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How CIP Works

The Next Generation Energy Act of 2007 (NGEA) (.pdf) established energy-saving goals, through the Conservation Improvement Program (CIP), for electric and gas utilities that operate in the state of Minnesota. The Minnesota Department of Commerce, Division of Energy Resources (DER) oversees CIP to ensure that ratepayer dollars are used effectively and energy savings are reported as accurately as possible. 

Benefits of CIP include:

  • Improved awareness and adoption of energy efficient technologies
  • Reduced energy costs for Minnesota households and businesses
  • Increased profitability for Minnesota companies and industries
  • Deferred costly utility infrastructure investments
  • Decreased emissions
  • Conserved resources

Utility CIP Plans
Each electric and natural gas utility develops its own conservation plan, offering a variety of programs to assist residential and business customers become more energy efficient. The DER reviews and approves each plan and the associated energy savings calculations.

Traditionally, utility programs have focused on incentivizing customers to purchase energy efficient products instead of standard efficiency products. Moving forward, as utilities strive to meet higher energy savings goals, the DER and Minnesota utilities are piloting new approaches to save energy such as offering packaged services and measuring savings that result from operation and maintenance or behavioral measures, such as fine-tuning building control systems or simply turning off lights when not in use.

When reviewing a utility's CIP plan, the DER looks for programs that are cost-effective and that reach a broad spectrum of the utility's customers including residential, commercial, industrial and agricultural customers. Special programs that specifically meet the needs of low-income customers are also required by statute.

Typical programs for residential customers include:

  • Energy audits, where a trained energy consultant examines your home and offers specific advice on energy improvements.

  • Rebates on high efficiency heating, cooling, and water heating appliances

  • Air-conditioner cycling programs, which allow the utility to manage its peak energy demand in return for discounted electric bills for participating customers

  • Compact fluorescent lighting rebates

  • Low-flow showerhead rebates, which serve a dual purpose by conserving water and the energy needed to heat the water.

  • Energy efficient home construction guidelines, calling for high insulation levels coupled with mechanical ventilation systems and efficient appliances

Typical programs for commercial or industrial customers include:

  • Rebates for high efficiency boilers, chillers, and rooftop units

  • Rebates for high efficiency lighting and lighting control systems

  • Rebates for high efficiency motors and drives

  • Building recommissioning studies

  • Manufacturing process improvements that reduce energy intensity and improve productivity

Statutory Requirements (see Minnesota Statutes 216B.241)
The NGEA established an energy savings goal of 1.5 percent of average retail sales for each electric and gas utility beginning in 2010. Utilities may petition the Director of the DER to adjust their savings goals to a minimum of 1 percent based on a conservation potential study, a utility's historic CIP experience, or other factors at the discretion of the Director. Legislation passed in 2009 established an interim savings goal of 0.75 percent over 2010-2012 for qualifying natural gas utilities.

The NGEA further established the potential for electric utilities to count the savings that result from qualified improvements to its generation, transmission, or distribution infrastructure, or conservation measures in its own facilities toward the 1.5 percent savings goal, once plans are in place to achieve at least 1 percent savings through conservation improvements. Further legislation passed in 2009 also allowed natural gas utilities to count biomethane purchases toward their savings goal in a similar fashion.

The CIP statutes contain important stipulations in regards to how utilities spend CIP funds:

  • Electric utilities, except for Xcel Energy, must spend a minimum of 1.5 percent of annual gross operating revenues (GOR) on CIP programs. As an owner of nuclear generation facilities, Xcel Energy must spend at least 2 percent of annual GOR.

  • Natural gas utilities must spend a minimum of 0.5 percent of annual GOR on CIP programs

  • At least 0.2 percent of residential GOR must be spent on programs specifically serving low income customers

  • Up to 10 percent of the overall minimum spending requirement may be spent on R&D projects

  • Up to 10 percent of the overall minimum spending requirement may be spent on qualifying solar energy projects. Up to 5 percent of the overall minimum spending requirement may be spent on other renewable and distributed generation projects.

  • Each electric utility must include in its CIP plan programs intended to encourage the use of energy efficient lighting by its customers and recycling of spent lamps.

Utilities must file their CIP plans with the energy division at least every three years. Utilities report their actual CIP spending and savings achieved on an annual basis.

Information
To learn more about the utility CIPs available to your home or business, contact your local electric or natural gas utility. For general information about CIP, e-mail CIP.Info@state.mn.us.