SF 2956

as introduced - 84th Legislature (2005 - 2006) Posted on 12/15/2009 12:00am

A bill for an act
relating to energy; providing state conservation objectives; regulating
conservation investments by utilities; requiring consideration of conservation in
various regulatory proceedings; providing a study of rate decoupling; amending
Minnesota Statutes 2004, sections 216B.241, subdivisions 1a, 1c, 6; 216B.2422,
by adding a subdivision; 216B.243, by adding a subdivision; Minnesota Statutes
2005 Supplement, section 216B.241, subdivision 1b.

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

Section 1.

Minnesota Statutes 2004, section 216B.241, subdivision 1a, is amended to
read:

Subd. 1a.

Investment, expenditure, and contribution; public utility.

(a) For
purposes of this subdivision and subdivision 2, "public utility" has the meaning given it
in section 216B.02, subdivision 4. Each public utility shall spend and invest for energy
conservation improvements under this subdivision and subdivision 2 the following
amounts:

(1) for a utility that furnishes gas service, 0.5 percent of its gross operating revenues
from service provided in the state;

(2) for a utility that furnishes electric service, 1.5 percent of its gross operating
revenues from service provided in the state; and

(3) for a utility that furnishes electric service and that operates a nuclear-powered
electric generating plant within the state, two percent of its gross operating revenues
from service provided in the state.

For purposes of this paragraph (a), "gross operating revenues" do not include
revenues from large electric customer facilities exempted by the commissioner under
paragraph (b).

new text begin The gross operating revenue to be used in determining the amount of spending
and investment required under this subdivision is the revenue for the immediately
preceding year. The commissioner may true up the revenue and spending and investment
requirement at the end of the year, and if necessary, carry over spending and investing
obligations into the next and succeeding years.
new text end

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

(c) The commissioner may require investments or spending greater than the amounts
required under this subdivision for a public utility whose most recent advance forecast
required under section 216B.2422 or 216C.17 projects a peak demand deficit of 100
megawatts or greater within five years under midrange forecast assumptions.

(d) A public utility or owner of a large electric customer facility may appeal
a decision of the commissioner under paragraph (b) or (c) to the commission under
subdivision 2. In reviewing a decision of the commissioner under paragraph (b) or (c),
the commission shall rescind the decision if it finds that the required investments or
spending will:

(1) not result in cost-effective energy conservation improvements; or

(2) otherwise not be in the public interest.

(e) Each utility shall determine what portion of the amount it sets aside for
conservation improvement will be used for conservation improvements under subdivision
2 and what portion it will contribute to the energy and conservation account established in
subdivision 2a. A public utility may propose to the commissioner to designate that all
or a portion of funds contributed to the account established in subdivision 2a be used
for research and development projects that can best be implemented on a statewide
basis. Contributions must be remitted to the commissioner by February 1 of each year.
Nothing in this subdivision prohibits a public utility from spending or investing for energy
conservation improvement more than required in this subdivision.

Sec. 2.

Minnesota Statutes 2005 Supplement, section 216B.241, subdivision 1b,
is amended to read:

Subd. 1b.

Conservation improvement by cooperative association or
municipality.

(a) This subdivision applies to:

(1) a cooperative electric association that provides retail service to its members;

(2) a municipality that provides electric service to retail customers; and

(3) a municipality with gross operating revenues in excess of $5,000,000 from sales
of natural gas to 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.

new text begin The gross operating revenue to be used in determining the amount of spending and
investments required under this subdivision is the revenue for the immediately preceding
year. The commissioner may true up the revenue and the investment and spending
requirement at the end of the year and, if necessary, carry over spending and investing
obligations into the next and succeeding years.
new text end

(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 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 that do not reduce energy use but that increase the
efficiency of the electric system 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) At least every four years, on a schedule determined by the commissioner, each
municipality or cooperative shall file an overview of its conservation improvement plan
with the commissioner. With this overview, the municipality or cooperative shall also
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. Up to three percent of a utility's conservation spending obligation
under this section may be used for program pre-evaluation, testing, and monitoring and
program evaluation. The overview and evaluation filed by a municipality with less than
60,000,000 kilowatt hours in annual retail sales of electric service may consist of a letter
from the governing board of the municipal utility to the department providing the amount
of annual conservation spending required of that municipality and certifying that the
required amount has been spent on conservation programs pursuant to this subdivision.

(h) The commissioner shall also review each evaluation for whether a portion of the
money spent on residential conservation improvement programs is devoted to programs
that directly address the needs of renters and low-income persons unless an insufficient
number of appropriate programs are available. For the purposes of this subdivision and
subdivision 2, "low-income" means an income at or below 50 percent of the state median
income.

(i) As part of its spending for conservation improvement, a municipality or
association may contribute to the energy and conservation account. A municipality or
association may propose to the commissioner to designate that all or a portion of funds
contributed to the account be used for research and development projects that can best
be implemented on a statewide basis. Any amount contributed must be remitted to the
commissioner by February 1 of each year.

(j) A municipality may spend up to 50 percent of its required spending under this
section to refurbish an existing district heating or cooling system. This paragraph expires
July 1, 2007.

Sec. 3.

Minnesota Statutes 2004, section 216B.241, subdivision 1c, is amended to read:

Subd. 1c.

Energy-saving deleted text begin goals deleted text end new text begin objectives new text end .

new text begin (a) new text end The commissioner shall establish
energy-saving deleted text begin goals deleted text end new text begin objectives new text end for new text begin all gas and electric new text end energy conservation improvement
expenditures and shall deleted text begin evaluate an deleted text end new text begin monitor new text end energy conservation improvement deleted text begin program on
how well it meets the goals set deleted text end new text begin programs for success in meeting the objectives new text end .

new text begin (b) The commissioner shall, commencing with calendar year 2007, establish annual
statewide electric capacity and energy savings objectives required from electric energy
conservation investment programs.
new text end

new text begin The minimum required annual capacity savings is 200 megawatts, unless the
commissioner finds there is no cost-effective way to achieve that savings, in which case
the annual energy saving requirement is the maximum cost-effective savings available as
determined by the commissioner.
new text end

new text begin If the spending required under this section will not result in the required savings, the
commissioner may order the level of spending necessary to obtain the savings.
new text end

new text begin The commissioner shall allocate savings requirements among public utilities,
cooperative electric associations, and municipals based on their percentage of total electric
service revenue. The commissioner may excuse a public utility, cooperative electric
association, or municipal from that part of its savings requirement for which it can be
shown that no cost-effective conservation investments are available in the particular
service territory.
new text end

new text begin (c) The commissioner shall, commencing with calendar year 2007, establish gas
savings objectives for a public utility and a municipal utility having an investment
obligation under this section. The minimum annual energy savings is the lesser of one
percent of the preceding year's usage or the maximum cost-effective savings.
new text end

new text begin (d) The commissioner shall annually report the success in meeting objectives under
this subdivision to the Public Utilities Commission and the chairs of the legislative
committees having primary jurisdiction over energy issues.
new text end

Sec. 4.

Minnesota Statutes 2004, section 216B.241, subdivision 6, is amended to read:

Subd. 6.

Renewable energy research.

(a) A public utility that owns a nuclear
generation facility in the state shall spend five percent of the total amount that utility
is required to spend under this section to support basic and applied research and
demonstration activities at the University of Minnesota Initiative for Renewable Energy
and the Environment for the development of renewable energy sources and technologies.
The utility shall transfer the required amount to the University of Minnesota on or before
July 1 of each year and that annual amount shall be deducted from the amount of money the
utility is required to spend under this section. The University of Minnesota shall transfer
at least ten percent of these funds to at least one rural campus or experiment station.

(b) Research funded under this subdivision shall include:

(1) development of environmentally sound production, distribution, and use of
energy, chemicals, and materials from renewable sources;

(2) processing and utilization of agricultural and forestry plant products and other
bio-based, renewable sources as a substitute for fossil-fuel-based energy, chemicals, and
materials using a variety of means including biocatalysis, biorefining, and fermentation;

(3) conversion of state wind resources to hydrogen for energy storage and
transportation to areas of energy demand;

(4) improvements in scalable hydrogen fuel cell technologies; and

(5) production of hydrogen from bio-based, renewable sources; and sequestration
of carbon.

(c) deleted text begin Notwithstanding other law to the contrary, the utility may, but is not required to,
spend more than two percent of its gross operating revenues from service provided in this
state under this section or section 216B.2411. deleted text end

deleted text begin (d) deleted text end This subdivision expires June 30, 2008.

Sec. 5.

Minnesota Statutes 2004, section 216B.2422, is amended by adding a
subdivision to read:

new text begin Subd. 3a. new text end

new text begin Preference for conservation. new text end

new text begin The commission shall not approve a new or
refurbished nonrenewable energy facility in an integrated resource plan or a certificate of
need, pursuant to section 216B.243, and the commission shall not allow rate recovery for
such a facility, unless the utility has demonstrated that conservation to meet the capacity
needs is not in the public interest.
new text end

Sec. 6.

Minnesota Statutes 2004, section 216B.243, is amended by adding a
subdivision to read:

new text begin Subd. 3c. new text end

new text begin Use of conservation resources. new text end

new text begin The commission may not issue a
certificate of need under this section for a large energy facility unless the applicant for the
certificate has demonstrated to the commissioner's satisfaction that the use of conservation
to replace the need for the facility is not in the public interest.
new text end

Sec. 7. new text begin PROMOTING CONSERVATION THROUGH UTILITY RATES;
STUDY.
new text end

new text begin The Legislative Electric Energy Task Force must study the issue of the use of utility
rates as an incentive to conservation commonly referred to as "decoupling" of rates. The
study may include both gas and electric utility rates. The task force may contract for all or
part of the study. The study must be completed by January 15, 2007.
new text end