Energy Conservation in Minnesota

  1. Energy conservation in Minnesota - is it a priority?
  2. How is Minnesota doing on conservation efforts compared to other states?
  3. What is Minnesota’s conservation investment mandate?
  4. Are there stipulations/requirements that must be met as part of the CIP program?
  5. What do the typical CIP programs include?
  6. Who has regulatory oversight over these programs?

1. Energy conservation in Minnesota - is it a priority?

Yes, the Next Generation Energy Act of 2007 (NGEA) established energy-saving goals, through the Conservation Improvement Program (CIP), for electric and gas utilities that operate in the state of Minnesota.

Each electric and natural gas utility develops its own conservation plan, offering a variety of programs to assist residential and business customers become more energy efficient. The Department of Commerce through the Division of Energy Resources (DER) reviews and approves each plan and the associated energy savings calculations.

2. How is Minnesota doing on conservation efforts compared to other states?

Minnesota has been recognized as a leader in our conservation efforts.  The American Council for an Energy-Efficient Economy (ACEEE) ranks states on their energy efficiency policy and program efforts.  Again in 2015, Minnesota ranked 10th for our commitment to conservation initiatives

3. What is Minnesota’s conservation investment mandate?

State law mandates that energy utilities dedicate a portion of their revenues for projects that will reduce the consumption of electricity and natural gas. The utilities collect these additional funds by adding an adjustment or surcharge to the electric and natural gas rates that they charge their customers.

Electric utilities, except for Xcel Energy, must spend a minimum of 1.5 percent of annual gross operating revenues (GOR) on CIP programs. As an owner of nuclear generation facilities, Xcel Energy must spend at least 2 percent of annual GOR.

Natural gas utilities must spend a minimum of 0.5 percent of annual GOR on CIP programs.

4. Are there stipulations/requirements that must be met as part of the CIP program?

The CIP statutes contain important stipulations in regards to how utilities spend CIP funds:

  • At least 0.2 percent of residential GOR must be spent on programs specifically serving low income customers
  • Up to 10 percent of the overall minimum spending requirement may be spent on R&D projects
  • Up to 10 percent of the overall minimum spending requirement may be spent on qualifying solar energy projects. Up to 5 percent of the overall minimum spending requirement may be spent on other renewable and distributed generation projects.
  • Each electric utility must include in its CIP plan programs intended to encourage the use of energy efficient lighting by its customers and recycling of spent lamps.

Utilities must file their CIP plans with the DER at least every three years. Utilities report their actual CIP spending and savings achieved on an annual basis.

 

5. What do the typical CIP programs include?

The utilities use the conservation funds primarily to provide their customers with rebates and other financial incentives to purchase energy-efficient products, such as furnaces, refrigerators, air compressors, and motors. The utilities also use CIP funding for home energy audits, consumer education, and research & development. In 2003, investor-owned utilities spent approximately $65 million carrying out CIP, while municipal and cooperative utilities spent roughly $26 million.

Examples for residential customers include:

  • Energy audits, where a trained energy consultant examines your home and offers specific advice on energy improvements.
  • Rebates on high efficiency heating, cooling, and water heating appliances
  • Air-conditioner cycling programs, which allow the utility to manage its peak energy demand in return for discounted electric bills for participating customers
  • Compact fluorescent lighting rebates
  • Low-flow showerhead rebates, which serve a dual purpose by conserving water and the energy needed to heat the water.
  • Energy efficient home construction guidelines, calling for high insulation levels coupled with mechanical ventilation systems and efficient appliances

Examples of programs for commercial or industrial customers include:

  • Rebates for high efficiency boilers, chillers, and rooftop units
  • Rebates for high efficiency lighting and lighting control systems
  • Rebates for high efficiency motors and drives
  • Building recommissioning studies

6. Who has regulatory oversight over these programs?

While the Department of Commerce oversees the CIP activities of both investor-owned and municipal/ cooperative utilities, the department only has the authority to order changes in the conservation programs of the investor-owned utilities. The department's oversight of municipal and cooperative utilities is only advisory.