C-BED benefits heading to Texas
Minnesota legislature is working to place the "community" back into its Community Based Energy Development programs.
Wednesday, August 11, 2010 - 18:01
Minnesota legislature is debating how to stop Texas from benefiting from Minnesota's Community Based Energy Development program, or C-BED.
"The entire purpose of this program is being exploited," said Minnesota House of Representatives member, Andy Welti. "It is supposed to be providing benefits to local community members and businesses. Now we are witnessing proceeds being shipped back to Texas."
Though C-BED programs are already occurring throughout Minnesota, loopholes in policies favor other states' investments, excluding the "community" in the Community Based Energy Development Program.
What is C-BED?
C-BED is a renewable energy program that was designed in 2009 in light of local economic hardship. According to Welti, it was intended to bring green energy and green jobs to Minnesota by bolstering local renewable energy options.
In the C-BED program, local businesses and individuals can buy in on wind energy projects to help the initial cost of construction. Because wind energy projects are expensive and the fuel is free, C-BED owners pay high amounts in the first 10 years of the contract when large loans must be repaid, and then see reimbursement every year after.
"Investors are cash-strapped during the early years of a project, and cash-rich during the later years," Welti told constituents in a congressional meeting held in May.
The C-BED framework states that project owners are limited to non-profit organizations, cooperatives, tribal councils and local government entities (such as school districts, towns, cities, associations, etc.).
However, the current C-BED program setup favors industrial energy companies that may be from outside of Minnesota borders.
A local landowner is required to pay $27 for a share in a wind energy development program. A local individual investor pays $60 a share, and must also prove to have a million dollars or more in net worth.
Industrial wind companies, that many be located anywhere in the world, are required to pay $5 a share.
Minnesota Representative Tim Kelly said these prices were set to encourage renewable energy companies to invest because as renewable projects grow larger, it is difficult to generate enough local business support.
"The larger the projects the more pressure is put on C-BED to transform into something it never was meant to be," Kelly said. "It now has to find a way to bring in large companies to invest."
Kelly also said that Texas utility companies are investing in two of Minnesota's three C-BED projects.
So far Minnesota legislature has proposed two solutions to encourage community involvement: altering the program so only Minnesota utility companies would be allowed to invest, or placing a cap on amounts of energy the wind project would produce.
Mandating an energy cap would assure renewable wind projects are kept small and initial investments would be low, decreasing dependence on utility companies, and increasing dependence on communities — although Minnesota Representative Torrey Westrom said an energy cap would be hindering progress to renewable energy development.
"In the condition of our current environment, we can no longer rely on fossil fuels," Westrom said. "We should be pushing green energy forward any way we can."
Minnesota legislature will be analyzing the C-BED framework to attain a workable renewable energy program that benefits local communities in the weeks ahead.