2002 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 mid-range 
 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 the following percentage of the conservation 
 investment and spending requirements of this subdivision: 

    (1) 2002 - 90 percent; 

    (2) 2003 - 80 percent; 

    (3) 2004 - 65 percent; and 

    (4) 2005 and thereafter - 50 percent. 

    (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) By June 1, 2002, and every two years thereafter, 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.  

    (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. 

    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 a 
 two-year period.  Public utilities shall file conservation 
 improvement plans by June 1, on a schedule determined by order 
 of the commissioner.  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 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. 

    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. 

    HIST: 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