1.1                          A bill for an act 
  1.2             relating to biomass electricity production; permitting 
  1.3             a fuel supply agreement to satisfy a biomass mandate; 
  1.4             including poultry litter as a renewable energy 
  1.5             resource; amending Minnesota Statutes 1998, sections 
  1.6             216B.2422, subdivision 1; 216B.2424, by adding a 
  1.7             subdivision; 216B.243, subdivision 3a; and 216C.41, 
  1.8             subdivisions 1, 2, 3, and 4. 
  1.9   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.10     Section 1.  Minnesota Statutes 1998, section 216B.2422, 
  1.11  subdivision 1, is amended to read: 
  1.12     Subdivision 1.  [DEFINITIONS.] (a) For purposes of this 
  1.13  section, the terms defined in this subdivision have the meanings 
  1.14  given them. 
  1.15     (b) "Utility" means an entity with the capability of 
  1.16  generating 100,000 kilowatts or more of electric power and 
  1.17  serving, either directly or indirectly, the needs of 10,000 
  1.18  retail customers in Minnesota.  Utility does not include federal 
  1.19  power agencies. 
  1.20     (c) "Renewable energy" means electricity generated through 
  1.21  use of any of the following resources: 
  1.22     (1) wind; 
  1.23     (2) solar; 
  1.24     (3) geothermal; 
  1.25     (4) hydro; 
  1.26     (5) trees or other vegetation; or 
  1.27     (6) landfill gas; or 
  2.1      (7) poultry litter. 
  2.2      (d) "Resource plan" means a set of resource options that a 
  2.3   utility could use to meet the service needs of its customers 
  2.4   over a forecast period, including an explanation of the supply 
  2.5   and demand circumstances under which, and the extent to which, 
  2.6   each resource option would be used to meet those service needs.  
  2.7   These resource options include using, refurbishing, and 
  2.8   constructing utility plant and equipment, buying power generated 
  2.9   by other entities, controlling customer loads, and implementing 
  2.10  customer energy conservation. 
  2.11     (e) "Refurbish" means to rebuild or substantially modify an 
  2.12  existing electricity generating resource of 30 megawatts or 
  2.13  greater. 
  2.14     Sec. 2.  Minnesota Statutes 1998, section 216B.2424, is 
  2.15  amended by adding a subdivision to read: 
  2.16     Subd. 6.  [FUEL SUPPLY CONTRACT.] Notwithstanding any other 
  2.17  provision of this section, a public utility may satisfy up to 75 
  2.18  megawatts of the mandate in subdivision 5 by converting power 
  2.19  purchase agreements entered into to satisfy that mandate and 
  2.20  executed prior to March 15, 1999, into fuel supply agreements 
  2.21  between the same parties.  The fuel supply agreement must 
  2.22  obligate the public utility to purchase farm-grown, closed-loop 
  2.23  biomass for use as a fuel in existing base load power plants of 
  2.24  the public utility as a substitute for coal or refuse-derived 
  2.25  fuel.  The megawatts of the mandate satisfied by a fuel supply 
  2.26  agreement shall be determined by multiplying the percentage of 
  2.27  biomass fuel measured in British thermal units used on an annual 
  2.28  basis under the agreement as a fuel by a base load power plant 
  2.29  by the nameplate capacity of the plant. 
  2.30     Sec. 3.  Minnesota Statutes 1998, section 216B.243, 
  2.31  subdivision 3a, is amended to read: 
  2.32     Subd. 3a.  [USE OF RENEWABLE RESOURCE.] The commission may 
  2.33  not issue a certificate of need under this section for a large 
  2.34  energy facility that generates electric power by means of a 
  2.35  nonrenewable energy source, or that transmits electric power 
  2.36  generated by means of a nonrenewable energy source, unless the 
  3.1   applicant for the certificate has demonstrated to the 
  3.2   commission's satisfaction that it has explored the possibility 
  3.3   of generating power by means of renewable energy sources and has 
  3.4   demonstrated that the alternative selected is less expensive 
  3.5   (including environmental costs) than power generated by a 
  3.6   renewable energy source.  For purposes of this subdivision, 
  3.7   "renewable energy source" includes hydro, wind, solar, and 
  3.8   geothermal energy and the use of trees or other vegetation and 
  3.9   poultry litter as fuel. 
  3.10     Sec. 4.  Minnesota Statutes 1998, section 216C.41, 
  3.11  subdivision 1, is amended to read: 
  3.12     Subdivision 1.  [DEFINITIONS.] (a) The definitions in this 
  3.13  subdivision apply to this section. 
  3.14     (b) "Qualified hydroelectric facility" means a 
  3.15  hydroelectric generating facility in this state that: 
  3.16     (1) is located at the site of a dam, if the dam was in 
  3.17  existence as of March 31, 1994; and 
  3.18     (2) begins generating electricity after July 1, 1994. 
  3.19     (c) "Qualified wind energy conversion facility" means a 
  3.20  wind energy conversion system that: 
  3.21     (1) produces two megawatts or less of electricity as 
  3.22  measured by nameplate rating and begins generating electricity 
  3.23  after June 30, 1997, and before July 1, 1999; or 
  3.24     (2) begins generating electricity after June 30, 1999, 
  3.25  produces two megawatts or less of electricity as measured by 
  3.26  nameplate rating, and is: 
  3.27     (i) located within one county and owned by a natural person 
  3.28  who owns the land where the facility is sited; 
  3.29     (ii) owned by a Minnesota small business as defined in 
  3.30  section 645.445; 
  3.31     (iii) owned by a nonprofit organization; or 
  3.32     (iv) owned by a tribal council if the facility is located 
  3.33  within the boundaries of the reservation. 
  3.34     (d) "Qualified poultry litter electricity generating 
  3.35  facility" means a facility that generates electricity using 
  3.36  poultry litter and related biomass as its fuel source and that: 
  4.1      (1) has a net production capacity of 40 megawatts or less; 
  4.2      (2) begins generating electricity after June 30, 2001; and 
  4.3      (3) is designed to burn poultry litter and related biomass. 
  4.4      Sec. 5.  Minnesota Statutes 1998, section 216C.41, 
  4.5   subdivision 2, is amended to read: 
  4.6      Subd. 2.  [INCENTIVE PAYMENT.] Incentive payments shall be 
  4.7   made according to this section to the owner or operator of a 
  4.8   qualified hydropower facility, qualified poultry litter 
  4.9   electricity generating facility, or qualified wind energy 
  4.10  conversion facility for electric energy generated and sold by 
  4.11  the facility.  Incentive payments made to the qualified poultry 
  4.12  litter electricity generating facility must be used to satisfy 
  4.13  the financial obligations of the facility.  Payment may only be 
  4.14  made upon receipt by the commissioner of finance of an incentive 
  4.15  payment application that establishes that the applicant is 
  4.16  eligible to receive an incentive payment and that satisfies 
  4.17  other requirements the commissioner deems necessary.  The 
  4.18  application shall be in a form and submitted at a time the 
  4.19  commissioner establishes.  There is annually appropriated from 
  4.20  the general fund sums sufficient to make the payments required 
  4.21  under this section.  
  4.22     Sec. 6.  Minnesota Statutes 1998, section 216C.41, 
  4.23  subdivision 3, is amended to read: 
  4.24     Subd. 3.  [ELIGIBILITY WINDOW.] Payments may be made under 
  4.25  this section only for electricity generated: 
  4.26     (a) from a qualified hydroelectric facility that is 
  4.27  operational and generating electricity before January 1, 2001; 
  4.28  or 
  4.29     (b) from a qualified wind energy conversion facility that 
  4.30  is operational and generating electricity before January 1, 
  4.31  2005; or 
  4.32     (c) from a qualified poultry litter electricity generating 
  4.33  facility that is operational and generating electricity before 
  4.34  January 1, 2010. 
  4.35     Sec. 7.  Minnesota Statutes 1998, section 216C.41, 
  4.36  subdivision 4, is amended to read: 
  5.1      Subd. 4.  [PAYMENT PERIOD.] A facility may receive payments 
  5.2   under this section for a ten-year period.  No payment under this 
  5.3   section may be made for electricity generated: 
  5.4      (a) by a qualified hydroelectric facility after December 
  5.5   31, 2010; or 
  5.6      (b) by a qualified wind energy conversion facility after 
  5.7   December 31, 2015; or 
  5.8      (c) by a qualified poultry litter electricity generating 
  5.9   facility after December 31, 2019.  
  5.10     The payment period begins and runs consecutively from the 
  5.11  first year in which electricity generated from the facility is 
  5.12  eligible for incentive payment.