1.1 	A bill for an act
1.2 	relating to energy; establishing the Clean Energy First Act; requiring electric 
1.3 	utilities to meet resource needs using clean energy resources; modifying the 
1.4 	definition of biomass as an eligible energy technology; increasing the proportion 
1.5 	of energy that electricity-generating utilities must supply from renewable sources 
1.6 	and setting target dates by which those goals must be achieved; updating the state's 
1.7 	energy savings policy goal and establishing the Conservation Improvement Program 
1.8 	Modernization Act of 2019;amending Minnesota Statutes 2018, sections 216B.16, 
1.9 	subdivisions 6, 13; 216B.1645, subdivisions 1, 2; 216B.1691, subdivisions 1, 2b, 
1.10 	9, by adding a subdivision; 216B.2401; 216B.241, subdivisions 1a, 1c, 1d, 1f, 2, 
1.11 	2b, 7, by adding a subdivision; 216B.2422, subdivisions 1, 2, 4, 5, by adding a 
1.12 	subdivision; 216F.04; 216F.08; proposing coding for new law in Minnesota 
1.13 	Statutes, chapter 216B; repealing Minnesota Statutes 2018, section 216B.241, 
1.14 	subdivisions 1, 2c, 4, 5.
1.15 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.16 	ARTICLE 1
1.17 	CLEAN ENERGY FIRST ACT

1.18 	Section 1. TITLE.
 1.19 	This article may be referred to as the "Clean Energy First Act."

1.20 	Sec. 2. Minnesota Statutes 2018, section 216B.16, subdivision 6, is amended to read:
1.21 		Subd. 6.Factors considered, generally. The commission, in the exercise of its powers 
1.22 	under this chapter to determine just and reasonable rates for public utilities, shall give due 
1.23 	consideration to the public need for adequate, efficient, and reasonable service and to the 
1.24 	need of the public utility for revenue sufficient to enable it to meet the cost of furnishing 
1.25 	the service, including adequate provision for depreciation of its utility property used and 
1.26 	useful in rendering service to the public, and to earn a fair and reasonable return upon the 
2.1 	investment in such property. In determining the rate base upon which the utility is to be 
2.2 	allowed to earn a fair rate of return, the commission shall give due consideration to evidence 
2.3 	of the cost of the property when first devoted to public use, to prudent acquisition cost to 
2.4 	the public utility less appropriate depreciation on each, to construction work in progress, to 
2.5 	offsets in the nature of capital provided by sources other than the investors, and to other 
2.6 	expenses of a capital nature. For purposes of determining rate base, the commission shall 
2.7 	consider the original cost of utility property included in the base and shall make no allowance 
2.8 	for its estimated current replacement value. If the commission orders a generating facility 
2.9 	to terminate its operations before the end of the facility's physical life in order to comply 
2.10 	with a specific state or federal energy statute or policy, the commission may allow the public 
2.11 	utility to recover any positive net book value of the facility as determined by the commission.

2.12 	Sec. 3. Minnesota Statutes 2018, section 216B.16, subdivision 13, is amended to read:
2.13 		Subd. 13.Economic and community development. The commission may allow a 
2.14 	public utility to recover from ratepayers the expenses incurred (1) for economic and 
2.15 	community development, and (2) to employ local workers to construct and maintain 
2.16 	generation facilities that supply power to the utility's customers.

2.17 	Sec. 4. Minnesota Statutes 2018, section 216B.1645, subdivision 1, is amended to read:
2.18 		Subdivision 1.Commission authority. Upon the petition of a public utility, the Public 
2.19 	Utilities Commission shall approve or disapprove power purchase contracts, investments, 
2.20 	or expenditures entered into or made by the utility to satisfy the wind and biomass mandates 
2.21 	contained in sections 216B.169, 216B.2423, and 216B.2424, and to satisfy the renewable 
2.22 	energy objectives and standards set forth in section 216B.1691, including reasonable 
2.23 	investments and expenditures, net of revenues, made to:
2.24 	(1) transmit the electricity generated from sources developed under those sections that 
2.25 	is ultimately used to provide service to the utility's retail customers, including studies 
2.26 	necessary to identify new transmission facilities needed to transmit electricity to Minnesota 
2.27 	retail customers from generating facilities constructed to satisfy the renewable energy 
2.28 	objectives and standards, provided that the costs of the studies have not been recovered 
2.29 	previously under existing tariffs and the utility has filed an application for a certificate of 
2.30 	need or for certification as a priority project under section 216B.2425 for the new 
2.31 	transmission facilities identified in the studies;
2.32 	(2) provide storage facilities for renewable energy generation facilities that contribute 
2.33 	to the reliability, efficiency, or cost-effectiveness of the renewable facilities; or
3.1 	(3) develop renewable energy sources from the account required in section 116C.779.

3.2 	Sec. 5. Minnesota Statutes 2018, section 216B.1645, subdivision 2, is amended to read:
3.3 		Subd. 2.Cost recovery. The expenses incurred by the utility over the duration of the 
3.4 	approved contract or useful life of the investment and, expenditures made pursuant to section 
3.5 	116C.779shall be, and employment of local workers to construct and maintain generation 
3.6 	facilities that supply power to the utility's customers are recoverable from the ratepayers of 
3.7 	the utility, to the extent they are not offset by utility revenues attributable to the contracts, 
3.8 	investments, or expenditures. Upon petition by a public utility, the commission shall approve 
3.9 	or approve as modified a rate schedule providing for the automatic adjustment of charges 
3.10 	to recover the expenses or costs approved by the commission under subdivision 1, which, 
3.11 	in the case of transmission expenditures, are limited to the portion of actual transmission 
3.12 	costs that are directly allocable to the need to transmit power from the renewable sources 
3.13 	of energy. The commission may not approve recovery of the costs for that portion of the 
3.14 	power generated from sources governed by this section that the utility sells into the wholesale 
3.15 	market.

3.16 	Sec. 6. Minnesota Statutes 2018, section 216B.1691, subdivision 9, is amended to read:
3.17 		Subd. 9.Local benefits. The commission shall take all reasonable actions within its 
3.18 	statutory authority to ensure this section is implemented to maximize benefits to Minnesota 
3.19 	citizens and local workers as defined in section 216B.2422, subdivision 1, balancing factors 
3.20 	such as local ownership of or participation in energy production, local job impacts as defined 
3.21 	in section 216B.2422, subdivision 1, development and ownership of eligible energy 
3.22 	technology facilities by independent power producers, Minnesota utility ownership of 
3.23 	eligible energy technology facilities, the costs of energy generation to satisfy the renewable 
3.24 	standard, and the reliability of electric service to Minnesotans.

3.25 	Sec. 7. Minnesota Statutes 2018, section 216B.2422, subdivision 1, is amended to read:
3.26 		Subdivision 1.Definitions. (a) For purposes of this section, the terms defined in this 
3.27 	subdivision have the meanings given them.
3.28 	(b) "Utility" means an entity with the capability of generating 100,000 kilowatts or more 
3.29 	of electric power and serving, either directly or indirectly, the needs of 10,000 retail 
3.30 	customers in Minnesota. Utility does not include federal power agencies.
3.31 	(c) "Renewable energy" means electricity generated through use of any of the following 
3.32 	resources:
4.1 	(1) wind;
4.2 	(2) solar;
4.3 	(3) geothermal;
4.4 	(4) hydro;
4.5 	(5) trees or other vegetation;
4.6 	(6) landfill gas; or
4.7 	(7) predominantly organic components of wastewater effluent, sludge, or related 
4.8 	by-products from publicly owned treatment works, but not including incineration of 
4.9 	wastewater sludge.
4.10 	(d) "Resource plan" means a set of resource options that a utility could use to meet the 
4.11 	service needs of its customers over a forecast period, including an explanation of the supply 
4.12 	and demand circumstances under which, and the extent to which, each resource option 
4.13 	would be used to meet those service needs. These resource options include using, 
4.14 	refurbishing, and constructing utility plant and equipment, buying power generated by other 
4.15 	entities, controlling customer loads, and implementing customer energy conservation.
4.16 	(e) "Refurbish" means to rebuild or substantially modify an existing electricity generating 
4.17 	resource of 30 megawatts or greater.
4.18 	(f) "Clean energy resource" means (1) renewable energy, an energy storage system, and 
4.19 	energy efficiency and load management, as defined in section 216B.241, subdivision 1, or 
4.20 	(2) a carbon-free resource, as defined under paragraph (g) and determined by the commission 
4.21 	under subdivision 4, paragraph (g).
4.22 	(g) "Carbon-free resource" means a generation technology that, when operating, does 
4.23 	not contribute to statewide greenhouse gas emissions, as defined in section 216H.01, 
4.24 	subdivision 2. Carbon-free resource does not include a nuclear generation facility that 
4.25 	currently exists in Minnesota.
4.26 	(h) "Energy storage system" means a commercially available technology that:
4.27 	(1) uses mechanical, chemical, or thermal processes to:
4.28 	(i) store energy and deliver the stored energy for use at a later time; or
4.29 	(ii) store thermal energy for direct use for heating or cooling at a later time in a manner 
4.30 	that reduces the demand for energy at the later time;
5.1 	(2) if being used for electric grid benefits, is (i) operationally visible to the distribution 
5.2 	or transmission entity managing it, and (ii) capable of being controlled by the distribution 
5.3 	or transmission entity to enable and optimize the safe and reliable operation of the electric 
5.4 	system; and
5.5 	(3) achieves the following:
5.6 	(i) reduces peak electrical demand;
5.7 	(ii) defers the need or substitutes for an investment in electric generation, transmission, 
5.8 	or distribution assets;
5.9 	(iii) improves the reliable operation of the electrical transmission or distribution systems; 
5.10 	and
5.11 	(iv) lowers customer costs by storing energy when the cost of generating or purchasing 
5.12 	energy is low and delivering energy to customers when costs are high.
5.13 	(i) "Nonrenewable energy facility" means a generation facility, other than a nuclear 
5.14 	facility, that does not use a renewable energy or other clean energy resource.
5.15 	(j) "Local job impacts" means the impacts of a certificate of need, a power purchase 
5.16 	agreement, or commission approval of a new or refurbished energy facility on the availability 
5.17 	of construction employment opportunities to local workers.
5.18 	(k) "Local workers" means workers employed to construct and maintain energy 
5.19 	infrastructure that are Minnesota residents, residents of the utility's service territory, or who 
5.20 	permanently reside within 150 miles of a proposed new or refurbished energy facility.

5.21 	Sec. 8. Minnesota Statutes 2018, section 216B.2422, subdivision 2, is amended to read:
5.22 		Subd. 2.Resource plan filing and approval. (a) A utility shall file a resource plan with 
5.23 	the commission periodically in accordance with rules adopted by the commission. The 
5.24 	commission shall approve, reject, or modify the plan of a public utility, as defined in section 
5.25 	216B.02, subdivision 4, consistent with the public interest.
5.26 	(b) In the resource plan proceedings of all other utilities, the commission's order shall 
5.27 	be advisory and the order's findings and conclusions shall constitute prima facie evidence 
5.28 	which may be rebutted by substantial evidence in all other proceedings. With respect to 
5.29 	utilities other than those defined in section 216B.02, subdivision 4, the commission shall 
5.30 	consider the filing requirements and decisions in any comparable proceedings in another 
5.31 	jurisdiction.
6.1 	(c) As a part of its resource plan filing, a utility shall include the least cost plan for 
6.2 	meeting 50 and 75 percent of all energy needs from both new and refurbished generating 
6.3 	facilities through a combination of conservationclean energy and renewable energy
6.4 	carbon-free resources.

6.5 	Sec. 9. Minnesota Statutes 2018, section 216B.2422, subdivision 4, is amended to read:
6.6 		Subd. 4.Preference for renewable energy facility clean energy resources. (a) The 
6.7 	commission shall not approve a new or refurbished nonrenewable energy facility located 
6.8 	in Minnesota in an integrated resource plan or a certificate of need, pursuant to section 
6.9 	216B.243, nor shall the commission approve a power purchase agreement for power from 
6.10 	in-state generation or allow rate recovery pursuant to section 216B.16 for such a 
6.11 	nonrenewable energy facility, unless the utility has demonstrated that a renewable energy 
6.12 	facility, alone or in combination with other clean energy resources, is not in the public 
6.13 	interest.
6.14 	(b) When making the public interest determination under paragraph (a), the commission 
6.15 	must consider:
6.16 	(1) whether the record in the proposed certificate of need or proposed power purchase 
6.17 	agreement for the new or refurbished nonrenewable energy facility in Minnesota demonstrates 
6.18 	the utility is unable affordably and reliably to meet the resource need the facility is proposed 
6.19 	for solely through the addition of clean energy resources, after evaluation by the utility, the 
6.20 	department, and other parties to the docket;
6.21 	(1)(2) whether the resource plan proposed certificate of need or proposed power purchase 
6.22 	agreement helps the utility achieve the greenhouse gas reduction goals under section 216H.02, 
6.23 	the renewable energy standard under section 216B.1691, or the solar energy standard under 
6.24 	section 216B.1691, subdivision 2f;
6.25 	(2) (3) impacts on local and regional grid reliability;
6.26 	(3) (4) utility and ratepayer impacts resulting from the intermittent nature of renewable 
6.27 	energy facilities, including but not limited to the costs of purchasing wholesale electricity 
6.28 	in the market and the costs of providing ancillary services; and
6.29 	(4) (5) utility and ratepayer impacts resulting from reduced exposure to fuel price 
6.30 	volatility, changes in transmission costs, portfolio diversification, and environmental 
6.31 	compliance costs, as well as utility and ratepayer impacts that might result from additional 
6.32 	investment in nonrenewable energy facilities.
7.1 	(c) If the commission finds the utility has made the demonstration required under 
7.2 	paragraph (a), the commission may approve a utility's proposal for a new or refurbished 
7.3 	nonrenewable energy facility located in Minnesota, as necessary to ensure reliable and 
7.4 	affordable service to the utility's customers.
7.5 	(d) This subdivision does not apply to an energy facility approved by the legislature 
7.6 	under Laws 2017, chapter 5.
7.7 	(e) When evaluating the reliability of proposed resources, the commission must consider 
7.8 	the ability of proposed resources to provide (1) essential reliability services needed by utility 
7.9 	customers or the electric system, including frequency response, balancing services, and 
7.10 	voltage control, and (2) energy and capacity.
7.11 	(f) Nothing in this section impacts a decision to continue operating a nuclear facility 
7.12 	that is generating energy in Minnesota as of June 1, 2019. If a decision is made to retire an 
7.13 	existing nuclear unit, the process in paragraphs (a) to (c) applies to the identification of 
7.14 	replacement resources.
7.15 	(g) The commission may, by order, add to the list of resources it determines are clean 
7.16 	energy resources for the purposes of this section upon a determination that the resource is 
7.17 	carbon free and cost competitive when compared with other carbon-free alternatives.

7.18 	Sec. 10. Minnesota Statutes 2018, section 216B.2422, is amended by adding a subdivision 
7.19 	to read:
7.20 		Subd. 4a.Preference for local job creation. As a part of its resource plan filing, a utility 
7.21 	must report on associated local job impacts and the steps the utility and its energy suppliers 
7.22 	and contractors are taking to maximize the availability of construction employment 
7.23 	opportunities for local workers. The commission must consider local job impacts and give 
7.24 	preference to proposals that maximize the creation of construction employment opportunities 
7.25 	for local workers, consistent with the public interest, when evaluating any utility proposal 
7.26 	that involves the selection or construction of facilities used to generate or deliver energy to 
7.27 	serve the utility's customers, including but not limited to a certificate of need, a power 
7.28 	purchase agreement, or commission approval of a new or refurbished electric generation 
7.29 	facility.

7.30 	Sec. 11. Minnesota Statutes 2018, section 216B.2422, subdivision 5, is amended to read:
7.31 		Subd. 5.Bidding; exemption from certificate of need proceeding. (a) A utility may 
7.32 	select resources to meet its projected energy demand through a bidding process approved 
8.1 	or established by the commission. A utility shall use the environmental cost estimates 
8.2 	determined under subdivision 3 and consider local job impacts in evaluating bids submitted 
8.3 	in a process established under this subdivision.
8.4 	(b) Notwithstanding any other provision of this section, if an electric power generating 
8.5 	plant, as described in section 216B.2421, subdivision 2, clause (1), is selected in a bidding 
8.6 	process approved or established by the commission, a certificate of need proceeding under 
8.7 	section 216B.243 is not required.
8.8 	(c) A certificate of need proceeding is also not required for an electric power generating 
8.9 	plant that has been selected in a bidding process approved or established by the commission, 
8.10 	or such other selection process approved by the commission, to satisfy, in whole or in part, 
8.11 	the wind power mandate of section 216B.2423 or the biomass mandate of section 216B.2424.

8.12 	Sec. 12. COORDINATED ELECTRIC TRANSMISSION STUDY.
 8.13 	(a) Each entity subject to Minnesota Statutes, section 216B.2425, must participate in a 
8.14 	coordinated engineering study to identify transmission network enhancements necessary to 
8.15 	maintain system reliability in the event large generation resources are retired. Specifically, 
8.16 	the study must evaluate what enhancements are necessary in the event large generation 
8.17 	resources that reach the end of the large generation resource's depreciation term or operating 
8.18 	license term within 20 years of the effective date of this section are retired. The study must 
8.19 	also evaluate what transmission enhancements may be necessary to interconnect replacement 
8.20 	generation and renewable resource additions, including generation tie lines, anticipated by 
8.21 	2035 in any utility's integrated resource plan filed with or approved by the Public Utilities 
8.22 	Commission.
8.23 	(b) When setting the scope for the study and as needed while the study is being conducted, 
8.24 	utilities must consult with the commissioner of commerce, technical representatives of 
8.25 	renewable energy resource developers, and other interested entities to discuss and identify 
8.26 	needed generation tie lines to support the continued orderly development of renewable 
8.27 	resources in Minnesota. The study must include any analysis performed by the Midcontinent 
8.28 	Independent System Operator.
8.29 	(c) A report on the study must be completed and submitted to the Public Utilities 
8.30 	Commission by November 1, 2020, and include a preliminary plan to build the needed 
8.31 	transmission network enhancements. Reasonable and prudent costs for the study are 
8.32 	recoverable through the mechanism provided under Minnesota Statutes, section 216B.1645, 
8.33 	subdivision 2.

9.1 	Sec. 13. EFFECTIVE DATE.
 9.2 	This article is effective August 1, 2019, and applies only to dockets initiated at the Public 
9.3 	Utilities Commission on or after that date.

9.4 	ARTICLE 2
9.5 	CARBON-FREE ENERGY STANDARD

9.6 	Section 1. Minnesota Statutes 2018, section 216B.1691, subdivision 1, is amended to read:
9.7 		Subdivision 1.Definitions. (a) Unless otherwise specified in law, "eligible energy 
9.8 	technology" means an energy technology that generates electricity from the following 
9.9 	renewable energy sources:
9.10 	(1) solar;
9.11 	(2) wind;
9.12 	(3) hydroelectric with a capacity of less than 100 megawatts;
9.13 	(4) hydrogen, provided that after January 1, 2010, the hydrogen must be generated from 
9.14 	the resources listed in this paragraph; or
9.15 	(5) biomass, which includes, without limitation, landfill gas; an anaerobic digester 
9.16 	system; the predominantly organic components of wastewater effluent, sludge, or related 
9.17 	by-products from publicly owned treatment works, but not including incineration of 
9.18 	wastewater sludge to produce electricity; and an energy recovery facility used to capture 
9.19 	the heat value of mixed municipal solid waste or refuse-derived fuel from mixed municipal 
9.20 	solid waste as a primary fuel.
9.21 	(b) "Electric utility" means a public utility providing electric service, a generation and 
9.22 	transmission cooperative electric association, a municipal power agency, or a power district.
9.23 	(c) "Total retail electric sales" means the kilowatt-hours of electricity sold in a year by 
9.24 	an electric utility to retail customers of the electric utility or to a distribution utility for 
9.25 	distribution to the retail customers of the distribution utility. "Total retail electric sales" 
9.26 	does not include the sale of hydroelectricity supplied by a federal power marketing 
9.27 	administration or other federal agency, regardless of whether the sales are directly to a 
9.28 	distribution utility or are made to a generation and transmission utility and pooled for further 
9.29 	allocation to a distribution utility.
9.30 	(d) "Carbon-free" means a technology that generates electricity without emitting carbon 
9.31 	dioxide.

10.1 	EFFECTIVE DATE. This section is effective the day following final enactment.

10.2 	Sec. 2. Minnesota Statutes 2018, section 216B.1691, subdivision 2b, is amended to read:
10.3 		Subd. 2b.Modification or delay of standard. (a) The commission shall modify or delay 
10.4 	the implementation of a standard obligation, in whole or in part, if the commission determines 
10.5 	it is in the public interest to do so. The commission, when requested to modify or delay 
10.6 	implementation of a standard, must consider:
10.7 	(1) the impact of implementing the standard on its customers' utility costs, including the 
10.8 	economic and competitive pressure on the utility's customers;
10.9 	(2) the environmental costs that would be incurred as a result of a delay or modification, 
10.10 	based on the environmental cost values established in section 216B.2422, subdivision 3;
10.11 	(3) the effects of implementing the standard on the reliability of the electric system;
10.12 	(3) (4) technical advances or technical concerns;
10.13 	(4) (5) delays in acquiring sites or routes due to rejection or delays of necessary siting 
10.14 	or other permitting approvals;
10.15 	(5) (6) delays, cancellations, or nondelivery of necessary equipment for construction or 
10.16 	commercial operation of an eligible energy technology facility;
10.17 	(6) (7) transmission constraints preventing delivery of service; and
10.18 	(7) (8) other statutory obligations imposed on the commission or a utility.
10.19 	(b) The commission may modify or delay implementation of a standard obligation under 
10.20 	paragraph (a), clauses (1) to (3) (4) only if it finds implementation would cause significant 
10.21 	rate impact, requires significant measures to address reliability, would cause significant 
10.22 	environmental costs, or raises significant technical issues. The commission may modify or 
10.23 	delay implementation of a standard obligation under paragraph (a), clauses (4) (5) to (6)
10.24 	(7) only if it finds that the circumstances described in those clauses were due to circumstances 
10.25 	beyond an electric utility's control and make compliance not feasible.
10.26 	(c) When evaluating transmission capacity constraints under paragraph (a), clause (7), 
10.27 	the commission must consider:
10.28 	(1) whether the utility has, in a timely fashion, undertaken reasonable measures under 
10.29 	its control and consistent with its obligations under local, state, and federal laws and 
10.30 	regulations, and its obligations as a member of the Midcontinent Independent System 
10.31 	Operator, to acquire sites, necessary permit approvals, and necessary equipment to develop 
11.1 	and construct new transmission lines or upgrade existing transmission lines to transmit 
11.2 	electricity generated by eligible energy technologies; and
11.3 	(2) whether the utility has taken all reasonable operational measures to maximize 
11.4 	cost-effective electricity delivery from eligible energy technologies in advance of 
11.5 	transmission availability.
11.6 	(b) (d) When considering whether to delay or modify implementation of a standard 
11.7 	obligation, the commission must give due consideration to a preference for electric generation 
11.8 	through use of eligible energy technology and to the achievement of the standards set by 
11.9 	this section.
11.10 	(c) (e) An electric utility requesting a modification or delay in the implementation of a 
11.11 	standard must file a plan to comply with its standard obligation in the same proceeding that 
11.12 	it is requesting the delay.

11.13 	EFFECTIVE DATE. This section is effective the day following final enactment.

11.14 	Sec. 3. Minnesota Statutes 2018, section 216B.1691, is amended by adding a subdivision 
11.15 	to read:
11.16 		Subd. 2g.Carbon-free standard. (a) By 2050, 100 percent of the electricity each electric 
11.17 	utility subject to subdivision 2a, paragraph (a), provides directly to Minnesota retail 
11.18 	customers, or indirectly through wholesale sales to a distribution utility serving Minnesota 
11.19 	retail customers, must be generated by a technology that is carbon-free.
11.20 	(b) By 2050, 100 percent of the electricity each electric utility subject to subdivision 2a, 
11.21 	paragraph (b), provides directly to Minnesota retail customers, or indirectly through wholesale 
11.22 	sales to a distribution utility serving Minnesota retail customers, must be generated by a 
11.23 	technology that is carbon-free.

11.24 	EFFECTIVE DATE. This section is effective the day following final enactment.

11.25 	Sec. 4. Minnesota Statutes 2018, section 216B.1691, subdivision 9, is amended to read:
11.26 		Subd. 9.Local benefits. (a) The commission shall take all reasonable actions within its 
11.27 	statutory authority to ensure this section is implemented to maximize in a manner that 
11.28 	maximizes benefits to all Minnesota citizens, balancing and local workers throughout the 
11.29 	state. Benefits under this subdivision include but are not limited to:
11.30 	(1) the creation of high-quality jobs in Minnesota that pay wages that support families;
11.31 	(2) recognition of the rights of workers to organize and unionize;
12.1 	(3) ensuring that workers have the necessary tools, opportunities, and economic assistance 
12.2 	to adapt successfully during the energy transition, particularly in communities that host 
12.3 	retiring power plants or that contain historically marginalized and underrepresented 
12.4 	populations;
12.5 	(4) ensuring that all Minnesotans share (i) the benefits of clean and renewable energy, 
12.6 	and (ii) the opportunity to participate fully in the clean energy economy;
12.7 	(5) ensuring that air emissions are reduced in communities historically burdened by 
12.8 	pollution and the impacts of climate change; and
12.9 	(6) the provision of affordable electric service to Minnesotans, particularly to low-income 
12.10 	consumers.
12.11 	(b) The commission must also implement this section in a manner that balances factors 
12.12 	such as local ownership of or participation in energy production, local job impacts,
12.13 	development and ownership of eligible energy technology facilities by independent power 
12.14 	producers, Minnesota utility ownership of eligible energy technology facilities, the costs 
12.15 	of energy generation to satisfy the renewable standard and carbon-free standards, and the 
12.16 	reliability of electric service to Minnesotans.

12.17 	EFFECTIVE DATE. This section is effective the day following final enactment.

12.18 	Sec. 5. Minnesota Statutes 2018, section 216B.2422, subdivision 1, is amended to read:
12.19 		Subdivision 1.Definitions. (a) For purposes of this section, the terms defined in this 
12.20 	subdivision have the meanings given them.
12.21 	(b) "Utility" means an entity with the capability of generating 100,000 kilowatts or more 
12.22 	of electric power and serving, either directly or indirectly, the needs of 10,000 retail 
12.23 	customers in Minnesota. Utility does not include federal power agencies.
12.24 	(c) "Renewable energy" means electricity generated through use of any of the following 
12.25 	resources:
12.26 	(1) wind;
12.27 	(2) solar;
12.28 	(3) geothermal;
12.29 	(4) hydro;
12.30 	(5) trees or other vegetation;
12.31 	(6) landfill gas; or
13.1 	(7) predominantly organic components of wastewater effluent, sludge, or related 
13.2 	by-products from publicly owned treatment works, but not including incineration of 
13.3 	wastewater sludge.
13.4 	(d) "Resource plan" means a set of resource options that a utility could use to meet the 
13.5 	service needs of its customers over a forecast period, including an explanation of the supply 
13.6 	and demand circumstances under which, and the extent to which, each resource option 
13.7 	would be used to meet those service needs. These resource options include using, 
13.8 	refurbishing, and constructing utility plant and equipment, buying power generated by other 
13.9 	entities, controlling customer loads, and implementing customer energy conservation.
13.10 	(e) "Refurbish" means to rebuild or substantially modify an existing electricity generating 
13.11 	resource of 30 megawatts or greater.
13.12 	(f) "Local job impacts" means the impacts of an integrated resource plan, a certificate 
13.13 	of need, a power purchase agreement, or commission approval of a new or refurbished 
13.14 	electric generation facility on the availability of high-quality construction employment 
13.15 	opportunities for local workers.
13.16 	(g) "Local workers" means workers employed in the construction and maintenance of 
13.17 	energy infrastructure that are Minnesota residents, residents of the utility's service territory, 
13.18 	or permanently reside within 150 miles of an electric generation facility.

13.19 	Sec. 6. Minnesota Statutes 2018, section 216F.04, is amended to read:
13.20 	216F.04 SITE PERMIT.
13.21 	(a) No person may construct an LWECS without a site permit issued by the Public 
13.22 	Utilities Commission.
13.23 	(b) Any person seeking to construct an LWECS shall submit an application to the 
13.24 	commission for a site permit in accordance with this chapter and any rules adopted by the 
13.25 	commission. The permitted site need not be contiguous land.
13.26 	(c) The commission shall make a final decision on an application for a site permit for 
13.27 	an LWECS within 180 days after acceptance of a complete application by the commission. 
13.28 	The commission may extend this deadline for cause.
13.29 	(d) The commission may place conditions in a permit and may deny, modify, suspend, 
13.30 	or revoke a permit.
13.31 	(e) The commission may require, as a condition of permit issuance, that the recipient of 
13.32 	a site permit to construct an LWECS with a nameplate capacity above 25,000 kilowatts and 
14.1 	all of the permit recipient's construction contractors and subcontractors on the project pay 
14.2 	the prevailing wage rate, as defined in section 177.42. The commission may also require, 
14.3 	as a condition of modifying a site permit for an LWECS repowering project as defined in 
14.4 	section 216B.243, subdivision 8, paragraph (b), that the recipient of the site permit and all 
14.5 	of the recipient's construction contractors and subcontractors on the repowering project pay 
14.6 	the prevailing wage rate as defined in section 177.42.

14.7 	Sec. 7. Minnesota Statutes 2018, section 216F.08, is amended to read:
14.8 	216F.08 PERMIT AUTHORITY; ASSUMPTION BY COUNTIES.
14.9 	(a) A county board may, by resolution and upon written notice to the Public Utilities 
14.10 	Commission, assume responsibility for processing applications for permits required under 
14.11 	this chapter for LWECS with a combined nameplate capacity of less than 25,000 kilowatts. 
14.12 	The responsibility for permit application processing, if assumed by a county, may be 
14.13 	delegated by the county board to an appropriate county officer or employee. Processing by 
14.14 	a county shall be done in accordance with procedures and processes established under 
14.15 	chapter 394.
14.16 	(b) A county board that exercises its option under paragraph (a) may issue, deny, modify, 
14.17 	impose conditions upon, or revoke permits pursuant to this section. The action of the county 
14.18 	board about a permit application is final, subject to appeal as provided in section 394.27.
14.19 	(c) The commission shall, by order, establish general permit standards, including 
14.20 	appropriate property line set-backs, governing site permits for LWECS under this section. 
14.21 	The order must consider existing and historic commission standards for wind permits issued 
14.22 	by the commission. The general permit standards shall apply to permits issued by counties 
14.23 	and to permits issued by the commission for LWECS with a combined nameplate capacity 
14.24 	of less than 25,000 kilowatts. The commission or a county may grant a variance from a 
14.25 	general permit standard if the variance is found to be in the public interest, provided all 
14.26 	LWECS site permits issued by the commission or a county and all modifications of site 
14.27 	permits issued by the commission or a county for repowering projects comply with the 
14.28 	prevailing wage rate requirements under section 216F.04, paragraph (e).
14.29 	(d) The commission and the commissioner of commerce shall provide technical assistance 
14.30 	to a county with respect to the processing of LWECS site permit applications.

15.1 	ARTICLE 3
15.2 	ENERGY OPTIMIZATION ACT

15.3 	Section 1. CITATION; CONSERVATION IMPROVEMENT PROGRAM 
15.4 	MODERNIZATION ACT.
 15.5 	This article may be referred to as the "Energy Optimization Act of 2019."

15.6 	Sec. 2. [216B.1697] INNOVATIVE CLEAN TECHNOLOGIES.
15.7 	(a) For purposes of this section, "innovative clean technology" means advanced energy 
15.8 	technology that is (1) environmentally superior to technologies currently in use, (2) expected 
15.9 	to offer energy-related, environmental, or economic benefits, and (3) not widely deployed 
15.10 	by the utility industry.
15.11 	(b) A public utility may petition the commission for authorization to invest in a project 
15.12 	or projects to deploy one or more innovative clean technologies to further the  development, 
15.13 	commercialization, and deployment of those technologies for the benefit of utility customers.
15.14 	(c) The commission may approve a petition under paragraph (b) if it finds:
15.15 	(1) the technologies to be deployed are innovative clean technologies;
15.16 	(2) the utility is meeting its energy conservation goals under section 216B.241; and
15.17 	(3) the petition would not result in utility spending greater than $5,000,000 per year on 
15.18 	innovative clean technologies under this section.
15.19 	(d) The commission may also permit a public utility to file rate schedules containing 
15.20 	provisions to automatically adjust charges for public utility service in direct relation to 
15.21 	changes in prudent costs incurred by a utility under this section, up to $5,000,000 each year. 
15.22 	To the extent the utility investment under this section is for a capital asset, the utility may 
15.23 	request the asset be included in the utility's rate base.

15.24 	Sec. 3. Minnesota Statutes 2018, section 216B.2401, is amended to read:
15.25 	216B.2401 ENERGY SAVINGS AND OPTIMIZATION POLICY GOAL.
15.26 	(a) The legislature finds that energy savings are an energy resource, and that cost-effective 
15.27 	energy savings are preferred over all other energy resources. In addition, the legislature 
15.28 	finds that optimizing when and how energy consumers manage energy use can provide 
15.29 	significant benefits to the consumers and to the utility system as a whole. The legislature 
15.30 	further finds that cost-effective energy savings and load management programs should be 
15.31 	procured systematically and aggressively in order to reduce utility costs for businesses and 
16.1 	residents, improve the competitiveness and profitability of businesses, create more 
16.2 	energy-related jobs, reduce the economic burden of fuel imports, and reduce pollution and 
16.3 	emissions that cause climate change. Therefore, it is the energy policy of the state of 
16.4 	Minnesota to achieve annual energy savings equal equivalent to at least 1.5 2.5 percent of 
16.5 	annual retail energy sales of electricity and natural gas through cost-effective energy 
16.6 	conservation improvement programs and rate design, energy efficiency achieved by energy 
16.7 	consumers without direct utility involvement, energy codes and appliance standards, programs 
16.8 	designed to transform the market or change consumer behavior, energy savings resulting 
16.9 	from efficiency improvements to the utility infrastructure and system, and other efforts to 
16.10 	promote energy efficiency and energy conservation. multiple means, including but not 
16.11 	limited to:
16.12 	(1) cost-effective energy conservation improvement programs, and efficient fuel-switching 
16.13 	utility programs, under sections 216B.2402 to 216B.241;
16.14 	(2) rate design;
16.15 	(3) energy efficiency achieved by energy consumers without direct utility involvement;
16.16 	(4) advancements in statewide energy codes and cost-effective appliance and equipment 
16.17 	standards;
16.18 	(5) programs designed to transform the market or change consumer behavior;
16.19 	(6) energy savings resulting from efficiency improvements to the utility infrastructure 
16.20 	and system; and
16.21 	(7) other efforts to promote energy efficiency and energy conservation.
16.22 	(b) A utility should design and offer to their customers load management programs that 
16.23 	enable: (1) customers to maximize the economic value gained from the energy purchased 
16.24 	from their utility service providers; and (2) utilities to optimize the infrastructure and 
16.25 	generation capacity needed to effectively serve customers and to facilitate the integration 
16.26 	of renewable energy into the energy system. The commissioner must provide a reasonable 
16.27 	estimate for progress toward this statewide energy savings goal in the annual report required 
16.28 	under section 216B.241, subdivision 1c, along with recommendations for administrative or 
16.29 	legislative initiatives to increase energy savings toward that goal.  The commissioner must 
16.30 	also report annually the energy productivity of the state's economy by providing an estimate 
16.31 	of the ratio of economic output produced in a previous year to the primary energy inputs 
16.32 	used in that year.

17.1 	Sec. 4. [216B.2402] DEFINITIONS.
17.2 	(a) For the purposes of section 216B.16, subdivision 6b, and sections 216B.2401 to 
17.3 	216B.241, the terms defined in this section have the meanings given them.
17.4 	(b) "Consumer-owned utility" means a municipal utility or a cooperative electric 
17.5 	association.
17.6 	(c) "Cumulative lifetime savings" means the total electric energy or natural gas savings 
17.7 	in a given year from energy conservation improvements installed that year or in previous 
17.8 	years that are still operational and providing savings in that year because the measures have 
17.9 	not reached the end of the measure's useful life.
17.10 	(d) "Efficient fuel-switching improvement" means a project that (1) results in converting 
17.11 	a customer from use of a fuel to the use of electric energy or natural gas delivered at retail 
17.12 	by a utility subject to this section, resulting in a net increase in the use of electric energy or 
17.13 	natural gas and a net decrease in source energy consumption on a fuel-neutral basis, and 
17.14 	(2) otherwise meets the criteria established in section 216B.2403, subdivision 8. An efficient 
17.15 	fuel-switching improvement requires the installation of equipment that utilizes electric 
17.16 	energy or natural gas, resulting in a reduction or elimination of use of the previous fuel.
17.17 	(e) "Energy conservation" means an action that results in a net reduction in electric 
17.18 	energy or natural gas consumption.
17.19 	(f) "Energy conservation improvement" means a project that results in energy efficiency 
17.20 	or energy conservation. Energy conservation improvement may include waste heat that is 
17.21 	recovered and converted into electricity, but does not include electric utility infrastructure 
17.22 	projects approved by the commission under section 216B.1636. Energy conservation 
17.23 	improvement includes waste heat recovered and used as thermal energy.
17.24 	(g) "Energy efficiency" means measures or programs, including energy conservation 
17.25 	measures or programs, that target consumer behavior, equipment, processes, or devices 
17.26 	designed to produce either an absolute decrease in consumption of electric energy or natural 
17.27 	gas or a decrease in consumption of electric energy or natural gas on a per unit of production 
17.28 	basis, without reducing the quality or level of service provided to the energy consumer.
17.29 	(h) "Fuel" means energy consumed by a retail utility customer. Fuel includes electricity, 
17.30 	propane, natural gas, heating oil, gasoline, diesel fuel, or steam.
17.31 	(i) "Fuel neutral" means an approach that compares the use of various fuels for a given 
17.32 	end use, using a common metric.
18.1 	(j) "Gross annual retail energy sales" means the annual electric sales to all retail customers 
18.2 	in a utility's or association's Minnesota service territory or natural gas throughput to all retail 
18.3 	customers, including natural gas transportation customers, on a utility's distribution system 
18.4 	in Minnesota. Gross annual retail energy sales does not include:
18.5 	(1) gas sales to:
18.6 	(i) a large energy facility;
18.7 	(ii) a large customer facility whose natural gas utility has been exempted by the 
18.8 	commissioner under section 216B.241, subdivision 1a, paragraph (b), with respect to natural 
18.9 	gas sales made to the large customer facility; and
18.10 	(iii) a commercial gas customer facility whose natural gas utility has been exempted by 
18.11 	the commissioner under section 216B.241, subdivision 1a, paragraph (c), with respect to 
18.12 	natural gas sales made to the commercial gas customer facility; or
18.13 	(2) electric sales to a large customer facility whose electric utility has been exempted 
18.14 	by the commissioner under section 216B.241, subdivision 1a, paragraph (b), with respect 
18.15 	to electric sales made to the large facility.
18.16 	(k) "Investments and expenses of a public utility" means the investments and expenses 
18.17 	incurred by a public utility in connection with an energy conservation improvement.
18.18 	(l) "Large customer facility" means all buildings, structures, equipment, and installations 
18.19 	at a single site that collectively (1) impose a peak electrical demand on an electric utility's 
18.20 	system of at least 20,000 kilowatts, measured in the same way as the utility that serves the 
18.21 	customer facility measures electric demand for billing purpose, or (2) consume at least 
18.22 	500,000,000 cubic feet of natural gas annually. When calculating peak electrical demand, 
18.23 	a large customer facility may include demand offset by on-site cogeneration facilities and, 
18.24 	if engaged in mineral extraction, may aggregate peak energy demand from the large customer 
18.25 	facility's mining processing operations.
18.26 	(m) "Large energy facility" has the meaning given it in section 216B.2421, subdivision 
18.27 	2, clause (1).
18.28 	(n) "Lifetime energy savings" means the amount of savings a particular energy 
18.29 	conservation improvement produces over the improvement's effective useful lifetime.
18.30 	(o) "Load management" means an activity, service, or technology to change the timing 
18.31 	or the efficiency of a customer's use of energy that allows a utility or a customer to respond 
18.32 	to local and regional energy system conditions, or to reduce peak demand for electric energy 
19.1 	or natural gas. Load management that reduces the customer's net annual energy consumption 
19.2 	is also energy conservation.
19.3 	(p) "Low-income programs" means energy conservation improvement programs that 
19.4 	directly serve the needs of low-income persons, including low-income renters.
19.5 	(q) "Member" has the meaning given to it in section 308B.005, subdivision 15.
19.6 	(r) "Qualifying utility" means a utility that supplies energy to a customer that enables 
19.7 	the customer to qualify as a large customer facility.
19.8 	(s) "Source energy" means the total amount of fuel required for a given purpose, 
19.9 	considering energy losses in the production, transmission, and delivery of the energy.
19.10 	(t) "Waste heat recovered and used as thermal energy" means capturing heat energy that 
19.11 	would be exhausted or dissipated to the environment from machinery, buildings, or industrial 
19.12 	processes, and productively using the recovered thermal energy where it was captured or 
19.13 	distributing it as thermal energy to other locations where it is used to reduce demand-side 
19.14 	consumption of natural gas, electric energy, or both.
19.15 	(u) "Waste heat recovery converted into electricity" means an energy recovery process 
19.16 	that converts otherwise lost energy from the heat of exhaust stacks or pipes used for engines 
19.17 	or manufacturing or industrial processes, or the reduction of high pressure in water or gas 
19.18 	pipelines.

19.19 	Sec. 5. [216B.2403] CUSTOMER-OWNED UTILITIES; ENERGY CONSERVATION 
19.20 	AND OPTIMIZATION.
19.21 		Subdivision 1.Applicability. This section applies to:
19.22 	(1) a cooperative electric association that provides retail service to more than 5,000 
19.23 	members;
19.24 	(2) a municipality that provides electric service to more than 1,000 retail customers; and
19.25 	(3) a municipality with more than 1,000,000,000 cubic feet in annual throughput sales 
19.26 	to natural gas retail customers.
19.27 		Subd. 2.Consumer-owned utility; energy savings goal. (a) Each individual 
19.28 	consumer-owned utility subject to this section has an annual energy savings goal equivalent 
19.29 	to 1.5 percent of gross annual retail energy sales. The annual energy savings goal must be 
19.30 	met with a minimum of energy savings from energy conservation improvements equivalent 
19.31 	to at least one percent of the consumer-owned utility's gross annual retail energy sales. The 
20.1 	balance of energy savings toward the annual energy savings goal must be achieved by the 
20.2 	following utility activities:
20.3 	(1) energy savings from additional energy conservation improvements;
20.4 	(2) electric utility infrastructure projects, as defined in section 216B.1636, subdivision 
20.5 	1; or
20.6 	(3) net energy savings from efficient fuel-switching improvements that meet the criteria 
20.7 	under subdivision 7.
20.8 	(b) Nothing in this section limits a utility's ability to report and recognize savings from 
20.9 	activities under paragraph (a), clauses (2) and (3), in excess of the utility's annual energy 
20.10 	savings provided the utility has met the minimum energy savings goal from energy 
20.11 	conservation improvements.
20.12 	(c) The energy savings goals specified in this section must be calculated based on the 
20.13 	most recent three-year, weather-normalized average. A consumer-owned utility that elects 
20.14 	to file annual plans may carry forward for up to three years any energy savings in excess 
20.15 	of its 1.5 percent energy savings goal in a single year.
20.16 	(d) A consumer-owned utility subject to this section is not required to make energy 
20.17 	conservation improvements that are not cost-effective, even if the improvement is necessary 
20.18 	to attain the energy savings goal. A consumer-owned utility subject to this section must 
20.19 	make reasonable efforts to implement energy conservation improvements above the minimum 
20.20 	level set under this subdivision, if cost-effective opportunities and utility funding are 
20.21 	available, considering other potential investments the utility plans to make for the benefit 
20.22 	of customers during the term of the plan filed under subdivision 3.
20.23 	(e) A consumer-owned utility may request that the commissioner adjust its minimum 
20.24 	goal for energy savings from energy conservation improvements specified under paragraph 
20.25 	(a) for the period of the plan filed under subdivision 3. The request must be made by January 
20.26 	1 of any year when the utility must file a plan under subdivision 4. The request must be 
20.27 	based on:
20.28 	(1) historical energy conservation improvement program achievements;
20.29 	(2) customer class makeup;
20.30 	(3) projected load growth;
20.31 	(4) an energy conservation potential study that estimates the amount of cost-effective 
20.32 	energy conservation potential that exists in the utility's service territory;
21.1 	(5) the cost-effectiveness and quality of the energy conservation programs offered by 
21.2 	the utility; and
21.3 	(6) other factors the commissioner and consumer-owned utility determine warrants an 
21.4 	adjustment.
21.5 	The commissioner must adjust the savings goal to a level the commissioner determines is 
21.6 	supported by the record, but must not approve a minimum energy savings goal from energy 
21.7 	conservation improvements that is less than one percent of gross annual retail energy sales.
21.8 		Subd. 3.Consumer-owned utility; energy savings investments. (a) Each cooperative 
21.9 	electric association and municipality subject to subdivision 2 must spend and invest in the 
21.10 	following amounts for energy conservation improvements under this subdivision:
21.11 	(1) for a municipality, 0.5 percent of its gross operating revenues from the sale of gas 
21.12 	and 1.5 percent of its gross operating revenues from the sale of electricity, excluding gross 
21.13 	operating revenues from electric and gas service provided in Minnesota to large electric 
21.14 	customer facilities; and
21.15 	(2) for a cooperative electric association, 1.5 percent of its gross operating revenues 
21.16 	from service provided in the state, excluding gross operating revenues from service provided 
21.17 	in the state to large electric customer facilities indirectly through a distribution cooperative 
21.18 	electric association.
21.19 	(b) Each municipality and cooperative electric association subject to this subdivision 
21.20 	must identify and implement energy conservation improvement spending and investments 
21.21 	that are appropriate for the municipality or association, except that a municipality or 
21.22 	association must not spend or invest for energy conservation improvements that directly 
21.23 	benefit a large energy facility or a large electric customer facility that the commissioner has 
21.24 	issued an exemption to under section 216B.241, subdivision 1a, paragraph (b).
21.25 		Subd. 4.Consumer-owned utility; energy conservation and optimization plans. (a) 
21.26 	By June 1, 2021, each consumer-owned utility must file with the commissioner an energy 
21.27 	conservation and optimization plan that describes the programs for energy conservation, 
21.28 	efficient fuel-switching improvements and load management programs, and other processes 
21.29 	and programs the utility plans to use to achieve its energy-savings goal. The plan may cover 
21.30 	a period not to exceed two years. The plan must provide an analysis of the cost-effectiveness 
21.31 	of the consumer-owned utility's programs offered under the plan, using a list of baseline 
21.32 	energy and capacity savings assumptions developed in consultation with the department. 
21.33 	An individual utility program may combine elements of energy conservation, load 
21.34 	management, or efficient fuel-switching.  Plans received by June 1 must be evaluated by the 
22.1 	commissioner based on how well the plan meets the goals set under subdivision 2 by 
22.2 	December 1 of the same year, including the commissioner's assessment of whether the plan 
22.3 	will likely achieve those goals. Beginning June 1, 2022, and each subsequent June 1, each 
22.4 	consumer-owned utility must file: (1) an annual update identifying the status of its annual 
22.5 	plan filed under this subdivision, including total expenditures and investments made to date, 
22.6 	and any intended changes to the plan; and (2) a summary of the annual energy-savings 
22.7 	achievements under a completed plan, and a new plan that complies with this section.
22.8 	(b) In the filings required under paragraph (a), the consumer-owned utility must provide 
22.9 	a description and evaluation of the programs offered by the utility under the plan, including:
22.10 	(1) energy conservation improvements in the previous period, and its progress toward 
22.11 	the minimum energy savings goal from energy conservation improvements described in 
22.12 	subdivision 2, including accounting for lifetime savings and cumulative lifetime energy 
22.13 	savings under the plan. The evaluation must briefly describe each conservation program 
22.14 	the utility offers or plans to offer, and must specify the energy savings or increased efficiency 
22.15 	in the use of energy within the service territory of the utility that is the result of the program. 
22.16 	The commissioner must review each evaluation and make recommendations, where 
22.17 	appropriate, to the consumer-owned utility to increase the effectiveness of conservation 
22.18 	improvement activities. The commissioner must consider and may require a consumer-owned 
22.19 	utility to undertake a cost-effective program suggested by an outside source, including a 
22.20 	political subdivision, nonprofit corporation, or community organization;
22.21 	(2) load management activities, including an analysis of the reduction in peak load that 
22.22 	is the result of the program, and an assessment of the cost-effectiveness of each program; 
22.23 	and
22.24 	(3) efficient fuel-switching improvement activities, including an analysis regarding how 
22.25 	each program meets the criteria specified in subdivision 8, and an assessment of the 
22.26 	cost-effectiveness of each program. For improvements requiring the deployment of electric 
22.27 	technologies, the plan must also provide an analysis regarding how the fuel-switching 
22.28 	improvement will be operated in order to facilitate the integration of variable renewable 
22.29 	energy into the electric system.
22.30 	(c) When evaluating the cost-effectiveness of utility programs, the consumer-owned 
22.31 	utility and the commissioner must consider the costs and benefits to ratepayers, the utility, 
22.32 	participants, and society. In addition, the commissioner must consider the rate at which the 
22.33 	consumer-owned utility is increasing its energy savings and expenditures on energy 
23.1 	conservation, as well as the lifetime energy savings and cumulative energy savings of the 
23.2 	consumer-owned utility.
23.3 	(d) Each consumer-owned utility subject to this subdivision may annually spend and 
23.4 	invest up to ten percent of the total amount spent and invested on energy conservation 
23.5 	improvements under this subdivision on research and development projects that meet the 
23.6 	definition of energy conservation improvement and that are funded directly by the 
23.7 	consumer-owned utility.
23.8 	(e) A generation and transmission cooperative electric association or municipal power 
23.9 	agency that provides energy services to consumer-owned utilities may invest in energy 
23.10 	conservation improvements on behalf of consumer-owned utilities it serves and may fulfill 
23.11 	the conservation, reporting, and energy-savings goals for any of those consumer-owned 
23.12 	utilities on an aggregate basis. For consumer-owned utilities electing to aggregate services 
23.13 	under this paragraph, multiyear plans up to three years may be filed with the department 
23.14 	under subdivision 3 activities with continued annual performance reporting.
23.15 	(f) A consumer-owned utility must not spend for or invest in energy conservation 
23.16 	improvements that directly benefit a large energy facility or a large electric customer facility 
23.17 	for which the commissioner has issued an exemption under section 216B.241, subdivision 
23.18 	1a.
23.19 	(g) The energy conservation and optimization plan of each consumer-owned utility 
23.20 	subject to this section must have a component focused on improving the energy efficiency 
23.21 	in the public schools served by the utility. At a minimum, the efficiency in schools component 
23.22 	must consist of programs to update lighting in the school, update the heating and cooling 
23.23 	systems of the school, provide for building recommissioning, provide building operator 
23.24 	training, and provide opportunities to educate students, teachers, and staff regarding energy 
23.25 	efficiency measures implemented at that school, including associated benefits for improved 
23.26 	learning resulting from the measures.
23.27 		Subd. 5.Low-income programs. (a) Each consumer-owned utility subject to this section 
23.28 	must provide low-income energy conservation programs. The commissioner must provide 
23.29 	an evaluation of a utility's plans under this section, considering the utility's historic spending 
23.30 	and participation levels, energy savings for low-income programs, and the number of 
23.31 	low-income persons residing in the utility's service territory. A municipal utility that furnishes 
23.32 	gas service must spend at least 0.4 percent of its most recent three-year average gross 
23.33 	operating revenue from residential customers in Minnesota on low-income programs. A 
23.34 	consumer-owned utility that furnishes electric service must spend at least 0.4 percent of its 
24.1 	gross operating revenue from residential customers in Minnesota on low-income programs. 
24.2 	This requirement applies to each generation and transmission cooperative association's 
24.3 	members' aggregate gross operating revenue from the sale of electricity to residential 
24.4 	customers in Minnesota.
24.5 	(b) To meet the requirements of paragraph (a), a consumer-owned utility may contribute 
24.6 	money to the energy and conservation account in section 216B.241, subdivision 2a. An 
24.7 	energy conservation improvement plan must state the amount, if any, of low-income energy 
24.8 	conservation improvement funds the utility plans to contribute to the energy and conservation 
24.9 	account. Contributions must be remitted to the commissioner by February 1 each year.
24.10 	(c) The commissioner must establish low-income programs to use money contributed 
24.11 	to the energy and conservation account under paragraph (b). When establishing low-income 
24.12 	programs, the commissioner must consult political subdivisions, utilities, and nonprofit and 
24.13 	community organizations, including organizations engaged in providing energy and 
24.14 	weatherization assistance to low-income persons. Money contributed to the energy and 
24.15 	conservation account under paragraph (b) must provide programs for low-income persons, 
24.16 	including low-income renters, located in the service territory of the utility or association 
24.17 	providing the money. The commissioner must record and report expenditures and energy 
24.18 	savings achieved as a result of low-income programs funded through the energy and 
24.19 	conservation account in the report required under section 216B.241, subdivision 1c, paragraph 
24.20 	(g). The commissioner may contract with a political subdivision, nonprofit or community 
24.21 	organization, public utility, municipality, or cooperative electric association to implement 
24.22 	low-income programs funded through the energy and conservation account.
24.23 	(d) A consumer-owned utility may petition the commissioner to modify its required 
24.24 	spending under this subdivision if the utility and the commissioner were unable to expend 
24.25 	the amount required for three consecutive years.
24.26 		Subd. 6.Recovery of expenses. The commission must allow a cooperative electric 
24.27 	association subject to rate regulation under section 216B.026 to recover expenses resulting 
24.28 	from (1) a plan under this subdivision, and (2) assessments and contributions to the energy 
24.29 	and conservation account under section 216B.241, subdivision 2a.
24.30 		Subd. 7.Ownership of energy conservation improvement. An energy conservation 
24.31 	improvement to or installed in a building under this section, except systems owned by the 
24.32 	consumer-owned utility and designed to turn off, limit, or vary the delivery of energy, is 
24.33 	the exclusive property of the building owner, except to the extent that the improvement is 
24.34 	subject to a security interest in favor of the utility in case of a loan to the building owner. 
25.1 	The utility has no liability for loss, damage, or injury caused directly or indirectly by an 
25.2 	energy conservation improvement, except for negligence by the utility in purchase, 
25.3 	installation, or modification of the product.
25.4 		Subd. 8.Criteria for efficient fuel-switching improvements. A fuel-switching 
25.5 	improvement is deemed efficient if the  improvement, relative to the fuel that is being 
25.6 	displaced:
25.7 	(1) results in a net reduction in the cost and amount of source energy consumed for a 
25.8 	particular use, measured on a fuel-neutral basis;
25.9 	(2) results in a net reduction of statewide greenhouse gas emissions, as defined in section 
25.10 	216H.01, subdivision 2, over the lifetime of the improvement. For an efficient electrification 
25.11 	or conversion improvement installed by an electric utility, the reduction in emissions must 
25.12 	be measured based on the emissions profile of the utility or the utility's wholesale provider. 
25.13 	Where applicable, the emissions profile used must be the most recent resource plan accepted 
25.14 	by the commission under section 216B.2422;
25.15 	(3) is cost-effective from a societal perspective, considering the costs associated with 
25.16 	both the fuel used in the past and the fuel used in the future; and
25.17 	(4) is planned to be installed and operated in a manner that does not unduly increase the 
25.18 	utility's system peak demand or require significant new investment in utility infrastructure.
25.19 		Subd. 9.Manner of filing and service. (a) A consumer-owned utility must submit the 
25.20 	filings required by this section to the department using the department's electronic filing 
25.21 	system.
25.22 	(b) The submission of a document to the department's electronic filing system constitutes 
25.23 	service on the department. If a department rule requires service of a notice, order, or other 
25.24 	document by the department, utility, or interested party upon persons on a service list 
25.25 	maintained by the department, service may be made by personal delivery, mail, or electronic 
25.26 	service, except that electronic service may only be made to persons on the service list that 
25.27 	have previously agreed in writing to accept electronic service at an electronic address 
25.28 	provided to the department for electronic service purposes.
25.29 		Subd. 10.Assessment. The commission or department may assess utilities subject to 
25.30 	this section to carry out the purposes of section 216B.241, subdivisions 1d, 1e, and 1f. An 
25.31 	assessment under this paragraph must be proportionate to the utility's respective gross 
25.32 	operating revenue from sales of gas or electric service in Minnesota during the previous 
26.1 	calendar year. Assessments under this subdivision are not subject to the cap on assessments 
26.2 	under section 216B.62 or any other law.
26.3 		Subd. 11.Waste heat recovery; thermal energy distribution.  Subject to department 
26.4 	approval, demand-side natural gas or electric energy displaced by use of waste heat recovered 
26.5 	and used as thermal energy, including the recovered thermal energy from a cogeneration 
26.6 	or combined heat and power facility, is eligible to be counted toward a consumer-owned 
26.7 	utility's natural gas or electric savings goals.

26.8 	Sec. 6. Minnesota Statutes 2018, section 216B.241, subdivision 1a, is amended to read:
26.9 		Subd. 1a.Investment, expenditure, and contribution; public utility Large customer 
26.10 	facility. (a) For purposes of this subdivision and subdivision 2, "public utility" has the 
26.11 	meaning given it in section 216B.02, subdivision 4. Each public utility shall spend and 
26.12 	invest for energy conservation improvements under this subdivision and subdivision 2 the 
26.13 	following amounts:
26.14 	(1) for a utility that furnishes gas service, 0.5 percent of its gross operating revenues 
26.15 	from service provided in the state;
26.16 	(2) for a utility that furnishes electric service, 1.5 percent of its gross operating revenues 
26.17 	from service provided in the state; and
26.18 	(3) for a utility that furnishes electric service and that operates a nuclear-powered electric 
26.19 	generating plant within the state, two percent of its gross operating revenues from service 
26.20 	provided in the state.
26.21 	For purposes of this paragraph (a), "gross operating revenues" do not include revenues 
26.22 	from large customer facilities exempted under paragraph (b), or from commercial gas 
26.23 	customers that are exempted under paragraph (c) or (e).
26.24 	(b) (a) The owner of a large customer facility may petition the commissioner to exempt 
26.25 	both electric and gas utilities serving the large customer facility from the investment and 
26.26 	expenditure requirements of paragraph (a) a utility's plan under this section or section 
26.27 	216B.2403 with respect to retail revenues attributable to the large customer facility. The 
26.28 	filing must include a discussion of the competitive or economic pressures facing the owner 
26.29 	of the facility and the efforts taken by the owner to identify, evaluate, and implement energy 
26.30 	conservation and efficiency improvements. A filing submitted on or before October 1 of 
26.31 	any year must be approved within 90 days and become effective January 1 of the year 
26.32 	following the filing, unless the commissioner finds that the owner of the large customer 
26.33 	facility has failed to take reasonable measures to identify, evaluate, and implement energy 
27.1 	conservation and efficiency improvements. If a facility qualifies as a large customer facility 
27.2 	solely due to its peak electrical demand or annual natural gas usage, the exemption may be 
27.3 	limited to the qualifying utility if the commissioner finds that the owner of the large customer 
27.4 	facility has failed to take reasonable measures to identify, evaluate, and implement energy 
27.5 	conservation and efficiency improvements with respect to the nonqualifying utility. Once 
27.6 	an exemption is approved, the commissioner may request the owner of a large customer 
27.7 	facility to submit, not more often than once every five years, a report demonstrating the 
27.8 	large customer facility's ongoing commitment to energy conservation and efficiency 
27.9 	improvement after the exemption filing. The commissioner may request such reports for 
27.10 	up to ten years after the effective date of the exemption, unless the majority ownership of 
27.11 	the large customer facility changes, in which case the commissioner may request additional 
27.12 	reports for up to ten years after the change in ownership occurs. The commissioner may, 
27.13 	within 180 days of receiving a report submitted under this paragraph, rescind any exemption 
27.14 	granted under this paragraph upon a determination that the large customer facility is not 
27.15 	continuing to make reasonable efforts to identify, evaluate, and implement energy 
27.16 	conservation improvements. A large customer facility that is, under an order from the 
27.17 	commissioner, exempt from the investment and expenditure requirements of paragraph (a) 
27.18 	as of December 31, 2010, is not required to submit a report to retain its exempt status, except 
27.19 	as otherwise provided in this paragraph with respect to ownership changes. No exempt large 
27.20 	customer facility may participate in a utility conservation improvement program unless the 
27.21 	owner of the facility submits a filing with the commissioner to withdraw its exemption.
27.22 	(c) (b) A commercial gas customer that is not a large customer facility and that purchases 
27.23 	or acquires natural gas from a public utility having fewer than 600,000 natural gas customers 
27.24 	in Minnesota may petition the commissioner to exempt gas utilities serving the commercial 
27.25 	gas customer from the investment and expenditure requirements of paragraph (a)a utility's 
27.26 	plan under this section or section 216B.2403 with respect to retail revenues attributable to 
27.27 	the commercial gas customer. The petition must be supported by evidence demonstrating 
27.28 	that the commercial gas customer has acquired or can reasonably acquire the capability to 
27.29 	bypass use of the utility's gas distribution system by obtaining natural gas directly from a 
27.30 	supplier not regulated by the commission. The commissioner shall grant the exemption if 
27.31 	the commissioner finds that the petitioner has made the demonstration required by this 
27.32 	paragraph.
27.33 	(d) (c)  The commissioner may require investments or spending greater than the amounts 
27.34 	required under this subdivision for a public utility whose most recent advance forecast 
28.1 	required under section 216B.2422 or 216C.17 projects a peak demand deficit of 100 
28.2 	megawatts or greater within five years under midrange forecast assumptions.
28.3 	(e) (d) A public utility or owner of a large customer facility may appeal a decision of 
28.4 	the commissioner under paragraph (a) or (b), (c), or (d) to the commission under subdivision 
28.5 	2. In reviewing a decision of the commissioner under paragraph (a) or (b), (c), or (d), the 
28.6 	commission shall rescind the decision if it finds that the required investments or spending 
28.7 	will:
28.8 	(1) not result in cost-effective energy conservation improvements; or
28.9 	(2) otherwise the decision is not be in the public interest.
28.10 	(e) A public utility is prohibited from spending for or investing in energy conservation 
28.11 	improvements that directly benefit a large energy facility or a large electric customer facility 
28.12 	for which the commissioner has issued an exemption under this section.

28.13 	Sec. 7. Minnesota Statutes 2018, section 216B.241, subdivision 1c, is amended to read:
28.14 		Subd. 1c.Public utility; energy-saving goals. (a) The commissioner shall establish 
28.15 	energy-saving goals for energy conservation improvement expenditures and shall evaluate 
28.16 	an energy conservation improvement program on how well it meets the goals set.
28.17 	(b) Each individual public utility and association shall have providing electric service 
28.18 	has an annual energy-savings goal equivalent to 1.5 1.75 percent of gross annual retail 
28.19 	energy sales unlessEach individual public utility providing natural gas service has an annual 
28.20 	energy savings goal equivalent to one percent of gross annual retail energy sales. The level 
28.21 	of the savings goal may be modified by the commissioner under paragraph (d) (c). The 
28.22 	savings goals must be calculated based on the most recent three-year weather-normalized 
28.23 	average. A public utility or association providing electric service may elect to carry forward 
28.24 	energy savings in excess of 1.5 1.75 percent for a year to the succeeding three calendar 
28.25 	years, except that savings from electric utility infrastructure projects allowed under paragraph 
28.26 	(d) may be carried forward for five years. A public utility providing natural gas service may 
28.27 	elect to carry forward energy savings in excess of one percent for a year to the succeeding 
28.28 	three calendar years. A particular energy savings can be used only for one year's goal.
28.29 	(c) The commissioner must adopt a filing schedule that is designed to have all utilities 
28.30 	and associations operating under an energy-savings plan by calendar year 2010.
28.31 	(d) (c) In its energy conservation improvement and optimization plan filing, a public 
28.32 	utility or association may request the commissioner to adjust its annual energy-savings 
28.33 	percentage goal based on its historical conservation investment experience, customer class 
29.1 	makeup, load growth, a conservation potential study, or other factors the commissioner 
29.2 	determines warrants an adjustment. The commissioner may not approve a plan of a public 
29.3 	utility that provides for an annual energy-savings goal of less than one percent of gross 
29.4 	annual retail energy sales from energy conservation improvements.
29.5 	(d) A public utility or association may include in its energy conservation and optimization
29.6 	plan energy savings from electric utility infrastructure projects approved by the commission 
29.7 	under section 216B.1636 or waste heat recovery converted into electricity projects that may 
29.8 	count as energy savings in addition to a minimum energy-savings goal of at least one percent 
29.9 	for energy conservation improvements. Energy savings from electric utility infrastructure 
29.10 	projects, as defined in section 216B.1636, may be included in the energy conservation plan 
29.11 	of a municipal utility or cooperative electric association. Electric utility infrastructure projects 
29.12 	must result in increased energy efficiency greater than that which would have occurred 
29.13 	through normal maintenance activity.
29.14 	(e) An energy-savings goal is not satisfied by attaining the revenue expenditure 
29.15 	requirements of subdivisions 1a and 1b, but can only be satisfied by meeting the 
29.16 	energy-savings goal established in this subdivision.
29.17 	(f) An association or (e) A public utility is not required to make energy conservation 
29.18 	investments to attain the energy-savings goals of this subdivision that are not cost-effective 
29.19 	even if the investment is necessary to attain the energy-savings goals. For the purpose of 
29.20 	this paragraph, in determining cost-effectiveness, the commissioner shall consider the costs 
29.21 	and benefits to ratepayers, the utility, participants, and society. In addition, the commissioner 
29.22 	shall consider the rate at which an association or municipal utility is increasing its energy 
29.23 	savings and its expenditures on energy conservation, as well as the lifetime energy savings 
29.24 	and cumulative energy savings of the public utility.
29.25 	(g)(f) On an annual basis, the commissioner shall produce and make publicly available 
29.26 	a report on the annual energy and capacity savings and estimated carbon dioxide reductions 
29.27 	achieved by the energy conservation improvement programs under this section and section 
29.28 	216B.2403 for the two most recent years for which data is available. The report must also 
29.29 	include information regarding any annual energy sales or generation capacity increases 
29.30 	resulting from any efficient fuel-switching improvements. The commissioner shall report 
29.31 	on program performance both in the aggregate and for each entity filing an energy 
29.32 	conservation improvement plan for approval or review by the commissioner, and must 
29.33 	provide an estimate for progress toward the statewide energy savings goal under section 
29.34 	216B.2401.
30.1 	(h) By January 15, 2010, the commissioner shall report to the legislature whether the 
30.2 	spending requirements under subdivisions 1a and 1b are necessary to achieve the 
30.3 	energy-savings goals established in this subdivision.
30.4 	(i) This subdivision does not apply to:
30.5 	(1) a cooperative electric association with fewer than 5,000 members;
30.6 	(2) a municipal utility with fewer than 1,000 retail electric customers; or
30.7 	(3) a municipal utility with less than 1,000,000,000 cubic feet in annual throughput sales 
30.8 	to retail natural gas customers.

30.9 	Sec. 8. Minnesota Statutes 2018, section 216B.241, subdivision 1d, is amended to read:
30.10 		Subd. 1d.Technical assistance. (a) The commissioner shall evaluate energy conservation 
30.11 	improvement programs under this section and section 216B.2403 on the basis of 
30.12 	cost-effectiveness and the reliability of the technologies employed. The commissioner shall, 
30.13 	by order, establish, maintain, and update energy-savings assumptions that must be used 
30.14 	when filing energy conservation improvement programs. The department must track a public 
30.15 	utility's or consumer-owned utility's lifetime energy savings and cumulative lifetime energy 
30.16 	savings provided to the commissioner in plans submitted under this section. The 
30.17 	commissioner shall establish an inventory of the most effective energy conservation 
30.18 	programs, techniques, and technologies, and encourage all Minnesota utilities to implement 
30.19 	them, where appropriate, in their service territories. The commissioner shall describe these 
30.20 	programs in sufficient detail to provide a utility reasonable guidance concerning 
30.21 	implementation. The commissioner shall prioritize the opportunities in order of potential 
30.22 	energy savings and in order of cost-effectiveness. The commissioner may contract with a 
30.23 	third party to carry out any of the commissioner's duties under this subdivision, and to obtain 
30.24 	technical assistance to evaluate the effectiveness of any conservation improvement program. 
30.25 	The commissioner may assess up to $850,000 annually for the purposes of this subdivision. 
30.26 	The assessments must be deposited in the state treasury and credited to the energy and 
30.27 	conservation account created under subdivision 2a. An assessment made under this 
30.28 	subdivision is not subject to the cap on assessments provided by section 216B.62, or any 
30.29 	other law.
30.30 	(b) Of the assessment authorized under paragraph (a), the commissioner may expend 
30.31 	up to $400,000 annually for the purpose of developing, operating, maintaining, and providing 
30.32 	technical support for a uniform electronic data reporting and tracking system available to 
30.33 	all utilities subject to this section, in order to enable accurate measurement of the cost and 
31.1 	energy savings of the energy conservation improvements required by this section. This 
31.2 	paragraph expires June 30, 2018. By March 15 of the year following the enactment of this 
31.3 	section, the commissioner must, by order, develop and publish technical information 
31.4 	necessary to evaluate whether deployment of a fuel-switching improvement meets the 
31.5 	criteria established under subdivision 11, paragraph (c), and section 216B.2403, subdivision 
31.6 	8, including the formula to account for the energy saved by a fuel-switching improvement 
31.7 	on a fuel-neutral basis. The commissioner must update the technical information as necessary.

31.8 	Sec. 9. Minnesota Statutes 2018, section 216B.241, subdivision 1f, is amended to read:
31.9 		Subd. 1f.Facilities energy efficiency. (a) The commissioner of administration and the 
31.10 	commissioner of commerce shall maintain and, as needed, revise the sustainable building 
31.11 	design guidelines developed under section 16B.325.
31.12 	(b) The commissioner of administration and the commissioner of commerce shall maintain 
31.13 	and update the benchmarking tool developed under Laws 2001, chapter 212, article 1, section 
31.14 	3, so that all public buildings can use the benchmarking tool to maintain energy use 
31.15 	information for the purposes of establishing energy efficiency benchmarks, tracking building 
31.16 	performance, and measuring the results of energy efficiency and conservation improvements.
31.17 	(c) The commissioner shall require that utilities include in their conservation improvement 
31.18 	plans programs that facilitate professional engineering verification to qualify a building as 
31.19 	Energy Star-labeled, Leadership in Energy and Environmental Design (LEED) certified, or 
31.20 	Green Globes-certified. The state goal is to achieve certification of 1,000 commercial 
31.21 	buildings as Energy Star-labeled, and 100 commercial buildings as LEED-certified or Green 
31.22 	Globes-certified by December 31, 2010.
31.23 	(d) (c) The commissioner may assess up to $500,000 annually for the purposes of this 
31.24 	subdivision. The assessments must be deposited in the state treasury and credited to the 
31.25 	energy and conservation account created under subdivision 2a. An assessment made under 
31.26 	this subdivision is not subject to the cap on assessments provided by section 216B.62, or 
31.27 	any other law.

31.28 	Sec. 10. Minnesota Statutes 2018, section 216B.241, subdivision 2, is amended to read:
31.29 		Subd. 2.Programs Public utility; energy conservation and optimization plans. (a) 
31.30 	The commissioner may require public utilities to make investments and expenditures in 
31.31 	energy conservation improvements, explicitly setting forth the interest rates, prices, and 
31.32 	terms under which the improvements must be offered to the customers. The required 
31.33 	programs must cover no more than a three-year period. Public utilities shall file energy
32.1 	conservation improvement and optimization plans by June 1, on a schedule determined by 
32.2 	order of the commissioner, but at least every three years. As provided in subdivision 11, 
32.3 	plans may include programs for efficient fuel-switching improvements and load management. 
32.4 	An individual utility program may combine elements of energy conservation, load 
32.5 	management, or efficient fuel-switching. Plans received by a public utility by June 1 must 
32.6 	be approved or approved as modified by the commissioner by December 1 of that same 
32.7 	year. The plan must account for the lifetime energy savings and cumulative lifetime savings 
32.8 	under the plan. The commissioner shall evaluate the program on the basis of 
32.9 	cost-effectiveness and the reliability of technologies employed. The commissioner's order 
32.10 	must provide to the extent practicable for a free choice, by consumers participating in the 
32.11 	program, of the device, method, material, or project constituting the energy conservation 
32.12 	improvement and for a free choice of the seller, installer, or contractor of the energy 
32.13 	conservation improvement, provided that the device, method, material, or project seller, 
32.14 	installer, or contractor is duly licensed, certified, approved, or qualified, including under 
32.15 	the residential conservation services program, where applicable.
32.16 	(b) The commissioner may require a utility subject to subdivision 1c to make an energy 
32.17 	conservation improvement investment or expenditure whenever the commissioner finds 
32.18 	that the improvement will result in energy savings at a total cost to the utility less than the 
32.19 	cost to the utility to produce or purchase an equivalent amount of new supply of energy. 
32.20 	The commissioner shall nevertheless ensure that every public utility operate one or more 
32.21 	programs under periodic review by the department.
32.22 	(c) Each public utility subject to this subdivision 1a may spend and invest annually up 
32.23 	to ten percent of the total amount required to be spent and invested on energy conservation 
32.24 	improvements under this section by the utility on research and development projects that 
32.25 	meet the definition of energy conservation improvement in subdivision 1 and that are funded 
32.26 	directly by the public utility.
32.27 	(d) A public utility may not spend for or invest in energy conservation improvements 
32.28 	that directly benefit a large energy facility or a large electric customer facility for which the 
32.29 	commissioner has issued an exemption pursuant to subdivision 1a, paragraph (b). The 
32.30 	commissioner shall consider and may require a public utility to undertake a program 
32.31 	suggested by an outside source, including a political subdivision, a nonprofit corporation, 
32.32 	or community organization.
32.33 	(e) A utility, a political subdivision, or a nonprofit or community organization that has 
32.34 	suggested a program, the attorney general acting on behalf of consumers and small business 
32.35 	interests, or a utility customer that has suggested a program and is not represented by the 
33.1 	attorney general under section 8.33 may petition the commission to modify or revoke a 
33.2 	department decision under this section, and the commission may do so if it determines that 
33.3 	the program is not cost-effective, does not adequately address the residential conservation 
33.4 	improvement needs of low-income persons, has a long-range negative effect on one or more 
33.5 	classes of customers, or is otherwise not in the public interest. The commission shall reject 
33.6 	a petition that, on its face, fails to make a reasonable argument that a program is not in the 
33.7 	public interest.
33.8 	(f) The commissioner may order a public utility to include, with the filing of the utility's 
33.9 	annual status report, the results of an independent audit of the utility's conservation 
33.10 	improvement programs and expenditures performed by the department or an auditor with 
33.11 	experience in the provision of energy conservation and energy efficiency services approved 
33.12 	by the commissioner and chosen by the utility. The audit must specify the energy savings 
33.13 	or increased efficiency in the use of energy within the service territory of the utility that is 
33.14 	the result of the spending and investments. The audit must evaluate the cost-effectiveness 
33.15 	of the utility's conservation programs.
33.16 	(g) A gas utility may not spend for or invest in energy conservation improvements that 
33.17 	directly benefit a large customer facility or commercial gas customer facility for which the 
33.18 	commissioner has issued an exemption pursuant to subdivision 1a, paragraph (b), (c), or 
33.19 	(e). The commissioner shall consider and may require a utility to undertake a program 
33.20 	suggested by an outside source, including a political subdivision, a nonprofit corporation, 
33.21 	or a community organization.
33.22 	(g) The energy conservation and optimization plan for each public utility subject to this 
33.23 	section must include a component focused on improving energy efficiency in public schools 
33.24 	served by the utility. At a minimum, the efficiency in schools component must consist of 
33.25 	programs to update lighting in schools, update heating and cooling systems in schools, 
33.26 	provide for building recommissioning, provide building operator training, and provide 
33.27 	opportunities to educate students, teachers, and staff regarding energy efficiency measures 
33.28 	implemented at the school, including the associated benefits for improved learning resulting 
33.29 	from the measures.

33.30 	Sec. 11. Minnesota Statutes 2018, section 216B.241, subdivision 2b, is amended to read:
33.31 		Subd. 2b.Recovery of expenses. The commission shall allow a public utility to recover 
33.32 	expenses resulting from a an energy conservation improvement program required and 
33.33 	optimization plan approved by the department under this section and contributions and 
33.34 	assessments to the energy and conservation account, unless the recovery would be 
34.1 	inconsistent with a financial incentive proposal approved by the commission. The commission 
34.2 	shall allow a cooperative electric association subject to rate regulation under section 
34.3 	216B.026, to recover expenses resulting from energy conservation improvement programs, 
34.4 	load management programs, and assessments and contributions to the energy and 
34.5 	conservation account unless the recovery would be inconsistent with a financial incentive 
34.6 	proposal approved by the commission. In addition, a public utility may file annually, or the 
34.7 	Public Utilities Commission may require the utility to file, and the commission may approve, 
34.8 	rate schedules containing provisions for the automatic adjustment of charges for utility 
34.9 	service in direct relation to changes in the expenses of the utility for real and personal 
34.10 	property taxes, fees, and permits, the amounts of which the utility cannot control. A public 
34.11 	utility is eligible to file for adjustment for real and personal property taxes, fees, and permits 
34.12 	under this subdivision only if, in the year previous to the year in which it files for adjustment, 
34.13 	it has spent or invested at least 1.75 percent of its gross revenues from provision of electric 
34.14 	service, excluding gross operating revenues from electric service provided in the state to 
34.15 	large electric customer facilities for which the commissioner has issued an exemption under 
34.16 	subdivision 1a, paragraph (b), and 0.6 percent of its gross revenues from provision of gas 
34.17 	service, excluding gross operating revenues from gas services provided in the state to large 
34.18 	electric customer facilities for which the commissioner has issued an exemption under 
34.19 	subdivision 1a, paragraph (b), for that year for energy conservation improvements under 
34.20 	this section.

34.21 	Sec. 12. Minnesota Statutes 2018, section 216B.241, subdivision 7, is amended to read:
34.22 		Subd. 7.Low-income programs. (a) The commissioner shall ensure that each public 
34.23 	utility and association subject to subdivision 1c provides low-income programs. When 
34.24 	approving spending and energy-savings goals for low-income programs, the commissioner 
34.25 	shall consider historic spending and participation levels, energy savings for low-income 
34.26 	programs, and the number of low-income persons residing in the utility's service territory. 
34.27 	A municipal utility that furnishes gas service must spend at least 0.2 percent, and a public 
34.28 	utility furnishing gas service must spend at least 0.4 0.8 percent, of its most recent three-year 
34.29 	average gross operating revenue from residential customers in the state on low-income 
34.30 	programs. A utility or association that furnishes electric service must spend at least 0.1 0.4
34.31 	percent of its gross operating revenue from residential customers in the state on low-income 
34.32 	programs. For a generation and transmission cooperative association, this requirement shall 
34.33 	apply to each association's members' aggregate gross operating revenue from sale of 
34.34 	electricity to residential customers in the state. Beginning in 2010, A utility or association 
35.1 	that furnishes electric service must spend 0.2 percent of its gross operating revenue from 
35.2 	residential customers in the state on low-income programs.
35.3 	(b) To meet the requirements of paragraph (a), a public utility or association may 
35.4 	contribute money to the energy and conservation account. An energy conservation 
35.5 	improvement plan must state the amount, if any, of low-income energy conservation 
35.6 	improvement funds the public utility or association will contribute to the energy and 
35.7 	conservation account. Contributions must be remitted to the commissioner by February 1 
35.8 	of each year.
35.9 	(c) The commissioner shall establish low-income programs to utilize money contributed 
35.10 	to the energy and conservation account under paragraph (b). In establishing low-income 
35.11 	programs, the commissioner shall consult political subdivisions, utilities, and nonprofit and 
35.12 	community organizations, especially organizations engaged in providing energy and 
35.13 	weatherization assistance to low-income persons. Money contributed to the energy and 
35.14 	conservation account under paragraph (b) must provide programs for low-income persons, 
35.15 	including low-income renters, in the service territory of the public utility or association
35.16 	providing the money. The commissioner shall record and report expenditures and energy 
35.17 	savings achieved as a result of low-income programs funded through the energy and 
35.18 	conservation account in the report required under subdivision 1c, paragraph (g). The 
35.19 	commissioner may contract with a political subdivision, nonprofit or community organization, 
35.20 	public utility, municipality, or cooperative electric association to implement low-income 
35.21 	programs funded through the energy and conservation account.
35.22 	(d) A public utility or association may petition the commissioner to modify its required 
35.23 	spending under paragraph (a) if the utility or association and the commissioner have been 
35.24 	unable to expend the amount required under paragraph (a) for three consecutive years.
35.25 	(e) The costs and benefits associated with any approved low-income gas or electric 
35.26 	conservation improvement program that is not cost-effective when considering the costs 
35.27 	and benefits to the utility may, at the discretion of the utility, be excluded from the calculation 
35.28 	of net economic benefits for purposes of calculating the financial incentive to the utility. 
35.29 	The energy and demand savings may, at the discretion of the utility, be applied toward the 
35.30 	calculation of overall portfolio energy and demand savings for purposes of determining 
35.31 	progress toward annual goals and in the financial incentive mechanism.

36.1 	Sec. 13. Minnesota Statutes 2018, section 216B.241, is amended by adding a subdivision 
36.2 	to read:
36.3 		Subd. 11.Programs for efficient fuel-switching improvements and load 
36.4 	management. (a) A public utility subject to this section may include in its plan required 
36.5 	under subdivision 2 programs for efficient fuel-switching improvements and load 
36.6 	management, or combinations of energy conservation improvements, fuel-switching 
36.7 	improvements, and load management.  For each program, the utility must provide proposed 
36.8 	budgets, cost-effectiveness analyses, and estimated net energy and demand savings.
36.9 	(b) The department may approve proposed programs for efficient fuel-switching 
36.10 	improvements if it finds the improvements meet the requirements of paragraph (c). For 
36.11 	improvements requiring the deployment of electric technologies, the department must also 
36.12 	consider whether the fuel-switching improvement can be operated in a manner that facilitates 
36.13 	the integration of variable renewable energy into the electric system. The net benefits from 
36.14 	an efficient fuel-switching improvement that is integrated with an energy efficiency program 
36.15 	approved under this section may be counted toward the net benefits of the energy efficiency 
36.16 	program, provided the department finds the primary purpose and effect of the program is 
36.17 	energy efficiency.
36.18 	(c) The department may approve a proposed program in load management if it finds the 
36.19 	program investment is cost-effective after considering the costs and benefits of the proposed 
36.20 	investment to ratepayers, the utility, participants, and society. The net benefits from a load 
36.21 	management activity that is integrated with an energy efficiency program approved under 
36.22 	this section may be counted toward the net benefits of the energy efficiency program, 
36.23 	provided the department finds the primary purpose and effect of the program is energy 
36.24 	efficiency.
36.25 	(d) The commission may permit a public utility to file rate schedules that provide for 
36.26 	annual cost recovery for efficient fuel-switching improvements and cost-effective load 
36.27 	management programs approved by the department, including reasonable and prudent costs 
36.28 	of implementing and promoting programs approved under this subdivision. The commission 
36.29 	may approve, modify, or reject a proposal made by the department or a utility for an incentive 
36.30 	plan to encourage investments in load management programs, applying the considerations 
36.31 	established under section 216B.16, subdivision 6c, paragraphs (b) and (c). An incentive 
36.32 	plan to encourage cost-effective load management programs may be structured as a regulatory 
36.33 	asset on which a public utility could earn a rate of return. A utility is not eligible for a 
36.34 	financial incentive under this subdivision in any year the utility or association did not achieve 
36.35 	its minimum energy savings goal.
37.1 	(e) A fuel-switching improvement is deemed efficient if the commissioner finds the 
37.2 	improvement, relative to the fuel that is being displaced, meets the following criteria:
37.3 	(1) results in a net reduction in the cost and amount of source energy consumed for a 
37.4 	particular use, measured on a fuel-neutral basis;
37.5 	(2) results in a net reduction of statewide greenhouse gas emissions as defined in section 
37.6 	216H.01, subdivision 2. For an efficient fuel-switching improvement affecting a customer's 
37.7 	use of electricity, the change in emissions must be measured based on the hourly emission 
37.8 	profile of the electric utility that controls the system where the electric technology is installed, 
37.9 	using the most recent resource plan approved by the commission under section 216B.2422;
37.10 	(3) is cost-effective from a societal perspective, considering the costs associated with 
37.11 	both the fuel that was used and the fuel that will be used; and
37.12 	(4) is installed and operated in a manner that does not unduly increase the utility's system 
37.13 	peak demand or require significant new investment in utility infrastructure.

37.14 	Sec. 14. REPEALER.
 37.15 	Minnesota Statutes 2018, section 216B.241, subdivisions 1, 2c, 4, and 5, are repealed.

APPENDIX 

Repealed Minnesota Statutes: 19-3563 

216B.241 ENERGY CONSERVATION IMPROVEMENT.Subdivision 1.Definitions. 
For purposes of this section and section 216B.16, subdivision 6b, the terms defined in this subdivision have the meanings given them. 

(a) "Commission" means the Public Utilities Commission. 

(b) "Commissioner" means the commissioner of commerce. 

(c) "Department" means the Department of Commerce. 

(d) "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. 

(e) "Energy conservation improvement" means a project that results in energy efficiency or energy conservation. Energy conservation improvement may include waste heat that is recovered and converted into electricity, but does not include electric utility infrastructure projects approved by the commission under section 216B.1636. Energy conservation improvement also includes waste heat recovered and used as thermal energy. 

(f) "Energy efficiency" means measures or programs, including energy conservation measures or programs, that target consumer behavior, equipment, processes, or devices designed to produce either an absolute decrease in consumption of electric energy or natural gas or a decrease in consumption of electric energy or natural gas on a per unit of production basis without a reduction in the quality or level of service provided to the energy consumer. 

(g) "Gross annual retail energy sales" means annual electric sales to all retail customers in a utility's or association's Minnesota service territory or natural gas throughput to all retail customers, including natural gas transportation customers, on a utility's distribution system in Minnesota. For purposes of this section, gross annual retail energy sales exclude: 

(1) gas sales to: 

(i) a large energy facility; 

(ii) a large customer facility whose natural gas utility has been exempted by the commissioner under subdivision 1a, paragraph (b), with respect to natural gas sales made to the large customer facility; and 

(iii) a commercial gas customer facility whose natural gas utility has been exempted by the commissioner under subdivision 1a, paragraph (c), with respect to natural gas sales made to the commercial gas customer facility; and 

(2) electric sales to a large customer facility whose electric utility has been exempted by the commissioner under subdivision 1a, paragraph (b), with respect to electric sales made to the large customer facility. 

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

(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 conservation improvement; 

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

(i) "Large customer facility" means all buildings, structures, equipment, and installations at a single site that collectively (1) impose 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 or (2) consume not less than 500 million cubic feet of natural gas annually. In calculating peak electrical demand, a large customer facility may include demand offset by on-site cogeneration facilities and, if engaged in mineral extraction, may aggregate peak energy demand from the large customer facility's mining and processing operations. 

(j) "Large energy facility" has the meaning given it in section 216B.2421, subdivision 2, clause (1). 

(k) "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 peak demand for energy or capacity. 

(l) "Low-income programs" means energy conservation improvement programs that directly serve the needs of low-income persons, including low-income renters. 

(m) "Qualifying utility" means a utility that supplies the energy to a customer that enables the customer to qualify as a large customer facility. 

(n) "Waste heat recovered and used as thermal energy" means capturing heat energy that would otherwise be exhausted or dissipated to the environment from machinery, buildings, or industrial processes and productively using such recovered thermal energy where it was captured or distributing it as thermal energy to other locations where it is used to reduce demand-side consumption of natural gas, electric energy, or both. 

(o) "Waste heat recovery converted into electricity" means an energy recovery process that converts otherwise lost energy from the heat of exhaust stacks or pipes used for engines or manufacturing or industrial processes, or the reduction of high pressure in water or gas pipelines. 

Subd. 2c.Performance incentives. 
By December 31, 2008, the commission shall review any incentive plan for energy conservation improvement it has approved under section 216B.16, subdivision 6c, and adjust the utility performance incentives to recognize making progress toward and meeting the energy-savings goals established in subdivision 1c. 

Subd. 4.Federal law prohibitions. 
If investments by public utilities in energy conservation improvements are in any manner prohibited or restricted by federal law and there is a provision under which the prohibition or restriction may be waived, then the commission, the governor, or any other necessary state agency or officer shall take all necessary and appropriate steps to secure a waiver with respect to those public utility investments in energy conservation improvements included in this section. 

Subd. 5.Efficient lighting program. 
(a) Each public utility, cooperative electric association, and municipal utility that provides electric service to retail customers and is subject to subdivision 1c 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.