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SF 4409

as introduced - 91st Legislature (2019 - 2020) Posted on 05/08/2020 07:53am

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

Current Version - as introduced

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A bill for an act
relating to energy; establishing the Energy Conservation and Optimization Act of
2020; amending Minnesota Statutes 2018, sections 216B.2401; 216B.241,
subdivisions 1a, 1c, 1d, 1f, 2, 2b, 3, 5, 7, by adding a subdivision; proposing coding
for new law in Minnesota Statutes, chapter 216B; repealing Minnesota Statutes
2018, section 216B.241, subdivisions 1, 2c, 4.

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

Section 1. new text beginTITLE.
new text end

new text begin Sections 2 to 15 may be cited as the "Energy Conservation and Optimization Act of
2020."
new text end

Sec. 2.

new text begin [216B.1698] INNOVATIVE CLEAN TECHNOLOGIES.
new text end

new text begin (a) For purposes of this section, "innovative clean technology" means advanced energy
technology that is:
new text end

new text begin (1) environmentally superior to technologies currently in use;
new text end

new text begin (2) expected to offer energy-related, environmental, or economic benefits; and
new text end

new text begin (3) not widely deployed by the utility industry.
new text end

new text begin (b) A public utility may petition the commission for authorization to invest in a project
or projects to deploy one or more innovative clean technologies to further the development,
commercialization, and deployment of innovative clean technologies that benefit utility
customers.
new text end

new text begin (c) The commission may approve a petition under paragraph (b) if it finds:
new text end

new text begin (1) the technologies proposed are innovative clean technologies;
new text end

new text begin (2) the utility has demonstrated the investment in an innovative clean energy technology
is likely to provide benefits to customers that exceed the cost;
new text end

new text begin (3) the utility is meeting its energy conservation goals under section 216B.241; and
new text end

new text begin (4) the petition does not result in a utility spending more than $5,000,000 per year on
innovative clean technologies under this section.
new text end

new text begin (d) The commission may authorize a public utility to file a rate schedule containing
provisions that automatically adjust charges for public utility service in direct relation to
changes in prudent costs incurred by a utility under this section, up to $5,000,000 each year.
To the extent the utility investment under this section is for a capital asset, the utility may
request that the asset be included in the utility's rate base.
new text end

Sec. 3.

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


216B.2401 ENERGY SAVINGS new text beginAND OPTIMIZATION new text endPOLICY GOAL.

new text begin (a) new text endThe legislature finds that energy savings are an energy resource, and that cost-effective
energy savings are preferred over all other energy resources. new text beginIn addition, the legislature
finds that optimizing the timing and method used by energy consumers to 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 savingsnew 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 beginequaldeleted text endnew text begin equivalentnew text end to at least deleted text begin1.5deleted text endnew text begin 2.5new text end
percent of annual retail energy sales of electricity and natural gas through deleted text begincost-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 endnew text begin multiple measures, including
but not limited to:
new text end

new text begin (1) cost-effective energy conservation improvement programs and efficient fuel-switching
utility programs under sections 216B.2402 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) advancements in statewide energy codes and cost-effective appliance and equipment
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

new text begin (b) A utility is encouraged to design and offer to its customers load management programs
that enable (1) customers to maximize the economic value gained from the energy purchased
from the customer's utility service provider, and (2) utilities to optimize the infrastructure
and generation capacity needed to effectively serve customers and facilitate the integration
of renewable energy into the energy system.
new text end

new text begin (c) The commissioner must provide a reasonable estimate for progress toward the
statewide energy-savings goal under paragraph (a) in the annual report required under section
216B.241, subdivision 1c, along with recommendations for administrative or legislative
initiatives to increase energy savings toward that goal. The commissioner must also annually
report on the energy productivity of the state's economy by providing an estimate of the
ratio of economic output produced in the most recently completed calendar year to the
primary energy inputs used in that year.
new text end

Sec. 4.

new text begin [216B.2402] DEFINITIONS.
new text end

new text begin (a) For the purposes of section 216B.16, subdivision 6b, and sections 216B.2401 to
216B.241, the terms defined in this section have the meanings given them.
new text end

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

new text begin (c) "Cumulative lifetime savings" means the total electric energy or natural gas savings
during a year from energy conservation improvements installed: (1) during the same year;
or (2) in previous years, but that are still operational and have not reached the end of the
improvement's useful life.
new text end

new text begin (d) "Efficient fuel-switching improvement" means a project that: replaces a fuel used
by a customer with electricity or natural gas delivered at retail by a utility subject to this
section, and results in a net increase in the use of electricity or natural gas and a net decrease
in source energy consumption on a fuel-neutral basis; and otherwise meets the criteria
established for consumer-owned utilities in section 216B.2403, subdivision 8, and for public
utilities under section 216B.241, subdivision 11. An efficient fuel-switching improvement
requires the installation of equipment that utilizes electricity or natural gas, resulting in a
reduction or elimination of use of the previous fuel. An efficient fuel-switching improvement
is not an energy conservation improvement or energy efficiency even if it results in a net
reduction in electricity or natural gas use.
new text end

new text begin (e) "Energy conservation" means an action that results in a net reduction in electricity
or natural gas consumption. Energy conservation does not include an efficient fuel-switching
improvement.
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 and
are designed to produce either an absolute decrease in consumption of electricity or natural
gas or a decrease in consumption of electric energy or natural gas on a per unit of production
basis, without reducing the quality or 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, diesel fuel, or steam.
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 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. 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 section 216B.241, subdivision 1a, paragraph (a), 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 section 216B.241, subdivision 1a, paragraph (b), 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 section 216B.241, subdivision 1a, paragraph (a), with respect
to electric sales made to the large facility; or
new text end

new text begin (3) the amount of increased electric sales associated with electric vehicle charging that
are the result of a utility program or rate until December 31, 2032. Incremental increases
in electric sales associated with electric vehicle charging after December 31, 2032, must be
included when determining a utility's gross annual retail sales. A utility must, in consultation
with the department, develop and report the relevant assumptions and calculation
methodologies used to determine programmatic electric vehicle sales. The final assumptions
and calculation methodologies must be complete by December 31, 2020.
new text end

new text begin (k) "Investments and expenses of a public utility" means the investments and expenses
incurred by a public utility in connection with an energy conservation improvement.
new text end

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

new text begin (n) "Lifetime energy savings" means the amount of savings a particular energy
conservation improvement produces over the improvement's effective useful lifetime.
new text end

new text begin (o) "Load management" means an activity, service, or technology that changes the timing
or the efficiency of a customer's use of energy that allows a utility or a customer to (1)
respond to local and regional energy system conditions, or (2) reduce peak demand for
electricity or natural gas. Load management that reduces the customer's net annual energy
consumption is also energy conservation.
new text end

new text begin (p) "Low-income household" means a household with a household income that is 60
percent or less of the state median household income.
new text end

new text begin (q) "Low-income programs" means energy conservation improvement programs that
directly serve the needs of low-income persons, including low-income renters.
new text end

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

new text begin (s) "Multifamily building" means a residential building with five or more dwelling units.
new text end

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

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

new text begin (v) "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 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.
new text end

new text begin (w) "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

Sec. 5.

new text begin [216B.2403] CONSUMER-OWNED UTILITIES; ENERGY CONSERVATION
AND OPTIMIZATION.
new text end

new text begin Subdivision 1. 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. 2. new text end

new text begin Consumer-owned utility; energy-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. The annual energy-savings goal must be
met with a minimum of energy savings from energy conservation improvements equivalent
to at least one percent of the consumer-owned utility's gross annual retail energy sales. The
balance of energy savings toward the annual energy-savings goal may be achieved only by
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, as defined in section 216B.1636, subdivision
1; or
new text end

new text begin (3) net energy savings from efficient fuel-switching improvements that meet the criteria
under subdivision 8.
new text end

new text begin (b) Nothing in this section limits a utility's ability to report and recognize savings from
activities under paragraph (a), clauses (2) and (3), in excess of the utility's annual energy
savings, provided the utility has met the minimum energy-savings goal from energy
conservation improvements.
new text end

new text begin (c) The energy-savings goals specified in this section must be calculated based on the
most recent three-year, weather-normalized average. A consumer-owned utility may elect
to carry forward energy savings in excess of 1.5 percent for a year to the next three years,
except that savings from electric utility infrastructure projects may be carried forward for
five years. A particular energy savings can be used for one year's goal.
new text end

new text begin (d) 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. A consumer-owned utility subject to this section must
make reasonable efforts to implement energy conservation improvements above the minimum
level set under this subdivision if cost-effective opportunities and utility funding are available,
considering other potential investments the utility intends to make for the benefit of customers
during the term of the plan filed under subdivision 3.
new text end

new text begin (e) A consumer-owned utility may request that the commissioner adjust its minimum
goal for energy savings from energy conservation improvements specified under paragraph
(a) for the period of the utility's most recent plan filed under subdivision 3. The request
must be made by January 1 of a year when the utility must file a plan under subdivision 3.
The request must be based on:
new text end

new text begin (1) historical energy conservation improvement program achievements;
new text end

new text begin (2) customer class makeup;
new text end

new text begin (3) projected load growth;
new text end

new text begin (4) an energy conservation potential study that estimates the amount of cost-effective
energy conservation potential that exists in the utility's service territory;
new text end

new text begin (5) the cost-effectiveness and quality of the energy conservation programs offered by
the utility; and
new text end

new text begin (6) other factors the commissioner and consumer-owned utility determine warrant an
adjustment.
new text end

new text begin (f) The commissioner must adjust the energy savings goal to a level the commissioner
determines is supported by the record, but must not approve a minimum energy-savings
goal from energy conservation improvements that is less than three percent of gross annual
retail energy sales over a consecutive three-year period that includes the year the minimum
energy-savings goal is adjusted.
new text end

new text begin Subd. 3. new text end

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

new text begin (a)
By June 1, 2022, each consumer-owned utility must file with the commissioner an energy
conservation and optimization plan that describes the programs for energy conservation,
efficient fuel-switching improvements and load management programs, and other processes
and programs the utility plans to use to achieve its energy savings goal. The plan may cover
a period not to exceed three years. For plans with a duration greater than a single year, the
consumer-owned utility's plan may provide for years in which the utility may not achieve
its annual energy savings goal, provided: (1) the utility's plan provides the percentage of
the utility's minimum energy savings goal from energy conservation improvements the
utility intends to meet in each year of the plan, with a summary detailing how the plan
ultimately satisfies clause (2) for any year in which the minimum energy savings for energy
conservation improvements is less than one percent of the utility's gross annual retail sales;
and (2) the total energy savings at the end of the plan's duration is projected to average at
least the annual energy savings goal for that utility. For existing programs, the plan must
provide an analysis of the cost-effectiveness of the consumer-owned utility's programs
offered under the plan, using a list of baseline energy- and capacity-savings assumptions
developed in consultation with the department. For new programs, the plan must provide a
preliminary analysis upon which the program begins, in parallel with further development
of assumptions and standards. An individual utility program may combine elements of
energy conservation, load management, or efficient fuel-switching.
new text end

new text begin (b) Plans, updates, and completion summaries must be evaluated by the commissioner
based on how well the plan meets the goals set under subdivision 2 and whether the plan is
likely to achieve the goals. The commissioner must review each evaluation and may also
make recommendations, where appropriate, to the consumer-owned utility regarding ways
to increase the effectiveness of the utility's activities and programs under this subdivision.
The commissioner may recommend that a consumer-owned utility implement a cost-effective
program, including a program suggested by an outside source such as a political subdivision,
nonprofit corporation, or community organization.
new text end

new text begin (c) Beginning June 1, 2023, and every June 1 thereafter, each consumer-owned utility
must file: (1) an annual update identifying the status of its plan filed under this subdivision,
including (i) total expenditures and investments made to date under the plan, and (ii) any
intended changes to the plan; and (2) a summary of the annual energy-savings achievements
under a plan. If the annual filing comes in the last year of a plan, the annual filing may
contain a new plan that complies with this section.
new text end

new text begin (d) When evaluating the cost-effectiveness of utility programs, the consumer-owned
utility and the commissioner must consider the costs and benefits to ratepayers, the utility,
participants, and society. In addition, the commissioner must consider the rate at which the
consumer-owned utility is increasing its energy savings and expenditures on energy
conservation, and its lifetime energy savings and cumulative energy savings.
new text end

new text begin (e) Each consumer-owned utility subject to this subdivision may, at its discretion, annually
spend and invest up to ten percent of the total amount spent and invested on energy
conservation improvements under this subdivision on research and development projects
that meet the definition of energy conservation improvement and that are funded directly
the consumer-owned utility.
new text end

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

new text begin (g) A consumer-owned utility is prohibited from spending for or investing in energy
conservation improvements that directly benefit a large energy facility or a large electric
customer facility the commissioner has issued an exemption to under section 216B.241,
subdivision 1a.
new text end

new text begin (h) The energy conservation and optimization plan of each consumer-owned utility
subject to this section may include activities to improve energy efficiency in the public
schools served by the utility. These activities may include programs to update lighting in
the school, update the heating and cooling systems of the school, provide for building
recommissioning, provide building operator training, and provide opportunities to educate
students, teachers, and staff regarding energy efficiency measures implemented at the school.
new text end

new text begin Subd. 4. new text end

new text begin Consumer-owned utility; energy savings investment. new text end

new text begin (a) Except as otherwise
provided, each consumer-owned utility subject to this section that falls short of the minimum
energy savings goal from energy conservation improvements established in subdivision 2,
paragraph (a), for three consecutive years must spend and invest in the following amounts
for energy conservation improvements under this subdivision:
new text end

new text begin (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 Minnesota to large electric
customer facilities; and
new text end

new text begin (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 Minnesota to large electric customers facilities indirectly through a distribution cooperative
electric association.
new text end

new text begin (b) The spending requirement under this subdivision must not be imposed if the utility
has followed the commissioner's recommendations, if any, provided under subdivision 3,
paragraph (b).
new text end

new text begin (c) Upon the request of a utility that demonstrates good cause regarding why the utility
was unable to achieve its minimum energy savings goal using energy conservation
improvements, the commissioner may reduce either or both the amount or duration of the
minimum expenditure imposed under this subdivision. The commissioner is prohibited from
reducing the amount or duration of the minimum expenditure by more than 50 percent. For
purposes of this paragraph, "good cause" means a response to a natural disaster declared
by the executive branch through emergency executive order, a unique load distribution
experienced by the utility, or other unique factors presented by the utility that the
commissioner determines justifies a reduction.
new text end

new text begin (d) The spending requirement under this section remains in effect until the
consumer-owned utility has met the minimum energy savings goal for three consecutive
years.
new text end

new text begin Subd. 5. new text end

new text begin Energy conservation programs for low-income households. new text end

new text begin (a) Each
consumer-owned utility subject to this section must provide energy conservation programs
to low-income households. The commissioner must evaluate a utility's plans under this
section by considering the utility's historic spending and participation levels, energy savings
resulting from energy conservation programs for low-income households, 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 0.4 percent of its most recent three-year average
gross operating revenue from residential customers in Minnesota on energy conservation
programs for low-income households. A consumer-owned utility that furnishes electric
service must spend at least 0.4 percent of its gross operating revenue from residential
customers in Minnesota on energy conservation programs for low-income households. The
requirement under this paragraph 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 energy conservation programs for low-income
households to use money contributed to the energy and conservation account under paragraph
(b). When establishing energy conservation programs for low-income households, the
commissioner must consult political subdivisions, utilities, and nonprofit and community
organizations, including organizations engaged in providing energy and weatherization
assistance to low-income households. Money contributed to the energy and conservation
account under paragraph (b) must provide programs for low-income households, 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 energy conservation programs for low-income households funded
through the energy and conservation account in the report required under section 216B.241,
subdivision 1c, paragraph (f). 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 (e) The commissioner must develop and establish guidelines for determining the eligibility
of multifamily buildings for low-income programs. Notwithstanding the definition of
low-income household in section 216B.2402, a utility or association may apply the most
recent guidelines published by the department for purposes of determining the eligibility
of multifamily buildings for low-income programs. The commissioner must convene a
stakeholder group to review and update guidelines by July 1, 2021, and at least once every
five years thereafter. The stakeholder group must include but is not limited to stakeholders
representative of public utilities as defined in section 216B.02, subdivision 4; municipal,
electric, or gas utilities; electric or gas cooperative associations; multifamily housing owners
and developers; and low-income advocates.
new text end

new text begin (f) Up to 15 percent of a consumer-owned utility's spending on low income programs
may be spent on preweatherization measures. For purposes of this section, "preweatherization
measures" means an improvement that is necessary to allow energy conservation
improvements to be installed in a home. A utility is prohibited from claiming energy savings
from preweatherization measures toward the utility's energy savings goal.
new text end

new text begin (g) The commissioner must, by order, establish a list of qualifying preweatherization
measures eligible for inclusion in low-income programs no later than March 15 of the year
following enactment of this section.
new text end

new text begin (h) A Healthy AIR (Asbestos Insulation Removal) account is established as a separate
account in the special revenue fund in the state treasury. A utility may elect to contribute
money to the Healthy AIR account to provide preweatherization measures for households
that are eligible for weatherization assistance under the state weatherization assistance
program in section 216C.264. Remediation activities must be executed in conjunction with
federal weatherization assistance program services. Money contributed to the account counts
toward: (1) the minimum low-income spending requirement under paragraph (a); and (2)
the cap on preweatherization measures under paragraph (f). Money in the account is annually
appropriated to the commissioner of commerce to pay for Healthy AIR-related activities.
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 (a) A preweatherization
measure or energy conservation improvement to or installed in a building under this section,
excluding a system owned by the consumer-owned utility that is 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.
new text end

new text begin (b) The utility has no liability for loss, damage, or injury directly or indirectly caused
by a preweatherization measure or energy conservation improvement, except that a utility
is liable for the utility's negligence in purchasing, installing, or modifying a preweatherization
product.
new text end

new text begin Subd. 8. new text end

new text begin Criteria for efficient fuel-switching improvements. new text end

new text begin (a) A fuel-switching
improvement is deemed efficient if, applying the technical criteria established under section
216B.241, subdivision 1d, paragraph (b), the improvement, relative to the fuel being
displaced:
new text end

new text begin (1) results in a net reduction in the 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 fuel-switching
improvement installed by an electric utility, the reduction in emissions must be measured
based on the hourly emissions profile of the utility or the utility's wholesale provider, if
available. If the hourly emissions profile is not available, the commissioner must develop
a proxy assumption for utilities to use as part of the technical criteria developed under
section 216B.241, subdivision 1d, paragraph (b). Where applicable, the hourly emissions
profile used must be the most recent resource plan approved by the commission under
section 216B.2422;
new text end

new text begin (3) is cost-effective, considering the costs and benefits from the perspective of the utility,
participants, and society; and
new text end

new text begin (4) is installed and operated in a manner that improves the utility's system load factor.
new text end

new text begin (b) For purposes of this subdivision, "source energy" means the total amount of primary
energy required to deliver energy services, adjusted for conversion losses from fossil fuel
combustion for electricity generation and transportation losses from transmission and
distribution.
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.
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. Electronic service may be made only to persons on the service list that have
previously agreed in writing to accept electronic service at an e-mail 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 The commission or department may assess utilities subject to
this section to carry out the purposes of section 216B.241, subdivisions 1d, 1e, and 1f. 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. Assessments under this subdivision are not subject to the cap on assessments
under section 216B.62 or any other law.
new text end

new text begin Subd. 11. new text end

new text begin Waste heat recover; 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

Sec. 6.

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


Subd. 1a.

deleted text beginInvestment, expenditure, and contribution; public utilitydeleted text endnew text begin Large customer
facility
new text end.

deleted text begin (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:
deleted text end

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

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

deleted text begin (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.
deleted text end

deleted text begin For purposes of this paragraph (a), "gross operating revenues" do not include revenues
from large customer facilities exempted under paragraph (b), or from commercial gas
customers that are exempted under paragraph (c) or (e).
deleted text end

deleted text begin (b)deleted text endnew text begin (a)new text end The owner of a large customer facility may petition the commissioner to exempt
both electric and gas utilities serving the large customer facility from the investment and
expenditure requirements of deleted text beginparagraph (a)deleted text endnew text begin a utility's plan under this section or section
216B.2403
new text end 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 by the owner 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 become effective January 1 of the year
following the filing, unless 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. 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, not more often than once every five years, a report demonstrating the
large customer facility's ongoing commitment to energy conservation and efficiency
improvement after the exemption filing. The commissioner may request such reports for
up to ten years after the effective date of the exemption, unless the majority ownership of
the large customer facility changes, in which case 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, under an order from the
commissioner, exempt from the investment and expenditure requirements of paragraph (a)
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. No exempt large
customer facility may participate in a utility conservation improvement program unless the
owner of the facility submits a filing with the commissioner to withdraw its exemption.

deleted text begin (c)deleted text endnew text begin (b)new text end A commercial gas customer that is not a large customer facility and that purchases
or acquires natural gas from a public utility having fewer than 600,000 natural gas customers
in Minnesota may petition the commissioner to exempt gas utilities serving the commercial
gas customer from the investment and expenditure requirements of deleted text beginparagraph (a)deleted text endnew text begin a utility's
plan under this section or section 216B.2403
new text end with respect to retail revenues 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 utility's gas distribution system by obtaining natural gas directly from a
supplier not regulated by the commission. The commissioner shall grant the exemption if
the commissioner finds that the petitioner has made the demonstration required by this
paragraph.

deleted text begin (d)deleted text endnew text begin (c)new text end 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.

deleted text begin (e)deleted text endnew text begin (d)new text end A public utility or owner of a large customer facility may appeal a decision of
the commissioner under paragraph new text begin(a) or new text end(b)deleted text begin, (c), or (d)deleted text end to the commission under subdivision
2. In reviewing a decision of the commissioner under paragraphnew text begin (a) ornew text end (b), deleted text begin(c), or (d),deleted text end the
commission shall rescind the decision if it finds deleted text beginthat the required investments or spending
will:
deleted text end

deleted text begin (1) not result in cost-effective energy conservation improvements; or
deleted text end

deleted text begin (2) otherwisedeleted text endnew text begin the decision isnew text end not deleted text beginbedeleted text end in the public interest.

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

Sec. 7.

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


Subd. 1c.

new text beginPublic utility; new text endenergy-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 beginpublic new text endutility deleted text beginand association shall havedeleted text endnew text begin providing electric service
has
new text end an annual energy-savings goal equivalent to deleted text begin1.5deleted text endnew text begin 1.75new text end percent of gross annual retail
energy sales unless modified by the commissioner under paragraph deleted text begin(d).deleted text end new text begin (c)new text endnew text begin.new text endnew text begin A public utility
providing natural gas service has an annual energy-savings goal equivalent to one percent
of gross annual retail energy sales, which cannot be lowered by the commissioner.
new text end The
savings goals must be calculated based on the most recent three-year weather-normalized
average. Anew text begin publicnew text end utility deleted text beginor associationdeleted text endnew text begin providing electric servicenew text end may elect to carry forward
energy savings in excess of deleted text begin1.5deleted text endnew text begin 1.75new text end percent for a year to the succeeding three calendar
years, except that savings from electric utility infrastructure projects allowed under paragraph
(d) may be carried forward for five years.new text begin A public utility providing natural gas service may
elect to carry forward energy savings in excess of one percent for a year to the succeeding
three calendar years.
new text end 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 endnew text begin (c)new text end In its energy conservation deleted text beginimprovementdeleted text endnew text begin and optimizationnew text end plan filing, a new text beginpublic
new text end utility deleted text beginor associationdeleted 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.

new text begin (d) new text endA new text beginpublic new text endutility deleted text beginor associationdeleted text end may include in its energy conservationnew text begin and optimizationnew text end
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 beginEnergy savings from electric utility infrastructure
projects, as defined in section 216B.1636, may be included in the energy conservation plan
of a municipal utility or cooperative electric association. Electric utility infrastructure projects
must
deleted text end new text beginThe balance of energy savings contributing toward the annual energy savings goal
must be achieved by: (1) energy savings from additional energy conservation improvements;
or (2) electric utility infrastructure projects, as defined in section 216B.1636, subdivision
1, that
new text endnew text begin new text endresult in increased energy efficiency greater than that which would have occurred
through normal maintenance activity.

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

deleted text begin (f) An association ordeleted text endnew text begin (e) A publicnew 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 beginan association or municipaldeleted text end new text begina publicnew text end utility is increasing its
energy savings and its expenditures on energy conservationnew text begin, as well as the public utility's
lifetime energy savings and cumulative energy savings
new text end.

deleted text begin (g)deleted text end new text begin(f) new text endOn an annual basis, the commissioner shall produce and make publicly available
a report on the annual energynew text begin and capacitynew text end savings and estimated carbon dioxide reductions
achieved by the deleted text beginenergy conservation improvementdeleted text end programsnew text begin under this section and section
216B.2403
new text end for the two most recent years for which data is available.new text begin The report must also
include information regarding any annual energy sales or generation capacity increases
resulting from efficient fuel-switching improvements.
new text end 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 commissionernew text begin, and must provide an estimate
for progress toward the statewide energy-savings goal under section 216B.2401
new text end.

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. 8.

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 beginunder this section and section 216B.2403 new text endon 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.new text begin The department must track a public
utility's or consumer-owned utility's lifetime energy savings and cumulative lifetime energy
savings provided to the commissioner in plans submitted under this section.
new text end 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) deleted text beginOf 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
deleted text enddeleted text begin energy savings of the energy conservation improvements required by this section. This
paragraph expires June 30, 2018.
deleted text endnew text begin By March 15 of the year following the enactment of this
section, the commissioner must, by order, develop and publish technical information
necessary to evaluate whether deployment of a fuel-switching improvement meets the
criteria established under subdivision 11, paragraph (c), and section 216B.2403, subdivision
8, including the formula to account for the energy saved by a fuel-switching improvement
on a fuel-neutral basis. When developing the technical information under this paragraph,
the commissioner must work with interested stakeholders. The commissioner must update
the technical information as necessary.
new text end

Sec. 9.

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


Subd. 1f.

Facilities energy efficiency.

(a) The commissioner of administration and the
commissioner of commerce shall maintain and, as needed, revise the sustainable building
design guidelines developed under section 16B.325.

(b) The commissioner of administration and the commissioner of commerce shall maintain
and update the benchmarking tool developed under Laws 2001, chapter 212, article 1, section
3, so that all public buildings can use the benchmarking tool to maintain energy use
information for the purposes of establishing energy efficiency benchmarks, tracking building
performance, and measuring the results of energy efficiency and conservation improvements.

(c) The commissioner shall require that utilities include in their conservation improvement
plans programs that facilitate professional engineering verification to qualify a building as
Energy Star-labeled, Leadership in Energy and Environmental Design (LEED) certified, or
Green Globes-certified. deleted text beginThe state goal is to achieve certification of 1,000 commercial
buildings as Energy Star-labeled, and 100 commercial buildings as LEED-certified or Green
Globes-certified by December 31, 2010.
deleted text end

(d) The commissioner may assess up to $500,000 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.

Sec. 10.

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


Subd. 2.

deleted text beginProgramsdeleted text endnew text begin Public utility; energy conservation and optimization plansnew text end.

(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 filenew text begin energynew text end
conservation deleted text beginimprovementdeleted text endnew text begin and optimizationnew text end plans by June 1, on a schedule determined by
order of the commissioner, but at least every three years.new text begin As provided in subdivision 11,
plans may include programs for efficient fuel-switching improvements and load management.
An individual utility program may combine elements of energy conservation, load
management, or efficient fuel-switching.
new text end 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.new text begin The plan must account for the lifetime energy savings and cumulative lifetime savings
under the plan.
new text end 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.
deleted text begin The commissioner shall nevertheless ensure that every public utility operate one or more
programs under periodic review by the department.
deleted text end

(c) Each public utility subject tonew text begin thisnew text end subdivision deleted text begin1adeleted text end may spend and invest annually up
to ten percent of the total amount deleted text beginrequired to bedeleted text end 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) deleted text beginA 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).
deleted text end The
commissioner shall consider and may require a new text beginpublic new text endutility 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.

deleted text begin (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.
deleted text end

new text begin (g) The energy conservation and optimization plan for each public utility subject to this
section must include activities to improve energy efficiency in public schools served by the
utility. At a minimum, the efficiency in schools component must consist of programs to
update lighting in schools, update heating and cooling systems in schools, provide for
building recommissioning, provide building operator training, and provide opportunities to
educate students, teachers, and staff regarding energy efficiency measures implemented at
the school.
new text end

Sec. 11.

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


Subd. 2b.

Recovery of expenses.

The commission shall allow a new text beginpublic new text endutility to recover
expenses resulting from deleted text beginadeleted text endnew text begin an energynew text end conservation deleted text beginimprovement program requireddeleted text endnew text begin and
optimization plan approved
new text end by the departmentnew text begin under this sectionnew text end 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. deleted text beginThe 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
deleted text enddeleted text beginthe energy and
conservation account unless the recovery would be inconsistent with a financial incentive
proposal approved by the commission.
deleted text end In addition, a new text beginpublic new text endutility 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. 12.

Minnesota Statutes 2018, section 216B.241, subdivision 3, is amended to read:


Subd. 3.

Ownership of energy conservation improvement.

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

Sec. 13.

Minnesota Statutes 2018, section 216B.241, subdivision 5, is amended to read:


Subd. 5.

Efficient lighting program.

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

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

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

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

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

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

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

new text begin (h) For the purposes of this section, "LED" means a light-emitting diode bulb or lighting
product.
new text end

Sec. 14.

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 beginpublic
new text end utility deleted text beginand associationdeleted text end subject to subdivision 1c provides deleted text beginlow-incomedeleted text end new text beginenergy conservationnew text end
programs new text beginto low-income householdsnew text end. 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 beginmunicipal 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 deleted text begin0.4deleted text endnew text begin
0.8
new text end percent, of its most recent three-year average gross operating revenue from residential
customers in the state on low-income programs. A new text beginpublicnew text end utility deleted text beginor associationdeleted text end that furnishes
electric service must spend at least deleted text begin0.1deleted text end new text begin0.4 new text endpercent of its gross operating revenue from
residential customers in the state on low-income programs. deleted text beginFor a generation and transmission
cooperative association, this requirement shall apply to each association's members' aggregate
gross operating revenue from sale of electricity to residential customers in the state.
Beginning in 2010, A utility or association that furnishes electric service must spend 0.2
percent of its gross operating revenue from residential customers in the state on low-income
programs.
deleted text end

(b) To meet the requirements of paragraph (a), a new text beginpublic new text endutility deleted text beginor associationdeleted 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 beginpublic new text endutility deleted text beginor associationdeleted 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 deleted text beginpersonsdeleted text end new text beginhouseholdsnew text end. Money contributed to the
energy and conservation account under paragraph (b) must provide programs for low-income
deleted text begin personsdeleted text end new text beginhouseholdsnew text end, including low-income renters, in the service territory of the new text beginpublic
new text end utility deleted text beginor associationdeleted 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 beginpublic new text endutility deleted text beginor associationdeleted 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.

new text begin (e) The commissioner must develop and establish guidelines to determine the eligibility
of multifamily buildings for low-income programs. Notwithstanding the definition of
low-income household in section 216B.2402, for purposes of determining the eligibility of
multifamily buildings for low-income programs, a utility or association may apply the most
recent guidelines published by the department. The commissioner must convene a stakeholder
group to review and update guidelines by July 1, 2021, and at least once every five years
thereafter. The stakeholder group must include but is not limited to stakeholders
representative of public utilities as defined in section 216B.02, subdivision 4; municipal,
electric, or gas utilities; electric or gas cooperative associations; multifamily housing owners
and developers; and low-income advocates.
new text end

new text begin (f) Up to 15 percent of a public utility's spending on low-income programs may be spent
on preweatherization measures. For purposes of this section and section 216B.241,
subdivision 3, "preweatherization measure" means an improvement that is necessary to
allow energy conservation improvements to be installed in a home. A utility is prohibited
from claiming energy savings from preweatherization measures toward the utility's energy
savings goal.
new text end

new text begin (g) The commissioner must, by order, establish a list of qualifying preweatherization
measures eligible for inclusion in low-income programs no later than March 15 of the year
following enactment of this section.
new text end

new text begin (h) A Healthy AIR (Asbestos Insulation Removal) account is established as a separate
account in the special revenue fund in the state treasury. A public utility may elect to
contribute money to the Healthy AIR account to provide preweatherization measures to
households eligible for weatherization assistance under section 216C.264. Remediation
activities must be executed in conjunction with federal weatherization assistance program
services. Money contributed to the fund counts toward: (1) the minimum low-income
spending requirement in paragraph (a); and (2) the cap on preweatherization measures under
this paragraph. Money in the account is annually appropriated to the commissioner of
commerce to pay for Healthy AIR-related activities.
new text end

deleted text begin (e)deleted text endnew text begin (g)new text end 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.

Sec. 15.

Minnesota Statutes 2018, section 216B.241, is amended by adding a subdivision
to read:


new text begin Subd. 11. new text end

new text begin Programs for efficient fuel-switching improvements and load
management.
new text end

new text begin (a) A public utility subject to this section may include in its plan required
under subdivision 2 programs for (1) efficient fuel-switching improvements and load
management, or (2) combinations of energy conservation improvements, fuel-switching
improvements, and load management. For each program, the utility must provide proposed
budgets, cost-effectiveness analyses, and estimated net energy and demand savings.
new text end

new text begin (b) The department may approve proposed programs for efficient fuel-switching
improvements if it finds the improvements meet the requirements of paragraph (e). For
improvements requiring the deployment of electric technologies, the department must also
consider whether the fuel-switching improvement can be operated in a manner that facilitates
the integration of variable renewable energy into the electric system. The net benefits from
an efficient fuel-switching improvement that is integrated with an energy efficiency program
approved under this section may be counted toward the net benefits of the energy efficiency
program, provided the department finds the primary purpose and effect of the program is
energy efficiency.
new text end

new text begin (c) The department may approve a proposed program in load management if it finds the
program investment is cost-effective after considering the costs and benefits of the proposed
investment to ratepayers, the utility, participants, and society. The net benefits from a load
management activity that is integrated with an energy efficiency program approved under
this section may be counted toward the net benefits of the energy efficiency program,
provided the department finds the primary purpose and effect of the program is energy
efficiency.
new text end

new text begin (d) The commission may permit a public utility to file rate schedules that provide for
annual cost recovery for efficient fuel-switching improvements and cost-effective load
management programs approved by the department, including reasonable and prudent costs
to implement and promote programs approved under this subdivision. The commission may
approve, modify, or reject a proposal made by the department or a utility for an incentive
plan to encourage investments in load management programs, applying the considerations
established under section 216B.16, subdivision 6c, paragraphs (b) and (c). The commission
must not approve a financial incentive to encourage efficient fuel-switching programs. The
commission may structure an incentive plan to encourage cost-effective load management
programs as a regulatory asset on which a public utility could earn a rate of return. A utility
is not eligible for a financial incentive under this subdivision in any year the utility does
not achieve its minimum energy-savings goal.
new text end

new text begin (e) A fuel-switching improvement is deemed efficient if, applying the technical criteria
established under section 216B.241, subdivision 1d, paragraph (b), the improvement meets
the following criteria, relative to the fuel that is being displaced:
new text end

new text begin (1) results in a net reduction in the 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 fuel-switching
improvement installed by an electric utility, the change in emissions must be measured
based on the hourly emission profile of the electric utility, using the hourly emissions profile
in the most recent resource plan approved by the commission under section 216B.2422;
new text end

new text begin (3) is cost-effective, considering the costs and benefits from the perspective of the utility,
participants, and society; and
new text end

new text begin (4) is installed and operated in a manner that improves the utility's system load factor.
new text end

new text begin (f) For purposes of this subdivision, "source energy" means the total amount of primary
energy required to deliver energy services, adjusted for conversion losses from fossil fuel
combustion for electricity generation and transportation losses from transmission and
distribution.
new text end

Sec. 16. new text beginREPEALER.
new text end

new text begin Minnesota Statutes 2018, section 216B.241, subdivisions 1, 2c, and 4, new text end new text begin are repealed.
new text end

Sec. 17. new text beginEFFECTIVE DATE.
new text end

new text begin Sections 1 to 16 are effective the day following final enactment.
new text end

APPENDIX

Repealed Minnesota Statutes: 20-7178

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.