Office of the Revisor of Statutes
Minnesota Session Laws - 1999, Regular Session
Key: (1) language to be deleted (2) new language
CHAPTER 140-S.F.No. 1357
An act relating to utilities; modifying conservation
improvement provisions; amending Minnesota Statutes
1998, sections 216B.16, subdivision 6b; and 216B.241,
subdivisions 1, 1a, 1b, 2, 2a, and 2b.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
Section 1. Minnesota Statutes 1998, section 216B.16,
subdivision 6b, is amended to read:
Subd. 6b. [ENERGY CONSERVATION IMPROVEMENT.] (a) Except as
otherwise provided in this subdivision, all investments and
expenses of a public utility as defined in section 216B.241,
subdivision 1, paragraph (d) (e), incurred in connection with
energy conservation improvements shall be recognized and
included by the commission in the determination of just and
reasonable rates as if the investments and expenses were
directly made or incurred by the utility in furnishing utility
service.
(b) After December 31, 1999, investments and expenses for
energy conservation improvements shall not be included by the
commission in the determination of just and reasonable electric
and gas rates for retail electric and gas service provided to
large electric customer facilities that have been exempted by
the commissioner of the department of public service pursuant to
section 216B.241, subdivision 1a, paragraph (b). However, no
public utility shall be prevented from recovering its investment
in energy conservation improvements from all customers that were
made on or before December 31, 1999, in compliance with the
requirements of section 216B.241.
(c) The commission may permit a public utility to file rate
schedules providing for annual recovery of the costs of energy
conservation improvements. These rate schedules may be
applicable to less than all the customers in a class of retail
customers if necessary to reflect the differing minimum spending
requirements of section 216B.241, subdivision 1a. After
December 31, 1999, the commission shall allow a public utility,
without requiring a general rate filing under this section, to
reduce the electric and gas rates applicable to large electric
customer facilities that have been exempted by the commissioner
of the department of public service pursuant to section
216B.241, subdivision 1a, paragraph (b), by an amount that
reflects the elimination of energy conservation improvement
investments or expenditures for those facilities required on or
before December 31, 1999. In the event that the commission has
set electric or gas rates based on the use of an accounting
methodology that results in the cost of conservation
improvements being recovered from utility customers over a
period of years, the rate reduction may occur in a series of
steps to coincide with the recovery of balances due to the
utility for conservation improvements made by the utility on or
before December 31, 1999.
Sec. 2. Minnesota Statutes 1998, section 216B.241,
subdivision 1, is amended to read:
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 public service.
(c) "Customer facility" means all buildings, structures,
equipment, and installations at a single site.
(d) "Department" means the department of public service.
(d) (e) "Energy conservation improvement" means the
purchase or installation of a device, method, or material, or
project that:
(1) reduces consumption of or increases efficiency in the
use of electricity or natural gas, including, but not limited to:
(1) insulation and ventilation;,
(2) storm or thermal doors or windows;,
(3) caulking and weatherstripping;,
(4) furnace efficiency modifications;,
(5) thermostat or lighting controls;,
(6) awnings;, or
(7) systems to turn off or vary the delivery of energy. The
term "energy conservation improvement" includes a device or
method that;
(2) creates, converts, or actively uses energy from
renewable sources such as solar, wind, and biomass, provided
that the device or method conforms with national or state
performance and quality standards whenever applicable;
(3) seeks to provide energy savings through reclamation or
recycling and that is used as part of the infrastructure of an
electric generation, transmission, or distribution system within
the state or a natural gas distribution system within the state;
or
(4) provides research or development of new means of
increasing energy efficiency or conserving energy or research or
development of improvement of existing means of increasing
energy efficiency or conserving energy.
(e) (f) "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.
(g) "Large electric customer facility" means a customer
facility that imposes 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, and for which
electric services are provided at retail on a single bill by a
utility operating in the state.
Sec. 3. Minnesota Statutes 1998, section 216B.241,
subdivision 1a, is amended to read:
Subd. 1a. [INVESTMENT, EXPENDITURE, AND CONTRIBUTION;
REGULATED UTILITIES PUBLIC UTILITY.] (a) For purposes of this
subdivision and subdivision 2, "public utility" has the meaning
given it in section 216B.02, subdivision 4. Each public utility
shall spend and invest for energy conservation improvements
under this subdivision and subdivision 2 the following amounts:
(1) for a utility that furnishes gas service, .5 percent of
its gross operating revenues from service provided in the state;
(2) for a utility that furnishes electric service, 1.5
percent of its gross operating revenues from service provided in
the state; and
(3) for a utility that furnishes electric service and that
operates a nuclear-powered electric generating plant within the
state, two percent of its gross operating revenues from service
provided in the state.
For purposes of this paragraph (a), "gross operating
revenues" do not include revenues from large electric customer
facilities exempted by the commissioner of the department of
public service pursuant to paragraph (b).
(b) The owner of a large electric customer facility may
petition the commissioner of the department of public service to
exempt both electric and gas utilities serving the large energy
customer facility from the investment and expenditure
requirements of paragraph (a) with respect to retail revenues
attributable to the facility. At a minimum, the petition must
be supported by evidence relating to competitive or economic
pressures on the customer and a showing by the customer of
reasonable efforts to identify, evaluate, and implement
cost-effective conservation improvements at the facility. If a
petition is filed on or before October 1 of any year, the order
of the commissioner to exempt revenues attributable to the
facility can be effective no earlier than January 1 of the
following year. The commissioner shall not grant an exemption
if the commissioner determines that granting the exemption is
contrary to the public interest. The commissioner may, after
investigation, rescind any exemption granted under this
paragraph upon a determination that cost-effective energy
conservation improvements are available at the large electric
customer facility. For the purposes of this paragraph,
cost-effective means that the projected total cost of the energy
conservation improvement at the large electric customer facility
is less than the projected present value of the energy and
demand savings resulting from the energy conservation
improvement. For the purposes of investigations by the
commissioner under this paragraph, the owner of any large
electric customer facility shall, upon request, provide the
commissioner with updated information comparable to that
originally supplied in or with the owner's original petition
under this paragraph.
(c) The commissioner may require investments or spending
greater than the amounts required under this subdivision for a
public utility whose most recent advance forecast required under
section 216B.2422 or 216C.17 projects a peak demand deficit of
100 megawatts or greater within five years under mid-range
forecast assumptions.
(d) A public utility or owner of a large electric customer
facility may appeal a decision of the commissioner under this
paragraph (b) or (c) to the commission under subdivision 2. In
reviewing a decision of the commissioner under this paragraph
(b) or (c), the commission shall rescind the decision if it
finds that the required investments or spending will:
(1) not result in cost-effective programs energy
conservation improvements; or
(2) otherwise not be in the public interest.
(c) (e) Each utility shall determine what portion of the
amount it sets aside for conservation improvement will be used
for conservation improvements under subdivision 2 and what
portion it will contribute to the energy and conservation
account established in subdivision 2a. A public utility may
propose to the commissioner to designate that all or a portion
of funds contributed to the account established in subdivision
2a be used for research and development projects. Contributions
must be remitted to the commissioner of public service by
February 1 of each year. Nothing in this subdivision prohibits a
public utility from spending or investing for energy
conservation improvement more than required in this subdivision.
Sec. 4. Minnesota Statutes 1998, section 216B.241,
subdivision 1b, is amended to read:
Subd. 1b. [CONSERVATION IMPROVEMENTS; COOPERATIVES;
MUNICIPALITIES IMPROVEMENT BY COOPERATIVE ASSOCIATION OR
MUNICIPALITY.] (a) This subdivision applies to:
(1) a cooperative electric association that generates and
transmits electricity to associations that provide electricity
at retail including a cooperative electric association not
located in this state that serves associations or others in the
state;
(2) a municipality that provides electric service to retail
customers; and
(3) a municipality with gross operating revenues in excess
of $5,000,000 from sales of natural gas to retail customers.
(b) Each cooperative electric association and municipality
subject to this subdivision shall spend and invest for energy
conservation improvements under this subdivision the following
amounts:
(1) for a municipality, .5 0.5 percent of its gross
operating revenues from the sale of gas and one percent of its
gross operating revenues from the sale of electricity not
purchased from a public utility governed by subdivision 1a or a
cooperative electric association governed by this subdivision,
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 association subject
to this subdivision shall identify and implement energy
conservation improvement spending and investments that are
appropriate for the municipality or association, except that a
municipality or association may not spend or invest for energy
conservation improvements that directly benefit a large electric
customer facility. Each municipality and cooperative electric
association subject to this subdivision may spend and invest
annually up to 15 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. Load management may be used
to meet the requirements of this subdivision if it reduces the
demand for or increases the efficiency of electric services. A
generation and transmission cooperative electric association may
include as spending and investment required under this
subdivision conservation improvement spending and investment by
cooperative electric associations that provide electric service
at retail to consumers and that are served by the generation and
transmission association. By February 1 of each year, each
municipality or cooperative shall report to the commissioner its
energy conservation improvement spending and investments with a
brief analysis of effectiveness in reducing consumption of
electricity or gas. The commissioner shall review each report
and make recommendations, where appropriate, to the municipality
or association to increase the effectiveness of conservation
improvement activities. The commissioner shall also review each
report for whether a portion of the money spent on residential
conservation improvement programs is devoted to programs that
directly address the needs of renters and low-income persons
unless an insufficient number of appropriate programs are
available. For the purposes of this subdivision and subdivision
2, "low-income" means an income of less than 185 percent of the
federal poverty level.
(d) As part of its spending for conservation improvement, a
municipality or association may contribute to the energy and
conservation account. A municipality or association may propose
to the commissioner to designate that all or a portion of funds
contributed to the account be used for research and development
projects. Any amount contributed must be remitted to the
commissioner of public service by February 1 of each year.
Sec. 5. Minnesota Statutes 1998, section 216B.241,
subdivision 2, is amended to read:
Subd. 2. [PROGRAMS.] The commissioner may by rule require
public utilities to make investments and expenditures in energy
conservation improvements, explicitly setting forth the interest
rates, prices, and terms under which the improvements must be
offered to the customers. The required programs must cover a
two-year period. The commissioner shall require at least one
public utility to establish a pilot program to make investments
in and expenditures for energy from renewable resources such as
solar, wind, or biomass and shall give special consideration and
encouragement to programs that bring about significant net
savings through the use of energy-efficient lighting. The
commissioner shall evaluate the program on the basis of
cost-effectiveness and the reliability of technologies
employed. The rules of the department must provide to the
extent practicable for a free choice, by consumers participating
in the program, of the device, method, or 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.
The commissioner may require a utility to make an energy
conservation improvement investment or expenditure whenever the
commissioner finds that the improvement will result in energy
savings at a total cost to the utility less than the cost to the
utility to produce or purchase an equivalent amount of new
supply of energy. The commissioner shall nevertheless ensure
that every public utility operate one or more programs under
periodic review by the department. Load management may be used
to meet the requirements for energy conservation improvements
under this section if it results in a demonstrable reduction in
consumption of energy. Each public utility subject to
subdivision 1a may spend and invest annually up to 15 percent of
the total amount required to be spent and invested on energy
conservation improvements under this section by the utility on
research and development projects that meet the definition of
energy conservation improvement in subdivision 1 and that are
funded directly by the public utility. A public utility may not
spend for or invest in energy conservation improvements that
directly benefit a large electric customer facility for which
the commissioner has issued an exemption pursuant to subdivision
1a, paragraph (b). The commissioner shall consider and may
require a utility to undertake a program suggested by an outside
source, including a political subdivision or a nonprofit or
community organization. No utility may make an energy
conservation improvement under this section to a building
envelope unless:
(1) it is the primary supplier of energy used for either
space heating or cooling in the building;
(2) the commissioner determines that special circumstances,
which that would unduly restrict the availability of
conservation programs, warrant otherwise; or
(3) the utility has been awarded a contract under
subdivision 2a.
The commissioner shall ensure that a portion of the money
spent on residential conservation improvement programs is
devoted to programs that directly address the needs of renters
and low-income persons unless an insufficient number of
appropriate programs are available.
A utility, a political subdivision, or a nonprofit or
community organization that has suggested a program, the
attorney general acting on behalf of consumers and small
business interests, or a utility customer that has suggested a
program and is not represented by the attorney general under
section 8.33 may petition the commission to modify or revoke a
department decision under this section, and the commission may
do so if it determines that the program is not cost-effective,
does not adequately address the residential conservation
improvement needs of low-income persons, has a long-range
negative effect on one or more classes of customers, or is
otherwise not in the public interest. The person petitioning
for commission review has the burden of proof. The commission
shall reject a petition that, on its face, fails to make a
reasonable argument that a program is not in the public interest.
Sec. 6. Minnesota Statutes 1998, section 216B.241,
subdivision 2a, is amended to read:
Subd. 2a. [ENERGY AND CONSERVATION ACCOUNT.] The
commissioner must deposit money contributed under subdivisions
1a and 1b in the energy and conservation account in the general
fund. Money in the account is appropriated to the department
for programs designed to meet the energy conservation needs of
low-income persons and to make energy conservation improvements
in areas not adequately served under subdivision 2, including
research and development projects included in the definition of
energy conservation improvement in subdivision 1. Interest on
money in the account accrues to the account. Using information
collected under section 216C.02, subdivision 1, paragraph (b),
the commissioner must, to the extent possible, allocate enough
money to programs for low-income persons to assure that their
needs are being adequately addressed. The commissioner must
request the commissioner of finance to transfer money from the
account to the commissioner of children, families, and learning
for an energy conservation program for low-income persons. In
establishing programs, the commissioner must consult political
subdivisions and nonprofit and community organizations,
especially organizations engaged in providing energy and
weatherization assistance to low-income persons. At least one
program must address the need for energy conservation
improvements in areas in which a high percentage of residents
use fuel oil or propane to fuel their source of home heating.
The commissioner may contract with a political subdivision, a
nonprofit or community organization, a public utility, a
municipality, or a cooperative electric association to implement
its programs. The commissioner may provide grants to any person
to conduct research and development projects in accordance with
this section.
Sec. 7. Minnesota Statutes 1998, section 216B.241,
subdivision 2b, is amended to read:
Subd. 2b. [RECOVERY OF EXPENSES FOR FEES, TAXES, PERMITS.]
The commission shall allow a utility to recover expenses
resulting from a conservation improvement program required by
the department and contributions to the energy and conservation
account, unless the recovery would be inconsistent with a
financial incentive proposal approved by the commission. In
addition, a utility may file annually, or the public utilities
commission may require the utility to file, and the commission
may approve, rate schedules containing provisions for the
automatic adjustment of charges for utility service in direct
relation to changes in the expenses of the utility for real and
personal property taxes, fees, and permits, the amounts of which
the utility cannot control. A public utility is eligible to
file for adjustment for real and personal property taxes, fees,
and permits under this subdivision only if, in the year previous
to the year in which it files for adjustment, it has spent or
invested at least 1.75 percent of its gross revenues from
provision of electric service, excluding gross operating
revenues from electric service provided in the state to large
electric customer facilities for which the commissioner of
public service has issued an exemption under subdivision 1a,
paragraph (b), and .6 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 of public service
has issued an exemption under subdivision 1a, paragraph (b), for
that year for energy conservation improvements under this
section.
Sec. 8. [REPORT ON CONSERVATION IMPROVEMENT PROGRAM.]
The commissioner of the department of public service shall
consult with representatives from public utilities, cooperative
and municipal utilities, environmental and energy conservation
groups, office of the attorney general, and state agencies to
evaluate possible changes in the conservation improvement
program. The commissioner shall report to the chairs of the
house and senate committees and subcommittees with jurisdiction
over energy utilities by January 15, 2001, on the work and
findings of the department of public service and any
recommendations.
Sec. 9. [EFFECTIVE DATE.]
Sections 2 and 3 are effective the day following final
enactment.
Presented to the governor May 7, 1999
Signed by the governor May 11, 1999, 1:38 p.m.
Official Publication of the State of Minnesota
Revisor of Statutes