Opinion ID: 1578403
Heading Depth: 1
Heading Rank: 13

Heading: Need for and Benefits from Energy Conservation and Alternative Energy Development Programs.

Text: 127. Energy used in Minnesota is almost wholly an imported commodity. By reducing the outflow of energy expenditures from the state, investments in energy conservation will tend to increase the total amount of financial resources for all types of investments within the state, provided that the investments in energy conservation are cost-effective or competitive vis-a-vis other investments, such as those for business expansion. Dumagan Aff. 128. Energy conservation investments have been viewed by conventional financing sources in a manner different from investments for business expansion. It is reasonable for the Legislature to determine that the asymmetrical treatment between these two types of investments needs to be corrected, since the impacts of these two investments on business profitability are in parallel directions. Whereas, investments for business expansion tend to increase the revenue side, investments in energy conservation tend to decrease the cost side. Dumagan Aff. 129. If an investment in energy conservation has an internal rate of return higher than the market rate of interest, then the investment cost per unit of conserved energy is less than the price paid for the same unit of energy if it were instead consumed. In this connection, energy conservation is, in principle, the same as energy production, in that energy conservation increases the supply of energy to uses other than the point of use where conservation occurred. When viewed in this light, cost effective energy conservation in Minnesota is the same as producing energy at a cost per unit cheaper than the price per unit of imported energy. Dumagan Aff. 130. It is reasonable for the Legislature to determine that it makes economic sense to invest in energy conservation in Minnesota. The opportunities to achieve net gains from energy conservation have not as yet been exhausted. Dumagan Affidavit. 131. Very little conventional financing is available for energy conservation companies because most such companies are new and have unknown and unproven technologies. Linhares Aff.; Appert Aff.; Kraus Aff. 132. Financial assistance programs such as the Authority's energy loan and energy loan insurance program are necessary if energy conservation businesses are to be financed. Linhares Aff.