HF 4423

as introduced - 93rd Legislature (2023 - 2024) Posted on 04/15/2024 10:28pm

A bill for an act
relating to energy; providing for and governing pilot thermal energy network
projects; authorizing administrative rulemaking; requiring a report; amending
Minnesota Statutes 2022, sections 216B.02, subdivision 6; 216B.2427, subdivision
1, by adding subdivisions; Minnesota Statutes 2023 Supplement, section 216B.243,
subdivision 8.

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

Section 1.

Minnesota Statutes 2022, section 216B.02, subdivision 6, is amended to read:

Subd. 6.

Service.

"Service" means natural, manufactured, or mixed gas new text begin , new text end deleted text begin and deleted text end electricity new text begin ,
and thermal energy new text end ; new text begin and new text end the installation, removal, or repair of equipment or facilities for
delivering or measuring such gas new text begin , new text end deleted text begin and deleted text end electricity new text begin , and new text end new text begin thermal energy new text end .

Sec. 2.

Minnesota Statutes 2022, section 216B.2427, subdivision 1, is amended to read:

Subdivision 1.

Definitions.

(a) For the purposes of this section and section 216B.2428,
the following terms have the meanings given.

(b) "Biogas" means gas produced by the anaerobic digestion of biomass, gasification of
biomass, or other effective conversion processes.

(c) "Carbon capture" means the capture of greenhouse gas emissions that would otherwise
be released into the atmosphere.

(d) "Carbon-free resource" means an electricity generation facility whose operation does
not contribute to statewide greenhouse gas emissions, as defined in section 216H.01,
subdivision 2.

new text begin (e) "Disadvantaged community" means a community in Minnesota that is:
new text end

new text begin (1) defined as disadvantaged by the federal agency disbursing federal funds, when the
federal agency is providing funds for an innovative resource; or
new text end

new text begin (2) an environmental justice area, as defined under section 216B.1691, subdivision 1.
new text end

deleted text begin (e) deleted text end new text begin (f) new text end "District energy" means a heating or cooling system that is solar thermal powered
or that uses the constant temperature of the earth or underground aquifers as a thermal
exchange medium to heat or cool multiple buildings connected through a piping network.

deleted text begin (f) deleted text end new text begin (g) new text end "Energy efficiency" has the meaning given in section 216B.241, subdivision 1,
paragraph (f), but does not include energy conservation investments that the commissioner
determines could reasonably be included in a utility's conservation improvement program.

deleted text begin (g) deleted text end new text begin (h) new text end "Greenhouse gas emissions" means emissions of carbon dioxide, methane, nitrous
oxide, hydrofluorocarbons, perfluorocarbons, and sulfur hexafluoride emitted by
anthropogenic sources within Minnesota and from the generation of electricity imported
from outside the state and consumed in Minnesota, excluding carbon dioxide that is injected
into geological formations to prevent its release to the atmosphere in compliance with
applicable laws.

deleted text begin (h) deleted text end new text begin (i) new text end "Innovative resource" means biogas, renewable natural gas, power-to-hydrogen,
power-to-ammonia, carbon capture, strategic electrification, district energy, and energy
efficiency.

deleted text begin (i) deleted text end new text begin (j) new text end "Lifecycle greenhouse gas emissions" means the aggregate greenhouse gas
emissions resulting from the production, processing, transmission, and consumption of an
energy resource.

deleted text begin (j) deleted text end new text begin (k) new text end "Lifecycle greenhouse gas emissions intensity" means lifecycle greenhouse gas
emissions per unit of energy delivered to an end user.

deleted text begin (k) deleted text end new text begin (l) new text end "Nonexempt customer" means a utility customer that has not been included in a
utility's innovation plan under subdivision 3, paragraph (f).

deleted text begin (l) deleted text end new text begin (m) new text end "Power-to-ammonia" means the production of ammonia from hydrogen produced
via power-to-hydrogen using a process that has a lower lifecycle greenhouse gas intensity
than does natural gas produced from conventional geologic sources.

deleted text begin (m) deleted text end new text begin (n) new text end "Power-to-hydrogen" means the use of electricity generated by a carbon-free
resource to produce hydrogen.

deleted text begin (n) deleted text end new text begin (o) new text end "Renewable energy" has the meaning given in section 216B.2422, subdivision
1.

deleted text begin (o) deleted text end new text begin (p) new text end "Renewable natural gas" means biogas that has been processed to be
interchangeable with, and that has a lower lifecycle greenhouse gas intensity than, natural
gas produced from conventional geologic sources.

deleted text begin (p) deleted text end new text begin (q) new text end "Solar thermal" has the meaning given to qualifying solar thermal project in
section 216B.2411, subdivision 2, paragraph (d).

deleted text begin (q) deleted text end new text begin (r) new text end "Strategic electrification" means the installation of electric end-use equipment in
an existing building in which natural gas is a primary or back-up fuel source, or in a newly
constructed building in which a customer receives natural gas service for one or more
end-uses, provided that the electric end-use equipment:

(1) results in a net reduction in statewide greenhouse gas emissions, as defined in section
216H.01, subdivision 2, over the life of the equipment when compared to the most efficient
commercially available natural gas alternative; and

(2) is installed and operated in a manner that improves the load factor of the customer's
electric utility.

Strategic electrification does not include investments that the commissioner determines
could reasonably be included in the natural gas utility's conservation improvement program
under section 216B.241.

new text begin (s) "Thermal energy" means piped noncombustible fluids used to transfer heat into and
out of buildings to reduce any on-site greenhouse gas emissions resulting from all types of
heating and cooling processes, including but not limited to comfort heating and cooling,
domestic hot water, and refrigeration.
new text end

new text begin (t) "Thermal energy network" means all real estate, fixtures, and personal property
operated, owned, used, or used for, in connection with, or to facilitate a utility-scale
distribution infrastructure project that supplies thermal energy, including but not limited to
the project types defined under section 103I.005.
new text end

deleted text begin (r) deleted text end new text begin (u) new text end "Total incremental cost" means the calculation of the following components of
a utility's innovation plan approved by the commission under subdivision 2:

(1) the sum of:

(i) return of and on capital investments for the production, processing, pipeline
interconnection, storage, and distribution of innovative resources;

(ii) incremental operating costs associated with capital investments in infrastructure for
the production, processing, pipeline interconnection, storage, and distribution of innovative
resources;

(iii) incremental costs to procure innovative resources from third parties;

(iv) incremental costs to develop and administer programs; and

(v) incremental costs for research and development related to innovative resources;

(2) less the sum of:

(i) value received by the utility upon the resale of innovative resources or innovative
resource by-products, including any environmental credits included with the resale of
renewable gaseous fuels or value received by the utility when innovative resources are used
as vehicle fuel;

(ii) cost savings achieved through avoidance of purchases of natural gas produced from
conventional geologic sources, including but not limited to avoided commodity purchases
and avoided pipeline costs; and

(iii) other revenues received by the utility that are directly attributable to the utility's
implementation of an innovation plan.

deleted text begin (s) deleted text end new text begin (v) new text end "Utility" means a public utility, as defined in section 216B.02, subdivision 4, that
provides natural gas sales or natural gas transportation services to customers in Minnesota.

Sec. 3.

Minnesota Statutes 2022, section 216B.2427, is amended by adding a subdivision
to read:

new text begin Subd. 9a. new text end

new text begin Thermal energy networks. new text end

new text begin (a) An innovation plan filed under this section
by a utility with more than 800,000 customers must include at least five pilot projects to
facilitate thermal energy network development, expansion, or modification in Minnesota.
new text end

new text begin (b) For each utility with more than 800,000 customers, at least two proposed thermal
energy network pilot projects must be in a disadvantaged community.
new text end

Sec. 4.

Minnesota Statutes 2022, section 216B.2427, is amended by adding a subdivision
to read:

new text begin Subd. 9b. new text end

new text begin Commission docket; thermal energy networks. new text end

new text begin (a) The commission must
initiate a proceeding to support the development of thermal energy networks. As part of the
proceeding initiated under this subdivision, the commission must, at a minimum, consider
(1) the appropriate ownership, market, and rate structures for pilot thermal energy networks,
and (2) whether thermal energy services provided by thermal energy providers are in the
public interest.
new text end

new text begin (b) When determining whether a pilot thermal energy network project is in the public
interest, the commission must consider whether:
new text end

new text begin (1) the pilot thermal energy network project develops information useful for the
commission to adopt administrative rules governing thermal energy networks;
new text end

new text begin (2) the pilot thermal energy network project helps Minnesota meet statutory goals and
requirements, including but not limited to the goals and requirements established under
sections 216B.1691, subdivisions 2a and 2g; 216B.2401; 216B.2403, subdivision 2;
216B.241, subdivision 1c; 216B.2427, subdivision 14; and 216H.02, subdivision 1;
new text end

new text begin (3) the pilot thermal energy network project improves financial and technical approaches
to equitable and affordable building decarbonization; and
new text end

new text begin (4) the pilot thermal energy network project creates economic and social benefits,
including but not limited to:
new text end

new text begin (i) impacts on public health, especially in environmental justice areas;
new text end

new text begin (ii) opportunities to create high-quality jobs paying wages that support families; and
new text end

new text begin (iii) reliability and affordability improvements for utility ratepayers, especially
low-income Minnesotans.
new text end

new text begin (c) The commission must initiate the proceeding under this subdivision within six months
of the date of final enactment.
new text end

Sec. 5.

Minnesota Statutes 2022, section 216B.2427, is amended by adding a subdivision
to read:

new text begin Subd. 9c. new text end

new text begin Rulemaking required. new text end

new text begin (a) The commission must adopt rules to (1) reflect
the provisions of subdivisions 9a and 9b, and (2) issue certificates of need for and to site
thermal energy networks.
new text end

new text begin (b) A thermal energy network approved by the commission in an innovation plan or
utility integrated resource plan is deemed to satisfy the need criteria under section 216B.243.
new text end

Sec. 6.

Minnesota Statutes 2023 Supplement, section 216B.243, subdivision 8, is amended
to read:

Subd. 8.

Exemptions.

(a) This section does not apply to:

(1) cogeneration or small power production facilities as defined in the Federal Power
Act, United States Code, title 16, section 796, paragraph (17), subparagraph (A), and
paragraph (18), subparagraph (A), and having a combined capacity at a single site of less
than 80,000 kilowatts; plants or facilities for the production of ethanol or fuel alcohol; or
any case where the commission has determined after being advised by the attorney general
that its application has been preempted by federal law;

(2) a high-voltage transmission line proposed primarily to distribute electricity to serve
the demand of a single customer at a single location, unless the applicant opts to request
that the commission determine need under this section or section 216B.2425;

(3) the upgrade to a higher voltage of an existing transmission line that serves the demand
of a single customer that primarily uses existing rights-of-way, unless the applicant opts to
request that the commission determine need under this section or section 216B.2425;

(4) a high-voltage transmission line of one mile or less required to connect a new or
upgraded substation to an existing, new, or upgraded high-voltage transmission line;

(5) conversion of the fuel source of an existing electric generating plant to using natural
gas;

(6) the modification of an existing electric generating plant to increase efficiency, as
long as the capacity of the plant is not increased more than ten percent or more than 100
megawatts, whichever is greater;

(7) a large wind energy conversion system, as defined in section 216F.01, subdivision
2, or a solar energy generating system, as defined in section 216E.01, subdivision 9a, for
which a site permit application is submitted by an independent power producer under chapter
216E or 216F; deleted text begin or
deleted text end

(8) a large wind energy conversion system, as defined in section 216F.01, subdivision
2, or a solar energy generating system that is a large energy facility, as defined in section
216B.2421, subdivision 2, engaging in a repowering project that:

(i) will not result in the system exceeding the nameplate capacity under its most recent
interconnection agreement; or

(ii) will result in the system exceeding the nameplate capacity under its most recent
interconnection agreement, provided that the Midcontinent Independent System Operator
has provided a signed generator interconnection agreement that reflects the expected net
power increase deleted text begin . deleted text end new text begin ; or
new text end

new text begin (9) a thermal energy network, as defined in section 216B.2427, subdivision 1, that has
been approved by the commission in an innovation plan or utility integrated resource plan.
new text end

(b) For the purpose of this subdivision, "repowering project" means:

(1) modifying a large wind energy conversion system or a solar energy generating system
that is a large energy facility to increase its efficiency without increasing its nameplate
capacity;

(2) replacing turbines in a large wind energy conversion system without increasing the
nameplate capacity of the system; or

(3) increasing the nameplate capacity of a large wind energy conversion system.

Sec. 7. new text begin THERMAL ENERGY NETWORK STUDY.
new text end

new text begin (a) The Department of Commerce must conduct or contract for a study to determine the
optimal capacity of thermal energy networks located in Minnesota by 2030, 2040, and 2050
in order to meet Minnesota's goals and requirements, including but not limited to the goals
and requirements established under Minnesota Statutes, sections 216B.1691, subdivisions
2a and 2g; 216B.2401; 216B.2403, subdivision 2; 216B.241, subdivision 1c; 216B.2427,
subdivision 14; and 216H.02, subdivision 1.
new text end

new text begin (b) When determining optimal capacity amounts, the study must consider:
new text end

new text begin (1) technological advances in thermal energy networks that are likely to be made by
2030, 2040, and 2050, and the impact the advances have on the cost-effectiveness of
deploying thermal energy networks;
new text end

new text begin (2) potential for greenhouse gas emissions reductions;
new text end

new text begin (3) impacts on public health, especially in environmental justice areas;
new text end

new text begin (4) opportunities to create high-quality jobs paying wages that support families;
new text end

new text begin (5) reliability and affordability improvements for utility ratepayers, especially low-income
Minnesotans;
new text end

new text begin (6) how thermal energy network project designs could, to the extent practicable, maximize
the use of existing energy efficiency programs, weatherization and adaptation programs,
and federal funding opportunities; and
new text end

new text begin (7) thermal energy network deployment in other states.
new text end

new text begin (c) No later than December 31, 2024, the Department of Commerce must submit a written
report that documents the study's findings to the chairs and ranking minority members of
the senate and house of representatives committees with primary jurisdiction over energy
policy and finance.
new text end

new text begin (d) No later than September 15, 2024, the Department of Commerce must host a meeting
to solicit input from stakeholders and the public regarding recommendations to implement
policies and programs designed to promote increased thermal energy network deployment
to achieve the goals under Minnesota Statutes, section 216B.2427, subdivision 9b.
new text end

new text begin (e) No later than December 31, 2024, the Department of Commerce must submit a written
summary of the recommendations made at the meeting to the chairs and ranking minority
members of the senate and house of representatives committees with primary jurisdiction
over energy policy and finance and must post the summary on the Department of Commerce's
website.
new text end