Skip to main content Skip to office menu Skip to footer
Capital IconMinnesota Legislature

HF 4502

1st Engrossment - 91st Legislature (2019 - 2020) Posted on 05/14/2020 12:40pm

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

Bill Text Versions

Engrossments
Introduction Posted on 03/16/2020
1st Engrossment Posted on 04/28/2020

Current Version - 1st Engrossment

Line numbers 1.1 1.2 1.3 1.4 1.5 1.6 1.7
1.8 1.9 1.10
1.11
1.12 1.13 1.14 1.15 1.16 1.17 1.18 1.19 1.20 1.21 2.1 2.2 2.3 2.4 2.5 2.6 2.7 2.8 2.9 2.10 2.11 2.12 2.13 2.14 2.15 2.16 2.17 2.18 2.19
2.20
2.21 2.22 2.23 2.24 2.25 2.26 2.27 2.28 2.29 2.30 2.31 2.32 3.1 3.2 3.3 3.4 3.5 3.6 3.7 3.8 3.9 3.10 3.11 3.12 3.13 3.14 3.15 3.16 3.17 3.18 3.19 3.20 3.21 3.22 3.23 3.24 3.25 3.26 3.27 3.28 3.29
3.30
4.1 4.2 4.3 4.4 4.5 4.6 4.7 4.8 4.9 4.10 4.11 4.12 4.13 4.14 4.15 4.16 4.17 4.18 4.19 4.20 4.21 4.22 4.23 4.24 4.25 4.26 4.27 4.28 4.29 4.30 4.31 4.32 5.1 5.2 5.3 5.4 5.5 5.6 5.7 5.8 5.9 5.10 5.11 5.12 5.13 5.14 5.15 5.16 5.17 5.18 5.19 5.20 5.21 5.22 5.23 5.24 5.25 5.26 5.27 5.28 5.29 5.30 5.31 5.32 6.1 6.2 6.3 6.4 6.5 6.6 6.7 6.8 6.9 6.10 6.11 6.12 6.13 6.14 6.15 6.16 6.17 6.18 6.19 6.20 6.21 6.22 6.23 6.24 6.25 6.26 6.27 6.28 6.29 6.30 6.31 6.32 6.33 7.1 7.2 7.3 7.4 7.5 7.6 7.7 7.8
7.9
7.10 7.11 7.12 7.13 7.14 7.15 7.16 7.17 7.18 7.19 7.20 7.21 7.22 7.23 7.24 7.25 7.26 7.27 7.28 7.29 7.30 8.1 8.2 8.3 8.4 8.5 8.6 8.7 8.8 8.9 8.10 8.11 8.12 8.13 8.14 8.15 8.16 8.17 8.18 8.19 8.20 8.21 8.22 8.23 8.24 8.25 8.26 8.27 8.28 8.29 8.30 8.31 8.32 9.1 9.2 9.3 9.4 9.5 9.6 9.7 9.8 9.9 9.10 9.11 9.12 9.13 9.14 9.15 9.16 9.17 9.18 9.19 9.20 9.21 9.22 9.23 9.24 9.25 9.26 9.27 9.28 9.29 9.30 9.31 9.32 9.33 9.34 10.1 10.2 10.3 10.4 10.5 10.6 10.7 10.8 10.9 10.10 10.11 10.12 10.13 10.14 10.15 10.16 10.17 10.18 10.19 10.20 10.21 10.22 10.23 10.24 10.25 10.26 10.27 10.28 10.29 10.30 11.1 11.2 11.3 11.4 11.5 11.6 11.7 11.8 11.9 11.10 11.11 11.12 11.13 11.14 11.15 11.16 11.17 11.18 11.19 11.20 11.21 11.22 11.23 11.24 11.25 11.26 11.27 11.28 11.29 11.30 11.31 11.32 11.33 12.1 12.2 12.3 12.4 12.5 12.6 12.7 12.8 12.9 12.10 12.11 12.12 12.13 12.14 12.15 12.16 12.17 12.18 12.19 12.20 12.21 12.22 12.23 12.24 12.25 12.26 12.27 12.28 12.29 12.30 12.31 12.32 12.33 12.34 13.1 13.2 13.3 13.4 13.5 13.6 13.7 13.8 13.9 13.10 13.11 13.12 13.13 13.14 13.15 13.16 13.17 13.18 13.19 13.20 13.21 13.22 13.23 13.24 13.25 13.26 13.27 13.28 13.29 13.30 13.31 13.32 13.33 13.34 14.1 14.2 14.3 14.4 14.5 14.6 14.7 14.8 14.9 14.10 14.11 14.12 14.13 14.14 14.15 14.16 14.17 14.18 14.19 14.20 14.21 14.22 14.23 14.24 14.25 14.26 14.27 14.28 14.29 14.30 14.31 14.32 15.1 15.2 15.3 15.4 15.5 15.6 15.7 15.8 15.9 15.10 15.11 15.12 15.13 15.14 15.15 15.16 15.17 15.18 15.19 15.20
15.21
15.22 15.23 15.24 15.25 15.26 15.27 15.28 15.29 15.30 15.31 16.1 16.2 16.3 16.4 16.5 16.6 16.7 16.8 16.9 16.10 16.11 16.12 16.13 16.14 16.15 16.16 16.17 16.18 16.19 16.20 16.21 16.22 16.23 16.24 16.25 16.26 16.27 16.28 16.29 16.30 16.31 16.32 16.33 16.34 16.35 17.1 17.2 17.3 17.4 17.5 17.6 17.7 17.8 17.9 17.10 17.11 17.12 17.13 17.14 17.15 17.16 17.17 17.18 17.19 17.20 17.21 17.22 17.23 17.24 17.25 17.26 17.27 17.28 17.29 17.30
17.31
18.1 18.2 18.3 18.4 18.5 18.6 18.7 18.8 18.9 18.10 18.11 18.12 18.13 18.14 18.15 18.16 18.17 18.18 18.19 18.20 18.21 18.22 18.23 18.24 18.25 18.26 18.27 18.28 18.29 18.30 18.31 18.32 19.1 19.2 19.3 19.4 19.5 19.6 19.7 19.8 19.9 19.10 19.11 19.12 19.13 19.14 19.15 19.16 19.17 19.18 19.19 19.20 19.21 19.22 19.23 19.24 19.25 19.26 19.27 19.28 19.29 19.30 19.31 19.32 20.1 20.2 20.3 20.4 20.5 20.6 20.7 20.8
20.9
20.10 20.11 20.12 20.13 20.14 20.15 20.16 20.17 20.18 20.19 20.20 20.21 20.22 20.23 20.24 20.25 20.26 20.27 20.28 20.29 20.30 20.31 21.1 21.2 21.3 21.4 21.5 21.6 21.7 21.8 21.9 21.10 21.11 21.12 21.13 21.14
21.15
21.16 21.17 21.18 21.19 21.20 21.21 21.22 21.23 21.24 21.25 21.26 21.27 21.28 21.29 21.30 21.31 21.32 22.1 22.2 22.3
22.4
22.5 22.6 22.7 22.8 22.9 22.10 22.11 22.12 22.13 22.14 22.15 22.16 22.17 22.18 22.19 22.20
22.21
22.22 22.23 22.24 22.25 22.26 22.27 22.28 22.29 22.30 22.31 22.32 23.1 23.2 23.3 23.4 23.5 23.6 23.7 23.8 23.9 23.10 23.11 23.12 23.13 23.14 23.15 23.16 23.17 23.18 23.19 23.20 23.21 23.22 23.23 23.24 23.25 23.26 23.27 23.28 23.29 23.30 23.31 23.32 23.33 23.34 24.1 24.2 24.3 24.4 24.5 24.6 24.7 24.8 24.9 24.10 24.11 24.12 24.13 24.14 24.15 24.16 24.17 24.18 24.19 24.20 24.21 24.22 24.23 24.24 24.25 24.26 24.27 24.28 24.29 24.30 24.31
24.32
25.1 25.2 25.3 25.4 25.5 25.6 25.7 25.8 25.9 25.10 25.11 25.12 25.13 25.14 25.15 25.16 25.17 25.18 25.19 25.20 25.21 25.22 25.23 25.24 25.25
25.26
25.27 25.28 25.29 25.30 25.31 25.32 25.33 25.34 26.1 26.2
26.3
26.4 26.5 26.6 26.7 26.8 26.9 26.10 26.11 26.12 26.13 26.14 26.15 26.16 26.17 26.18 26.19 26.20 26.21 26.22 26.23 26.24 26.25 26.26 26.27 26.28 26.29 26.30 26.31 26.32 26.33 27.1 27.2 27.3 27.4 27.5 27.6 27.7 27.8 27.9 27.10 27.11 27.12
27.13
27.14 27.15 27.16 27.17 27.18 27.19 27.20 27.21 27.22 27.23 27.24 27.25 27.26 27.27 27.28 27.29 27.30 27.31 27.32 27.33 28.1 28.2 28.3 28.4 28.5 28.6 28.7 28.8 28.9 28.10 28.11 28.12 28.13 28.14 28.15 28.16 28.17 28.18 28.19 28.20 28.21 28.22 28.23 28.24 28.25 28.26 28.27 28.28 28.29 28.30 28.31 28.32 28.33 29.1 29.2 29.3 29.4 29.5 29.6 29.7 29.8 29.9 29.10 29.11 29.12 29.13 29.14 29.15 29.16 29.17 29.18
29.19
29.20 29.21 29.22 29.23 29.24 29.25
29.26
29.27 29.28 29.29 29.30 29.31 29.32 30.1 30.2 30.3 30.4 30.5 30.6 30.7 30.8 30.9 30.10 30.11 30.12 30.13 30.14 30.15 30.16 30.17 30.18 30.19 30.20 30.21 30.22 30.23 30.24 30.25 30.26 30.27 30.28 30.29 30.30 30.31
30.32
31.1 31.2 31.3 31.4 31.5 31.6 31.7 31.8 31.9 31.10 31.11 31.12 31.13 31.14 31.15 31.16 31.17 31.18 31.19 31.20 31.21 31.22 31.23 31.24 31.25 31.26 31.27 31.28 31.29 31.30 31.31 31.32 31.33
32.1
32.2 32.3 32.4 32.5 32.6 32.7 32.8 32.9 32.10 32.11 32.12 32.13 32.14 32.15 32.16 32.17 32.18 32.19 32.20 32.21 32.22 32.23 32.24 32.25 32.26 32.27 32.28 32.29 32.30 32.31 33.1 33.2 33.3 33.4 33.5
33.6
33.7 33.8 33.9
33.10

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, 1g, 2, 2b, 3, 5, 7, 8, by adding subdivisions; proposing
coding for new law in Minnesota Statutes, chapter 216B; repealing Minnesota
Statutes 2018, section 216B.241, subdivisions 1, 1b, 2c, 4, 10.

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 19 may be cited as the "Energy Conservation and Optimization Act of
2020."
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
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 the public
utility's 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 investment in an innovative clean energy technology is likely to provide benefits
to customers that exceed the technology's cost;
new text end

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

new text begin (4) the project complies with the spending limits under paragraph (d).
new text end

new text begin (d) Over any three consecutive years, a public utility must not spend more on innovative
clean technologies under this section than:
new text end

new text begin (1) for a public utility providing service to 200,000 or more retail Minnesota customers,
$6,000,000; or
new text end

new text begin (2) for a public utility providing service to fewer than 200,000 retail Minnesota customers,
$3,000,000.
new text end

new text begin (e) 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 public utility under this section, up to the amounts
allowed under paragraph (d).To the extent the public 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

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
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 provides significant benefits to the consumers and to the utility system as a whole.
new text endThe
legislature further finds that cost-effective energy savingsnew text begin and load management programsnew 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 of progress made toward the
statewide energy-savings goal under paragraph (a) in the annual report required under section
216B.241, subdivision 1c, and make 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 estimating 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

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 4.

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

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin For the purposes of section 216B.16, subdivision 6b, and
sections 216B.2401 to 216B.241, the following terms have the meanings given them.
new text end

new text begin Subd. 2. new text end

new text begin Consumer-owned utility. new text end

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

new text begin Subd. 3. new text end

new text begin Cumulative lifetime savings. new text end

new text begin "Cumulative lifetime savings" means the total
electric energy or natural gas savings in a given year from energy conservation improvements
installed in that given year and energy conservation improvements installed in previous
years that are still in operation.
new text end

new text begin Subd. 4. new text end

new text begin Efficient fuel-switching improvement. new text end

new text begin "Efficient fuel-switching improvement"
means a project that:
new text end

new text begin (1) replaces a fuel used by a customer with electricity or natural gas delivered at retail
by a utility subject to section 216B.2403 or 216B.241;
new text end

new text begin (2) 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;
new text end

new text begin (3) 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;
and
new text end

new text begin (4) requires the installation of equipment that utilizes electricity or natural gas, resulting
in a reduction or elimination of the previous fuel used.
new text end

new text begin 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 Subd. 5. new text end

new text begin Energy conservation. new text end

new text begin "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 Subd. 6. new text end

new text begin Energy conservation improvement. new text end

new text begin "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 or used
as thermal energy, but does not include electric utility infrastructure projects approved by
the commission under section 216B.1636.
new text end

new text begin Subd. 7. new text end

new text begin Energy efficiency. new text end

new text begin "Energy efficiency" means measures or programs, including
energy conservation measures or programs, that (1) target consumer behavior, equipment,
processes, or devices, (2) are designed to produce a decrease in consumption of electricity
or natural gas on either an absolute or per unit of production basis, and (3) do not reduce
the quality or level of service provided to the energy consumer.
new text end

new text begin Subd. 8. new text end

new text begin Fuel. new text end

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

new text begin Subd. 9. new text end

new text begin Fuel neutral. new text end

new text begin "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 Subd. 10. new text end

new text begin Gross annual retail energy sales. new text end

new text begin "Gross annual retail energy sales" means
a utility's annual electric sales to all Minnesota retail customers, 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 electric sales prior to December 31, 2032, that are associated with a
utility's program, rate, or tariff for electric vehicle charging based on a methodology and
assumptions developed by the department in consultation with interested stakeholders no
later than December 31, 2020. After December 31, 2032, incremental sales to electric
vehicles must be included in calculating a utility's gross retail sales.
new text end

new text begin Subd. 11. new text end

new text begin Investments and expenses of a public utility. new text end

new text begin "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 Subd. 12. new text end

new text begin Large customer facility. new text end

new text begin "Large customer facility" means all buildings,
structures, equipment, and installations at a single site that in aggregate: (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 include
peak energy demand from the large customer facility's mining processing operations.
new text end

new text begin Subd. 13. new text end

new text begin Large energy facility. new text end

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

new text begin Subd. 14. new text end

new text begin Lifetime energy savings. new text end

new text begin "Lifetime energy savings" means the amount of
savings a particular energy conservation improvement is projected to produce over the
improvement's effective useful lifetime.
new text end

new text begin Subd. 15. new text end

new text begin Load management. new text end

new text begin "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 a customer's
net annual energy consumption is also energy conservation.
new text end

new text begin Subd. 16. new text end

new text begin Low-income household. new text end

new text begin "Low-income household" means a household whose
household income is 60 percent or less of the state median household income.
new text end

new text begin Subd. 17. new text end

new text begin Low-income programs. new text end

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

new text begin Subd. 18. new text end

new text begin Member. new text end

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

new text begin Subd. 19. new text end

new text begin Multifamily building. new text end

new text begin "Multifamily building" means a residential building
containing five or more dwelling units.
new text end

new text begin Subd. 20. new text end

new text begin Preweatherization measure. new text end

new text begin "Preweatherization measure" means an
improvement that is necessary to allow energy conservation improvements to be installed
in a home.
new text end

new text begin Subd. 21. new text end

new text begin Qualifying utility. new text end

new text begin "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 Subd. 22. new text end

new text begin Waste heat recovered and used as thermal energy. new text end

new text begin "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 Subd. 23. new text end

new text begin Waste heat recovery converted into electricity. new text end

new text begin "Waste heat recovery
converted into electricity" means an energy recovery process that converts to electricity
energy from the heat of exhaust stacks or pipes used for engines or manufacturing or
industrial processes, or from the reduction of high pressure in water or gas pipelines, that
would otherwise be lost.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
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, to 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
consumer-owned 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, that result in increased efficiency greater than would have occurred through normal
maintenance activity;
new text end

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

new text begin (4) 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.
new text end

new text begin (b) The energy-savings goals specified in this section must be calculated based on
weather-normalized sales averaged over the most recent three years. 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 only be used to meet one
year's goal.
new text end

new text begin (c) 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 that exceed the
minimum level established under this subdivision if cost-effective opportunities and funding
are available, considering other potential investments the consumer-owned utility intends
to make to benefit customers during the term of the plan filed under subdivision 3.
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, and at least every three years thereafter, 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, load management, and other
measures the consumer-owned utility intends to offer to achieve the utility's energy savings
goal.
new text end

new text begin (b) A plan's term may be up to three years. A multiyear plan must identify the total
energy savings and energy savings resulting from energy conservation improvements that
are projected to be achieved in each year of the plan. A multiyear plan that does not, in each
year of the plan, meet both the minimum energy savings goal from energy conservation
improvements and the total energy savings goal of 1.5 percent, or lower goals adjusted by
the commissioner under paragraph (k), must:
new text end

new text begin (1) state why each goal is projected to be unmet; and
new text end

new text begin (2) demonstrate how the consumer-owned utility proposes to meet both goals on an
average basis over the duration of the plan.
new text end

new text begin (c) A plan filed under this subdivision must provide:
new text end

new text begin (1) for existing programs, 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; and
new text end

new text begin (2) for new programs, a preliminary analysis upon which the program will proceed, in
parallel with further development of assumptions and standards.
new text end

new text begin (d) The commissioner must evaluate a plan filed under this subdivision based on the
plan's likelihood to achieve the energy-savings goals established in subdivision 2. The
commissioner may make recommendations to a consumer-owned utility regarding ways to
increase the effectiveness of the consumer-owned utility's energy conservation activities
and programs under this subdivision. The commissioner may recommend that a
consumer-owned utility implement a cost-effective energy conservation program, including
an energy conservation program suggested by an outside source such as a political
subdivision, nonprofit corporation, or community organization.
new text end

new text begin (e) 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. An annual filing made in the last year of a plan must contain a new plan that
complies with this section.
new text end

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

new text begin (g) A consumer-owned utility may annually spend and invest up to ten percent of the
total amount spent and invested on energy conservation improvements on research and
development projects that meet the definition of energy conservation improvement.
new text end

new text begin (h) A generation and transmission cooperative electric association or municipal power
agency that provides energy services to consumer-owned utilities may file a plan under this
subdivision on behalf of the consumer-owned utilities to which the association or agency
provides energy services and may make investments, offer conservation programs, and
otherwise fulfill the energy-savings goals and reporting requirements of this subdivision
for those consumer-owned utilities on an aggregate basis.
new text end

new text begin (i) 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 exempted under section 216B.241, subdivision 1a.
new text end

new text begin (j) The energy conservation and optimization plan of a consumer-owned utility may
include activities to improve energy efficiency in the public schools served by the utility.
These activities may include programs to:
new text end

new text begin (1) increase the efficiency of the school's lighting and heating and cooling systems;
new text end

new text begin (2) recommission buildings;
new text end

new text begin (3) train building operators; and
new text end

new text begin (4) provide opportunities to educate students, teachers, and staff regarding energy
efficiency measures implemented at the school.
new text end

new text begin (k) A consumer-owned utility may request that the commissioner adjust its minimum
goal for energy savings from energy conservation improvements under subdivision 2,
paragraph (a), for the duration of the plan filed under this subdivision. The request must be
made by January 1 of the year when the consumer-owned utility must file a plan under this
subdivision. 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 consumer-owned utility's service territory;
new text end

new text begin (5) the cost-effectiveness and quality of the energy conservation programs offered by
the consumer-owned 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 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 an average of one percent per year over
the consecutive years of the plan's duration, including the year the minimum energy savings
goal is adjusted.
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, a consumer-owned utility that the commissioner determines falls short of the
minimum energy savings goal from energy conservation improvements established in
subdivision 2, paragraph (a), for three consecutive years during which the utility has annually
spent on energy conservation improvements less than 1.5 percent of its gross operating
revenues for an electric utility or less than 0.5 percent of its gross operating revenues for a
natural gas utility, must spend no less than the following amounts for energy conservation
improvements:
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 commissioner may not impose the spending requirement under this subdivision
if the commissioner has determined that the utility has followed the commissioner's
recommendations, if any, provided under subdivision 3, paragraph (d).
new text end

new text begin (c) Upon request of a consumer-owned utility, the commissioner may reduce the amount
or duration of the spending requirement imposed under this subdivision, or both, if the
commissioner determines that the consumer-owned utility's failure to maintain the minimum
energy savings goal is the result of:
new text end

new text begin (1) a natural disaster or other emergency that is declared by the executive branch through
an emergency executive order that affects the consumer-owned utility's service area;
new text end

new text begin (2) a unique load distribution experienced by the consumer-owned utility; or
new text end

new text begin (3) other factors that the commissioner determines justifies a reduction.
new text end

new text begin (d) Unless the commissioner reduces the duration of the spending requirement under
paragraph (c), the spending requirement under this subdivision 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) A
consumer-owned utility subject to this section must provide energy conservation programs
to low-income households. The commissioner must evaluate a consumer-owned utility's
plans under this section by considering the consumer-owned utility's historic spending on
energy conservation programs directed to low-income households, the rate of customer
participation in and the energy savings resulting from those programs, and the number of
low-income persons residing in the consumer-owned utility's service territory. A municipal
utility that furnishes natural gas service must spend at least 0.2 percent of the municipal
utility's 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 0.2 percent of the
consumer-owned utility's 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 aggregate
gross operating revenue from the sale of electricity to residential customers in Minnesota
by all of the association's member distribution cooperatives.
new text end

new text begin (b) To meet all or part of the spending requirements of paragraph (a), a consumer-owned
utility may contribute money to the energy and conservation account established in section
216B.241, subdivision 2a. An energy conservation optimization plan must state the amount
of contributions the consumer-owned utility plans to make to the energy and conservation
account. Contributions to the account must be used for energy conservation programs serving
low-income households, including renters, located in the service area of the consumer-owned
utility making the contribution. 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 funded through contributions 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 providing energy and weatherization assistance to
low-income households. 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
consumer-owned utility 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 the required
spending under this subdivision if the consumer-owned 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 to participate in energy conservation programs provided to
low-income households. Notwithstanding the definition of low-income household in section
216B.2402, a consumer-owned utility or association may apply the most recent guidelines
published by the department for purposes of determining the eligibility of multifamily
buildings to participate in low-income programs. The commissioner must convene a
stakeholder group to review and update these guidelines by July 1, 2021, and at least once
every five years thereafter. The stakeholder group must include but is not limited to
representatives of public utilities; municipal electric or gas utilities; electric 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 energy
conservation programs may be spent on preweatherization measures. A consumer-owned
utility is prohibited from claiming energy savings from preweatherization measures toward
the consumer-owned utility's energy savings goal.
new text end

new text begin (g) The commissioner must, by order, establish a list of preweatherization measures
eligible for inclusion in low-income energy conservation programs no later than March 15,
2021.
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 consumer-owned utility may
elect to contribute money to the Healthy AIR account to provide preweatherization measures
for households eligible for weatherization assistance from 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 by a
consumer-owned utility 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 section; 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 preweatherization measure or energy conservation
improvement.
new text end

new text begin (a) A preweatherization measure or energy conservation improvement
installed in a building under this section, excluding a system owned by a 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 consumer-owned utility in case of a loan to the building
owner for the improvement.
new text end

new text begin (b) A consumer-owned utility has no liability for loss, damage, or injury directly or
indirectly caused by a preweatherization measure or energy conservation improvement,
unless a consumer-owned utility is determined to have been negligent 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 consumer-owned utility, the reduction in emissions
must be measured based on the hourly emissions profile of the consumer-owned utility or
the utility's electricity supplier, as reported in the most recent resource plan approved by
the commission under section 216B.2422. If the hourly emissions profile is not available,
the commissioner must develop a method consumer-owned utilities must use to estimate
that value;
new text end

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

new text begin (4) is installed and operated in a manner that improves the consumer-owned 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 losses in generation, transmission,
and distribution, and expressed on a fuel-neutral basis.
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 under this section to the department using the department's electronic filing
system. The commissioner may approve an exemption from this requirement if an affected
consumer-owned utility is unable to submit filings via the department's electronic filing
system. All other interested parties must submit filings to the department via the department's
electronic filing system whenever practicable but may also file by personal delivery or by
mail.
new text end

new text begin (b) The submission of a document to the department's electronic filing system constitutes
service on the department. If a department rule requires service of a notice, order, or other
document by the department, a consumer-owned utility, or an 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 consumer-owned
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
consumer-owned 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 EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
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 deleted text beginthe investment and
expenditure requirements of paragraph (a)
deleted text endnew text begin contributing to investments and expenditures
made under an energy and conservation optimization plan filed under subdivision 2 or
section 216B.2403, subdivision 3,
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 deleted text beginthe investment and expenditure requirements of paragraph (a)deleted text endnew text begin contributing
to investments and expenditures made under an energy and conservation optimization plan
filed under subdivision 2 or section 216B.2403, subdivision 3,
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) 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 end

deleted text begin (e)deleted text endnew text begin (c)new text end A public utilitynew text begin, consumer-owned utility,new text end 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 (d) 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

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
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 deleted text beginimprovement expendituresdeleted text endnew text begin improvementsnew text end and
shall evaluate an energy conservation improvement program on how well it meets the goals
set.

(b) deleted text beginEach individualdeleted text end new text beginA public 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). 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 new text beginonly new text endbe used deleted text beginonly fordeleted text endnew text begin to meetnew text end 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.

new text begin (d)new text end 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.

deleted text begin A utility or association may include in its energy conservation plan energy savings from deleted text end new text begin
The balance of the 1.75 percent annual energy savings goal may be achieved through energy
savings from:
new text end

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

new text begin (2)new text end electric utility infrastructure projects approved by the commission under section
216B.1636 new text beginthat result in increased efficiency greater than would have occurred through
normal maintenance activity;
new text endor deleted text beginwaste 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. Energy savings from electric utility
infrastructure projects, as defined in section 216B.1636, may be included in the energy
conservation plan of a municipal utility or cooperative electric association. Electric utility
infrastructure projects must result in increased energy efficiency greater than that which
would have occurred through normal maintenance activity
deleted text end

new text begin (3) 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
new text end.

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 considernew text begin: (1)new text end the
costs and benefits to ratepayers, the utility, participants, and societydeleted text begin. In addition, the
commissioner shall consider
deleted text endnew text begin; (2)new text end the rate at which deleted text beginan association or municipaldeleted text endnew text begin a publicnew text end
utility is increasing new text beginboth new text endits energy savings and its expenditures on energy conservationnew text begin;
and (3) 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 estimate progress
made 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

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new 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 beginfiled under 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 new text beginby
utilities
new text endwhen 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 reported in plans submitted under this section and section 216B.2403.
new text end

new text begin (b)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 appropriatedeleted text begin, in their service territoriesdeleted text end. 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.

new text begin (c)new text end 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.

new text begin (d)new text end 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.

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

new text begin (e) The commissioner must work with stakeholders to develop technical guidelines that
public utilities and consumer-owned utilities must use to:
new text end

new text begin (1) determine whether deployment of a fuel-switching improvement meets the criteria
established in subdivision 11, paragraph (e), or section 216B.2403, subdivision 8, as
applicable; and
new text end

new text begin (2) calculate the amount of energy saved by deployment of a fuel-switching improvement.
new text end

new text begin The guidelines must be issued by the commissioner by order no later than March 15, 2021,
and must be updated as the commissioner determines is necessary.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
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.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 10.

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


Subd. 1g.

Manner of filing and service.

(a) A public utilitydeleted text begin, generation and transmission
cooperative electric association, municipal power agency, cooperative electric association,
and municipal utility
deleted text end shall submit filings to the department via the department's electronic
filing system. The commissioner may approve an exemption from this requirement in the
event an affected new text beginpublic new text endutility deleted text beginor associationdeleted text end is unable to submit filings via the department's
electronic filing system. All other interested parties shall submit filings to the department
via the department's electronic filing system whenever practicable but may also file by
personal delivery or by mail.

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

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 11.

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 new text begina new text endpublic deleted text beginutilitiesdeleted text endnew text begin utilitynew text end 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. deleted text beginThe required
programs must cover no more than a three-year period.
deleted text end

new text begin (b) Anew text end public deleted text beginutilitiesdeleted text endnew text begin utilitynew text end shall filenew text begin an energynew text end conservation deleted text beginimprovement plansdeleted text endnew text begin and
optimization plan
new text end by June 1, on a schedule determined by order of the commissioner, but
at least every three years. deleted text beginPlans receiveddeleted text endnew text begin As provided in subdivisions 11 to 13, 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. The plan must estimate the lifetime energy savings and cumulative
lifetime energy savings projected to be achieved under the plan. A plan filed
new text end 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 (c)new text end The commissioner shall evaluate the deleted text beginprogramdeleted text endnew text begin plannew text end 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 deleted text beginthedeleted text endnew text begin an energy conservationnew text end
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.

deleted text begin (b)deleted text endnew text begin (d)new text end 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

deleted text begin (c)deleted text endnew text begin (e)new text end 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 new text beginpublic new text endutility on research and development projects
that meet the definition of energy conservation improvement deleted text beginin subdivision 1 and that are
funded directly by the public utility
deleted text end.

deleted text begin (d) A public utility may not spend for or invest in energy conservation improvements
that directly benefit a large energy facility or a large electric customer facility for which the
commissioner has issued an exemption pursuant to subdivision 1a, paragraph (b).
deleted text end

new text begin (f)new text end The commissioner shall consider and may require a new text beginpublic new text endutility to undertake deleted text beginadeleted text endnew text begin an
energy conservation
new text end program suggested by an outside source, including a political
subdivision, a nonprofit corporation, or community organization.

deleted text begin (e)deleted text endnew text begin (g)new text end A new text beginpublic new text endutility, a political subdivision, or a nonprofit or community organization
that has suggested deleted text beginadeleted text endnew text begin an energy conservationnew text end program, the attorney general acting on behalf
of consumers and small business interests, or a new text beginpublic new text endutility customer that has suggested deleted text beginadeleted text endnew text begin
an energy conservation
new text end 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 new text beginenergy conservation new text endprogram
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 deleted text beginadeleted text endnew text begin an energy conservationnew text end program
is not in the public interest.

deleted text begin (f)deleted text endnew text begin (h)new text end The commissioner may order a public utility to include, with the filing of the
new text begin public new text endutility's annual status report, the results of an independent audit of the new text beginpublic new text endutility'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 new text beginpublic new text endutility. The audit must
specify the energy savings or increased efficiency in the use of energy within the service
territory of the new text beginpublic new text endutility that is the result of the new text beginpublic utility's new text endspending and investments.
The audit must evaluate the cost-effectiveness of the new text beginpublic new text endutility'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 (i) The energy conservation and optimization plan of each public utility subject to this
section must include activities to improve energy efficiency in public schools served by the
utility. As applicable to each public utility, at a minimum the activities must include programs
to increase the efficiency of the school's lighting and heating and cooling systems, and to
provide for building recommissioning, building operator training, and opportunities to
educate students, teachers, and staff regarding energy efficiency measures implemented at
the school.
new text end

new text begin (j) The commissioner may require investments or spending greater than the amounts
proposed in a plan filed under this subdivision or section 216C.17 for a public utility whose
most recent advanced forecast required under section 216B.2422 projects a peak demand
deficit of 100 megawatts or more within five years under midrange forecast assumptions.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 12.

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


Subd. 2b.

Recovery of expenses.

new text begin(a) new text endThe 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 the energy and
conservation account unless the recovery would be inconsistent with a financial incentive
proposal approved by the commission. In addition,
deleted text end

new text begin (b)new text end A new text beginpublic new text endutility may file annually, or the Public Utilities Commission may require
the new text beginpublic new text endutility 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 new text beginpublic new text endutility for real and personal property taxes, fees, and
permits, the amounts of which the new text beginpublic new text endutility 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.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 13.

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


Subd. 3.

Ownership of new text beginpreweatherization measure or new text endenergy conservation
improvement.

deleted text beginAndeleted text endnew text begin A preweatherization measure ornew text end energy conservation improvement made
to or installed in a building in accordance with this section, except systems owned by deleted text beginthedeleted text end new text begina
public
new text endutility 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 new text beginpublic new text endutility in case of a loan to the building owner.
The new text beginpublic new text endutility has no liability for loss, damage or injury caused directly or indirectly by
deleted text begin andeleted 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.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 14.

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


Subd. 5.

Efficient lighting program.

(a) Each public utilitydeleted text begin, cooperative electric
association, and municipal
deleted text endnew text begin and consumer-ownednew text end utility that provides electric service to
retail customers and is subject to subdivision 1cnew text begin or section 216B.2403new text end shall include as part
of its conservation improvement activities a program to strongly encourage the use of
deleted text begin fluorescent and high-intensity discharge lampsdeleted text endnew text begin LEDsnew 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 deleted text beginfluorescent or high-intensity dischargedeleted text endnew text begin LEDnew text end 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,
deleted text begin a cooperative electric association, or a municipaldeleted text endnew text begin or a consumer-ownednew text end utility that provides
electric service at retail to customersnew text begin,new text end 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 utilitydeleted text begin, cooperative electric association, or municipalitydeleted text endnew text begin or
consumer-owned utility
new text end 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 utilitydeleted text begin, cooperative electric association, or municipaldeleted text endnew text begin or consumer-ownednew text end
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 utilitydeleted text begin, cooperative electric association, or municipaldeleted text endnew text begin
or consumer-owned
new text end utility for promotion and deleted text begincollection of fluorescent and high-intensity
discharge
deleted text endnew text begin to collect LEDnew text end 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

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 15.

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 endnew text begin energy conservationnew text end
programsnew text begin to 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 deleted text beginfordeleted text endnew text begin achieved bynew text end 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 0.8new 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 accountnew text begin established under subdivision 2anew text end.
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 new text beginenergy conservation new text endprograms to utilize
deleted text begin money contributeddeleted text endnew text begin contributions madenew text end 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
deleted text begin engaged indeleted text end providing energy and weatherization assistance to low-income deleted text beginpersonsdeleted text endnew text begin
households
new text end. deleted text beginMoney contributeddeleted text endnew text begin Contributions madenew text end to the energy and conservation account
under paragraph (b) must provide programs for low-income deleted text beginpersonsdeleted text endnew text begin householdsnew text end, including
low-income renters, in the service territory of the new text beginpublic new text endutility 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 deleted text begin(g)deleted text endnew text begin (f)new text end. The commissioner may contract
with a political subdivision, nonprofit or community organization, public utility, deleted text beginmunicipality,deleted text end
or deleted text begincooperative electric associationdeleted text endnew text begin consumer-owned utilitynew text end 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 deleted text beginor associationdeleted text end 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 to participate in low-income energy conservation 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 public
utility 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 representatives of public utilities as defined in section 216B.02, subdivision 4; municipal
electric or gas utilities; electric 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. A public utility is prohibited from claiming energy savings
from preweatherization measures toward the public utility's energy savings goal.
new text end

new text begin (g) The commissioner must, by order, establish a list of preweatherization measures
eligible for inclusion in low-income programs no later than March 15, 2021.
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 account counts toward: (1) the minimum low-income
spending requirement in 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

deleted text begin (e)deleted text endnew text begin (i)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 new text beginpublic new text endutility 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 new text beginpublic new text endutility. The energy and demand savings may, at the discretion of the new text beginpublic new text endutility,
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.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 16.

Minnesota Statutes 2018, section 216B.241, subdivision 8, is amended to read:


Subd. 8.

Assessment.

The commission or department may assessnew text begin publicnew text end utilities subject
to this section in proportion to their respective gross operating revenue from sales of gas or
electric service within the state during the last calendar year to carry out the purposes of
subdivisions 1d, 1e, and 1f. Those assessments are not subject to the cap on assessments
provided by section 216B.62, or any other law.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 17.

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; electric utilities. new text end

new text begin (a)
A public utility providing electric service at retail may include in the plan required under
subdivision 2 programs to implement efficient fuel-switching improvements or combinations
of energy conservation improvements, fuel-switching improvements, and load management.
For each program, the public utility must provide a proposed budget, an analysis of the
program's cost-effectiveness, 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 determines the improvements meet the requirements of paragraph (d).
For fuel-switching improvements that require 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, if the department determines the primary purpose
and effect of the program is energy efficiency.
new text end

new text begin (c) A public utility may file a rate schedule with the commission that provides for annual
cost recovery of reasonable and prudent costs to implement and promote efficient
fuel-switching programs. The commission may not approve a financial incentive to encourage
efficient fuel-switching programs operated by a public utility providing electric service.
new text end

new text begin (d) 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 reduction 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 (e) For purposes of this subdivision, "source energy" means the total amount of primary
energy required to deliver energy services, adjusted for losses in generation, transmission,
and distribution, and expressed on a fuel-neutral basis.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 18.

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


new text begin Subd. 12. new text end

new text begin Programs for efficient fuel-switching improvements; natural gas
utilities.
new text end

new text begin (a) As part of a public utility's plan filed under subdivision 2, a public utility that
provides natural gas service to Minnesota retail customers may propose one or more programs
to install electric technologies that reduce the consumption of natural gas by the utility's
retail customers as an energy conservation improvement. The commissioner may approve
a proposed program if the commissioner, applying the technical criteria developed under
section 216B.241, subdivision 1d, paragraph (b), determines that:
new text end

new text begin (1) the electric technology to be installed meets the criteria established under section
216B.241, subdivision 11, paragraph (d), clauses (1) and (2); and
new text end

new text begin (2) the program is cost-effective, considering the costs and benefits to ratepayers, the
utility, participants, and society.
new text end

new text begin (b) If a program is approved by the commission under this subdivision, the public utility
may count the program's energy savings toward its energy savings goal under section
216B.241, subdivision 1c. Notwithstanding section 216B.2402, paragraph (e), efficient
fuel-switching achieved through programs approved under this subdivision is energy
conservation.
new text end

new text begin (c) A public utility may file rate schedules with the commission that provide annual
cost-recovery for programs approved by the department under this subdivision, including
reasonable and prudent costs to implement and promote the programs.
new text end

new text begin (d) The commission may approve, modify, or reject a proposal made by the department
or a utility for an incentive plan to encourage efficient fuel-switching programs approved
under this subdivision, applying the considerations established under section 216B.16,
subdivision 6c, paragraphs (b) and (c). The commission may approve a financial incentive
mechanism that is calculated based on the combined energy savings and net benefits that
the commission has determined have been achieved by a program approved under this
subdivision, provided the commission determines that the financial incentive mechanism
is in the ratepayers' interest.
new text end

new text begin (e) A public utility is not eligible for a financial incentive for an efficient fuel-switching
program under this subdivision in any year in which the utility achieves energy savings
below one percent of gross annual retail energy sales, excluding savings achieved through
fuel-switching programs.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 19.

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


new text begin Subd. 13. new text end

new text begin Cost-effective load management programs. new text end

new text begin (a) A public utility may include
in the utility's plan required under subdivision 2 programs to implement load management
activities, or combinations of energy conservation improvements, fuel-switching
improvements, and load management activities. For each program the public utility must
provide a proposed budget, cost-effectiveness analysis, and estimated net energy and demand
savings.
new text end

new text begin (b) The commissioner may approve a proposed program if the commissioner determines
that the program is cost-effective, considering the costs and benefits to ratepayers, the utility,
participants, and society.
new text end

new text begin (c) A public utility providing retail electric service to Minnesota customers may file rate
schedules with the commission that provide for annual cost recovery of reasonable and
prudent costs incurred to implement and promote cost-effective load management programs
approved by the department under this subdivision.
new text end

new text begin (d) The commission may approve, modify, or reject a proposal made by the department
or a public utility for an incentive plan to encourage investments in load management
programs if the commission determines that the program:
new text end

new text begin (1) is needed to increase the public utility's investment in cost-effective load management;
new text end

new text begin (2) is compatible with the interest of the public utility's ratepayers; and
new text end

new text begin (3) links the incentive to the public utility's performance in achieving cost-effective load
management.
new text end

new text begin (e) The commission may structure an incentive plan to encourage cost-effective load
management programs as an asset on which a public utility earns a rate of return at a level
the commission determines is reasonable and in the public interest.
new text end

new text begin (f) The commission may include the net benefits from a load management activity
integrated with an energy efficiency program approved under this section in the net benefits
of the energy efficiency program for purposes of a financial incentive program under section
216B.16, subdivision 6c, if the department determines the primary purpose of the load
management activity is energy efficiency.
new text end

new text begin (g) A public utility is not eligible for a financial incentive for a load management program
in any year in which the utility achieves energy savings below one percent of gross annual
retail energy sales, excluding savings achieved through load management programs.
new text end

new text begin (h) The commission may include net benefits from a particular load management activity
in an incentive plan under this subdivision or section 216B.16, subdivision 6c, but not both.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 20. new text beginREPEALER.
new text end

new text begin Minnesota Statutes 2018, section 216B.241, subdivisions 1, 1b, 2c, 4, and 10, new text end new text begin are
repealed.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

APPENDIX

Repealed Minnesota Statutes: H4502-1

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. 1b.

Conservation improvement by cooperative association or municipality.

(a) This subdivision applies to:

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

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

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

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

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

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

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

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

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

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

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

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

Subd. 2c.

Performance incentives.

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

Subd. 4.

Federal law prohibitions.

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

Subd. 10.

Waste heat recovery; thermal energy distribution.

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 towards a utility's natural gas or electric energy savings goals, subject to department approval.