Energy efficiency and conservation are critical pieces of the puzzle in our fight against climate change. Programs run by Minnesota’s utilities can be impactful tools to reduce emissions by cutting down the amount of fossil fuels we burn to heat and cool our homes, apartments, and buildings, while at the same time lowering energy bills for customers.
One of Minnesota’s most important energy programs is the Energy Conservation and Optimization (ECO) program — read about the program’s origins and evolution here. Utilities must file their “Triennial Plans” every three years and just recently, the Minnesota Department of Commerce, Division of Energy Resources, has approved changes to the ECO program to improve electric and natural gas utilities’ energy efficiency frameworks ahead of their ECO filings this summer. Before utilities file their ECO Triennial plans, the Department of Commerce, utilities, and stakeholders review and refine the key program frameworks, like updating the ECO cost-effectiveness test methodologies, Technical Reference Manual, and financial incentive mechanism.
Now that the Department of Commerce has completed its ECO updates, the core framework is in place for utilities to file their proposed 2027-2029 Triennial proposals on June 1, 2026. Fresh Energy engaged throughout these proceedings, advocating for strong alignment with Minnesota’s policy goals of reducing emissions, improving affordability, and advancing equity.
Below are key updates the Department of Commerce approved for Minnesota’s ECO program — many of which were advanced by Fresh Energy:
Incremental updates in the ECO cost-effectiveness methodologies leave room for improvement (Docket #26-89)
The Minnesota Cost Test is the primary framework utilities use to evaluate the cost-effectiveness of distributed energy resources, including energy efficiency, load management, and efficient fuel switching. These methodologies guide ECO program design and are also used by electric and gas utilities in integrated resource plans (IRPs). The Minnesota Department of Commerce finalized the 2027–2029 ECO cost-effectiveness methodologies for investor-owned utilities in a March 30 decision.
A key focus of this update was how to better account for natural gas price volatility. With increasing uncertainty in gas markets, stakeholders broadly agreed on the need to better reflect this in cost-effectiveness inputs. The Department approved extending the historical lookback period used to calculate gas commodity costs from two years to five years, finding this would better capture price variability. The decision also maintains the Department’s existing approach of weighting monthly costs based on gas sales and directs utilities to submit updated data so ECO staff can recalculate these values.
In our comments, Fresh Energy recommended using higher, forward-looking gas price assumptions to better reflect market trends and regulatory risk, but the Department did not adopt this approach. Their decision acknowledges need for future improvements and directs ECO staff to track the gas forecasting methodologies used in the first round of utilities’ upcoming gas IRPs to evaluate, through the Cost-Effectiveness Advisory Committee, using the forecasted gas IRP commodity costs to inform cost-effectiveness inputs for the 2030-2032 Triennial.
The decision also highlights ongoing gaps in the Minnesota Cost Test, including the need to better quantify societal impacts that are currently represented by placeholder values. This creates an important opportunity for increased stakeholder engagement through the Cost-Effectiveness Advisory Committee ahead of the next Triennial.
Fresh Energy also recommended adopting a lower societal discount rate to better reflect Minnesota’s climate goals and the long-term public health and societal benefits of reduced emissions; however, the Department did not adopt this recommendation.
Updated Technical Reference Manual improves accuracy of ECO program savings calculations (Docket #18-694)
The Minnesota Technical Reference Manual (TRM) is a standard set of methodologies, inputs, and assumptions that ECO program administrators may reference when developing, implementing, and reporting on ECO programs. Fresh Energy participated in the ECO TRM advisory committee and submitted comments on proposed updates.
On January 9, 2026, the Minnesota Department of Commerce issued a decision updating the TRM to version 5.0. The TRM is used by utilities to calculate the savings impacts and cost-effectiveness of ECO programs and is updated annually to reflect evolving technologies and market conditions.
One important update is the increase to the baseline efficiency assumed for residential furnaces in the TRM from 80% to 90% Annual Fuel Utilization Efficiency, a measurement of how efficiently a furnace converts energy from the fuel it uses into heat. By raising the baseline assumption, the TRM more accurately reflects current market conditions and reduces the projected savings attributed to standard-efficiency furnace replacements. Fresh Energy supported this update in our comments, as it better aligns program assumptions with real-world performance and avoids overstating savings.
ECO financial incentive modernized (Docket #08-133)
Fresh Energy collaborated with the Center for Energy and Environment and the Minnesota Department of Commerce, Division of Energy Resources, on a joint proposal to modernize the ECO financial incentive mechanism. The proposal was approved with minor modifications by the Minnesota Public Utilities Commission during its March 12 hearing. While the Department of Commerce oversees the ECO program, it is the Commission’s role to determine and approve the financial incentives that utilities can earn for meeting performance goals and recover from ratepayers.
Fresh Energy believes this is an important update to the ECO financial incentive mechanism transitioning it to a multifactor ECO incentive that goes beyond first-year energy savings and cost effectiveness to incorporate metrics for policy priorities including spending on low-income customers and communities, insulation and air sealing, and beneficial electrification via efficient fuel-switching.
This progress builds on earlier advocacy. In 2020, Fresh Energy submitted joint comments proposing the creation of a low-income performance incentive for the 2021-2023 Triennial. We appreciate the collaboration with stakeholders to bring this comprehensive, policy-aligned incentive structure to fruition.
Tracking program modifications throughout ECO 2024-2026 Triennial
Fresh Energy has also been tracking and reviewing program modifications during the current 2024-2026 ECO Triennial:
Minnesota Power modification (Docket #23-93)
Minnesota Power proposed a new efficient fuel-switching program that includes heat pump, electric vehicle, and e-bike rebates. Fresh Energy filed comments in support of the modification request, and the Department of Commerce approved the request in early 2026. The utility plans to launch the program in spring 2026.
Fresh Energy and partners have worked extensively to address barriers to efficient fuel-switching, including through support of 2024 legislation that strengthened ECO to better enable these efforts. This approval represents an important milestone, as Minnesota Power will now implement a robust efficient fuel-switching program that includes full rebates for income-qualified customers. Fresh Energy looks forward to reviewing the utility’s plan for the 2027-2029 ECO Triennial.
CenterPoint Energy modification (Docket #23-95)
CenterPoint Energy proposed a modification to its 2024-2026 Triennial plan to add a bonus rebate for customers who pair insulation and air sealing with the installation of an air-source heat pump. This modification follows Fresh Energy’s 2023 recommendation that CenterPoint offer a bonus rebate for customers who combine weatherization and heat pump upgrades, recognizing the benefits of a whole-home approach. In our comments on CenterPoint’s modification request, Fresh Energy recommended that CenterPoint further align its bonus rebate with Xcel Energy’s ECO bonus rebate offering to improve consistency and strengthen the incentive.
The Minnesota Department of Commerce approved the modification request and directed CenterPoint to reevaluate the bonus rebate’s incentive amount, eligibility requirements, and areas for further alignment with Xcel’s bonus rebate as part of CenterPoint’s upcoming 2027-2029 ECO Triennial Plan, informed by CenterPoint’s collection of additional data related to the bonus rebate.
Xcel Energy modification (Docket #23-92)
In an ongoing ECO modification, Xcel has proposed two new programs to support transportation electrification. The first of these is an advisory services and guided charging installation program, which will help customers identify the lowest-cost and best-suited solutions for installing EV charging where they park. The second is a Commercial EV Charging Infrastructure Rebate program, which will incentivize the construction of public fast chargers, chargers at multifamily buildings, and chargers serving electric transit and school buses. Fresh Energy and a coalition of clean energy groups commented on this modification.
Reviewing utilities’ annual ECO reports (Docket #23-92 through 23-97)
Fresh Energy also reviews utilities’ annual ECO reports, including the most recent 2025 filings. In its report, Xcel noted strong customer demand for both ducted and ductless air-source heat pumps within its efficient fuel-switching segment. Xcel further observed that its Residential Heating and Cooling program reflected a continued market shift toward electrification. Consistent with this trend, Xcel reported that customer adoption of efficient fuel-switching measures accelerated significantly in 2025, with the program substantially exceeding its savings targets.
Other ongoing ECO working groups
Over the last year, Fresh Energy has also actively participated in both the ECO Income-Eligible Working Group, which brings together a diverse range of stakeholders to explore how ECO programs can better serve under-resourced households across Minnesota, as well as the ECO Potential Study Advisory Committee. This advisory committee works with the Minnesota Department of Commerce and its consultant to help guide the development of the next statewide natural gas and electric ECO potential study. The goal of this study is to assess the potential for energy efficiency, load management, and efficient fuel-switching technologies and their impact on carbon reduction over the next two decades. Unfortunate delays in the ECO potential study mean that preliminary results will not be available in time to inform utilities’ ECO plans and Xcel’s gas IRP filings this summer.
Fresh Energy also presented and participated in a stakeholder process in spring 2025 regarding ECO customer incentive prioritization. In that process, we recommended a phased transition away from ECO rebates for gas-fired appliances that have cost-effective and more efficient electric alternatives to better align ratepayer-funded utility programs with state energy policy.
Next steps
Ahead of filing their proposed Triennial plans on June 1, 2026 several utilities are hosting stakeholder meetings to gather input on their program designs. Fresh Energy has been actively participating in these discussions and providing feedback as utilities refine their plans. Utilities have also recently presented their proposed income-eligible ECO programs for 2027-2029 to the ECO Income-Eligible Working Group, offering insight into how they plan to serve low-income households in the upcoming Triennial and creating an opportunity to collect stakeholder feedback on program design.
The comments we shared above are the result of hundreds of hours of staff work and detailed research. Engaging in these processes to continually refine ECO methodologies and closely tracking the implementation of utilities’ Triennial plans are important ways Fresh Energy holds our utilities accountable to their climate commitments, our state’s emissions reduction goals, and keeping energy affordable for customers. Fresh Energy will continue to engage with utilities and stakeholders throughout the Triennial plan filing process and as proposed plans are reviewed in the months ahead.