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Energy savings, efficiency bill on its way to House Floor

House Photography file photo
House Photography file photo

When COVID-19 forced the Legislature to start working from home, leadership in both the House and Senate made clear that the emphasis would be upon emergency legislation related to the pandemic and bipartisan efforts upon which both bodies could agree.

Enter the Energy Conservation and Optimization Act of 2020.

If there’s one thing upon which most legislators can agree, it’s the benefit of finding ways to use less energy and save citizens money. So Rep. Zack Stephenson (DFL-Coon Rapids) sponsors HF4502, which — as amended by a delete-all amendment — was approved by the House Energy and Climate Finance and Policy Division Thursday morning on a 10-5 vote, and is on its way to the House Floor.

Its companion, SF4409, sponsored by Sen. Jason Rarick (R-Pine City), was on the agenda of Thursday afternoon’s Senate Energy and Utilities Finance and Policy Committee meeting.

The core of the bill concerns cost-effective energy savings for utilities operating within the state, be they investor- or consumer-owned, including municipal utilities and rural cooperatives. It would require that most increase the percentages of their annual gross operating revenues that must be devoted to energy savings.

It would also mandate a move toward “innovative clean technologies” in energy production, and establish criteria for utilities’ load management and efficient switching between fuel sources. Furthermore, the bill would broaden how energy conservation programs can be used to aid low-income households, and establish an asbestos insulation removal account in the state treasury.

House Energy and Climate Finance and Policy Division (Remote Hearing) 4/23/20

Bob Eleff, an analyst for the nonpartisan House Research Department, said 70% of the bill’s language is already in statute, as it deals with the Conservation Improvement Program that helps Minnesota businesses and households use electricity and natural gas more efficiently. But the bill provides clarity by separating requirements into how they pertain to consumer- and investor-owned utilities.

Stephenson said the bill “expands and improves CIP, which hasn’t been updated since 2007.” He also spoke of the broad support for the bill among Minnesota’s utilities, business groups, labor unions and environmental organizations.

“We’ve reached a complex agreement with a large group of stakeholders that will result in more savings for consumers and more jobs,” he said.

Enforcing the new standards would fall under the purview of the Commerce Department.

Mentioning that most of the bill’s provisions were included in Gov. Tim Walz’s legislative proposals last year, Commerce Commissioner Steve Kelley said, “The proposal will put money back in the pockets of Minnesota consumers. There’s been a $4 return on every $1 invested from the CIP program, and that will only improve with these changes.”

When questioned by Rep. Chris Swedzinski (R-Ghent) as to how much the increased requirements will cost utilities, Kelley said many already meet or exceed the new standards.

“For example, for 2018, Xcel Energy spent $107 million on CIP,” Kelley said. “That amounted to 3.77% of its gross revenue, which is the base for the calculation. As you can see, they were well above the mandatory 1.75% that’s in this bill.”

When Swedzinski asked why the state needs to mandate something that industry’s already doing, Kelley replied, “It’s not uniform throughout the state, so setting these in law is important, so everyone can participate.”

Written testimony was provided to the division from dozens of organizations, including utilities, unions, and environmental and industry groups, almost all in favor. Among the two dissenting voices was the Minnesota Propane Association, which expressed concern about propane not being part of the program, although, as Stephenson pointed out, propane was not part of the CIP program updated by the legislation.

The bill is not expected to increase state expenditures.

Two amendments were offered that would keep the required percentages of utilities’ gross revenues at their current levels. Both were defeated on party-line votes.

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