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3 golden objects Minnesota Legislature

Office of the Legislative Auditor - Financial Audit Division

Report Summary

Special Review

Use of Energy Utility Assessments

Laws of Minnesota 2001, Chapter 212, addressed various issues relating to energy conservation, including development of sustainable building design guidelines for all new state buildings and establishing energy efficiency benchmarks and energy conservation goals for existing public buildings. Another provision created the position of reliability administrator in the Department of Commerce and authorized the payment of general administrative costs (not to exceed $1.5 million in a fiscal year) for the position. The commissioner of Commerce was directed to recover the administrative costs through assessments on energy utilities. The amounts collected from the assessments are to be deposited in the Special Revenue Fund and are appropriated to the commissioner of Commerce for the specified purposes. The commissioner also was directed to transfer up to $500,000 of the $1.5 million to the commissioner of Administration for development of the sustainable building design guidelines.

Our objective in conducting this special review was to determine whether the Department of Commerce's billing of utilities and subsequent transfer of amounts to the Department of Administration, as well as the Department of Administration's expenditure of those funds, complied with appropriation laws and other legal requirements.

Key Conclusions

The Department of Administration's use of an appropriation designated for sustainable building design guidelines did not comply with the appropriation language. During fiscal years 2002 and 2003 (through May 30, 2003), the Department of Administration inappropriately expended approximately $161,200 of the appropriation on energy benchmarks for existing public buildings. The department stopped work on the project on February 20, 2003, when concerns were raised about the use of funds for energy benchmarking. We recommend that the department repay the assessment account for the unallowable charges or seek legislative authority to otherwise resolve the inappropriate use of assessment moneys. In addition, the Department of Commerce assessed energy utilities for these unallowable costs and also collected assessments in advance rather, than on a reimbursement basis, as required by law. On May 27, 2003, in part because of questions raised about the issue, the Department of Commerce refunded approximately $358,000 to energy utilities for over-assessments. Once fiscal year 2003 financial activity is finalized, additional adjustments may be necessary.

During the 2003 Special Session, the Legislature passed an energy bill that allows the departments to use appropriated funds (up to $500,000 annually) for both the sustainable building and energy benchmarking initiatives. The revised law, effective May 30, 2003, also states the Department of Commerce is to assess energy utilities for these costs.