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2021-2022 Regular Session

Conservation Improvement Program is reorganized, enhanced

The state’s Conservation Improvement Program, which encourages utility customers to employ energy-saving strategies, has been reorganized and some new language added to the Energy Conservation and Optimization Act of 2021, under a new law that took effect May 26, 2021.

For almost 40 years, the Conservation Improvement Program has required electric and gas utilities to invest in energy conservation measures that save energy at a lower cost than purchasing an additional unit of energy for consumption.

While the majority of the law was already in statute, the new law reorganizes it into one section that applies to co-operatives and municipal utilities, and another that pertains to investor-owned utilities. It requires an increase in annual energy-savings goals, and how much a utility must spend on energy conservation programs for low-income households.

The law increases the state’s annual energy savings goal from 1.5% to 2.5%.

For consumer-owned utilities

Under this law, efficient fuel switching improvements may contribute to energy savings above the minimum 1% level. These are defined as measures that substitute electricity or natural gas for a customer’s current fuel.

The minimum annual amount a municipal electric utility must spend on energy conservation programs for low-income households increases from 0.1% of its gross operating revenues to at least 0.2%.

For public utilities

The annual energy-savings goal for a public utility providing electric service increases from 1.5% to 1.75%, while the goal for a natural gas utility is lowered from 1.5% to 1%.

A public utility’s energy conservation plan must include activities to improve energy efficiency in public schools served by the utility.

The annual amount a public electric utility must spend on energy conservation programs for low-income households increases from 0.1% to 0.4% of its gross operating revenues, rising to 0.6% in 2024. For a natural gas utility, the increase is from 0.4% to 1% of its average gross operating revenues from the previous three years.

The net benefits resulting from the implementation of a fuel-switching improvement may be counted toward the overall net benefits of the public utility’s Conservation Improvement Program.

The law also allows a public utility to obtain a financial incentive to encourage load management programs, provided the Public Utilities Commission finds the program in the interest of the utility’s ratepayers.

LED lights

The law requires both public and consumer-owned electric utilities to encourage the use of LED lights and to provide cost recovery for the collection of used LEDs by Xcel Energy and any other utility that elects to do so.

Rep. Zack Stephenson (DFL-Coon Rapids) and Sen. Jason Rarick (R-Pine City) sponsor the law.

HF164/SF227*/CH29


New Laws 2021

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HF0164* / SF0227 / CH29
House Chief Author: Stephenson
Senate Chief Author: Rarick
Effective Dates: See chapter summary in the file link above.
* The legislative bill marked with an asterisk denotes the file submitted to the governor.