Sen. Rarick column: The ECO Act is a major player in burgeoning energy solutions
This bill is a pragmatic step towards more energy options to benefit all Minnesotans.
Public support for clean, reliable energy and constant innovation within the industry has permanently changed our commercial landscape.
On Thursday, April 23, I presented Senate File 4409 to amend and update the Energy Conservation and Optimization (ECO) Act to the Senate Energy and Utilities Committee. Propane providers are concerned that the changes will incentivize electricity.
In reality, the proposed changes would provide cleaner, more cost-effective energy and a wider variety of options for consumers while maintaining equal treatment of each energy source.
The ECO update expands the Conservation Improvement Program (CIP) to include load management and fuel switching to offer more fuel choices to Minnesotans. Currently, switching to electric heat in a home is cost-prohibitive — the technology to run large systems on electricity (as efficiently as propane) does not exist. Propane remains the cheaper and more efficient option for fueling entire homes or businesses, which inherently prevents incentivized electricity.
The program will lower overall costs for customers and get ahead of the impending technology boom. Demand is consistently inching towards better electric systems and away from fossil fuels. This bill gets ahead of the market. As better technology appears, this language guarantees that electricity will not be at a significant disadvantage, and energy providers will not have to scramble to apply for changes to statute each year.
An updated ECO Act would allow consumers to have a lower bill each month by utilizing appliances and other small parts of the home that will run more efficiently on electricity. Offering these changes will be financially favorable for every consumer, including heavily propane-run rural areas.
Now, I’m going to get technical. For nearly four decades, conservation programs have been in place in Minnesota, but they have changed over time.
Starting in 2007, electric providers have maintained the utility energy savings goals of 1.5% of gross annual retail sales. In the decade since, electric providers have made great strides in meeting and exceeding that goal while moving toward a more renewable energy mix.
ECO continues that tradition and allows switching for efficiency improvements (and the net energy savings that result) to count toward the 1.5% goal. Municipalities and co-ops (COUs) cannot begin fuel switching activities until they have reached the first 1% of savings with traditional CIP activities. The remaining .5% can be achieved with the expanded language of fuel switching and load management. Investor-owned electric utilities like Xcel Energy, Minnesota Power and Otter Tail Power cannot count fuel switching toward financial incentives for customers.
Reform is needed in the CIP program because disallowing efficiency improvements to count towards the 1.5% has become unrealistic when trying to present consumers with the best emerging technology solutions. We should not limit them based on outdated restrictions that focus too much on fuel type. Customers and energy companies alike will be at a distinct disadvantage if they cannot count improvements in home efficiency towards energy savings goals.
Energy efficiency provides over 45,000 local jobs all over the state and reforms to the CIP program will encourage more.
Additionally, ECO doubles the financial support available to low-income customers. The measures in my bill are supported by municipalities, cooperatives, investor-owned electric and gas utilities, environmental groups, electrical contractors, unions and consumer and low-income advocates, to name a few.
If municipalities and co-ops thought this bill would be detrimental to our area, I would never have signed my name to it. We have to do what is right to keep energy costs low in our frigid state. People need to heat and cool their homes at a reasonable rate. This bill is a major player in burgeoning energy solutions and is a pragmatic step towards more energy options to benefit all Minnesotans.
Sen. Jason Rarick represents District 11 in the Minnesota Senate.