1.1    .................... moves to amend H. F. No. 1221, the first committee engrossment,
1.2as follows:
1.3Delete everything after the enacting clause and insert:


1.6    Section 1. Minnesota Statutes 2006, section 216B.16, subdivision 1, is amended to read:
1.7    Subdivision 1. Notice. Unless the commission otherwise orders, no public utility
1.8shall change a rate which has been duly established under this chapter, except upon 60
1.9days' notice to the commission. The notice shall include statements of facts, expert
1.10opinions, substantiating documents, and exhibits, supporting the change requested, and
1.11state the change proposed to be made in the rates then in force and the time when the
1.12modified rates will go into effect. If the filing utility does not have an approved energy
1.13conservation improvement plan on file with the department, it shall also include in its
1.14notice an energy conservation plan pursuant to section 216B.241. A filing utility subject to
1.15rate regulation under section 216B.026 shall reference in its notice the energy conservation
1.16improvement plans of the generation and transmission cooperative providing energy
1.17conservation improvement programs to members of the filing utility pursuant to section
1.18216B.241. The filing utility shall give written notice, as approved by the commission, of
1.19the proposed change to the governing body of each municipality and county in the area
1.20affected. All proposed changes shall be shown by filing new schedules or shall be plainly
1.21indicated upon schedules on file and in force at the time.

1.22    Sec. 2. Minnesota Statutes 2006, section 216B.16, subdivision 6b, is amended to read:
1.23    Subd. 6b. Energy conservation improvement. (a) Except as otherwise provided
1.24in this subdivision, all investments and expenses of a public utility as defined in
1.25section 216B.241, subdivision 1, paragraph (e) (i), incurred in connection with energy
1.26conservation improvements shall be recognized and included by the commission in the
2.1determination of just and reasonable rates as if the investments and expenses were directly
2.2made or incurred by the utility in furnishing utility service.
2.3    (b) After December 31, 1999, Investments and expenses for energy conservation
2.4improvements shall not be included by the commission in the determination of (i) just and
2.5reasonable electric and gas rates for retail electric and gas service provided to large electric
2.6customer facilities that have been exempted by the commissioner of the department
2.7pursuant to section 216B.241, subdivision 1a, paragraph (b); or (ii) just and reasonable
2.8gas rates for large energy facilities. However, no public utility shall be prevented from
2.9recovering its investment in energy conservation improvements from all customers that
2.10were made on or before December 31, 1999, in compliance with the requirements of
2.11section 216B.241.
2.12    (c) The commission may permit a public utility to file rate schedules providing for
2.13annual recovery of the costs of energy conservation improvements. These rate schedules
2.14may be applicable to less than all the customers in a class of retail customers if necessary to
2.15reflect the differing minimum spending requirements of section 216B.241, subdivision 1a.
2.16After December 31, 1999, The commission shall allow a public utility, without requiring
2.17a general rate filing under this section, to reduce the electric and gas rates applicable to
2.18large electric customer facilities that have been exempted by the commissioner of the
2.19department pursuant to section 216B.241, subdivision 1a, paragraph (b), and to reduce the
2.20gas rate applicable to a large energy facility by an amount that reflects the elimination
2.21of energy conservation improvement investments or expenditures for those facilities
2.22required on or before December 31, 1999. In the event that the commission has set
2.23electric or gas rates based on the use of an accounting methodology that results in the cost
2.24of conservation improvements being recovered from utility customers over a period of
2.25years, the rate reduction may occur in a series of steps to coincide with the recovery of
2.26balances due to the utility for conservation improvements made by the utility on or before
2.27December 31, 1999 2007.

2.28    Sec. 3. [216B.1636] RECOVERY OF ELECTRIC UTILITY INFRASTRUCTURE
2.29COSTS.
2.30    Subdivision 1. Definitions. (a) "Electric utility" means a public utility as defined in
2.31section 216B.02, subdivision 4, that furnishes electric service to retail customers.
2.32    (b) "Electric utility infrastructure costs" or "EUIC" means costs for electric utility
2.33infrastructure projects that were not included in the electric utility's rate base in its most
2.34recent general rate case.
2.35    (c) "Electric utility infrastructure projects" means projects that:
3.1(1) replace or modify existing electric utility infrastructure, including utility-owned
3.2buildings, if the replacement or modification is shown to conserve energy or use energy
3.3more efficiently, consistent with section 216B.241, subdivision 1c; or
3.4(2) conserve energy or use energy more efficiently by using waste heat recovery
3.5converted into electricity as defined in section 216B.241, subdivision 1, paragraph (n).
3.6    Subd. 2. Filing. (a) The commission may approve an electric utility's petition for
3.7a rate schedule to recover EUIC under this section. An electric utility may petition the
3.8commission to recover a rate of return, income taxes on the rate of return, incremental
3.9property taxes, if any, plus incremental depreciation expense associated with EUIC.
3.10    (b) The filing is subject to the following:
3.11    (1) an electric utility may submit a filing under this section no more than once
3.12per year; and
3.13    (2) an electric utility must file sufficient information to satisfy the commission
3.14regarding the proposed EUIC or be subject to denial by the commission. The information
3.15includes, but is not limited to:
3.16    (i) the location, description, and costs associated with the project;
3.17    (ii) evidence that the electric utility infrastructure project will conserve energy or use
3.18energy more efficiently than similar utility facilities currently used by the electric utility;
3.19    (iii) the proposed schedule for implementation;
3.20    (iv) a description of the costs, and salvage value, if any, associated with the existing
3.21infrastructure replaced or modified as a result of the project;
3.22    (v) the proposed rate design and an explanation of why the proposed rate design
3.23is in the public interest;
3.24    (vi) the magnitude of timing of any known future electric utility projects that the
3.25utility may seek to recover under this section;
3.26    (vii) the magnitude of EUIC in relation to the electric utility's base revenue as
3.27approved by the commission in the electric utility's most recent general rate case,
3.28exclusive of fuel cost adjustments;
3.29    (viii) the magnitude of EUIC in relation to the electric utility's capital expenditures
3.30since its most recent general rate case;
3.31    (ix) the amount of time since the utility last filed a general rate case and the utility's
3.32reasons for seeking recovery outside of a general rate case;
3.33    (x) documentation supporting the calculation of the EUIC; and
3.34    (xi) a cost and benefit analysis showing that the electric utility infrastructure project
3.35is in the public interest.
4.1Upon approval of the proposed projects and associated EUIC rate schedule, the utility
4.2may implement the electric utility infrastructure projects.
4.3    Subd. 3. Commission authority; orders. The commission may issue orders
4.4necessary to implement and administer this section.

4.5    Sec. 4. [216B.2401] ENERGY CONSERVATION POLICY GOAL.
4.6    It is the energy policy of the state of Minnesota to achieve annual energy savings
4.7equal to 1.5 percent of annual retail energy sales of electricity and natural gas directly
4.8through energy conservation improvement programs and rate design, and indirectly
4.9through energy codes and appliance standards, programs designed to transform the market
4.10or change consumer behavior, energy savings resulting from efficiency improvements to
4.11the utility infrastructure and system, and other efforts to promote energy efficiency and
4.12energy conservation.

4.13    Sec. 5. Minnesota Statutes 2006, section 216B.241, is amended to read:
4.14216B.241 ENERGY CONSERVATION IMPROVEMENT.
4.15    Subdivision 1. Definitions. For purposes of this section and section 216B.16,
4.16subdivision 6b , the terms defined in this subdivision have the meanings given them.
4.17    (a) "Commission" means the Public Utilities Commission.
4.18    (b) "Commissioner" means the commissioner of commerce.
4.19    (c) "Customer facility" means all buildings, structures, equipment, and installations
4.20at a single site.
4.21    (d) "Department" means the Department of Commerce.
4.22    (e) "Energy conservation" means demand-side management of energy supplies
4.23resulting in a net reduction in energy use. Load management that reduces overall energy
4.24use is energy conservation.
4.25    (f) "Energy efficiency" means measures or programs, including energy conservation
4.26measures or programs, that target consumer behavior, equipment, processes, or devices
4.27designed to produce either an absolute decrease in consumption of electric energy or
4.28natural gas or a decrease in consumption of electric energy or natural gas on a per unit
4.29of production basis without a reduction in the quality or level of service provided to
4.30the energy consumer.
4.31    (g) "Energy conservation improvement" means a project that results in energy
4.32efficiency or energy conservation. Energy conservation improvement does not include
4.33waste heat recovery converted into electricity or electric utility infrastructure projects
4.34approved by the commission under section 216B.1636.
5.1    (g) (h) "Gross annual retail energy sales" means annual electric sales to all retail
5.2customers in a utility's or association's Minnesota service territory or natural gas
5.3throughput to all retail customers, including natural gas transportation customers, on a
5.4utility's distribution system in Minnesota. For purposes of this section, gross annual
5.5retail energy sales exclude gas sales to a large energy facility and gas and electric sales
5.6to a large electric customer facility exempted by the commissioner under subdivision
5.71a, paragraph (b).
5.8    (i) "Investments and expenses of a public utility" includes the investments and
5.9expenses incurred by a public utility in connection with an energy conservation
5.10improvement, including but not limited to:
5.11    (1) the differential in interest cost between the market rate and the rate charged on a
5.12no-interest or below-market interest loan made by a public utility to a customer for the
5.13purchase or installation of an energy conservation improvement;
5.14    (2) the difference between the utility's cost of purchase or installation of energy
5.15conservation improvements and any price charged by a public utility to a customer for
5.16such improvements.
5.17    (h) (j) "Large electric customer facility" means a customer facility that imposes a
5.18peak electrical demand on an electric utility's system of not less than 20,000 kilowatts,
5.19measured in the same way as the utility that serves the customer facility measures
5.20electrical demand for billing purposes, and for which electric services are provided at
5.21retail on a single bill by a utility operating in the state.
5.22    (i) (k) "Large energy facility" has the meaning given it in section 216B.2421,
5.23subdivision 2, clause (1).
5.24    (l) "Load management" means an activity, service, or technology to change the
5.25timing or the efficiency of a customer's use of energy that allows a utility or a customer
5.26to respond to wholesale market fluctuations or to reduce the overall peak demand for
5.27energy or capacity.
5.28    (m) "Low income programs" means energy conservation improvement programs
5.29that directly serve the needs of low income persons, including low income renters.
5.30    (n) "Waste heat recovery converted into electricity" means an energy recovery
5.31process that converts otherwise lost energy from the heat of exhaust stacks or pipes used
5.32for engines or manufacturing or industrial processes, or the reduction of high pressure
5.33in water or gas pipelines.
5.34    Subd. 1a. Investment, expenditure, and contribution; public utility. (a) For
5.35purposes of this subdivision and subdivision 2, "public utility" has the meaning given it
5.36in section 216B.02, subdivision 4. Each public utility shall spend and invest for energy
6.1conservation improvements under this subdivision and subdivision 2 the following
6.2amounts:
6.3    (1) for a utility that furnishes gas service, 0.5 percent of its gross operating revenues
6.4from service provided in the state;
6.5    (2) for a utility that furnishes electric service, 1.5 percent of its gross operating
6.6revenues from service provided in the state; and
6.7    (3) for a utility that furnishes electric service and that operates a nuclear-powered
6.8electric generating plant within the state, two percent of its gross operating revenues
6.9from service provided in the state.
6.10    For purposes of this paragraph (a), "gross operating revenues" do not include
6.11revenues from large electric customer facilities exempted by the commissioner under
6.12paragraph (b).
6.13    (b) The owner of a large electric customer facility may petition the commissioner
6.14to exempt both electric and gas utilities serving the large energy customer facility from
6.15the investment and expenditure requirements of paragraph (a) with respect to retail
6.16revenues attributable to the facility. At a minimum, the petition must be supported by
6.17evidence relating to competitive or economic pressures on the customer and a showing
6.18by the customer of reasonable efforts to identify, evaluate, and implement cost-effective
6.19conservation improvements at the facility. If a petition is filed on or before October 1 of
6.20any year, the order of the commissioner to exempt revenues attributable to the facility can
6.21be effective no earlier than January 1 of the following year. The commissioner shall
6.22not grant an exemption if the commissioner determines that granting the exemption is
6.23contrary to the public interest. The commissioner may, after investigation, rescind any
6.24exemption granted under this paragraph upon a determination that cost-effective the
6.25customer is not continuing to make reasonable efforts to identify, evaluate, and implement
6.26energy conservation improvements are available at the large electric customer facility.
6.27For the purposes of this paragraph, "cost-effective" means that the projected total cost of
6.28the energy conservation improvement at the large electric customer facility is less than
6.29the projected present value of the energy and demand savings resulting from the energy
6.30conservation improvement. For the purposes of investigations by the commissioner under
6.31this paragraph, the owner of any large electric customer facility shall, upon request,
6.32provide the commissioner with updated information comparable to that originally supplied
6.33in or with the owner's original petition under this paragraph.
6.34    (c) The commissioner may require investments or spending greater than the amounts
6.35required under this subdivision for a public utility whose most recent advance forecast
7.1required under section 216B.2422 or 216C.17 projects a peak demand deficit of 100
7.2megawatts or greater within five years under midrange forecast assumptions.
7.3    (d) A public utility or owner of a large electric customer facility may appeal
7.4a decision of the commissioner under paragraph (b) or (c) to the commission under
7.5subdivision 2. In reviewing a decision of the commissioner under paragraph (b) or (c),
7.6the commission shall rescind the decision if it finds that the required investments or
7.7spending will:
7.8    (1) not result in cost-effective energy conservation improvements; or
7.9    (2) otherwise not be in the public interest.
7.10    (e) Each utility shall determine what portion of the amount it sets aside for
7.11conservation improvement will be used for conservation improvements under subdivision
7.122 and what portion it will contribute to the energy and conservation account established in
7.13subdivision 2a. A public utility may propose to the commissioner to designate that all
7.14or a portion of funds contributed to the account established in subdivision 2a be used
7.15for research and development projects that can best be implemented on a statewide
7.16basis. Contributions must be remitted to the commissioner by February 1 of each year.
7.17Nothing in this subdivision prohibits a public utility from spending or investing for energy
7.18conservation improvement more than required in this subdivision.
7.19    Subd. 1b. Conservation improvement by cooperative association or
7.20municipality. (a) This subdivision applies to:
7.21    (1) a cooperative electric association that provides retail service to its members;
7.22    (2) a municipality that provides electric service to retail customers; and
7.23    (3) a municipality with gross operating revenues in excess of $5,000,000 from
7.24sales of more than 1,000,000,000 cubic feet in annual throughput sales to natural gas
7.25to retail customers.
7.26    (b) Each cooperative electric association and municipality subject to this subdivision
7.27shall spend and invest for energy conservation improvements under this subdivision
7.28the following amounts:
7.29    (1) for a municipality, 0.5 percent of its gross operating revenues from the sale of
7.30gas and 1.5 percent of its gross operating revenues from the sale of electricity, excluding
7.31gross operating revenues from electric and gas service provided in the state to large
7.32electric customer facilities; and
7.33    (2) for a cooperative electric association, 1.5 percent of its gross operating revenues
7.34from service provided in the state, excluding gross operating revenues from service
7.35provided in the state to large electric customer facilities indirectly through a distribution
7.36cooperative electric association.
8.1    (c) Each municipality and cooperative electric association subject to this subdivision
8.2shall identify and implement energy conservation improvement spending and investments
8.3that are appropriate for the municipality or association, except that a municipality
8.4or association may not spend or invest for energy conservation improvements that
8.5directly benefit a large energy facility or a large electric customer facility for which the
8.6commissioner has issued an exemption under subdivision 1a, paragraph (b).
8.7    (d) Each municipality and cooperative electric association subject to this subdivision
8.8may spend and invest annually up to ten percent of the total amount required to be spent
8.9and invested on energy conservation improvements under this subdivision on research
8.10and development projects that meet the definition of energy conservation improvement
8.11in subdivision 1 and that are funded directly by the municipality or cooperative electric
8.12association.
8.13    (e) Load-management activities that do not reduce energy use but that increase the
8.14efficiency of the electric system may be used to meet 50 percent of the conservation
8.15investment and spending requirements of this subdivision.
8.16    (f) A generation and transmission cooperative electric association that provides
8.17energy services to cooperative electric associations that provide electric service at retail to
8.18consumers may invest in energy conservation improvements on behalf of the associations
8.19it serves and may fulfill the conservation, spending, reporting, and energy savings goals on
8.20an aggregate basis. A municipal power agency or other not-for-profit entity that provides
8.21energy service to municipal utilities that provide electric service at retail may invest in
8.22energy conservation improvements on behalf of the municipal utilities it serves and may
8.23fulfill the conservation, spending, reporting, and energy savings goals on an aggregate
8.24basis, under an agreement between the municipal power agency or not-for-profit entity
8.25and each municipal utility for funding the investments.
8.26    (g) At least every four years, on a schedule determined by the commissioner, each
8.27municipality or cooperative shall file an overview of its conservation improvement plan
8.28with the commissioner. With this overview, Each municipality or cooperative shall file
8.29energy conservation improvement plans by June 1 on a schedule determined by order
8.30of the commissioner, but at least every three years. Plans received by June 1 must be
8.31approved or approved as modified by the commissioner by December 1 of the same year.
8.32The municipality or cooperative shall also provide an evaluation to the commissioner
8.33detailing its energy conservation improvement spending and investments for the previous
8.34period. The evaluation must briefly describe each conservation program and must specify
8.35the energy savings or increased efficiency in the use of energy within the service territory
8.36of the utility or association that is the result of the spending and investments. The
9.1evaluation must analyze the cost-effectiveness of the utility's or association's conservation
9.2programs, using a list of baseline energy and capacity savings assumptions developed
9.3in consultation with the department. The commissioner shall review each evaluation
9.4and make recommendations, where appropriate, to the municipality or association to
9.5increase the effectiveness of conservation improvement activities. Up to three percent of
9.6a utility's conservation spending obligation under this section may be used for program
9.7pre-evaluation, testing, and monitoring and program evaluation. The overview and
9.8evaluation filed by a municipality with less than 60,000,000 kilowatt-hours in annual
9.9retail sales of electric service may consist of a letter from the governing board of the
9.10municipal utility to the department providing the amount of annual conservation spending
9.11required of that municipality and certifying that the required amount has been spent on
9.12conservation programs pursuant to this subdivision.
9.13    (h) The commissioner shall also review each evaluation for whether a portion of the
9.14money spent on residential conservation improvement programs is devoted to programs
9.15that directly address the needs of renters and low-income persons unless an insufficient
9.16number of appropriate programs are available. For the purposes of this subdivision and
9.17subdivision 2, "low-income" means an income at or below 50 percent of the state median
9.18income.
9.19    (i) As part of its spending for conservation improvement, a municipality or
9.20association may contribute to the energy and conservation account. A municipality or
9.21association may propose to the commissioner to designate that all or a portion of funds
9.22contributed to the account be used for research and development projects that can best
9.23be implemented on a statewide basis. Any amount contributed must be remitted to the
9.24commissioner by February 1 of each year.
9.25    (j) (h) A municipality may spend up to 50 percent of its required spending under
9.26this section to refurbish an existing district heating or cooling system. This paragraph
9.27expires until July 1, 2007. From July 1, 2007, through June 30, 2011, expenditures made
9.28to refurbish a district heating or cooling system are considered to be load-management
9.29activities under paragraph (e). This paragraph expires July 1, 2011.
9.30    (i) The commissioner shall consider and may require a utility, association, or
9.31other entity providing energy efficiency and conservation services under this section to
9.32undertake a program suggested by an outside source, including a political subdivision,
9.33nonprofit corporation, or community organization.
9.34    Subd. 1c. Energy-saving goals. (a) The commissioner shall establish energy-saving
9.35goals for energy conservation improvement expenditures and shall evaluate an energy
9.36conservation improvement program on how well it meets the goals set.
10.1    (b) Each individual utility and association shall have an annual energy-savings
10.2goal equivalent to 1.5 percent of gross annual retail energy sales unless modified by the
10.3commissioner under paragraph (d). The savings goals must be calculated based on the
10.4most recent three-year weather normalized average.
10.5    (c) The commissioner must adopt a filing schedule that is designed to have all
10.6utilities and associations operating under an energy savings plan by calendar year 2010.
10.7    (d) In its energy conservation improvement plan filing, a utility or association may
10.8request the commissioner to adjust its annual energy savings percentage goal based on
10.9its historical conservation investment experience, customer class makeup, load growth,
10.10a conservation potential study, or other factors the commissioner determines warrants
10.11an adjustment. The commissioner may not approve a plan that provides for an annual
10.12energy savings goal of less than one percent of gross annual retail energy sales from
10.13energy conservation improvements. A utility or association may include in its energy
10.14conservation plan energy savings from an electric utility infrastructure project or waste
10.15heat recovery converted into electricity project approved by the commission under section
10.16216B.1636 that may count as energy savings in addition to the minimum energy savings
10.17goal of at least one percent for energy conservation improvements. Electric utility
10.18infrastructure projects must result in increased energy efficiency greater than that which
10.19would have occurred through normal maintenance activity.
10.20    (e) An energy savings goal is not satisfied by attaining the revenue expenditure
10.21requirements of subdivisions 1a and 1b, but can only be satisfied by meeting the energy
10.22savings goal established in this subdivision.
10.23    (f) An association or utility is not required to make energy conservation investments
10.24to attain the energy savings goals of this subdivision that are not cost-effective even
10.25if the investment is necessary to attain the energy savings goals. For the purpose of
10.26this paragraph, in determining cost-effectiveness, the commissioner shall consider the
10.27costs and benefits to ratepayers, the utility, participants, and society. In addition, the
10.28commissioner shall consider the rate at which an association or municipal utility is
10.29increasing its energy savings and its expenditures on energy conservation.
10.30    (g) On an annual basis, the commissioner shall produce and make publicly available
10.31a report on the annual energy savings and estimated carbon dioxide reductions achieved
10.32by the energy conservation improvement programs for the two most recent years for
10.33which data is available. The commissioner shall report on program performance both in
10.34the aggregate and for each entity filing an energy conservation improvement plan for
10.35approval or review by the commissioner.
11.1    (h) By January 15, 2010, the commissioner shall report to the legislature whether the
11.2spending requirements under subdivisions 1a and 1b are necessary to achieve the energy
11.3savings goals established in this subdivision.
11.4    Subd. 1d. Cooperative conservation investment increase phase-in Technical
11.5assistance. The increase in required conservation improvement expenditures by a
11.6cooperative electric association that results from the amendments in Laws 2001, chapter
11.7212, article 8, section 6, to subdivision 1b, paragraph (a), clause (1), must be phased
11.8in as follows:
11.9    (1) at least 25 percent shall be effective in year 2002;
11.10    (2) at least 50 percent shall be effective in year 2003;
11.11    (3) at least 75 percent shall be effective in year 2004; and
11.12    (4) all of the increase shall be effective in year 2005 and thereafter.
11.13    The commissioner shall evaluate energy conservation improvement programs
11.14on the basis of cost-effectiveness and the reliability of the technologies employed.
11.15The commissioner shall, by order, establish, maintain and update energy savings
11.16assumptions that must be used when filing energy conservation improvement programs.
11.17The commissioner shall establish an inventory of the most effective energy conservation
11.18programs, techniques, and technologies, and encourage all Minnesota utilities to
11.19implement them, where appropriate, in their service territories. The commissioner shall
11.20describe these programs in sufficient detail to provide a utility reasonable guidance
11.21concerning implementation. The commissioner shall prioritize the opportunities in
11.22order of potential energy savings and in order of cost-effectiveness. The commissioner
11.23may contract with a third party to carry out any of the commissioner's duties under
11.24this subdivision, and to obtain technical assistance to evaluate the effectiveness of any
11.25conservation improvement program. The commissioner may assess up to $800,000
11.26annually until June 30, 2009, and $450,000 annually thereafter for the purposes of this
11.27subdivision. The assessments must be deposited into the energy and conservation account
11.28created under subdivision 2a. An assessment made under this subdivision is not subject to
11.29the cap on assessments provided by section 216B.62, or any other law.
11.30    Subd. 1e. Applied research and development grants. The commissioner may, by
11.31order, approve and make grants for applied research and development projects of general
11.32applicability that identify new technologies or strategies to maximize energy savings,
11.33improve the effectiveness of energy conservation programs, or document the carbon
11.34dioxide reductions from energy conservation programs. When approving projects, the
11.35commissioner shall consider proposals and comments from utilities and other interested
11.36parties. The commissioner may assess up to $3,600,000 annually for the purposes of this
12.1subdivision. The assessments must be deposited into the energy and conservation account
12.2created under subdivision 2a. An assessment made under this subdivision is not subject to
12.3the cap on assessments provided by section 216B.62, or any other law.
12.4    Subd. 1f. Facilities energy efficiency. (a) The Department of Administration
12.5and the Department of Commerce shall maintain and, as needed, revise the sustainable
12.6building design guidelines developed under section 16B.325.
12.7    (b) The Department of Administration and the Department of Commerce shall
12.8maintain and update the benchmarking tool developed under Laws 2001, chapter 212,
12.9article 1, section 3, so that all public buildings can use the benchmarking tool to maintain
12.10energy use information for the purposes of establishing energy efficiency benchmarks,
12.11tracking building performance and measuring the results of energy efficiency and
12.12conservation improvements.
12.13    (c) The commissioner shall require that utilities include in their conservation
12.14improvement plans programs that facilitate professional engineering verification to qualify
12.15a building as Energy Star-labeled or as Leadership in Energy and Environmental Design
12.16(LEED) certified. The state goal is to achieve certification of 1,000 commercial buildings
12.17as Energy Star-certified, and 100 commercial buildings as LEED-certified by December
12.1831, 2010.
12.19    (d) The commissioner may assess up to $500,000 annually for the purposes of this
12.20subdivision. The assessments must be deposited into the energy and conservation account
12.21created under subdivision 2a. An assessment made under this subdivision is not subject to
12.22the cap on assessments provided by section 216B.62, or any other law.
12.23    Subd. 2. Programs. (a) The commissioner may require public utilities to make
12.24investments and expenditures in energy conservation improvements, explicitly setting
12.25forth the interest rates, prices, and terms under which the improvements must be offered to
12.26the customers. The required programs must cover no more than a four-year three-year
12.27period. Public utilities shall file conservation improvement plans by June 1, on a schedule
12.28determined by order of the commissioner, but at least every four three years. Plans
12.29received by a public utility by June 1 must be approved or approved as modified by the
12.30commissioner by December 1 of that same year. The commissioner shall give special
12.31consideration and encouragement to programs that bring about significant net savings
12.32through the use of energy-efficient lighting. The commissioner shall evaluate the program
12.33on the basis of cost-effectiveness and the reliability of technologies employed. The
12.34commissioner's order must provide to the extent practicable for a free choice, by consumers
12.35participating in the program, of the device, method, material, or project constituting the
12.36energy conservation improvement and for a free choice of the seller, installer, or contractor
13.1of the energy conservation improvement, provided that the device, method, material, or
13.2project seller, installer, or contractor is duly licensed, certified, approved, or qualified,
13.3including under the residential conservation services program, where applicable.
13.4    (b) The commissioner may require a utility to make an energy conservation
13.5improvement investment or expenditure whenever the commissioner finds that the
13.6improvement will result in energy savings at a total cost to the utility less than the cost
13.7to the utility to produce or purchase an equivalent amount of new supply of energy. The
13.8commissioner shall nevertheless ensure that every public utility operate one or more
13.9programs under periodic review by the department.
13.10    (c) Each public utility subject to subdivision 1a may spend and invest annually up to
13.11ten percent of the total amount required to be spent and invested on energy conservation
13.12improvements under this section by the utility on research and development projects
13.13that meet the definition of energy conservation improvement in subdivision 1 and that
13.14are funded directly by the public utility.
13.15    (d) A public utility may not spend for or invest in energy conservation improvements
13.16that directly benefit a large energy facility or a large electric customer facility for which
13.17the commissioner has issued an exemption pursuant to subdivision 1a, paragraph (b). The
13.18commissioner shall consider and may require a utility to undertake a program suggested
13.19by an outside source, including a political subdivision or, a nonprofit corporation, or
13.20community organization.
13.21    (e) The commissioner may, by order, establish a list of programs that may be
13.22offered as energy conservation improvements by a public utility, municipal utility,
13.23cooperative electric association, or other entity providing conservation services pursuant
13.24to this section. The list of programs may include rebates for high-efficiency appliances,
13.25rebates or subsidies for high-efficiency lamps, small business energy audits, and building
13.26recommissioning. The commissioner may, by order, change this list to add or subtract
13.27programs as the commissioner determines is necessary to promote efficient and effective
13.28conservation programs.
13.29    (f) The commissioner shall ensure that a portion of the money spent on residential
13.30conservation improvement programs is devoted to programs that directly address the
13.31needs of renters and low-income persons, in proportion to the amount the utility has
13.32historically spent on such programs based on the most recent three-year average relative to
13.33the utility's total conservation spending under this section, unless an insufficient number of
13.34appropriate programs are available.
13.35    (g) (e) A utility, a political subdivision, or a nonprofit or community organization
13.36that has suggested a program, the attorney general acting on behalf of consumers and
14.1small business interests, or a utility customer that has suggested a program and is not
14.2represented by the attorney general under section 8.33 may petition the commission to
14.3modify or revoke a department decision under this section, and the commission may do
14.4so if it determines that the program is not cost-effective, does not adequately address the
14.5residential conservation improvement needs of low-income persons, has a long-range
14.6negative effect on one or more classes of customers, or is otherwise not in the public
14.7interest. The commission shall reject a petition that, on its face, fails to make a reasonable
14.8argument that a program is not in the public interest.
14.9    (h) (f) The commissioner may order a public utility to include, with the filing of the
14.10utility's proposed conservation improvement plan under paragraph (a), the results of an
14.11independent audit of the utility's conservation improvement programs and expenditures
14.12performed by the department or an auditor with experience in the provision of energy
14.13conservation and energy efficiency services approved by the commissioner and chosen by
14.14the utility. The audit must specify the energy savings or increased efficiency in the use
14.15of energy within the service territory of the utility that is the result of the spending and
14.16investments. The audit must evaluate the cost-effectiveness of the utility's conservation
14.17programs.
14.18    (i) Up to three percent of a utility's conservation spending obligation under this
14.19section may be used for program pre-evaluation, testing, and monitoring and program
14.20audit and evaluation.
14.21    Subd. 2a. Energy and conservation account. The energy and conservation
14.22account is established in the special revenue fund in the state treasury. The commissioner
14.23must deposit money contributed under subdivisions 1a and 1b assessed or contributed
14.24under subdivisions 1d, 1e, 1f, and 7 in the energy and conservation account in the
14.25general special revenue fund. Money in the account is appropriated to the department
14.26for programs designed to meet the energy conservation needs of low-income persons
14.27and to make energy conservation improvements in areas not adequately served under
14.28subdivision 2, including research and development projects included in the definition of
14.29energy conservation improvement in subdivision 1 the purposes of subdivisions 1d, 1e,
14.301f, and 7. Interest on money in the account accrues to the account. Using information
14.31collected under section 216C.02, subdivision 1, paragraph (b), the commissioner must,
14.32to the extent possible, allocate enough money to programs for low-income persons to
14.33assure that their needs are being adequately addressed. The commissioner must request
14.34the commissioner of finance to transfer money from the account to the commissioner of
14.35education for an energy conservation program for low-income persons. In establishing
14.36programs, the commissioner must consult political subdivisions and nonprofit and
15.1community organizations, especially organizations engaged in providing energy and
15.2weatherization assistance to low-income persons. At least one program must address
15.3the need for energy conservation improvements in areas in which a high percentage of
15.4residents use fuel oil or propane to fuel their source of home heating. The commissioner
15.5may contract with a political subdivision, a nonprofit or community organization, a public
15.6utility, a municipality, or a cooperative electric association to implement its programs. The
15.7commissioner may provide grants to any person to conduct research and development
15.8projects in accordance with this section.
15.9    Subd. 2b. Recovery of expenses. The commission shall allow a utility to recover
15.10expenses resulting from a conservation improvement program required by the department
15.11and contributions and assessments to the energy and conservation account, unless the
15.12recovery would be inconsistent with a financial incentive proposal approved by the
15.13commission. The commission shall allow a cooperative electric association subject
15.14to rate regulation under section 216B.026, to recover expenses resulting from energy
15.15conservation improvement programs, load management programs, and assessments
15.16and contributions to the energy and conservation account unless the recovery would be
15.17inconsistent with a financial incentive proposal approved by the commission. In addition,
15.18a utility may file annually, or the Public Utilities Commission may require the utility
15.19to file, and the commission may approve, rate schedules containing provisions for the
15.20automatic adjustment of charges for utility service in direct relation to changes in the
15.21expenses of the utility for real and personal property taxes, fees, and permits, the amounts
15.22of which the utility cannot control. A public utility is eligible to file for adjustment for real
15.23and personal property taxes, fees, and permits under this subdivision only if, in the year
15.24previous to the year in which it files for adjustment, it has spent or invested at least 1.75
15.25percent of its gross revenues from provision of electric service, excluding gross operating
15.26revenues from electric service provided in the state to large electric customer facilities for
15.27which the commissioner has issued an exemption under subdivision 1a, paragraph (b), and
15.280.6 percent of its gross revenues from provision of gas service, excluding gross operating
15.29revenues from gas services provided in the state to large electric customer facilities for
15.30which the commissioner has issued an exemption under subdivision 1a, paragraph (b), for
15.31that year for energy conservation improvements under this section.
15.32    Subd. 2c. Performance incentives. By December 31, 2008, the commission shall
15.33review any incentive plan for energy conservation improvement it has approved under
15.34216B.16, subdivision 6c, and adjust the utility performance incentives to recognize making
15.35progress toward and meeting the energy savings goals established in subdivision 1c.
16.1    Subd. 3. Ownership of energy conservation improvement. An energy
16.2conservation improvement made to or installed in a building in accordance with this
16.3section, except systems owned by the utility and designed to turn off, limit, or vary the
16.4delivery of energy, are the exclusive property of the owner of the building except to the
16.5extent that the improvement is subjected to a security interest in favor of the utility in case
16.6of a loan to the building owner. The utility has no liability for loss, damage or injury
16.7caused directly or indirectly by an energy conservation improvement except for negligence
16.8by the utility in purchase, installation, or modification of the product.
16.9    Subd. 4. Federal law prohibitions. If investments by public utilities in energy
16.10conservation improvements are in any manner prohibited or restricted by federal law
16.11and there is a provision under which the prohibition or restriction may be waived, then
16.12the commission, the governor, or any other necessary state agency or officer shall take
16.13all necessary and appropriate steps to secure a waiver with respect to those public utility
16.14investments in energy conservation improvements included in this section.
16.15    Subd. 5. Efficient lighting program. (a) Each public utility, cooperative electric
16.16association, and municipal utility that provides electric service to retail customers shall
16.17include as part of its conservation improvement activities a program to strongly encourage
16.18the use of fluorescent and high-intensity discharge lamps. The program must include at
16.19least a public information campaign to encourage use of the lamps and proper management
16.20of spent lamps by all customer classifications.
16.21    (b) A public utility that provides electric service at retail to 200,000 or more
16.22customers shall establish, either directly or through contracts with other persons, including
16.23lamp manufacturers, distributors, wholesalers, and retailers and local government units, a
16.24system to collect for delivery to a reclamation or recycling facility spent fluorescent and
16.25high-intensity discharge lamps from households and from small businesses as defined in
16.26section 645.445 that generate an average of fewer than ten spent lamps per year.
16.27    (c) A collection system must include establishing reasonably convenient locations
16.28for collecting spent lamps from households and financial incentives sufficient to encourage
16.29spent lamp generators to take the lamps to the collection locations. Financial incentives
16.30may include coupons for purchase of new fluorescent or high-intensity discharge lamps,
16.31a cash back system, or any other financial incentive or group of incentives designed to
16.32collect the maximum number of spent lamps from households and small businesses that is
16.33reasonably feasible.
16.34    (d) A public utility that provides electric service at retail to fewer than 200,000
16.35customers, a cooperative electric association, or a municipal utility that provides electric
17.1service at retail to customers may establish a collection system under paragraphs (b) and
17.2(c) as part of conservation improvement activities required under this section.
17.3    (e) The commissioner of the Pollution Control Agency may not, unless clearly
17.4required by federal law, require a public utility, cooperative electric association, or
17.5municipality that establishes a household fluorescent and high-intensity discharge lamp
17.6collection system under this section to manage the lamps as hazardous waste as long as
17.7the lamps are managed to avoid breakage and are delivered to a recycling or reclamation
17.8facility that removes mercury and other toxic materials contained in the lamps prior to
17.9placement of the lamps in solid waste.
17.10    (f) If a public utility, cooperative electric association, or municipal utility contracts
17.11with a local government unit to provide a collection system under this subdivision,
17.12the contract must provide for payment to the local government unit of all the unit's
17.13incremental costs of collecting and managing spent lamps.
17.14    (g) All the costs incurred by a public utility, cooperative electric association, or
17.15municipal utility for promotion and collection of fluorescent and high-intensity discharge
17.16lamps under this subdivision are conservation improvement spending under this section.
17.17    Subd. 6. Renewable energy research. (a) A public utility that owns a nuclear
17.18generation facility in the state shall spend five percent of the total amount that utility
17.19is required to spend under this section to support basic and applied research and
17.20demonstration activities at the University of Minnesota Initiative for Renewable Energy
17.21and the Environment for the development of renewable energy sources and technologies.
17.22The utility shall transfer the required amount to the University of Minnesota on or before
17.23July 1 of each year and that annual amount shall be deducted from the amount of money the
17.24utility is required to spend under this section. The University of Minnesota shall transfer
17.25at least ten percent of these funds to at least one rural campus or experiment station.
17.26    (b) Research funded under this subdivision shall include:
17.27    (1) development of environmentally sound production, distribution, and use of
17.28energy, chemicals, and materials from renewable sources;
17.29    (2) processing and utilization of agricultural and forestry plant products and other
17.30bio-based, renewable sources as a substitute for fossil-fuel-based energy, chemicals, and
17.31materials using a variety of means including biocatalysis, biorefining, and fermentation;
17.32    (3) conversion of state wind resources to hydrogen for energy storage and
17.33transportation to areas of energy demand;
17.34    (4) improvements in scalable hydrogen fuel cell technologies; and
17.35    (5) production of hydrogen from bio-based, renewable sources; and sequestration
17.36of carbon.
18.1    (c) Notwithstanding other law to the contrary, the utility may, but is not required to,
18.2spend more than two percent of its gross operating revenues from service provided in this
18.3state under this section or section 216B.2411.
18.4    (d) This subdivision expires June 30, 2008.
18.5    Subd. 7. Low-income programs. (a) The commissioner shall ensure that each
18.6utility and association provides low-income programs. When approving spending and
18.7energy savings goals for low-income programs, the commissioner shall consider historic
18.8spending and participation levels, energy savings for low-income programs, and the
18.9number of low-income persons residing in the utility's service territory. A utility that
18.10furnishes gas service must spend at least 0.2 percent of its gross operating revenue from
18.11residential customers in the state on low-income programs. A utility or association that
18.12furnishes electric service must spend at least 0.1 percent of its gross operating revenue
18.13from residential customers in the state on low-income programs. For a generation and
18.14transmission cooperative association, this requirement shall apply to each association's
18.15members' aggregate gross operating revenue from sale of electricity to residential
18.16customers in the state. Beginning in 2010, a utility or association that furnishes electric
18.17service must spend 0.2 percent of its gross operating revenue from residential customers
18.18in the state on low-income programs.
18.19    (b) To meet the requirements of paragraph (a), a utility or association may contribute
18.20funds to the energy and conservation account. An energy conservation improvement plan
18.21must state the amount, if any, of low-income energy conservation improvement funds the
18.22utility or association will contribute to the energy and conservation account. Contributions
18.23must be remitted to the commissioner by February 1 of each year.
18.24    (c) The commissioner shall establish low-income programs to utilize funds
18.25contributed to the energy and conservation account under paragraph (b). In establishing
18.26low-income programs, the commissioner shall consult political subdivisions, utilities, and
18.27nonprofit and community organizations, especially organizations engaged in providing
18.28energy and weatherization assistance to low-income persons. Money contributed to
18.29the energy and conservation account under paragraph (b) must provide programs for
18.30low-income persons, including low-income renters, in the service territory of the utility or
18.31association providing the funds. The commissioner shall record and report expenditures
18.32and energy savings achieved as a result of low-income programs funded through the
18.33energy and conservation account in the report required under subdivision 1c, paragraph
18.34(g). The commissioner may contract with a political subdivision, nonprofit or community
18.35organization, public utility, municipality, or cooperative electric association to implement
18.36low-income programs funded through the energy and conservation account.
19.1    (d) A utility or association may petition the commissioner to modify its required
19.2spending under paragraph (a) if the utility or association and the commissioner have been
19.3unable to expend the amount required under paragraph (a) for three consecutive years.
19.4    Subd. 8. Assessment. The commission or department may assess utilities subject to
19.5this section in proportion to their respective gross operating revenue from sales of gas or
19.6electric service within the state during the last calendar year to carry out the purposes of
19.7subdivisions 1d, 1e, and 1f. Those assessments are not subject to the cap on assessments
19.8provided by section 216B.62, or any other law.

19.9    Sec. 6. [216B.2412] DECOUPLING OF ENERGY SALES FROM REVENUES.
19.10    Subdivision 1. Definition and purpose. For the purpose of this section,
19.11"decoupling" means a regulatory tool designed to separate a utility's revenue from changes
19.12in energy sales. The purpose of decoupling is to reduce a utility's disincentive to promote
19.13energy efficiency.
19.14    Subd. 2. Decoupling criteria. The commission shall, by order, establish criteria
19.15and standards for decoupling. The commission shall design the criteria and standards to
19.16mitigate the impact on public utilities of the energy savings goals under section 216B.241
19.17without adversely affecting utility ratepayers. In designing the criteria, the commission
19.18shall consider energy efficiency, weather, and cost of capital, among other factors.
19.19    Subd. 3. Pilot programs. The commission shall allow one or more rate-regulated
19.20utilities to participate in a pilot program to assess the merits of a rate-decoupling strategy
19.21to promote energy efficiency and conservation. Each pilot program must utilize the
19.22criteria and standards established in subdivision 2 and be designed to determine whether
19.23a rate-decoupling strategy achieves energy savings. On or before a date established by
19.24the commission, the commission shall require electric and gas utilities that intend to
19.25implement a decoupling program to file a decoupling pilot plan which shall be approved
19.26or approved as modified by the commission. A pilot program may not exceed three years
19.27in length. Any extension beyond three years can only be approved in a general rate case,
19.28unless that decoupling program was previously approved as part of a general rate case.
19.29The commission shall report on the programs annually to the chairs of the house of
19.30representatives and senate committees with primary jurisdiction over energy policy.

19.31    Sec. 7. EFFECTIVE DATE.
19.32    This article is effective July 1, 2007.


19.35    Section 1. Minnesota Statutes 2006, section 123B.65, subdivision 2, is amended to read:
20.1    Subd. 2. Energy efficiency contract. (a) Notwithstanding any law to the contrary,
20.2a school district may enter into a guaranteed energy savings contract with a qualified
20.3provider to significantly reduce energy or operating costs.
20.4    (b) Before entering into a contract under this subdivision, the board shall comply
20.5with clauses (1) to (5).
20.6    (1) The board must seek proposals from multiple qualified providers by publishing
20.7notice of the proposed guaranteed energy savings contract in the board's official newspaper
20.8and in other publications if the board determines that additional publication is necessary to
20.9notify multiple qualified providers.
20.10    (2) The school board must select the qualified provider that best meets the needs of
20.11the board. The board must provide public notice of the meeting at which it will select the
20.12qualified provider.
20.13    (3) The contract between the board and the qualified provider must describe the
20.14methods that will be used to calculate the costs of the contract and the operational and
20.15energy savings attributable to the contract.
20.16    (4) The qualified provider shall issue a report to the board giving a description of all
20.17costs of installations, modifications, or remodeling, including costs of design, engineering,
20.18installation, maintenance, repairs, or debt service, and giving detailed calculations of the
20.19amounts by which energy or operating costs will be reduced and the projected payback
20.20schedule in years.
20.21    (5) The board must provide published notice of the meeting in which it proposes to
20.22award the contract, the names of the parties to the proposed contract, and the contract's
20.23purpose.
20.24    (c) The board must provide a copy of any contract entered into under paragraph (a)
20.25and the report provided under paragraph (b), clause (4), to the commissioner of commerce
20.26within 30 days of the effective date of the contract.

20.27    Sec. 2. Minnesota Statutes 2006, section 216C.31, is amended to read:
20.28216C.31 ENERGY AUDIT PROGRAMS.
20.29    The commissioner shall develop and administer state programs of energy audits of
20.30residential and commercial buildings including those required by United States Code, title
20.3142, sections 8211 to 8222 and sections 8281 to 8284. The commissioner shall continue
20.32to administer the residential energy audit program as originally established under the
20.33provisions of United States Code, title 42, sections 8211 to 8222; through July 1, 1986
20.34irrespective of any prior expiration date provided in United States Code, title 42, section
20.358216. The commissioner may approve temporary programs if they are likely to result
20.36in the installation of as many conservation measures as would have been installed had
21.1the utility met the requirements of United States Code, title 42, sections 8211 to 8222.
21.2The Consumer Services Division and the attorney general may release information on
21.3consumer comments about the operation of the program to the commissioner the training
21.4and qualifications necessary for the auditing of residential and commercial buildings under
21.5the auspices of a program created under section 216B.2412.

21.6    Sec. 3. Minnesota Statutes 2006, section 471.345, subdivision 13, is amended to read:
21.7    Subd. 13. Energy efficiency projects. The following definitions apply to this
21.8subdivision.
21.9    (a) "Energy conservation measure" means a training program or facility alteration
21.10designed to reduce energy consumption or operating costs and includes:
21.11    (1) insulation of the building structure and systems within the building;
21.12    (2) storm windows and doors, caulking or weatherstripping, multiglazed windows
21.13and doors, heat absorbing or heat reflective glazed and coated window and door
21.14systems, additional glazing, reductions in glass area, and other window and door system
21.15modifications that reduce energy consumption;
21.16    (3) automatic energy control systems;
21.17    (4) heating, ventilating, or air conditioning system modifications or replacements;
21.18    (5) replacement or modifications of lighting fixtures to increase the energy efficiency
21.19of the lighting system without increasing the overall illumination of a facility, unless an
21.20increase in illumination is necessary to conform to the applicable state or local building
21.21code for the lighting system after the proposed modifications are made;
21.22    (6) energy recovery systems;
21.23    (7) cogeneration systems that produce steam or forms of energy such as heat, as well
21.24as electricity, for use primarily within a building or complex of buildings;
21.25    (8) energy conservation measures that provide long-term operating cost reductions.
21.26    (b) "Guaranteed energy savings contract" means a contract for the evaluation
21.27and recommendations of energy conservation measures, and for one or more energy
21.28conservation measures. The contract must provide that all payments, except obligations
21.29on termination of the contract before its expiration, are to be made over time, but not to
21.30exceed 15 years from the date of final installation, and the savings are guaranteed to the
21.31extent necessary to make payments for the systems.
21.32    (c) "Qualified provider" means a person or business experienced in the design,
21.33implementation, and installation of energy conservation measures. A qualified provider
21.34to whom the contract is awarded shall give a sufficient bond to the municipality for its
21.35faithful performance.
22.1    Notwithstanding any law to the contrary, a municipality may enter into a guaranteed
22.2energy savings contract with a qualified provider to significantly reduce energy or
22.3operating costs.
22.4    Before entering into a contract under this subdivision, the municipality shall provide
22.5published notice of the meeting in which it proposes to award the contract, the names of
22.6the parties to the proposed contract, and the contract's purpose.
22.7    Before installation of equipment, modification, or remodeling, the qualified provider
22.8shall first issue a report, summarizing estimates of all costs of installations, modifications,
22.9or remodeling, including costs of design, engineering, installation, maintenance, repairs,
22.10or debt service, and estimates of the amounts by which energy or operating costs will be
22.11reduced.
22.12    A guaranteed energy savings contract that includes a written guarantee that savings
22.13will meet or exceed the cost of energy conservation measures is not subject to competitive
22.14bidding requirements of section 471.345 or other law or city charter. The contract is
22.15not subject to section 123B.52.
22.16    A municipality may enter into a guaranteed energy savings contract with a qualified
22.17provider if, after review of the report, it finds that the amount it would spend on the energy
22.18conservation measures recommended in the report is not likely to exceed the amount
22.19to be saved in energy and operation costs over 15 years from the date of installation if
22.20the recommendations in the report were followed, and the qualified provider provides a
22.21written guarantee that the energy or operating cost savings will meet or exceed the costs
22.22of the system. The guaranteed energy savings contract may provide for payments over
22.23a period of time, not to exceed 15 years.
22.24    A municipality may enter into an installment payment contract for the purchase and
22.25installation of energy conservation measures. The contract must provide for payments
22.26of not less than 1/15 of the price to be paid within two years from the date of the first
22.27operation, and the remaining costs to be paid monthly, not to exceed a 15-year term from
22.28the date of the first operation.
22.29    A municipality entering into a guaranteed energy savings contract shall provide a
22.30copy of the contract and the report from the qualified provider to the commissioner of
22.31commerce within 30 days of the effective date of the contract.
22.32    Guaranteed energy savings contracts may extend beyond the fiscal year in which
22.33they become effective. The municipality shall include in its annual appropriations measure
22.34for each later fiscal year any amounts payable under guaranteed energy savings contracts
22.35during the year. Failure of a municipality to make such an appropriation does not affect
23.1the validity of the guaranteed energy savings contract or the municipality's obligations
23.2under the contracts.

23.3    Sec. 4. Minnesota Statutes 2006, section 504B.161, subdivision 1, is amended to read:
23.4    Subdivision 1. Requirements. In every lease or license of residential premises, the
23.5landlord or licensor covenants:
23.6    (1) that the premises and all common areas are fit for the use intended by the parties;
23.7    (2) to keep the premises in reasonable repair during the term of the lease or license,
23.8except when the disrepair has been caused by the willful, malicious, or irresponsible
23.9conduct of the tenant or licensee or a person under the direction or control of the tenant or
23.10licensee; and
23.11    (3) to make the premises reasonably energy efficient by installing weatherstripping,
23.12caulking, storm windows, and storm doors when any such measure will result in energy
23.13procurement cost savings, based on current and projected average residential energy costs
23.14in Minnesota, that will exceed the cost of implementing that measure, including interest,
23.15amortized over the ten-year period following the incurring of the cost; and
23.16    (4) to maintain the premises in compliance with the applicable health and safety
23.17laws of the state, including the weatherstripping, caulking, storm window, and storm door
23.18energy efficiency standards for renter-occupied residences prescribed by section 216C.27,
23.19subdivisions 1 and 3 , and of the local units of government where the premises are located
23.20during the term of the lease or license, except when violation of the health and safety
23.21laws has been caused by the willful, malicious, or irresponsible conduct of the tenant or
23.22licensee or a person under the direction or control of the tenant or licensee.
23.23    The parties to a lease or license of residential premises may not waive or modify the
23.24covenants imposed by this section.

23.25    Sec. 5. REPEALER.
23.26Minnesota Statutes 2006, sections 216B.165; 216C.27; and 216C.30, subdivision 5,
23.27and Minnesota Rules, parts 7635.0100; 7635.0110; 7635.0120; 7635.0130; 7635.0140;
23.287635.0150; 7635.0160; 7635.0170; 7635.0180; 7635.0200; 7635.0210; 7635.0220;
23.297635.0230; 7635.0240; 7635.0250; 7635.0260; 7635.0300; 7635.0310; 7635.0320;
23.307635.0330; 7635.0340; 7635.0400; 7635.0410; 7635.0420; 7635.0500; 7635.0510;
23.317635.0520; 7635.0530; 7635.0600; 7635.0610; 7635.0620; 7635.0630; 7635.0640;
23.327635.1000; 7635.1010; 7635.1020; 7635.1030; 7655.0100; 7655.0120; 7655.0200;
23.337655.0210; 7655.0220; 7655.0230; 7655.0240; 7655.0250; 7655.0260; 7655.0270;
23.347655.0280; 7655.0290; 7655.0300; 7655.0310; 7655.0320; 7655.0330; 7655.0400;
23.357655.0410; and 7655.0420, are repealed, effective July 1, 2007.

24.1    Sec. 6. EFFECTIVE DATE.
24.2    This article is effective July 1, 2007."