2006 Minnesota Statutes

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) "Customer facility" means all buildings, structures, equipment, and installations at a
single site.
(d) "Department" means the Department of Commerce.
(e) "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.
(f) "Energy conservation improvement" means a project that results in energy conservation.
(g) "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.
(h) "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.
(i) "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 the overall demand for energy or capacity.
    Subd. 1a. Investment, expenditure, and contribution; public utility. (a) For purposes of
this subdivision and subdivision 2, "public utility" has the meaning given it in section 216B.02,
subdivision 4 . Each public utility shall spend and invest for energy conservation improvements
under this subdivision and subdivision 2 the following amounts:
(1) for a utility that furnishes gas service, 0.5 percent of its gross operating revenues from
service provided in the state;
(2) for a utility that furnishes electric service, 1.5 percent of its gross operating revenues
from service provided in the state; and
(3) for a utility that furnishes electric service and that operates a nuclear-powered electric
generating plant within the state, two percent of its gross operating revenues from service
provided in the state.
For purposes of this paragraph (a), "gross operating revenues" do not include revenues from
large electric customer facilities exempted by the commissioner under paragraph (b).
(b) The owner of a large electric customer facility may petition the commissioner to exempt
both electric and gas utilities serving the large energy customer facility from the investment
and expenditure requirements of paragraph (a) with respect to retail revenues attributable to
the facility. At a minimum, the petition must be supported by evidence relating to competitive
or economic pressures on the customer and a showing by the customer of reasonable efforts to
identify, evaluate, and implement cost-effective conservation improvements at the facility. If a
petition is filed on or before October 1 of any year, the order of the commissioner to exempt
revenues attributable to the facility can be effective no earlier than January 1 of the following
year. The commissioner shall not grant an exemption if the commissioner determines that granting
the exemption is contrary to the public interest. The commissioner may, after investigation,
rescind any exemption granted under this paragraph upon a determination that cost-effective
energy conservation improvements are available at the large electric customer facility. For the
purposes of this paragraph, "cost-effective" means that the projected total cost of the energy
conservation improvement at the large electric customer facility is less than the projected present
value of the energy and demand savings resulting from the energy conservation improvement. For
the purposes of investigations by the commissioner under this paragraph, the owner of any large
electric customer facility shall, upon request, provide the commissioner with updated information
comparable to that originally supplied in or with the owner's original petition under this paragraph.
(c) The commissioner may require investments or spending greater than the amounts
required under this subdivision for a public utility whose most recent advance forecast required
under section 216B.2422 or 216C.17 projects a peak demand deficit of 100 megawatts or greater
within five years under midrange forecast assumptions.
(d) A public utility or owner of a large electric customer facility may appeal a decision of the
commissioner under paragraph (b) or (c) to the commission under subdivision 2. In reviewing
a decision of the commissioner under paragraph (b) or (c), the commission shall rescind the
decision if it finds that the required investments or spending will:
(1) not result in cost-effective energy conservation improvements; or
(2) otherwise not be in the public interest.
(e) Each utility shall determine what portion of the amount it sets aside for conservation
improvement will be used for conservation improvements under subdivision 2 and what portion it
will contribute to the energy and conservation account established in subdivision 2a. A public
utility may propose to the commissioner to designate that all or a portion of funds contributed to
the account established in subdivision 2a be used for research and development projects that can
best be implemented on a statewide basis. Contributions must be remitted to the commissioner by
February 1 of each year. Nothing in this subdivision prohibits a public utility from spending or
investing for energy conservation improvement more than required in this subdivision.
    Subd. 1b. Conservation improvement by cooperative association or municipality. (a)
This subdivision applies to:
(1) a cooperative electric association that provides retail service to its members;
(2) a municipality that provides electric service to retail customers; and
(3) a municipality with gross operating revenues in excess of $5,000,000 from sales of
natural gas to retail customers.
(b) Each cooperative electric association and municipality subject to this subdivision shall
spend and invest for energy conservation improvements under this subdivision the following
amounts:
(1) for a municipality, 0.5 percent of its gross operating revenues from the sale of gas and
1.5 percent of its gross operating revenues from the sale of electricity, excluding gross operating
revenues from electric and gas service provided in the state to large electric customer facilities; and
(2) for a cooperative electric association, 1.5 percent of its gross operating revenues from
service provided in the state, excluding gross operating revenues from service provided in the
state to large electric customer facilities indirectly through a distribution cooperative electric
association.
(c) Each municipality and cooperative electric association subject to this subdivision shall
identify and implement energy conservation improvement spending and investments that are
appropriate for the municipality or association, except that a municipality or association may
not spend or invest for energy conservation improvements that directly benefit a large electric
customer facility for which the commissioner has issued an exemption under subdivision 1a,
paragraph (b).
(d) Each municipality and cooperative electric association subject to this subdivision may
spend and invest annually up to ten percent of the total amount required to be spent and invested
on energy conservation improvements under this subdivision on research and development
projects that meet the definition of energy conservation improvement in subdivision 1 and that are
funded directly by the municipality or cooperative electric association.
(e) Load-management activities that do not reduce energy use but that increase the efficiency
of the electric system may be used to meet 50 percent of the conservation investment and
spending requirements of this subdivision.
(f) A generation and transmission cooperative electric association that provides energy
services to cooperative electric associations that provide electric service at retail to consumers
may invest in energy conservation improvements on behalf of the associations it serves and may
fulfill the conservation, spending, reporting, and energy savings goals on an aggregate basis. A
municipal power agency or other not-for-profit entity that provides energy service to municipal
utilities that provide electric service at retail may invest in energy conservation improvements on
behalf of the municipal utilities it serves and may fulfill the conservation, spending, reporting, and
energy savings goals on an aggregate basis, under an agreement between the municipal power
agency or not-for-profit entity and each municipal utility for funding the investments.
(g) At least every four years, on a schedule determined by the commissioner, each
municipality or cooperative shall file an overview of its conservation improvement plan with the
commissioner. With this overview, the municipality or cooperative shall also provide an evaluation
to the commissioner detailing its energy conservation improvement spending and investments for
the previous period. The evaluation must briefly describe each conservation program and must
specify the energy savings or increased efficiency in the use of energy within the service territory
of the utility or association that is the result of the spending and investments. The evaluation
must analyze the cost-effectiveness of the utility's or association's conservation programs, using
a list of baseline energy and capacity savings assumptions developed in consultation with the
department. The commissioner shall review each evaluation and make recommendations, where
appropriate, to the municipality or association to increase the effectiveness of conservation
improvement activities. Up to three percent of a utility's conservation spending obligation under
this section may be used for program pre-evaluation, testing, and monitoring and program
evaluation. The overview and evaluation filed by a municipality with less than 60,000,000
kilowatt-hours in annual retail sales of electric service may consist of a letter from the governing
board of the municipal utility to the department providing the amount of annual conservation
spending required of that municipality and certifying that the required amount has been spent on
conservation programs pursuant to this subdivision.
(h) The commissioner shall also review each evaluation for whether a portion of the money
spent on residential conservation improvement programs is devoted to programs that directly
address the needs of renters and low-income persons unless an insufficient number of appropriate
programs are available. For the purposes of this subdivision and subdivision 2, "low-income"
means an income at or below 50 percent of the state median income.
(i) As part of its spending for conservation improvement, a municipality or association may
contribute to the energy and conservation account. A municipality or association may propose to
the commissioner to designate that all or a portion of funds contributed to the account be used
for research and development projects that can best be implemented on a statewide basis. Any
amount contributed must be remitted to the commissioner by February 1 of each year.
(j) A municipality may spend up to 50 percent of its required spending under this section to
refurbish an existing district heating or cooling system. This paragraph expires July 1, 2007.
    Subd. 1c. Energy-saving goals. The commissioner shall establish energy-saving goals
for energy conservation improvement expenditures and shall evaluate an energy conservation
improvement program on how well it meets the goals set.
    Subd. 1d. Cooperative conservation investment increase phase-in. The increase in
required conservation improvement expenditures by a cooperative electric association that results
from the amendments in Laws 2001, chapter 212, article 8, section 6, to subdivision 1b, paragraph
(a), clause (1), must be phased in as follows:
(1) at least 25 percent shall be effective in year 2002;
(2) at least 50 percent shall be effective in year 2003;
(3) at least 75 percent shall be effective in year 2004; and
(4) all of the increase shall be effective in year 2005 and thereafter.
    Subd. 2. Programs. (a) The commissioner may require public utilities to make investments
and expenditures in energy conservation improvements, explicitly setting forth the interest rates,
prices, and terms under which the improvements must be offered to the customers. The required
programs must cover no more than a four-year period. Public utilities shall file conservation
improvement plans by June 1, on a schedule determined by order of the commissioner, but at least
every four years. Plans received by a public utility by June 1 must be approved or approved as
modified by the commissioner by December 1 of that same year. The commissioner shall 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 commissioner's
order must provide to the extent practicable for a free choice, by consumers participating in
the program, of the device, method, material, or project constituting the energy conservation
improvement and for a free choice of the seller, installer, or contractor of the energy conservation
improvement, provided that the device, method, material, or project seller, installer, or contractor
is duly licensed, certified, approved, or qualified, including under the residential conservation
services program, where applicable.
(b) The commissioner may require a utility to make an energy conservation improvement
investment or expenditure whenever the commissioner finds that the improvement will result in
energy savings at a total cost to the utility less than the cost to the utility to produce or purchase
an equivalent amount of new supply of energy. The commissioner shall nevertheless ensure that
every public utility operate one or more programs under periodic review by the department.
(c) Each public utility subject to subdivision 1a may spend and invest annually up to
ten percent of the total amount required to be spent and invested on energy conservation
improvements under this section by the utility on research and development projects that meet
the definition of energy conservation improvement in subdivision 1 and that are funded directly
by the public utility.
(d) A public utility may not spend for or invest in energy conservation improvements that
directly benefit a large 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.
(e) The commissioner may, by order, establish a list of programs that may be offered as
energy conservation improvements by a public utility, municipal utility, cooperative electric
association, or other entity providing conservation services pursuant to this section. The list
of programs may include rebates for high-efficiency appliances, rebates or subsidies for
high-efficiency lamps, small business energy audits, and building recommissioning. The
commissioner may, by order, change this list to add or subtract programs as the commissioner
determines is necessary to promote efficient and effective conservation programs.
(f) 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, in proportion to the amount the utility has historically spent
on such programs based on the most recent three-year average relative to the utility's total
conservation spending under this section, unless an insufficient number of appropriate programs
are available.
(g) A utility, a political subdivision, or a nonprofit or community organization that has
suggested a program, the attorney general acting on behalf of consumers and small business
interests, or a utility customer that has suggested a program and is not represented by the attorney
general under section 8.33 may petition the commission to modify or revoke a department
decision under this section, and the commission may do so if it determines that the program is not
cost-effective, does not adequately address the residential conservation improvement needs of
low-income persons, has a long-range negative effect on one or more classes of customers, or is
otherwise not in the public interest. The commission shall reject a petition that, on its face, fails to
make a reasonable argument that a program is not in the public interest.
(h) The commissioner may order a public utility to include, with the filing of the utility's
proposed conservation improvement plan under paragraph (a), the results of an independent
audit of the utility's conservation improvement programs and expenditures performed by the
department or an auditor with experience in the provision of energy conservation and energy
efficiency services approved by the commissioner and chosen by the utility. The audit must
specify the energy savings or increased efficiency in the use of energy within the service territory
of the utility that is the result of the spending and investments. The audit must evaluate the
cost-effectiveness of the utility's conservation programs.
(i) Up to three percent of a utility's conservation spending obligation under this section may
be used for program pre-evaluation, testing, and monitoring and program audit and evaluation.
    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 education 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.
    Subd. 2b. Recovery of expenses. 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 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.
    Subd. 3. Ownership of energy conservation improvement. An energy conservation
improvement made to or installed in a building in accordance with this section, except systems
owned by the utility and designed to turn off, limit, or vary the delivery of energy, are the
exclusive property of the owner of the building except to the extent that the improvement is
subjected to a security interest in favor of the utility in case of a loan to the building owner.
The utility has no liability for loss, damage or injury caused directly or indirectly by an energy
conservation improvement except for negligence by the utility in purchase, installation, or
modification of the product.
    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. 5. Efficient lighting program. (a) Each public utility, cooperative electric association,
and municipal utility that provides electric service to retail customers shall include as part of its
conservation improvement activities a program to strongly encourage the use of fluorescent
and high-intensity discharge lamps. The program must include at least a public information
campaign to encourage use of the lamps and proper management of spent lamps by all customer
classifications.
(b) A public utility that provides electric service at retail to 200,000 or more customers shall
establish, either directly or through contracts with other persons, including lamp manufacturers,
distributors, wholesalers, and retailers and local government units, a system to collect for delivery
to a reclamation or recycling facility spent fluorescent and high-intensity discharge lamps from
households and from small businesses as defined in section 645.445 that generate an average of
fewer than ten spent lamps per year.
(c) A collection system must include establishing reasonably convenient locations for
collecting spent lamps from households and financial incentives sufficient to encourage spent
lamp generators to take the lamps to the collection locations. Financial incentives may include
coupons for purchase of new fluorescent or high-intensity discharge lamps, a cash back system, or
any other financial incentive or group of incentives designed to collect the maximum number of
spent lamps from households and small businesses that is reasonably feasible.
(d) A public utility that provides electric service at retail to fewer than 200,000 customers, a
cooperative electric association, or a municipal utility that provides electric service at retail to
customers may establish a collection system under paragraphs (b) and (c) as part of conservation
improvement activities required under this section.
(e) The commissioner of the Pollution Control Agency may not, unless clearly required
by federal law, require a public utility, cooperative electric association, or municipality that
establishes a household fluorescent and high-intensity discharge lamp collection system under
this section to manage the lamps as hazardous waste as long as the lamps are managed to avoid
breakage and are delivered to a recycling or reclamation facility that removes mercury and other
toxic materials contained in the lamps prior to placement of the lamps in solid waste.
(f) If a public utility, cooperative electric association, or municipal utility contracts with a
local government unit to provide a collection system under this subdivision, the contract must
provide for payment to the local government unit of all the unit's incremental costs of collecting
and managing spent lamps.
(g) All the costs incurred by a public utility, cooperative electric association, or municipal
utility for promotion and collection of fluorescent and high-intensity discharge lamps under this
subdivision are conservation improvement spending under this section.
    Subd. 6. Renewable energy research. (a) A public utility that owns a nuclear generation
facility in the state shall spend five percent of the total amount that utility is required to
spend under this section to support basic and applied research and demonstration activities at
the University of Minnesota Initiative for Renewable Energy and the Environment for the
development of renewable energy sources and technologies. The utility shall transfer the required
amount to the University of Minnesota on or before July 1 of each year and that annual amount
shall be deducted from the amount of money the utility is required to spend under this section.
The University of Minnesota shall transfer at least ten percent of these funds to at least one
rural campus or experiment station.
(b) Research funded under this subdivision shall include:
(1) development of environmentally sound production, distribution, and use of energy,
chemicals, and materials from renewable sources;
(2) processing and utilization of agricultural and forestry plant products and other bio-based,
renewable sources as a substitute for fossil-fuel-based energy, chemicals, and materials using a
variety of means including biocatalysis, biorefining, and fermentation;
(3) conversion of state wind resources to hydrogen for energy storage and transportation
to areas of energy demand;
(4) improvements in scalable hydrogen fuel cell technologies; and
(5) production of hydrogen from bio-based, renewable sources; and sequestration of carbon.
(c) Notwithstanding other law to the contrary, the utility may, but is not required to, spend
more than two percent of its gross operating revenues from service provided in this state under
this section or section 216B.2411.
(d) This subdivision expires June 30, 2008.
History: 1980 c 579 s 18; 1980 c 614 s 123; 1981 c 356 s 182,248; 1982 c 561 s 4; 1983
c 179 s 6-8; 1989 c 338 s 2,3; 1991 c 235 art 1 s 2; 1992 c 478 s 2,3; 1993 c 249 s 31; 1994 c
483 s 1; 1994 c 641 art 3 s 1; art 4 s 4; 1994 c 644 s 3; 1998 c 273 s 11; 1998 c 350 s 1; 1999 c
140 s 2-7; 2001 c 212 art 8 s 4-7,12; 1Sp2001 c 4 art 6 s 44-46,77; 2003 c 130 s 12; 1Sp2003 c
11 art 2 s 5; art 3 s 4; 2004 c 216 s 3; 2005 c 97 art 7 s 1,2