SF 2798

2nd Engrossment - 84th Legislature (2005 - 2006) Posted on 12/15/2009 12:00am

A bill for an act
relating to energy; modifying sustainable building guidelines relating to
greenhouse gases and extending assessments of energy utilities; requiring
reports on utility customers; authorizing prepurchase propane fuel program;
providing for residential heat reconnection arrangements; modifying provisions
for assisting low-income residential heating customers; modifying renewable
energy standards and objectives; defining "gross operating revenue" for
energy conservation investment; providing for statewide energy-saving
objectives; modifying renewable wind energy production incentive payment
periods; establishing Minnesota Renewable Hydrogen Initiative and requiring
development of standards; defining "energy conservation investments" to
include renewable energy measures; clarifying status of biomass generation
facility; authorizing petroleum violation escrow funds to be used for energy
grants; establishing plug-in hybrid electric vehicle project and task force;
requiring a study; amending Minnesota Statutes 2004, sections 16B.325;
216B.16, subdivision 15; 216B.1691; 216B.241, subdivisions 1a, 1c, 6; 216C.37,
subdivision 1; 216C.41, subdivision 4; Minnesota Statutes 2005 Supplement,
sections 216B.241, subdivisions 1b, 2; 216C.052, subdivisions 3, 4; 216C.41,
subdivision 3; Laws 2005, chapter 97, article 13, section 4; proposing coding for
new law in Minnesota Statutes, chapters 216B; 325E.

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

Section 1.

Minnesota Statutes 2004, section 16B.325, is amended to read:

16B.325 SUSTAINABLE BUILDING GUIDELINES.

new text begin Subdivision 1. new text end

new text begin Energy, lighting, air quality, and other guidelines. new text end

The Department
of Administration and the Department of Commerce, with the assistance of other agencies,
shall develop sustainable building design guidelines for all new state buildings by January
15, 2003. The primary objectives of these guidelines are to ensure that all new state
buildings initially exceed existing energy code, as established in Minnesota Rules, chapter
7676, by at least 30 percent. The guidelines must focus on achieving the lowest possible
lifetime cost for new buildings and allow for changes in the guidelines that encourage
continual energy conservation improvements in new buildings. The design guidelines
must establish sustainability guidelines that include air quality and lighting standards and
that create and maintain a healthy environment and facilitate productivity improvements;
specify ways to reduce material costs; and must consider the long-term operating costs of
the building, including the use of renewable energy sources and distributed electric energy
generation that uses a renewable source or natural gas or a fuel that is as clean or cleaner
than natural gas. In developing the guidelines, the departments shall use an open process,
including providing the opportunity for public comment. The guidelines established under
this deleted text begin section deleted text end new text begin subdivision new text end are mandatory for all new buildings receiving funding from the
bond proceeds fund after January 1, 2004.

new text begin Subd. 2. new text end

new text begin Greenhouse gases. new text end

new text begin The Department of Administration and the Department
of Commerce, with the assistance of other agencies, shall report to the legislature by
March 15, 2007, on guidelines and procedures for a requirement that no net increases
in greenhouse gases are allowed as a result of new building projects. The guidelines
established under this subdivision are mandatory for all new buildings receiving funding
from the bond proceeds fund after January 1, 2008.
new text end

Sec. 2.

new text begin [216B.091] UTILITY CUSTOMER.
new text end

new text begin new text end

new text begin Subdivision 1. new text end

new text begin Monthly reports. new text end

new text begin (a) Each natural gas and electric public utility
must submit a monthly report to the commission that includes the following information:
new text end

new text begin (1) number of residential customers;
new text end

new text begin (2) total number and dollar amount of residential customer accounts past due;
new text end

new text begin (3) average residential customer past due amount;
new text end

new text begin (4) total dollars received from the low-income home energy assistance program
and from other sources;
new text end

new text begin (5) average monthly residential bill;
new text end

new text begin (6) revenue from sales to residential accounts;
new text end

new text begin (7) total residential write-offs due to uncollectible bills;
new text end

new text begin (8) number of disconnection notices mailed to customers;
new text end

new text begin (9) number of residential accounts disconnected; and
new text end

new text begin (10) number of residential primary heating accounts reconnected to service.
new text end

new text begin (b) During the period from October 15 to April 15, monthly reports must also
include the following information:
new text end

new text begin (1) number of cold weather protection requests;
new text end

new text begin (2) number of reconnection plan requests received and granted;
new text end

new text begin (3) number of inability to pay requests received and granted;
new text end

new text begin (4) number of ten-percent plans received and granted;
new text end

new text begin (5) number of payment schedule requests received and granted; and
new text end

new text begin (6) all other information currently provided to the commission in monthly cold
weather rule reports.
new text end

new text begin Subd. 2. new text end

new text begin Commission report. new text end

new text begin On or about September 30 of each year, the
commission must issue a report that summarizes the monthly data provided under
subdivision 1 by each natural gas and electric public utility for the period beginning
July 1 to the following June 30 of that year.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2006, provided that the first
report under subdivision 2 is due on or about September 30, 2007.
new text end

Sec. 3.

new text begin [216B.0951] PREPURCHASE PROPANE FUEL PROGRAM.
new text end

new text begin new text end

new text begin Subdivision 1. new text end

new text begin Created. new text end

new text begin The commissioner shall operate, or contract to operate, a
prepurchase delivered fuel program.
new text end

new text begin The commissioner shall each July and August purchase the lesser of one-third of the
liquid propane fuel consumed by low-income home energy assistance program recipients
during the previous heating season or the amount that can be purchased with available
funds. The prepurchase delivered fuel program must be available statewide through each
local agency that administers the energy assistance program. The commissioner may
decide to limit or not engage in prepurchasing if the commissioner finds that there is a
reasonable likelihood that prepurchasing will not provide fuel-cost savings.
new text end

new text begin Subd. 2. new text end

new text begin Hedge account. new text end

new text begin The commissioner may establish a hedge account with
realized program savings due to prepurchasing. The account must be used to compensate
program recipients an amount up to the difference in cost for fuel provided to the recipient
if winter-delivered fuel prices are lower than the prepurchase or summer-fill price. No
more than ten percent of the aggregate prepurchase program savings may be used to
establish the hedge account.
new text end

new text begin Subd. 3. new text end

new text begin Report. new text end

new text begin The department shall issue an annual report, made available
electronically on its Web site and in print upon request, which contains the following
information:
new text end

new text begin (1) the cost per gallon of the prepurchased fuel;
new text end

new text begin (2) the total gallons of fuel prepurchased;
new text end

new text begin (3) the average cost of propane and fuel oil by month between October and the
following April;
new text end

new text begin (4) the number of energy assistance program households receiving prepurchased
fuel; and
new text end

new text begin (5) the average savings accruing or benefit increase provided to energy assistance
households.
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.

new text begin [216B.096] EARLY IDENTIFICATION OF HEAT-DISCONNECTED
CUSTOMERS.
new text end

new text begin new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin For the purposes of this section, the terms defined in this
subdivision have the meanings given them:
new text end

new text begin (a) "Heat-affected customer" means a residential customer heating with electricity
or natural gas.
new text end

new text begin (b) "Heating season" means the period between October 15 and the following
April 15.
new text end

new text begin (c) "Utility" means a public utility serving residential customers who heat with
electricity or natural gas.
new text end

new text begin Subd. 2. new text end

new text begin Early identification. new text end

new text begin Beginning no later than September 15, a utility
must attempt to contact heat-affected customers in occupied dwellings whose service
was disconnected after the previous heating season to establish payment arrangements
or a reconnection plan in order to restore service. A record must be made of all contacts
and attempted contacts.
new text end

new text begin Subd. 3. new text end

new text begin Report to commission. new text end

new text begin Annually on November 1, a utility must file with
the commission a report specifying the number of heat-affected customers in occupied
dwellings whose service is disconnected on October 1 and on October 15. If heat-affected
customers remain disconnected on October 15, each utility shall file a weekly report,
beginning November 1, specifying the number of heat-affected customers that are or
remain disconnected from service during the current heating season.
new text end

Sec. 5.

Minnesota Statutes 2004, section 216B.16, subdivision 15, is amended to read:

Subd. 15.

Low-income programs.

(a) The commission may consider ability to
pay as a factor in setting utility rates and deleted text begin may deleted text end new text begin must new text end establish programs for low-income
residential ratepayers in order to ensure affordable, reliable, and continuous service
to low-income utility customers. new text begin By September 1, 2006, public utilities that serve
low-income natural gas heating customers must file an affordability program with the
commission. A program must be implemented upon approval by the commission.
new text end

(b) The purpose of the low-income programs is to lower the percentage of income
that new text begin participating new text end low-income households devote to energy bills, to increase new text begin participating
new text end customer payments, new text begin to decrease or eliminate participating customer arrears, new text end and to lower
the utility costs associated with new text begin participating new text end customer account collection activities.
In ordering low-income programs, the commission may require public utilities to file
program evaluations, including the coordination of other available low-income bill
payment and conservation resources and the effect of the program on:

(1) reducing the percentage of income that participating households devote to energy
bills;

(2) service disconnections; and

(3) customer payment behavior, utility collection costs, arrearages, and bad debt.

new text begin (c) The commission shall issue orders necessary to implement, administer, and
recover the costs, including administrative costs, of a program on a timely basis.
new text end

Sec. 6.

Minnesota Statutes 2004, section 216B.1691, is amended to read:

216B.1691 RENEWABLE ENERGY new text begin STANDARDS AND new text end OBJECTIVES.

Subdivision 1.

Definitions.

(a) Unless otherwise specified in law, "eligible energy
technology" means an energy technology that:

(1) generates electricity from the following renewable energy sources: solar; wind;
hydroelectric with a capacity of less than deleted text begin 60 deleted text end new text begin 100 new text end megawatts; hydrogen, provided that
after January 1, 2010, the hydrogen must be generated from the resources listed in this
clause; or biomass, which includes an energy recovery facility used to capture the heat
value of mixed municipal solid waste or refuse-derived fuel from mixed municipal solid
waste as a primary fuel; and

(2) was not mandated by Laws 1994, chapter 641, or by commission order issued
pursuant to that chapter prior to August 1, 2001.

(b) "Electric utility" means a public utility providing electric service, a generation
and transmission cooperative electric association, or a municipal power agency.

(c) "Total retail electric sales" means the kilowatt-hours of electricity sold in a year
by an electric utility to retail customers of the electric utility or to a distribution utility for
distribution to the retail customers of the distribution utility.

Subd. 2.

Eligible energy objectives.

(a) Each electric utility shall make a good
faith effort to generate or procure sufficient electricity generated by an eligible energy
technology to provide its retail consumers, or the retail customers of a distribution utility
to which the electric utility provides wholesale electric service, so that:

(1) commencing in 2005, at least one percent of the electric utility's total retail
electric sales is generated by eligible energy technologies;

(2) the amount provided under clause (1) is increased by one percent of the utility's
total retail electric sales each year until deleted text begin 2015 deleted text end new text begin 2010 new text end ; and

(3) deleted text begin ten deleted text end new text begin five new text end percent of the electric energy provided to retail customers in Minnesota
new text begin by 2010 new text end is generated by eligible energy technologies.

(b) Of the eligible energy technology generation required under paragraph (a),
clauses (1) and (2), not less than 0.5 percent of the energy must be generated by biomass
energy technologies, including an energy recovery facility used to capture the heat value
of mixed municipal solid waste or refuse-derived fuel from mixed municipal solid waste
as a primary fuel, by 2005. By 2010, one percent of the eligible technology generation
required under paragraph (a), clauses (1) and (2), shall be generated by biomass energy
technologies. An energy recovery facility used to capture the heat value of mixed
municipal solid waste or refuse-derived fuel from mixed municipal solid waste, with a
power sales agreement in effect as of May 29, 2003, that terminates after December 31,
2010, does not qualify as an eligible energy technology unless the agreement provides for
rate adjustment in the event the facility qualifies as a renewable energy source.

new text begin Subd. 2a. new text end

new text begin Eligible energy standard. new text end

new text begin Each electric utility shall generate or procure
sufficient electricity generated by an eligible energy technology to provide its retail
customers, or the retail customers of a distribution utility to which the electric utility
provides wholesale electric service, so that at least the following percentages of the
electric utility's total retail electric sales is generated by eligible energy technologies
by the end of the year indicated:
new text end

new text begin (1) new text end	new text begin 2013 new text end	new text begin ten percent new text end
new text begin (2) new text end	new text begin 2015 new text end	new text begin 15 percent new text end
new text begin (3) new text end	new text begin 2020 new text end	new text begin 20 percent new text end

new text begin To be counted toward satisfying the standard, energy, other than energy generated
within the state by an eligible energy technology using hydroelectric or biomass as an
energy source, must be generated by a facility originally placed in service after January 1,
1975. The commission must delay or modify the standard for an electric utility if it finds
that compliance with a standard is not in the public interest because compliance will either
produce undesirable impacts on the reliability of the utility's system or on the utility's
ratepayers or if it finds that compliance is not technically feasible. The standard is both
an individual electric utility standard and a statewide standard so that by the end of 2020
at least 20 percent of the electric energy provided to retail customers in Minnesota is
generated by eligible energy technologies.
new text end

deleted text begin (c) deleted text end new text begin Subd. 2b. new text end

Commission order.

By June 1, 2004, and as needed thereafter, the
commission shall issue an order detailing the criteria and standards by which it will
measure an electric utility's efforts to meet the renewable energy objectives new text begin and standards
new text end of this section to determine whether the utility is making the required good faith effort
new text begin and is meeting the standards new text end . In this order, the commission shall include criteria and
standards that protect against undesirable impacts on the reliability of the utility's system
and economic impacts on the utility's ratepayers and that consider technical feasibility.

deleted text begin (d) In its order under paragraph (c), the commission shall provide for a weighted
scale of how energy produced by various eligible energy technologies shall count toward a
utility's objective. In establishing this scale, the commission shall consider the attributes
of various technologies and fuels, and shall establish a system that grants multiple credits
toward the objectives for those technologies and fuels the commission determines is in
the public interest to encourage.
deleted text end

Subd. 3.

Utility plans filed with commission.

(a) Each electric utility shall report
on its plans, activities, and progress with regard to these objectives new text begin and standards new text end in its
filings under section 216B.2422 or in a separate report submitted to the commission every
two years, whichever is more frequent, demonstrating to the commission deleted text begin that deleted text end the deleted text begin utility is
making the required good faith deleted text end new text begin utility's new text end effort new text begin to comply with this section new text end . In its resource
plan or a separate report, each electric utility shall provide a description of:

(1) the status of the utility's renewable energy mix relative to the deleted text begin good faith
deleted text end objective new text begin and standards new text end ;

(2) efforts taken to meet the objective new text begin and standards new text end ;

(3) any obstacles encountered or anticipated in meeting the objective new text begin or standards new text end ;
and

(4) potential solutions to the obstacles.

(b) The commissioner shall compile the information provided to the commission
under paragraph (a), and report to the chairs of the house of representatives and senate
committees with jurisdiction over energy and environment policy issues as to the progress
of utilities in the state in increasing the amount of renewable energy provided to retail
customers, with any recommendations for regulatory or legislative action, by January
15 of each odd-numbered year.

Subd. 4.

Renewable energy credits.

(a) To facilitate compliance with this section,
the commission, by rule or order, may establish a program for tradable credits for
electricity generated by an eligible energy technology. In doing so, the commission shall
implement a system that constrains or limits the cost of credits, taking care to ensure that
such a system does not undermine the market for those credits.

(b) In lieu of generating or procuring energy directly to satisfy the renewable energy
objective new text begin and standard new text end of this section, an electric utility may purchase sufficient renewable
energy credits, issued pursuant to this subdivision, to meet its objective new text begin and standard new text end .

(c) Upon the passage of a renewable energy standard, portfolio, or objective in
a bordering state that includes a similar definition of eligible energy technology or
renewable energy, the commission may facilitate the trading of renewable energy credits
between states.

Subd. 5.

Technology based on fuel combustion.

(a) Electricity produced by fuel
combustion may only count toward a utility's objectives new text begin or standards new text end if the generation
facility:

(1) was constructed in compliance with new source performance standards
promulgated under the federal Clean Air Act for a generation facility of that type; or

(2) employs the maximum achievable or best available control technology available
for a generation facility of that type.

(b) An eligible energy technology may blend or co-fire a fuel listed in subdivision 1,
paragraph (a), clause (1), with other fuels in the generation facility, but only the percentage
of electricity that is attributable to a fuel listed in that clause can be counted toward an
electric utility's renewable energy objectives.

Subd. 6.

Electric utility that owns nuclear generation facility.

(a) An electric
utility that owns a nuclear generation facility, as part of its good faith effort under this
subdivision and subdivision 2, shall deploy an additional 300 megawatts of nameplate
capacity of wind energy conversion systems by 2010, beyond the amount of wind energy
capacity to which the utility is required by law or commission order as of May 1, 2003.
At least 100 megawatts of this capacity are to be wind energy conversion systems of two
megawatts or less, which shall not be eligible for the production incentive under section
216C.41. To the greatest extent technically feasible and economic, these 300 megawatts
of wind energy capacity are to be distributed geographically throughout the state. The
utility may opt to own, construct, and operate up to 100 megawatts of this wind energy
capacity, except that the utility may not own, construct, or operate any of the facilities
that are under two megawatts of nameplate capacity. The deployment of the wind energy
capacity under this subdivision must be consistent with the outcome of the engineering
study required under Laws 2003, First Special Session chapter 11, article 2, section 21.

(b) deleted text begin The renewable energy objective set forth in subdivision 2 shall be a requirement
for the public utility that owns the Prairie Island nuclear generation plant. The objective is
a requirement subject to resource planning and least-cost planning requirements in section
216B.2422, unless implementation of the objective can reasonably be shown to jeopardize
the reliability of the electric system. The least-cost planning analysis must include the
costs of ancillary services and other necessary generation and transmission upgrades.
deleted text end

deleted text begin (c) deleted text end Also as part of its good faith effort under this section, the utility that owns a
nuclear generation facility is to enter into a power purchase agreement by January 1, 2004,
for ten to 20 megawatts of biomass energy and capacity at an all-inclusive price not to
exceed $55 per megawatt-hour, for a project described in section 216B.2424, subdivision
5, paragraph (e), clause (2). The project must be operational and producing energy by
June 30, 2005.

new text begin Subd. 7. new text end

new text begin Compliance. new text end

new text begin The commission, on its own motion or upon petition, may
investigate whether an electric utility is in compliance with its standard obligation under
subdivision 2a and if it finds noncompliance may order the electric utility to construct
facilities or purchase credits to achieve compliance. If an electric utility fails to comply
with an order under this subdivision, the commission may impose a financial penalty on
the electric utility in an amount up to the electric utility's estimated cost of compliance.
new text end

Sec. 7.

Minnesota Statutes 2004, section 216B.241, subdivision 1a, is amended to read:

Subd. 1a.

Investment, expenditure, and contribution; public utility.

(a) For
purposes of this subdivision and subdivision 2, "public utility" has the meaning given it
in section 216B.02, subdivision 4. Each public utility shall spend and invest for energy
conservation improvements under this subdivision and subdivision 2 the following
amounts:

(1) for a utility that furnishes gas service, 0.5 percent of its gross operating revenues
from service provided in the state;

(2) for a utility that furnishes electric service, 1.5 percent of its gross operating
revenues from service provided in the state; and

(3) for a utility that furnishes electric service and that operates a nuclear-powered
electric generating plant within the state, two percent of its gross operating revenues
from service provided in the state.

For purposes of this paragraph (a), "gross operating revenues" do not include
revenues from large electric customer facilities exempted by the commissioner under
paragraph (b).

new text begin The gross operating revenue to be used in determining the amount of spending
and investment required under this subdivision is the revenue for the year preceding the
year that a proposed plan is filed with the commissioner. The commissioner may adjust
the spending required after the first or subsequent year of a plan to reflect more recent
available revenue figures.
new text end

(b) The owner of a large electric customer facility may petition the commissioner
to exempt both electric and gas utilities serving the large energy customer facility from
the investment and expenditure requirements of paragraph (a) with respect to retail
revenues attributable to the facility. At a minimum, the petition must be supported by
evidence relating to competitive or economic pressures on the customer and a showing
by the customer of reasonable efforts to identify, evaluate, and implement cost-effective
conservation improvements at the facility. If a petition is filed on or before October 1 of
any year, the order of the commissioner to exempt revenues attributable to the facility can
be effective no earlier than January 1 of the following year. The commissioner shall not
grant an exemption if the commissioner determines that granting the exemption is contrary
to the public interest. The commissioner may, after investigation, rescind any exemption
granted under this paragraph upon a determination that cost-effective energy conservation
improvements are available at the large electric customer facility. For the purposes of this
paragraph, "cost-effective" means that the projected total cost of the energy conservation
improvement at the large electric customer facility is less than the projected present value
of the energy and demand savings resulting from the energy conservation improvement.
For the purposes of investigations by the commissioner under this paragraph, the owner
of any large electric customer facility shall, upon request, provide the commissioner
with updated information comparable to that originally supplied in or with the owner's
original petition under this paragraph.

(c) The commissioner may require investments or spending greater than the amounts
required under this subdivision for a public utility whose most recent advance forecast
required under section 216B.2422 or 216C.17 projects a peak demand deficit of 100
megawatts or greater within five years under midrange forecast assumptions.

(d) A public utility or owner of a large electric customer facility may appeal
a decision of the commissioner under paragraph (b) or (c) to the commission under
subdivision 2. In reviewing a decision of the commissioner under paragraph (b) or (c),
the commission shall rescind the decision if it finds that the required investments or
spending will:

(1) not result in cost-effective energy conservation improvements; or

(2) otherwise not be in the public interest.

(e) Each utility shall determine what portion of the amount it sets aside for
conservation improvement will be used for conservation improvements under subdivision
2 and what portion it will contribute to the energy and conservation account established in
subdivision 2a. A public utility may propose to the commissioner to designate that all
or a portion of funds contributed to the account established in subdivision 2a be used
for research and development projects that can best be implemented on a statewide
basis. Contributions must be remitted to the commissioner by February 1 of each year.
Nothing in this subdivision prohibits a public utility from spending or investing for energy
conservation improvement more than required in this subdivision.

Sec. 8.

Minnesota Statutes 2005 Supplement, section 216B.241, subdivision 1b,
is amended to read:

Subd. 1b.

Conservation improvement by cooperative association or
municipality.

(a) This subdivision applies to:

(1) a cooperative electric association that provides retail service to its members;

(2) a municipality that provides electric service to retail customers; and

(3) a municipality with gross operating revenues in excess of $5,000,000 from sales
of natural gas to retail customers.

(b) Each cooperative electric association and municipality subject to this subdivision
shall spend and invest for energy conservation improvements under this subdivision
the following amounts:

(1) for a municipality, 0.5 percent of its gross operating revenues from the sale of
gas and 1.5 percent of its gross operating revenues from the sale of electricity, excluding
gross operating revenues from electric and gas service provided in the state to large
electric customer facilities; and

(2) for a cooperative electric association, 1.5 percent of its gross operating revenues
from service provided in the state, excluding gross operating revenues from service
provided in the state to large electric customer facilities indirectly through a distribution
cooperative electric association.

new text begin The gross operating revenue to be used in determining the amount of spending
and investment required under this subdivision is the revenue for the year preceding the
year that a proposed plan is filed with the commissioner. The commissioner may adjust
the spending required after the first or subsequent year of a plan to reflect more recent
available revenue figures.
new text end

(c) Each municipality and cooperative electric association subject to this subdivision
shall identify and implement energy conservation improvement spending and investments
that are appropriate for the municipality or association, except that a municipality or
association may not spend or invest for energy conservation improvements that directly
benefit a large electric customer facility for which the commissioner has issued an
exemption under subdivision 1a, paragraph (b).

(d) Each municipality and cooperative electric association subject to this subdivision
may spend and invest annually up to ten percent of the total amount required to be spent
and invested on energy conservation improvements under this subdivision on research
and development projects that meet the definition of energy conservation improvement
in subdivision 1 and that are funded directly by the municipality or cooperative electric
association.

(e) Load-management activities that do not reduce energy use but that increase the
efficiency of the electric system may be used to meet 50 percent of the conservation
investment and spending requirements of this subdivision.

(f) A generation and transmission cooperative electric association that provides
energy services to cooperative electric associations that provide electric service at retail to
consumers may invest in energy conservation improvements on behalf of the associations
it serves and may fulfill the conservation, spending, reporting, and energy savings goals on
an aggregate basis. A municipal power agency or other not-for-profit entity that provides
energy service to municipal utilities that provide electric service at retail may invest in
energy conservation improvements on behalf of the municipal utilities it serves and may
fulfill the conservation, spending, reporting, and energy savings goals on an aggregate
basis, under an agreement between the municipal power agency or not-for-profit entity
and each municipal utility for funding the investments.

(g) At least every four years, on a schedule determined by the commissioner, each
municipality or cooperative shall file an overview of its conservation improvement plan
with the commissioner. With this overview, the municipality or cooperative shall also
provide an evaluation to the commissioner detailing its energy conservation improvement
spending and investments for the previous period. The evaluation must briefly describe
each conservation program and must specify the energy savings or increased efficiency in
the use of energy within the service territory of the utility or association that is the result
of the spending and investments. The evaluation must analyze the cost-effectiveness
of the utility's or association's conservation programs, using a list of baseline energy
and capacity savings assumptions developed in consultation with the department.
The commissioner shall review each evaluation and make recommendations, where
appropriate, to the municipality or association to increase the effectiveness of conservation
improvement activities. Up to three percent of a utility's conservation spending obligation
under this section may be used for program pre-evaluation, testing, and monitoring and
program evaluation. The overview and evaluation filed by a municipality with less than
60,000,000 kilowatt hours in annual retail sales of electric service may consist of a letter
from the governing board of the municipal utility to the department providing the amount
of annual conservation spending required of that municipality and certifying that the
required amount has been spent on conservation programs pursuant to this subdivision.

(h) The commissioner shall also review each evaluation for whether a portion of the
money spent on residential conservation improvement programs is devoted to programs
that directly address the needs of renters and low-income persons unless an insufficient
number of appropriate programs are available. For the purposes of this subdivision and
subdivision 2, "low-income" means an income at or below 50 percent of the state median
income.

(i) As part of its spending for conservation improvement, a municipality or
association may contribute to the energy and conservation account. A municipality or
association may propose to the commissioner to designate that all or a portion of funds
contributed to the account be used for research and development projects that can best
be implemented on a statewide basis. Any amount contributed must be remitted to the
commissioner by February 1 of each year.

(j) A municipality may spend up to 50 percent of its required spending under this
section to refurbish an existing district heating or cooling system. This paragraph expires
July 1, 2007.

Sec. 9.

Minnesota Statutes 2004, section 216B.241, subdivision 1c, is amended to read:

Subd. 1c.

Energy-saving deleted text begin goals deleted text end new text begin objectives new text end .

new text begin (a) new text end The commissioner shall establish
new text begin statewide new text end energy-saving deleted text begin goals deleted text end new text begin objectives new text end for new text begin all gas and electric new text end energy conservation
improvement expenditures and shall deleted text begin evaluate an deleted text end new text begin monitor new text end energy conservation
improvement deleted text begin program on how well it meets the goals set deleted text end new text begin programs for success in meeting
the statewide objectives. The commissioner must present a report on these objectives to
the legislature by January 15, 2007 new text end .

new text begin (b) The commissioner shall, consistent with other law, commencing with calendar
year 2008, establish annual statewide electric capacity and energy savings objectives for
electric conservation investment programs that the commissioner deems to be in the
public interest. The commissioner may establish these objectives based upon utility
integrated resource plans, cost-effectiveness potential, utility load-growth projections, and
other factors.
new text end

new text begin The commissioner shall, consistent with other law, allocate statewide capacity and
energy savings objectives among public utilities, cooperative electric associations, and
municipals as determined by the commissioner to result in the greatest likelihood of
meeting the statewide objective. In determining the allocation of capacity and energy
savings objectives, the commissioner shall consider individual utilities' load-growth
projections, cost-effective savings potential, and past performance.
new text end

new text begin (c) The commissioner shall, consistent with other law, commencing with calendar
year 2008, establish annual statewide natural gas savings objectives for natural gas
conservation investment programs that the commissioner deems to be in the public
interest. The commissioner may establish these goals based upon utility forecasts,
cost-effectiveness potential, and other sources.
new text end

new text begin The commissioner shall determine and allocate statewide capacity and energy
savings objectives among public utilities and municipal utilities having an investment
obligation under this section related to gas revenues so as to result in the greatest
likelihood of meeting the statewide objective. In determining the allocation of capacity
and energy savings objectives, the commissioner shall consider individual utilities'
load-growth projections, cost-effective savings potential, and past performance.
new text end

new text begin (d) The commissioner shall annually report the success in meeting these statewide
and individual utility objectives under this subdivision in a publicly available format.
new text end

new text begin (e) An objective allocation by the commissioner under this subdivision does not
create an additional conservation investment spending obligation.
new text end

Sec. 10.

Minnesota Statutes 2005 Supplement, section 216B.241, subdivision 2,
is amended to read:

Subd. 2.

Programs.

(a) The commissioner may require public utilities to make
investments and expenditures in energy conservation improvements, explicitly setting
forth the interest rates, prices, and terms under which the improvements must be offered to
the customers. The required programs must cover no more than a four-year period. Public
utilities shall file conservation improvement plans by June 1, on a schedule determined
by order of the commissioner, but at least every four years. Plans received by a public
utility by June 1 must be approved or approved as modified by the commissioner by
December 1 of that same year. The commissioner shall give special consideration and
encouragement to programs that bring about significant net savings through the use of
energy-efficient lighting. The commissioner shall evaluate the program on the basis of
cost-effectiveness and the reliability of technologies employed. The commissioner's order
must provide to the extent practicable for a free choice, by consumers participating in the
program, of the device, method, material, or project constituting the energy conservation
improvement and for a free choice of the seller, installer, or contractor of the energy
conservation improvement, provided that the device, method, material, or project seller,
installer, or contractor is duly licensed, certified, approved, or qualified, including under
the residential conservation services program, where applicable.

(b) The commissioner may require a utility to make an energy conservation
improvement investment or expenditure whenever the commissioner finds that the
improvement will result in energy savings at a total cost to the utility less than the cost
to the utility to produce or purchase an equivalent amount of new supply of energy. The
commissioner shall nevertheless ensure that every public utility operate one or more
programs under periodic review by the department.

(c) Each public utility subject to subdivision 1a may spend and invest annually up to
ten percent of the total amount required to be spent and invested on energy conservation
improvements under this section by the utility on research and development projects
that meet the definition of energy conservation improvement in subdivision 1 and that
are funded directly by the public utility.

(d) A public utility may not spend for or invest in energy conservation improvements
that directly benefit a large electric customer facility for which the commissioner has
issued an exemption pursuant to subdivision 1a, paragraph (b). The commissioner shall
consider and may require a utility to undertake a program suggested by an outside source,
including a political subdivision or a nonprofit or community organization.

(e) The commissioner may, by order, establish a list of programs that may be
offered as energy conservation improvements by a public utility, municipal utility,
cooperative electric association, or other entity providing conservation services pursuant
to this section. The list of programs may include rebates for high-efficiency appliances,
rebates or subsidies for high-efficiency lamps, small business energy audits, and building
recommissioning. The commissioner may, by order, change this list to add or subtract
programs as the commissioner determines is necessary to promote efficient and effective
conservation programs.

(f) The commissioner shall ensure that a portion of the money spent on residential
conservation improvement programs is devoted to programs that directly address the
needs of deleted text begin renters and deleted text end low-income persons, deleted text begin in proportion to the amount the utility has
historically spent on such programs based on the most recent three-year average relative to
the utility's total conservation spending under this section, unless an insufficient number
of appropriate programs are available deleted text end new text begin including low-income renters. When approving
spending and energy savings goals for low-income conservation improvement programs,
the commissioner shall consider historic spending, participation and energy savings for
low-income programs, and the number of low-income persons residing in the utility's
service territory. A utility that furnishes gas service must spend at least 0.2 percent
of its gross operating revenue from residential customers on low-income conservation
improvement programs new text end .

(g) A utility, a political subdivision, or a nonprofit or community organization
that has suggested a program, the attorney general acting on behalf of consumers and
small business interests, or a utility customer that has suggested a program and is not
represented by the attorney general under section 8.33 may petition the commission to
modify or revoke a department decision under this section, and the commission may do
so if it determines that the program is not cost-effective, does not adequately address the
residential conservation improvement needs of low-income persons, has a long-range
negative effect on one or more classes of customers, or is otherwise not in the public
interest. The commission shall reject a petition that, on its face, fails to make a reasonable
argument that a program is not in the public interest.

(h) The commissioner may order a public utility to include, with the filing of the
utility's proposed conservation improvement plan under paragraph (a), the results of an
independent audit of the utility's conservation improvement programs and expenditures
performed by the department or an auditor with experience in the provision of energy
conservation and energy efficiency services approved by the commissioner and chosen by
the utility. The audit must specify the energy savings or increased efficiency in the use
of energy within the service territory of the utility that is the result of the spending and
investments. The audit must evaluate the cost-effectiveness of the utility's conservation
programs.

(i) Up to three percent of a utility's conservation spending obligation under this
section may be used for program pre-evaluation, testing, and monitoring and program
audit and evaluation.

Sec. 11.

Minnesota Statutes 2004, section 216B.241, subdivision 6, is amended to read:

Subd. 6.

Renewable energy research.

(a) A public utility that owns a nuclear
generation facility in the state shall spend five percent of the total amount that utility
is required to spend under this section to support basic and applied research and
demonstration activities at the University of Minnesota Initiative for Renewable Energy
and the Environment for the development of renewable energy sources and technologies.
The utility shall transfer the required amount to the University of Minnesota on or before
July 1 of each year and that annual amount shall be deducted from the amount of money the
utility is required to spend under this section. The University of Minnesota shall transfer
at least ten percent of these funds to at least one rural campus or experiment station.

(b) Research funded under this subdivision shall include:

(1) development of environmentally sound production, distribution, and use of
energy, chemicals, and materials from renewable sources;

(2) processing and utilization of agricultural and forestry plant products and other
bio-based, renewable sources as a substitute for fossil-fuel-based energy, chemicals, and
materials using a variety of means including biocatalysis, biorefining, and fermentation;

(3) conversion of state wind resources to hydrogen for energy storage and
transportation to areas of energy demand;

(4) improvements in scalable hydrogen fuel cell technologies; and

(5) production of hydrogen from bio-based, renewable sources; and sequestration
of carbon.

(c) deleted text begin Notwithstanding other law to the contrary, the utility may, but is not required to,
spend more than two percent of its gross operating revenues from service provided in this
state under this section or section 216B.2411. deleted text end

deleted text begin (d) deleted text end This subdivision expires June 30, 2008.

Sec. 12.

new text begin [216B.8121] MINNESOTA RENEWABLE HYDROGEN INITIATIVE.
new text end

new text begin The Department of Commerce must coordinate and administer, directly or by
contract, the Minnesota Renewable Hydrogen Initiative. The initiative may be run
as a public-private partnership representing business, academic, governmental, and
nongovernmental organizations, and is charged with achieving the hydrogen goal set in
section 216B.013. The initiative's main responsibility is to oversee the development and
implementation of a hydrogen road map that capitalizes on Minnesota's strengths and
establishes a vision, goals, and measurable milestones for achieving those hydrogen goals.
The Department of Commerce shall report to the legislature on the initiative's progress
every two years as part of its existing reporting requirements under section 216B.812,
subdivision 2.
new text end

Sec. 13.

Minnesota Statutes 2005 Supplement, section 216C.052, subdivision 3,
is amended to read:

Subd. 3.

Assessment and appropriation.

In addition to the amount noted in
subdivision 2, the commission may assess utilities, using the mechanism specified in that
subdivision, up to an additional $500,000 annually through June 30, deleted text begin 2006 deleted text end new text begin 2008 new text end . The
amounts assessed under this subdivision are appropriated to the commission, and some or
all of the amounts assessed may be transferred to the commissioner of administration, for
the purposes specified in section 16B.325 and Laws 2001, chapter 212, article 1, section
3, as needed to implement those sections.

Sec. 14.

Minnesota Statutes 2005 Supplement, section 216C.052, subdivision 4,
is amended to read:

Subd. 4.

Expiration.

deleted text begin This section expires deleted text end new text begin Subdivisions 1 and 2 expire new text end June 30,
2007. new text begin Subdivision 3 expires June 30, 2008.
new text end

Sec. 15.

Minnesota Statutes 2004, section 216C.37, subdivision 1, is amended to read:

Subdivision 1.

Definitions.

In this section:

(a) "Commissioner" means the commissioner of commerce.

(b) "Energy conservation investments" means all capital expenditures that are
associated with conservation measures identified in an energy project study, new text begin including
renewable energy measures, new text end and that have a ten-year or less payback period.

(c) "Municipality" means any county, statutory or home rule charter city, town,
school district, or any combination of those units operating under an agreement to jointly
undertake projects authorized in this section.

(d) "Energy project study" means a study of one or more energy-related capital
improvement projects analyzed in sufficient detail to support a financing application. At a
minimum, it must include one year of energy consumption and cost data, a description
of existing conditions, a description of proposed conditions, a detailed description of the
costs of the project, and calculations sufficient to document the proposed energy savings.

Sec. 16.

Minnesota Statutes 2005 Supplement, section 216C.41, subdivision 3, is
amended to read:

Subd. 3.

Eligibility window.

Payments may be made under this section only for
electricity generated:

(1) from a qualified hydroelectric facility that is operational and generating
electricity before December 31, deleted text begin 2007 deleted text end new text begin 2009 new text end ;

(2) from a qualified wind energy conversion facility that is operational and
generating electricity before January 1, deleted text begin 2007 deleted text end new text begin 2008 new text end ; or

(3) from a qualified on-farm biogas recovery facility from July 1, 2001, through
December 31, 2017.

Sec. 17.

Minnesota Statutes 2004, section 216C.41, subdivision 4, is amended to read:

Subd. 4.

Payment period.

(a) A facility may receive payments under this section for
a ten-year period. No payment under this section may be made for electricity generated:

(1) by a qualified hydroelectric facility after December 31, deleted text begin 2017 deleted text end new text begin 2019 new text end ;

(2) by a qualified wind energy conversion facility after December 31, deleted text begin 2017 deleted text end new text begin 2018 new text end ; or

(3) by a qualified on-farm biogas recovery facility after December 31, 2015.

(b) The payment period begins and runs consecutively from the date the facility
begins generating electricity or, in the case of refurbishment of a hydropower facility, after
substantial repairs to the hydropower facility dam funded by the incentive payments are
initiated.

Sec. 18.

new text begin [325E.027] LOW-INCOME CUSTOMERS; DELIVERED HEATING
FUEL VENDOR'S OBLIGATION.
new text end

new text begin A dealer or distributor of liquid propane gas or number 1 or number 2 fuel oil may
not refuse to deliver liquid propane gas or number 1 or number 2 fuel oil within their
normal delivery area to any person who receives direct grants under the low-income home
energy assistance program if that person has requested delivery, the dealer or distributor
has product available and the person requesting delivery is capable of making full payment
at the time of delivery, and is not in arrears regarding any previous fuel purchase from that
dealer or distributor. A distributor or dealer making delivery to a person receiving direct
grants from the low-income home energy assistance program may not charge that person
any additional costs or fees that would not be charged to any other customer and shall
make available to that person any discount programs on the same basis as the dealer or
distributor makes available to any other customer.
new text end

Sec. 19.

Laws 2005, chapter 97, article 13, section 4, is amended to read:

Sec. 4. HYDROGEN REFUELING STATIONS; GRANTS.

The commissioner of commerce shall make assessments under Minnesota Statutes,
section 216C.052, of $300,000 in fiscal year 2006 and $300,000 in fiscal year 2007 for
the purpose of matching federal and private investments in deleted text begin three multifuel deleted text end hydrogen
refueling stations in new text begin any of the following cities: Duluth, new text end Moorhead, Alexandria, new text begin Morris,
new text end and the Twin Cities deleted text begin respectively deleted text end . The assessments are subject to the assessment caps
specified in Minnesota Statutes, section 216C.052. Sums assessed under this section
are appropriated to the commissioner of commerce for the purpose of this section. The
assessments and grants are contingent upon securing the balance of the total project costs
from nonstate sources.

Sec. 20. new text begin UNIFORM CODES AND STANDARDS FOR HYDROGEN, FUEL
CELLS, AND RELATED TECHNOLOGIES.
new text end

new text begin The Department of Labor and Industry shall, in consultation with the Department
of Commerce, develop recommendations regarding the adoption of uniform codes and
standards for hydrogen infrastructure, fuel cells, and related technologies, and report
those recommendations to the legislature by December 31, 2006. The report must, at a
minimum, examine the following:
new text end

new text begin (1) codes and standards that already exist for hydrogen, fuel cell, and related
technologies;
new text end

new text begin (2) codes and standards under development by various official standard-making
bodies;
new text end

new text begin (3) gaps between existing codes and standards, those under development, and those
that may still be needed but are not yet being developed; and
new text end

new text begin (4) additional education and training for code officials regarding hydrogen, fuel cell,
and related technologies.
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. 21. new text begin BIOMASS GENERATION FACILITY CLARIFICATION.
new text end

new text begin Consistent with Minnesota Statutes, section 216B.02, subdivision 4, that no person
shall be deemed a public utility if it produces or furnishes service to less than 25 persons,
the owner and operator of an up-to-15-megawatt, biomass-fueled, electric generation
facility located in Scott County, adjacent to an agricultural product processing plant that
uses the heat from the biomass facility in its production process, is not a public utility if
the electricity produced by the biomass facility is used solely for the operations of the
owners of the biomass facility and for wholesale sales. The providing of electric service
by the biomass facility to the owners of the facility does not require the consent of the
public utility in whose service area the agricultural product processing plant is located.
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. 22. new text begin PETROLEUM VIOLATION ESCROW FUNDS.
new text end

new text begin Petroleum violation escrow funds appropriated to the commissioner of commerce by
Laws 1988, chapter 686, article 1, section 38, for state energy loan programs for schools,
hospitals, and public buildings may also be used for energy grants to those entities.
new text end

Sec. 23. new text begin PROMOTING CONSERVATION THROUGH UTILITY RATES;
STUDY.
new text end

new text begin The Legislative Electric Energy Task Force must study the issue of the use of
utility rates as an incentive to conservation, including the separation of utility revenues
from sales. The study may include both gas and electric utility rates. The task force may
contract for all or part of the study, including contracting with other state agencies. The
study must be completed by January 15, 2007.
new text end

Sec. 24. new text begin STATE PURCHASING OF PLUG-IN HYBRID ELECTRIC VEHICLES.
new text end

new text begin Subdivision 1. new text end

new text begin Definition. new text end

new text begin (a) As used in sections 25 and 26, "plug-in hybrid
electric vehicle (PHEV)" means a vehicle containing an internal combustion engine that
also allows power to be delivered to the drive wheels by a battery-powered electric motor
and that meets applicable federal motor vehicle safety standards. When connected to the
electrical grid via an electrical outlet, the vehicle must be able to recharge its battery. The
vehicle must have the ability to travel at least 20 miles, powered substantially by electricity.
new text end

new text begin (b) As used in this section, "neighborhood electric vehicle" means an electrically
powered motor vehicle that has four wheels and has a speed attainable in one mile of at
least 20 miles per hour but not more than 25 miles per hour on a paved level surface.
new text end

new text begin Subd. 2. new text end

new text begin Notice of state procurement policy in bid documents. new text end

new text begin All solicitation
documents for the purchase of a passenger automobile, as defined in Minnesota Statutes,
section 168.011, subdivision 7; pickup truck, as defined in Minnesota Statutes, section
168.011, subdivision 29; or van, as defined in Minnesota Statutes, section 168.011,
subdivision 28, issued under the jurisdiction of the Department of Administration after
June 30, 2006, must contain the following language: "It is the intention of the state of
Minnesota to begin purchasing plug-in hybrid electric vehicles and neighborhood electric
vehicles as soon as they become commercially available, meet the state's performance
specifications, and are priced no more than ten percent above the price for comparable
gasoline-powered vehicles. It is the intention of the state to purchase plug-in hybrid
electric vehicles and neighborhood electric vehicles whenever practicable after these
conditions have been met and as fleet needs dictate for at least five years after these
conditions have been met."
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. 25. new text begin PLUG-IN HYBRID ELECTRIC VEHICLE RETROFIT PROJECT.
new text end

new text begin The automotive engineering program at Minnesota State University - Mankato
is strongly encouraged to retrofit two flexible fuel vehicles to also operate as plug-in
hybrid electric vehicles (PHEV's). If the legislature does not appropriate funds for this
purpose, the Department of Administration and Minnesota State University - Mankato
may accept donations and work cooperatively with nonprofit agencies, higher education
institutions, and public agencies to procure vehicles and obtain other necessary funds to
conduct the retrofit.
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. 26. new text begin PLUG-IN HYBRID ELECTRIC VEHICLE TASK FORCE.
new text end

new text begin Subdivision 1. new text end

new text begin Establishment; membership. new text end

new text begin The plug-in hybrid electric vehicle
task force is established. The task force shall consist of 14 members as follows:
new text end

new text begin (1) one representative each from Xcel Energy and Great River Energy;
new text end

new text begin (2) one representative each from the Minnesota Department of Commerce, the
Minnesota Department of Transportation, and the Minnesota Pollution Control Agency;
new text end

new text begin (3) the director of the Travel Management Division of the Minnesota Department of
Administration, or the director's designee;
new text end

new text begin (4) a representative from the University of Minnesota Department of Electrical
Engineering;
new text end

new text begin (5) one representative each from Minnesota-based manufacturers of electric
batteries, automotive parts, and power electronics;
new text end

new text begin (6) a representative from an environmental advocacy organization active in
electricity issues;
new text end

new text begin (7) a representative of United Auto Workers Local 879;
new text end

new text begin (8) a representative of the Ford Motor Company; and
new text end

new text begin (9) a representative of a Minnesota-based manufacturer of electric vehicles.
new text end

new text begin Subd. 2. new text end

new text begin Appointment. new text end

new text begin The chairs of the senate and house of representatives
committees with primary jurisdiction over energy policy shall jointly appoint the task
force members.
new text end

new text begin Subd. 3. new text end

new text begin Cochairs. new text end

new text begin The task force shall have two cochairs, one appointed by each
of the appointing authorities established in subdivision 2.
new text end

new text begin Subd. 4. new text end

new text begin Charge. new text end

new text begin (a) The plug-in hybrid electric vehicle task force shall identify
barriers to the adoption of plug-in hybrid electric vehicles by state agencies, small
and large private fleets, and Minnesota drivers at-large and develop strategies to be
implemented over one-, three-, and five-year time frames to overcome those barriers.
Included in the analysis should be possible financial incentives to encourage Ford Motor
Company to produce plug-in hybrid, flexible-fueled vehicles at its St. Paul plant.
new text end

new text begin (b) The task force shall consider and evaluate the data and information presented to
it under subdivision 5 in presenting its findings and recommendations.
new text end

new text begin Subd. 5. new text end

new text begin Data and analysis. new text end

new text begin The commissioner of the Minnesota Pollution Control
Agency shall analyze and report to the task force the environmental impacts of purchasing
plug-in hybrid electric vehicles for the state-owned vehicle fleet and at penetration rates of
ten percent, 25 percent, and 50 percent of all motor vehicles registered in this state. The
analysis must compare, for plug-in hybrid electric vehicles and current fleet vehicles, air
emissions of sulfur dioxide, nitrogen oxides, particulate matter less than 2.5 microns in
width, volatile organic compounds, and carbon dioxide.
new text end

new text begin Subd. 6. new text end

new text begin Expenses. new text end

new text begin Members of the task force are entitled to reimbursement
for expenses under Minnesota Statutes, section 15.059, subdivision 6. Member
reimbursements shall be paid for by the commissioner of commerce.
new text end

new text begin Subd. 7. new text end

new text begin Staff. new text end

new text begin The state agencies represented on the commission shall provide
staff support.
new text end

new text begin Subd. 8. new text end

new text begin Report. new text end

new text begin The task force shall present its findings and recommendations in a
report to the chairs of the senate and house of representatives committees with primary
jurisdiction over energy policy and state government operations by April 1, 2007.
new text end

new text begin Subd. 9. new text end

new text begin Expiration. new text end

new text begin The task force expires on June 30, 2008.
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