Renewable Energy and Conservation

Issue

How can Minnesota implement its renewable energy and energy efficiency goals and mandates such that the competitiveness of our energy costs increases relative to other states?

Policy

POLICY

• Policies that propose to expand the state’s commitment to renewable energy or conservation should undergo a neutral economic study of their costs and benefits, including the net statewide impact on Minnesota’s economy, by industry sector.  New policies should not be enacted unless the study shows that there is a substantial likelihood that energy costs will improve relative to the region. 
• The Legislature should perform or direct an analysis to determine the actual costs and benefits of Minnesota’s Renewable Energy Mandate.  The analysis should investigate whether the policy has created a net benefit for electric energy customers, and whether there has been a net increase in Minnesota jobs due to the policy, and the nature of jobs created (i.e., full-time manufacturing, temporary construction.) 
• Energy technologies and systems that do not contribute to, or are substantially likely to reduce, the state’s long-term net greenhouse gas emissions should be included in the state’s definition of “renewable” energy if they compare favorably to other technologies in terms of cost and reliability. 
• Customer dollars used to finance Conservation Improvement Programs (CIPs), including alternative CIPs, should be spent on programs designed to directly help customers conserve energy.  State-directed CIP expenses should be eliminated.  Utility regulatory filings should demonstrate a growing percentage of their program budgets for programs that directly benefit customers, unless it can be demonstrated that another program achieves more savings at a smaller cost.
• Energy “incentive” and/or “decoupling” programs should be required to demonstrate value to customers before approved. 
• Incentives that result in customers using energy more efficiently (“load management”) should be counted toward a utility’s conservation goal.  For example, if a utility can avoid building new generation due to its successful attempt at getting customers to change usage patterns, the utility – and its customers – should receive credit toward the state goals. 

Business Impact

Minnesota’s nation-leading commitment to renewable energy and conservation could be an opportunity for our state, but it isn’t guaranteed to be so.  If economic development promised from Minnesota’s nation-leading investment in renewable energy is jeopardized by energy costs that become uncompetitive, the policy will have failed.  Many companies, including “green” companies, rely on competitively priced energy as a key factor when making decisions to build new facilities or expand existing ones.  To fulfill the promise of the legislation, all parties need to carefully implement the policies to ensure that the state’s economy stands to benefit, and that well-intentioned energy policy doesn’t hinder the state’s economy.  Now that the Legislature has set its long-term policy goals, stakeholders – customers, utilities, policy makers, regulators, and environmental advocates – should work together to ensure that they are met at the lowest possible cost to the economy.