SF 3096

2nd Engrossment - 85th Legislature (2007 - 2008) Posted on 12/15/2009 12:00am

A bill for an act
relating to energy; creating programs for government energy conservation
investments; removing rulemaking requirement for certain loan and grant
programs; establishing microenergy loan program; authorizing issuance of
state revenue bonds; modifying provision allowing guaranteed energy savings
contracts; requiring a report; appropriating money; amending Minnesota Statutes
2006, section 216C.09; Minnesota Statutes 2007 Supplement, section 471.345,
subdivision 13; proposing coding for new law in Minnesota Statutes, chapters
16B; 216C; repealing Laws 2007, chapter 57, article 2, section 30.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

new text begin [16B.321] DEFINITIONS.
new text end

new text begin Subdivision 1. new text end

new text begin Scope. new text end

new text begin For the purpose of this section and section 16B.322, the terms
defined in this section have the meanings given them.
new text end

new text begin Subd. 2. new text end

new text begin Energy improvement project. new text end

new text begin "Energy improvement project" means:
new text end

new text begin (1) a project to improve energy efficiency in a building or facility, including the
design, acquisition, installation, construction, and commissioning of equipment or
improvements to a building or facility, and training of building or facility staff necessary
to properly operate and maintain the equipment or improvements; or
new text end

new text begin (2) a project to design, acquire, install, construct, and commission equipment or
products to utilize solar, wind, geothermal, biomass, or other alternative energy sources in
heating, cooling, or providing electricity for a building or facility owned or operated by a
state agency and training of building or facility staff necessary to properly operate and
maintain the equipment or improvements.
new text end

new text begin Subd. 3. new text end

new text begin Energy project study. new text end

new text begin "Energy project study" means a technical and
financial study of one or more energy improvement projects, including:
new text end

new text begin (1) an analysis of historical energy consumption and cost data;
new text end

new text begin (2) a description of existing equipment, structural elements, operating characteristics,
and other conditions affecting energy use;
new text end

new text begin (3) a description of the proposed energy improvement projects;
new text end

new text begin (4) a detailed budget for the proposed project; and
new text end

new text begin (5) calculations sufficient to demonstrate the expected energy and operational cost
savings and reduction in fossil-fuel use.
new text end

new text begin Subd. 4. new text end

new text begin Financing agreement. new text end

new text begin "Financing agreement" means a tax-exempt
lease-purchase agreement entered into by the commissioner of administration and a
financial institution under a standard project financing agreement offered under section
16B.322, subdivision 4.
new text end

new text begin Subd. 5. new text end

new text begin State agency. new text end

new text begin "State agency" means any office, board, commission,
authority, department, or other agency of the executive branch of state government.
new text end

Sec. 2.

new text begin [16B.322] ENERGY IMPROVEMENT FINANCING PROGRAM FOR
STATE GOVERNMENT.
new text end

new text begin Subdivision 1. new text end

new text begin Commissioner's authority and duties; state agency authority.
new text end

new text begin The commissioner shall administer the energy improvement financing program created
by this section. A state agency may enter into contracts for the purposes of this section
with the commissioner and participating financial institutions. All technical services and
construction contracts shall be executed through the appropriate procurement procedure in
chapters 16B, 16C, and other applicable law.
new text end

new text begin Subd. 2. new text end

new text begin Program eligibility; voluntary program participation; targeted
technical services. new text end

new text begin A state agency may elect to participate in the program. The
commissioner may prioritize and target technical services offered under subdivision 3 to
state agencies with state buildings or facilities that the commissioner determines offer the
greatest potential to improve energy efficiency or reduce use of fossil-fuel energy.
new text end

new text begin Subd. 3. new text end

new text begin Target technical services. new text end

new text begin The commissioner may require full or partial
reimbursement of costs for technical services provided to a state agency, subject to terms
and conditions specified and agreed to by contract prior to the delivery of technical
services.
new text end

new text begin Subd. 4. new text end

new text begin Financing agreement. new text end

new text begin The commissioner shall solicit proposals from
private financial institutions and may enter into a financing agreement with one or more
financial institutions. The term of the financing agreement shall not exceed 15 years
from the date of final completion of the energy improvement project. The financing
agreement is assignable to the state agency operating or managing the state building or
facility improved by the energy improvement project. The proceeds from the financing
agreement are appropriated to the commissioner and may be used for the purposes of
this section and are available until spent.
new text end

new text begin Subd. 5. new text end

new text begin Qualifying energy improvement projects. new text end

new text begin The commissioner may
approve an energy improvement project and enter into a financing agreement if the
commissioner determines that:
new text end

new text begin (1) the project and financing agreement have been approved by the governing body
or head of the state agency that operates or manages the state building or facility to be
improved;
new text end

new text begin (2) the project is technically and economically feasible;
new text end

new text begin (3) the state agency that operates or manages the state building or facility has made
adequate provision for the operation and maintenance of the project;
new text end

new text begin (4) if an energy efficiency improvement, the project has a substantial likelihood to
result in a positive cash flow in each year the financing agreement is in effect;
new text end

new text begin (5) the project proposer has fully explored the use of conservation investment plan
opportunities under section 216B.241 with the utilities providing gas and electric service
to the energy improvement project;
new text end

new text begin (6) if a renewable energy improvement, the project has a substantial likelihood to
reduce use of fossil-fuel energy; and
new text end

new text begin (7) if a geothermal energy improvement, the project has a substantial likelihood to
produce savings in terms of nongeothermal energy and costs.
new text end

new text begin Subd. 6. new text end

new text begin Program costs. new text end

new text begin Program costs incurred by the commissioner or a state
agency that are not reimbursed or paid directly under a financing agreement may be paid
with money made available to the commissioner under section 216C.43, subdivision 10.
new text end

new text begin Subd. 7. new text end

new text begin Conservation investment plan savings goals. new text end

new text begin A utility or association
may count toward its energy savings goals under section 216B.241, subdivision 1c, the
energy savings resulting from its investment in an energy improvement project.
new text end

Sec. 3.

Minnesota Statutes 2006, section 216C.09, is amended to read:

216C.09 COMMISSIONER DUTIES.

(a) The commissioner shall:

(1) manage the department as the central repository within the state government for
the collection of data on energy;

(2) prepare and adopt an emergency allocation plan specifying actions to be taken
in the event of an impending serious shortage of energy, or a threat to public health,
safety, or welfare;

(3) undertake a continuing assessment of trends in the consumption of all forms of
energy and analyze the social, economic, and environmental consequences of these trends;

(4) carry out energy conservation measures as specified by the legislature and
recommend to the governor and the legislature additional energy policies and conservation
measures as required to meet the objectives of sections 216C.05 to 216C.30;

(5) collect and analyze data relating to present and future demands and resources
for all sources of energy;

(6) evaluate policies governing the establishment of rates and prices for energy
as related to energy conservation, and other goals and policies of sections 216C.05 to
216C.30, and make recommendations for changes in energy pricing policies and rate
schedules;

(7) study the impact and relationship of the state energy policies to international,
national, and regional energy policies;

(8) design and implement a state program for the conservation of energy; this
program shall include but not be limited to, general commercial, industrial, and residential,
and transportation areas; such program shall also provide for the evaluation of energy
systems as they relate to lighting, heating, refrigeration, air conditioning, building design
and operation, and appliance manufacturing and operation;

(9) inform and educate the public about the sources and uses of energy and the
ways in which persons can conserve energy;

(10) dispense funds made available for the purpose of research studies and projects
of professional and civic orientation, which are related to either energy conservation,
resource recovery, or the development of alternative energy technologies which conserve
nonrenewable energy resources while creating minimum environmental impact;

(11) charge other governmental departments and agencies involved in energy-related
activities with specific information gathering goals and require that those goals be met;

(12) design a comprehensive program for the development of indigenous energy
resources. The program shall include, but not be limited to, providing technical,
informational, educational, and financial services and materials to persons, businesses,
municipalities, and organizations involved in the development of solar, wind, hydropower,
peat, fiber fuels, biomass, and other alternative energy resources. The program shall be
evaluated by the alternative energy technical activity; and

(13) dispense loans, grants, or other financial aid from money received from
litigation or settlement of alleged violations of federal petroleum-pricing regulations
made available to the department for that purpose. deleted text begin The commissioner shall adopt rules
under chapter 14 for this purpose.
deleted text end

(b) Further, the commissioner may participate fully in hearings before the
Public Utilities Commission on matters pertaining to rate design, cost allocation,
efficient resource utilization, utility conservation investments, small power production,
cogeneration, and other rate issues. The commissioner shall support the policies stated in
section 216C.05 and shall prepare and defend testimony proposed to encourage energy
conservation improvements as defined in section 216B.241.

Sec. 4.

new text begin [216C.145] MICROENERGY LOAN PROGRAM.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin (a) The definitions in this subdivision apply to this
section.
new text end

new text begin (b) "Small-scale renewable energy" projects include solar thermal water heating,
solar electric or photovoltaic equipment, small wind energy conversion systems of less
than 250 kW, anaerobic digester gas systems, microhydro systems up to 100 kW, and
heating and cooling applications using geothermal energy.
new text end

new text begin (c) "Unit of local government" means any home rule charter or statutory city, county,
commission, district, authority, or other political subdivision or instrumentality of this
state, including a sanitary district, the Metropolitan Council, a port authority, an economic
development authority, or a housing and redevelopment authority.
new text end

new text begin Subd. 2. new text end

new text begin Program established. new text end

new text begin The commissioner of commerce shall develop,
implement, and administer a microenergy loan program under this section.
new text end

new text begin Subd. 3. new text end

new text begin Loan purposes. new text end

new text begin (a) The commissioner may issue low-interest, long-term
loans to units of local government to finance community-owned or publicly owned small
scale renewable energy systems or to provide loans or other aids to small businesses to
install small-scale renewable energy systems.
new text end

new text begin (b) The commissioner may participate in loans made by the Housing Finance
Agency to residential property owners, private developers, nonprofit organizations, or
units of local government under sections 462A.05, subdivisions 14 and 18; and 462A.33
for the construction, purchase, or rehabilitation of residential housing, to facilitate
the installation of small-scale renewable energy systems in residential housing and
cost-effective energy conservation improvements identified in an energy efficiency audit.
The commissioner shall assist the Housing Finance Agency in assessing the technical
qualifications of loan applicants.
new text end

new text begin Subd. 4. new text end

new text begin Technical standards. new text end

new text begin The commissioner shall determine technical
standards for small-scale renewable energy systems to qualify for loans under this section.
new text end

new text begin Subd. 5. new text end

new text begin Loan proposals. new text end

new text begin (a) At least once a year, the commissioner shall publish in
the State Register a request for proposals from units of local government for a loan under
this section. Within 45 days after the deadline for receipt of proposals, the commissioner
shall select proposals based on the following criteria:
new text end

new text begin (1) the reliability and cost-effectiveness of the renewable technology to be installed
under the proposal;
new text end

new text begin (2) the extent to which the proposal effectively integrates with the conservation and
energy efficiency programs of the energy utilities serving the proposer;
new text end

new text begin (3) the total life cycle energy use and greenhouse gas emissions reductions per
dollar of installed cost;
new text end

new text begin (4) the diversity of the renewable energy technology installed under the proposal;
new text end

new text begin (5) the geographic distribution of projects throughout the state;
new text end

new text begin (6) the percentage of total project cost requested;
new text end

new text begin (7) the proposed security for payback of the loan; and
new text end

new text begin (8) other criteria the commissioner may determine to be necessary and appropriate.
new text end

new text begin Subd. 6. new text end

new text begin Loan terms. new text end

new text begin A loan under this section must be issued at the lowest interest
required to recover the costs of issuing the loan, and must be for a minimum of 15 years,
unless the commissioner determines that a shorter loan period of no less than ten years
is necessary and feasible.
new text end

new text begin Subd. 7. new text end

new text begin Account. new text end

new text begin A microenergy loan account is established in the state treasury.
Money in the account consists of the proceeds of revenue bonds issued under section
216C.146, interest and other earnings on money in the account, money received in
repayment of loans from the account, legislative appropriations, and money from any
other source credited to the account.
new text end

new text begin Subd. 8. new text end

new text begin Appropriation. new text end

new text begin Money in the account is appropriated to the commissioner
of commerce to make microenergy loans under this section and to the commissioner of
finance to pay debt service and other costs under section 216C.146. Payment of debt
service costs and funding reserves take priority over use of money in the account for
any other purpose.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 5.

new text begin [216C.146] MICROENERGY LOAN REVENUE BONDS.
new text end

new text begin Subdivision 1. new text end

new text begin Bonding authority. new text end

new text begin (a) The commissioner of finance, if requested by
the commissioner of commerce, shall sell and issue state revenue bonds for the following
purposes:
new text end

new text begin (1) to make microenergy loans under section 216C.145;
new text end

new text begin (2) to pay the costs of issuance, debt service, and bond insurance or other credit
enhancements, and to fund reserves; and
new text end

new text begin (3) to refund bonds issued under this section.
new text end

new text begin (b) The aggregate principal amount of bonds for the purposes of paragraph (a),
clause (1), that may be outstanding at any time may not exceed $20,000,000; the principal
amount of bonds that may be issued for the purposes of paragraph (a), clauses (2) and
(3), is not limited.
new text end

new text begin Subd. 2. new text end

new text begin Procedure. new text end

new text begin The commissioner may sell and issue the bonds on the terms
and conditions the commissioner determines to be in the best interests of the state. The
bonds may be sold at public or private sale. The commissioner may enter into any
agreements or pledges the commissioner determines necessary or useful to sell the bonds
that are not inconsistent with section 216C.145. Sections 16A.672 to 16A.675 apply to
the bonds. The proceeds of the bonds issued under this section must be credited to the
microenergy loan account created under section 216C.145.
new text end

new text begin Subd. 3. new text end

new text begin Revenue sources. new text end

new text begin The debt service on the bonds is payable only from the
following sources:
new text end

new text begin (1) revenue credited to the microenergy loan account from the sources identified in
section 216C.145 or from any other source; and
new text end

new text begin (2) other revenues pledged to the payment of the bonds.
new text end

new text begin Subd. 4. new text end

new text begin Refunding bonds. new text end

new text begin The commissioner may issue bonds to refund
outstanding bonds issued under subdivision 1, including the payment of any redemption
premiums on the bonds and any interest accrued or to accrue to the first redemption date
after delivery of the refunding bonds. The proceeds of the refunding bonds may, at the
discretion of the commissioner, be applied to the purchases or payment at maturity of the
bonds to be refunded, or the redemption of the outstanding bonds on the first redemption
date after delivery of the refunding bonds and may, until so used, be placed in escrow to
be applied to the purchase, retirement, or redemption. Refunding bonds issued under this
subdivision must be issued and secured in the manner provided by the commissioner.
new text end

new text begin Subd. 5. new text end

new text begin Not a general or moral obligation. new text end

new text begin Bonds issued under this section are
not public debt, and the full faith, credit, and taxing powers of the state are not pledged
for their payment. The bonds may not be paid, directly in whole or in part from a tax of
statewide application on any class of property, income, transaction, or privilege. Payment
of the bonds is limited to the revenues explicitly authorized to be pledged under this
section. The state neither makes nor has a moral obligation to pay the bonds if the pledged
revenues and other legal security for them is insufficient.
new text end

new text begin Subd. 6. new text end

new text begin Trustee. new text end

new text begin The commissioner may contract with and appoint a trustee for
bond holders. The trustee has the powers and authority vested in it by the commissioner
under the bond and trust indentures.
new text end

new text begin Subd. 7. new text end

new text begin Pledges. new text end

new text begin A pledge made by the commissioner is valid and binding from
the time the pledge is made. The money or property pledged and later received by the
commissioner is immediately subject to the lien of the pledge without any physical
delivery of the property or money or further act, and the lien of the pledge is valid and
binding as against all parties having claims of any kind in tort, contract, or otherwise
against the commissioner, whether or not those parties have notice of the lien or pledge.
Neither the order nor any other instrument by which a pledge is created need be recorded.
new text end

new text begin Subd. 8. new text end

new text begin Bonds; purchase and cancellation. new text end

new text begin The commissioner, subject to
agreements with bondholders that may then exist, may, out of any money available for the
purpose, purchase bonds of the commissioner at a price not exceeding (1) if the bonds are
then redeemable, the redemption price then applicable plus accrued interest to the next
interest payment date thereon, or (2) if the bonds are not redeemable, the redemption price
applicable on the first date after the purchase upon which the bonds become subject to
redemption plus accrued interest to that date.
new text end

new text begin Subd. 9. new text end

new text begin State pledge against impairment of contracts. new text end

new text begin The state pledges and
agrees with the holders of any bonds that the state will not limit or alter the rights vested in
the commissioner to fulfill the terms of any agreements made with the bondholders, or
in any way impair the rights and remedies of the holders until the bonds, together with
interest on them, with interest on any unpaid installments of interest, and all costs and
expenses in connection with any action or proceeding by or on behalf of the bondholders,
are fully met and discharged. The commissioner may include this pledge and agreement
of the state in any agreement with the holders of bonds issued under this section.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 6.

new text begin [216C.42] DEFINITIONS.
new text end

new text begin Subdivision 1. new text end

new text begin Scope. new text end

new text begin For the purpose of this section and section 216C.43, the terms
defined in this section have the meanings given them.
new text end

new text begin Subd. 2. new text end

new text begin Energy improvement project. new text end

new text begin "Energy improvement project" means
a project to improve energy efficiency in a building or facility, including the design,
acquisition, installation, construction, and commissioning of equipment or improvements
to a building or facility, and training of building or facility staff necessary to properly
operate and maintain the equipment or improvements.
new text end

new text begin Subd. 3. new text end

new text begin Energy project study. new text end

new text begin "Energy project study" means a technical and
financial study of one or more energy improvement projects, including:
new text end

new text begin (1) an analysis of historical energy consumption and cost data;
new text end

new text begin (2) a description of existing equipment, structural elements, operating characteristics,
and other conditions affecting energy use;
new text end

new text begin (3) a description of the proposed energy improvement projects;
new text end

new text begin (4) a detailed budget for the proposed project;
new text end

new text begin (5) calculations sufficient to demonstrate the expected energy savings; and
new text end

new text begin (6) if a geothermal energy improvement, whether the project has a substantial
likelihood to produce savings in terms of nongeothermal energy and costs.
new text end

new text begin Subd. 4. new text end

new text begin Financing agreement. new text end

new text begin "Financing agreement" means a tax-exempt
lease-purchase agreement entered into by a local government and a financial institution
under a standard project financing agreement offered under section 216C.43.
new text end

new text begin Subd. 5. new text end

new text begin Local government. new text end

new text begin "Local government" means a county, statutory or
home rule charter city, town, school district, park district, or any combination of those
units operating under an agreement to exercise powers jointly.
new text end

new text begin Subd. 6. new text end

new text begin Program. new text end

new text begin "Program" means the energy improvement financing program
for local governments authorized by section 216C.43.
new text end

new text begin Subd. 7. new text end

new text begin Supplemental cash flow agreement. new text end

new text begin "Supplemental cash flow agreement"
means an agreement by the state to guarantee a positive budget impact for an energy
improvement as provided in section 216C.43, subdivision 7.
new text end

Sec. 7.

new text begin [216C.43] ENERGY IMPROVEMENT FINANCING PROGRAM FOR
LOCAL GOVERNMENT.
new text end

new text begin Subdivision 1. new text end

new text begin Commissioner's authority and duties; local government
authority. new text end

new text begin The commissioner shall administer this section. A local government may
enter into contracts for the purposes of this section with the commissioner, the primary
contractor, other contracted technical service providers, and participating financial
institutions.
new text end

new text begin Subd. 2. new text end

new text begin Program eligibility; voluntary program participation; targeted
technical services. new text end

new text begin A local government may elect to participate in the program. The
commissioner may prioritize and target technical services offered under subdivision
4 to public entities that the commissioner determines offer the greatest potential for
cost-effective energy improvement projects.
new text end

new text begin Subd. 3. new text end

new text begin Primary contractor for technical, financial, and program management
services. new text end

new text begin The commissioner may enter into a contract for the delivery of technical
services, financial management, marketing, and administrative services necessary for
implementation of the program.
new text end

new text begin Subd. 4. new text end

new text begin Targeted technical services. new text end

new text begin The commissioner shall offer technical
services to targeted public entities to conduct energy project studies. The commissioner
may contract with one or more qualified technical service providers to conduct energy
project studies for targeted public entities. The commissioner may require full or partial
reimbursement of costs for technical services provided to a local government, subject to
terms and conditions specified and agreed to by contract before the delivery of technical
services. A local government may independently procure technical services to conduct an
energy project study, but the energy project study must be reviewed and approved by the
commissioner to qualify an energy improvement project for a financing agreement under
subdivision 6 or a supplemental cash flow agreement under subdivision 7.
new text end

new text begin Subd. 5. new text end

new text begin Participation of technical service providers statewide. new text end

new text begin Program
activities must be implemented to encourage statewide participation of engineers,
architects, energy auditors, contractors, and other technical service providers. The
commissioner may provide training on energy project study requirements and procedures
to technical service providers.
new text end

new text begin Subd. 6. new text end

new text begin Standard project financing agreement. new text end

new text begin The commissioner shall solicit
proposals from private financial institutions and may enter into a standard project
financing agreement with one or more financial institutions. A standard project financing
agreement must specify terms and conditions uniformly available to all participating
public entities for financing to implement energy improvement projects under this section.
A local government may choose to finance an energy improvement project by means other
than a standard project financing agreement, but a supplemental cash flow agreement
under subdivision 7 must not be offered unless the commissioner determines that the other
financing means creates no greater potential obligation under a supplemental cash flow
agreement than would be created through a standard project financing agreement.
new text end

new text begin Subd. 7. new text end

new text begin Supplemental cash flow agreement. new text end

new text begin (a) The commissioner shall
offer a supplemental cash flow agreement for the term of the financing agreement
to a participating local government for qualifying energy improvement projects. A
supplemental cash flow agreement is an agreement by the commissioner to lend money
to a local government in an amount necessary so that the cumulative payments made
by the local government under a financing agreement minus the amount loaned by the
commissioner do not exceed the actual energy and operating cost savings attributable to
the energy improvement project for the term of the supplemental cash flow agreement.
new text end

new text begin Money loaned to a local government by the commissioner in fulfillment of a supplemental
cash flow agreement is repayable only to the extent that a positive budget impact is
maintained during the term of the supplemental cash flow agreement. Terms and
conditions of a supplemental cash flow agreement must be agreed to by contract before a
local government enters into a financing agreement. A supplemental cash flow agreement
shall not exceed 15 years from the date of final completion of the energy improvement
project.
new text end

new text begin (b) A supplemental cash flow agreement must include, but is not limited to:
new text end

new text begin (1) specification of methods and procedures to measure and verify energy cost
savings;
new text end

new text begin (2) obligations of the local government to operate and maintain the energy
improvements;
new text end

new text begin (3) procedures to modify the supplemental cash flow agreement if the local
government modifies operating characteristics of its building or facility in a manner that
adversely affects energy cost savings;
new text end

new text begin (4) interest charged on the loan, which may not exceed the interest on the related
financial agreement; and
new text end

new text begin (5) procedures for resolution of disputes.
new text end

new text begin (c) The commissioner must limit aggregate exposure to liability for payments under
existing supplemental cash flow agreements to an amount no more than the appropriation
available to make those payments.
new text end

new text begin Subd. 8. new text end

new text begin Qualifying energy improvement projects. new text end

new text begin A local government may
submit to the commissioner, on a form prescribed by the commissioner, an application for
a financing agreement authorization and supplemental cash flow agreement for energy
improvement projects. The commissioner shall approve an energy improvement project
for a supplemental cash flow agreement and authorize eligibility for a financing agreement
if the commissioner determines that:
new text end

new text begin (1) the application has been approved by the governing body or agency head of the
local government;
new text end

new text begin (2) the project is technically and economically feasible;
new text end

new text begin (3) the local government has made adequate provision for the operation and
maintenance of the project;
new text end

new text begin (4) the project proposer has fully explored the use of conservation investment plan
opportunities under section 216B.241 with the utilities providing gas and electric service
to the project;
new text end

new text begin (5) the project has a substantial likelihood of resulting in a positive cash flow in each
year the financing agreement is in effect; and
new text end

new text begin (6) adequate money will be available to the commissioner to fulfill the supplemental
cash flow agreement.
new text end

new text begin Energy improvement projects under this section are not subject to section 123B.71.
new text end

new text begin Subd. 9. new text end

new text begin Program costs. new text end

new text begin Program costs incurred by the commissioner or a public
entity that are not direct costs to implement energy improvement projects may be paid
with program money appropriated under subdivision 10.
new text end

new text begin Subd. 10. new text end

new text begin Funding; appropriation; receipts. new text end

new text begin Petroleum violation escrow funds
appropriated to the commissioner by Laws 1988, chapter 686, article 1, section 38, for
state energy loan programs for schools, hospitals, and public buildings, and reappropriated
by Laws 2007, chapter 57, article 2, section 30, are appropriated to the commissioner
for the purposes of this section and are available until spent. The commissioner may
transfer up to $1,000,000 of this appropriation to the commissioner of administration for
the purposes of section 16B.322.
new text end

new text begin Subd. 11. new text end

new text begin CIP energy savings goals. new text end

new text begin A utility or association may count toward its
energy savings goals under section 216B.241, subdivision 1c, the energy savings resulting
from its investment in an energy improvement project.
new text end

Sec. 8.

Minnesota Statutes 2007 Supplement, section 471.345, subdivision 13, is
amended to read:

Subd. 13.

Energy efficiency projects.

The following definitions apply to this
subdivision.

(a) "Energy conservation measure" means a training program or facility alteration
designed to reduce energy consumption or operating costs and includes:

(1) insulation of the building structure and systems within the building;

(2) storm windows and doors, caulking or weatherstripping, multiglazed windows
and doors, heat absorbing or heat reflective glazed and coated window and door
systems, additional glazing, reductions in glass area, and other window and door system
modifications that reduce energy consumption;

(3) automatic energy control systems;

(4) heating, ventilating, or air conditioning system modifications or replacements;

(5) replacement or modifications of lighting fixtures to increase the energy efficiency
of the lighting system without increasing the overall illumination of a facility, unless an
increase in illumination is necessary to conform to the applicable state or local building
code for the lighting system after the proposed modifications are made;

(6) energy recovery systems;

(7) cogeneration systems that produce steam or forms of energy such as heat, as well
as electricity, for use primarily within a building or complex of buildings;

(8) energy conservation measures that provide long-term operating cost reductions.

(b) "Guaranteed energy savings contract" means a contract for the evaluation
and recommendations of energy conservation measures, and for one or more energy
conservation measures. The contract must provide that all payments, except obligations
on termination of the contract before its expiration, are to be made over time, but not to
exceed deleted text begin 15 deleted text end new text begin 20 new text end years from the date of final installation, and the savings are guaranteed to
the extent necessary to make payments for the systems.

(c) "Qualified provider" means a person or business experienced in the design,
implementation, and installation of energy conservation measures. A qualified provider
to whom the contract is awarded shall give a sufficient bond to the municipality for its
faithful performance.

Notwithstanding any law to the contrary, a municipality may enter into a guaranteed
energy savings contract with a qualified provider to significantly reduce energy or
operating costs.

Before entering into a contract under this subdivision, the municipality shall provide
published notice of the meeting in which it proposes to award the contract, the names of
the parties to the proposed contract, and the contract's purpose.

Before installation of equipment, modification, or remodeling, the qualified provider
shall first issue a report, summarizing estimates of all costs of installations, modifications,
or remodeling, including costs of design, engineering, installation, maintenance, repairs,
or debt service, and estimates of the amounts by which energy or operating costs will be
reduced.

A guaranteed energy savings contract that includes a written guarantee that savings
will meet or exceed the cost of energy conservation measures is not subject to competitive
bidding requirements of section 471.345 or other law or city charter. The contract is
not subject to section 123B.52.

A municipality may enter into a guaranteed energy savings contract with a qualified
provider if, after review of the report, it finds that the amount it would spend on the energy
conservation measures recommended in the report is not likely to exceed the amount to be
saved in energy and operation costs over deleted text begin 15 deleted text end new text begin 20 new text end years from the date of new text begin final new text end installation if
the recommendations in the report were followed, and the qualified provider provides a
written guarantee that the energy or operating cost savings will meet or exceed the costs
of the system. The guaranteed energy savings contract may provide for payments over a
period of time, not to exceed deleted text begin 15 deleted text end new text begin 20 new text end years.

A municipality may enter into an installment payment contract for the purchase and
installation of energy conservation measures. The contract must provide for payments of
not less than deleted text begin 1/15 deleted text end new text begin 1/20 new text end of the price to be paid within two years from the date of the first
operation, and the remaining costs to be paid monthly, not to exceed a deleted text begin 15-year deleted text end new text begin 20-year
new text end term from the date of deleted text begin the first operation deleted text end new text begin final acceptance new text end .

A municipality entering into a guaranteed energy savings contract shall provide a
copy of the contract and the report from the qualified provider to the commissioner of
commerce within 30 days of the effective date of the contract.

Guaranteed energy savings contracts may extend beyond the fiscal year in which
they become effective. The municipality shall include in its annual appropriations measure
for each later fiscal year any amounts payable under guaranteed energy savings contracts
during the year. Failure of a municipality to make such an appropriation does not affect
the validity of the guaranteed energy savings contract or the municipality's obligations
under the contracts.

Sec. 9. new text begin REPORT TO COMMISSIONER OF EDUCATION.
new text end

new text begin The commissioner of commerce must report to the commissioner of education by
January 15, 2009, and January 15, 2010, the school districts that have applied for loans
under Minnesota Statutes, section 216C.243. The report must indicate the type of project
for which each district requested approval, the amount of the loan requested, and whether
the project was approved. If the district's project was not approved, the commissioner
must report the reason for the lack of approval. This section expires January 16, 2010.
new text end

Sec. 10. new text begin REPEALER.
new text end

new text begin Laws 2007, chapter 57, article 2, section 30, new text end new text begin is repealed.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end