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HF 2278

as introduced - 90th Legislature (2017 - 2018) Posted on 03/09/2017 09:12am

KEY: stricken = removed, old language.
underscored = added, new language.

Bill Text Versions

Engrossments
Introduction Posted on 03/09/2017

Current Version - as introduced

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A bill for an act
relating to energy; exempting certain cooperative electric associations and municipal
utilities from participation in the state energy conservation program; amending
Minnesota Statutes 2016, section 216B.241, subdivisions 1b, 1c, 2, 5, 5d, 7.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2016, section 216B.241, subdivision 1b, is amended to read:


Subd. 1b.

Conservation improvement by cooperative association or municipality.

(a) This subdivision applies to:

(1) a cooperative electric association that provides retail service to deleted text beginitsdeleted text endnew text begin more than 5,000new text end
members;

(2) a municipality that provides electric service tonew text begin more than 1,000new text end retail customers; and

(3) a municipality with more than deleted text begin1,000,000,000 cubic feet in annual throughput sales
to
deleted text endnew text begin 1,000new text end natural gas deleted text begintodeleted text end retail customers.

(b) Each cooperative electric association and municipality subject to this subdivision
shall spend and invest for energy conservation improvements under this subdivision the
following amounts:

(1) for a municipality, 0.5 percent of its gross operating revenues from the sale of gas
and 1.5 percent of its gross operating revenues from the sale of electricity, excluding gross
operating revenues from electric and gas service provided in the state to large electric
customer facilities; and

(2) for a cooperative electric association, 1.5 percent of its gross operating revenues
from service provided in the state, excluding gross operating revenues from service provided
in the state to large electric customer facilities indirectly through a distribution cooperative
electric association.

(c) Each municipality and cooperative electric association subject to this subdivision
shall identify and implement energy conservation improvement spending and investments
that are appropriate for the municipality or association, except that a municipality or
association may not spend or invest for energy conservation improvements that directly
benefit a large energy facility or a large electric customer facility for which the commissioner
has issued an exemption under subdivision 1a, paragraph (b).

(d) Each municipality and cooperative electric association subject to this subdivision
may spend and invest annually up to ten percent of the total amount required to be spent
and invested on energy conservation improvements under this subdivision on research and
development projects that meet the definition of energy conservation improvement in
subdivision 1 and that are funded directly by the municipality or cooperative electric
association.

(e) Load-management activities may be used to meet 50 percent of the conservation
investment and spending requirements of this subdivision.

(f) A generation and transmission cooperative electric association that provides energy
services to cooperative electric associations that provide electric service at retail to consumers
may invest in energy conservation improvements on behalf of the associations it serves and
may fulfill the conservation, spending, reporting, and energy-savings goals on an aggregate
basis. A municipal power agency or other not-for-profit entity that provides energy service
to municipal utilities that provide electric service at retail may invest in energy conservation
improvements on behalf of the municipal utilities it serves and may fulfill the conservation,
spending, reporting, and energy-savings goals on an aggregate basis, under an agreement
between the municipal power agency or not-for-profit entity and each municipal utility for
funding the investments.

(g) Each municipality or cooperative shall file energy conservation improvement plans
by June 1 on a schedule determined by order of the commissioner, but at least every three
years. Plans received by June 1 must be approved or approved as modified by the
commissioner by December 1 of the same year. The municipality or cooperative shall
provide an evaluation to the commissioner detailing its energy conservation improvement
spending and investments for the previous period. The evaluation must briefly describe
each conservation program and must specify the energy savings or increased efficiency in
the use of energy within the service territory of the utility or association that is the result of
the spending and investments. The evaluation must analyze the cost-effectiveness of the
utility's or association's conservation programs, using a list of baseline energy and capacity
savings assumptions developed in consultation with the department. The commissioner
shall review each evaluation and make recommendations, where appropriate, to the
municipality or association to increase the effectiveness of conservation improvement
activities.

deleted text begin (h) MS 2010 [Expired, 1Sp2003 c 11 art 3 s 4; 2007 c 136 art 2 s 5]
deleted text end

deleted text begin (i)deleted text endnew text begin (h)new text end The commissioner shall consider and may require a utility, association, or other
entity providing energy efficiency and conservation services under this section to undertake
a program suggested by an outside source, including a political subdivision, nonprofit
corporation, or community organization.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 2.

Minnesota Statutes 2016, section 216B.241, subdivision 1c, is amended to read:


Subd. 1c.

Energy-saving goals.

(a) The commissioner shall establish energy-saving
goals for energy conservation improvement expenditures and shall evaluate an energy
conservation improvement program on how well it meets the goals set.

(b) Each individual utility and association shall have an annual energy-savings goal
equivalent to 1.5 percent of gross annual retail energy sales unless modified by the
commissioner under paragraph (d). The savings goals must be calculated based on the most
recent three-year weather-normalized average. A utility or association may elect to carry
forward energy savings in excess of 1.5 percent for a year to the succeeding three calendar
years, except that savings from electric utility infrastructure projects allowed under paragraph
(d) may be carried forward for five years. A particular energy savings can be used only for
one year's goal.

(c) The commissioner must adopt a filing schedule that is designed to have all utilities
and associations operating under an energy-savings plan by calendar year 2010.

(d) In its energy conservation improvement plan filing, a utility or association may
request the commissioner to adjust its annual energy-savings percentage goal based on its
historical conservation investment experience, customer class makeup, load growth, a
conservation potential study, or other factors the commissioner determines warrants an
adjustment. The commissioner may not approve a plan of a public utility that provides for
an annual energy-savings goal of less than one percent of gross annual retail energy sales
from energy conservation improvements.

A utility or association may include in its energy conservation plan energy savings from
electric utility infrastructure projects approved by the commission under section 216B.1636
or waste heat recovery converted into electricity projects that may count as energy savings
in addition to a minimum energy-savings goal of at least one percent for energy conservation
improvements. Energy savings from electric utility infrastructure projects, as defined in
section 216B.1636, may be included in the energy conservation plan of a municipal utility
or cooperative electric association. Electric utility infrastructure projects must result in
increased energy efficiency greater than that which would have occurred through normal
maintenance activity.

(e) An energy-savings goal is not satisfied by attaining the revenue expenditure
requirements of subdivisions 1a and 1b, but can only be satisfied by meeting the
energy-savings goal established in this subdivision.

(f) An association or utility is not required to make energy conservation investments to
attain the energy-savings goals of this subdivision that are not cost-effective even if the
investment is necessary to attain the energy-savings goals. For the purpose of this paragraph,
in determining cost-effectiveness, the commissioner shall consider the costs and benefits
to ratepayers, the utility, participants, and society. In addition, the commissioner shall
consider the rate at which an association or municipal utility is increasing its energy savings
and its expenditures on energy conservation.

(g) On an annual basis, the commissioner shall produce and make publicly available a
report on the annual energy savings and estimated carbon dioxide reductions achieved by
the energy conservation improvement programs for the two most recent years for which
data is available. The commissioner shall report on program performance both in the
aggregate and for each entity filing an energy conservation improvement plan for approval
or review by the commissioner.

(h) By January 15, 2010, the commissioner shall report to the legislature whether the
spending requirements under subdivisions 1a and 1b are necessary to achieve the
energy-savings goals established in this subdivision.

new text begin (i) This subdivision does not apply to (1) a cooperative electric association with fewer
than 5,000 members, or (2) a municipal utility with fewer than 1,000 customers.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 3.

Minnesota Statutes 2016, section 216B.241, subdivision 2, is amended to read:


Subd. 2.

Programs.

(a) The commissioner may require public utilities to make
investments and expenditures in energy conservation improvements, explicitly setting forth
the interest rates, prices, and terms under which the improvements must be offered to the
customers. The required programs must cover no more than a three-year period. Public
utilities shall file conservation improvement plans by June 1, on a schedule determined by
order of the commissioner, but at least every three years. Plans received by a public utility
by June 1 must be approved or approved as modified by the commissioner by December 1
of that same year. The commissioner shall evaluate the program on the basis of
cost-effectiveness and the reliability of technologies employed. The commissioner's order
must provide to the extent practicable for a free choice, by consumers participating in the
program, of the device, method, material, or project constituting the energy conservation
improvement and for a free choice of the seller, installer, or contractor of the energy
conservation improvement, provided that the device, method, material, or project seller,
installer, or contractor is duly licensed, certified, approved, or qualified, including under
the residential conservation services program, where applicable.

(b) The commissioner may require a utilitynew text begin subject to subdivision 1cnew text end to make an energy
conservation improvement investment or expenditure whenever the commissioner finds
that the improvement will result in energy savings at a total cost to the utility less than the
cost to the utility to produce or purchase an equivalent amount of new supply of energy.
The commissioner shall nevertheless ensure that every public utility operate one or more
programs under periodic review by the department.

(c) Each public utility subject to subdivision 1a may spend and invest annually up to ten
percent of the total amount required to be spent and invested on energy conservation
improvements under this section by the utility on research and development projects that
meet the definition of energy conservation improvement in subdivision 1 and that are funded
directly by the public utility.

(d) A public utility may not spend for or invest in energy conservation improvements
that directly benefit a large energy facility or a large electric customer facility for which the
commissioner has issued an exemption pursuant to subdivision 1a, paragraph (b). The
commissioner shall consider and may require a utility to undertake a program suggested by
an outside source, including a political subdivision, a nonprofit corporation, or community
organization.

(e) A utility, a political subdivision, or a nonprofit or community organization that has
suggested a program, the attorney general acting on behalf of consumers and small business
interests, or a utility customer that has suggested a program and is not represented by the
attorney general under section 8.33 may petition the commission to modify or revoke a
department decision under this section, and the commission may do so if it determines that
the program is not cost-effective, does not adequately address the residential conservation
improvement needs of low-income persons, has a long-range negative effect on one or more
classes of customers, or is otherwise not in the public interest. The commission shall reject
a petition that, on its face, fails to make a reasonable argument that a program is not in the
public interest.

(f) The commissioner may order a public utility to include, with the filing of the utility's
annual status report, the results of an independent audit of the utility's conservation
improvement programs and expenditures performed by the department or an auditor with
experience in the provision of energy conservation and energy efficiency services approved
by the commissioner and chosen by the utility. The audit must specify the energy savings
or increased efficiency in the use of energy within the service territory of the utility that is
the result of the spending and investments. The audit must evaluate the cost-effectiveness
of the utility's conservation programs.

(g) A gas utility may not spend for or invest in energy conservation improvements that
directly benefit a large customer facility or commercial gas customer facility for which the
commissioner has issued an exemption pursuant to subdivision 1a, paragraph (b), (c), or
(e). The commissioner shall consider and may require a utility to undertake a program
suggested by an outside source, including a political subdivision, a nonprofit corporation,
or a community organization.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 4.

Minnesota Statutes 2016, section 216B.241, subdivision 5, is amended to read:


Subd. 5.

Efficient lighting program.

(a) Each public utility, cooperative electric
association, and municipal utility that provides electric service to retail customersnew text begin and is
subject to subdivision 1c
new text end shall include as part of its conservation improvement activities a
program to strongly encourage the use of fluorescent and high-intensity discharge lamps.
The program must include at least a public information campaign to encourage use of the
lamps and proper management of spent lamps by all customer classifications.

(b) A public utility that provides electric service at retail to 200,000 or more customers
shall establish, either directly or through contracts with other persons, including lamp
manufacturers, distributors, wholesalers, and retailers and local government units, a system
to collect for delivery to a reclamation or recycling facility spent fluorescent and
high-intensity discharge lamps from households and from small businesses as defined in
section 645.445 that generate an average of fewer than ten spent lamps per year.

(c) A collection system must include establishing reasonably convenient locations for
collecting spent lamps from households and financial incentives sufficient to encourage
spent lamp generators to take the lamps to the collection locations. Financial incentives may
include coupons for purchase of new fluorescent or high-intensity discharge lamps, a cash
back system, or any other financial incentive or group of incentives designed to collect the
maximum number of spent lamps from households and small businesses that is reasonably
feasible.

(d) A public utility that provides electric service at retail to fewer than 200,000 customers,
a cooperative electric association, or a municipal utility that provides electric service at
retail to customers may establish a collection system under paragraphs (b) and (c) as part
of conservation improvement activities required under this section.

(e) The commissioner of the Pollution Control Agency may not, unless clearly required
by federal law, require a public utility, cooperative electric association, or municipality that
establishes a household fluorescent and high-intensity discharge lamp collection system
under this section to manage the lamps as hazardous waste as long as the lamps are managed
to avoid breakage and are delivered to a recycling or reclamation facility that removes
mercury and other toxic materials contained in the lamps prior to placement of the lamps
in solid waste.

(f) If a public utility, cooperative electric association, or municipal utility contracts with
a local government unit to provide a collection system under this subdivision, the contract
must provide for payment to the local government unit of all the unit's incremental costs of
collecting and managing spent lamps.

(g) All the costs incurred by a public utility, cooperative electric association, or municipal
utility for promotion and collection of fluorescent and high-intensity discharge lamps under
this subdivision are conservation improvement spending under this section.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 5.

Minnesota Statutes 2016, section 216B.241, subdivision 5d, is amended to read:


Subd. 5d.

On-bill repayment programs.

(a) For the purposes of this subdivision:

(1) "utility" means a public utility, municipal utility, or cooperative electric associationnew text begin
subject to subdivision 1c
new text end that provides electric or natural gas service to retail customers;
and

(2) "on-bill repayment program" means a program in which a utility collects on a
customer's bill repayment of a loan to the customer by an eligible lender to finance the
customer's investment in eligible energy conservation or renewable energy projects, and
remits loan repayments to the lender.

(b) A utility may include as part of its conservation improvement plan an on-bill
repayment program to enable a customer to finance eligible projects with installment loans
originated by an eligible lender. An eligible project is one that is either an energy conservation
improvement, or a project installed on the customer's site that uses an eligible renewable
energy source as that term is defined in section 216B.2411, subdivision 2, paragraph (b),
but does not include mixed municipal solid waste or refuse-derived fuel from mixed
municipal solid waste. An eligible renewable energy source also includes solar thermal
technology that collects the sun's radiant energy and uses that energy to heat or cool air or
water, and meets the requirements of section 216C.25. To be an eligible lender, a lender
must:

(1) have a federal or state charter and be eligible for federal deposit insurance;

(2) be a government entity, including an entity established under chapter 469, that has
authority to provide financial assistance for energy efficiency and renewable energy projects;

(3) be a joint venture by utilities established under section 452.25; or

(4) be licensed, certified, or otherwise have its lending activities overseen by a state or
federal government agency.

The commissioner must allow a utility broad discretion in designing and implementing an
on-bill repayment program, provided that the program complies with this subdivision.

(c) A utility may establish an on-bill repayment program for all customer classes or for
a specific customer class.

(d) A public utility that implements an on-bill repayment program under this subdivision
must enter into a contract with one or more eligible lenders that complies with the
requirements of this subdivision and contains provisions addressing capital commitments,
loan origination, transfer of loans to the public utility for on-bill repayment, and acceptance
of loans returned due to delinquency or default.

(e) A public utility's contract with a lender must require the lender to comply with all
applicable federal and state laws, rules, and regulations related to lending practices and
consumer protection; to conform to reasonable and prudent lending standards; and to provide
businesses that sell, maintain, and install eligible projects the ability to participate in an
on-bill repayment program under this subdivision on a nondiscriminatory basis.

(f) A public utility's contract with a lender may provide:

(1) for the public utility to purchase loans from the lender with a condition that the lender
must purchase back loans in delinquency or default; or

(2) for the lender to retain ownership of loans with the public utility servicing the loans
through on-bill repayment as long as payments are current.

The risk of default must remain with the lender. The lender shall not have recourse against
the public utility except in the event of negligence or breach of contract by the utility.

(g) If a public utility customer makes a partial payment on a utility bill that includes a
loan installment, the partial payment must be credited first to the amount owed for utility
service, including taxes and fees. A public utility may not suspend or terminate a customer's
utility service for delinquency or default on a loan that is being serviced through the public
utility's on-bill repayment program.

(h) An outstanding balance on a loan being repaid under this subdivision is a financial
obligation only of the customer who is signatory to the loan, and not to any subsequent
customer occupying the property associated with the loan. If the public utility purchases
loans from the lender as authorized under paragraph (f), clause (1), the public utility must
return to the lender a loan not repaid when a customer borrower no longer occupies the
property.

(i) Costs incurred by a public utility under this subdivision are recoverable as provided
in section 216B.16, subdivision 6b, paragraph (c), including reasonable incremental costs
for billing system modifications necessary to implement and operate an on-bill repayment
program and for ongoing costs to operate the program. Costs in a plan approved by the
commissioner may be counted toward a utility's conservation spending requirements under
subdivisions 1a and 1b. Energy savings from energy conservation improvements resulting
from this section may be counted toward satisfying a utility's energy-savings goals under
subdivision 1c.

(j) This subdivision does not require a utility to terminate or modify an existing financing
program and does not prohibit a utility from establishing an on-bill financing program in
which the utility provides the financing capital.

(k) A municipal utility or cooperative electric association that implements an on-bill
repayment program shall design the program to address the issues identified in paragraphs
(d) through (h) as determined by the governing board of the utility or association.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 6.

Minnesota Statutes 2016, section 216B.241, subdivision 7, is amended to read:


Subd. 7.

Low-income programs.

(a) The commissioner shall ensure that each utility
and associationnew text begin subject to subdivision 1cnew text end provides low-income programs. When approving
spending and energy-savings goals for low-income programs, the commissioner shall
consider historic spending and participation levels, energy savings for low-income programs,
and the number of low-income persons residing in the utility's service territory. A municipal
utility that furnishes gas service must spend at least 0.2 percent, and a public utility furnishing
gas service must spend at least 0.4 percent, of its most recent three-year average gross
operating revenue from residential customers in the state on low-income programs. A utility
or association that furnishes electric service must spend at least 0.1 percent of its gross
operating revenue from residential customers in the state on low-income programs. For a
generation and transmission cooperative association, this requirement shall apply to each
association's members' aggregate gross operating revenue from sale of electricity to residential
customers in the state. Beginning in 2010, a utility or association that furnishes electric
service must spend 0.2 percent of its gross operating revenue from residential customers in
the state on low-income programs.

(b) To meet the requirements of paragraph (a), a utility or association may contribute
money to the energy and conservation account. An energy conservation improvement plan
must state the amount, if any, of low-income energy conservation improvement funds the
utility or association will contribute to the energy and conservation account. Contributions
must be remitted to the commissioner by February 1 of each year.

(c) The commissioner shall establish low-income programs to utilize money contributed
to the energy and conservation account under paragraph (b). In establishing low-income
programs, the commissioner shall consult political subdivisions, utilities, and nonprofit and
community organizations, especially organizations engaged in providing energy and
weatherization assistance to low-income persons. Money contributed to the energy and
conservation account under paragraph (b) must provide programs for low-income persons,
including low-income renters, in the service territory of the utility or association providing
the money. The commissioner shall record and report expenditures and energy savings
achieved as a result of low-income programs funded through the energy and conservation
account in the report required under subdivision 1c, paragraph (g). The commissioner may
contract with a political subdivision, nonprofit or community organization, public utility,
municipality, or cooperative electric association to implement low-income programs funded
through the energy and conservation account.

(d) A utility or association may petition the commissioner to modify its required spending
under paragraph (a) if the utility or association and the commissioner have been unable to
expend the amount required under paragraph (a) for three consecutive years.

(e) The costs and benefits associated with any approved low-income gas or electric
conservation improvement program that is not cost-effective when considering the costs
and benefits to the utility may, at the discretion of the utility, be excluded from the calculation
of net economic benefits for purposes of calculating the financial incentive to the utility.
The energy and demand savings may, at the discretion of the utility, be applied toward the
calculation of overall portfolio energy and demand savings for purposes of determining
progress toward annual goals and in the financial incentive mechanism.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end