1.1                          A bill for an act 
  1.2             relating to energy; declaring the goal of moving 
  1.3             Minnesota to a hydrogen energy economy; supporting 
  1.4             research and development related to hydrogen energy; 
  1.5             amending Minnesota Statutes 2002, sections 116C.779; 
  1.6             216B.1691, subdivision 1; 216B.241, subdivisions 1, 2; 
  1.7             216B.2422, subdivision 1; proposing coding for new law 
  1.8             in Minnesota Statutes, chapter 216B. 
  1.9   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.10     Section 1.  Minnesota Statutes 2002, section 116C.779, is 
  1.11  amended to read: 
  1.12     116C.779 [FUNDING FOR RENEWABLE DEVELOPMENT.] 
  1.13     Subdivision 1.  [RENEWABLE DEVELOPMENT ACCOUNT.] (a) The 
  1.14  public utility that operates the Prairie Island nuclear 
  1.15  generating plant must transfer to a renewable development 
  1.16  account $500,000 each year for each dry cask containing spent 
  1.17  fuel that is located at the independent spent fuel storage 
  1.18  installation at Prairie Island after January 1, 1999.  The fund 
  1.19  transfer must be made if waste is stored in a cask for any part 
  1.20  of a year.  Funds in the account may be expended only for 
  1.21  development of renewable energy sources.  Preference must be 
  1.22  given to development of renewable energy source projects located 
  1.23  within the state. 
  1.24     (b) Expenditures from the account may only be made after 
  1.25  approval by order of the public utilities commission upon a 
  1.26  petition by the public utility. 
  1.27     Subd. 2.  [HYDROGEN ECONOMY RESEARCH.] (a) $3,000,000 
  2.1   annually from the renewable development account must be 
  2.2   allocated to support basic and applied research at the Minnesota 
  2.3   hydrogen and renewables research center at the University of 
  2.4   Minnesota.  
  2.5      (b) Research funded under this subdivision must focus on: 
  2.6      (1) conversion of state wind resources to hydrogen for 
  2.7   energy storage and transportation to areas of energy demand; 
  2.8      (2) improvement of scalable hydrogen fuel cells for 
  2.9   stationary combined electricity generation and heating/cooling 
  2.10  function for residential and commercial use; and 
  2.11     (3) processing of agricultural and forestry plant products 
  2.12  for production of hydrogen and other fuels and sequestration of 
  2.13  carbon using a variety of means, including biocatalysis and 
  2.14  fermentation.  
  2.15     Sec. 2.  [216B.013] [HYDROGEN ENERGY ECONOMY GOAL.] 
  2.16     It is a goal of this state that Minnesota move to hydrogen 
  2.17  as an increasing source of energy for its electrical power, 
  2.18  heating, and transportation needs. 
  2.19     Sec. 3.  Minnesota Statutes 2002, section 216B.1691, 
  2.20  subdivision 1, is amended to read: 
  2.21     Subdivision 1.  [DEFINITIONS.] (a) "Eligible energy 
  2.22  technology" means an energy technology that: 
  2.23     (1) generates electricity from the following renewable 
  2.24  energy sources:  solar,; wind,; hydroelectric with a capacity of 
  2.25  less than 60 megawatts, or; biomass; or hydrogen, provided that 
  2.26  after January 1, 2010, the hydrogen must be generated from the 
  2.27  renewable energy resources otherwise identified in this clause; 
  2.28  and 
  2.29     (2) was not mandated by state law or commission order 
  2.30  enacted or issued prior to August 1, 2001. 
  2.31     (b) "Electric utility" means a public utility providing 
  2.32  electric service, a generation and transmission cooperative 
  2.33  electric association, or a municipal power agency. 
  2.34     Sec. 4.  Minnesota Statutes 2002, section 216B.241, 
  2.35  subdivision 1, is amended to read: 
  2.36     Subdivision 1.  [DEFINITIONS.] For purposes of this section 
  3.1   and section 216B.16, subdivision 6b, the terms defined in this 
  3.2   subdivision have the meanings given them.  
  3.3      (a) "Commission" means the public utilities commission. 
  3.4      (b) "Commissioner" means the commissioner of commerce. 
  3.5      (c) "Customer facility" means all buildings, structures, 
  3.6   equipment, and installations at a single site. 
  3.7      (d) "Department" means the department of commerce. 
  3.8      (e) "Energy conservation" means demand-side management of 
  3.9   energy supplies resulting in a net reduction in energy use.  
  3.10  Load management that reduces overall energy use is energy 
  3.11  conservation. 
  3.12     (f) "Energy conservation improvement" means a project that 
  3.13  results in energy conservation.  
  3.14     (g) "Investments and expenses of a public utility" includes 
  3.15  the investments and expenses incurred by a public utility in 
  3.16  connection with an energy conservation improvement, including 
  3.17  but not limited to:  
  3.18     (1) the differential in interest cost between the market 
  3.19  rate and the rate charged on a no-interest or below-market 
  3.20  interest loan made by a public utility to a customer for the 
  3.21  purchase or installation of an energy conservation improvement; 
  3.22     (2) the difference between the utility's cost of purchase 
  3.23  or installation of energy conservation improvements and any 
  3.24  price charged by a public utility to a customer for such 
  3.25  improvements.  
  3.26     (h) "Large electric customer facility" means a customer 
  3.27  facility that imposes a peak electrical demand on an electric 
  3.28  utility's system of not less than 20,000 kilowatts, measured in 
  3.29  the same way as the utility that serves the customer facility 
  3.30  measures electrical demand for billing purposes, and for which 
  3.31  electric services are provided at retail on a single bill by a 
  3.32  utility operating in the state. 
  3.33     (i) "Load management" means an activity, service, or 
  3.34  technology to change the timing or the efficiency of a 
  3.35  customer's use of energy that allows a utility or a customer to 
  3.36  respond to wholesale market fluctuations or to reduce the 
  4.1   overall demand for energy or capacity.  
  4.2      (j) "Renewable energy" has the meaning given in section 
  4.3   216B.2422, subdivision 1, paragraph (c).  
  4.4      Sec. 5.  Minnesota Statutes 2002, section 216B.241, 
  4.5   subdivision 2, is amended to read: 
  4.6      Subd. 2.  [PROGRAMS.] (a) The commissioner may require 
  4.7   public utilities to make investments and expenditures in energy 
  4.8   conservation improvements, explicitly setting forth the interest 
  4.9   rates, prices, and terms under which the improvements must be 
  4.10  offered to the customers.  The required programs must cover a 
  4.11  two-year period.  Public utilities shall file conservation 
  4.12  improvement plans by June 1, on a schedule determined by order 
  4.13  of the commissioner.  Plans received by a public utility by June 
  4.14  1 must be approved or approved as modified by the commissioner 
  4.15  by December 1 of that same year.  The commissioner shall give 
  4.16  special consideration and encouragement to programs that bring 
  4.17  about significant net savings through the use of 
  4.18  energy-efficient lighting.  The commissioner shall evaluate the 
  4.19  program on the basis of cost effectiveness and the reliability 
  4.20  of technologies employed.  The commissioner's order must provide 
  4.21  to the extent practicable for a free choice, by consumers 
  4.22  participating in the program, of the device, method, material, 
  4.23  or project constituting the energy conservation improvement and 
  4.24  for a free choice of the seller, installer, or contractor of the 
  4.25  energy conservation improvement, provided that the device, 
  4.26  method, material, or project seller, installer, or contractor is 
  4.27  duly licensed, certified, approved, or qualified, including 
  4.28  under the residential conservation services program, where 
  4.29  applicable.  
  4.30     (b) The commissioner may require a utility to make an 
  4.31  energy conservation improvement investment or expenditure 
  4.32  whenever the commissioner finds that the improvement will result 
  4.33  in energy savings at a total cost to the utility less than the 
  4.34  cost to the utility to produce or purchase an equivalent amount 
  4.35  of new supply of energy.  The commissioner shall nevertheless 
  4.36  ensure that every public utility operate one or more programs 
  5.1   under periodic review by the department.  
  5.2      (c) Each public utility subject to subdivision 1a may spend 
  5.3   and invest annually up to ten percent of the total amount 
  5.4   required to be spent and invested on energy conservation 
  5.5   improvements under this section by the utility on research and 
  5.6   development projects that meet the definition of energy 
  5.7   conservation improvement in subdivision 1 and that are funded 
  5.8   directly by the public utility.  
  5.9      (d) A public utility may not spend for or invest in energy 
  5.10  conservation improvements that directly benefit a large electric 
  5.11  customer facility for which the commissioner has issued an 
  5.12  exemption pursuant to subdivision 1a, paragraph (b).  The 
  5.13  commissioner shall consider and may require a utility to 
  5.14  undertake a program suggested by an outside source, including a 
  5.15  political subdivision or a nonprofit or community organization. 
  5.16     (e) The commissioner may, by order, establish a list of 
  5.17  programs that may be offered as energy conservation improvements 
  5.18  by a public utility, municipal utility, cooperative electric 
  5.19  association, or other entity providing conservation services 
  5.20  pursuant to this section.  The list of programs may include 
  5.21  rebates for high-efficiency appliances, rebates or subsidies for 
  5.22  high-efficiency lamps, small business energy audits, and 
  5.23  building recommissioning.  The commissioner may, by order, 
  5.24  change this list to add or subtract programs as the commissioner 
  5.25  determines is necessary to promote efficient and effective 
  5.26  conservation programs. 
  5.27     (f) The commissioner shall ensure that a portion of the 
  5.28  money spent on residential conservation improvement programs is 
  5.29  devoted to programs that directly address the needs of renters 
  5.30  and low-income persons, in proportion to the amount the utility 
  5.31  has historically spent on such programs based on the most recent 
  5.32  three-year average relative to the utility's total conservation 
  5.33  spending under this section, unless an insufficient number of 
  5.34  appropriate programs are available. 
  5.35     (g) A utility, a political subdivision, or a nonprofit or 
  5.36  community organization that has suggested a program, the 
  6.1   attorney general acting on behalf of consumers and small 
  6.2   business interests, or a utility customer that has suggested a 
  6.3   program and is not represented by the attorney general under 
  6.4   section 8.33 may petition the commission to modify or revoke a 
  6.5   department decision under this section, and the commission may 
  6.6   do so if it determines that the program is not cost effective, 
  6.7   does not adequately address the residential conservation 
  6.8   improvement needs of low-income persons, has a long-range 
  6.9   negative effect on one or more classes of customers, or is 
  6.10  otherwise not in the public interest.  The commission shall 
  6.11  reject a petition that, on its face, fails to make a reasonable 
  6.12  argument that a program is not in the public interest. 
  6.13     (h) The commissioner may order a public utility to include, 
  6.14  with the filing of the utility's proposed conservation 
  6.15  improvement plan under paragraph (a), the results of an 
  6.16  independent audit of the utility's conservation improvement 
  6.17  programs and expenditures performed by the department or an 
  6.18  auditor with experience in the provision of energy conservation 
  6.19  and energy efficiency services approved by the commissioner and 
  6.20  chosen by the utility.  The audit must specify the energy 
  6.21  savings or increased efficiency in the use of energy within the 
  6.22  service territory of the utility that is the result of the 
  6.23  spending and investments.  The audit must evaluate the cost 
  6.24  effectiveness of the utility's conservation programs. 
  6.25     (i) Up to three percent of a utility's conservation 
  6.26  spending obligation under this section may be used for program 
  6.27  pre-evaluation, testing, and monitoring and program audit and 
  6.28  evaluation.  
  6.29     (j) Each public utility subject to subdivision 1a may spend 
  6.30  and invest annually up to five percent of the total amount 
  6.31  required to be spent and invested on energy conservation 
  6.32  improvements under this section on renewable energy research or 
  6.33  renewable energy production at a public school or public 
  6.34  institution of higher education.  
  6.35     Sec. 6.  Minnesota Statutes 2002, section 216B.2422, 
  6.36  subdivision 1, is amended to read: 
  7.1      Subdivision 1.  [DEFINITIONS.] (a) For purposes of this 
  7.2   section, the terms defined in this subdivision have the meanings 
  7.3   given them. 
  7.4      (b) "Utility" means an entity with the capability of 
  7.5   generating 100,000 kilowatts or more of electric power and 
  7.6   serving, either directly or indirectly, the needs of 10,000 
  7.7   retail customers in Minnesota.  Utility does not include federal 
  7.8   power agencies. 
  7.9      (c) "Renewable energy" means electricity generated through 
  7.10  use of any of the following resources: 
  7.11     (1) wind; 
  7.12     (2) solar; 
  7.13     (3) geothermal; 
  7.14     (4) hydro; 
  7.15     (5) trees or other vegetation; or 
  7.16     (6) landfill gas; or 
  7.17     (7) hydrogen, provided that after January 1, 2010, the 
  7.18  hydrogen must be generated from the resources identified in 
  7.19  clauses (1) through (6). 
  7.20     (d) "Resource plan" means a set of resource options that a 
  7.21  utility could use to meet the service needs of its customers 
  7.22  over a forecast period, including an explanation of the supply 
  7.23  and demand circumstances under which, and the extent to which, 
  7.24  each resource option would be used to meet those service needs.  
  7.25  These resource options include using, refurbishing, and 
  7.26  constructing utility plant and equipment, buying power generated 
  7.27  by other entities, controlling customer loads, and implementing 
  7.28  customer energy conservation. 
  7.29     (e) "Refurbish" means to rebuild or substantially modify an 
  7.30  existing electricity generating resource of 30 megawatts or 
  7.31  greater. 
  7.32     Sec. 7.  [DEPARTMENT OF TRADE AND ECONOMIC DEVELOPMENT; 
  7.33  PROGRAM DEVELOPMENT.] 
  7.34     The department of trade and economic development should 
  7.35  promote and encourage the development and attraction of 
  7.36  businesses engaged in the biocatalysis of agricultural and 
  8.1   forestry plant products for the production of hydrogen, the 
  8.2   manufacture of hydrogen fuel cells, and hydrogen electrolysis 
  8.3   from renewable energy sources.  The program may make use of 
  8.4   existing departmental programs, either alone or in combination. 
  8.5      Sec. 8.  [DEMONSTRATION PROJECT.] 
  8.6      (a) The University of Minnesota should promote the 
  8.7   construction of a hydrogen-to-electricity demonstration project 
  8.8   with the following components:  
  8.9      (1) commercial-scale windmill-powered electrolysis of water 
  8.10  to hydrogen; 
  8.11     (2) on-site storage of hydrogen and fuel cells for 
  8.12  hydrogen-to-electricity conversion to maintain the supply of 
  8.13  electricity in the absence of wind; 
  8.14     (3) a hydrogen pipeline of less than ten miles to a public 
  8.15  facility demonstration site; and 
  8.16     (4) a public facility with on-site hydrogen fuel cells 
  8.17  providing hydrogen-to-electricity and heating/cooling function.  
  8.18     (b) For purposes of this section, a "public facility" is a 
  8.19  municipal building, public school, state college or university, 
  8.20  or other public building. 
  8.21     Sec. 9.  [EFFECTIVE DATE.] 
  8.22     Sections 1 to 8 are effective the day following final 
  8.23  enactment.