Goals for reductions in greenhouse gas emissions, for construction of zero net energy buildings and for energy conservation; information, analyses, reports, education, and training concerning greenhouse gas emissions and climate change; energy efficiency and renewable resource programs; renewable energy requirements of electric utilities and retail cooperatives; requiring electric utilities to purchase renewable energy from certain renewable facilities in their service territories; authority of the Public Service Commission over nuclear power plants; motor vehicle emission limitations; a low carbon standard for transportation fuels; the brownfield site assessment grant program, the main street program, the brownfields grant program, the forward innovation fund, grants to local governments for planning activities, the transportation facilities economic assistance and development program, a model parking ordinance; surface transportation planning by the Department of Transportation and metropolitan planning organizations to reduce greenhouse gas emissions; environmental evaluations for transportation projects; idling limits for certain vehicles; energy conservation codes for public buildings, places of employment, one- and two-family dwellings, and agricultural facilities; design standards for state buildings; energy efficiency standards for certain consumer audio and video devices, boiler inspection requirements; greenhouse gas emissions and energy use by certain state agencies and state assistance to school districts in achieving energy efficiencies; creating an exception to local levy limits for amounts spent on energy efficiency measures; creating an energy crop reserve program; identification of private forest land, promoting sequestration of carbon in forests, qualifying practices and cost-share requirements under the forest grant program established by the Department of Natural Resources; air pollution permits for certain stationary sources reducing greenhouse gas emissions; allocating a portion of existing tax-exempt industrial development revenue bonding to clean energy manufacturing facilities and renewable power generating facilities; requiring a report on certain programs to limit greenhouse gas emissions; granting rule-making authority; requiring the exercise of rule-making authority; and providing a penalty

Zero net energy building goal This bill specifies that it is the goal of this state that by 2030 each newly constructed residential or commercial building will use no more energy than is generated on-site using renewable resources. The bill requires the Department of Commerce (Commerce) to quadrennially assess progress toward meeting the goal.

Energy conservation goals This bill specifies goals for reductions in projected statewide consumption of electricity, liquified petroleum gas, heating oil, and natural gas by percentages specified in the bill. The bill requires the Public Service Commission (PSC) to quadrennially assess progress toward meeting the goals.

Information, analyses, and reports This bill requires DNR to collect or estimate information on greenhouse gas emissions, to prepare inventories and analyses of greenhouse gas emissions, and to quadrennially prepare an assessment of whether this state is meeting current greenhouse gas emission reduction goals and of whether the state is likely to meet future goals. The bill requires DNR to propose new climate change programs or changes in existing programs or goals.

The bill creates the Climate Change Coordinating Council (council), consisting of the heads of specified state agencies or their designees, and requires the council to make recommendations on climate change policy to the legislature and the governor based on DNR's assessments and other information. The bill also requires the council to promote and coordinate educational and training programs related to climate change.

Under current DNR rules, the threshold for a stationary source of air emissions to report its emissions of carbon dioxide is 100,000 tons per year. The bill requires DNR to lower the threshold to 10,000 tons per year and to require a source that must report its emissions of carbon dioxide to also report methane and nitrous oxide emissions from the combustion of fuel.

Energy efficiency and renewable resource programs Under current law, investor-owned electric and natural gas utilities (energy utilities) must collectively fund and establish statewide energy efficiency and renewable resource programs. This bill refers to these programs as "statewide programs." Subject to approval by the PSC, the energy utilities must contract with one or more persons to develop and administer the statewide programs. The bill refers to such persons as statewide programs contractors. Current law defines "energy efficiency program" as a program for reducing the usage or increasing the efficiency of the usage of energy by customers, other than certain daily or seasonal demand management programs. Current law defines "renewable resource program" as, in part, a program for encouraging the development or use of customer applications of a "renewable resource," which is defined as a resource deriving energy from a source other than coal, petroleum products, nuclear power or, except as used in a fuel cell, natural gas. "Renewable resource" is also defined to include a resource deriving energy from solar energy, wind or water power, biomass, geothermal technology, tidal or wave action, or certain types of fuel cell technologies.

Current law also allows, but does not require, an energy utility to administer, subject to PSC approval, energy efficiency programs limited to large commercial, industrial, institutional, or agricultural customers in its service territory. The bill refers to these programs as "utility-administered programs." In addition, the PSC may also allow an energy utility to administer additional energy efficiency or renewable resource programs, which are referred to as "supplemental utility programs." Also, the PSC may allow certain large energy customers of energy utilities to administer their own energy efficiency programs, which are referred to as "large energy customer programs." Under current law, with certain exceptions, the PSC must require energy utilities to spend 1.2 percent of their operating revenues on statewide programs and utility-administered programs, and the PSC must ensure in rate-making orders that an energy utility recovers from its customers the amounts it spends on statewide programs, subject to certain requirements regarding customer classes and large energy customers.

Municipal electric utilities and retail electric cooperatives are subject to different requirements. Under current law, subject to certain exceptions, municipal electric utilities and retail electric cooperatives must charge a monthly fee to each customer or member that is sufficient to collect an annual average of $8 per meter.

Municipal electric utilities and retail electric cooperatives must either contribute the amounts collected to the statewide programs or administer their own energy efficiency programs, which are referred to as "commitment to community programs."

The bill makes the following changes to the requirements described above.

Liquified petroleum gas and heating oil.

Under current law, only the users of electricity and natural gas are eligible to participate in energy efficiency and renewable resource programs. The bill allows users of liquified petroleum gas or heating oil to participate in energy efficiency programs as well. The bill refers to electricity and natural gas as "regulated fuels" and liquified petroleum gas and heating oil as "unregulated fuels." Regulated and unregulated fuels are jointly referred to as "target fuels."

Program goals and funding.

Under current law, the PSC has oversight of the statewide, utility-administered, supplemental utility, and large energy customer programs, and must coordinate all programs with similar purposes. At least every four years, the PSC is required to evaluate the programs and to set or revise goals, priorities, and measurable targets for the programs. The bill creates more detailed requirements for the PSC's review of programs, including requirements for setting goals and funding programs.

The bill requires the PSC to conduct a proceeding every four years to assess the reduction in the use of and demand for each target fuel that can be achieved in each year of the upcoming quadrennium through each of the following: 1) energy efficiency and renewable resource programs administered by energy utilities, municipal electric utilities, retail electric cooperatives, or others; 2) low-income weatherization programs; 3) other programs and policy mechanisms under the PSC's jurisdiction; and 4) other programs and policy mechanisms, such as appliance and equipment efficiency standards, mandatory building codes, and voluntary certification programs. Based on the foregoing assessments, the bill specifies a formula for the PSC to establish goals for the reduction in use of or demand for each target fuel for each year of the upcoming quadrennium. The PSC must establish one set of goals for the statewide programs and a separate set of goals for each municipal electric utility and retail electric cooperative. For the statewide programs, the PSC sets goals for each regulated fuel that is based, in part, on the proportion of total sales of the fuel that is attributable to all energy utilities. For an individual municipal electric utility or retail electric cooperative, the PSC sets goals for regulated fuels that are based, in part, on the proportion of total sales of the fuel that are attributable to the utility or cooperative. For unregulated fuels, the PSC sets goals for the statewide programs, but not for individual municipal electric utilities and retail electric cooperatives.

Regarding funding, the bill repeals the requirements under current law for energy utilities to spend 1.2 percent of their operating revenues and municipal electric utilities and retail electric cooperatives to charge monthly fees to customers and members. Instead, for municipal electric utilities and retail electric cooperatives, the bill allows them to determine the funding amounts necessary to achieve their goals for regulated fuels in each year of the upcoming quadrennium.

Except for assignments to wholesale suppliers, which are discussed below, a municipal electric utility or retail electric cooperative must spend the amounts it determines on commitment to community programs regarding the regulated fuel that are administered individually by the municipal electric utility or retail electric cooperative or jointly with other municipal electric utilities and retail electric cooperatives. Alternatively, a municipal electric utility or retail electric cooperative may spend the amounts it determines on contracts with a statewide programs contractor or wholesale supplier to administer commitment to community programs in the utility's or cooperative's service territory, or may spend the amount on any combination of individually or jointly administered programs or contracts.

For energy utilities, the bill creates requirements for them to fund the statewide programs. The PSC must determine the amount of funding required to achieve the goal for each target fuel under the statewide programs for each year of the upcoming quadrennium, and subtract from that amount any amounts the PSC has authorized to be spent on utility-administered or large energy customer programs for the target fuel. The difference is the total funding required for the target fuel under the statewide programs. For regulated fuels, the PSC then determines each energy utility's percentage of the total sales of the regulated fuel in the quadrennium prior to the proceeding. Annually, an energy utility must pay to statewide programs contractors an amount equal to that percentage multiplied by the total funding required for the regulated fuel. However, an energy utility is allowed to reduce its payment by any amount the PSC has authorized the utility to spend on utility-administered programs and any amount the PSC has authorized the utility's customers to spend on large energy customer programs. For unregulated fuels, funding of the goals is borne by "prime suppliers," which the bill defines as persons who import an unregulated fuel into this state for use in this state. The PSC must determine each prime supplier's percentage of the total sales of the unregulated fuel in the quadrennium prior to the proceeding. Annually, a prime supplier must pay to statewide programs contractors an amount equal to that percentage multiplied by the total funding required for the unregulated fuel.

Assignments to wholesale suppliers.

Current law defines "wholesale supplier" as a municipal electric company or wholesale electric cooperative that supplies electricity at wholesale to a municipal electric utility or retail electric cooperative. The bill allows a municipal electric utility or retail electric cooperative to assign its duties regarding a goal to its wholesale supplier. A wholesale supplier who accepts an assignment must notify the PSC, determine the funding amount necessary to achieve the assigned goal, and spend the amount so determined in administering commitment to community programs on behalf of the municipal electric utility or retail electric cooperative. The wholesale supplier must also take other actions regarding the municipal electric utility's or retail electric cooperative's reporting and auditing duties with respect to the goal. In addition, if a wholesale supplier accepts an assignment from more than one municipal electric utility or retail electric cooperative, the wholesale supplier must carry out the its duties on an aggregate basis on behalf of all the municipal electric utilities and retail electric cooperatives that made an assignment.

Compliance and enforcement.

Under the bill, the PSC must determine whether the statewide and commitment to community programs have met their goals on average over the quadrennium following the proceeding establishing the goals. If a wholesale supplier accepts an assignment from more than one municipal electric utility or retail electric cooperative, the PSC must determine whether the relevant goals have been met on an aggregate basis. The PSC must also determine whether utility-administered, supplemental utility, and large energy customer programs have met their goals over the period of the program or another time period determined by the PSC.

If the PSC determines that a program has failed to meet one or more goals, the PSC must determine the reason for that failure. If the PSC determines that the person responsible for the program made a good faith effort to meet the goals and that the failure to do so was due to factors outside that person's control, the PSC must take those factors into account in modifying goals when approving future programs administered by that person. If the PSC determines that the person responsible for the program did not make a good faith effort to meet the goals or that the failure to do so was due to factors within that person's control, the PSC must implement remedies specified in rules promulgated by the PSC. However, the PSC may find that a person did not make a good faith effort only if the PSC finds that the person has repeatedly or grossly failed to meet a goal or, with respect to a commitment to community program, that the person administering the program did not determine a funding amount that was reasonably necessary to meet the goal. In addition, the PSC may promulgate rules specifying other conditions for finding that a person did not make a good faith effort to meet a goal.

The bill requires that the remedies specified in the PSC's rules must be in proportion to the magnitude of the failure and the degree to which the person did not make a good faith effort or control the relevant factors. The potential remedies must include an order that the person take corrective actions, which may include meeting a goal in a time period specified by the PSC, in addition to meeting any other goals that apply during that time period. In addition, for statewide programs, the potential remedies must include the following: 1) an order that energy utilities or a statewide programs contractor invoke any contractual remedies that imposes monetary penalties for failure to meet a goal; 2) an order that the energy utilities modify or terminate a contract with a statewide programs contractor; and 3) an order that a statewide programs contractor terminate or modify any subcontract. For utility-administered programs and large energy customer programs, the potential remedies must include an order modifying or terminating the program. For commitment to community programs, the potential remedies must include the following: 1) modification or termination of a contract with, or assignment to, a wholesale supplier; and 2) a requirement that a municipal electric utility or retail electric cooperative enter into a contract with a statewide programs contractor.

Other changes.

The bill makes other changes, including the following:

1. The bill creates additional requirements for the PSC's approval of utility-administered, supplemental utility, and large energy customer programs.

The bill also clarifies that utility-administered and supplemental utility programs must be limited to services related to regulated fuels and that supplemental utility programs must be limited to an energy utility's customers. In addition, the bill allows an energy utility to request PSC approval at any time to establish, modify, or discontinue a utility-administered or supplemental utility program.

2. Current law requires that the PSC ensure that statewide and utility-administered program costs are equitably divided among customer classes and that customer classes have the opportunity to receive grants and benefits under the programs in amounts equal to the amounts recovered from the class to fund the programs. Under the bill, the PSC may allow a customer class the opportunity to receive grants and benefits not equal to the amount recovered from the class if the PSC finds that to do so is in the public interest and promotes the cost-effective achievement of program goals.

3. The bill requires the PSC to promulgate rules for allowing, under specified circumstances, an energy utility to earn a return on capital invested in energy conservation or efficiency equipment under a utility-administered or supplemental utility program.

4. The bill allows commitment to community programs to include renewable resource programs, as well as the energy efficiency programs allowed under current law.

5. Current law prohibits the PSC from imposing additional energy conservation and efficiency requirements on energy utilities that have complied with their duties under the statewide programs. The bill creates a similar prohibition regarding municipal electric utilities and wholesale suppliers that have, on average, complied with commitment to community program goals or have made a good faith effort to comply.

6. Under current law, the PSC is required to annually contract for an audit of statewide, utility-administered, supplemental utility, and large energy customer programs. Under the bill, if an audit indicates that a program has failed to meet any goal for any one year, the PSC must consult with the person administering the program regarding ways to modify the program to ensure that it meets its goals.

7. The bill allows the PSC to recover its costs related to administering energy efficiency and renewable resource programs through an assessment procedure specified in current law.

8. The bill revises the definition of "renewable resource" so that it does not include resources deriving energy from natural gas or nonbiological industrial, commercial, or household waste. Under current law, a resource that derives energy from natural gas used in a fuel cell is considered a renewable resource.

9. The bill requires the PSC to exercise its regulatory authority to ensure, under certain circumstances, maximum reductions in the use of and demand for regulated fuels.

10. The bill requires the PSC to ensure in its rate-making orders that municipal electric utilities recover from ratepayers the amounts necessary to comply with requirements for commitment to community programs. Current law imposes a similar duty regarding energy utilities.

11. The bill requires the PSC to study whether its rules allow an adequate opportunity for creating large energy customer programs and report its findings to the legislature and governor.