HF 789

as introduced - 85th Legislature (2007 - 2008) Posted on 12/15/2009 12:00am

A bill for an act
relating to energy; requiring energy efficiency and conservation improvement
plans by public utilities and setting energy savings goals; amending Minnesota
Statutes 2006, sections 216B.16, subdivisions 6b, 6c; 216B.243, subdivision 3;
proposing coding for new law in Minnesota Statutes, chapter 216B; repealing
Minnesota Statutes 2006, sections 216B.241; 216B.2411.

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

Section 1.

Minnesota Statutes 2006, section 216B.16, subdivision 6b, is amended to
read:

Subd. 6b.

Energy new text begin efficiency and new text end conservation improvement.

(a) Except as
otherwise provided in this subdivision, all investments and expenses of a public utility
as defined in section deleted text begin 216B.241 deleted text end new text begin 216B.2412 new text end , subdivision 1, paragraph (e), incurred in
connection with energy new text begin efficiency and new text end conservation improvements shall be recognized
and included by the commission in the determination of just and reasonable rates as if
the investments and expenses were directly made or incurred by the utility in furnishing
utility service.

(b) deleted text begin After December 31, 1999, deleted text end Investments and expenses for energy new text begin efficiency and
new text end conservation improvements shall not be included by the commission in the determination
of just and reasonable electric and gas rates for retail electric and gas service provided
to large electric customer facilities that have been exempted by the commissioner of the
department pursuant to section deleted text begin 216B.241, subdivision 1a, paragraph (b) deleted text end new text begin 216B.2412,
subdivision 2, paragraph (b) new text end . deleted text begin However, no public utility shall be prevented from recovering
its investment in energy conservation improvements from all customers that were made on
or before December 31, 1999, in compliance with the requirements of section 216B.241.
deleted text end

(c) The commission may permit a public utility to file rate schedules providing
for annual recovery of the costs of energy new text begin efficiency and new text end conservation improvements.
These rate schedules may be applicable to less than all the customers in a class of retail
customers if necessary to reflect the differing deleted text begin minimum spending deleted text end requirements of section
deleted text begin 216B.241, subdivision 1a deleted text end new text begin 216B.2412, subdivision 3 new text end . deleted text begin After December 31, 1999, deleted text end The
commission shall allow a public utility, without requiring a general rate filing under this
section, to reduce the electric and gas rates applicable to large electric customer facilities
that have been exempted by the commissioner of the department pursuant to section
deleted text begin 216B.241, subdivision 1a deleted text end new text begin 216B.2412, subdivision 2 new text end , paragraph (b), by an amount that
reflects the elimination of energy new text begin efficiency and new text end conservation improvement investments
or expenditures for those facilities deleted text begin required on or before December 31, 1999 deleted text end . In the
event that the commission has set electric or gas rates based on the use of an accounting
methodology that results in the cost of conservation improvements being recovered from
utility customers over a period of years, the rate reduction may occur in a series of steps to
coincide with the recovery of balances due to the utility for conservation improvements
made by the utility on or before December 31, 1999.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2008.
new text end

Sec. 2.

Minnesota Statutes 2006, section 216B.16, subdivision 6c, is amended to read:

Subd. 6c.

Incentive plan for energy new text begin efficiency and new text end conservation improvement.

(a) The commission may order public utilities to develop and submit for commission
approval incentive plans that describe the method of recovery and accounting for utility
conservation expenditures and savings. In developing the incentive plans the commission
shall ensure the effective involvement of interested parties.

(b) In approving incentive plans, the commission shall consider:

(1) whether the plan is likely to increase utility investment in cost-effective energy
new text begin efficiency and new text end conservation;

(2) whether the plan is compatible with the interest of utility ratepayers and other
interested parties;

(3) whether the plan links the incentive to the utility's performance in achieving
cost-effective conservation; and

(4) whether the plan is in conflict with other provisions of this chapter.

(c) The commission may set rates to encourage the vigorous and effective
implementation of utility new text begin energy efficiency and new text end conservation programs. The commission
may:

(1) increase or decrease any otherwise allowed rate of return on net investment based
upon the utility's skill, efforts, and success in conserving energy;

(2) share between ratepayers and utilities the net savings resulting from energy
new text begin efficiency and new text end conservation programs to the extent justified by the utility's skill, efforts,
and success in conserving energy; and

(3) compensate the utility for earnings lost as a result of its conservation programs.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2008.
new text end

Sec. 3.

new text begin [216B.2412] DEMAND EFFICIENCY PROGRAM.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin For purposes of this section and section 216B.16,
subdivision 6b, the terms defined in this subdivision have the meanings given them.
new text end

new text begin (a) "Customer facility" means all buildings, structures, equipment, and installations
at a single site.
new text end

new text begin (b) "Energy conservation" means demand-side management of energy supplies
resulting in a net reduction in energy use. Load management that reduces overall energy
use is energy conservation.
new text end

new text begin (c) "Energy efficiency" means measures or programs, including energy conservation
measures or programs, that target consumer behavior, equipment, processes, or devices to
result in a decrease in consumption of electric energy or natural gas without a reduction in
the quality or level of service provided to the energy consumer.
new text end

new text begin (d) "Energy efficiency and conservation improvement" means a project that results
in energy efficiency or energy conservation.
new text end

new text begin (e) "Investments and expenses of a public utility" includes the investments and
expenses incurred by a public utility in connection with an energy efficiency and
conservation improvement, including but not limited to:
new text end

new text begin (1) the differential in interest cost between the market rate and the rate charged on a
no-interest or below-market interest loan made by a public utility to a customer for the
purchase or installation of an energy efficiency and conservation improvement;
new text end

new text begin (2) the difference between the utility's cost of purchase or installation of energy
efficiency and conservation improvements and any price charged by a public utility to a
customer for such improvements.
new text end

new text begin (f) "Large electric customer facility" means a customer facility that imposes a
peak electrical demand on an electric utility's system of not less than 20,000 kilowatts,
measured in the same way as the utility that serves the customer facility measures
electrical demand for billing purposes, and for which electric services are provided at
retail on a single bill by a utility operating in the state.
new text end

new text begin (g) "Load management" means an activity, service, or technology to change the
timing or the efficiency of a customer's use of energy that allows a utility or a customer to
respond to wholesale market fluctuations or to reduce the overall demand for energy or
capacity.
new text end

new text begin Subd. 2. new text end

new text begin Applicability. new text end

new text begin (a) This section applies to each:
new text end

new text begin (1) public utility;
new text end

new text begin (2) municipal utility that furnishes electric service in the state;
new text end

new text begin (3) municipal utility with more than 1,000,000,000 cubic feet in annual throughput
sales from natural gas service provided in the state; and
new text end

new text begin (4) generation and transmission cooperative electric association that provides
energy services to cooperative electric associations that provide electric service at retail
to consumers in the state.
new text end

new text begin (b) The owner of a large electric customer facility may petition the commissioner
to exempt both electric and gas utilities serving the large energy customer facility from
the energy savings requirements of subdivision 3 with respect to retail sales attributable
to the facility. At a minimum, the petition must be supported by evidence relating to
competitive or economic pressures on the customer and a showing by the customer
of reasonable efforts to identify, evaluate, and implement cost-effective conservation
improvements at the facility. If a petition is filed on or before October 1 of any year, the
order of the commissioner to exempt revenues attributable to the facility can be effective
no earlier than January 1 of the following year. The commissioner shall not grant an
exemption if the commissioner determines that granting the exemption is contrary to
the public interest. The commissioner may, after investigation, rescind any exemption
granted under this paragraph upon a determination that cost-effective energy efficiency
and conservation improvements are available at the large electric customer facility. For
the purposes of investigations by the commissioner under this paragraph, the owner of
any large electric customer facility shall, upon request, provide the commissioner with
updated information comparable to that originally supplied in or with the owner's original
petition under this paragraph.
new text end

new text begin (c) A generation and transmission cooperative electric association or public utility
serving utilities with fewer than 500 aggregate retail customers in the state may petition
the commissioner for an exemption from this section. The commissioner shall grant an
exemption if the affected retail consumers in Minnesota have access to energy efficiency
and conservation programs provided by a utility or other entity under requirements of
another state.
new text end

new text begin Subd. 3. new text end

new text begin Energy savings goals. new text end

new text begin (a) The commissioner shall establish annual
energy savings goals for each utility and association listed in subdivision 2. Unless the
commissioner determines the goal is not in the public interest, the energy savings goals
for programs established under subdivision 4 must equal:
new text end

new text begin (1) at least 0.75 percent of gross annual retail energy sales by 2009;
new text end

new text begin (2) at least 1.0 percent of gross annual retail energy sales by 2010; and
new text end

new text begin (3) at least 1.5 percent of gross annual retail energy sales by 2012 and each year
thereafter.
new text end

new text begin (b) For a generation and transmission electric cooperative association, the goals
listed in paragraph (a) apply to each associationa??s membersa?? aggregate gross annual
retail energy sales.
new text end

new text begin (c) Municipal utilities may meet the energy savings goals established in paragraph
(a) on an aggregate basis through a municipal power agency, generation and transmission
electric cooperative association, or other not-for-profit entity. A municipal power agency,
generation and transmission electric cooperative association, or other not-for-profit entity
administering aggregate energy efficiency and conservation programs may invest in
energy efficiency and conservation improvements on behalf of the municipal utilities it
serves and shall fulfill the reporting and energy savings goals on an aggregate basis.
new text end

new text begin (d) The commissioner may require a public utility to make an energy efficiency and
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.
new text end

new text begin Subd. 4. new text end

new text begin Demand efficiency programs. new text end

new text begin (a) Utilities and associations subject
to subdivision 2 shall file energy efficiency and conservation improvement plans by
June 1, on a schedule determined by order of the commissioner, but at least every four
years. Plans received 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 efficiency and conservation improvement and for a free choice of
the seller, installer, or contractor of the energy efficiency and conservation improvement;
provided that the device, method, material, or project seller, installer, or contractor is duly
licensed, certified, approved, or qualified.
new text end

new text begin (b) A utility or association subject to this section under subdivision 2, paragraph
(a), may not spend for or invest in energy efficiency and conservation improvements that
directly benefit a large electric customer facility for which the commissioner has issued an
exemption pursuant to subdivision 2, paragraph (b).
new text end

new text begin (c) 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
or a nonprofit or community organization.
new text end

new text begin (d) The commissioner may, by order, establish a list of programs that may be
offered as energy efficiency and conservation improvements by a public utility, municipal
utility, cooperative electric association, or other entity providing energy efficiency and
conservation services pursuant to this section. The commissioner may, by order, change
this list to add or subtract programs as the commissioner determines is necessary to
promote efficient and effective conservation programs.
new text end

new text begin (e) The commissioner may, by order, establish energy savings assumptions for
energy efficiency and conservation improvements that must be used when filing programs
under this subdivision. The commissioner may contract with a third party to provide
technical assistance establishing these assumptions.
new text end

new text begin Subd. 5. new text end

new text begin Manner of filing and service. new text end

new text begin (a) If subject to section 216B.2412, as
of January 1, 2008, any public utility, generation and transmission cooperative electric
association, municipal power agency, cooperative electric association and municipal utility
shall submit filings to the department via the departmenta??s electronic filing system. The
commissioner may approve an exemption from this requirement in the event an affected
utility is unable to submit filings via the departmenta??s electronic filing system. All other
interested parties shall submit filings to the department via the departmenta??s electronic
filing system whenever practicable but may also file by personal delivery or by mail.
new text end

new text begin (b) Submission of a document to the departmenta??s electronic filing system constitutes
service on the department. When department rule requires service of a notice, order, or
other document by the department, utility, or interested party upon persons on a service
list maintained by the department, service may be made by personal delivery, mail, or
electronic service, except that electronic service may only be made upon persons on
the service list who have previously agreed in writing to accept electronic service at an
electronic address provided to the department for electronic service purposes.
new text end

new text begin Subd. 6. new text end

new text begin Appeals. new text end

new text begin (a) A utility, a political subdivision, a nonprofit or community
organization, the attorney general acting on behalf of consumers and small business
interests, the owner of a large electric customer facility, or a utility customer that 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 commissionera??s decision:
new text end

new text begin (1) will not result in cost-effective energy efficiency and conservation improvements;
new text end

new text begin (2) has a long-range negative effect on one or more classes of customers; or
new text end

new text begin (3) is otherwise not in the public interest.
new text end

new text begin (b) The commission shall reject a petition that, on its face, fails to make a reasonable
argument that a decision is not in the public interest.
new text end

new text begin Subd. 7. new text end

new text begin Independent audit. new text end

new text begin The commissioner shall order a public utility to
file annually the results of an independent audit of the utility's energy efficiency and
conservation improvement programs and expenditures performed by the department or an
auditor with experience in the provision of energy efficiency and conservation 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 investments. The audit must evaluate the cost-effectiveness
of the utility's energy efficiency and conservation programs.
new text end

new text begin Subd. 8. new text end

new text begin Ownership of energy efficiency and conservation improvement. new text end

new text begin An
energy efficiency and conservation improvement made to or installed in a building in
accordance with this section, except systems owned by the utility and designed to turn
off, limit, or vary the delivery of energy, are the exclusive property of the owner of the
building except to the extent that the improvement is subjected to a security interest in
favor of the utility in case of a loan to the building owner. The utility has no liability
for loss, damage, or injury caused directly or indirectly by an energy efficiency and
conservation improvement except for negligence by the utility in the purchase, installation,
or modification of the product.
new text end

new text begin Subd. 9. new text end

new text begin Low income programs. new text end

new text begin The commissioner shall establish and
implement low-income energy efficiency and conservation programs. In establishing
low-income energy efficiency and conservation 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. To the extent practicable, money collected under subdivision 12 for this purpose
must serve low-income persons, including low-income renters, in the service territory of
the utility or association providing the funds. The commissioner shall record and report
expenditures and energy savings achieved as a result of low-income programs funded
through this account. The commissioner may contract with a political subdivision, a
nonprofit or community organization, a public utility, a municipality, or a cooperative
electric association to implement its programs.
new text end

new text begin Subd. 10. new text end

new text begin Demand efficiency research and development grants. new text end

new text begin The
commissioner may provide grants to any person to conduct research and development of
energy efficiency and conservation improvements. In awarding research and development
grants, the commissioner shall consult with an advisory group consisting of utilities,
consumer advocates, and other interested parties.
new text end

new text begin Subd. 11. new text end

new text begin Facilities demand efficiency. new text end

new text begin (a) The Department of Administration
and the Department of Commerce shall maintain and, as needed, revise the sustainable
building guidelines developed under section 16B.325.
new text end

new text begin (b) The Department of Administration and the Department of Commerce shall
maintain and update the benchmarking tool developed under Laws 2001, chapter 212,
article 1, section 3, so that all public buildings can use the benchmarking tool to maintain
energy usage information for the purposes of establishing energy efficiency benchmarks
and tracking building performance and the results of energy efficiency and conservation
improvements.
new text end

new text begin (c) The commissioner may provide grants to commercial building owners to
facilitate energy efficiency and conservation improvements and professional engineering
certification to reach the goal of 1,000 Energy Star-labeled commercial buildings in the
state by 2010.
new text end

new text begin Subd. 12. new text end

new text begin Demand efficiency account. new text end

new text begin (a) A demand efficiency account is
established within the next generation energy fund established under section 216C.054.
Interest on money in the account accrues to the account.
new text end

new text begin (b) Subject to the limitations established in paragraph (c), the commissioner shall
assess energy utilities for costs related to execution of subdivision 4, paragraph (e), and
9, 10, and 11. The commissioner shall apportion the costs among all energy utilities in
proportion to their respective gross operating revenues from sales of gas or electric service
within the state during the last calendar year and shall then render a bill to each utility on a
regular basis. For purposes of administrative efficiency, the commissioner shall assess
energy utilities and issue bills in accordance with the billing and assessment procedures
provided in section 216B.62, to the extent that these procedures do not conflict with this
subdivision. The amount of the bills rendered by the commissioner under this paragraph
must be paid by the energy utility into the demand efficiency account within the next
generation energy fund within 30 days from the date of billing and is appropriated to the
commissioner for the purposes of executing subdivisions 4, paragraph (e), 9, 10, and
11. All amounts assessed under this section are in addition to amounts appropriated to
the commissioner by other law.
new text end

new text begin (c) The commissioner may assess:
new text end

new text begin (1) an amount equal to 0.20 percent of the gross operating revenue from annual retail
sales of electricity and natural gas in the state for the purpose of providing low-income
energy efficiency programs under subdivision 9;
new text end

new text begin (2) up to $3,500,000 annually to establish energy savings assumptions under
subdivision 4, paragraph (e), to provide grants for research and development of energy
efficiency and conservation improvements under subdivision 10 and grants promoting
Energy Star-labeled commercial buildings under subdivision 11, paragraph (c); and
new text end

new text begin (3) up to an additional $500,000 annually to carry out subdivision 11, paragraphs
(a) and (b). The amount assessed under this clause is appropriated to the commissioner,
and some or all of the amount assessed may be transferred to the commissioner of
administration, for the purposes specified in subdivision 11, paragraphs (a) and (b), as
needed to implement those paragraphs.
new text end

new text begin Subd. 13. new text end

new text begin Recovery of expenses. new text end

new text begin The commission shall allow a utility to recover
expenses resulting from an energy efficiency and conservation improvement program
required by the department and contributions to the demand efficiency account, unless
the recovery would be inconsistent with a financial incentive proposal approved by the
commission. In addition, a utility may file annually or the Public Utilities Commission
may require the utility to file, and the commission may approve, rate schedules containing
provisions for the automatic adjustment of charges for utility service in direct relation
to changes in the expenses of the utility for real and personal property taxes, fees, and
permits, the amounts of which the utility cannot control. A public utility is eligible
to file for adjustment for real and personal property taxes, fees, and permits under this
subdivision only if, in the year previous to the year in which it files for adjustment, it has
saved an additional 0.15 percent over the amount specified in subdivision 3, excluding
large electric customer facilities for which the commissioner has issued an exemption
under subdivision 2, paragraph (b).
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2008, and applies to proposals
pending on that date.
new text end

Sec. 4.

new text begin [216B.2413] DECOUPLING OF ENERGY SALES FROM REVENUES.
new text end

new text begin The commission may, by order, establish criteria and standards for decoupling, in
whole or in part, energy sales by public utilities from the revenues of those utilities. The
commission shall design the criteria and standards to mitigate the impact on the public
utilities of the energy efficiency objectives under section 216B.2412 without adversely
affecting utility ratepayers. Upon adoption of criteria and standards under this section,
the commission may approve utility proposals for decoupling that are consistent with
those criteria and standards.
new text end

Sec. 5.

Minnesota Statutes 2006, section 216B.243, subdivision 3, is amended to read:

Subd. 3.

Showing required for construction.

No proposed large energy facility
shall be certified for construction unless the applicant can show that demand for electricity
cannot be met more cost effectively through energy conservation and load-management
measures and unless the applicant has otherwise justified its need. In assessing need,
the commission shall evaluate:

(1) the accuracy of the long-range energy demand forecasts on which the necessity
for the facility is based;

(2) the effect of existing or possible energy conservation programs under sections
216C.05 to 216C.30 and this section or other federal or state legislation on long-term
energy demand;

(3) the relationship of the proposed facility to overall state energy needs, as
described in the most recent state energy policy and conservation report prepared under
section 216C.18, or, in the case of a high-voltage transmission line, the relationship of the
proposed line to regional energy needs, as presented in the transmission plan submitted
under section 216B.2425;

(4) promotional activities that may have given rise to the demand for this facility;

(5) benefits of this facility, including its uses to protect or enhance environmental
quality, and to increase reliability of energy supply in Minnesota and the region;

(6) possible alternatives for satisfying the energy demand or transmission needs
including but not limited to potential for increased efficiency and upgrading of existing
energy generation and transmission facilities, load-management programs, and distributed
generation;

(7) the policies, rules, and regulations of other state and federal agencies and local
governments;

(8) new text begin whether the applicant or applicants are in compliance with section 216B.2412,
subdivision 3;
new text end

new text begin (9) new text end any feasible combination of energy conservation improvements, required under
section , that can (i) replace part or all of the energy to be provided
by the proposed facility, and (ii) compete with it economically;

deleted text begin (9) deleted text end new text begin (10) new text end with respect to a high-voltage transmission line, the benefits of enhanced
regional reliability, access, or deliverability to the extent these factors improve the
robustness of the transmission system or lower costs for electric consumers in Minnesota;

deleted text begin (10) deleted text end new text begin (11) new text end whether the applicant or applicants are in compliance with applicable
provisions of sections 216B.1691 and 216B.2425, subdivision 7, and have filed or will file
by a date certain an application for certificate of need under this section or for certification
as a priority electric transmission project under section 216B.2425 for any transmission
facilities or upgrades identified under section 216B.2425, subdivision 7;

deleted text begin (11) deleted text end new text begin (12) new text end whether the applicant has made the demonstrations required under
subdivision 3a; and

deleted text begin (12) deleted text end new text begin (13) new text end if the applicant is proposing a nonrenewable generating plant, the
applicant's assessment of the risk of environmental costs and regulation on that proposed
facility over the expected useful life of the plant, including a proposed means of allocating
costs associated with that risk.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2008.
new text end

Sec. 6. new text begin REVISOR'S INSTRUCTION.
new text end

new text begin The revisor of statutes shall change all statutory references to all or parts of
section 216B.241 wherever found in Minnesota Statutes and Minnesota Rules to section
216B.2412.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2008.
new text end

Sec. 7. new text begin REPEALER.
new text end

new text begin Minnesota Statutes 2006, sections 216B.241; and 216B.2411, new text end new text begin are repealed effective
June 30, 2008.
new text end