michael J. Bull mbull@mncee.org Center for Energy and Environment Jessica Burdette jessica.burdette@state.mn. us Department of Commerce 212 Third Ave N Ste th Place East Suite Joel Cannon jcannon@tenksolar.com Tenk Solar, Inc Penn Avenue S Bloomington, John J. Carroll BAD jcarroll@newportpartners.c om Carl Cronin Regulatory.records@xcele nergy.com Newport Partners, LLC 9 Cushing, Suite 200 Irvine, California Xcel Energy 414 Nicollet Mall FL Arthur Crowell Crowell.arthur@yahoo.com A Work of Art Solar Orchard Rd. Paper Service No OFF_SL_13-867_Official Minnetonka, 55345

7 Timothy DenHerder Thomas yfutures.com Dustin Denison vations.org James Denniston ergy.com Cooperative Energy Futures 3500 Bloomington Ave. S Applied Energy Innovations 4000 Minnehaha Ave S Xcel Energy Services, Inc Nicollet Mall, Fifth Floor Ian Dobson ian.dobson@ag.state.mn.u s Office of the Attorney General-RUD Jason Edens jason@rreal.org Rural Renewable Energy Alliance Betsy Engelking betsy@geronimoenergy.co m Geronimo Energy John Farrell jfarrell@ilsr.org Institute for Local Self- Reliance Antitrust and Utilities Electronic Service Yes OFF_SL_13-867_Official Division 445 Street, 1400 BRM Tower th Street SW Backus, Edinborough Way Suite 725 Edina, th St SE # Emma Fazio emma.fazio@stoel.com Stoel Rives LLP 33 South Sixth Street Suite Sharon Ferguson sharon.ferguson@state.mn.us Department of Commerce 85 7th Place E Ste 500 Saint Paul,

8 Nathan Franzen om Geronimo Energy 7650 Edinborough Way Suite 725 Edina, Karen Gados SunShare, LLC th Street Suite 400 Denver, CO Hal Galvin Provectus Energy Development llc 1936 Kenwood Parkway Allen Gleckner Fresh Energy 408 St. Peter Street Ste 220 Saint Paul, Sean Gosiewski Alliance for Sustainability st Ave S Ste 100 Todd J. Guerrero todd.guerrero@kutakrock.c om Timothy Gulden info@winonarenewableene rgy.com Kutak Rock LLP Suite South Sixth Street Winona Renewable Energy, LLC 1449 Ridgewood Dr Winona, Michael Harvey mike@weknowsolar.com We Know Solar 265 Mounds View Rd Suite #1 River Falls, WI Duane Hebert duane.hebert@novelenerg y.biz Novel Energy Solutions Lynn Hinkle lhinkle@mnseia.org Solar Energy Industries Association nd Ave SE Rochester, rd Ave South #

9 Jim Horan Rural Electric Association rd Ave N Maple Grove, Jan Hubbard jan.hubbard@comcast.net 7730 Mississippi Lane Brooklyn Park, John S. Jaffray jjaffray@jjrpower.com JJR Power 350 Highway 7 Suite 236 Excelsior, Linda Jensen linda.s.jensen@ag.state.m n.us Office of the Attorney General-DOC 1800 BRM Tower 445 Street Julie Jorgensen Julie@greenmark.us.com GreenMark Solar LLC 4626 Emerson Ave. S Michael Kampmeyer mkampmeyer@a-egroup.com AEG Group, LLC Brad Klein bklein@elpc.org Environmental Law & Policy Center 260 Salem Church Road Sunfish Lake, E. Wacker Drive, Suite 1600 Suite 1600 Chicago, IL Madeleine Klein mklein@socoreenergy.com SoCore Energy 225 W Hubbard Street Suite 200 Chicago, IL John Kluempke jwkluempke@winlectric.co m Elk River Winlectric Meadowvale Rd Elk River, Jon Kramer jk2surf@aol.com Sundial Solar 4708 york ave. S

10 Michael Krause om Kandiyo Consulting, LLC 433 S 7th Street Suite Dean Leischow dean@sunriseenergyventur es.com Sunrise Energy Ventures 601 Carlson Parkway, Suite John Lindell john.lindell@ag.state.mn.us Office of the Attorney General-RUD Erica McConnell mcconnell@smwlaw.com Shute, Mihaly & Weinberger LLP Thomas Melone Thomas.Melone@AllcoUS. com Andrew Moratzka andrew.moratzka@stoel.co m Martin Morud mmorud@trunorthsolar.co m Go Solar LLC 1400 BRM Tower 445 St Hayes St San Francisco, California South 9th Street Suite Stoel Rives LLP 33 South Sixth St Ste 4200 Tru North Solar th Ave S Rolf Nordstrom rnordstrom@gpisd.net Great Plains Institute ST AVE S STE 220 Electronic Service Yes OFF_SL_13-867_Official Jeff O'Neill jeff.oneill@ci.monticello.mn.us City of Monticello 505 Walnut Street Suite 1 Monticelllo, Dan Patry dpatry@sunedison.com SunEdison 600 Clipper Drive Belmont, CA

11 Jeffrey C Paulson jeff.jcplaw@comcast.net Paulson Law Office, Ltd W 77th Street Suite 224 Edina, Donna Pickard dpickardgsss@gmail.com Citizen 1215 Lilac Lane Excelsior, Gayle Prest gayle.prest@minneapolism n.gov Doug Shoemaker dougs@mnrenewables.or g City of Mpls Sustainability 350 South 5th St, #315 MRES th Ave S Eric Swanson eswanson@winthrop.com Winthrop Weinstine 225 S 6th St Ste 3500 Capella Tower Thomas P. Sweeney III tom.sweeney@easycleane nergy.com Clean Energy Collective P O Box 1828 Boulder, CO Pat Treseler pat.jcplaw@comcast.net Paulson Law Office LTD 4445 W 77th Street Suite 224 Edina, Jason Willett jason.willett@metc.state.m n.us Metropolitan Council 390 Robert St N Saint Paul, Daniel P Wolf dan.wolf@state.mn.us Public Utilities Commission 121 7th Place East Suite Electronic Service Yes OFF_SL_13-867_Official 6

May 30, Via Electronic Filing

May 30, Via Electronic Filing 414 Nicollet Mall 55401 May 30, 2014 Burl W. Haar Executive Secretary Minnesota Public Utilities Commission 121 7 th Place East, Suite 350 55101 Via Electronic Filing RE: CORRECTED COMPLIANCE FILING COMMUNITY