Conflict of interest complaints filed against Minnesota Commerce official over solar ties

A simmering conflict of interest controversy is unsettling an energy division at the Minnesota Department of Commerce, prompting employees to lodge a complaint about a leader's marriage to a prominent lobbyist.

Louise Miltich, assistant commissioner of regulatory analysis in the department's division of energy resources, works closely with the Minnesota Public Utilities Commission (PUC). Her husband, Curtis Zaun, lobbies the PUC as director of policy and regulatory affairs for the Minnesota Solar Energy Industries Association (MnSEIA).

One incident last fall involving Miltich and Zaun — coupled with Miltich's broad input on solar issues — spurred eight veteran energy analysts to file conflict of interest complaints with the agency's human resources department.

MnSEIA, the state's top trade organization for solar developers, had ripped into the state Department of Commerce on a Friday in August, accusing the agency in PUC filings that Zaun signed of "nonsensical" and "feeble" analysis related to a large source of developer profit - the community solar garden program.

The following Monday, Miltich, who oversees a team that analyzes the community solar program, told staff that recent advice to state utility regulators in that docket had been "conspicuously antagonistic" toward the program, controversial because of its cost to Xcel Energy customers. Miltich then intervened to guide the advice analysts give to the PUC, issuing a directive for staff to view community solar as having costs, benefits and overall "public interest value" for those who can't build solar on their own.

"The recommendation could have been put forth and supported without reinforcement of the [solar gardens]-cost-too-much talking points that we regularly hear from Xcel," Miltich said in an email the Star Tribune obtained.

Commerce Commissioner Grace Arnold said Wednesday that Miltich flagged her relationship when appointed in February 2023, and the agency believes it's not a conflict of interest based on state law and policy.

"We've had the interest reviewed and double-checked," Arnold said, adding Commerce has "confidence in Louise's independent decision-making from her husband."

The department also had the Minnesota Management and Budget review the case.

Still, Commerce put some "guard rails" in place for "cases where there may be a perception [of bias]," Arnold said. The agency largely declined to offer details but provided an internal memo stating that Miltich is excluded from issues where the department's interest might differ from MnSEIA's.

Commerce and community solar

Commerce handles consumer protection work. At the PUC, the agency is a watchdog for utility customers, advising the five-member board on topics such as electricity bills.

Miltich was previously a program director in a unit at Commerce that reviews large energy infrastructure projects. After her promotion, Miltich now works on energy issues before the PUC, including cases involving solar, such as community solar debates.

The Legislature-created community solar program allows people to subscribe to a shared plot of solar run by an independent developer. Xcel must take the power from the gardens and then credit subscribers at rates set by state lawmakers and the PUC.

Community solar led to an industry boom, but it has its critics. Xcel's customers foot the bill, regardless of whether they subscribe to a garden. Skeptics such as Xcel argue that other forms of energy would be cheaper, including solar bought outside the program.

Last year, lawmakers froze the community solar program to new subscribers and started a new one meant to be cheaper for Xcel customers and aimed more at low-income and residential subscribers.

Yet the original program remains a subject of frequent debate, and MnSEIA is one of the most influential community solar supporters in those fights.

MnSEIA filed its August letter that was critical of Commerce in a case related to the bill credit for subscribers, which can have a financial impact on developers. Miltich also has signed documents or been involved in other cases tied directly to community solar rates.

Commerce later withdrew its August directive on community solar. But two days after Miltich issued it, a supervisor emailed Miltich and Deputy Commissioner Michelle Gransee informing them that a group of analysts wanted to ask for guidance "around what could be a perceived conflict of interest between Louise's participation in dockets relating to these guiding principles and the participation of MnSEIA in the same dockets."

In September and October, Anthony Fryer sent emails to human resources on behalf of eight analysts: Fryer, Michelle Rebholz, Nancy Campbell, Stephen Rakow, Mark Johnson, Andrew Bahn, Craig Addonizio and Michael Zajicek. Many of them work on community solar issues or have work the program affects.

"These concerns relate directly to an employee being able 'to faithfully fulfill their state responsibilities with objectivity, impartiality, good judgment and loyalty to the state's interest,'" Fryer wrote, referencing the state's ethics code. "We did not raise these concerns lightly."

HR responded that it reviewed Miltich's situation and didn't perceive a conflict. The issue reached the PUC, where Executive Secretary Will Seuffert asked Commerce to share the conflict of interest findings after PUC staff told him their concerns.

Logan O'Grady, the executive director of MnSEIA, said the organization agreed that Miltich's marriage was not a conflict of interest.

State law on conflict of interest

One ethics professor said Miltich's role and actions undermine faith that government is acting in the public interest.

Minnesota law says that no employee of Commerce specifically can participate in any decision or action of the PUC "where that person has a direct or indirect financial interest."

Supervisors and managers must disclose to the state if family or a partner works for an organization that "presently has dealings" with their agency or has direct or indirect financial interest in an organization with dealings before their agency.

The state's code of ethical conduct says employees must avoid conflicts of interest, or the appearance of a conflict, which happen when a state worker's "personal interest or loyalties compete with or compromise their ability to faithfully fulfill their state responsibilities."

Kathleen Clark, a law professor at Washington University in St. Louis who studies government ethics, said "this is a really bad look" and appears to be a conflict of interest.

"That actually undermines the public's trust that the government official or government in general is acting in the public interest," she said.

Clark added that if political leaders above Miltich support her work on community solar, then they should still "keep her out of it."

Political push and pull

Internal emails show tensions at Commerce about Miltich shaping the positions of analysts on community solar.

The agency has at times fractured because of the program more broadly, with political appointees aligned with many Democrats being more favorable toward community solar, including at the Legislature.

In her August email, Miltich said the agency "repeatedly draw(s) harsh criticism for representing one view in policymaking and entirely another in front of the PUC." She also said she was "on board" with the overall recommendation analysts made in that case and that Gransee also developed the directive.

Arnold downplayed the idea of an internal divide on community solar but said it's important "to have the left arm and the right arm working together, so to speak." She also said the state's political leadership isn't "imposing things" on Miltich or analysts. But, she said, Miltich was acting within her authority in "a structure that involves me and Michelle and the governor."

Last year, the Legislature took the solar program out of Xcel's hands and gave it to Commerce to administer, giving the agency incentive to help it succeed.

There are fierce critics of the community solar program who hold Miltich in high regard.

One is Kevin Pranis, marketing manager for the Minnesota and North Dakota chapter of the Laborers' International Union of North America, who said Miltich "is among the most capable and courageous public servants I have ever met."

"We may not always agree with the department's analysis, but we have complete confidence in Ms. Miltich's integrity and her commitment to protecting the public interest," he said.

In her job, Miltich is a prominent voice on solar issues. She was a panelist during an October conference MnSEIA held, speaking alongside two Walz administration officials and a PUC commissioner about the future of solar.

Miltich expressed concern that fractious debates on "who can own what" and "how we will pay for it" will hamper renewable power development that requires fast action.

"We need it all," Miltich said. "We need rooftop [solar]. We need distributed. We need community solar gardens. We need utility-scale solar."