Energy and Commerce

Energy and Commerce Omnibus Budget Bill

Two-year funding is provided for the Commerce Department’s Division of Energy Resources, Public Utilities Commission, Petroleum Tank Release Compensation Board, and Telecommunications – including agency operating adjustments. Both the Energy and Commerce budget shared a target of $16.83 million between the two – which is an increase from the $0 target Senate Republicans had for the committee during regular session. The Energy budget also included spending from the Renewable Development Account (RDA), which is financed by Xcel Energy’s Minnesota electric customers and promotes the startup, expansion, and attraction of renewable energy projects and companies within Xcel service areas. (HF 6)

Notable items in HF 6 include:

Natural Gas Innovation Act (NGIA)

Creates a framework for gas utilities to pursue innovative resources (biogas, renewable natural gas, power-to-hydrogen, power-to-ammonia, carbon capture, strategic electrification, district energy, and energy efficiency) that can reduce lifecycle greenhouse gas emissions. Gas utilities can recover the costs of the program from its customers – but with limitations. Though the cost of the programs will be recovered through the utilities, $602,000 was appropriated from the general fund for costs associated with establishing the framework.

Solar on Schools and Colleges

Establishes grant programs to encourage and reduce the cost of installing solar energy systems both in school districts as well as state colleges and universities. The bill provides appropriations from both the RDA and the general fund to ensure access to funding is available across the entire state.

From the RDA: $8 million is provided for solar on schools for projects within Xcel service territory, with at least 40% of the funding prioritized for schools that provide free and reduced-price lunch for 50% or more of their students and no more than 10% of the funding to the same school district; $1.242 million is provided for solar on state colleges for projects within Xcel service territory, with no more than 10% of the funding going to the same college/university. From the general fund: $8 million for solar on schools outside of Xcel territory and $1.242 million for solar on state colleges/universities outside of Xcel territory.

Clean energy career training pilot project

This appropriates $2.5 million from the RDA to Northgate Development to create a pilot project to provide skills and training relevant to the design, construction, operation or maintenance of: 1) renewable wind or solar systems; 2) energy efficiency systems as defined in the CIP statutes; 3) storage systems for renewable energy; 4) charging infrastructure for EV and plug-in hybrids; and 5) technology that manages electrical load to reduce usage or shift demand to off-peak periods.

State building energy and conservation improvement revolving loan account

This newly established revolving loan account provides loans to state agencies for energy conservation improvement projects. From the RDA: $5 million is appropriated for the account and $307,000 is appropriated for software and administrative costs.

Ammonia research and production

This appropriates $10 million from the RDA to the University of Minnesota for the research, development, and advancement of energy storage systems that utilize hydrogen and ammonia production from renewables and other sources of clean energy. A portion of the appropriation will also be used to provide a demonstration of the technologies.

Construction materials environmental impact study

This appropriates $125,000 for the study at the Center for Sustainable Building Research (U of M) to examine the feasibility, economic costs, and environmental benefits of requiring certain bids that use eligible construction materials. The study is required to provide a report to the Legislature.

Agricultural weather study

This appropriates $583,000 from the RDA to the University of Minnesota to conduct a study that generates weather model projections under varying greenhouse gas emissions scenarios for the entire state of Minnesota at a level of detail as small as three-square miles in area. The modeling projection data will be available to farmers, other universities, nonprofits and other businesses, and local governments, and the University will provide a written report to the Legislature.

Cold weather rule extension

This expands the cold weather rule protections by extending the window two weeks in the fall from the current October 15 to October 1. The bill also extends the protections two weeks in the spring from April 15 to April 30.

Minnesota efficient technology accelerator

Creates a framework for an experienced energy efficiency nonprofit to work with businesses and utilities to accelerate the adoption of an emerging technology by preparing supply chains, markets, and the workforce.

Energy transition planning

Several initiatives were passed around energy transition planning including the establishment of an Energy Transition Office in the Department of Employment and Economic Development (DEED), an Energy Transition Advisory Committee, the requirement of an energy transition plan from the advisory committee, and the requirement for utilities to provide a plan to minimize impacts to workers due to facility retirement.

The Energy Transition Office will lead the effort to support communities and workers impacted by the closing of a legacy power generating facility. The office will support transitioning communities by assisting with the creation of property tax revenue replacement, community energy transition programs, and economic development tools for impacted communities and workers. The Energy Transition Advisory Committee will work with this office to develop a statewide energy transition plan to advise the governor, commissioner, and Legislature on transition issues, established transition programs, economic initiatives, and transition policy.

2021 Energy legislation that passed

Energy Conservation and Optimization (ECO) Act of 2021

This legislation marks the first significant update to the Conservation Improvement Program (CIP) since the passage of the Next Generation Energy Act of 2007. ECO Act accomplishes the following:

• Increases Minnesota’s state annual energy savings goal to at least 2.5% of annual retail energy sales
• Expands CIP to include load management and provides limited efficient fuel-switching, which allows utilities to switch to the use of another fuel that is more efficient, cost-effective, and lower carbon
• Eliminates the minimum utility energy conservation spending requirement, which completes a transition from a program based on utility spending on energy efficiency to one that is based on energy savings for customers
• Allows COUs to submit plans that could cover up to three years, providing more flexibility to meet state goals
• Maintains energy savings goals of COUs at 1.5% of gross annual retail sales and allows net energy savings from efficient fuel-switching improvements to count toward that goal above a minimum energy savings goal of 1% from traditional energy efficiency
• Increases energy savings goals for investor-owned electric utilities to 1.75% (up from 1.5%) and sets a goal for investor-owned gas utilities at 1%
• Increases the amount of support available to benefit low-income customers for IOUS to 1%

(HF 164)

Cogeneration pilot project agreement

This is a joint effort by District Energy St. Paul and Xcel Energy to establish a unique pilot for St. Paul’s downtown business district and the state capitol complex. The goal is to decarbonize heating and cooling in a targeted manner and to help deal with waste from the state’s emerald ash borer infestation. (SF 1047)

2021 Energy legislation that did not pass

100% carbon-free electricity standard by 2040

This change would require all electric utilities to be 100% carbon-free by 2040. It also increases the amount of electricity that a utility must either generate or procure through renewable energy sources. Xcel Energy, Minnesota Power, and Great River Energy (which provide electricity to 80% of Minnesotans) are already on a path to receive carbon-free electricity by 2050. This legislation is considered a top priority among DFLers in the House and Senate as well as for Governor Walz. (SF 643)

Clean Energy First

This proposal creates a preference for renewable energy and carbon-free resources. It defines carbon-free as technology that does not contribute to Minnesota’s greenhouse gas emissions while the technology is operating. Once in law, utilities will have to prove with clear and convincing evidence that they cannot meet the needs of their customers with renewable or clean energy resources before considering carbon-intensive resources. (HF 10)

Next Generation Climate Act

A Senate DFL amendment offered on the floor to the Senate Commerce and Energy Omnibus Bill: the Next Generation Climate Act increases the statewide greenhouse gas emissions targets by including a 45% reduction from 2005 baseline levels by 2030 and a goal to be net zero carbon by 2050.  To better help Minnesota achieve its greenhouse gas reduction goals the bill directs the governor’s climate subcabinet integrate greenhouse gas reductions into state activities. The amendment was rejected on a party-line vote. (Amendment to SF 972)

Requiring prevailing wage for clean energy jobs

Multiple other Senate DFL amendments offered to the Senate Commerce and Energy Omnibus Bill would have required that any employees working on clean energy projects be paid a prevailing wage for their work. Both amendments were rejected – once again on party-line votes. (Amendment to SF 972)

Electric vehicle initiatives

Several provisions included the House version of the original Commerce and Energy Omnibus Bill and supported by Senate DFLers aimed at furthering the infrastructure and financial affordability for electric vehicles. Some ideas for increasing electric vehicle use in the state include establishing a preference for electric vehicles purchased for the state fleet, providing funding for electric vehicle rebates, building out electric vehicle charging infrastructure across the entire state (including charging stations at state buildings and in state parks), and increasing the number of electric buses for schools and for the Metropolitan Council. Senate Republicans refused to include any provisions related to electric vehicles in the final bill passed. (HF 1031)

2021 Commerce legislation that passed

Reinsurance

The Omnibus HHS Budget Bill ultimately included a one-year extension of the reinsurance program, which extends the program through plan year 2022. This is a slightly dialed down version of the current reinsurance program designed to utilize all of the existing money in the Premium Security Account. This language also directs the Department of Commerce to apply for another five-year federal waiver for reinsurance beginning in 2023 to maximize potential federal funding. MMB and Commerce must transfer money to make up for the losses facing the MinnesotaCare program and MNsure revenue if reinsurance is extended.

2021 votes on reinsurance:

• HF 33 – special session HHS bill; signed by Governor Walz, includes a one-year extension
• SF 972 – regular session omnibus Commerce/Energy bill, includes two-year extension at cost of $150 million
• SF 694 – regular session, standalone reinsurance bill, includes one-year extension

Minnesota’s reinsurance plan – the Minnesota Premium Security Plan – originally passed in 2017 when the individual marketplace was new. It provided state money to insurance companies to subsidize high-cost enrollees to incentivize those companies to lower their advertised premiums. The program was supported with $542 million in taxpayer dollars. It encourages – but does not require – insurance companies offering plans on the individual market to hold down their rates.

Many DFLers argued that new language in the American Rescue Plan that caps consumers’ premium costs at no more than 8% of income means reinsurance subsidies to insurance companies are no longer needed, but Republicans said the roughly 50,000 Minnesotans who purchase plans outside the MNsure exchange wouldn’t be affected by that chance and would need reinsurance as a backstop. When a standalone bill was heard on the Senate Floor in February, DFLers argued that taxpayer dollars would be better spent exploring long-term solutions that address not just insurance premiums, but health care costs and health outcomes.

Catalytic converter theft

The Omnibus Commerce and Energy Bill includes a House DFL provision to require any person purchasing or receiving a catalytic converter to record any numbers, bar codes, or unique markings and the name of the person who removed the converter. The bill also establishes a pilot program to place unique ID numbers on catalytic converters and directs the commissioner to develop a procedure to mark converters, to work with law enforcement and scrap metal dealers to identify types of vehicles most at risk of theft, to prioritize distribution of materials to areas with the highest rates of theft, and to make educational materials available. The program was funded with $200,000 from the General Fund, plus $200,000 from the Auto Theft Prevention Account. (SF 972)

Neither this bill nor a more robust Senate DFL bill were heard by the Senate Commerce Committee. The Senate bill would have provided criminal penalties for those who possess a catalytic converter not attached to a vehicle and prohibited scrap metal dealers from purchasing the converters from anyone not authorized under the law. (SF 890)

Student Loan Borrower Bill of Rights

The Omnibus Commerce and Bill included a DFL priority – the Student Borrowers Bill of Rights. It requires loan servicers to obtain a Minnesota license and enacts certain requirements, such as:

• Requires timely responses to borrowers’ written communication
• Requires servicers to apply overpayments as instructed by the borrower
• Requires servicers to apply partial payments in a way that minimizes late fees and the negative impact on the borrower’s credit history
• Requires servicers to evaluate borrowers for income-driven repayment program eligibility before placing them in forbearance or default
• Prohibits servicers from engaging in unfair or deceptive practices; from attempting to mislead a borrower; from knowingly misapplying payments; from providing inaccurate information to a consumer reporting agency.
• Allows the Commerce Commissioner to examine student loan servicers as necessary and take action against a licensee, including barring a person from servicing loans.
• Effective Aug. 1, 2021 and applied to student loan contracts executed on or after that date.

Similar to many other consume protection measures passed in the compromise special session bill, the Senate Republican Commerce Committee never heard this bill during regular session, despite strong bipartisan support. (SF 1502)

Mandated health benefit proposals evaluation

The Omnibus Commerce Bill includes a provision to require any proposed legislative changes that would mandate health benefits insurers must cover to go through a review process by the Depts. of Commerce, Health, and MMB. This is currently an optional review if the bill author requests it.

The bill requires lawmakers planning to author a bill that would: 1) change mandated health benefits; 2) change the cost-sharing or benefit design for a treatment, service, or medical equipment; or 3) impose limits or conditions on a contract between a health plan and provider to notify the chair of the relevant legislative committee by August 1 the year before the legislative session in which the bill would be introduced. The chair must then notify the Commissioner of Commerce that an evaluation must be completed. (SF 972)

Storage unit lease regulations

Under a new law passed in the Omnibus Commerce and Energy Bill, storage unit owners now must notify a person renting a space when they are in default. Current law also is amended to allow a person to gain access to certain items in their storage space, including personal papers and health aids from a storage unit. When the person is a recipient of government benefits, this section also allows them to remove tools of the trade and personal clothing worth less than $125. (SF 972)

2021 Commerce legislation that did not pass

Anti-price-gouging law

Minnesota is one of 14 states that do not have some type of anti-price gouging law on its books. One of the first Executive Orders Gov. Walz imposed after the pandemic began prohibits anyone from selling consumer goods or services for an amount that represents an unconscionably excessive price during the pandemic (Executive Order 20-10). It came after early reports of items such as toilet paper and hand sanitizer being sold for exorbitant prices. Once implemented, the Attorney General’s office received more than 700 complaints in the first three weeks and 2,200 by November 2020.

Once the emergency expires, this temporary executive order also will be nullified. The Minnesota House passed a bill – twice – that would permanently etch these restrictions into Minnesota law, but Senate Republicans refused to even grant a hearing on the matter. Enacting this law also was included in Gov. Walz’s letter to the Legislature outlining steps toward ending the peacetime emergency but, still, Republicans would not hear the bill. (HF 844)

Liquor law bills refused a hearing

The Senate Commerce Committee did not consider any liquor-related bills this session, despite an aggressive grassroots campaign from Minnesotans asking to make their case before the Legislature. One bill generating attention is dubbed the #DrinkLocalMN bill (SF 1021). It would allow cideries and brewpubs to self-distribute, would permanently permit bars and restaurants to sell cocktails to go and would allow liquor stores to fill growlers. Another high-profile proposal would remove the 20,000-barrel threshold at which craft brewers can no longer sell growlers (SF 874). Both the Senate and House Commerce chairs indicated they would not hear the bills this session.