1.1                          A bill for an act 
  1.2             relating to energy; decreasing regulatory requirements 
  1.3             for small power lines; modifying provision for 
  1.4             selecting reliability administrator; requiring 
  1.5             department of administration to coordinate with 
  1.6             department of commerce to develop comprehensive energy 
  1.7             plan for public buildings by 2004; extending 
  1.8             expiration by three years of certain procedural powers 
  1.9             of public utilities commission; making technical 
  1.10            corrections; amending Minnesota Statutes 2000, section 
  1.11            116C.63, subdivision 4; Minnesota Statutes 2001 
  1.12            Supplement, sections 216B.1691, subdivision 1; 
  1.13            216B.2425, subdivisions 3, 6; 216B.243, subdivision 8; 
  1.14            216C.052, subdivision 2; 216C.41, subdivision 5; 
  1.15            272.02, subdivision 22; Laws 1999, chapter 125, 
  1.16            section 4; Laws 2001, chapter 212, article 1, section 
  1.17            3. 
  1.18  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.19     Section 1.  Minnesota Statutes 2000, section 116C.63, 
  1.20  subdivision 4, is amended to read: 
  1.21     Subd. 4. (a) When private real property that is an 
  1.22  agricultural or nonagricultural homestead, nonhomestead 
  1.23  agricultural land, rental residential property, and both 
  1.24  commercial and noncommercial seasonal residential recreational 
  1.25  property, as those terms are defined in section 273.13 is 
  1.26  proposed to be acquired for the construction of a site or route 
  1.27  for a high-voltage transmission line with a capacity of 200 
  1.28  kilovolts or more by eminent domain proceedings, the fee owner, 
  1.29  or when applicable, the fee owner with the written consent of 
  1.30  the contract for deed vendee, or the contract for deed vendee 
  1.31  with the written consent of the fee owner, shall have the option 
  2.1   to require the utility to condemn a fee interest in any amount 
  2.2   of contiguous, commercially viable land which the owner or 
  2.3   vendee wholly owns or has contracted to own in undivided fee and 
  2.4   elects in writing to transfer to the utility within 60 days 
  2.5   after receipt of the notice of the objects of the petition filed 
  2.6   pursuant to section 117.055.  Commercial viability shall be 
  2.7   determined without regard to the presence of the utility route 
  2.8   or site.  The owner or, when applicable, the contract vendee 
  2.9   shall have only one such option and may not expand or otherwise 
  2.10  modify an election without the consent of the utility.  The 
  2.11  required acquisition of land pursuant to this subdivision shall 
  2.12  be considered an acquisition for a public purpose and for use in 
  2.13  the utility's business, for purposes of chapter 117 and section 
  2.14  500.24, respectively; provided that a utility shall divest 
  2.15  itself completely of all such lands used for farming or capable 
  2.16  of being used for farming not later than the time it can receive 
  2.17  the market value paid at the time of acquisition of lands less 
  2.18  any diminution in value by reason of the presence of the utility 
  2.19  route or site.  Upon the owner's election made under this 
  2.20  subdivision, the easement interest over and adjacent to the 
  2.21  lands designated by the owner to be acquired in fee, sought in 
  2.22  the condemnation petition for a ~~high voltage~~ right-of-way for a 
  2.23  high-voltage transmission line ~~right-of-way~~ with a capacity of 
  2.24  200 kilovolts or more shall automatically be converted into a 
  2.25  fee taking. 
  2.26     (b) A utility may voluntarily offer the same option 
  2.27  provided to fee owners under paragraph (a) with regard to the 
  2.28  acquisition of property for the construction of a site or route 
  2.29  for a proposed high voltage transmission line with a capacity of 
  2.30  between 100 and 200 kilovolts if: 
  2.31     (1) the property is located within an unincorporated area; 
  2.32  and 
  2.33     (2) the proposed high voltage transmission line would, if 
  2.34  constructed, cross a federally designated national scenic 
  2.35  riverway. 
  2.36  Expenses incurred under this paragraph are recoverable by a 
  3.1   public utility, as defined in section 216B.02, subdivision 4, in 
  3.2   the utility's subsequent general rate proceeding under section 
  3.3   216B.16. 
  3.4      Sec. 2.  Minnesota Statutes 2001 Supplement, section 
  3.5   216B.1691, subdivision 1, is amended to read: 
  3.6      Subdivision 1.  [DEFINITIONS.] (a) "Eligible energy 
  3.7   technology" means: 
  3.8      (1) an energy technology that generates electricity from 
  3.9   the following renewable energy sources:  solar, wind, 
  3.10  hydroelectric with a capacity of less than 60 megawatts, or 
  3.11  biomass; and 
  3.12     (2) was not mandated by state law or commission 
  3.13  order enacted or issued prior to August 1, 2001. 
  3.14     (b) "Electric utility" means a public utility providing 
  3.15  electric service, a generation and transmission cooperative 
  3.16  electric association, or a municipal power agency. 
  3.17     Sec. 3.  Minnesota Statutes 2001 Supplement, section 
  3.18  216B.2425, subdivision 3, is amended to read: 
  3.19     Subd. 3.  [COMMISSION APPROVAL.] By June 1 of each 
  3.20  even-numbered year, the commission shall adopt a state 
  3.21  transmission project list and shall certify, certify as 
  3.22  modified, or deny certification of the projects proposed under 
  3.23  subdivision 2.  The commission may only certify a project that 
  3.24  is a high-voltage transmission line as defined in section 
  3.25  216B.2421, subdivision 2, that the commission finds is: 
  3.26     (1) necessary to maintain or enhance the reliability of 
  3.27  electric service to Minnesota consumers; 
  3.28     (2) needed, applying the criteria in section ~~216B.241~~ 
  3.29  216B.243, subdivision 3; and 
  3.30     (3) in the public interest, taking into account electric 
  3.31  energy system needs and economic, environmental, and social 
  3.32  interests affected by the project. 
  3.33     Sec. 4.  Minnesota Statutes 2001 Supplement, section 
  3.34  216B.2425, subdivision 6, is amended to read: 
  3.35     Subd. 6.  [EXCLUSION.] This section does not apply to any 
  3.36  transmission line ~~proposal~~ application that has been approved 
  4.1   by, or was pending before, ~~a~~ at least one local unit of 
  4.2   government, the environmental quality board, or the public 
  4.3   utilities commission on August 1, 2001.  
  4.4      Sec. 5.  Minnesota Statutes 2001 Supplement, section 
  4.5   216B.243, subdivision 8, is amended to read: 
  4.6      Subd. 8.  [EXEMPTIONS.] This section does not apply to: 
  4.7      (1) cogeneration or small power production facilities as 
  4.8   defined in the Federal Power Act, United States Code, title 16, 
  4.9   section 796, paragraph (17), subparagraph (A), and paragraph 
  4.10  (18), subparagraph (A), and having a combined capacity at a 
  4.11  single site of less than 80,000 kilowatts or to plants or 
  4.12  facilities for the production of ethanol or fuel alcohol nor in 
  4.13  any case where the commission shall determine after being 
  4.14  advised by the attorney general that its application has been 
  4.15  preempted by federal law; 
  4.16     (2) a high-voltage transmission line proposed primarily to 
  4.17  distribute electricity to serve the demand of a single customer 
  4.18  at a single location, unless the applicant opts to request that 
  4.19  the commission determine need under this section or section 
  4.20  216B.2425; 
  4.21     (3) the upgrade to a higher voltage of an existing 
  4.22  transmission line that serves the demand of a single customer 
  4.23  that primarily uses existing rights-of-way, unless the applicant 
  4.24  opts to request that the commission determine need under this 
  4.25  section or section 216B.2425; 
  4.26     (4) a transmission line with a capacity between 100 
  4.27  kilovolts and 200 kilovolts for which an application has been 
  4.28  approved by, or was pending before, at least one local unit of 
  4.29  government, the environmental quality board, or the public 
  4.30  utilities commission on August 1, 2001; 
  4.31     (5) a high-voltage transmission line of one mile or less 
  4.32  required to connect a new or upgraded substation to an existing, 
  4.33  new or upgraded high-voltage transmission line; 
  4.34     (6) conversion of the fuel source of an existing electric 
  4.35  generating plant to using natural gas; or 
  4.36     ~~(5)~~ (7) modification of an existing electric generating 
  5.1   plant to increase efficiency, as long as the capacity of the 
  5.2   plant is not increased more than ten percent or more than 100 
  5.3   megawatts, whichever is greater.  
  5.4      Sec. 6.  Minnesota Statutes 2001 Supplement, section 
  5.5   216C.052, subdivision 2, is amended to read: 
  5.6      Subd. 2.  [ADMINISTRATIVE ISSUES.] (a) The commissioner may 
  5.7   select the administrator who shall serve for a four-year 
  5.8   term.  The administrator may not have been a party or a 
  5.9   participant in a commission energy proceeding for at least one 
  5.10  year prior to selection by the commissioner.  The commissioner 
  5.11  shall oversee and direct the work of the administrator, annually 
  5.12  review the expenses of the administrator, and annually approve 
  5.13  the budget of the administrator.  The administrator may hire 
  5.14  staff and may contract for technical expertise in performing 
  5.15  duties when existing state resources are required for other 
  5.16  state responsibilities or when special expertise is required.  
  5.17  The salary of the administrator is governed by section 15A.0815, 
  5.18  subdivision 2. 
  5.19     (b) Costs relating to a specific proceeding, analysis, or 
  5.20  project are not general administrative costs.  For purposes of 
  5.21  this section, "energy utility" means public utilities, 
  5.22  generation and transmission cooperative electric associations, 
  5.23  and municipal power agencies providing natural gas or electric 
  5.24  service in the state.  
  5.25     (c) The department of commerce shall pay: 
  5.26     (1) the general administrative costs of the administrator, 
  5.27  not to exceed $1,500,000 in a fiscal year, and shall assess 
  5.28  energy utilities for reimbursement for those administrative 
  5.29  costs.  These costs must be consistent with the budget approved 
  5.30  by the commissioner under paragraph (a).  The department shall 
  5.31  apportion the costs among all energy utilities in proportion to 
  5.32  their respective gross operating revenues from sales of gas or 
  5.33  electric service within the state during the last calendar year, 
  5.34  and shall then render a bill to each utility on a regular basis; 
  5.35  and 
  5.36     (2) costs relating to a specific proceeding analysis or 
  6.1   project and shall render a bill for reimbursement to the 
  6.2   specific energy utility or utilities participating in the 
  6.3   proceeding, analysis, or project directly, either at the 
  6.4   conclusion of a particular proceeding, analysis, or project, or 
  6.5   from time to time during the course of the proceeding, analysis, 
  6.6   or project. 
  6.7      (d) For purposes of administrative efficiency, the 
  6.8   department shall assess energy utilities and issue bills in 
  6.9   accordance with the billing and assessment procedures provided 
  6.10  in section 216B.62, to the extent that these procedures do not 
  6.11  conflict with this subdivision.  The amount of the bills 
  6.12  rendered by the department under paragraph (c) must be paid by 
  6.13  the energy utility into an account in the special revenue fund 
  6.14  in the state treasury within 30 days from the date of billing 
  6.15  and is appropriated to the commissioner for the purposes 
  6.16  provided in this section.  The commission shall approve or 
  6.17  approve as modified a rate schedule providing for the automatic 
  6.18  adjustment of charges to recover amounts paid by utilities under 
  6.19  this section.  All amounts assessed under this section are in 
  6.20  addition to amounts appropriated to the commission and the 
  6.21  department by other law.  
  6.22     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
  6.23  following final enactment.  
  6.24     Sec. 7.  Minnesota Statutes 2001 Supplement, section 
  6.25  216C.41, subdivision 5, is amended to read: 
  6.26     Subd. 5.  [AMOUNT OF PAYMENT.] (a) An incentive payment is 
  6.27  based on the number of kilowatt hours of electricity generated. 
  6.28  The amount of the payment is: 
  6.29     (1) for a facility described under subdivision 2, paragraph 
  6.30  (a), clause (4), 1.0 cents per kilowatt hour; and 
  6.31     (2) for all other facilities, 1.5 cents per kilowatt hour.  
  6.32  For electricity generated by qualified wind energy conversion 
  6.33  facilities, the incentive payment under this section is limited 
  6.34  to no more than 100 megawatts of nameplate capacity.  During any 
  6.35  period in which qualifying claims for incentive payments exceed 
  6.36  100 megawatts of nameplate capacity, the payments must be made 
  7.1   to producers in the order in which the production capacity was 
  7.2   brought into production.  
  7.3      (b) ~~Beginning~~ For wind energy conversion systems installed 
  7.4   and contracted for after January 1, 2002, the total size of a 
  7.5   wind energy conversion system under this section must be 
  7.6   determined according to this paragraph.  Unless the systems are 
  7.7   interconnected with different distribution systems, the 
  7.8   nameplate capacity of one wind energy conversion system must be 
  7.9   combined with the nameplate capacity of any other wind energy 
  7.10  conversion system that is: 
  7.11     (1) located within five miles of the wind energy conversion 
  7.12  system; 
  7.13     (2) constructed within the same calendar year as the wind 
  7.14  energy conversion system; and 
  7.15     (3) under common ownership. 
  7.16  In the case of a dispute, the commissioner of commerce shall 
  7.17  determine the total size of the system, and shall draw all 
  7.18  reasonable inferences in favor of combining the systems. 
  7.19     (c) In making a determination under paragraph (b), the 
  7.20  commissioner of commerce may determine that two wind energy 
  7.21  conversion systems are under common ownership when the 
  7.22  underlying ownership structure contains similar persons or 
  7.23  entities, even if the ownership shares differ between the two 
  7.24  systems.  Wind energy conversion systems are not under common 
  7.25  ownership solely because the same person or entity provided 
  7.26  equity financing for the systems. 
  7.27     Sec. 8.  Minnesota Statutes 2001 Supplement, section 
  7.28  272.02, subdivision 22, is amended to read: 
  7.29     Subd. 22.  [WIND ENERGY CONVERSION SYSTEMS.] (a) Small 
  7.30  scale wind energy conversion systems installed after January 1, 
  7.31  1991, and used as an electric power source are exempt. 
  7.32     "Small scale wind energy conversion systems" are wind 
  7.33  energy conversion systems, as defined in section 216C.06, 
  7.34  subdivision 12, including the foundation or support pad, which 
  7.35  (i) are used as an electric power source; (ii) are located 
  7.36  within one county and owned by the same owner; and (iii) produce 
  8.1   two megawatts or less of electricity as measured by nameplate 
  8.2   ratings. 
  8.3      (b) Medium scale wind energy conversion systems installed 
  8.4   after January 1, 1991, are treated as follows:  (i) the 
  8.5   foundation and support pad are taxable; (ii) the associated 
  8.6   supporting and protective structures are exempt for the first 
  8.7   five assessment years after they have been constructed, and 
  8.8   thereafter, 30 percent of the market value of the associated 
  8.9   supporting and protective structures are taxable; and (iii) the 
  8.10  turbines, blades, transformers, and its related equipment, are 
  8.11  exempt.  "Medium scale wind energy conversion systems" are wind 
  8.12  energy conversion systems as defined in section 216C.06, 
  8.13  subdivision 12, including the foundation or support pad, which:  
  8.14  (i) are used as an electric power source; (ii) are located 
  8.15  within one county and owned by the same owner; and (iii) produce 
  8.16  more than two but equal to or less than 12 megawatts of energy 
  8.17  as measured by nameplate ratings. 
  8.18     (c) Large scale wind energy conversion systems installed 
  8.19  after January 1, 1991, are treated as follows:  25 percent of 
  8.20  the market value of all property is taxable, including (i) the 
  8.21  foundation and support pad; (ii) the associated supporting and 
  8.22  protective structures; and (iii) the turbines, blades, 
  8.23  transformers, and its related equipment.  "Large scale wind 
  8.24  energy conversion systems" are wind energy conversion systems as 
  8.25  defined in section 216C.06, subdivision 12, including the 
  8.26  foundation or support pad, which (i) are used as an electric 
  8.27  power source; and (ii) produce more than 12 megawatts of energy 
  8.28  as measured by nameplate ratings. 
  8.29     (d) For wind energy conversion systems installed and 
  8.30  contracted for after January 1, 2002, the total size of a wind 
  8.31  energy conversion system under this subdivision shall be 
  8.32  determined according to this paragraph.  Unless the systems are 
  8.33  interconnected with different distribution systems, the 
  8.34  nameplate capacity of one wind energy conversion system shall be 
  8.35  combined with the nameplate capacity of any other wind energy 
  8.36  conversion system that is: 
  9.1      (1) located within five miles of the wind energy conversion 
  9.2   system; 
  9.3      (2) constructed within the same calendar year as the wind 
  9.4   energy conversion system; and 
  9.5      (3) under common ownership.  
  9.6      In the case of a dispute, the commissioner of commerce 
  9.7   shall determine the total size of the system, and shall draw all 
  9.8   reasonable inferences in favor of combining the systems. 
  9.9      (e) In making a determination under paragraph (d), the 
  9.10  commissioner of commerce may determine that two wind energy 
  9.11  conversion systems are under common ownership when the 
  9.12  underlying ownership structure contains similar persons or 
  9.13  entities, even if the ownership shares differ between the two 
  9.14  systems.  Wind energy conversion systems are not under common 
  9.15  ownership solely because the same person or entity provided 
  9.16  equity financing for the systems.  
  9.17     Sec. 9.  Laws 1999, chapter 125, section 4, is amended to 
  9.18  read: 
  9.19     Sec. 4.  [SUNSETS.] 
  9.20     Sections 1 to 3 expire as of June 30, ~~2002~~ 2005. 
  9.21     Sec. 10.  Laws 2001, chapter 212, article 1, section 3, is 
  9.22  amended to read:  
  9.23     Sec. 3.  [BENCHMARKS FOR EXISTING PUBLIC BUILDINGS.] 
  9.24     The department of administration shall maintain information 
  9.25  on energy usage in all public buildings for the purpose of 
  9.26  establishing energy efficiency benchmarks and energy 
  9.27  conservation goals.  The department shall report preliminary 
  9.28  energy conservation goals to the chairs of the senate 
  9.29  telecommunications, energy and utilities committee and the house 
  9.30  regulated industries committee by January 15, 2002.  The 
  9.31  department shall develop, in coordination with the department of 
  9.32  commerce, a comprehensive plan by January 15, ~~2003~~ 2004, to 
  9.33  maximize electrical and thermal energy efficiency in existing 
  9.34  public buildings through conservation measures having a simple 
  9.35  payback within ten to 15 years.  The plan must detail the steps 
  9.36  necessary to implement the conservation measures and include the 
 10.1   projected costs of these measures.  The owner or operator of a 
 10.2   public building subject to this section shall provide 
 10.3   information to the department of administration necessary to 
 10.4   accomplish the purposes of this section.  
 10.5      Sec. 11.  [INSTRUCTION TO REVISOR.] 
 10.6      The revisor of statutes shall remove codification of Laws 
 10.7   2001, chapter 212, article 8, section 14.  Laws 2001, chapter 
 10.8   212, article 8, section 14, shall remain part of Laws 2001 as 
 10.9   uncodified law. 
 10.10     Sec. 12.  [EFFECTIVE DATE.] 
 10.11     Sections 1, 7, 8, and 9 are effective the day following 
 10.12  final enactment.