1. Demand-side Management (DSM) as a Resource Midwest Energy Policy Conference October 2015 Bill Grant, Deputy Commissioner Division of Energy Resources

2. Demand-side Management (DSM) as a Resource Energy Savings Policy Goal “The legislature finds that energy savings are an energy resource, and that cost-effective energy savings are preferred over all other energy resources…” Minnesota Statute §216B.2401 Public policy objective achieved through the Conservation Improvement Program (CIP) and Integrated Resource Plans (IRP)

3. History of the Conservation Improvement Program (CIP) 1980: PUC directed to initiate a pilot to demonstrate the “feasibility” of investments in EE 1989: All Public utilities were required to operate conservation improvement programs. Oversight transferred from PUC, low- income requirements added. 1983 : Utilities with revenues greater than $50 million were required to operate at least 1 conservation program. Required “significant” investment. 1991: A specific level of spending was required (1.5% electric, 0.5% gas) & munis and coops were included. 1994: Prairie Island settlement required [Xcel] to spend 2.0% of their annual GOR. Programs began to be evaluated against a pre-set goal. 2007: Next Generation Energy Act 2010: 1.5% Savings Goal for Utilities takes Effect

4. Demand-side Management (DSM) in Resource Planning

5. DSM Analysis and Planning Conservation Improvement Program Utility CIP Plan Evaluation and Approval Technical Assistance and Outreach Research & Development Measurement & Verification Energy Regulation & Planning Integrated Resource Plans Demand Side Management Financial Incentives Cost Recovery

6. DSM in Resource Planning CIP related to IRP process: CIP is an annual goal of at least 1.5% set by the Next Generation Energy Act IRP goal is set using supply side modeling of various resource mixes for long-term integrated resource plans The 1.5% CIP goal is designed to meet longer term resource planning needs

7. DSM in Resource Planning Commerce uses a capacity expansion model called “Strategist” Resource planning decides the size, type and timing of future resources Most cost-effective amount and type of DSM depends upon existing utility system and future needs 7

8. 8 Issues with DSM modeling in resource planning center around the difficulty of know the future Estimating costs Predicting technologies Technical potential studies underestimate energy savings Impact of changes in baseline due to energy and and appliance standards DSM in Resource Planning

9. DSM – Tracking and Reporting CommercePUCUtilityConsultants Trade Partners Residential Customers Commercial Customers Evaluators MN has an IT “Platform” dedicated to tracking and reporting DSM: – Centralized, accessible data – Measure Design Tools allow collaboration, innovative design

10. Two DSM Tools on Platform for Tracking, Reporting and Evaluating Reporting ESP ™ – Reporting tool for the state CIP – Its use is required for all MN utilities – Data is public with controlled access ESP® – Provides program operations and tracking with automated reporting – Allows utility to do measure designs – Available for free to all MN utilities (optional) – Data is private

11. DSM – Tracking, Reporting and Evaluating Minnesota Technical Reference Manual (TRM) – Measures use standard algorithms, inputs, costs – Workgroup meets regularly review updates TRM is being built as Smart Measure™ library on ESP® – Real-time calculators and tracking available for free to all MN utilities – Better data, more efficient program implementation

12. DSM – Tracking, Reporting and Evaluating M&V Protocols Adapted from IPMVP with input from TRM workgroup Large custom projects Custom Projects CIP staff does random sampling/review of programs with custom projects Engineering review of custom projects ensures accurate assumptions in energy efficiency calculations

13. Closing Thoughts Minnesota has long considered DSM a resource, now specific in statute We have systematically incorporated DSM into our Integrated Resource Planning process Work remains to reconcile short-term programs with long-term plans EM&V is also still evolving, but is key to validating DSM as a resource 13