5.5 ERMUSR 04-12-2011 - Laserfiche WebLink

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/~1///1/~.~i Conservation Improvement Background Minnesota's municipal utilities support energy conservation. The wise use of energy is in keeping with the main goal of our electric and gas services - to provide good service at a reasonable price. Helping customers improve their efficiency helps the environment, helps the utility defer the need to invest in generating facilities and helps consumers manage their energy bills. Toward that end, Minnesota e municipal utilities currently spend about $12 million per year on conservation improvement programs (CIP). Municipal utilities were early leaders in developing programs to manage and control customers' peak. Many municipal utilities have been operating energy efficiency programs for 20 years or more. Many others have become increasingly engaged in developing and implementing conservation programs. Municipal utilities' support for energy conservation has been demonstrated by their continuing efforts to meet state energy conservation mandates, which have been evolving over the course of the last 20 years The legal state mandate for CIP began in 1993, when Minnesota law required municipal electric utilities to spend 1% of their gross revenues on CIP programs. In 2001 the Minnesota State Legislature expanded municipal involvement in these programs by increasing CIP spending on electric operations to 1.5% of gross revenues, while gradually reducing the amount of spending on load management that could be used to meet municipal CIP spending requirements. In 2007, the Minnesota legislature changed the statewide CIP goal from a spending requirement to a 1.5% annual energy savings goal. The new requirement is very difficult to meet and may be virtually impossible to meet for some small systems with little load growth. In order to meet or even approach the goal, a utility must spend substantially more than the 1.5°~ of revenue required prior to 2007. Some utilities have picked all the low-hanging fruit and are finding it incmasingly w~ ~r Position Statement difficult to maintain cost-effective conservation programs. Legislative Action Proposals are being discussed in both houses of the Minnesota legislature that could alter the current State- mandated CIP program. MMUA Position Minnesota's municipal utilities are serious about conservation, but we are also serious about spending our ratepayers' dollars wisely and about not raising rates to pay for CIP efforts that are not tailored to the needs of many of our utilities. We have detailed a number of concerns. Not Sustainable -The Conservation Improvement Program in its current form ie not sustainable over the long term. The legislative intent was to compel cost-effective measures, but the coat-effectiveness of measures going into the future will decline quickly. The legislature should consider ways to clarify the coat- effectiveneas provisions of the statute. Legitimate Saviags -The current program does not recognize much of the legitimate energy savings that do or could occur from utility efforts. Energy savings from adopting certain technologies will 4 / 2011 State Position Statements