MN Legislature: Energy Conservation & Optimization Act of 2020

Posted by Mike Bull  |  Date May 1, 2020

Update: Disappointingly, the ECO Act did not make it to a final vote in the regular session of the 2020 Minnesota Legislature. With several legislative priorities left unresolved, a special session is likely.
 

On April 23, 2020, both the House and Senate energy committees of the Minnesota Legislature approved the Energy Conservation and Optimization Act, chief authored by Sen. Jason Rarick (R – Pine City) and Rep. Zack Stephenson (D – Coon Rapids).

Broadly supported bipartisan action

CEE has led the charge on this initiative over the past couple of years, along with an incredible list of supporters. The group includes utilities of all sizes and types, covering every corner of the state, and pretty much all of the state’s clean energy nonprofit and consumer organizations.

Probably most important, the initiative is also supported by the organizations that represent the folks who do the actual work to install efficient technologies and projects in the state — the Minnesota Electrical Association, the Minnesota Mechanical Contractors Association, the Sheet Metal Workers of Local 10, and Local 292 of the IBEW, among others. In addition, ECO was included as a key part of Governor Walz’s Path to Clean Electricity Initiative announced in 2019.

Builds on success of CIP and supports local economies

ECO would expand Minnesota’s nation-leading Conservation Improvement Program (CIP) beyond energy efficiency. Currently, the CIP program has provided more than $6 billion in net benefits to Minnesota energy customers, and supports over 45,000 local jobs in every corner of Minnesota. But since CIP began, the energy efficiency framework has had limited customer energy efficiency opportunities within defined siloes — electric technologies to reduce electric consumption and natural gas technologies to reduce natural gas consumption.

It would expand CIP to allow fuel switching and electrification (like switching from a natural gas heating system to an all-electric source) to coexist with and complement the traditional energy efficiency activities that have served Minnesota so well — increasing CIP’s ability to offer additional efficient choices for customers and support local job opportunities.

Projects supported by ECO are inherently local jobs in electrical upgrades, insulation installations, and HVAC and ventilation projects. These types of projects are typically designed and carried out by local businesses and installed by state licensed contractors and, to a large extent, using locally sourced products. That kind of local stimulus will be critical in the weeks and months to come.

Modernizes CIP

ECO will update and modernize the CIP statute, which hasn’t had a refresh since 2007. This refresh does several things:

• ECO would establish separate regulatory frameworks for consumer-owned utilities (COUs — municipal and cooperative utilities) and investor-owned utilities (IOUs), reflecting important differences between these types of utilities.

• ECO would also eliminate the energy conservation spending requirement currently imposed on utilities subject to CIP, completing the transition begun in 2007 from a program based on energy conservation spending to one that is based on energy savings outcomes.

• ECO also allows COUs to submit plans that could cover up to three years, providing COUs more flexibility to meet state goals.

• ECO resets the floor for energy savings targets for IOUs, increasing energy savings goals for investor owned electric utilities to 1.75% of gross annual retail sales (which was 1.5%) and setting the goal for investor owned gas utilities at 1% of gross annual sales. ECO maintains the energy savings goals COUs at 1.5% of gross annual retail sales and allows net energy savings from efficient fuel-switching improvements to count toward that goal, above a minimum energy savings goal of 1% from traditional energy efficiency.

• ECO enhances efforts to address low-income needs, expanding the kinds of investments for which utility low-income CIP funds can be spent, as well as doubling the amount of support available to benefit IOU low-income customers.

• And finally, ECO expands CIP to include limited fuel-switching. As I mentioned, fuel-switching provides customers with energy- and cost-saving opportunities between fuels and sectors. In addition to the workforce opportunities I mentioned above, expanding CIP to include fuel-switching will:

  • Increase efficiency and cost-saving opportunities for all Minnesotans, especially rural customers; and

  • Support a greater range of technology and fuel choices for Minnesotans for heating, cooling and personal transportation. No fuel or technology would be excluded by ECO, and the same fuel-neutral criteria would apply to all fuel alternatives and technologies.

No particular fuel will be benefited or harmed by ECO — the bill does not pick winners and losers among fuels or technologies; rather, it leaves that to the energy customer to decide.

As a distinctly purple state, we know that continuing Minnesota’s clean energy transition will require broad-based bipartisan commitment and resolve. Last week’s actions by the House and Senate energy committees demonstrates that to the rest of the country bipartisan progress on clean energy is not only possible, but welcomed and broadly supported.

The next steps are to pass ECO off the House and Senate floors, and then on to Governor Walz. That's not to say that those steps will be easy — we need to continue to work with our fantastic authors and broad coalition to get this done. ECO is a terrific example of how we approach clean energy policy at CEE — innovative, collaborative, and bipartisan. Those attributes can lead to policies that can be enacted even in volatile political and economic times.


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