1.1                          A bill for an act
  1.2             relating to utilities; providing for siting and 
  1.3             construction of certain power plants for three years; 
  1.4             amending Minnesota Statutes 1994, sections 116C.57, 
  1.5             subdivisions 1 and 5a; and 216B.243, subdivisions 2 
  1.6             and 3; proposing coding for new law in Minnesota 
  1.7             Statutes, chapter 272. 
  1.8   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.9                              ARTICLE 1
  1.10     Section 1.  Minnesota Statutes 1994, section 116C.57, 
  1.11  subdivision 1, is amended to read: 
  1.12     Subdivision 1.  [DESIGNATION OF SITES SUITABLE FOR SPECIFIC 
  1.13  FACILITIES; REPORTS.] (a) A utility must apply to the board in a 
  1.14  form and manner prescribed by the board for designation of a 
  1.15  specific site for a specific size and type of facility.  The 
  1.16  application shall contain at least two proposed sites, unless 
  1.17  the application is for a cogeneration plant, which produces both 
  1.18  electrical and useful thermal energy.  If the application is for 
  1.19  a cogeneration plant, the application may identify a single site 
  1.20  if the site is in reasonable proximity to the thermal host of 
  1.21  the cogeneration plant.  For the purposes of this subdivision, 
  1.22  the "thermal host" of a cogeneration plant means the facility in 
  1.23  which the thermal energy produced by the cogeneration plant is 
  1.24  to be utilized.  The board shall determine whether the 
  1.25  cogeneration plant is reasonably proximate to the thermal host 
  1.26  with the understanding that the site should be adjacent to or 
  2.1   contiguous with the site of the thermal host whenever 
  2.2   practicable.  In the event a utility proposes a site not 
  2.3   included in the board's inventory of study areas, the utility 
  2.4   shall specify the reasons for the proposal and shall make an 
  2.5   evaluation of the proposed site based upon the planning 
  2.6   policies, criteria and standards specified in the inventory.  
  2.7      (b) Pursuant to sections 116C.57 to 116C.60, the board 
  2.8   shall study and evaluate any site proposed by a utility and any 
  2.9   other site the board deems necessary which was proposed in a 
  2.10  manner consistent with rules adopted by the board concerning the 
  2.11  form, content, and timeliness of proposals for alternate sites.  
  2.12  No site designation shall be made in violation of the site 
  2.13  selection standards established in section 116C.55.  The board 
  2.14  shall indicate the reasons for any refusal and indicate changes 
  2.15  in size or type of facility necessary to allow site designation. 
  2.16  Within a year after the board's acceptance of a utility's 
  2.17  application, the board shall decide in accordance with the 
  2.18  criteria specified in section 116C.55, subdivision 2, the 
  2.19  responsibilities, procedures and considerations specified in 
  2.20  section 116C.57, subdivision 4, and the considerations in 
  2.21  chapter 116D which proposed site is to be designated.  The board 
  2.22  may extend for just cause the time limitation for its decision 
  2.23  for a period not to exceed six months.  When the board 
  2.24  designates a site, it shall issue a certificate of site 
  2.25  compatibility to the utility with any appropriate conditions.  
  2.26  The board shall publish a notice of its decision in the State 
  2.27  Register within 30 days of site designation.  No large electric 
  2.28  power generating plant shall be constructed except on a site 
  2.29  designated by the board. 
  2.30     Sec. 2.  Minnesota Statutes 1994, section 116C.57, 
  2.31  subdivision 5a, is amended to read: 
  2.32     Subd. 5a.  [EXEMPTION OF CERTAIN SITES.] (a) A utility or 
  2.33  person may apply to the board in a form and manner prescribed by 
  2.34  the board to exempt the construction at a proposed site of a 
  2.35  proposed electric power generating plant with a capacity between 
  2.36  50 and 80 megawatts, or in the case of a proposed cogeneration 
  3.1   plant, with a capacity greater than 50 megawatts, from the 
  3.2   requirements of sections 116C.51 to 116C.69.  Within 15 days of 
  3.3   the board's receipt of an exemption application, the utility or 
  3.4   person shall:  
  3.5      (1) publish a notice and description of the exemption 
  3.6   application in a legal newspaper of general circulation in the 
  3.7   county of the proposed site; 
  3.8      (2) send a copy of the exemption application by certified 
  3.9   mail to the chief executive of counties, home rule charter and 
  3.10  statutory cities, and organized towns within ten miles of the 
  3.11  proposed site; and 
  3.12     (3) mail to each owner whose property is part of or 
  3.13  contiguous to the proposed site a notice and description of the 
  3.14  exemption application, together with an understandable 
  3.15  description of the procedures the owner must follow should the 
  3.16  owner desire to object.  
  3.17     (b) For the purpose of giving mailed notice under this 
  3.18  subdivision, owners are the persons or entities shown on the tax 
  3.19  records of the county auditor or, in a county where tax 
  3.20  statements are mailed by the county treasurer, on the records of 
  3.21  the county treasurer, but other appropriate records may be used 
  3.22  to identify owners.  Except for owners of tax-exempt property or 
  3.23  property taxed on a gross earnings basis, a property owner whose 
  3.24  name does not appear on the records of the county auditor or the 
  3.25  county treasurer is deemed to have waived the mailed notice 
  3.26  unless the owner has requested in writing that the county 
  3.27  auditor or county treasurer, as the case may be, include the 
  3.28  owner's name on the records for that purpose.  The failure to 
  3.29  give mailed notice to a property owner or defects in the notice 
  3.30  does not invalidate the proceedings, if a good faith effort is 
  3.31  made to comply with this subdivision.  
  3.32     (c) If a person who owns real property that is part of or 
  3.33  contiguous to the proposed site or an affected political 
  3.34  subdivision files an objection with the board within 60 days 
  3.35  after the board receives an exemption application, the board 
  3.36  must either deny the exemption application or conduct a public 
  4.1   hearing to determine if the proposed electric power generating 
  4.2   plant at the proposed site will cause any significant human or 
  4.3   environmental impact.  
  4.4      (d) The board shall require environmental review under 
  4.5   chapter 116D to assist in making its determination regarding 
  4.6   potential significant human and environmental impact.  
  4.7      (e) If the board determines that the proposed plant has an 
  4.8   electric power production capacity less than 80 megawatts, or in 
  4.9   the case of a proposed cogeneration plant, that the plant has an 
  4.10  electric power production capacity greater than 50 megawatts, 
  4.11  and the proposed site will not have a significant human and 
  4.12  environmental impact, the board may exempt the construction of 
  4.13  the proposed plant at the proposed site from the requirements of 
  4.14  sections 116C.51 to 116C.69 with any appropriate conditions.  
  4.15     (f) If an exemption is granted, the utility or person must 
  4.16  comply with applicable state rules, local zoning, building, and 
  4.17  land use rules, regulations, and ordinances of any regional, 
  4.18  county, local, and special purpose governments in which the 
  4.19  facility is to be located.  
  4.20     (g) The board may, by rule, require a fee to pay costs 
  4.21  incurred in processing exemptions.  An estimated cost for 
  4.22  processing the exemption application must be discussed with the 
  4.23  applicant and be approved by the board when an application is 
  4.24  received.  The applicant must remit 50 percent of the approved 
  4.25  cost within 14 days of acceptance of the application.  The 
  4.26  balance is due within 30 days after receipt of an invoice from 
  4.27  the board.  Costs in excess of those approved must be certified 
  4.28  by the board and charged to the applicant.  Certification is 
  4.29  prima facie evidence that the costs are reasonable and 
  4.30  necessary.  All money received pursuant to this subdivision must 
  4.31  be deposited in a special account.  Money in the account is 
  4.32  appropriated to the board to pay expenses incurred in processing 
  4.33  the application and in the event the expenses are less than the 
  4.34  fee paid, to refund the excess to the applicant. 
  4.35                             ARTICLE 2
  4.36     Section 1.  Minnesota Statutes 1994, section 216B.243, 
  5.1   subdivision 2, is amended to read: 
  5.2      Subd. 2.  [CERTIFICATE REQUIRED.] No large energy facility 
  5.3   shall be sited or constructed in Minnesota, or if already sited 
  5.4   and constructed under an exemption granted pursuant to section 
  5.5   3, be allowed to operate and generate electric power, without 
  5.6   the issuance of a certificate of need by the commission pursuant 
  5.7   to sections 216C.05 to 216C.30 and this section and consistent 
  5.8   with the criteria for assessment of need. 
  5.9      Sec. 2.  Minnesota Statutes 1994, section 216B.243, 
  5.10  subdivision 3, is amended to read: 
  5.11     Subd. 3.  [SHOWING REQUIRED FOR CONSTRUCTION.] No proposed 
  5.12  large energy facility shall be certified for construction unless 
  5.13  the applicant can show that demand for electricity cannot be met 
  5.14  more cost-effectively through energy conservation and 
  5.15  load-management measures and unless the applicant has otherwise 
  5.16  justified its need.  In assessing need, the commission shall 
  5.17  evaluate: 
  5.18     (1) the accuracy of the long-range energy demand forecasts 
  5.19  on which the necessity for the facility is based; 
  5.20     (2) the effect of existing or possible energy conservation 
  5.21  programs under sections 216C.05 to 216C.30 and this section or 
  5.22  other federal or state legislation on long-term energy demand; 
  5.23     (3) the relationship of the proposed facility to overall 
  5.24  state energy needs, as described in the most recent state energy 
  5.25  policy and conservation report prepared under section 216C.18; 
  5.26     (4) promotional activities that may have given rise to the 
  5.27  demand for this facility; 
  5.28     (5) socially beneficial uses of the output of this 
  5.29  facility, including its uses to protect or enhance environmental 
  5.30  quality; 
  5.31     (6) the effects of the facility in inducing future 
  5.32  development; 
  5.33     (7) possible alternatives for satisfying the energy demand 
  5.34  including but not limited to potential for increased efficiency 
  5.35  of existing energy generation facilities; 
  5.36     (8) the policies, rules, and regulations of other state and 
  6.1   federal agencies and local governments; and 
  6.2      (9) any feasible combination of energy conservation 
  6.3   improvements, required under section 216B.241, that can (i) 
  6.4   replace part or all of the energy to be provided by the proposed 
  6.5   facility, and (ii) compete with it economically; 
  6.6      (10) whether adding the capacity would displace existing 
  6.7   capacity in a utility's rate base, and if so, whether the 
  6.8   resulting utility system would achieve lower total cost, 
  6.9   including environmental cost as determined under section 
  6.10  216B.2433; and 
  6.11     (11) whether adding the capacity would reduce a utility's 
  6.12  ability to achieve, in the most cost-effective manner, the 
  6.13  renewable energy additions anticipated in its approved resource 
  6.14  plan. 
  6.15     Sec. 3.  [EXEMPTION FOR COGENERATION FACILITIES GREATER 
  6.16  THAN 80 MEGAWATTS.] 
  6.17     (a) A person proposing to construct a cogeneration facility 
  6.18  which will utilize as its fuel gasified petroleum coke derived 
  6.19  as a waste by-product of the oil refining process at an oil 
  6.20  refining facility owned by the proposer and with a net capacity, 
  6.21  alone or in combination with other plants at a single site, of 
  6.22  not less than 80 megawatts, nor more than 275 megawatts, may 
  6.23  apply to the commission for a certificate of exemption from this 
  6.24  section.  This exemption applies only to the first 275 megawatts 
  6.25  of cogeneration for which an exemption has been applied for 
  6.26  under this section.  Once the commission has received 
  6.27  applications from persons who create petroleum coke as a 
  6.28  by-product of the oil-refining process at an oil-refining 
  6.29  facility owned by that person for cogeneration facilities 
  6.30  utilizing the petroleum coke in a gasified form as its fuel 
  6.31  totaling a net 275 megawatts of cogeneration capacity, the 
  6.32  commission may not grant any additional exemptions from the 
  6.33  certificate of need process under this section or Minnesota 
  6.34  Statutes, section 216B.243.  In addition, an exemption granted 
  6.35  under this section or Minnesota Statutes, section 216B.243, may 
  6.36  apply only to those facilities that, in addition to the above 
  7.1   requirements, are: 
  7.2      (1) a cogeneration facility or a qualifying cogeneration 
  7.3   facility as defined in the Federal Power Act, United States 
  7.4   Code, title 16, section 796, paragraph (18), subparagraphs (A) 
  7.5   and (B), and the regulations promulgated under that section; or 
  7.6      (2) an eligible facility producing electric power as an 
  7.7   exempt wholesale generator, as defined in the Federal Public 
  7.8   Utility Holding Company Act, United States Code, title 15, 
  7.9   section 79z-5a, subsection (a), paragraph (2), that is also a 
  7.10  cogeneration facility or a qualifying cogeneration facility. 
  7.11     (b) The commission shall grant a certificate of exemption, 
  7.12  within 120 days of the receipt of the application, if the 
  7.13  commission finds: 
  7.14     (1) that the person proposing to construct the facility has 
  7.15  filed with the commission, prior to the commencement of actual 
  7.16  construction of the facility, a document signed by the owner, or 
  7.17  agent of the owner, stating that the owner of the proposed 
  7.18  facility waives all rights under the Federal Public Utility 
  7.19  Regulatory Policies Act, United States Code, title 16, section 
  7.20  824a-3 and the regulations promulgated under that section, to 
  7.21  require any electric utility to offer to purchase, or to 
  7.22  purchase, electric energy or capacity from the facility.  The 
  7.23  waiver shall identify the site and the anticipated net kilowatt 
  7.24  capacity of the facility; 
  7.25     (2) that the proposed cogeneration facility meets the 
  7.26  minimum standards of efficiency for a qualifying cogeneration 
  7.27  facility set forth under the Federal Power Act, United States 
  7.28  Code, title 16, section 796, paragraph (18), and the regulations 
  7.29  promulgated under that section, as the standards existed as of 
  7.30  the date the waiver of rights under clause (1) was originally 
  7.31  filed with the commission.  These federal standards of 
  7.32  efficiency shall be the only standards for efficiency considered 
  7.33  in making this determination.  The person proposing to construct 
  7.34  the facility must provide to the commission such information as 
  7.35  the commission deems necessary to make the findings required for 
  7.36  a certificate of exemption; and 
  8.1      (3) that the project is in the public interest, considering 
  8.2   solely the provisions of Minnesota Statutes, section 216B.243, 
  8.3   subdivision 3, clauses (10) and (11).  Any information relating 
  8.4   to the facility's cost of generation must be kept confidential 
  8.5   by the commission. 
  8.6      (c) A facility granted a certificate of exemption under 
  8.7   this section may not be sold or otherwise transferred to any 
  8.8   other person or entity unless the buyer or transferee: 
  8.9      (1) files with the commission a waiver of rights as 
  8.10  described in paragraph (b), clause (1), signed by the buyer or 
  8.11  agent of the buyer; or 
  8.12     (2) relinquishes the certificate of exemption and obtains a 
  8.13  certificate of need under this section or Minnesota Statutes, 
  8.14  section 216B.243. 
  8.15     (d) The owner of a facility granted a certificate of 
  8.16  exemption under this section must relinquish the certificate of 
  8.17  exemption and obtain a certificate of need under this section or 
  8.18  Minnesota Statutes, section 216B.243, to continue to operate the 
  8.19  facility if: 
  8.20     (1) the owner of the facility withdraws the waiver required 
  8.21  under paragraph (b), clause (1) from the commission; or 
  8.22     (2) the commission finds, after a contested case action, 
  8.23  that the facility has failed, on an average basis over 180 days 
  8.24  of normal operation, to meet the minimum standards of efficiency 
  8.25  for a qualifying cogeneration facility required under paragraph 
  8.26  (b), clause (2). 
  8.27     (e) If the owner of a facility granted a certificate of 
  8.28  exemption under this section is later required to obtain a 
  8.29  certificate of need by the provisions of paragraph (d), the 
  8.30  facility shall not thereafter generate electric power for sale 
  8.31  until the commission grants a certificate of need for the 
  8.32  facility, but the facility may generate electric power for its 
  8.33  own use and may also generate power for sale on site to be used 
  8.34  on site. 
  8.35     (f) The commission may hold public hearings, and comment on 
  8.36  any aspect or effect of any facility applying for a certificate 
  9.1   of exemption under paragraph (a), but such hearings and comments 
  9.2   shall be advisory only.  The comments shall be delivered to the 
  9.3   owner of the facility within 90 days after filing of the 
  9.4   document described in paragraph (b), clause (1).  The owner of 
  9.5   the facility shall defer construction of the facility until the 
  9.6   earlier of (1) the expiration of the 90-day period, or (2) the 
  9.7   receipt of the comments of the commission.  The owner of the 
  9.8   facility may respond to the comments of the commission. 
  9.9      (g) This section and Minnesota Statutes, section 216B.243, 
  9.10  shall not apply to any case where the commission shall 
  9.11  determine, after being advised by the attorney general, that its 
  9.12  application has been preempted by federal law. 
  9.13                             ARTICLE 3 
  9.14     Section 1.  [272.0211] [SLIDING SCALE MARKET VALUE 
  9.15  EXCLUSION FOR ELECTRIC POWER-GENERATION EFFICIENCY.] 
  9.16     Subdivision 1.  [EFFICIENCY DETERMINATION AND 
  9.17  CERTIFICATION.] (a) An owner or operator of a new or existing 
  9.18  electric power-generation facility, excluding wind energy 
  9.19  conversion systems, may apply to the commissioner of revenue for 
  9.20  a market value exclusion on the property as provided for in this 
  9.21  section.  This exclusion shall apply only to the market value of 
  9.22  the attached machinery and other personal property of the 
  9.23  facility and shall not apply to the land upon which the facility 
  9.24  is located.  The commissioner of revenue shall prescribe the 
  9.25  forms and procedures for this application. 
  9.26     (b) Upon receiving the application, the commissioner of 
  9.27  revenue shall request the commissioner of public service to make 
  9.28  a determination of the efficiency of the applicant's electric 
  9.29  power generation facility.  The applicant shall provide the 
  9.30  commissioner of public service with whatever information the 
  9.31  commissioner deems necessary to make the determination.  Within 
  9.32  30 days of the receipt of the necessary information, the 
  9.33  commissioner of public service shall determine the efficiency of 
  9.34  the facility and certify the findings of that determination to 
  9.35  the commissioner of revenue every two years thereafter from the 
  9.36  date of the original certification. 
 10.1      (c) In calculating the efficiency of a facility, the 
 10.2   commissioner of public service shall use a definition of 
 10.3   efficiency which calculates efficiency as the sum of: 
 10.4      (1) the useful electrical power output; plus 
 10.5      (2) the useful thermal energy output; plus 
 10.6      (3) the fuel energy of the useful chemical products; plus 
 10.7      (4) the useful mechanical energy output, all divided by the 
 10.8   total energy input to the facility, including the energy 
 10.9   directly used on site to convert a substance into the fuel used 
 10.10  in the facility, expressed as a percentage.  The commissioner 
 10.11  shall use the high heating value for all substances in the 
 10.12  commissioner's efficiency calculations. 
 10.13     Subd. 2.  [SLIDING SCALE EXCLUSION.] Based upon the 
 10.14  efficiency determination provided by the commissioner of public 
 10.15  service as described in subdivision 1, the commissioner of 
 10.16  revenue shall subtract ten percent of the market value of the 
 10.17  qualifying property for each percent that the efficiency of that 
 10.18  specific facility, as determined by the commissioner of public 
 10.19  service, is above 42 percent.  The reduction in market value 
 10.20  shall be reflected in the market value of the facility beginning 
 10.21  with the assessment year immediately following the 
 10.22  determination.  For a facility that has its market value 
 10.23  assessed by the county in which the facility is located, the 
 10.24  commissioner of revenue shall certify to the assessor of that 
 10.25  county the percentage of the market value of the facility to be 
 10.26  excluded. 
 10.27     Sec. 2.  [SUNSET; STUDY.] 
 10.28     This act shall be repealed as of August 1, 1998, but the 
 10.29  repeal shall not apply to any facility which has commenced 
 10.30  actual construction prior to that date and has received a 
 10.31  certificate of exemption under article 2, section 3.  The public 
 10.32  utilities commission shall review the actual and potential 
 10.33  positive and negative impacts of this act, and report its 
 10.34  findings to the legislature by January 1, 1999.