1.1                          A bill for an act 
  1.2             relating to energy; providing incentives for use of 
  1.3             renewable biodiesel fuel; making clarifying changes; 
  1.4             amending Minnesota Statutes 2001 Supplement, sections 
  1.5             216B.169, subdivision 1; 216B.1691, subdivision 1; 
  1.6             216B.2411; 216C.41, subdivisions 1, 2, 3, 4. 
  1.7   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.8      Section 1.  Minnesota Statutes 2001 Supplement, section 
  1.9   216B.169, subdivision 1, is amended to read: 
  1.10     Subdivision 1.  [DEFINITIONS.] For the purposes of this 
  1.11  section, the following terms have the meanings given them. 
  1.12     (a) "Utility" means a public utility, municipal utility, or 
  1.13  cooperative electric association providing electric service at 
  1.14  retail to Minnesota consumers. 
  1.15     (b) "Renewable energy" has the meaning given in section 
  1.16  216B.2422, subdivision 1, paragraph (c).  Renewable energy also 
  1.17  includes electric energy generated by a generation facility that 
  1.18  utilizes a fuel blend that contains at least 85 percent 
  1.19  biodiesel fuel. 
  1.20     (c) "High-efficiency, low-emissions, distributed generation"
  1.21  means a distributed generation facility of no more than ten 
  1.22  megawatts of interconnected capacity that is certified by the 
  1.23  commissioner under subdivision 3 as a high-efficiency, 
  1.24  low-emissions facility. 
  1.25     (d) For the purposes of this section and section 216B.1691, 
  1.26  "biodiesel fuel" means a renewable, biodegradable, mono alkyl 
  2.1   ester combustible liquid fuel derived from agricultural plant 
  2.2   oils or animal fats and that meets American Society For Testing 
  2.3   and Materials Specification D6751-02 for Biodiesel Fuel (B100) 
  2.4   Blend Stock for Distillate Fuels. 
  2.5      Sec. 2.  Minnesota Statutes 2001 Supplement, section 
  2.6   216B.1691, subdivision 1, is amended to read: 
  2.7      Subdivision 1.  [DEFINITIONS.] (a) "Eligible energy 
  2.8   technology" means: 
  2.9      (1) an energy technology that: 
  2.10     (1) generates electricity from the following renewable 
  2.11  energy sources:  solar, wind, hydroelectric with a capacity of 
  2.12  less than 60 megawatts, or biomass, or a fuel blend of at least 
  2.13  85 percent biodiesel fuel; and 
  2.14     (2) was not mandated by state law or commission order. 
  2.15     (b) "Electric utility" means a public utility providing 
  2.16  electric service, a generation and transmission cooperative 
  2.17  electric association, or a municipal power agency. 
  2.18     Sec. 3.  Minnesota Statutes 2001 Supplement, section 
  2.19  216B.2411, is amended to read: 
  2.20     216B.2411 [DISTRIBUTED ENERGY RESOURCES.] 
  2.21     Subdivision 1.  [NEW RENEWABLE GENERATION.] (a) To the 
  2.22  extent that cost-effective projects are available in the service 
  2.23  territory of a utility or association providing conservation 
  2.24  services under section 216B.241, the utility or association 
  2.25  shall use five percent of the total amount to be spent on energy 
  2.26  conservation improvements under section 216B.241, on: 
  2.27     (1) projects to construct an electric generating facility 
  2.28  that utilizes renewable fuels as defined in section 216B.2422, 
  2.29  subdivision 1, such as methane or other combustible gases 
  2.30  derived from the processing of plant or animal wastes, biomass 
  2.31  fuels such as short-rotation woody or fibrous agricultural 
  2.32  crops, or other renewable fuel, as its primary fuel source; or 
  2.33     (2) projects to install a distributed generation facility 
  2.34  of ten megawatts or less of interconnected capacity that is 
  2.35  fueled by natural gas, renewable fuels, or another similarly 
  2.36  clean fuel.  
  3.1      (b) For public utilities, as defined under section 216B.02, 
  3.2   subdivision 4, projects under this section must be considered 
  3.3   energy conservation improvements as defined in section 
  3.4   216B.241.  For cooperative electric associations and municipal 
  3.5   utilities, projects under this section must be considered 
  3.6   load-management activities described in section 216B.241, 
  3.7   subdivision 1, paragraph (i).  
  3.8      (c) The commission may provide an alternative recovery 
  3.9   mechanism for the expense of continuing existing approved 
  3.10  cost-effective projects by a rate-regulated distribution 
  3.11  cooperative electric association.  
  3.12     (d) This section subdivision expires May 30, 2006.  
  3.13     Subd. 2.  [CREDIT FOR USE OF BIODIESEL.] An electric 
  3.14  utility subject to the provisions of section 216B.241 may credit 
  3.15  against the amount the utility is required to spend under that 
  3.16  section the difference between: 
  3.17     (1) the annual amount the utility spent per gallon of 
  3.18  biodiesel-blended fuel for use in a qualified biodiesel 
  3.19  generation facility as defined in section 216C.41, subdivision 
  3.20  1, paragraph (f); and 
  3.21     (2) the average cost of a gallon of diesel fuel in that 
  3.22  year, as calculated by the department of commerce. 
  3.23  The utility may take this credit on an annual basis and only to 
  3.24  the extent that biodiesel-blended fuel is more expensive than 
  3.25  petroleum diesel.  Amounts credited to a utility under this 
  3.26  subdivision shall count toward, and be limited by, the 
  3.27  requirement in subdivision 1, paragraph (a).  
  3.28     Sec. 4.  Minnesota Statutes 2001 Supplement, section 
  3.29  216C.41, subdivision 1, is amended to read: 
  3.30     Subdivision 1.  [DEFINITIONS.] (a) The definitions in this 
  3.31  subdivision apply to this section. 
  3.32     (b) "Qualified hydroelectric facility" means a 
  3.33  hydroelectric generating facility in this state that: 
  3.34     (1) is located at the site of a dam, if the dam was in 
  3.35  existence as of March 31, 1994; and 
  3.36     (2) begins generating electricity after July 1, 1994, or 
  4.1   generates electricity after substantial refurbishing of a 
  4.2   facility that begins after July 1, 2001. 
  4.3      (c) "Qualified wind energy conversion facility" means a 
  4.4   wind energy conversion system that: 
  4.5      (1) produces two megawatts or less of electricity as 
  4.6   measured by nameplate rating and begins generating electricity 
  4.7   after December 31, 1996, and before July 1, 1999; 
  4.8      (2) begins generating electricity after June 30, 1999, 
  4.9   produces two megawatts or less of electricity as measured by 
  4.10  nameplate rating, and is: 
  4.11     (i) located within one county and owned by a natural person 
  4.12  who owns the land where the facility is sited; 
  4.13     (ii) owned by a Minnesota small business as defined in 
  4.14  section 645.445; 
  4.15     (iii) owned by a nonprofit organization; or 
  4.16     (iv) owned by a tribal council if the facility is located 
  4.17  within the boundaries of the reservation; or 
  4.18     (3) begins generating electricity after June 30, 1999, 
  4.19  produces seven megawatts or less of electricity as measured by 
  4.20  nameplate rating, and: 
  4.21     (i) is owned by a cooperative organized under chapter 308A; 
  4.22  and 
  4.23     (ii) all shares and membership in the cooperative are held 
  4.24  by natural persons or estates, at least 51 percent of whom 
  4.25  reside in a county or contiguous to a county where the wind 
  4.26  energy production facilities of the cooperative are located. 
  4.27     (d) "Qualified on-farm biogas recovery facility" means an 
  4.28  anaerobic digester system that: 
  4.29     (1) is located at the site of an agricultural operation; 
  4.30     (2) is owned by a natural person who owns or rents the land 
  4.31  where the facility is located; and 
  4.32     (3) begins generating electricity after July 1, 2001.  
  4.33     (e) "Anaerobic digester system" means a system of 
  4.34  components that processes animal waste based on the absence of 
  4.35  oxygen and produces gas used to generate electricity. 
  4.36     (f) "Qualified biodiesel generation facility" means an 
  5.1   electric power generation facility that: 
  5.2      (1) had been generating electricity before May 30, 2002, 
  5.3   using diesel fuel as its primary fuel, in compliance with all 
  5.4   state and federal air emissions standards in effect on that 
  5.5   date, and that has converted, after June 1, 2003, to using a 
  5.6   fuel blend of at least 20 percent biodiesel fuel as its primary 
  5.7   fuel; or 
  5.8      (2) uses a fuel blend of at least 85 percent biodiesel fuel.
  5.9      (g) "Biodiesel fuel" means a renewable, biodegradable, mono 
  5.10  alkyl ester combustible liquid fuel derived from agricultural 
  5.11  plant oils or animal fats and that meets American Society for 
  5.12  Testing and Materials Specification D6751-02 for Biodiesel Fuel 
  5.13  (B100) Blend Stock for Distillate Fuels.  
  5.14     Sec. 5.  Minnesota Statutes 2001 Supplement, section 
  5.15  216C.41, subdivision 2, is amended to read: 
  5.16     Subd. 2.  [INCENTIVE PAYMENT; APPROPRIATION.] (a) Incentive 
  5.17  payments must be made according to this section to:  
  5.18     (1) a qualified on-farm biogas recovery facility,; 
  5.19     (2) the owner or operator of a qualified hydropower 
  5.20  facility or qualified wind energy conversion facility for 
  5.21  electric energy generated and sold by the facility,; 
  5.22     (3) a publicly owned hydropower facility for electric 
  5.23  energy that is generated by the facility and used by the owner 
  5.24  of the facility outside the facility, or; 
  5.25     (4) the owner of a publicly owned dam that is in need of 
  5.26  substantial repair, for electric energy that is generated by a 
  5.27  hydropower facility at the dam and, provided the annual 
  5.28  incentive payments will be are used either (i) to fund the 
  5.29  structural repairs and replacement of structural components of 
  5.30  the dam, or (ii) to retire debt incurred to fund those repairs; 
  5.31  or 
  5.32     (5) the owner or operator of a qualified biodiesel 
  5.33  generation facility.  
  5.34     (b) Payment may only be made upon receipt by the 
  5.35  commissioner of finance of an incentive payment application that 
  5.36  establishes that the applicant is eligible to receive an 
  6.1   incentive payment and that satisfies other requirements the 
  6.2   commissioner deems necessary.  The application must be in a form 
  6.3   and submitted at a time the commissioner establishes.  
  6.4      (c) There is annually appropriated from the general fund 
  6.5   sums sufficient to make the payments required under this section.
  6.6      Sec. 6.  Minnesota Statutes 2001 Supplement, section 
  6.7   216C.41, subdivision 3, is amended to read: 
  6.8      Subd. 3.  [ELIGIBILITY WINDOW.] Payments may be made under 
  6.9   this section only for electricity generated: 
  6.10     (1) from a qualified hydroelectric facility that is 
  6.11  operational and generating electricity before December 31, 2005; 
  6.12     (2) from a qualified wind energy conversion facility that 
  6.13  is operational and generating electricity before January 1, 
  6.14  2005; or 
  6.15     (3) from a qualified on-farm biogas recovery facility from 
  6.16  July 1, 2001, through December 31, 2015; or 
  6.17     (4) from a qualified biodiesel generation facility that is 
  6.18  operational and generating electricity after June 1, 2003. 
  6.19     Sec. 7.  Minnesota Statutes 2001 Supplement, section 
  6.20  216C.41, subdivision 4, is amended to read: 
  6.21     Subd. 4.  [PAYMENT PERIOD.] (a) A facility may receive 
  6.22  payments under this section for a ten-year period.  No payment 
  6.23  under this section may be made for electricity generated: 
  6.24     (1) by a qualified hydroelectric facility after December 
  6.25  31, 2015; 
  6.26     (2) by a qualified wind energy conversion facility after 
  6.27  December 31, 2015; or 
  6.28     (3) by a qualified on-farm biogas recovery facility after 
  6.29  December 31, 2015; or 
  6.30     (4) by a qualified biodiesel generation facility after 
  6.31  December 31, 2015.  
  6.32     (b) The payment period begins and runs consecutively from 
  6.33  the first year in which electricity generated from the facility 
  6.34  is eligible for incentive payment or after substantial repairs 
  6.35  to the hydropower facility dam funded by the incentive payments 
  6.36  are initiated.