ECO Act of 2021 Modernizes State Conservation Law

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ECO Act of 2021 Modernizes State Conservation Law

June 3, 2021

The Minnesota Municipal Utilities Association (MMUA) is proud to announce the Energy Conservation and Optimization ACT (ECO) of 2021 has been signed by the Governor and became law effective May 26, 2021. 

Reflecting over three years of collaborative effort, compromise, and legislative proceedings, this bill (HF 164) enacts changes to the Conservation Improvement Program (CIP), modernizing its scope to account for the evolution of technology, the growth of efficient electrification, and the importance of load management. In addition, it retains the core requirement for energy conservation.

Key provisions of ECO, from a municipal utility perspective, include:

• The State’s overall economy-wide energy savings goal is increased from 1.5% to 2.5%.
• The savings goal for municipals remains 1.5% of retail sales, with conservation efforts being responsible for at least the first 0.95% and up to 0.55% coming from other program areas including efficient fuel-switching improvements. A municipal utility may file with the Commerce Commissioner a request for a reduced goal, but not below 0.95% for conservation efforts.
• Expenditures on efficient fuel-switching improvements are capped at .55% of annual retail sales, averaged over three years, until July 1, 2026.
• A working group is established to finalize details on how efficient fuel-switching will be measured and reported.
• Utilities need not incorporate increased load from electric vehicle charging into their CIP savings goals until after December 31, 2032, allowing time to evaluate and plan for load changes attributable to EVs.
• A minimum spending mandate is repealed, but if a municipal utility fails to meet its savings goal for three consecutive years, the commissioner may impose an expenditure requirement

Initial ECO plans will be due by June 1, 2022.  They can cover up to a three-year period of time, with annual updates being required beginning June 1, 2023.

MMUA extends its thanks to the Minnesota Rural Electric Association (MREA), the Center for Energy and Environment (CEE), and the Energy Resources Division at the Minnesota Department of Commerce, as well as to ECO authors Rep. Zack Stephenson and Sen. Jason Rarick, for all of their efforts and assistance in getting this important legislation to the Governor’s office.

A copy of the ECO Act (HF 164) is available at: https://www.revisor.mn.gov/bills/text.php?number=HF164&type=ccr&session=ls92&version=0