1.1                          A bill for an act 
  1.2             relating to economic development; clarifying ownership 
  1.3             and location requirements for small wind energy 
  1.4             conversion systems and on-farm biogas recovery 
  1.5             facilities that qualify for renewable energy 
  1.6             production incentive; funding the incentive from 
  1.7             assessment on electric utilities; increasing overall 
  1.8             limit on number of megawatts of small wind energy 
  1.9             conversion systems that qualify for the incentive; 
  1.10            excluding very small systems from the overall limit; 
  1.11            amending Minnesota Statutes 2002, section 216C.41, 
  1.12            subdivisions 1, 2, 3, 4, 5. 
  1.13  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.14     Section 1.  Minnesota Statutes 2002, section 216C.41, 
  1.15  subdivision 1, is amended to read: 
  1.16     Subdivision 1.  [DEFINITIONS.] (a) The definitions in this 
  1.17  subdivision apply to this section. 
  1.18     (b) "Qualified hydroelectric facility" means a 
  1.19  hydroelectric generating facility in this state that: 
  1.20     (1) is located at the site of a dam, if the dam was in 
  1.21  existence as of March 31, 1994; and 
  1.22     (2) begins generating electricity after July 1, 1994, or 
  1.23  generates electricity after substantial refurbishing of a 
  1.24  facility that begins after July 1, 2001. 
  1.25     (c) "Qualified wind energy conversion facility" means a 
  1.26  wind energy conversion system in this state that: 
  1.27     (1) produces two megawatts or less of electricity as 
  1.28  measured by nameplate rating and begins generating electricity 
  1.29  after December 31, 1996, and before July 1, 1999; 
  2.1      (2) begins generating electricity after June 30, 1999, 
  2.2   produces two megawatts or less of electricity as measured by 
  2.3   nameplate rating, and is: 
  2.4      (i) located within one county and owned by a natural person 
  2.5   who an entity that is not prohibited from owning agricultural 
  2.6   land under section 500.24 that owns the land where the facility 
  2.7   is sited; 
  2.8      (ii) owned by a Minnesota small business as defined in 
  2.9   section 645.445; 
  2.10     (iii) owned by a Minnesota nonprofit organization; or 
  2.11     (iv) owned by a tribal council if the facility is located 
  2.12  within the boundaries of the reservation; or 
  2.13     (v) owned by a Minnesota municipal utility or a Minnesota 
  2.14  cooperative electric association; or 
  2.15     (vi) owned by a Minnesota political subdivision or local 
  2.16  government, including, but not limited to, a county, statutory 
  2.17  or home rule charter city, town, school district, or any other 
  2.18  local or regional governmental organization such as a board, 
  2.19  commission, or association; or 
  2.20     (3) begins generating electricity after June 30, 1999, 
  2.21  produces seven megawatts or less of electricity as measured by 
  2.22  nameplate rating, and: 
  2.23     (i) is owned by a cooperative organized under chapter 
  2.24  308A other than a Minnesota cooperative electric association; 
  2.25  and 
  2.26     (ii) all shares and membership in the cooperative are held 
  2.27  by natural persons or estates, at least 51 percent of whom 
  2.28  reside in a county or contiguous to a county where the wind 
  2.29  energy production facilities of the cooperative are located an 
  2.30  entity that is not prohibited from owning agricultural land 
  2.31  under section 500.24. 
  2.32     (d) "Qualified on-farm biogas recovery facility" means an 
  2.33  anaerobic digester system that: 
  2.34     (1) is located at the site of an agricultural operation; 
  2.35     (2) is owned by a natural person who an entity that is not 
  2.36  prohibited from owning agricultural land under section 500.24 
  3.1   that owns or rents the land where the facility is located; and 
  3.2      (3) begins generating electricity after July 1, 2001.  
  3.3      (e) "Anaerobic digester system" means a system of 
  3.4   components that processes animal waste based on the absence of 
  3.5   oxygen and produces gas used to generate electricity. 
  3.6      Sec. 2.  Minnesota Statutes 2002, section 216C.41, 
  3.7   subdivision 2, is amended to read: 
  3.8      Subd. 2.  [INCENTIVE PAYMENT; APPROPRIATION.] (a) Incentive 
  3.9   payments must be made according to this section to (1) a 
  3.10  qualified on-farm biogas recovery facility, (2) the owner or 
  3.11  operator of a qualified hydropower facility or qualified wind 
  3.12  energy conversion facility for electric energy generated and 
  3.13  sold by the facility, (3) a publicly owned hydropower facility 
  3.14  for electric energy that is generated by the facility and used 
  3.15  by the owner of the facility outside the facility, or (4) the 
  3.16  owner of a publicly owned dam that is in need of substantial 
  3.17  repair, for electric energy that is generated by a hydropower 
  3.18  facility at the dam and the annual incentive payments will be 
  3.19  used to fund the structural repairs and replacement of 
  3.20  structural components of the dam, or to retire debt incurred to 
  3.21  fund those repairs.  
  3.22     (b) Payment may only be made upon receipt by the 
  3.23  commissioner of finance of an incentive payment application that 
  3.24  establishes that the applicant is eligible to receive an 
  3.25  incentive payment and that satisfies other requirements the 
  3.26  commissioner deems necessary.  The application must be in a form 
  3.27  and submitted at a time the commissioner establishes.  
  3.28     (c) There is annually appropriated from the general fund to 
  3.29  the commissioner of finance sums sufficient to make the payments 
  3.30  required under this section. 
  3.31     (d) The commissioner of commerce shall assess all utilities 
  3.32  that provide retail electric service in this state, proportional 
  3.33  to their share of retail electric sales in the state, an amount 
  3.34  sufficient to make the incentive payments under this section for 
  3.35  megawatts of nameplate capacity in excess of 100.  The 
  3.36  commissioner shall use the procedures developed under sections 
  4.1   216B.62 and 216B.63 to collect the assessments but shall 
  4.2   separately identify the amounts assessed under this section.  
  4.3   Amounts assessed under this section are in addition to the 
  4.4   amounts assessed under section 216B.62 and must be deposited in 
  4.5   the general fund.  
  4.6      (e) For the purposes of meeting its obligations under the 
  4.7   renewable energy objective in section 216B.1691, each electric 
  4.8   utility may claim one renewable energy kilowatt hour for each 
  4.9   3-1/2 cents assessed and paid under this subdivision.  
  4.10     Sec. 3.  Minnesota Statutes 2002, section 216C.41, 
  4.11  subdivision 3, is amended to read: 
  4.12     Subd. 3.  [ELIGIBILITY WINDOW.] Payments may be made under 
  4.13  this section only for electricity generated: 
  4.14     (1) from a qualified hydroelectric facility that is 
  4.15  operational and generating electricity before December 31, 2005; 
  4.16     (2) from a qualified wind energy conversion facility that 
  4.17  is operational and generating electricity before January 1, 2005 
  4.18  2007; or 
  4.19     (3) from a qualified on-farm biogas recovery facility from 
  4.20  July 1, 2001, through December 31, 2015 2017. 
  4.21     Sec. 4.  Minnesota Statutes 2002, section 216C.41, 
  4.22  subdivision 4, is amended to read: 
  4.23     Subd. 4.  [PAYMENT PERIOD.] (a) A facility may receive 
  4.24  payments under this section for a ten-year period.  No payment 
  4.25  under this section may be made for electricity generated: 
  4.26     (1) by a qualified hydroelectric facility after December 
  4.27  31, 2015; 
  4.28     (2) by a qualified wind energy conversion facility after 
  4.29  December 31, 2015 2017; or 
  4.30     (3) by a qualified on-farm biogas recovery facility after 
  4.31  December 31, 2015 2017.  
  4.32     (b) The payment period begins and runs consecutively from 
  4.33  the first year in which electricity generated from the facility 
  4.34  is eligible for incentive payment the date the facility begins 
  4.35  generating electricity or, in the case of refurbishment of a 
  4.36  hydropower facility, after substantial repairs to the hydropower 
  5.1   facility dam funded by the incentive payments are initiated. 
  5.2      Sec. 5.  Minnesota Statutes 2002, section 216C.41, 
  5.3   subdivision 5, is amended to read: 
  5.4      Subd. 5.  [AMOUNT OF PAYMENT; WIND FACILITIES LIMIT.] (a) 
  5.5   An incentive payment is based on the number of kilowatt hours of 
  5.6   electricity generated. The amount of the payment is: 
  5.7      (1) for a facility described under subdivision 2, paragraph 
  5.8   (a), clause (4), 1.0 cent per kilowatt hour; and 
  5.9      (2) for all other facilities, 1.5 cents per kilowatt hour.  
  5.10  For electricity generated by qualified wind energy conversion 
  5.11  facilities greater than 40 kilowatts nameplate capacity, the 
  5.12  incentive payment under this section is limited to no more 
  5.13  than 100 250 megawatts of nameplate capacity.  During any period 
  5.14  in which qualifying claims for incentive payments exceed 100 
  5.15  megawatts of nameplate capacity, the payments must be made to 
  5.16  producers in the order in which the production capacity was 
  5.17  brought into production.  
  5.18     (b) For wind energy conversion systems installed and 
  5.19  contracted for after January 1, 2002, the total size of a wind 
  5.20  energy conversion system under this section must be determined 
  5.21  according to this paragraph.  Unless the systems are 
  5.22  interconnected with different distribution systems, the 
  5.23  nameplate capacity of one wind energy conversion system must be 
  5.24  combined with the nameplate capacity of any other wind energy 
  5.25  conversion system that is: 
  5.26     (1) located within five miles of the wind energy conversion 
  5.27  system; 
  5.28     (2) constructed within the same calendar year as the wind 
  5.29  energy conversion system; and 
  5.30     (3) under common ownership. 
  5.31  In the case of a dispute, the commissioner of commerce shall 
  5.32  determine the total size of the system, and shall draw all 
  5.33  reasonable inferences in favor of combining the systems. 
  5.34     (c) In making a determination under paragraph (b), the 
  5.35  commissioner of commerce may determine that two wind energy 
  5.36  conversion systems are under common ownership when the 
  6.1   underlying ownership structure contains similar persons or 
  6.2   entities, even if the ownership shares differ between the two 
  6.3   systems.  Wind energy conversion systems are not under common 
  6.4   ownership solely because the same person or entity provided 
  6.5   equity financing for the systems. 
  6.6      (d) A qualified wind energy conversion system is eligible 
  6.7   for the incentive on the date the commissioner receives: 
  6.8      (1) an application for payment of the incentive; 
  6.9      (2) one of the following: 
  6.10     (i) a copy of a signed power purchase agreement; 
  6.11     (ii) a copy of a binding agreement other than a power 
  6.12  purchase agreement to sell electricity generated by the facility 
  6.13  to a third person; or 
  6.14     (iii) if the facility developer or owner will sell 
  6.15  electricity to its own members or customers, a copy of the 
  6.16  purchase order for equipment to construct the facility with a 
  6.17  delivery date and a copy of a signed receipt for a nonrefundable 
  6.18  deposit; and 
  6.19     (3) any other information the commissioner deems necessary 
  6.20  to determine whether the proposed facility qualifies for the 
  6.21  incentive under this section.  
  6.22     (e) The commissioner or the commissioner's designee shall 
  6.23  determine whether a facility qualifies for the incentive and 
  6.24  respond in writing to the applicant approving or denying the 
  6.25  application within 15 working days of receipt of the information 
  6.26  required in paragraph (d).  A facility that is not operational 
  6.27  within 18 months of receipt of a letter of approval is no longer 
  6.28  approved for the incentive.  The commissioner shall notify an 
  6.29  applicant of potential loss of approval not less than 60 days 
  6.30  prior to the end of the 18-month period.  Eligibility for a 
  6.31  facility that loses approval may be reestablished as of the date 
  6.32  the commissioner receives a new completed application.  Approval 
  6.33  applies only to the person or persons who applied for the 
  6.34  incentive and may not be transferred to any other person or 
  6.35  persons. 
  6.36     Sec. 6.  [EFFECTIVE DATE.] 
  7.1      Sections 1 to 5 are effective the day following final 
  7.2   enactment.