Goal: Protect Minnesota consumers in a variety of commercial and financial transactions

Why is this goal important?
A free marketplace where consumers have the confidence they are getting a fair deal is the cornerstone of our system of commerce and finance.

What is DOC doing to achieve this goal?
The Department of Commerce is primarily a regulatory agency that oversees more than 20 industries including insurance, state chartered banks and credit unions, real estate, energy, and telecommunications.

Minnesota consumers contact the Department when they encounter a problem in one of these industries. Each year, the Department receives about 70,000 consumer phone calls, conducts about 10,000 investigations, returns millions of dollars in unclaimed property, and advocates for the public's interest before the Public Utilities Commission.

By increasing efficiency and improving technology, consumers will experience better service. In addition, the Department will be able to better identify and respond to regulatory issues before consumers encounter problems. The Department has taken several steps to accomplish these goals: 

        The Consumer Response Team resolves insurance consumer complaints, when
           possible, rather than conducting time-intensive formal investigations.

        The Department has added resources to complete additional consumer investigations in
           a thorough and timely manner.

        The Department continues to increase public awareness of Unclaimed Property
           program through advertising and our presence at the Minnesota State Fair.

        The Weights and Measures staff checks the accuracy of all commercial weighing and
           measuring equipment in Minnesota.

What is the department's progress on this goal to date?

Consumer Response and Insurance Investigations
The Minnesota Department of Commerce Consumer Response Team (CRT) is comprised of investigators who respond to consumer phone calls specifically about insurance. The CRT attempts to resolve disputes between consumers and the insurance industry informally. An increasing percentage of consumers are resolving their disputes informally and a large majority of formal investigations were completed within 90 days.

In calendar year 2006, the CRT responded to 33,737 phone calls, helping consumers with issues relating to the following industries:

          ·         Real Estate:   8,178 calls
          ·         Insurance:   20,801 calls
          ·         Securities:   1,286 calls
          ·         Collections:   2,127 calls
          ·         Do Not Call:   376 calls
          ·         Licensing:   969 calls

Market Assurance
If a complaint cannot be handled by the Consumer Response Team, a file is opened with an investigator with the Market Assurance division. The Department of Commerce investigates complaints in the following areas: 

                                                Market Assurance Formal Investigations

Unclaimed Property Claims Processed
Every day, someone loses some form of financial property because of a change of address, death, or just plain forgetfulness. What happens to these forgotten funds? The Unclaimed Property Division is responsible for holding the abandoned funds or property until the rightful owner or heir claims it. As the data below suggests, we have seen a significant increase in claims processed in the last four years. The increase is attributable to the program receiving over 100 million dollars in funds from life insurance companies that converted from privately-held to publicly-held entities. The following graph shows the number of claims processed and returned to rightful owners in each of the following calendar years.

Since its inception in 1969, the Unclaimed Property Program has returned approximately $200 million to rightful owners.

Weights and Measures
The Weights and Measures Division benefits Minnesota buyers and sellers in commercial transactions. The division is responsible for checking the accuracy of all commercial weighing and measuring devices in Minnesota, from gas pumps to grain elevators to grocery scales. The Division has 34 employees which includes 22 field staff.

Weights and Measures light duty staff inspected 43,000 gas pumps in 2006 with a 96% compliance rate. In addition, they inspected 8,200 light capacity scales, 1,100 vehicle tank meters, 675 hi-volume meters at the terminals, refineries, ethanol plants, and airports. Also, 270 package checking inspections were performed at grocery stores and other food related facilities.

The heavy duty field staff inspected 2,550 large capacity scales, including scales for vehicles, livestock, and grain and fertilizer.

The Department received 457 complaints with 37 resulting in action taken such as warnings, fines, or rejections. The majority of the complaints pertain to petroleum pump accuracy and quality of the product.

The metrology lab calibrated more than 1,400 artifacts, including five gallon measures, one gram weights, and 100,000 pound railroad test cars.

Other accomplishments:

• Moved to a new state-of-the-art facility in Burnsville, which includes a new petroleum and metrology lab

• The petroleum lab has been upgraded with new equipment to perform additional quality testing for all types of fuels

• The metrology lab space has doubled in square footage

• We will increase the calibration services by 25% to 40% with the new electronic equipment that has been purchased and installed

• We implemented a database system for below cost gas pricing (BCGP) complaints and B2 bill of lading collections

• We now do field evaluations (scales) for the National Type Evaluation Program (NTEP) as part of National Conference on Weights and Measure organization

Goal: Provide excellent service to business and industry

In each of the above instances, the Department must review, approve, and process these filings or applications. Individuals and business must wait for the Department to complete its work before they can proceed.  

Minnesota consumers benefit from additional choices and competition in the marketplace and delays in processing these applications limits consumer options. 

What is DOC doing to achieve this goal?  

        The Department continues to expand on-line licensing functions including systems to
           process new license applications, renewals, and more license types. The Department
           has moved its licensing function for insurance agents and companies completely online;
           reducing the time it takes to receive a license from as much as twelve weeks to a matter
           of days. The Department is partnering with a private vendor to bring better and faster
           service to Minnesota's 90,000 active insurance agents and 7,612 active agencies.

        The Department encourages electronic filing through the System for Electronic Rate and
           Form Filing (SERFF) operated by the National Association of Insurance
           Commissioners.

        The Division of Insurance Fraud
           Prevention conducts investigations and
           makes arrests in cases of insurance
           fraud alleged by insurance companies,
           other law enforcement agencies, or
           consumers.

        The Financial Exams Division seeks to
           maintain the Department's accreditation
           with both the Conference of State Bank
           Supervisors and the National
           Association of Insurance Commissioners.                       Fraud Unit being sworn in  

What is the department's progress on this goal to date?  

Online Licensing
The increase of electronic rate and form filing is decreasing the amount of time to process rate and form filings. The insurance licensing tool was launched on May 24, 2006 and in its first three weeks of operation, 950 insurance agents and companies had already completed online applications. In October of 2006, over 45,000 insurance producers renewed their license using the new online system. The remaining 45,000 insurance producers will renew online beginning in October of 2007.

Real Estate licensing is also occurring completely online for the first time in the summer of 2007.

Insurance Filings Using SERFF and Number of Days to Process Filings
When an insurance company develops a new policy or product, generally speaking, that policy must be approved by the Department before it can be sold to consumers. The Department has used the System for Electronic Rate and Form Filing to speed this approval process, creating more choices for consumers in the insurance marketplace.

Effective January 1, 2008, this process will be completely electronic as the SERFF system will be mandated for all insurance filings.

Fraud Prevention
The Department is on schedule to handle more than 1,000 referrals in Fiscal Year 2007 with several high profile cases handed over for prosecution to state and federal law enforcement agencies.

Keeping Financial Institutions Sound
The Financial Exams Division was recently awarded another five year accreditation with the National Association of Insurance Commissioners. The Department also maintains accreditation with the Conference of State Bank Supervisors.

Both of these entities perform a periodic peer review/quality control assessment to assure that our examination and oversight with respect to banks and insurers is sufficiently rigorous.

The best measure of success in this area is the lack of financial institution failures in Minnesota during the last five years.

Goal: Expand the use of alternative fuels in Minnesota

Why is this goal important?
Expanding the availability and use of clean alternative fuels will reduce pollution, add money to the Minnesota economy, and lessen our dependence on other states and nations for energy supplies. Experts estimate that by 2050, most of the economically recoverable petroleum in the world will be exhausted and long before then, the price of petroleum will rise as the production declines. For these reasons, Minnesota state energy policy promotes the use of clean fuels on our streets and highways by working with the federal government, non-profit organizations, and private industry to help develop viable alternatives to gasoline and diesel fuels.

Clean fuels have two main characteristics: in most cases their primary content is a substance other than petroleum and they emit lower levels of pollution than gasoline or diesel.

Because alternative fuels are most commonly produced from corn and waste products, they have significant economic benefits for Minnesota, an agricultural state without petroleum reserves.

Predicting the future of alternative fuels is difficult, but the economic and environmental problems associated with our present reliance on gasoline and diesel fuel bode strongly for changes in transportation energy use. Gasoline and diesel account for about 40 percent of our state’s total energy use with nearly one-third of what we spend for energy going to buy gasoline and diesel fuel. For the nation, two-thirds of all oil used in the United States goes for transportation; in Minnesota, the percentage is even higher - about three quarters.

This reliance on gas and diesel results in dependence on foreign oil and accounts for more than 40 percent of our nation’s growing world trade deficit. In addition to these economic problems, gasoline and diesel also harm the environment. The air in many U.S. cities contains unacceptable amounts of carbon monoxide, hydrocarbons, and other pollutants harmful to human health. A large portion of these emissions comes from motor vehicles.

What is DOC doing to achieve this goal?
The use of E85 continues to be the most available and promising alternative fuel source in the state. E85 is composed of 85 percent ethanol and 15 percent gasoline, emits fewer pollutants and has higher octane than gasoline. It performs very much like gasoline, although the fuel has a lower energy content than gasoline.

E85 is an alternative fuel, not to be confused with traditional Minnesota gasoline that has about 10 percent ethanol added as an oxygenate to reduce pollution. E85 is also different than “low-sulfur gasoline” that also reduces pollution from conventional gasoline (and also contains 10 percent ethanol).

A distinct advantage of E85 as an alternative fuel is the ready availability of flexible fuel vehicles (FFVs), which run on E85, gasoline, or any combination of the two. A current list of FFVs can be found on the Department of Commerce web site. Since 1995, the Minnesota Department of Commerce has worked with other state agencies, the federal government, private industry, public interest groups, and others to encourage the development, testing, and use of alternatives to petroleum fuels so that they can eventually enter the marketplace and compete with conventional transportation fuels.

The Department offers grants to petroleum retailers to offset the cost of converting tanks to handle E85 or install new tanks specifically for E85.

In September 2004, Governor Pawlenty signed an executive order requiring state agencies to reduce gasoline use in on-road vehicles 25% by 2010 and 50% by 2015, and to reduce petroleum-based diesel fuel use 10% by 2010 and 25% by 2015. At least 75% of most new onroad vehicles must be powered by biodiesel (blends of 20% or greater), ethanol (blends of 70% or greater), or hydrogen. Vehicles with high fuel economies - such as hybrid vehicles - also qualify under Minnesota’s executive order.

Governor Pawlenty reinforced this commitment to renewable fuels by issuing another executive order in March of 2006 directing all state departments to immediately take all reasonable actions necessary to strengthen the infrastructure for increasing the availability and usage of E85 and biodiesel fuel throughout the state.

What is the department's progress on this goal to date?
Since 1995, when the Minnesota Department of Commerce began promoting clean fuels through private-public partnerships, use of E85 has grown substantially in Minnesota. Approximately 150,000 flexible fuel vehicles were registered in the state as of early 2007, according to the American Lung Association of The Upper Midwest. Minnesota leads the nation in developing E85 fueling sites, with plans to double the number of stations over the next few years from 300 to approximately 600. This represents nearly half the E85 stations in the United States and Minnesota is seen as a model for building a competitive choice to gasoline.

The use of E85 in the state fleet has also increased since the Governor’s executive orders of 2004 and 2006.  E85 use by state agencies increased 69%, growing from 98,000 gallons in 2005 to over 165,000 gallons in 2006.

Goal: Encourage and promote the development of locally owned wind energy projects

Why is this goal important?
Wind is the best opportunity we have in Minnesota to produce our own renewable energy. Minnesota is not blessed with coal reserves or underground oil fields, but we do have wind. The production of wind energy also causes no negative environmental impacts. Once a turbine is constructed, it does not use fuel, water or any other form of energy to work.

As the wind industry matures, advances in technology are making this form of energy increasingly reliable and Minnesota utilities are improving their ability to integrate wind energy into the state’s supply grid.

Community-Based Energy Development (C-BED) is a critical and unique component of Minnesota’s Renewable Energy Objective. C-BED projects are locally-owned wind energy projects located in Minnesota. As with the farmer-owned ethanol plants that have acted as economic anchors for Minnesota’s farm communities and rural economies, C-BED projects capture energy dollars to the local economy to be reinvested locally again and again. Local ownership and local benefits of energy production is central to the Pawlenty Administration’s energy policy.

What is DOC doing to achieve this goal?
Minnesota is the unquestioned national leader on local ownership of wind energy production. In November of 2005, Governor Pawlenty sought to aggressively build on that leadership by establishing a C-BED goal for the state of an additional 800 megawatts (MW) of locally owned wind projects by 2010 (on top of the nation-leading 200 MW in operation in 2005).

The Minnesota Department of Commerce is working with our state’s utilities to increase the number and quality of their community based     wind projects. The Department is also working with wind developers to make sure their projects are cost effective, reliable and ultimately a good deal for Minnesota ratepayers.

A key component to the C-BED statute is the availability of a "front-end loaded rate" for the energy from a community-based energy project. The front-end loaded rate means that the project can receive a higher rate from the utility in the early years of a wind energy contract, in exchange for a lower rate in the later years of a contract. This financing tool is intended to allow C-BED projects to overcome financing barriers, and cash flow a project during the first 10 years of production when the project owners must service the debt on the project.

What is the department's progress on this goal to date?
As of June 2007, over 470 MW of C-BED projects toward meeting the Governor’s goal are either under contract (166.85 MW) or under serious negotiation (303.35 MW). Xcel Energy has committed to providing 500 MW toward the Governor’s C-BED goal, and accounts for over half of the 470 MW under contract or under serious negotiation.
 

Utility C-BED Rankings, June 2007

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