Minnesota ranked as Midwest's leader in energy efficiency

Stateline Midwest ~ November 2012

When it comes to promoting energy efficiency, Minnesota ranks highest in the Midwest, thanks in large part to the state’s strong efficiency standards and the conservation plans that it requires of utilities, according to a national scorecard released in October.

The American Council for an Energy Efficient Economy uses a broad range of public policies to score all 50 states — from the strength of their public-benefits programs, which levy a fee or surcharge on utilitycustomers in order to invest in a shared energy-policy goal such as efficiency, to the rigor of their building codes.

Ben Foster says the scorecard is designed to provide a snapshot of how and why certain states have emerged as national leaders in energy conservation.

“But it doesn’t tell the longer story, which is that states are making good movement overall in energy efficiency,” adds Foster, the report’s lead author. One example of that movement is the adoption of energy efficiency standards, which are in place in 24 states, including Illinois, Indiana, Iowa, Michigan, Minnesota, Ohio and Wisconsin.

Minnesota’s standard for electric utilities began in 2010, requiring annual savings of about 1.5 percent per year. For natural gas utilities, a 0.75 percent reduction is required from 2010 to 2012, with 1.5 percent in annual savings required beginning in 2013.

“Minnesota imports all of its energy, except renewables, so most energy dollars leave the state,” says Bill Grant, who heads the state’s Division of Energy Resources. “Anything we can do to keep those dollars circulating in the state is good for the economy.”

Minnesota’s progress is the result of two policies: the Next Generation Energy Act of 2007, which established the efficiency standards, and the Conservation Improvement Program, which requires utilities to develop conservation plans every three years. These plans have mostly focused on providing incentives to ratepayers — residential, commercial and industrial users — to get energy audits and buy energy-efficient products.

One weakness of Minnesota’s current policies, Grant says, is an opt-out provision for the state’s largest industrial customers. Because these customers were exempted from paying for CIP programs, other ratepayers have a greater responsibility for funding the efficiency programs.

According to the report, energy savings from the nation’s customer-funded efficiency programs totaled 18 million megawatt-hours, equivalent to the amount of electricity used by the state of Wyoming in a year. In Minnesota, Grant says, the programs have averted the need to build two or three new power plants.

But to continue such savings, states will have to do more, says Dan York, utilities program director for the American Council for an Energy Efficient Economy. Because some of the easier efficiencies have been reached, he notes, policies may have to be extended to review industrial processes and to provide design assistance for new construction.

According to Grant, Minnesota is already offering programs like this. Utilities in Minnesota have also begun to provide reports to customers about how their energy use compares to that of their neighbors.

Other scorecard standouts were Illinois, for being one of two states requiring (through SB 3724) use of the newest International Energy Conservation Code for home building, and Ohio, for promoting the use of combined heat and power (through SB 315, which adds cogeneration to its Energy Efficiency Resource Standard).