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The State of Minnesota's Next Generation Energy Act of 2007 changes our Conservation <br />Improvement Programs (CIP) from 1.5% of gross sales spending, to spending to achieve 1.5% of <br />gross KWh saving. This law becomes effective in 2010. For 2008, CIP spending of 1.5% gross <br />2007 sales equates to $267,500. Staff is proposing to spend $412,495 of which $303,275 comes <br />from Great River Energy and $109,220 comes from us. We are proposing to continue ERMU's <br />level of spending to keep our programs viable when the large commercial rebates end. The <br />attached CIP budget reflects the proposed CIP spending. <br />Under the new legislation, we would be required to save 1.5% x (average of 3 previous years <br />KWh sales) or 2,940,000 KWh. By petition, this may be reduced to 1 % or 1,960,000 KWh. <br />1,960,000 KWh is approximately equivalent to 12,200 100 watt compact fluorescent lights. The <br />Minnesota Department of Commerce is in the process of determining what programs would <br />apply to CIP and what the KWh savings are. As a point of reference, Great River Energy's <br />system wide 1.5% of gross sales spending results in approximately .40% KWh savings. This <br />new CIP requirement is going to be difficult for Elk River. We have already done the easy <br />projects and our spending will need to double to triple. In 2005, all electric utilities in Minnesota <br />spend almost $83,000,000 in CIP spending. Is it reasonable to double or triple this number? <br />