CEO’s Message – July 2021
Minnesota Passes Eco Act: New Law Demonstrates that Smart Electrification Benefits Consumers, the Environment
A bill led by electric cooperatives to modernize and expand the state’s energy conservation program for utilities was signed into law by Minnesota Governor Tim Walz on May 17, 2021. This bill is great news for electric consumers across Minnesota, including our members at Stearns Electric Association.
Receiving strong bipartisan support from both the House and Senate, the Energy Conservation and Optimization (ECO) Act updates and expands Minnesota’s Conservation Improvement Program (CIP). I especially want to thank our local constituents Aric Putnum, Torrey Westrom and Dan Wolgamott for the support of this bill as it made its way through the Minnesota Legislature.
When it was created, CIP established energy-saving requirements for all Minnesota utilities – including electric cooperatives like Stearns Electric – to realize annual energy savings equal to at least 1.5% of annual electricity sales, and to spend at least 1.5% of their gross operating revenues on programs to achieve this goal.
These energy savings are typically achieved when member-consumers make energy-efficiency improvements in their homes and businesses, such as installing LED lighting, purchasing ENERGY STAR® appliances, and enrolling in utility load control programs to help manage peak energy demand.
Since CIP was adopted in 2007, the landscape of the utility industry has changed dramatically, primarily in the number of renewable energy resources that have been added to the electric grid (i.e., solar and wind generation). Therefore, CIP became outdated and needed to be reformed.
To make CIP more relevant today, a variety of stakeholders, including Minnesota’s electric cooperatives and other industry partners, introduced the ECO Act. The goal of the bill was to help incentivize industry technologies and consumer behaviors that lead to greater energy efficiency while also reducing emissions economy-wide.
One main component of the ECO Act emphasizes total energy efficiency across several areas rather than focusing solely on reducing overall electricity use. As part of the reform, efficient fuel switching improvements allow cooperatives to offer programs that substitute electricity for a consumer’s current fuel when those programs achieve a trifecta of (1) reducing the overall amount of energy; (2) reducing greenhouse gas emissions; and (3) reducing consumer costs.
In other words, electric utility providers can now count certain efficiency programs toward their required savings goals, even if overall electricity use is not reduced. This will allow Stearns Electric to achieve the 1.5% reduction standard through additional programs that promote electrification technologies such as electric vehicles, electric storage water heaters and air source heat pumps.
According to the bill, a fuel-switching measure is efficient if it:
- Results in a net reduction in source energy on a fuel neutral basis
- Reduces greenhouse gas emissions
- Is cost-effective to the utility, participant and society
- Is installed and operated in a manner that improves system load factor
“I am proud to sign this important energy legislation into Minnesota law,” Governor Walz said in a press release. “We know that investing in energy conservation and beneficial fuel switching means that Minnesota’s homes and businesses run more efficiently and have a lower impact on our environment. The ECO Act will help Minnesota families and small businesses save money, create good-paying jobs, and, most importantly, protect Minnesota’s environment for generations to come.”
Overall, these updates will not only benefit the environment by reducing greenhouse gas emissions, but also foster a more resilient power grid.
“Not only will the ECO Act benefit consumers’ pocketbooks while contributing to Minnesota’s conservation goals, but it also will increase and expand workforce opportunities all over the state,” said Darrick Moe, President and CEO of the Minnesota Rural Electric Association, which represents electric cooperatives. “This is a win-win-win for consumers, energy providers and all sectors of Minnesota.”
Robin C. Doege