Minnesota utilities are bullish on energy efficiency
On July 1, Minnesota’s investor-owned electric and natural gas utilities filed their Conservation Improvement Program (CIP) plans for 2021 through 2023, called the CIP triennial plans.
These plans lay out the utilities’ proposed energy efficiency savings goals, budgets, and the details of the energy efficiency programs they will implement over the next three years, once each is approved by the Minnesota Department of Commerce. Despite a number of challenges noted by utilities — not least of which is the economic uncertainty caused by the COVID-19 pandemic — Minnesota utilities are bullish on energy efficiency, filing record-high energy savings goals for the 2021–2023 CIP term.
All of Minnesota’s largest investor-owned utilities (IOUs) filed energy savings goals for 2021–2023 that exceed the goals filed in any previous period.
Electric IOUs: Each of the electric investor-owned utilities (Xcel Energy, Minnesota Power, and Otter Tail Power) filed energy savings goals equal to or above 2.5% of their sales, far exceeding the target set in the CIP statute of 1.5% of sales. Before these latest CIP plans, no electric utility had ever filed a CIP plan with an energy savings goal as high as 2% of sales.
Xcel Energy’s triennial electric savings goals are especially noteworthy, as they begin to implement toward the historic efficiency commitments from the settlement we reached with them last summer, described in this blog post from June 2019.
Natural Gas IOUs: On the natural gas side, Xcel Energy also led the pack, filing aggressive natural gas savings goals, equivalent to between 1.37% and 1.46% of total sales. For comparison, Xcel Energy’s natural gas savings goals for 2017–2019 were equivalent to just 1% of their sales, and the utility has never achieved natural gas savings levels as high as these proposed goals. CenterPoint Energy, which typically achieves the highest energy savings for natural gas utilities in Minnesota, also filed energy savings goals of between 1.22% and 1.25% of total sales for the upcoming triennium.
Why CIP Matters
Energy efficiency remains a highly valuable energy resource. These ambitious CIP plans recognize that energy efficiency continues to be a highly valuable and cost-effective energy resource, even as the price of natural gas remains low and the price of renewable energy resources are coming down. CenterPoint Energy noted that the levelized cost per lifetime energy savings in their proposed plan is just $1.66 per dekatherm, well below the average cost of buying and delivering natural gas to its customers.
Energy efficiency provides critical economic stimulus. Not only is energy efficiency a cost-effective resource, it also provides significant and important economic benefits for Minnesota. Energy efficiency programs create high-quality local jobs and increase local economic activity for contractors, distributors, and others within the efficiency supply chain. Energy efficiency also helps businesses that participate in efficiency programs to save money on their energy bills, allowing them to put those savings toward operating expenses or even business expansion. The economic benefits of the State’s energy efficiency programs have always been important, but are even more critical today as we face an unprecedented economic downturn as a result of the COVID-19 pandemic. Several utilities noted the important role that their CIP portfolios can play in helping Minnesota recover from the economic impact of the pandemic. In fact, Xcel Energy included increased energy efficiency efforts as a part of its COVID-19 Relief and Recovery package (Docket No. E,G999/CI20-492).
Energy efficiency reduces energy bills. Additionally, energy efficiency helps Minnesota families save money on their energy bills. This is particularly important for Minnesotans struggling financially, whether as a result of the pandemic or for other reasons. Nearly all of Minnesota’s investor-owned utilities proposed increased spending on energy efficiency programs that serve low-income Minnesotans for the 2021–2023 triennium. And several of the utilities, particularly those serving Minnesota’s mid-sized to large cities, proposed additional programs and efforts with a specific focus on serving renters. For instance, Minnesota Power proposed a new dedicated program for multifamily buildings in its territory to better meet its customers’ needs. Renters are often harder to serve with traditional energy efficiency programs because, though they may pay the utility bill, they don’t own the home they live in or its equipment. Therefore, they rely on a landlord to implement energy efficiency upgrades, which may be a low priority for the landlord, who doesn’t pay the utility bill.
Energy efficiency significantly reduces carbon emissions. Finally, on top of the financial and economic benefits that these CIP portfolios provide, energy efficiency is an effective and cost-effective carbon mitigation strategy. Saving energy means saving fuel and combustion, which immediately reduces carbon emissions. Xcel Energy noted that the impetus for their high natural gas savings goals is to “help customers reduce [carbon] emissions from the natural gas they use in their homes and businesses.”
Further, by mitigating load, energy efficiency can also help to better integrate renewable energy resources and serve remaining energy loads through low-carbon alternative fuels and technologies, which will allow us to decarbonize further, faster, and at a lower cost.
Achieving the ambitious CIP goals proposed by Minnesota’s investor-owned utilities and realizing the many benefits that energy efficiency can provide will not be easy. It will take hard work on behalf of the utilities and their many partners. We enthusiastically applaud our utilities for making this commitment, and CEE will work to support them however we can over the coming years to successfully achieve their CIP goals.
Minnesota Public Utilities Commission: COVID-19 Information
Minnesota’s Conservation Improvement Program: 2019 Highlights at CEE