The State Fighting The Feds to Lower Energy Costs – (Bonus) Episode 253 of Local Energy Rules

Pete Wyckoff:
I think we’re a doing great job, not because of anything I’m doing, but because I have an amazing staff who’s out there every day giving their best for trying to make this transition work for everyone.

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John Farrell:
Hey, you’ve stumbled on some bonus content from my two-day, nine interview podcast recording marathon at the Gateway to Solar Conference in October, 2025. Please consider donating to ILSR to keep the conversations like this flowing. Now here’s my discussion with Pete Wyckoff, Minnesota Deputy Commissioner of Energy Resources, where we talked about the substantial role of the state energy office in deploying state and federal energy programs, the success of shifting management of the state’s community solar program to the state agency from the utility and the Trump administration’s actions that are making electricity more expensive for everyone.

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John Farrell:
Pete, thanks so much for taking the time to chat with me.

Pete Wyckoff:
Thanks so much for having me. It’s great to be on the show.

John Farrell:
I’m just really excited to talk to you about a lot of different ways in which states and state energy offices interface with our clean energy economy. I kind of want to start with the elephant in the room of course, which is what’s been happening at the federal level. Obviously there have been policy changes with the big ugly bill. There have been clawbacks. What have you seen in terms of Minnesota’s clean energy future? What are the implications of some of those federal clawback, the federal retrenchment on clean energy policy?

Pete Wyckoff:
Yeah, maybe if I can just start by saying what it is we do at the Division of Energy Resources at the Department of Commerce, because I think that’s important to the story I’ll tell here.
So we have two sides at the Division of Energy Resources. We have our programs and policy side, which is called the Unit of Federal and State Energy Programs, and then we have a regulatory side and you can think of that as we’re sort of state’s attorney, the Public Utilities Commission. We try to give recommendations to the PUC that represent what the governor thinks should happen, because that’s our role, but are balancing our need to push for clean, our need to push for an affordable system and our need to push for a system that is reliable. So we can’t compromise on any of those things. So we have the programs and policy side, we have the regulatory side and both are very much impacted by the change in Washington.
On the programs and policy side, one way of thinking about it is we are supported and that’s the side that’s also called our State Energy Office. We are supported to the tune of about $14 million a year by the state. Contrast that with our federal entanglements where we are currently under contract for about a billion dollars directly in federal grants. So most of our money is dependent on the federal government being a responsible partner that shares our values and goals.

John Farrell:
I’m hearing a little subtext here about responsible partner, but please continue.

Pete Wyckoff:
So a lot of those grants we have came out of the Inflation Reduction Act, the Bipartisan Infrastructure Bill that passed during the Biden administration. The new administration has taken a sort of hostile view towards those programs. The kicker is the grants we received through those programs are what are called obligated. They are signed contracts with the federal government. We consider them obligations that they must pay off on. Because they don’t want to, and this is a new thing in the US federal government stance, previous administrations, even if they didn’t agree with what the prior administration had done, did not try to violate legally binding contracts. This one is behaving differently and when a contract is broken, what do you do? Unfortunately you lawyer up. So we’ve been working, I spend way more time working with my new friends in a new unit, the attorney general’s office pointing out that what is happening is illegal and un-American, and that we’re not going to accept it. Thanks to the amazing work of Keith Ellison’s office and other attorney general’s offices, they’re kind of working in tandem across the country, we keep winning in the lower courts. So most of our money keeps flowing, but the administration keeps coming up with new ways and new angles for arguing why they don’t have to meet their obligations and we are pushing back.

John Farrell:
Well, I’m really glad to hear that you’ve had victory so far. I’m kind of curious when I’ve heard about this in the nonprofit community, the money is not flowing while they’re waiting for the litigation. Is that the case? Are there different circumstances where some money is?

Pete Wyckoff:
There are different circumstances for different grants and because we, because have an attorney general’s office and other entities don’t have access to that, have had better luck in keeping the money flowing. But yes, we certainly have places where the money isn’t currently flowing that we don’t accept the federal government’s right to just be relieved of their obligation, to break their contract. I feel very much for the other entities like local governments and non-government organizations and universities and tribes who are seeing more across the board their funding effectively frozen in terms of the grants.

John Farrell:
Right. So I wondering of that billion, first of all, is that large in terms of historical funding from the federal government to states, because I’m not as familiar, I would assume there’s an increase based on the design of the Inflation Reduction Act and the Infrastructure Bill, but I’m also just curious then if you can describe, I know there’s lots of different things that were part of that. I don’t know if you can give me a few categories of things that that money is intending to do.

Pete Wyckoff:
So of our billion dollars, about a third of it are two long running programs. There’s the Federal Weatherization Assistance Program that we run for the state of Minnesota and there’s the Federal Energy Assistance Program. So those are not part of those Biden era bills. Those are long running programs. We are waiting to see what happens with the federal government shutdown, the federal government adopting a new budget to see how those programs turn out. We’re reasonably optimistic, but we’re concerned and been working hard to illustrate the value of those programs to Congress and to push at the federal level why those programs are very important.
The other money has come in grants. The billion dollars includes just grants to US Department of Commerce. We’ve also been working with many other entities in Minnesota and if you look at the total number of clean energy related grants that came out of the IRA and the IHAA or the bipartisan infrastructure law to Minnesota, it’s well over 3 billion maybe pushing 4 billion in grants.
Those are really important for reducing the costs of building out this new energy system, which we have to do anyway. The old one is old and on its way out. There’s a lot of infrastructure that we just need to build, but we’re going to build it back so it’s going to be cheaper to run and it’s going to be cleaner. But without that federal support, if we are not successful in holding the federal government to its obligations, we’re still going to need to do that work, most of it. And that just means the burden will be transferred from the federal government and federal taxpayers and a progressive tax system that’s still somewhat progressive to Minnesota rate payers. And that’s what we’re trying to avoid. We do not want to have energy bills go up, but that’s where the federal policies all across the board are pushing right now under this new administration.

John Farrell:
I think it sounds to me like the Inflation Reduction Act was aptly named in the sense that it saw the need for these investments in energy infrastructure, power plants, transmission lines, pipelines, whatever, made those grants to the states to help cover those costs, to help keep prices down. And ironically, despite the fact that we sort of have this impression that the political outcomes of the last election were driven by people’s concern for price, the decisions that this new administration is making are actually going in the opposite direction. They’re going to raise costs for people if they go through with them.

Pete Wyckoff:
Oh, it is not only what we’re talking about right now, which are attempts to cancel obligated grants. I’ve told you why we think that’s problematic, but one of the big implications if they’re successful is that will push up energy prices. But there’s other things the federal government is doing that are pushing up energy prices and that gets to the other side of my shop and that’s the regulatory side and the home and consumer side as well. One of the things they’ve done legally, unfortunately, they have the right to do this and they did it the right way, was put serious curtailment on the clean energy tax credits that are available from the federal government. What that means is that billions and billions of dollars that would come to Minnesota as we grow our energy system the way it needs to grow, will not be coming. We are trying to meet deadlines before those tax credit expires, so we’re working with utilities, working with all scales of renewable and clean energy developers to try to push projects forward to get those.
But the bottom line is in the end of the day when Congress passed what they called their big, bold, beautiful bill or something like that this summer, it was a completely legal action. We also call it HR one, that’s the other way to refer it to perfectly legal action, but it was extremely shortsighted. And one of the things we know will happen as a result of that is substantial energy price inflation. And that is mostly because of the impact on utility scale clean energy deployment, which will still be the cheapest way to deploy new generation even without those tax credits. Wind and solar and storage are going to be the way you would go about building new clean or any sort of electric generation. They will win on price, but they will be higher price and that is only because of the actions of the federal government. That’s the second inflationary thing they’re doing to Minnesota bill payers.
The third thing they’re doing is these crazy tariffs. It particularly hits Minnesotans where, for reasons of geography, all of our gasoline in the state comes from Canada. A lot of our natural gas in the state comes from Canada. Some of our electricity comes from Canada. When we get into international tariff wars, it hits Minnesota particularly hard on the energy pocketbook, but also the supply chains for the energy system are really disrupted by tariffs. So we now have three things that are raising prices because of the way the new administration is acting: 1) we have the attempt to cancel grants; 2) we have the shortsighted curtailment of clean energy tax credits; 3) we have the crazy tariffs, and I’ll give you one more. This is a broad category. There’s a lot of executive actions of questionable legality, but if you kind of summarize what they are trying to do, they’re trying to make it harder to build the affordable things which are wind and solar and storage and harder to close the expensive things, which tend to be things like coal plants.
For instance, the federal government for now has been successful in forcing a uneconomic coal plant in the state of Michigan, which was supposed to close this summer, to stay open. And just because of the way the energy markets work and the way the federal regulators have thus ruled and the courts have, everybody’s going to be weighing in, it’s not resolved. But what that means is that a plant that was too expensive to operate and not needed, according to the utility, the state of Michigan, the regional regulators, there were plans for dealing with this closure that would save a lot of money in the first 39 days that this plant was forced to stay open. It costs an additional $23 million. And the craziest thing is that Minnesota rate payers, because we are in the same region as Michigan, are on the hook for helping to pay for these expensive additional coal plants.
So they’re putting up all sorts of barricades, because I think they recognize that wind and solar are still going to be the cheapest, to try to keep us from building those things out. And they’re doing crazy things to try to keep us to holding on to the expensive fossil assets. So that’s the fourth thing, and that’s just a suite of weird federal attempts to put a thumb on the scale of how the energy system develops, because they know if they don’t put a thumb on the scale it’s going to develop in the same way it was going to develop anyway before the Inflation Reduction Act, before the Bipartisan Infrastructure Act, it was going to continue to move to clean because that’s also, beautifully, the affordability play. And because of things like batteries and virtual power plants and things, it’s also the best way to build a system, especially when you build out more transmission, that is reliable going forward.

John Farrell:
It seems like such a trap too because as you were talking about Minnesota’s pain of the geography that we just happened to for a long time have this partnership with Canada over energy transfer, and for a long time, whether it was Canada or Mexico, we had this sort of understanding that we’re all in this together. We might as well have our economies connected to one another. My first thought was, okay, so they’re putting on these tariffs, they’re making it harder for us to get access to these energy resources from other places. Well, great Minnesota can invest more in its own native resources. And then you followed up with that fourth thing around the ways in which they’re putting their thumb on the scale and they’re making it even harder for states. It sounds like they’re basically trapping states. They’re saying, we’re taking away the money that would’ve made this less expensive. We’re taking away your access to resources that might’ve been affordable from other places, and we’re going to try to stop you from developing new affordable resources that would allow you to meet your own energy demands.

Pete Wyckoff:
Yeah, I need to be careful about always crying “federalism,” but now I used to work at the federal level and I work at the state level, so maybe perspectives change, but this is a clear the federal government is not seeing the states as a partner. They’re not seeing the states as leaders. They’re seeing the states as a hindrance to what they want to do. So they’re trying to stop state action in a way that is very different from how the federal government has looked at the states in the past.

John Farrell:
So one of the things I wanted to also ask you about is we have a community solar program here in Minnesota and, uniquely, we have more sort of independent operation of it, for lack of a better term. I guess what I’ll say is the state energy office is involved in overseeing our community solar program in a way that is different than in other states where we generally have a utility who’s in charge of the program. In Minnesota, there was some contention over that. Xcel Energy actually paid a fine for having slow interconnection procedures. I guess I’m just kind of curious how is that working, having the energy office overseeing the implementation of the community solar program?

Pete Wyckoff:
Yeah, so Minnesota, as you know, and I think you’ve been part of advocating for this throughout, is a national leader in community solar. We have been the envy of the nation. We built out approaching I think a gigawatt, you probably know the number even better than I do off the top of my head, of community solar, which per capita makes us the envy of community solar advocates all across the country. Minnesota Department of Commerce Energy Division had a more indirect role until the 2023 legislative session when we were actually given what had been run by Xcel and said, we’re going to reimagine the community solar garden program in the Xcel area and we’re going to have Commerce – Energy Division be running it, which basically takes it from a system where there had been independent developers and Xcel, directly interacting, to a system where we are the advocate for the program, we are the referee, we meet with, and try to understand the needs, but also hold to the statute of all players on both sides.
And the program was also modified to be more explicitly about low and moderate income Minnesotans. In the first two years of running that program, we have proudly achieved extremely high levels of hitting the targeted audience, which is low and moderate [income] Minnesotans or other sort of public goods, solar. We’re proud of the program. We are seeing up close and personal all of the complexities and the complexities of getting a utility that may not be that excited about the program but has been told by the state that they have to do it and developers who also would like us to run it exactly their way. We run it according to the statute. I think the program has been very successful thus far. There are garden openings after garden openings that I can’t make it to all of them now that we are into our second year and we’re excited to carry out what the state and the governor told us to do. So we’re proud of it.
We’ll be even more excited when we get our federal Solar for All money reinstated. So that was going to be a large chunk of that was going to help us make community solar gardens even more valuable for low and moderate income Minnesotans. And it would very much when we get that federal funding back piggyback with the state level CSG program that we are mandated to run, plus the federal funds that we have obtained to make it even more valuable from the low and modern income Minnesota household perspective.

John Farrell:
Seems pretty important in an era of affordability challenges. One quick follow up on the community solar, if you have any very brief of lessons learned from having to step in to run that program from to have the Department of Commerce step in instead of having that direct interaction between developers and the utility. Just kind of curious if there’s things that other states could think about and their choices about how they set that up. And then more broadly, I’m just interested in other ideas you have about how state energy offices can help states lead on clean energy. Obviously the community solar program is not the only thing. You have a lot of these federal grants. What else is exciting in your pipeline?

Pete Wyckoff:
So we are happy to talk with any state about our CSG lessons learned. Like I said, we’re sort of the in-between now and the referee, which can make you unpopular with both sides that are negotiating to get these gardens built. So there’s a lot of work by my staff and I’m very proud of what they’re doing and we are happy to talk to anybody from any state that wants to learn about what we are learning more broadly. The state energy office got a lot bigger, lot bigger after the ’23 state session and with all the influx of federal bipartisan infrastructure and IRA money and we have stood up, depending on how you squint, 30 to 60 new programs. We have learned a lot. They’ve been all over the map in terms of what the programs have done, in terms of solar and storage and grid enhancements and this and that.
We even ran an EV rebate program at the state level until the money ran out. We have learned a lot about what goes well and what’s hard about those implementations. I’m a political, I’m around at least through the end of next year, maybe longer than that. I think if we stick around longer than that, we will have a chance to take all the lessons we’ve learned and apply them as we are called on hopefully to launch new programs going forward or get these monies flowing. We’re still waiting to set up some of our IRA programs that are being slow-walked. So there are a lot of new programs we are working on, but I think the overall theme of what the legislature and the federal government have funded us to do is helping the energy transition and making it more affordable. Most of our programs are focused on low income or moderate income Minnesotans and making sure they are participating in this energy transition, making sure that the energy costs and energy cost burden are lowered for them as much as we can through implementing these funds. I think we’re doing great job, not because of anything I’m doing, but because an amazing staff who’s out there every day given their best for trying to make this transition work for everyone.

John Farrell:
Well, I’ll just tip my hat to you in terms of the lessons learned. I have followed the e-bike rebate program, which had limited funds and was really impressed with the second iteration of the program where it was more focused on low and moderate income folks. The process to apply, I remember the first time there was one of those, everybody get on your computer at 10 o’clock in the middle of the day and just try to get in there. And then it was redesigned as a lottery program so you didn’t have to necessarily be at a computer. To me, that just showed that there’s a real dedication to getting those things designed in a way that really makes the funds go to the people that you intend and to work effectively. So just tip of the hat there on one small thing that I’ve seen,

Pete Wyckoff:
Just to give some more specific examples, we have long running programs that have gotten boosts like our Solar on Schools program, but we also have a Solar on Public Buildings program. We have storage programs, we have long running programs like PACE and other programs like that help with financing and we help to launch the Minnesota Green Bank MNCIFA, which is also providing low interest capital to make this energy transition work and work for all Minnesotans. We work with a lot of community partners. CERTs is an example. We have been doing our own sort of outreach work. A lot of funding for that is also in flux, but we’ve been proud of how we’ve built up that outreach work. And the other thing we have done, in addition to MNCIFA, the state was kind enough to give us money to set up something called the State Competitiveness Fund, which we have used to help state entities get federal funding.
And part of that is matching grants. Part of that is now we’re moving on to grants that are focused on the tax credits as they exist and will continue to exist. So more of an emphasis on storage and geothermal and an emphasis on getting solar tax credits while they’re still available. We also had money from the state to do local capacity building through local capacity grants. So to help communities and the entities that serve communities build up their capacity. That is all under siege by the federal government and its new sort of attitude. But I want to say that our resources are still there. We are still deploying them every day in the best way that we can. We cannot make up for the loss of the federal resources. The state not have the ability financial aid to do that, but we’re doing everything we can to continue pushing on this clean energy transition and make sure it works for everybody.

John Farrell:
Well, thank you so much, Pete. I really appreciate you taking the time to give me this overview. I hadn’t known as much as I had wished before I came into this conversation, but I think I’ve learned a lot. And that summary you gave at the end of all the different ways that you’re helping individuals, helping communities, helping cities. Yeah. Well, it just helps me understand better all of the opportunities that might be out there for communities to look into.

Pete Wyckoff:
Thank you. And one more I’ll mention. We just had our first annual tribal energy forum in the state of Minnesota that is something called PACE, which is actually being set up by the tribes. It’s kind of like MNCEFA where we were given the money to start it, and then it’s going off to be its own thing. But Minnesota Commerce will continue to support efforts for our tribal nations in Minnesota to help them meet their clean energy goals and we’re really proud of that.

John Farrell:
That’s great news. Well, Pete, thanks again. I really appreciate you taking the time.

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John Farrell:
Thanks for listening to one of my nine mini podcasts from the 2025 Gateway to Solar Conference with Pete Wyckoff, Minnesota Deputy Commissioner of Energy Resources. Even these mini versions of local energy rules are produced by myself and Ingrid Behrsin with editing provided by audio engineer Drew Birschbach. And as always, we’re talking about taking on concentrated power to transform the energy system. Until next time, keep your energy local and thanks for listening.