Allowing certain utilities to administer investment programs for energy efficiency improvements and renewable energy applications, creating requirements for political subdivision loans for similar improvements and applications, providing an exemption from emergency rule procedures, and granting rule-making authority

The bill also requires that all work involved in making or installing an energy efficiency improvement or renewable resource application under an authorized program must be performed by a contractor or subcontractor that the PSC has included on a prequalification list of approved contractors and subcontractors. The PSC may include a contractor or subcontractor on the list only if the PSC determines that the contractor or subcontractor satisfies certain requirements, including the following: 1) agrees to comply with prevailing wage and substance abuse prevention requirements that apply to certain public works projects; 2) certifies that employees are not improperly classified as independent contractors in violation of federal or state law; 3) satisfies cultural competency requirements in rules promulgated by the PSC; 4) certifies every three years that not less than 30 percent of the total hours worked on an individual energy efficiency improvement or renewable resource application will be performed by individuals who had incomes in the prior year that do not exceed 200 percent of federal poverty guidelines and who reside in the 1st or 2nd class city where the work is performed, or, if the work is not performed in a 1st or 2nd class city in the county where the work is performed; and 5) discloses certain past disciplinary actions and violations of federal or state law. If the past disciplinary actions and violations constitute "good cause," as defined by the PSC by rule, the PSC may exclude a contractor or subcontractor from the list. In addition, the PSC must determine that a contractor or subcontractor has agreed to sponsor an apprenticeship program administered by the Department of Workforce Development. However, the bill allows work to be performed by a contractor or subcontractor who does not sponsor such a program, but only if contractors and subcontractors who sponsor such a program are not available to perform the work.

The bill also imposes the requirements described above regarding audits and prequalification on certain loans made under current law by cities, villages, towns, and counties (political subdivisions). Under current law, a political subdivision is authorized to make to make a loan to a resident for making or installing an energy efficiency improvement or renewable resource application to the resident's residential property. Current law allows a political subdivision to collect loan repayments as special charges, divide the special charges into installments, and include the special charges in tax rolls even if they are not delinquent. The bill allows political subdivisions to make the loans for any type of premises, not just residential property as under current law. In addition, a premises is not eligible for a loan unless the audit requirements described above are satisfied. The post-audit requirements also apply to the loans. Also, all work on energy efficiency improvements and renewable resource applications made or installed pursuant to a loan must be performed by contractors and subcontractors who are included on the prequalification list described above.

The bill also includes requirements for utilities and political subdivisions to prioritize spending on utility programs authorized under the bill and political subdivision loans. For utility spending whose source is a grant by the PSC, the utility must give the greatest priority to energy efficiency improvements and renewable resource applications at residential premises and the least priority to energy efficiency improvements and renewable resource applications at nonresidential premises of customers with the greatest demand for utility service. For utility spending from other sources, the priorities are reversed. For political subdivision loans, the bill requires political subdivisions to give the greatest priority to energy efficiency improvements and renewable resource applications at residential premises and the least priority to nonresidential premises of utility customers with the greatest demand for utility services. The PSC must promulgate rules implementing the priorities and requiring utilities and political subdivisions to make annual reports regarding implementation of the priorities.

The bill also does all of the following:

1. Requires the PSC to make grants to political subdivisions for loans described above and to utilities for programs authorized under the bill. The bill directs the PSC to make the grants from certain federal block grants that the state receives under a program administered by the federal Department of Energy under the American Recovery and Reinvestment Act of 2009. The bill also requires the PSC to allocate the federal grants in the manner required under the federal program.

2. Requires political subdivisions and utilities that receive payments from residents and customers for energy efficiency improvements and renewable resource applications under authorized utility programs and political subdivision loans to use the payments to invest in other improvements and applications.

3. Requires a tariff filed by a utility for which a program is authorized to include contracts between the utility and an owner of property benefited by an energy efficiency improvement or renewable resource application. The contracts must require the owner to do the following: a) inform lessees that are liable for utility service that the cost of the improvement or application will appear on the lessees' utility bills; and b) inform a purchaser of the property that the purchaser, or any other person who is liable for utility service at the property, is liable for the unpaid costs of the improvement or application, and that such costs will appear on utility bills for the property.

4. Allows a utility that participates in the program to include a separate line item on customer bills that compares certain costs of the program with energy savings resulting from an energy efficiency improvement or renewable resource application made under the program.

5. Prohibits a utility with an authorized program from recovering from ratepayers any bad debt related to nonutility services provided under the program.

6. Specifies that, if a utility with an authorized program is an energy utility, the PSC must ensure in rate-making orders that the utility recovers from its ratepayers the amounts spent on the program at a rate of return equal to the utility's overall rate of return authorized by the PSC.

7. Requires an owner of residential property to make a disclosure about an energy efficiency improvement or renewable resource application made under an authorized utility program on the real estate conditions report that is required for residential property transfers.

8. Requires contractors and subcontractors to apply to renew their inclusion on the prequalification list every two years, allows the PSC to conditionally approve a contractor or subcontractor for inclusion on the list, allows the PSC to revoke inclusion for "good cause," as defined in rules promulgated by the PSC, and requires the PSC to update the list on a monthly basis and make the list available to the public.

9. Requires the PSC to promulgate a rule or issue an order that prohibits any work under contracts under energy efficiency and renewable resource programs administered by the PSC under current law from being performed by contractors and subcontractors who are not included on the prequalification list described above.

However, the rule or order must allow performance of work by contractors and subcontractors who do not satisfy the apprenticeship requirements only if contractors and subcontractors who do satisfy the requirements are not available to perform the work.

10. Requires DOA to promulgate a rule similar to the rule described above that applies to work under contracts under a federal weatherization program administered by DOA under current law.

11. Prohibits an energy utility from counting any spending under a program authorized under the bill toward compliance with requirements under current law for spending a specified percentage of the energy utility's annual operating revenues on energy efficiency and renewable resource programs.

Finally, current law requires certain electric utilities and cooperatives to ensure that, in a given year, a specified percentage of the electricity it sells at retail is derived from renewable resources. These requirements are commonly referred to as renewable portfolio standards (RPSs). Current law also allows electric utilities and cooperatives to create credits based on the amount of electricity derived from renewable resources that is sold at retail in a year and that exceeds the RPS for the year. Subject to certain restrictions, an electric utility or cooperative may use the credit in a subsequent year to help comply with an RPS, or sell the credit to another electric utility or cooperative to help the buyer comply with an RPS. This bill requires the PSC to promulgate rules that allow an electric utility to create an additional credit that can be used or sold like the credits under current law. The PSC's rules must allow for the creation of credits that are based on the reductions in energy usage, increases in efficiency of electricity usage, and generation of renewable energy that results from an energy efficiency improvement or renewable resource application under a program authorized by the PSC under the bill, but only if the spending source for the improvement or application is not a PSC grant under the bill.

The PSC's rules must include requirements for measuring the amount of such reductions, increases, and generation, and calculating the amount of a credit. In addition, the bill eliminates the requirement under current law that a credit must be used in a year subsequent to the the year in which it is created or purchased.