SF4534

Purpose

• The bill updates how energy conservation programs for low-income households are funded and administered, and expands how certain improvements can count toward required spending by utilities that serve Minnesota residents.

Main Provisions

• Spending requirements for low-income energy programs

  • Municipal utilities that provide natural gas must spend at least 0.2% of their recent three-year average gross operating revenue from residential customers in Minnesota on energy conservation programs for low-income households.
  • Consumer-owned electric utilities must spend at least 0.2% of their gross operating revenue from residential customers in Minnesota on such programs (the requirement applies to electric service; for multiple cooperative associations, it covers the aggregate revenue from residential electricity sold in Minnesota).
  • These spending requirements can be met in part by contributions to the Energy and Conservation Account.

• Energy and Conservation Account

  • Utilities can contribute money to the Energy and Conservation Account to meet all or part of their low-income spending requirements.
  • Utilities must file an energy conservation optimization plan stating how much they plan to contribute to the Account.
  • The Commissioner must establish energy conservation programs for low-income households funded through these contributions and must record and report expenditures and savings.

• Administration and oversight

  • The Commissioner must consult with political subdivisions, utilities, nonprofits, and community organizations (including groups that provide energy and weatherization assistance) when creating programs.
  • The Commissioner may contract with various entities (subdivisions, nonprofits, community organizations, public utilities, municipalities, or utilities) to implement programs funded through the Energy and Conservation Account.
  • The Commissioner may modify spending requirements if a utility cannot meet them for three consecutive years.

• Eligibility, guidelines, and stakeholder involvement

  • The Commissioner must develop guidelines to determine the eligibility of multifamily buildings for low-income programs.
  • Notwithstanding existing low-income definitions, utilities may use the most recent guidelines published by the Department to determine multifamily eligibility.
  • A stakeholder group (including public and municipal utilities, electric or gas utilities, electric cooperative associations, multifamily housing owners, developers, and low-income advocates) must review and update these guidelines, with updates required by August 1, 2021 and at least every five years.

• Preweatherization and cap on spending

  • Up to 15% of a consumer-owned utility’s spending on low-income energy conservation programs may be used for preweatherization measures.
  • A utility generally may not count energy savings from preweatherization measures toward its overall energy savings goal.

• Preweatherization measures list

  • By March 15, 2022, the Commissioner must issue an order establishing which preweatherization measures are eligible for inclusion in low-income energy conservation programs.

• Healthy AIR account and related activities

  • A Healthy AIR Asbestos Insulation Removal account is created as a separate account in the state’s special revenue fund.
  • Consumer-owned utilities may contribute to the Healthy AIR account to fund preweatherization activities for households eligible for weatherization assistance.
  • Money contributed to the Healthy AIR account counts toward the minimum low-income spending requirement and toward the cap on preweatherization measures.
  • Money in the Healthy AIR account is annually appropriated to the Commissioner of Commerce to pay for Healthy AIR-related activities.

• Fuel-switching and weatherization alignment

  • For a consumer-owned utility serving a low-income household whose primary heating fuel comes from a non-public-utility source, spending on space and water heating energy conservation improvements and efficient fuel-switching may be counted toward the utility’s low-income spending requirement.
  • To the extent possible, these services should be offered in conjunction with weatherization services under the state weatherization program (216C.264).

• Efficient fuel-switching

  • Spending on efficient fuel-switching improvements made for low-income households may count toward the utility’s low-income conservation spending requirement.

• Reporting and revenue impact

  • The commissioner must record and report energy savings and expenditures resulting from low-income programs funded through the Energy and Conservation Account.

How it changes existing law

• Explicitly allows expenditures on fuelswitching improvements to count toward the low-income conservation spending requirement for municipal utilities and cooperative electric associations.
• Creates an Energy and Conservation Account that utilities can fund to meet their low-income program spending requirements.
• Adds a Healthy AIR account to fund preweatherization-related activities, with money countable toward minimum spending and preweatherization caps.
• Adds a formal process for preweatherization measures, including a published eligible measures list and a cap on preweatherization spending.
• Requires a structured stakeholder process and clearer guidelines for multifamily building eligibility.
• Introduces new reporting, oversight, and potential timing requirements (e.g., contribution deadlines, list creation date).

Implementation Timeline (highlights)

• Guidelines for multifamily eligibility: stakeholder group updates by August 1, 2021, and every five years thereafter.
• Eligible preweatherization measures list: to be established by March 15, 2022.
• Contributions to the Energy and Conservation Account: contributions remitted to the commissioner by February 1 each year.

Oversight and Accountability

• The Commissioner oversees program development, expenditures, and energy savings reporting for low-income programs funded through the Energy and Conservation Account.
• The Department (or appropriate department) establishes guidelines for multifamily eligibility and ensures review by a stakeholder group.
• The Commissioner of Commerce administers the Healthy AIR account and related activities.

Relevant terms

• low-income households
• energy conservation programs
• energy conservation spending requirement
• consumer-owned utility
• municipal utility
• electric service
• gross operating revenue
• residential customers
• Energy and Conservation Account
• energy conservation optimization plan
• preweatherization measures
• preweatherization cap (up to 15%)
• Healthy AIR Asbestos Insulation Removal account
• weatherization assistance
• weatherization program (216C.264)
• multifamily buildings
• eligibility guidelines
• stakeholder group
• efficient fuelswitching
• fuelswitching
• energy savings
• expenditures and savings reporting
• contributions deadline (February 1)
• list of eligible measures (by March 15, 2022)