1.2relating to utilities; regulating incentive rate plans for conservation investments;
1.3amending Minnesota Statutes 2008, sections 216B.16, subdivision 6c; 216B.241,
1.4subdivision 5a.
1.5BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.6    Section 1. Minnesota Statutes 2008, section 216B.16, subdivision 6c, is amended to
1.7read:
1.8    Subd. 6c. Incentive plan for energy conservation improvement. (a) The
1.9commission may order public utilities to develop and submit for commission approval
1.10incentive plans that describe the method of recovery and accounting for utility
1.11conservation expenditures and savings. In developing the incentive plans the commission
1.12shall ensure the effective involvement of interested parties.
1.13(b) In approving incentive plans, the commission shall consider:
1.14(1) whether the plan is likely to increase utility investment in cost-effective energy
1.15conservation;
1.16(2) whether the plan is compatible with the interest of utility ratepayers and other
1.17interested parties;
1.18(3) whether the plan links the incentive to the utility's performance in achieving
1.19cost-effective conservation; and
1.20(4) whether the plan is in conflict with other provisions of this chapter.
1.21(c) The commission may set rates to encourage the vigorous and effective
1.22implementation of utility conservation programs. The commission may:
1.23(1) increase or decrease any otherwise allowed rate of return on net investment based
1.24upon the utility's skill, efforts, and success in conserving energy;
2.1(2) share between ratepayers and utilities the net savings resulting from energy
2.2conservation programs to the extent justified by the utility's skill, efforts, and success in
2.3conserving energy; and
2.4(3) compensate the utility for earnings lost as a result of its conservation programs
2.5adopt any mechanism that satisfies the criteria of this subdivision.
2.6(d) In a review of an incentive plan, including a review under section 216B.241,
2.7subdivision 2c, the commission shall ensure that any changes to the incentive plan will
2.8encourage public utilities to achieve or exceed the state's energy conservation goals
2.9and maintain the cost-effectiveness of its programs. The commission shall provide the
2.10utility with a reasonable opportunity to improve its overall profitability by effective
2.11implementation of energy conservation programs, taking into consideration earnings lost
2.12as a result of the conservation program. The commission shall ensure that cost-effective
2.13conservation is the most profitable resource option for public utilities.

2.14    Sec. 2. Minnesota Statutes 2008, section 216B.241, subdivision 5a, is amended to read:
2.15    Subd. 5a. Qualifying solar energy project. (a) A utility or association may include
2.16in its conservation plan programs for the installation of qualifying solar energy projects as
2.17defined by section 216B.2411 to the extent of the spending allowed for generation projects
2.18by section 216B.2411. The cost-effectiveness of a qualifying solar energy project may
2.19be determined by a different standard than for other energy conservation improvements
2.20under this section if the commissioner determines it is in the public interest to do so to
2.21encourage solar energy projects. Energy savings from qualifying solar energy projects
2.22may not be counted toward the minimum energy-savings goal of at least one percent
2.23for energy conservation improvements required under subdivision 1c, but may, if the
2.24conservation plan is approved:
2.25    (1) be counted toward energy savings above that minimum percentage; and
2.26    (2) be considered when establishing performance incentives under section 216B.241,
2.27subdivision 2c eligible for a performance incentive under section 216B.16, subdivision 6c,
2.28or 216B.241, subdivision 2c, that is distinct from the incentive for energy conservation
2.29and is based on the competitiveness and cost-effectiveness of solar projects in relation to
2.30other potential solar projects available to the utility.
2.31    (b) Qualifying solar energy projects may not be considered when establishing
2.32demand-side management targets under section 216B.2422, 216B.243, or any other
2.33section of this chapter.