HF 3368

1st Engrossment - 91st Legislature (2019 - 2020) Posted on 03/02/2020 03:37pm

A bill for an act
relating to energy; establishing a distributed solar generation tariff; modifying the
community solar garden program; appropriating money; amending Minnesota
Statutes 2018, sections 216B.164, subdivision 10; 216B.1641; 216B.2422,
subdivision 3; proposing coding for new law in Minnesota Statutes, chapter 216B.

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

Section 1.

new text begin [216B.1615] DISTRIBUTED SOLAR GENERATION TARIFF.
new text end

new text begin Subdivision 1. new text end

new text begin Application. new text end

new text begin The distributed solar generation tariff developed under this
section applies to a solar photovoltaic device, as defined in section 216C.06, subdivision
16, with a capacity greater than three megawatts but no greater than ten megawatts alternating
current interconnecting with the distribution system of the public utility that is subject to
section 116C.779, subdivision 1.
new text end

new text begin Subd. 2. new text end

new text begin Tariff filing. new text end

new text begin By January 1, 2021, the electric utility subject to this section shall
file a distributed solar generation tariff with the commission that represents the utility's
alternative tariff approved by the commission under section 216B.164, subdivision 10,
minus the environmental value of solar energy that is included in the alternative tariff rate.
new text end

new text begin Subd. 3. new text end

new text begin Commission review; approval. new text end

new text begin The commission shall, after notice and
opportunity for public comment, approve the distributed solar generation tariff developed
by the public utility if the public utility demonstrates that the distributed solar generation
tariff:
new text end

new text begin (1) appropriately calculates the tariff rate according to the provisions of subdivision 2;
new text end

new text begin (2) includes a mechanism to allow recovery of the costs paid to the facilities operating
under the distributed solar generation tariff;
new text end

new text begin (3) compensates the distributed solar generating facility for all electricity generated
under the distributed solar generation tariff;
new text end

new text begin (4) complies with the interconnection requirements under section 216B.1611, subdivision
2, paragraph (a), clause (5); and
new text end

new text begin (5) represents the present value of the future revenue streams of the remaining value
components of distributed solar energy embodied in the alternative tariff approved by the
commission under section 216B.164, subdivision 10.
new text end

new text begin Subd. 4. new text end

new text begin Tariff; updates. new text end

new text begin The public utility subject to this section shall recalculate the
distributed solar generation tariff rate annually, and shall file the recalculated rate with the
commission for approval.
new text end

new text begin Subd. 5. new text end

new text begin Renewable energy credits. new text end

new text begin Renewable energy credits for solar photovoltaic
devices operating under the tariff developed under this section are the property of the solar
energy generator.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment and
applies to applications for interconnections of solar photovoltaic devices eligible to operate
under the tariff developed under this section that are filed with the public utility on or after
that date.
new text end

Sec. 2.

Minnesota Statutes 2018, section 216B.164, subdivision 10, is amended to read:

Subd. 10.

Alternative tariff; compensation for resource value.

(a) A public utility
may apply new text begin with respect to residential customers, and a public utility subject to section
116C.779, subdivision 1, must apply with respect to commercial and industrial customers, new text end
for commission approval for an alternative tariff that compensates customers through a bill
credit mechanism for the value to the utility, its customers, and society for operating
distributed solar photovoltaic resources interconnected to the utility system and operated
by customers primarily for meeting their own energy needs.

(b) If approved, the alternative tariff shall apply to customers' interconnections occurring
after the date of approval. The alternative tariff is in lieu of the applicable rate under
subdivisions 3 and 3a.

(c) The commission shall after notice and opportunity for public comment approve the
alternative tariff provided the utility has demonstrated the alternative tariff:

(1) appropriately applies the methodology established by the department and approved
by the commission under this subdivision;

(2) includes a mechanism to allow recovery of the cost to serve customers receiving the
alternative tariff rate;

(3) charges the customer for all electricity consumed by the customer at the applicable
rate schedule for sales to that class of customer;

(4) credits the customer for all electricity generated by the solar photovoltaic device at
the distributed solar value rate established under this subdivision;

(5) applies the charges and credits in clauses (3) and (4) to a monthly bill that includes
a provision so that the unused portion of the credit in any month or billing period shall be
carried forward and credited against all charges. In the event that the customer has a positive
balance after the 12-month cycle ending on the last day in February, that balance will be
eliminated and the credit cycle will restart the following billing period beginning on March
1;

(6) complies with the size limits specified in subdivision 3a;

(7) complies with the interconnection requirements under section 216B.1611; and

(8) complies with the standby charge requirements in subdivision 3a, paragraph (b) new text begin , as
applicable new text end .

(d) A utility must provide to the customer the meter and any other equipment needed to
provide service under the alternative tariff.

(e) The department must establish the distributed solar value methodology in paragraph
(c), clause (1), no later than January 31, 2014. The department must submit the methodology
to the commission for approval. The commission must approve, modify with the consent
of the department, or disapprove the methodology within 60 days of its submission. When
developing the distributed solar value methodology, the department shall consult stakeholders
with experience and expertise in power systems, solar energy, and electric utility ratemaking
regarding the proposed methodology, underlying assumptions, and preliminary data.

(f) The distributed solar value methodology established by the department must, at a
minimum, account for the value of energy and its delivery, generation capacity, transmission
capacity, transmission and distribution line losses, and environmental value. The department
may, based on known and measurable evidence of the cost or benefit of solar operation to
the utility, incorporate other values into the methodology, including credit for locally
manufactured or assembled energy systems, systems installed at high-value locations on
the distribution grid, or other factors.

(g) The credit for distributed solar value applied to alternative tariffs approved under
this section shall represent the present value of the future revenue streams of the value
components identified in paragraph (f).

(h) The utility shall recalculate the alternative tariff on an annual cycle, and shall file
the recalculated alternative tariff with the commission for approval.

(i) Renewable energy credits for solar energy credited under this subdivision belong to new text begin :
new text end

new text begin (1) new text end the electric utility providing the credit new text begin , for solar energy generated by residential
customers or a community solar garden operating under section 216B.1641; and
new text end

new text begin (2) the customer, for solar energy generated by a commercial or industrial customer new text end .

(j) The commission may not authorize a utility to charge an alternative tariff rate that is
lower than the utility's applicable retail rate until three years after the commission approves
an alternative tariff for the utility.

(k) A utility must enter into a contract with an owner of a solar photovoltaic device
receiving an alternative tariff rate under this section that has a term of at least 20 years,
unless a shorter term is agreed to by the parties new text begin , except if the owner is a commercial or
industrial facility, the contract must have a term of 20 years unless a different term is agreed
to by the parties new text end .

(l) An owner of a solar photovoltaic device receiving an alternative tariff rate under this
section must be paid the same rate per kilowatt-hour generated each year for the term of
the contract.

Sec. 3.

Minnesota Statutes 2018, section 216B.1641, is amended to read:

216B.1641 COMMUNITY SOLAR GARDEN.

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin (a) For the purposes of this section, the following terms have
the meanings given.
new text end

new text begin (b) "Subscribed energy" means electricity generated by the community solar garden that
is attributable to a subscriber's subscription.
new text end

new text begin (c) "Subscriber" means a retail customer of a utility who owns one or more subscriptions
of a community solar garden interconnected with that utility.
new text end

new text begin (d) "Subscription" means a contract between a subscriber and the owner of a solar garden.
new text end

new text begin Subd. 2. new text end

new text begin Solar garden; project requirements. new text end

(a) The public utility subject to section
116C.779 shall file by September 30, 2013, a plan with the commission to operate a
community solar garden program which shall begin operations within 90 days after
commission approval of the plan. Other public utilities may file an application at their
election. The community solar garden program must be designed to offset the energy use
of not less than five subscribers in each community solar garden facility of which no single
subscriber has more than a 40 percent interest. The owner of the community solar garden
may be a public utility or any other entity or organization that contracts to sell the output
from the community solar garden to the utility under section 216B.164. There shall be no
new text begin cumulative new text end limitation on the number or deleted text begin cumulative deleted text end generating capacity of community solar
garden facilities other than the limitations imposed under section 216B.164, subdivision
4c, or other limitations provided in law or regulations.

new text begin (b) By September 30, 2020, the public utility must file a plan for commission approval
to limit the nameplate capacity of new executed interconnection agreements for community
solar garden facilities to 225 megawatts per year, beginning in calendar year 2021. This
limit does not apply to community solar gardens designated a community access project
under subdivision 4.
new text end

deleted text begin (b) deleted text end new text begin (c) new text end A solar garden is a facility that generates electricity by means of a ground-mounted
or roof-mounted solar photovoltaic device whereby subscribers receive a bill credit for the
electricity generated in proportion to the size of their subscription. The solar garden must
have a nameplate capacity of no more than deleted text begin one megawatt deleted text end new text begin three megawatts new text end . Each subscription
shall be sized to represent at least 200 watts of the community solar garden's generating
capacity and to supply, when combined with other distributed generation resources serving
the premises, no more than 120 percent of the average annual consumption of electricity
by each subscriber at the premises to which the subscription is attributed.

deleted text begin (c) deleted text end new text begin (d) new text end The solar generation facility must be located in the service territory of the public
utility filing the plan. Subscribers must be retail customers of the public utility new text begin and, unless
the facility has a minimum setback of 100 feet from the nearest residential property and the
owner of the facility reserves at least ten percent of its capacity for use by residential
subscribers, must be new text end located in the same county or a county contiguous to where the facility
is located.

deleted text begin (d) deleted text end new text begin (e) new text end The public utility must purchase from the community solar garden all energy
generated by the solar garden. new text begin Except as provided under subdivision 5, new text end the purchase shall
be at the new text begin most recent three-year average of the new text end rate calculated new text begin annually new text end under section
216B.164, subdivision 10, or, until that rate for the public utility has been approved by the
commission, the applicable retail rate. A solar garden is eligible for any incentive programs
offered under deleted text begin either deleted text end section 116C.7792 deleted text begin or section 216C.415 deleted text end . A subscriber's portion of the
purchase shall be provided by a credit on the subscriber's bill.

new text begin Subd. 3. new text end

new text begin Solar garden plan; requirements; nonutility status. new text end

deleted text begin (e) deleted text end new text begin (a) new text end The commission
may approve, disapprove, or modify a community solar garden deleted text begin program deleted text end new text begin plan new text end . Any plan
approved by the commission must:

(1) reasonably allow for the creation, financing, and accessibility of community solar
gardens;

(2) establish uniform standards, fees, and processes for the interconnection of community
solar garden facilities that allow the utility to recover reasonable interconnection costs for
each community solar garden;

(3) not apply different requirements to utility and nonutility community solar garden
facilities;

(4) be consistent with the public interest;

(5) identify the information that must be provided to potential subscribers to ensure fair
disclosure of future costs and benefits of subscriptions;

(6) include a program implementation schedule;

(7) identify all proposed rules, fees, and charges; deleted text begin and
deleted text end

(8) identify the means by which the program will be promoted deleted text begin . deleted text end new text begin ;
new text end

new text begin (9) require that residential subscribers have a right to cancel a community solar garden
subscription within three business days, as provided under section 325G.07;
new text end

new text begin (10) require that the following information is provided by the solar garden owner in
writing to any prospective subscriber asked to make a prepayment to the solar garden owner
prior to the delivery of subscribed energy by the solar garden:
new text end

new text begin (i) an estimate of the annual generation of subscribed energy, based on the methodology
approved by the commission; and
new text end

new text begin (ii) an estimate of the length of time required to fully recover a subscriber's prepayments
made to the owner of the solar garden prior to the delivery of subscribed energy, calculated
using the formula developed by the commission under paragraph (d); and
new text end

new text begin (11) require new residential subscription agreements that require a prepayment to allow
the subscriber to transfer the subscription to other new or current subscribers, or to cancel
the subscription, on commercially reasonable terms.
new text end

deleted text begin (f) deleted text end new text begin (b) new text end Notwithstanding any other law, neither the manager of nor the subscribers to a
community solar garden facility shall be considered a utility solely as a result of their
participation in the community solar garden facility.

deleted text begin (g) deleted text end new text begin (c) new text end Within 180 days of commission approval of a plan under this section, a utility
shall begin crediting subscriber accounts for each community solar garden facility in its
service territory, and shall file with the commissioner of commerce a description of its
crediting system.

deleted text begin (h) For the purposes of this section, the following terms have the meanings given:
deleted text end

deleted text begin (1) "subscriber" means a retail customer of a utility who owns one or more subscriptions
of a community solar garden facility interconnected with that utility; and
deleted text end

deleted text begin (2) "subscription" means a contract between a subscriber and the owner of a solar garden.
deleted text end

new text begin (d) By November 30, 2020, the commission must approve a formula that solar garden
owners must use to estimate the length of time required to fully recover a subscriber's
prepayments made to the solar garden owner prior to the delivery of subscribed energy.
new text end

new text begin Subd. 4. new text end

new text begin Community access project; eligibility. new text end

new text begin An owner of a community solar garden
may, at any time before making an initial payment under an interconnection agreement
entered into with the public utility, apply to the utility to be designated as a community
access project. The utility shall designate a solar garden as a community access project if
the solar garden commits to meeting the following conditions:
new text end

new text begin (1) at least 50 percent of the solar garden's generating capacity is subscribed by residential
customers;
new text end

new text begin (2) the contract between an owner of the solar garden and the public utility that purchases
the garden's electricity, and any agreement between the utility or owner of the solar garden
and subscribers, states that the owner of the solar garden does not discriminate against or
screen subscribers based on income or credit score and that any customer of a utility whose
community solar garden plan has been approved by the commission under subdivision 3 is
eligible to become a subscriber;
new text end

new text begin (3) the solar garden is operated by an entity that maintains a physical address in Minnesota
and has designated a contact person in Minnesota who responds to subscriber inquiries; and
new text end

new text begin (4) the agreement between the owner of the solar garden and subscribers states that the
owner will adequately publicize and convene at least one meeting annually to provide an
opportunity for subscribers to address questions to the manager or owner.
new text end

new text begin Subd. 5. new text end

new text begin Community access project; financial arrangements. new text end

new text begin (a) If a solar garden is
approved by the utility as a community access project:
new text end

new text begin (1) the public utility purchasing the electricity generated by the community access project
may charge the owner of the community access project no more than one cent per watt
alternating current based on the solar garden's generating capacity for any refundable deposit
the utility requires of a solar garden during the application process;
new text end

new text begin (2) notwithstanding subdivision 2, paragraph (d), the public utility must purchase all
energy generated by the community access project at the retail rate; and
new text end

new text begin (3) all renewable energy credits generated by the community access project belong to
subscribers unless the operator contracts to:
new text end

new text begin (i) sell the credits to a third party; or
new text end

new text begin (ii) sell or transfer the credits to the utility; and
new text end

new text begin (iii) discloses a sale or transfer to subscribers at the time the subscribers enter into a
subscription.
new text end

new text begin (b) If at any time after commercial operation begins a solar garden approved by the
utility as a community access project fails to meet the conditions under subdivision 4, the
solar garden shall no longer be subject to the provisions of this subdivision and subdivision
6 and shall operate under the program rules established by the commission for a solar garden
that does not qualify as a community access project.
new text end

new text begin (c) An owner of a solar garden whose designation as a community access project is
revoked under this subdivision may reapply to the commission at any time to have its
designation as a community access project reinstated under the provisions of subdivision
4.
new text end

new text begin (d) An owner of a community access project may require the public utility to offer
subscribers the option of paying any lump sum payment required of subscribers via an
on-bill repayment program under section 216B.241, subdivision 5d.
new text end

new text begin Subd. 6. new text end

new text begin Community access project; reporting. new text end

new text begin The owner of a community access
project must include the following information in an annual report to the subscribers of the
community access project and the utility:
new text end

new text begin (1) a description of the process by which subscribers can provide input to solar garden
policy and decision-making;
new text end

new text begin (2) the amount of revenues received by the solar garden in the previous year that were
allocated to categories that include but are not limited to operating costs, debt service, profits
distributed to subscribers, and profits distributed to others; and
new text end

new text begin (3) an analysis of the proportion of subscribers that are low and moderate income and
a description of one or more of the following methods used to calculate that proportion:
new text end

new text begin (i) income verification by subscribers;
new text end

new text begin (ii) subscriber evidence that the subscriber or a member of the subscriber's household
receives assistance from any of the following sources:
new text end

new text begin (A) the Low-Income Home Energy Assistance Program;
new text end

new text begin (B) Section 8 housing assistance;
new text end

new text begin (C) medical assistance;
new text end

new text begin (D) the Supplemental Nutrition Assistance Program; or
new text end

new text begin (E) the National School Lunch Program;
new text end

new text begin (iii) characterization of the census tract in which the subscriber resides as low or moderate
income by the Federal Financial Institutions Examination Council; or
new text end

new text begin (iv) other methods approved by the commission.
new text end

new text begin Subd. 7. new text end

new text begin Commission order. new text end

new text begin Within 180 days of the effective date of this act, the
commission shall issue an order addressing the provisions of this act.
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. 4.

Minnesota Statutes 2018, section 216B.2422, subdivision 3, is amended to read:

Subd. 3.

Environmental costs.

deleted text begin (a) deleted text end The commission shall, to the extent practicable,
quantify and establish a range of environmental costs associated with each method of
electricity generation. A utility shall use the values established by the commission in
conjunction with other external factors, including socioeconomic costs, when evaluating
and selecting resource options in all proceedings before the commission, including new text begin power
purchase agreement, new text end resource plan new text begin , new text end and certificate of need proceedings. new text begin When evaluating
resource options, the commission must include and consider the environmental cost values
adopted under this subdivision.
new text end

deleted text begin (b) The commission shall establish interim environmental cost values associated with
each method of electricity generation by March 1, 1994. These values expire on the date
the commission establishes environmental cost values under paragraph (a).
deleted text end

Sec. 5. new text begin APPROPRIATION.
new text end

new text begin (a) Notwithstanding Minnesota Statutes, section 116C.779, subdivision 1, paragraph (j),
$117,000 in fiscal year 2021 is appropriated from the renewable development account
established in Minnesota Statutes, section 116C.779, subdivision 1, to the commissioner of
commerce for the purpose of conducting the activities required under sections 1 to 4.
new text end

new text begin (b) Notwithstanding Minnesota Statutes, section 116C.779, subdivision 1, paragraph
(j), $109,000 in fiscal year 2021 is appropriated from the renewable development account
established in Minnesota Statutes, section 116C.779, subdivision 1, to the Public Utilities
Commission for the purpose of conducting the activities required under sections 1 to 4.
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