1.1                          A bill for an act
  1.2             relating to energy; allowing for a market value 
  1.3             exclusion for electric power generation facilities 
  1.4             based on facility efficiency; permitting certain 
  1.5             consumptive use of water; requiring a study; proposing 
  1.6             coding for new law in Minnesota Statutes, chapter 272. 
  1.7   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.8      Section 1.  [272.0211] [SLIDING SCALE MARKET VALUE 
  1.9   EXCLUSION FOR ELECTRIC POWER GENERATION EFFICIENCY.] 
  1.10     Subdivision 1.  [EFFICIENCY DETERMINATION AND 
  1.11  CERTIFICATION.] An owner or operator of a new or existing 
  1.12  electric power generation facility, excluding wind energy 
  1.13  conversion systems, may apply to the commissioner of revenue for 
  1.14  a market value exclusion on the property as provided for in this 
  1.15  section.  The commissioner of revenue shall prescribe the forms 
  1.16  and procedures for this application.  Upon receiving the 
  1.17  application, the commissioner of revenue shall request the 
  1.18  commissioner of public service to make a determination of the 
  1.19  efficiency of the applicant's electric power generation 
  1.20  facility.  In calculating the efficiency of a facility, the 
  1.21  commissioner of public service shall use a definition of 
  1.22  efficiency which calculates efficiency as the sum of: 
  1.23     (1) the useful electrical power output; plus 
  1.24     (2) the useful thermal energy output; plus 
  1.25     (3) the fuel energy of the useful chemical products; plus 
  1.26     (4) the useful mechanical energy output, all divided by the 
  2.1   total energy input to the facility, expressed as a percentage. 
  2.2   The commissioner shall use the high heating value for all 
  2.3   substances in the commissioner's efficiency calculations.  The 
  2.4   applicant shall provide the commissioner of public service with 
  2.5   whatever information the commissioner deems necessary to make 
  2.6   the determination.  Within 30 days of the receipt of the 
  2.7   necessary information, the commissioner of public service shall 
  2.8   certify the findings of the efficiency determination to the 
  2.9   commissioner of revenue and to the applicant.  The commissioner 
  2.10  of public service shall determine the efficiency of the facility 
  2.11  and certify the findings of that determination to the 
  2.12  commissioner of revenue every two years thereafter from the date 
  2.13  of the original certification. 
  2.14     Subd. 2.  [SLIDING SCALE EXCLUSION.] Based upon the 
  2.15  efficiency determination provided by the commissioner of public 
  2.16  service as described in subdivision 1, the commissioner of 
  2.17  revenue shall subtract five percent of the market value of the 
  2.18  qualifying property for each percent that the efficiency of the 
  2.19  specific facility, as determined by the commissioner of public 
  2.20  service, is above 40 percent.  As used in this section, 
  2.21  "qualifying property" means the equipment at an electric power 
  2.22  generation facility described in subdivision 1.  In the case of 
  2.23  property subject to section 272.027, the exemption provided 
  2.24  under that section applies to the property before application of 
  2.25  the exemption provided under this section.  The reduction in 
  2.26  market value shall be reflected in the market value of the 
  2.27  facility beginning with the assessment year immediately 
  2.28  following the determination.  For a facility that has its market 
  2.29  value assessed by the county in which the facility is located, 
  2.30  the commissioner of revenue shall certify to the assessor of 
  2.31  that county the percentage of the market value of the facility 
  2.32  to be excluded. 
  2.33     Subd. 3.  [ELIGIBILITY.] An owner or operator of a new or 
  2.34  existing electric power generation facility who offers electric 
  2.35  power generated by the facility for sale is eligible for an 
  2.36  exclusion under this section only if:  
  3.1      (1) the owner or operator has received a certificate of 
  3.2   need under section 216B.243, if required under that section; and 
  3.3      (2) the purchaser has agreed not to offer the electric 
  3.4   power for resale to a retail customer located outside of the 
  3.5   purchaser's existing electric service franchise area, unless 
  3.6   otherwise permitted by law. 
  3.7      Sec. 2.  [LEGISLATIVE APPROVAL OF CONSUMPTIVE USE OF 
  3.8   WATER.] 
  3.9      Pursuant to Minnesota Statutes, section 103G.265, 
  3.10  subdivision 3, the legislature approves the consumptive use 
  3.11  under a permit of more than 2,000,000 gallons per day average in 
  3.12  a 30-day period in Rosemount and Inver Grove Heights in 
  3.13  connection with a cogeneration power facility, subject to the 
  3.14  commissioner of natural resources making a determination that 
  3.15  the water remaining in the basin of origin will be adequate to 
  3.16  meet the basin's need for water and approval by the commissioner 
  3.17  of natural resources. 
  3.18     Sec. 3.  [ANALYSIS OF UTILITY TAXATION.] 
  3.19     The commissioner of revenue, in consultation with the 
  3.20  commissioner of public service and the public utilities 
  3.21  commission, shall undertake an analysis of the following issues 
  3.22  and report the findings and recommendations of the analysis to 
  3.23  legislative committees with jurisdiction over these issues by 
  3.24  January 15, 1997: 
  3.25     (1) the amount of taxes paid by utilities in this state 
  3.26  relative to other states; 
  3.27     (2) a comparison of taxes paid by investor-owned utilities, 
  3.28  municipal gas and electric utilities, cooperative utilities, 
  3.29  producers of cogeneration power, and independent power 
  3.30  producers; 
  3.31     (3) the competitive aspects and consequences of disparities 
  3.32  in utility taxation, to the electric and gas industry and to the 
  3.33  state, in light of the restructuring that is occurring in the 
  3.34  industry; and 
  3.35     (4) other issues related to utility taxation and 
  3.36  recommendations for reform of the utility tax system, including 
  4.1   property taxes. 
  4.2      For the purposes of this section, "taxes paid" includes 
  4.3   payments made in lieu of taxes and other payments and 
  4.4   contributions of goods and services in the nature of payments in 
  4.5   lieu of taxes. 
  4.6      Sec. 4.  [EFFECTIVE DATE.] 
  4.7      Section 1 is effective for taxes levied in 1996 and 
  4.8   thereafter for taxes payable in 1997, and thereafter.  Section 2 
  4.9   is effective the day following final enactment.