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HF 3688

Expenditures on fuel-switching improvements made to low-income households allowed to apply to low-income conservation spending requirements for municipal utilities and cooperative electric associations.

2025-2026 Regular Session Introduced by Tom Sexton

Allows fuel-switching improvements for low-income households to count toward utilities’ low-income energy conservation spending requirements.

Second reading
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Bill Summary · HF 3688

Summary of HF 3688 (2025-2026) – Expenditures on fuel-switching improvements for low-income households

Purpose and intent

HF 3688 proposes to allow expenditures on fuel-switching improvements made for low-income households to count toward the low-income conservation spending requirements for municipal utilities and cooperative electric associations. In short, it broadens how utilities can meet required investments in energy efficiency for low-income customers by including fuel-switching measures (e.g., switching heating fuels) as eligible expenditures.

Key provisions and changes

  • Targeted obligation for utilities

    • Municipal utilities that furnish natural gas and consumer-owned electric utilities must spend at least 0.2% of their most recent three-year average gross operating revenue from residential customers in Minnesota on low-income energy conservation programs.
    • The spending requirement applies to each generation and transmission cooperative association’s aggregate gross operating revenue from residential sales in Minnesota (through its member distribution cooperatives).

  • Fuel-switching expenditures eligible for conservation goals

    • Expenditures on efficient space and water heating energy conservation improvements and fuel-switching for low-income households may be counted toward the utility’s low-income spending requirement, to the extent programs are implemented under the bill.
    • Up to 15% of a utility’s spending on low-income energy conservation programs may be used for preweatherization measures. Savings from preweatherization cannot be counted toward the energy savings goal.

  • Funding mechanism via energy conservation account

    • Utilities may contribute to the Energy and Conservation Account (as established in Minnesota Statutes) to meet all or part of the spending requirement.
    • Contributions must be included in an energy conservation optimization plan and remitted to the commissioner by February 1 each year.
    • The commissioner administers low-income programs funded through this account and may contract with various entities to implement them.

  • Program administration and oversight

    • The commissioner must establish energy conservation programs for low-income households funded through these contributions and consult with local governments, utilities, nonprofits, and organizations providing assistance.
    • Expenditures and energy savings from these programs must be recorded and reported as part of the state reporting on energy conservation (216B.241, 1c(f)).

  • Multifamily and eligibility guidelines

    • The bill authorizes the commissioner to develop guidelines for determining eligibility of multifamily buildings for low-income programs, with updates at least every five years.

  • Additional provisions

    • The bill creates a process to modify spending requirements if a utility cannot meet them for three consecutive years.
    • An advisory stakeholder group must be convened to review guidelines related to multifamily eligibility.

  • Effective date

    • Effective the day after final enactment; applies to efficient fuel-switching improvements installed on or after that date.

Who is affected

  • Municipal utilities (natural gas) and consumer-owned electric utilities, including their member distribution cooperatives.
  • Low-income households served by these utilities (including renters).
  • Administrative bodies: Minnesota Department of Commerce and the Energy Conservation Account administrator.
  • Stakeholders: political subdivisions, nonprofits, community organizations, multifamily housing owners/developers, and low-income advocacy groups.

Timeline and procedural notes

  • Effective date is the day after final enactment.
  • Utilities must begin applying fuel-switching expenditures to meet the low-income spending requirement for eligible improvements installed after enactment.
  • The bill's provisions are framed within the existing statutory structure governing energy conservation spending and the Energy and Conservation Account, with reporting requirements tied to existing reporting under 216B.241.

Compiled from official sources — confirm details with the bill’s official record.

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