HF 1839

as introduced - 91st Legislature (2019 - 2020) Posted on 03/27/2019 01:24pm

A bill for an act
relating to energy; updating the state's energy savings policy goal and establishing
the Conservation Improvement Program Modernization Act of 2019; amending
Minnesota Statutes 2018, sections 216B.2401; 216B.241, subdivisions 1c, 1d, 2,
2b, 7; proposing coding for new law in Minnesota Statutes, chapter 216B; repealing
Minnesota Statutes 2018, section 216B.241, subdivision 1b.

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

ARTICLE 1

TITLE

Section 1. new text begin CITATION; CONSERVATION IMPROVEMENT PROGRAM
MODERNIZATION ACT.
new text end

new text begin This act shall be known as the "Conservation Improvement Program Modernization Act
of 2019."
new text end

ARTICLE 2

STATE ENERGY SAVINGS POLICY GOAL UPDATED

Section 1.

Minnesota Statutes 2018, section 216B.2401, is amended to read:

216B.2401 ENERGY SAVINGS new text begin AND DEMAND-SIDE MANAGEMENT new text end POLICY
GOAL.

The legislature finds that energy savings are an energy resource, and that cost-effective
energy savings are preferred over all other energy resources. new text begin In addition, the legislature
finds that optimizing when and how energy consumers manage energy use can provide
significant benefits to the consumers and to the utility system as a whole. new text end The legislature
further finds that cost-effective energy savings new text begin and load management programs new text end should be
procured systematically and aggressively in order to reduce utility costs for businesses and
residents, improve the competitiveness and profitability of businesses, create more
energy-related jobs, reduce the economic burden of fuel imports, and reduce pollution and
emissions that cause climate change. Therefore, it is the energy policy of the state of
Minnesota to achieve annual energy savings deleted text begin equal deleted text end new text begin equivalent new text end to at least 1.5 percent of annual
retail energy sales of electricity and natural gas through deleted text begin cost-effective energy conservation
improvement programs and rate design, energy efficiency achieved by energy consumers
without direct utility involvement, energy codes and appliance standards, programs designed
to transform the market or change consumer behavior, energy savings resulting from
efficiency improvements to the utility infrastructure and system, and other efforts to promote
energy efficiency and energy conservation. deleted text end new text begin multiple means, including but not limited to:
new text end

new text begin (1) cost-effective energy conservation improvement programs, including efficient
electrification, under sections 216B.2401 to 216B.241;
new text end

new text begin (2) rate design;
new text end

new text begin (3) energy efficiency achieved by energy consumers without direct utility involvement;
new text end

new text begin (4) energy codes and appliance standards;
new text end

new text begin (5) programs designed to transform the market or change consumer behavior;
new text end

new text begin (6) energy savings resulting from efficiency improvements to the utility infrastructure
and system; and
new text end

new text begin (7) other efforts to promote energy efficiency and energy conservation.
new text end

ARTICLE 3

CONSERVATION IMPROVEMENT PROGRAMS
FOR CONSUMER-OWNED UTILITIES

Section 1.

new text begin [216B.2402] CONSERVATION IMPROVEMENT PROGRAMS FOR
CONSUMER-OWNED UTILITIES.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin For the purpose of this section, the terms defined in this
subdivision have the meanings given to them:
new text end

new text begin (a) "Consumer-owned utility" means a municipal gas utility, a municipal electric utility,
or a cooperative electric association.
new text end

new text begin (b) "Cumulative lifetime savings" means the total electric energy or natural gas savings
in a given year from energy conservation improvements installed that year or in previous
years that are still operational and providing savings in that year because the measures have
not reached the end of their useful lives.
new text end

new text begin (c) "Efficient electrification or conversion improvement" means a project that (1) results
in converting a customer from use of a fuel to the use of electric energy or natural gas sold
at retail by a utility subject to this section, resulting in a net increase of the use of electric
energy or natural gas and a net decrease in energy consumption overall on a fuel-neutral
basis, and (2) otherwise meets the criteria established in subdivision 7. An efficient
electrification improvement requires the installation of equipment that utilizes electric energy
or natural gas, resulting in a reduction or elimination of use of the previous fuel.
new text end

new text begin (d) "Electric utility infrastructure projects" means projects owned by a consumer-owned
utility that replace or modify existing electric utility infrastructure, including utility-owned
buildings, if the replacement or modification conserves energy or uses energy more
efficiently.
new text end

new text begin (e) "Energy conservation" means an action that results in a net reduction in electric
energy or natural gas consumption.
new text end

new text begin (f) "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 includes waste heat recovered and used as thermal energy.
new text end

new text begin (g) "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 level of service provided to the energy consumer.
new text end

new text begin (h) "Fuel" means energy consumed by a retail utility customer. Fuel includes electricity,
propane, natural gas, heating oil, gasoline, or diesel fuel.
new text end

new text begin (i) "Fuel neutral" means an approach that compares the use of various fuels for a given
end use, using a common metric.
new text end

new text begin (j) "Gross annual retail energy sales" means the total annual sale of electric energy
generated by nonrenewable resources, as determined by the percentage of renewable and
hydroelectric sources compared to nonrenewable sources identified in the portfolio of the
utility's electricity provider, 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. Gross annual retail
energy sales does not include:
new text end

new text begin (1) gas sales to:
new text end

new text begin (i) a large energy facility;
new text end

new text begin (ii) a large customer facility whose natural gas utility has been exempted by the
commissioner under subdivision 12, with respect to natural gas sales made to the large
customer facility; and
new text end

new text begin (iii) a commercial gas customer facility whose natural gas utility has been exempted by
the commissioner under subdivision 12, with respect to natural gas sales made to the
commercial gas customer facility;
new text end

new text begin (2) electric sales to a large customer facility whose electric utility has been exempted
by the commissioner under subdivision 12, with respect to electric sales made to the large
facility; and
new text end

new text begin (3) increased electric or natural gas sales from efficient electrification or conversion
caused by a utility program.
new text end

new text begin (k) "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 at least 20,000 kilowatts, measured in the same way as the utility that serves the
customer facility measures electric demand for billing purpose, or (2) consume at least
500,000,000 cubic feet of natural gas annually. When 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 processing operations.
new text end

new text begin (l) "Large energy facility" has the meaning given it in section 216B.2421, subdivision
2, clause (1).
new text end

new text begin (m) "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 local and regional energy system conditions, or to reduce peak demand for electric energy
or natural gas. Load management that reduces overall energy use is also energy conservation.
new text end

new text begin (n) "Low-income programs" means energy conservation improvement programs that
directly serve the needs of low-income persons, including low-income renters and entities
that serve low-income customers. Programs that aggregate resources for improvements to
low-income housing, including the upgrading of appliances, heating and air conditioning,
and other infrastructure, are considered a direct benefit.
new text end

new text begin (o) "Member" has the meaning given to it in section 308B.005, subdivision 15.
new text end

new text begin (p) "Qualifying utility" means a utility that supplies energy to a customer that enables
the customer to qualify as a large customer facility.
new text end

new text begin (q) "Source energy" means the total amount of fuel required for a given purpose,
considering energy losses in the production, transmission, and delivery of that energy.
new text end

new text begin (r) "Waste heat recovered and used as thermal energy" means capturing heat energy that
would be exhausted or dissipated to the environment from machinery, buildings, or industrial
processes, and productively using the recovered thermal energy where it is used to reduce
demand-side consumption of natural gas, electric energy, or both.
new text end

new text begin (s) "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.
new text end

new text begin Subd. 2. new text end

new text begin Applicability. new text end

new text begin This section applies to:
new text end

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

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

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

new text begin Subd. 3. new text end

new text begin Savings goal. new text end

new text begin (a) Each individual consumer-owned utility subject to this section
has an annual energy savings goal equivalent to 1.5 percent of gross annual retail energy
sales.
new text end

new text begin (b) A consumer-owned utility's savings goal is satisfied when the consumer-owned
utility achieves a savings equivalent of at least one percent of the consumer-owned utility's
gross annual retail energy sales from energy conservation improvements, and up to 0.5
percent from the following utility activities:
new text end

new text begin (1) energy savings from additional energy conservation improvements;
new text end

new text begin (2) electric utility infrastructure projects; or
new text end

new text begin (3) net energy savings from efficient electrification and conversion improvements that
meet the criteria under subdivision 8.
new text end

new text begin (c) The energy savings goals specified must be calculated based on the most recent
three-year, weather-normalized average. When determining compliance with this subdivision,
a consumer-owned utility may elect to average annual energy savings over a period not to
exceed five years, as specified in the plan filed under subdivision 4. A consumer-owned
utility that uses annual plans may carry forward for up to five years any energy savings
exceeding 1.5 percent in a single year.
new text end

new text begin (d) Nothing in this subdivision limits a utility's ability to report and recognize savings
in excess of 0.5 percent of the utility's gross annual retail energy sales generated under
paragraph (b), clauses (1), (2), and (3), provided the utility has satisfied the one percent
savings required under paragraph (b).
new text end

new text begin (e) A consumer-owned utility subject to this section is not required to make energy
conservation improvements that are not cost-effective, even if the improvement is necessary
to attain the energy savings goal.
new text end

new text begin (f) A consumer-owned utility may request that the commissioner adjust its annual energy
savings goal based on its historical conservation investment experience, customer class
makeup, load growth, a conservation potential study, impact on utility revenue that threatens
necessary system investment, or other factors the commissioner and consumer-owned utility
determines warrants an adjustment. The commissioner must adjust the savings goal to a
level the commissioner determines is supported by the record.
new text end

new text begin Subd. 4. new text end

new text begin Consumer-owned utility; energy conservation and optimization plans. new text end

new text begin (a)
By June 1, 2021, each consumer-owned utility must file an energy conservation and
optimization plan with the commissioner. The plan must identify and outline the utility's
intended conservation improvement program, efficient electrification or conversion
improvement plans, load management plans, and other processes and programs to achieve
the energy savings goal. The plan may cover a period of time not to exceed five years. For
plans with a duration greater than one year, the consumer-owned utility's plan may include
years where the consumer-owned utility may not achieve the annual savings goal, provided
the total savings at the end of the plan meets, at a minimum, the otherwise applicable annual
savings goal for the utility. Beginning June 1, 2022, and each June 1 thereafter, each
consumer-owned utility must file an annual update identifying the status of, including total
expenditures and investments made to date, and any intended changes to its multiyear plan
filed under this subdivision. For consumer-owned utilities whose plans were completed the
prior June 1, a summary of the plan's result must be filed. A summary for a completed plan's
result must also be filed. The summary for a completed plan must include: (1) the total
savings achieved under the plan; (2) a breakdown of total expenditures and investments
made; and (3) a brief discussion regarding where the utility achieved the greatest savings
and, if areas exist where savings were less than anticipated under the plan, where the shortage
occurred and what the suspected reason for the shortage is. For consumer-owned utilities
that fall short of the total applicable savings goal, the final report or update on that plan
must indicate where the actual savings differed from anticipated savings, any known reasons
for the shortfall, and any identified changes that utility will make in future plans filed under
this subdivision to reach the identified savings goal. A consumer-owned utility must file a
new plan under this paragraph by June 1 of the year following the completion of the
consumer-owned utility's most recently completed plan.
new text end

new text begin (b) Energy savings from electric utility infrastructure projects or waste heat recovery
converted into electricity projects that may count as energy savings may be included in a
plan submitted under paragraph (a). A consumer-owned electric facility's infrastructure
project must result in increased energy efficiency greater than would have occurred during
normal maintenance activities.
new text end

new text begin (c) Energy savings from thermal-to-electric efficient electrification or conversion
improvement programs must be stated in kilowatt-hours, using a conversion rate of 3.412
British thermal units to one kilowatt-hour.
new text end

new text begin (d) A consumer-owned utility must not spend or invest in energy conservation
improvements that directly benefit large energy facility or a large electric customer facility
the commissioner has issued an exemption to under subdivision 12.
new text end

new text begin (e) A generation and transmission cooperative electric association cooperative electric
association, a municipal power agency, or a comparable organization that provides energy
services to consumer-owned utilities may invest in energy conservation improvements on
behalf of the consumer-owned utilities it serves and may fulfill all aspects of the conservation,
reporting, and energy-saving goals for any of the consumer-owned utilities on an aggregate
basis.
new text end

new text begin Subd. 5. new text end

new text begin Low-income programs. new text end

new text begin (a) Each consumer-owned utility subject to this section
must provide low-income energy conservation programs. When approving spending and
energy-savings goals for low-income energy conservation programs, the consumer-owned
utility must consider historic spending and participation levels, energy savings for low-income
programs, and the number of low-income persons residing in the utility's service territory.
A municipal utility that furnishes gas service must spend at least 0.2 percent off its most
recent three-year average gross operating revenue from residential customers in Minnesota
on low-income programs. A consumer-owned utility that furnishes electric service must
spend at least 0.2 percent of its gross operating revenue from residential customers in
Minnesota on low-income programs. This requirement applies to each generation and
transmission cooperative association's members' aggregate gross operating revenue from
the sale of electricity to residential customers in Minnesota.
new text end

new text begin (b) To meet the requirements of paragraph (a), a consumer-owned utility may contribute
money to the energy and conservation account in section 216B.241, subdivision 2a. An
energy conservation improvement plan must state the amount, if any, of low-income energy
conservation improvement funds the utility plans to contribute to the energy and conservation
account. Contributions must be remitted to the commissioner by February 1 each year.
new text end

new text begin (c) The commissioner must establish low-income programs to use money contributed
to the energy and conservation account under paragraph (b). When establishing low-income
programs, the commissioner must consult political subdivisions, utilities, and nonprofit and
community organizations, including organizations engaged in providing energy and
weatherization assistance to low-income persons. Money contributed to the energy and
conservation account under paragraph (b) must provide programs for low-income persons,
including low-income renters, located in the service territory of the utility or association
providing the money. The commissioner must record and report expenditures and energy
savings achieved as a result of low-income programs funded through the energy and
conservation account in the report required under section 216B.241, subdivision 1c, paragraph
(g). The commissioner may contract with a political subdivision, nonprofit or community
organization, public utility, municipality, or cooperative electric association to implement
low-income programs funded through the energy and conservation account.
new text end

new text begin (d) A consumer-owned utility may petition the commissioner to modify its required
spending under this subdivision if the utility and the commissioner were unable to expend
the amount required for three consecutive years.
new text end

new text begin Subd. 6. new text end

new text begin Recovery of expenses. new text end

new text begin The commission must allow a cooperative electric
association subject to rate regulation under section 216B.026 to recover expenses resulting
from (1) a plan under this subdivision, and (2) assessments and contributions to the energy
and conservation account under section 216B.241, subdivision 2a.
new text end

new text begin Subd. 7. new text end

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

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

new text begin Subd. 8. new text end

new text begin Criteria for efficient electrification or conversion improvements and load
management. new text end

new text begin (a) Each consumer-owned utility subject to this section may form a technical
consumer-owned utility working group to define and establish proposed programs for
efficient electrification or conversion improvements and load management. A proposed
program may be included in an energy conservation and optimization plan filed by the
consumer-owned utility under subdivision 4. The technical consumer-owned utility working
group may approve a proposed program for efficient electrification or conversion
improvements if it finds the investment is cost-effective after considering the costs and
benefits of the proposed investment to rate payers, the utility, participants, and society.
new text end

new text begin (b) The commission may permit a consumer-owned utility subject to rate regulation to
file rate schedules providing for annual recovery of the costs of (1) efficient electrification
or conversion improvement programs, and (2) cost-effective load management approved
by the technical consumer-owned utility working group under subdivision 6, including
reasonable and prudent costs associated with promoting and implementing a program
approved under this subdivision.
new text end

new text begin (c) An efficient electrification or conversion improvement is deemed efficient if the
technical consumer-owned utility working group finds the improvement, relative to the fuel
that is being displaced:
new text end

new text begin (1) results in a net reduction in the cost and amount of source energy consumed for a
particular use, measured on a fuel-neutral basis;
new text end

new text begin (2) results in a net reduction of statewide greenhouse gas emissions, as defined in section
216H.01, subdivision 2, over the lifetime of the improvement. For an efficient electrification
or conversion improvement installed by an electric utility, the reduction in emissions must
be measured based on the emissions profile of the utility or the utility's wholesale provider.
Where applicable, the emissions profile used must be the most recent resource plan accepted
by the commission under section 216B.2422;
new text end

new text begin (3) is cost-effective from a societal perspective, considering the costs associated with
both the fuel used in the past and the fuel used in the future; and
new text end

new text begin (4) is planned to be installed and operated in a manner that does not unduly increase the
utility's system peak demand or require significant new investment in utility infrastructure.
new text end

new text begin Subd. 9. new text end

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

new text begin (a) A consumer-owned utility must submit the
filings required by this section to the department using the department's electronic filing
system. The commissioner may exempt a consumer-owned utility from this requirement if
the utility is unable to submit filings using the department's electronic filing system. All
other interested parties must submit filings to the department using the department's electronic
filing system whenever practicable, but may also file by personal delivery or by mail.
new text end

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

new text begin Subd. 10. new text end

new text begin Assessment. new text end

new text begin (a) The commission or department may assess utilities subject
to this section to carry out the purposes of section 216B.241, subdivision 1d. An assessment
under this paragraph must be proportionate to the utility's respective gross operating revenue
from sales of gas or electric service in Minnesota during the previous calendar year.
new text end

new text begin (b) The commission or department may annually assess a utility subject to this section
to carry out the purposes of section 216B.241, subdivisions 1e and 1f, upon notice from the
utility of its desire to discontinue the assessment. An assessment under this paragraph must
be proportionate to the utility's respective gross revenue from sales of gas or electric service
in Minnesota during the previous calendar year. Assessments under this paragraph are not
subject to the cap on assessments provided by section 216B.62, or any other law.
new text end

new text begin Subd. 11. new text end

new text begin Waste heat recovery; thermal energy distribution. new text end

new text begin Subject to department
approval, demand-side natural gas or electric energy displaced by use of waste heat recovered
and used as thermal energy, including the recovered thermal energy from a cogeneration
or combined heat and power facility, is eligible to be counted toward a consumer-owned
utility's natural gas or electric savings goals.
new text end

new text begin Subd. 12. new text end

new text begin Large customer facilities. new text end

new text begin (a) The owner of a large customer facility may
petition the commissioner to exempt municipal electric utilities, municipal gas utilities, and
cooperative electric associations serving the large customer facility from the investment
and expenditure requirements of the municipal electric utility, municipal gas utility, or
cooperative electric association's plan under this section with respect to retail revenues
attributable to the large customer facility. The filing must include a discussion of the
competitive or economic pressures facing the owner of the facility and the efforts taken to
identify, evaluate, and implement energy conservation and efficiency improvements. A
filing submitted on or before October 1 of any year must be approved within 90 days and
becomes effective January 1 of the year following the filing, unless the commissioner finds
the owner of the large customer facility has failed to take reasonable measures to identify,
evaluate, and implement energy conservation and efficiency improvements. If a facility
qualifies as a large customer facility solely due to its peak electrical demand or annual
natural gas usage, the exemption may be limited to the qualifying utility if the commissioner
finds that the owner of the large customer facility has failed to take reasonable measures to
identify, evaluate, and implement energy conservation and efficiency improvements with
respect to the nonqualifying utility. Once an exemption is approved, the commissioner may
request the owner of a large customer facility to submit a report demonstrating the large
customer facility's ongoing commitment to energy conservation and efficiency improvement
after the exemption filing. The commissioner may request a report under this paragraph not
more than once every five years for up to ten years after the effective date of the exemption.
If the majority ownership of the large customer facility changes, the commissioner may
request additional reports for up to ten years after the change in ownership occurs. The
commissioner may, within 180 days of receiving a report submitted under this paragraph,
rescind any exemption granted under this paragraph upon a determination that the large
customer facility is not continuing to make reasonable efforts to identify, evaluate, and
implement energy conservation improvements. A large customer facility that is exempt
from the investment and expenditure requirements of this section under an order from the
commissioner as of December 31, 2010, is not required to submit a report to retain its exempt
status, except as otherwise provided in this paragraph with respect to ownership changes.
An exempt large customer facility is prohibited from participating in a municipal electric,
municipal gas, or cooperative electric association utility's conservation improvement program
unless the owner of the facility files with the commissioner to withdraw its exemption.
new text end

new text begin (b) A commercial gas customer that is not a large customer facility and that purchases
or acquires natural gas from a municipal gas utility may petition the commissioner to exempt
the commercial gas customer from the municipal gas customer from the municipal gas
utility's plan under this section with respect to gas sales attributable to the commercial gas
customer. The petition must be supported by evidence demonstrating that the commercial
gas customer has acquired or can reasonably acquire the capability to bypass use of the
municipal utility's gas distribution system by obtaining natural gas directly from a supplier
other than the municipal gas utility. The commissioner must grant the exemption if the
commissioner finds the petitioner has made the demonstration required by this paragraph.
new text end

new text begin (c) A municipal electric utility, municipal gas utility, cooperative electric association,
or the owner of a large customer facility may appeal the commissioner's decision under
paragraph (a) or (b) to the commissioner under subdivision 2. When reviewing a decision
of the commissioner under paragraph (a) or (b), the commission must rescind the decision
if it finds the decision is not in the public's interest.
new text end

new text begin (d) A municipal electric utility, municipal gas utility, or cooperative electric association
is prohibited from spending for or investing in energy conservation improvements that
directly benefit a large facility or a large electric customer facility that the commissioner
has issued an exemption for under this section.
new text end

ARTICLE 4

PUBLIC UTILITIES

Section 1.

Minnesota Statutes 2018, section 216B.241, subdivision 1c, is amended to read:

Subd. 1c.

new text begin Public utility; new text end energy-saving goals.

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

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

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

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

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

deleted text begin (e) An deleted text end new text begin (d) A public utility's new text end energy-savings goal is not satisfied by attaining the revenue
expenditure requirements of subdivisions 1a and 1b, but can only be satisfied by meeting
the energy-savings goal established in this subdivision.

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

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

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

deleted text begin (i) This subdivision does not apply to:
deleted text end

deleted text begin (1) a cooperative electric association with fewer than 5,000 members;
deleted text end

deleted text begin (2) a municipal utility with fewer than 1,000 retail electric customers; or
deleted text end

deleted text begin (3) a municipal utility with less than 1,000,000,000 cubic feet in annual throughput sales
to retail natural gas customers.
deleted text end

Sec. 2.

Minnesota Statutes 2018, section 216B.241, subdivision 1d, is amended to read:

Subd. 1d.

Technical assistance.

(a) The commissioner shall evaluate energy conservation
improvement programs new text begin under this section and section 216B.2402 new text end on the basis of
cost-effectiveness and the reliability of the technologies employed. The commissioner shall,
by order, establish, maintain, and update energy-savings assumptions that must be used
when filing energy conservation improvement programs. The commissioner shall establish
an inventory of the most effective energy conservation programs, techniques, and
technologies, and encourage all Minnesota utilities to implement them, where appropriate,
in their service territories. The commissioner shall describe these programs in sufficient
detail to provide a utility reasonable guidance concerning implementation. The commissioner
shall prioritize the opportunities in order of potential energy savings and in order of
cost-effectiveness. The commissioner may contract with a third party to carry out any of
the commissioner's duties under this subdivision, and to obtain technical assistance to
evaluate the effectiveness of any conservation improvement program. The commissioner
may assess up to $850,000 annually for the purposes of this subdivision. The assessments
must be deposited in the state treasury and credited to the energy and conservation account
created under subdivision 2a. An assessment made under this subdivision is not subject to
the cap on assessments provided by section 216B.62, or any other law.

(b) Of the assessment authorized under paragraph (a), the commissioner may expend
up to $400,000 annually for the purpose of developing, operating, maintaining, and providing
technical support for a uniform electronic data reporting and tracking system available to
all utilities subject to this section, in order to enable accurate measurement of the cost and
energy savings of the energy conservation improvements required by this section. This
paragraph expires June 30, 2018.

Sec. 3.

Minnesota Statutes 2018, section 216B.241, subdivision 2, is amended to read:

Subd. 2.

Programs.

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

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

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

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

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

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

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

Sec. 4.

Minnesota Statutes 2018, section 216B.241, subdivision 2b, is amended to read:

Subd. 2b.

Recovery of expenses.

The commission shall allow a new text begin public new text end utility to recover
expenses resulting from a conservation improvement program required by the department
and contributions and assessments to the energy and conservation account, unless the
recovery would be inconsistent with a financial incentive proposal approved by the
commission. The commission shall allow a cooperative electric association subject to rate
regulation under section 216B.026, to recover expenses resulting from energy conservation
improvement programs, load management programs, and assessments and contributions to
the energy and conservation account unless the recovery would be inconsistent with a
financial incentive proposal approved by the commission. In addition, a new text begin public new text end utility may
file annually, or the Public Utilities Commission may require the utility to file, and the
commission may approve, rate schedules containing provisions for the automatic adjustment
of charges for utility service in direct relation to changes in the expenses of the utility for
real and personal property taxes, fees, and permits, the amounts of which the utility cannot
control. A public utility is eligible to file for adjustment for real and personal property taxes,
fees, and permits under this subdivision only if, in the year previous to the year in which it
files for adjustment, it has spent or invested at least 1.75 percent of its gross revenues from
provision of electric service, excluding gross operating revenues from electric service
provided in the state to large electric customer facilities for which the commissioner has
issued an exemption under subdivision 1a, paragraph (b), and 0.6 percent of its gross revenues
from provision of gas service, excluding gross operating revenues from gas services provided
in the state to large electric customer facilities for which the commissioner has issued an
exemption under subdivision 1a, paragraph (b), for that year for energy conservation
improvements under this section.

Sec. 5.

Minnesota Statutes 2018, section 216B.241, subdivision 7, is amended to read:

Subd. 7.

Low-income programs.

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

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

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

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

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

ARTICLE 5

REPEALER

Section 1. new text begin REPEALER.
new text end

new text begin Minnesota Statutes 2018, section 216B.241, subdivision 1b, new text end new text begin is repealed.
new text end

APPENDIX

Repealed Minnesota Statutes: 19-3503

216B.241 ENERGY CONSERVATION IMPROVEMENT.

Subd. 1b.

Conservation improvement by cooperative association or municipality.

(a) This subdivision applies to:

(1) a cooperative electric association that provides retail service to more than 5,000 members;

(2) a municipality that provides electric service to more than 1,000 retail customers; and

(3) a municipality with more than 1,000,000,000 cubic feet in annual throughput sales to natural gas retail customers.

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

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

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

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

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

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

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

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

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