1.1                          A bill for an act
  1.2             relating to energy; amending the definition of a 
  1.3             radioactive waste management facility; increasing 
  1.4             funding for renewable development; specifying the 
  1.5             applicability of the renewable development fund; 
  1.6             clarifying disconnection of residential utility; 
  1.7             authorizing sufficient dry cask storage capacity to 
  1.8             allow the nuclear reactors at the Prairie Island 
  1.9             nuclear generation facility to operate until the end 
  1.10            of their current licenses; modifying transmission 
  1.11            upgrade requirements; providing for environmental 
  1.12            review; modifying relicensing provisions; creating a 
  1.13            hydrogen production development program; providing for 
  1.14            township agreements; modifying duties of the 
  1.15            legislative energy task force; appropriating money; 
  1.16            amending Minnesota Statutes 2002, sections 116C.71, 
  1.17            subdivision 7; 116C.779; 216B.095; 216B.097, by adding 
  1.18            a subdivision; 216B.1645, by adding a subdivision; 
  1.19            216B.1691, subdivisions 1, 2, by adding subdivisions; 
  1.20            216B.241, subdivision 1b; 216B.2424, subdivision 5; 
  1.21            216B.243, subdivision 3b; 216C.051, subdivisions 2, 3, 
  1.22            6, 9, by adding a subdivision; 216C.052, subdivisions 
  1.23            2, 3; 216C.41, subdivisions 1, 2, 3, 4, 5, by adding a 
  1.24            subdivision; proposing coding for new law in Minnesota 
  1.25            Statutes, chapters 116C; 216B; repealing Minnesota 
  1.26            Statutes 2002, section 216C.051, subdivisions 1, 4, 5. 
  1.27  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.28     Section 1.  Minnesota Statutes 2002, section 116C.71, 
  1.29  subdivision 7, is amended to read: 
  1.30     Subd. 7.  [RADIOACTIVE WASTE MANAGEMENT FACILITY.] 
  1.31  "Radioactive waste management facility" means a geographic site, 
  1.32  including buildings, structures, and equipment in or upon which 
  1.33  radioactive waste is retrievably or irretrievably disposed by 
  1.34  burial in soil or permanently stored.  An independent spent fuel 
  1.35  storage installation located on the site of a Minnesota nuclear 
  1.36  generation facility for dry cask storage of spent nuclear fuel 
  2.1   generated solely by that facility is not a radioactive waste 
  2.2   management facility. 
  2.3      Sec. 2.  Minnesota Statutes 2002, section 116C.779, is 
  2.4   amended to read: 
  2.5      116C.779 [FUNDING FOR RENEWABLE DEVELOPMENT.] 
  2.6      Subdivision 1.  [RENEWABLE DEVELOPMENT FUND.] (a) The 
  2.7   public utility that operates owns the Prairie Island nuclear 
  2.8   generating plant must transfer to a renewable development 
  2.9   account $500,000 each year for each dry cask containing spent 
  2.10  fuel that is located at the independent spent fuel storage 
  2.11  installation at Prairie Island after January 1, 1999 $8,500,000 
  2.12  annually.  Beginning January 1, 2005, if a contracted biomass 
  2.13  project of 50 megawatts is terminated, the public utility shall 
  2.14  transfer an additional $11,000,000 per year to the renewable 
  2.15  development account.  The fund transfer must be made if nuclear 
  2.16  waste is stored in a dry cask at the independent spent fuel 
  2.17  storage facility at Prairie Island for any part of a year in 
  2.18  which the plant is in operation.  Funds in the account may be 
  2.19  expended only for development of renewable energy sources.  
  2.20  Preference must be given to development of renewable energy 
  2.21  source projects located within the state. 
  2.22     (b) Expenditures from the account may only be made after 
  2.23  approval by order of the public utilities commission upon a 
  2.24  petition by the public utility.  
  2.25     Subd. 2.  [HYDROGEN ECONOMY RESEARCH.] (a) Notwithstanding 
  2.26  subdivision 1, $2,500,000 annually from the renewable 
  2.27  development account must be allocated from unobligated funds in 
  2.28  the account as of June 30, 2003, to support basic and applied 
  2.29  research at the Minnesota hydrogen and renewables research 
  2.30  center at the University of Minnesota.  
  2.31     (b) Research funded under this subdivision must focus on: 
  2.32     (1) conversion of state wind resources to hydrogen for 
  2.33  energy storage and transportation to areas of energy demand; 
  2.34     (2) improvement of scalable hydrogen fuel cells for 
  2.35  stationary combined electricity generation and heating/cooling 
  2.36  function for residential and commercial use; and 
  3.1      (3) processing of agricultural and forestry plant products 
  3.2   for production of hydrogen and other fuels and sequestration of 
  3.3   carbon using a variety of means, including biocatalysis and 
  3.4   fermentation.  
  3.5      Subd. 3.  [WIND ENERGY PRODUCTION INCENTIVE.] (a) Until 
  3.6   January 1, 2018, up to $7,000,000 annually must be allocated 
  3.7   from available funds in the account to fund the renewable energy 
  3.8   production incentive for up to 150 megawatts of electricity 
  3.9   generated by wind energy conversion systems larger than 40 
  3.10  kilowatts in size that are eligible for the incentive under 
  3.11  section 216C.41.  Any portion of the $7,000,000 not expended in 
  3.12  any calendar year for the incentive is available for other 
  3.13  spending purposes under this section.  This subdivision does not 
  3.14  create an obligation to contribute funds to the account.  
  3.15     (b) The department of commerce shall determine eligibility 
  3.16  of projects under section 216C.41 for the purposes of this 
  3.17  subdivision.  At least quarterly, the department of commerce 
  3.18  shall notify the public utility of the name and address of each 
  3.19  eligible project owner and the amount due to each project under 
  3.20  section 216C.41.  The public utility shall make payments within 
  3.21  15 working days after receipt of notification of payments due.  
  3.22  Payments made more than 15 working days following receipt of 
  3.23  notification of payments due must include late fees of: 
  3.24     (1) five percent for payments made up to 20 working days of 
  3.25  notification; 
  3.26     (2) ten percent for payments made up to 25 working days of 
  3.27  notification; and 
  3.28     (3) 25 percent for payments made after 25 working days of 
  3.29  notification.  
  3.30     Late fees required under this section may not be charged to 
  3.31  the renewable development account and may not be recovered from 
  3.32  ratepayers. 
  3.33     Sec. 3.  [116C.83] [AUTHORIZATION FOR ADDITIONAL DRY CASK 
  3.34  STORAGE.] 
  3.35     Subdivision 1.  [AUTHORIZATION TO END OF CURRENT PRAIRIE 
  3.36  ISLAND LICENSE.] (a) Subject to the cask storage limits of the 
  4.1   federal license for the independent spent fuel storage 
  4.2   installation at Prairie Island, the public utility that owns the 
  4.3   Prairie Island nuclear generation plant has authorization for 
  4.4   sufficient dry cask storage capacity at that installation to 
  4.5   allow:  
  4.6      (1) the unit 1 reactor at Prairie Island to operate until 
  4.7   the end of its current license in 2013; and 
  4.8      (2) the unit 2 reactor at Prairie Island to operate until 
  4.9   the end of its current license in 2014. 
  4.10     (b) A settlement agreement between the Mdewakanton Dakota 
  4.11  Tribal Council at Prairie Island, a federally recognized Indian 
  4.12  Tribe, and the public utility, to resolve outstanding issues 
  4.13  with respect to the provisions of Laws 1994, chapter 641, 
  4.14  article 1, section 4, shall provide for payments to be used for, 
  4.15  among other purposes, acquiring land in the state of Minnesota 
  4.16  for placement in trust.  
  4.17     Subd. 2.  [COMMISSION AND LEGISLATIVE PROCESS FOR FUTURE 
  4.18  ADDITIONAL AUTHORIZATION.] Authorization of any additional dry 
  4.19  cask storage other than that provided for in subdivision 1, or 
  4.20  expansion or establishment of an independent spent fuel storage 
  4.21  facility at a nuclear generation facility in this state is 
  4.22  subject to approval of a certificate of need by the public 
  4.23  utilities commission pursuant to section 216B.243.  In any 
  4.24  proceeding under this subdivision, the commission may make a 
  4.25  decision that could result in a shutdown of a nuclear generating 
  4.26  facility.  An authorization required by this subdivision is not 
  4.27  effective until ratified by a law that contains no other 
  4.28  provision than the ratification required by this subdivision.  
  4.29  Legislative ratification is not required for that part of a 
  4.30  certificate of need that authorizes the fabrication of spent 
  4.31  fuel storage casks. 
  4.32     Subd. 3.  [OTHER CONDITIONS.] (a) The storage of spent 
  4.33  nuclear fuel in the pool and in dry casks at a nuclear 
  4.34  generating plant must be managed to facilitate the shipment of 
  4.35  waste out of state to a permanent or interim storage facility as 
  4.36  soon as feasible in a manner that allows the continued operation 
  5.1   of the plant consistent with sections 116C.71 to 116C.83 and 
  5.2   216B.1645, subdivision 2. 
  5.3      (b) The authorization for storage capacity pursuant to this 
  5.4   section is limited to the storage of spent nuclear fuel 
  5.5   generated by a Minnesota nuclear generation facility and stored 
  5.6   on the site of that facility. 
  5.7      Subd. 4.  [WATER STANDARDS.] The standards established in 
  5.8   section 116C.76, subdivision 1, clauses (1) to (3), apply to an 
  5.9   independent spent fuel installation.  Such an installation must 
  5.10  be operated in accordance with those standards. 
  5.11     Subd. 5.  [ENVIRONMENTAL REVIEW AND PROTECTION.] (a) The 
  5.12  siting, construction, and operation of an independent spent fuel 
  5.13  storage installation located on the site of a Minnesota 
  5.14  generation facility for dry cask storage of spent nuclear fuel 
  5.15  generated solely by that facility is subject to all 
  5.16  environmental review and protection provisions of chapters 115, 
  5.17  115B, 116, 116B, 116C, 116D, and 216B and rules associated with 
  5.18  those chapters, except those statutes and rules that apply 
  5.19  specifically to a radioactive waste management facility as 
  5.20  defined in section 116C.71, subdivision 7. 
  5.21     (b) An environmental impact statement is required under 
  5.22  chapter 116D for a proposal to construct and operate a new or 
  5.23  expanded independent spent fuel storage installation.  The 
  5.24  environmental quality board shall be the responsible 
  5.25  governmental unit for the environmental impact statement.  Prior 
  5.26  to finding the statement adequate, the board must find that the 
  5.27  applicant has demonstrated that the facility is designed to 
  5.28  provide a reasonable expectation that the operation of the 
  5.29  facility will not result in groundwater contamination in excess 
  5.30  of the standards established in section 116C.76, subdivision 1, 
  5.31  clauses (1) to (3). 
  5.32     Sec. 4.  [216B.013] [HYDROGEN ENERGY ECONOMY GOAL.] 
  5.33     It is a goal of this state that Minnesota move to hydrogen 
  5.34  as an increasing source of energy for its electrical power, 
  5.35  heating, and transportation needs. 
  5.36     Sec. 5.  Minnesota Statutes 2002, section 216B.095, is 
  6.1   amended to read: 
  6.2      216B.095 [DISCONNECTION DURING COLD WEATHER.] 
  6.3      The commission shall amend its rules governing 
  6.4   disconnection of residential utility customers who are unable to 
  6.5   pay for utility service during cold weather to include the 
  6.6   following: 
  6.7      (1) coverage of customers whose household income is less 
  6.8   than 50 percent of the state median income; 
  6.9      (2) a requirement that a customer who pays the utility at 
  6.10  least ten percent of the customer's income or the full amount of 
  6.11  the utility bill, whichever is less, in a cold weather month 
  6.12  cannot be disconnected during that month.  The customer's income 
  6.13  means the actual monthly income of the customer or the average 
  6.14  monthly income of the customer computed on an annual calendar 
  6.15  year, whichever is less, and does not include any amount 
  6.16  received for energy assistance; 
  6.17     (3) that the ten percent figure in clause (2) must be 
  6.18  prorated between energy providers proportionate to each 
  6.19  provider's share of the customer's total energy costs where the 
  6.20  customer receives service from more than one provider; 
  6.21     (4) verification of income by the local energy assistance 
  6.22  provider or the utility, unless the customer is automatically 
  6.23  eligible for protection against disconnection as a recipient of 
  6.24  any form of public assistance, including energy assistance, that 
  6.25  uses income eligibility in an amount at or below the income 
  6.26  eligibility in clause (1); 
  6.27     (5) a requirement that the customer receive referrals to 
  6.28  energy assistance, weatherization, conservation, or other 
  6.29  programs likely to reduce the customer's energy bills; and 
  6.30     (6) a requirement that customers who have demonstrated an 
  6.31  inability to pay on forms provided for that purpose by the 
  6.32  utility, and who make reasonably timely payments to the utility 
  6.33  under a payment plan that considers the financial resources of 
  6.34  the household, cannot be disconnected from utility service from 
  6.35  October 15 through April 15.  A customer who is receiving energy 
  6.36  assistance is deemed to have demonstrated an inability to pay. 
  7.1      For the purposes of this section, disconnection includes a 
  7.2   service or load limiter or any device that limits or interrupts 
  7.3   electric service in any way. 
  7.4      Sec. 6.  Minnesota Statutes 2002, section 216B.097, is 
  7.5   amended by adding a subdivision to read: 
  7.6      Subd. 4.  [APPLICATION TO SERVICE LIMITERS.] For the 
  7.7   purposes of this section, disconnection includes a service or 
  7.8   load limiter or any device that limits or interrupts electric 
  7.9   service in any way. 
  7.10     Sec. 7.  [216B.0975] [DISCONNECTION DURING EXTREME HEAT 
  7.11  CONDITIONS; RECONNECTION.] 
  7.12     A utility may not effect an involuntary disconnection of 
  7.13  services in affected counties when an excessive heat watch, heat 
  7.14  advisory, or excessive heat warning issued by the national 
  7.15  weather service is in effect.  For purposes of this section, 
  7.16  "utility" means a public utility providing electric service, 
  7.17  municipal utility, or cooperative electric association. 
  7.18     Sec. 8.  Minnesota Statutes 2002, section 216B.1645, is 
  7.19  amended by adding a subdivision to read: 
  7.20     Subd. 4.  [SETTLEMENT WITH MDEWAKANTON DAKOTA TRIBAL 
  7.21  COUNCIL AT PRAIRIE ISLAND.] The commission shall approve a rate 
  7.22  schedule providing for the automatic adjustment of charges to 
  7.23  recover the costs or expenses of a settlement between the public 
  7.24  utility that owns the Prairie Island nuclear generation facility 
  7.25  and the Mdewakanton Dakota Tribal Council at Prairie Island, 
  7.26  resolving outstanding disputes regarding the provisions of Laws 
  7.27  1994, chapter 641, article 1, section 4.  The settlement must 
  7.28  provide for annual payments, not to exceed $2,500,000 annually 
  7.29  by the public utility to the Prairie Island Indian Community, to 
  7.30  be used for, among other purposes, acquiring up to 1,500 
  7.31  contiguous or noncontiguous acres of land in the state of 
  7.32  Minnesota within 50 miles of the tribal community's reservation 
  7.33  at Prairie Island to be taken into trust by the federal 
  7.34  government for the benefit of the tribal community for housing 
  7.35  and other residential purposes.  The legislature acknowledges 
  7.36  that the intent to purchase land by the tribe for relocation 
  8.1   purposes is part of the settlement agreement and this 
  8.2   legislation.  However, the state, through the governor, reserves 
  8.3   the right to support or oppose any particular application to 
  8.4   place land in trust status. 
  8.5      Sec. 9.  Minnesota Statutes 2002, section 216B.1691, 
  8.6   subdivision 1, is amended to read: 
  8.7      Subdivision 1.  [DEFINITIONS.] (a) "Eligible energy 
  8.8   technology" means an energy technology that: 
  8.9      (1) generates electricity from the following renewable 
  8.10  energy sources:  solar,; wind,; hydroelectric with a capacity of 
  8.11  less than 60 megawatts,; or biomass, which shall include an 
  8.12  energy recovery facility used to capture the heat value of mixed 
  8.13  municipal solid waste or refuse-derived fuel from mixed 
  8.14  municipal solid waste as a primary fuel; and 
  8.15     (2) was not mandated by state energy law or commission 
  8.16  order enacted or issued prior to August 1, 2001. 
  8.17     (b) "Electric utility" means a public utility providing 
  8.18  electric service, a generation and transmission cooperative 
  8.19  electric association, or a municipal power agency. 
  8.20     Sec. 10.  Minnesota Statutes 2002, section 216B.1691, 
  8.21  subdivision 2, is amended to read: 
  8.22     Subd. 2.  [ELIGIBLE ENERGY OBJECTIVES.] (a) Each electric 
  8.23  utility shall make a good faith effort to generate or procure 
  8.24  sufficient electricity generated by an eligible energy 
  8.25  technology to provide its retail consumers, or the retail 
  8.26  members of a distribution utility to which the electric utility 
  8.27  provides wholesale electric service, so that: 
  8.28     (1) commencing in 2005, at least one percent of the 
  8.29  electric energy provided to those retail customers is generated 
  8.30  by eligible energy technologies; 
  8.31     (2) the amount provided under clause (1) is increased by 
  8.32  one percent each year until 2015; 
  8.33     (3) ten percent of the electric energy provided to retail 
  8.34  customers in Minnesota is generated by eligible energy 
  8.35  technologies; and 
  8.36     (4) of the eligible energy technology generation required 
  9.1   under clauses (1) and (2), at least not less than 0.5 percent of 
  9.2   the energy must be generated by biomass energy technologies, 
  9.3   including an energy recovery facility used to capture the heat 
  9.4   value of mixed municipal solid waste or refuse-derived fuel from 
  9.5   mixed municipal solid waste as a primary fuel, by 2010 and one 
  9.6   percent by 2015 2005.  By 2010, 1.0 percent of the eligible 
  9.7   energy technology generation required under clauses (1) and (2) 
  9.8   shall be generated by the sources described in this clause.  An 
  9.9   energy recovery facility, as described in subdivision 1, clause 
  9.10  (1), with a power sales agreement in effect as of the date of 
  9.11  this act that terminates after December 31, 2010, does not 
  9.12  qualify as an eligible energy technology unless the agreement 
  9.13  provides for rate adjustment in the event the facility qualifies 
  9.14  as a renewable energy source. 
  9.15     (b) Each electric utility shall report on its activities 
  9.16  and progress with regard to these objectives in their filings 
  9.17  under section 216B.2422. 
  9.18     (c) The commission, in consultation with the commissioner 
  9.19  of commerce, shall compile the information provided to the 
  9.20  commission under paragraph (b), and report to the chairs of the 
  9.21  house of representatives and senate committees with jurisdiction 
  9.22  over energy and environment policy issues as to the progress of 
  9.23  utilities in the state in increasing the amount of renewable 
  9.24  energy provided to retail customers, with any recommendations 
  9.25  for regulatory or legislative action, by January 15, 2002. 
  9.26     Sec. 11.  Minnesota Statutes 2002, section 216B.1691, is 
  9.27  amended by adding a subdivision to read: 
  9.28     Subd. 3.  [REQUIREMENT.] The good faith objective set forth 
  9.29  in subdivision 2 shall be a requirement for the public utility 
  9.30  that owns the Prairie Island nuclear generation plant.  The 
  9.31  objective is a requirement to the extent that the eligible 
  9.32  resources are the utility's least cost resource, including the 
  9.33  costs of ancillary services and other generation and 
  9.34  transmission upgrades necessary to manage the intermittent 
  9.35  nature of certain renewable resources or implementation of the 
  9.36  objective can reasonably be shown to jeopardize the reliability 
 10.1   of the electric system. 
 10.2      Sec. 12.  Minnesota Statutes 2002, section 216B.1691, is 
 10.3   amended by adding a subdivision to read: 
 10.4      Subd. 4.  [TRANSMISSION.] (a) Each public electric utility 
 10.5   shall determine necessary transmission upgrades to support 
 10.6   development of renewable energy resources required to meet the 
 10.7   renewable energy objective under this section and shall: 
 10.8      (1) seek approval for those upgrades from the appropriate 
 10.9   regional transmission entity or entities at the earliest 
 10.10  practicable date; and 
 10.11     (2) submit to the commission an application for 
 10.12  certificates of need for those transmission upgrades, with a 
 10.13  firm schedule for construction, not later than January 1, 2005. 
 10.14     (b) Transmission capacity upgrades under paragraph (a) 
 10.15  qualify for rate treatment provided under section 216B.1645, 
 10.16  provided the utility coordinates the construction of the 
 10.17  transmission capacity with the signing of power purchase 
 10.18  agreements for wind generation. 
 10.19     Sec. 13.  Minnesota Statutes 2002, section 216B.241, 
 10.20  subdivision 1b, is amended to read: 
 10.21     Subd. 1b.  [CONSERVATION IMPROVEMENT BY COOPERATIVE 
 10.22  ASSOCIATION OR MUNICIPALITY.] (a) This subdivision applies to: 
 10.23     (1) a cooperative electric association that provides retail 
 10.24  service to its members; 
 10.25     (2) a municipality that provides electric service to retail 
 10.26  customers; and 
 10.27     (3) a municipality with gross operating revenues in excess 
 10.28  of $5,000,000 from sales of natural gas to retail customers.  
 10.29     (b) Each cooperative electric association and municipality 
 10.30  subject to this subdivision shall spend and invest for energy 
 10.31  conservation improvements under this subdivision the following 
 10.32  amounts: 
 10.33     (1) for a municipality, 0.5 percent of its gross operating 
 10.34  revenues from the sale of gas and 1.5 percent of its gross 
 10.35  operating revenues from the sale of electricity, excluding gross 
 10.36  operating revenues from electric and gas service provided in the 
 11.1   state to large electric customer facilities; and 
 11.2      (2) for a cooperative electric association, 1.5 percent of 
 11.3   its gross operating revenues from service provided in the state, 
 11.4   excluding gross operating revenues from service provided in the 
 11.5   state to large electric customer facilities indirectly through a 
 11.6   distribution cooperative electric association. 
 11.7      (c) Each municipality and cooperative electric association 
 11.8   subject to this subdivision shall identify and implement energy 
 11.9   conservation improvement spending and investments that are 
 11.10  appropriate for the municipality or association, except that a 
 11.11  municipality or association may not spend or invest for energy 
 11.12  conservation improvements that directly benefit a large electric 
 11.13  customer facility for which the commissioner has issued an 
 11.14  exemption under subdivision 1a, paragraph (b). 
 11.15     (d) Each municipality and cooperative electric association 
 11.16  subject to this subdivision may spend and invest annually up to 
 11.17  ten percent of the total amount required to be spent and 
 11.18  invested on energy conservation improvements under this 
 11.19  subdivision on research and development projects that meet the 
 11.20  definition of energy conservation improvement in subdivision 1 
 11.21  and that are funded directly by the municipality or cooperative 
 11.22  electric association.  
 11.23     (e) Load-management activities that do not reduce energy 
 11.24  use but that increase the efficiency of the electric system may 
 11.25  be used to meet the following percentage of the conservation 
 11.26  investment and spending requirements of this subdivision: 
 11.27     (1) 2002 - 90 percent; 
 11.28     (2) 2003 - 80 percent; 
 11.29     (3) 2004 - 65 percent; and 
 11.30     (4) 2005 and thereafter - 50 percent. 
 11.31     (f) A generation and transmission cooperative electric 
 11.32  association that provides energy services to cooperative 
 11.33  electric associations that provide electric service at retail to 
 11.34  consumers may invest in energy conservation improvements on 
 11.35  behalf of the associations it serves and may fulfill the 
 11.36  conservation, spending, reporting, and energy savings goals on 
 12.1   an aggregate basis.  A municipal power agency or other 
 12.2   not-for-profit entity that provides energy service to municipal 
 12.3   utilities that provide electric service at retail may invest in 
 12.4   energy conservation improvements on behalf of the municipal 
 12.5   utilities it serves and may fulfill the conservation, spending, 
 12.6   reporting, and energy savings goals on an aggregate basis, under 
 12.7   an agreement between the municipal power agency or 
 12.8   not-for-profit entity and each municipal utility for funding the 
 12.9   investments. 
 12.10     (g) By June 1, 2002, and every two years thereafter, each 
 12.11  municipality or cooperative shall file an overview of its 
 12.12  conservation improvement plan with the commissioner.  With this 
 12.13  overview, the municipality or cooperative shall also provide an 
 12.14  evaluation to the commissioner detailing its energy conservation 
 12.15  improvement spending and investments for the previous period.  
 12.16  The evaluation must briefly describe each conservation program 
 12.17  and must specify the energy savings or increased efficiency in 
 12.18  the use of energy within the service territory of the utility or 
 12.19  association that is the result of the spending and investments.  
 12.20  The evaluation must analyze the cost effectiveness of the 
 12.21  utility's or association's conservation programs, using a list 
 12.22  of baseline energy and capacity savings assumptions developed in 
 12.23  consultation with the department. 
 12.24  The commissioner shall review each evaluation and make 
 12.25  recommendations, where appropriate, to the municipality or 
 12.26  association to increase the effectiveness of conservation 
 12.27  improvement activities.  Up to three percent of a utility's 
 12.28  conservation spending obligation under this section may be used 
 12.29  for program pre-evaluation, testing, and monitoring and program 
 12.30  evaluation.  The overview filed by a municipality with less than 
 12.31  $2,500,000 in annual gross revenues from the retail sale of 
 12.32  electric service may consist of a letter from the governing 
 12.33  board of the municipal utility to the department providing the 
 12.34  amount of annual conservation spending required of that 
 12.35  municipality and certifying that the required amount has been 
 12.36  spent on conservation programs pursuant to this subdivision.  
 13.1      (h) The commissioner shall also review each evaluation for 
 13.2   whether a portion of the money spent on residential conservation 
 13.3   improvement programs is devoted to programs that directly 
 13.4   address the needs of renters and low-income persons unless an 
 13.5   insufficient number of appropriate programs are available.  For 
 13.6   the purposes of this subdivision and subdivision 2, "low-income" 
 13.7   means an income at or below 50 percent of the state median 
 13.8   income.  
 13.9      (i) As part of its spending for conservation improvement, a 
 13.10  municipality or association may contribute to the energy and 
 13.11  conservation account.  A municipality or association may propose 
 13.12  to the commissioner to designate that all or a portion of funds 
 13.13  contributed to the account be used for research and development 
 13.14  projects that can best be implemented on a statewide basis.  Any 
 13.15  amount contributed must be remitted to the commissioner by 
 13.16  February 1 of each year. 
 13.17     (j) A municipality may spend up to 50 percent of its 
 13.18  required spending under this section to refurbish an existing 
 13.19  district heating or cooling system. 
 13.20     Sec. 14.  Minnesota Statutes 2002, section 216B.2424, 
 13.21  subdivision 5, is amended to read: 
 13.22     Subd. 5.  [MANDATE.] (a) A public utility, as defined in 
 13.23  section 216B.02, subdivision 4, that operates a nuclear-powered 
 13.24  electric generating plant within this state must construct and 
 13.25  operate, purchase, or contract to construct and operate (1) by 
 13.26  December 31, 1998, 50 megawatts of electric energy installed 
 13.27  capacity generated by farm-grown closed-loop biomass scheduled 
 13.28  to be operational by December 31, 2001; and (2) by December 31, 
 13.29  1998, an additional 75 megawatts of installed capacity so 
 13.30  generated scheduled to be operational by December 31, 2002.  
 13.31     (b) Of the 125 megawatts of biomass electricity installed 
 13.32  capacity required under this subdivision, no more than 50 55 
 13.33  megawatts of this capacity may be provided by a facility that 
 13.34  uses poultry litter as its primary fuel source and any such 
 13.35  facility:  
 13.36     (1) need not use biomass that complies with the definition 
 14.1   in subdivision 1; 
 14.2      (2) must enter into a contract with the public utility for 
 14.3   such capacity, that has an average purchase price per megawatt 
 14.4   hour over the life of the contract that is equal to or less than 
 14.5   the average purchase price per megawatt hour over the life of 
 14.6   the contract in contracts approved by the public utilities 
 14.7   commission before April 1, 2000, to satisfy the mandate of this 
 14.8   section, and file that contract with the public utilities 
 14.9   commission prior to September 1, 2000; and 
 14.10     (3) must schedule such capacity to be operational by 
 14.11  December 31, 2002.  
 14.12     (c) Of the total 125 megawatts of biomass electric energy 
 14.13  installed capacity required under this section, no more than 75 
 14.14  megawatts may be provided by a single project.  
 14.15     (d) Of the 75 megawatts of biomass electric energy 
 14.16  installed capacity required under paragraph (a), clause (2), no 
 14.17  more than 25 33 megawatts of this capacity may be provided by a 
 14.18  St. Paul district heating and cooling system cogeneration 
 14.19  facility utilizing waste wood as a primary fuel source.  The St. 
 14.20  Paul district heating and cooling system cogeneration facility 
 14.21  need not use biomass that complies with the definition in 
 14.22  subdivision 1.  
 14.23     (e) The public utility must accept and consider on an equal 
 14.24  basis with other biomass proposals: 
 14.25     (1) a proposal to satisfy the requirements of this section 
 14.26  that includes a project that exceeds the megawatt capacity 
 14.27  requirements of either paragraph (a), clause (1) or (2), and 
 14.28  that proposes to sell the excess capacity to the public utility 
 14.29  or to other purchasers; and 
 14.30     (2) a proposal for a new facility to satisfy more than ten 
 14.31  but not more than 20 megawatts of the electrical generation 
 14.32  requirements by a small business-sponsored independent power 
 14.33  producer facility to be located within the northern quarter of 
 14.34  the state, which means the area located north of Constitutional 
 14.35  Route No. 8 as described in section 161.114, subdivision 2, and 
 14.36  that utilizes biomass residue wood, sawdust, bark, chipped wood, 
 15.1   or brush to generate electricity.  A facility described in this 
 15.2   clause is not required to utilize biomass complying with the 
 15.3   definition in subdivision 1, but must have the capacity required 
 15.4   by this clause operational by December 31, 2002. 
 15.5      (f) If a public utility files a contract with the 
 15.6   commission for electric energy installed capacity that uses 
 15.7   poultry litter as its primary fuel source, the commission must 
 15.8   do a preliminary review of the contract to determine if it meets 
 15.9   the purchase price criteria provided in paragraph (b), clause 
 15.10  (2), of this subdivision.  The commission shall perform its 
 15.11  review and advise the parties of its determination within 30 
 15.12  days of filing of such a contract by a public utility.  A public 
 15.13  utility may submit by September 1, 2000, a revised contract to 
 15.14  address the commission's preliminary determination.  
 15.15     (g) The commission shall finally approve, modify, or 
 15.16  disapprove no later than July 1, 2001, all contracts submitted 
 15.17  by a public utility as of September 1, 2000, to meet the mandate 
 15.18  set forth in this subdivision.  
 15.19     (h) If a public utility subject to this section exercises 
 15.20  an option to increase the generating capacity of a project in a 
 15.21  contract approved by the commission prior to April 25, 2000, to 
 15.22  satisfy the mandate in this subdivision, the public utility must 
 15.23  notify the commission by September 1, 2000, that it has 
 15.24  exercised the option and include in the notice the amount of 
 15.25  additional megawatts to be generated under the option 
 15.26  exercised.  Any review by the commission of the project after 
 15.27  exercise of such an option shall be based on the same criteria 
 15.28  used to review the existing contract. 
 15.29     (i) A facility specified in this subdivision qualifies for 
 15.30  exemption from property taxation under section 272.02, 
 15.31  subdivision 43. 
 15.32     Sec. 15.  Minnesota Statutes 2002, section 216B.243, 
 15.33  subdivision 3b, is amended to read: 
 15.34     Subd. 3b.  [NUCLEAR POWER PLANT; NEW CONSTRUCTION 
 15.35  PROHIBITED; RELICENSING.] (a) The commission may not issue a 
 15.36  certificate of need for the construction of a new 
 16.1   nuclear-powered electric generating plant. 
 16.2      (b) Any certificate of need for additional storage of spent 
 16.3   nuclear fuel for a facility seeking a license extension shall 
 16.4   address the impacts of continued operations over the period for 
 16.5   which approval is sought. 
 16.6      Sec. 16.  [216B.361] [TOWNSHIP AGREEMENT WITH NATURAL GAS 
 16.7   UTILITY.] 
 16.8      A township may enter into an agreement with a public 
 16.9   utility providing natural gas services to provide services 
 16.10  within a designated portion or all of the township.  If a city 
 16.11  annexes township land for which a utility has an agreement with 
 16.12  a township to serve, the utility shall continue to have a 
 16.13  nonexclusive right to offer and provide service in the area 
 16.14  identified by the agreement with the township for the term of 
 16.15  that agreement, subject to the authority of the annexing city to 
 16.16  manage public rights-of-way within the city as provided in 
 16.17  sections 216B.36, 237.162, and 237.163. 
 16.18     Nothing in this section precludes a city from acquiring the 
 16.19  property of a public utility under sections 216B.45 to 216B.47 
 16.20  for the purpose of allowing the city to own and operate a 
 16.21  natural gas utility, or to extend natural gas and other utility 
 16.22  services into newly annexed areas. 
 16.23     Sec. 17.  Minnesota Statutes 2002, section 216C.051, 
 16.24  subdivision 2, is amended to read: 
 16.25     Subd. 2.  [ESTABLISHMENT.] (a) There is established a 
 16.26  legislative electric energy task force to study future electric 
 16.27  energy sources and costs and to make recommendations for 
 16.28  legislation for an environmentally and economically sustainable 
 16.29  and advantageous electric energy supply. 
 16.30     (b) The task force consists of: 
 16.31     (1) ten eight members of the house of representatives 
 16.32  including the chairs of the environment and natural resources 
 16.33  committee and regulated industries subcommittee committees and 
 16.34  eight six members to be appointed by the speaker of the 
 16.35  house, four three of whom must be from the minority caucus; and 
 16.36     (2) ten eight members of the senate including the chairs of 
 17.1   the environment and natural resources and jobs, energy, and 
 17.2   community development commerce and utilities committees and 
 17.3   eight six members to be appointed by the subcommittee on 
 17.4   committees, four three of whom must be from the minority caucus. 
 17.5      (c) The task force may employ staff, contract for 
 17.6   consulting services, and may reimburse the expenses of persons 
 17.7   requested to assist it in its duties other than state employees 
 17.8   or employees of electric utilities.  The director of the 
 17.9   legislative coordinating commission shall assist the task force 
 17.10  in administrative matters.  The task force shall elect cochairs, 
 17.11  one member of the house and one member of the senate from among 
 17.12  the committee and subcommittee chairs named to the committee.  
 17.13  The task force members from the house shall elect the house 
 17.14  cochair, and the task force members from the senate shall elect 
 17.15  the senate cochair. 
 17.16     Sec. 18.  Minnesota Statutes 2002, section 216C.051, 
 17.17  subdivision 3, is amended to read: 
 17.18     Subd. 3.  [FUTURE ENERGY SOLUTIONS; TECHNICAL AND ECONOMIC 
 17.19  ANALYSIS.] (a) In light of the electric energy guidelines 
 17.20  established in subdivision 7 and in light of existing 
 17.21  conservation improvement programs and plans, utility resource 
 17.22  plans, and other existing energy plans and analyses, the 
 17.23  legislative task force on energy shall undertake an analysis of 
 17.24  the technical and economic feasibility of an electric energy 
 17.25  future for the state that relies on environmentally and 
 17.26  economically sustainable and advantageous electric energy supply 
 17.27  utility resource plans and competitive bidding dockets before 
 17.28  the commission, the task force shall gather information and make 
 17.29  recommendations to the legislature regarding potential electric 
 17.30  energy resources.  The task force shall may contract with one or 
 17.31  more energy policy experts and energy economists to assist it in 
 17.32  its analysis.  The task force may not contract for service nor 
 17.33  employ any person who was involved in any capacity in any 
 17.34  portion of any proceeding before the public utilities 
 17.35  commission, the administrative law judge, the state court of 
 17.36  appeals, or the United States Nuclear Regulatory Commission 
 18.1   related to the dry cask storage proposal on Prairie Island.  The 
 18.2   task force must gather information on at least the following 
 18.3   electric energy resources, but may expand its inquiry as 
 18.4   warranted by the information collected: 
 18.5      (1) wind energy; 
 18.6      (2) hydrogen as a fuel carrier produced from renewable and 
 18.7   fossil fuel resources; 
 18.8      (3) biomass; 
 18.9      (4) decomposition gases produced by solid waste management 
 18.10  facilities; 
 18.11     (5) solid waste as a direct fuel or refuse-derived fuel; 
 18.12  and 
 18.13     (6) clean coal technology.  
 18.14     (b) The analysis must address In evaluating these electric 
 18.15  energy resources, the task force must consider at least the 
 18.16  following: 
 18.17     (1) to the best of forecasting abilities, how much electric 
 18.18  generation capacity and demand for electric energy is necessary 
 18.19  to maintain a strong economy and a high quality of life in the 
 18.20  state over the next 15 to 20 years; how is this demand level 
 18.21  affected by achievement of the maximum reasonably feasible and 
 18.22  cost-effective demand side management and generation and 
 18.23  distribution efficiencies; 
 18.24     (2) what alternative forms of energy can provide a stable 
 18.25  supply of energy and are producible and sustainable in the state 
 18.26  and at what cost; 
 18.27     (3) what are the costs to the state and ratepayers to 
 18.28  ensure that new electric energy generation utilizes less 
 18.29  environmentally damaging sources; how do those costs change as 
 18.30  the time frame for development and implementation of new 
 18.31  generation sources is compressed; 
 18.32     (4) what are the implications for delivery systems for 
 18.33  energy produced in areas of the state that do not now have 
 18.34  high-volume transmission capability; are new transmission 
 18.35  technologies being developed that can address some of the 
 18.36  concerns with transmission; can a more dispersed electric 
 19.1   generation system lessen the need for long-distance 
 19.2   transmission; 
 19.3      (5) what are the actual costs and benefits of purchasing 
 19.4   electricity and fuel to generate electricity from outside the 
 19.5   state; what are the present costs to the state's economy of 
 19.6   exporting a large percentage of the state's energy dollars and 
 19.7   what is the future economic impact of continuing to do so; 
 19.8      (6) are there benefits to be had from a large immediate 
 19.9   investment in quickly implementing alternative electric energy 
 19.10  sources in terms of developing an exportable technology and/or 
 19.11  commodity; is it feasible to turn around the flow of dollars for 
 19.12  energy so that the state imports dollars and exports energy and 
 19.13  energy technology; what is a reasonable time frame for the shift 
 19.14  if it is possible; 
 19.15     (7) are there taxation or regulatory barriers to developing 
 19.16  more sustainable and less problematic electric energy 
 19.17  generation; what are they specifically and how can they be 
 19.18  specifically addressed; 
 19.19     (8) can an approach be developed that moves quickly to 
 19.20  development and implementation of alternative energy sources 
 19.21  that can be forgiving of interim failures but that is also 
 19.22  sufficiently deliberate to ensure ultimate success on a large 
 19.23  scale; and 
 19.24     (9) in what specific ways can the state assist regional 
 19.25  energy suppliers to accelerate phasing out energy production 
 19.26  processes that produce wastes or emissions that must necessarily 
 19.27  be carefully controlled and monitored to minimize adverse 
 19.28  effects on the environment and human health and to assist in 
 19.29  developing and implementing base load energy production that 
 19.30  both prevents or minimizes by its nature adverse environmental 
 19.31  and human health effects and utilizes resources that are 
 19.32  available or producible in the state; 
 19.33     (10) whether there is a need to establish additional 
 19.34  dislocated worker assistance for workers at the Prairie Island 
 19.35  nuclear power plant; if so, how that assistance should be 
 19.36  structured; 
 20.1      (11) can the state monitor, evaluate, and affect federal 
 20.2   actions relating to permanent storage of high-level radioactive 
 20.3   waste; what actions by the state over what period of time would 
 20.4   expedite federal action to take responsibility for the waste; 
 20.5      (12) should the state establish a legislative oversight 
 20.6   commission on energy issues; should the responsibilities of an 
 20.7   oversight commission be coordinated with the activities of the 
 20.8   public utilities commission and the department of public service 
 20.9   and if so, how; and 
 20.10     (13) is it feasible to convert existing nuclear power and 
 20.11  coal-fired electric generating plants to utilization of energy 
 20.12  sources that result in significantly less environmental damage; 
 20.13  if so, what are the short-term and long-term costs and benefits 
 20.14  of doing so; how do shorter or longer time periods for 
 20.15  conversion affect the cost/benefit analysis. 
 20.16     (c) The task force must study issues related to the 
 20.17  transportation of spent nuclear fuel from this state to interim 
 20.18  or permanent repositories outside this state.  
 20.19     Sec. 19.  Minnesota Statutes 2002, section 216C.051, is 
 20.20  amended by adding a subdivision to read: 
 20.21     Subd. 4a.  [REPORT AND RECOMMENDATIONS.] By January 15, 
 20.22  2005, and every two years thereafter, the task force shall 
 20.23  submit a report to the chairs of the committees in the house of 
 20.24  representatives and in the senate that have responsibility for 
 20.25  energy and for environmental and natural resources issues that 
 20.26  contains an overview of information gathered and analyses that 
 20.27  have been prepared, and specific recommendations, if any, for 
 20.28  legislative action that will ensure development and 
 20.29  implementation of electric energy policy that will provide the 
 20.30  state with adequate, renewable, and economic electric power for 
 20.31  the long-term.  
 20.32     Sec. 20.  Minnesota Statutes 2002, section 216C.051, 
 20.33  subdivision 6, is amended to read: 
 20.34     Subd. 6.  [ASSESSMENT; APPROPRIATION.] On request by the 
 20.35  cochairs of the legislative task force and after approval of the 
 20.36  legislative coordinating commission, the commissioner of 
 21.1   commerce shall assess from all public utilities, generation and 
 21.2   transmission cooperative electric associations, and municipal 
 21.3   power agencies providing electric or natural gas services in 
 21.4   Minnesota, in addition to assessments made under section 
 21.5   216B.62, the amount requested for the operation of the task 
 21.6   force not to exceed $150,000 $250,000 in a fiscal year.  The 
 21.7   amount assessed under this section is appropriated to the 
 21.8   director of the legislative coordinating commission for those 
 21.9   purposes, and is available until expended.  The department shall 
 21.10  apportion those costs among all energy utilities in proportion 
 21.11  to their respective gross operating revenues from the sale of 
 21.12  gas or electric service within the state during the last 
 21.13  calendar year.  For the purposes of administrative efficiency, 
 21.14  the department shall assess energy utilities and issue bills in 
 21.15  accordance with the billing and assessment procedures provided 
 21.16  in section 216B.62, to the extent that these procedures do not 
 21.17  conflict with this subdivision. 
 21.18     Sec. 21.  Minnesota Statutes 2002, section 216C.051, 
 21.19  subdivision 9, is amended to read: 
 21.20     Subd. 9.  [EXPIRATION.] This section is repealed June 
 21.21  30, 2005 2007. 
 21.22     Sec. 22.  Minnesota Statutes 2002, section 216C.052, 
 21.23  subdivision 2, is amended to read: 
 21.24     Subd. 2.  [ADMINISTRATIVE ISSUES.] (a) The commissioner may 
 21.25  select the administrator who shall serve for a four-year term.  
 21.26  The administrator may not have been a party or a participant in 
 21.27  a commission energy proceeding for at least one year prior to 
 21.28  selection by the commissioner.  The commissioner shall oversee 
 21.29  and direct the work of the administrator, annually review the 
 21.30  expenses of the administrator, and annually approve the budget 
 21.31  of the administrator.  The administrator may hire staff and may 
 21.32  contract for technical expertise in performing duties when 
 21.33  existing state resources are required for other state 
 21.34  responsibilities or when special expertise is required.  The 
 21.35  salary of the administrator is governed by section 15A.0815, 
 21.36  subdivision 2. 
 22.1      (b) Costs relating to a specific proceeding, analysis, or 
 22.2   project are not general administrative costs.  For purposes of 
 22.3   this section, "energy utility" means public utilities, 
 22.4   generation and transmission cooperative electric associations, 
 22.5   and municipal power agencies providing natural gas or electric 
 22.6   service in the state.  
 22.7      (c) The department of commerce shall pay: 
 22.8      (1) the general administrative costs of the administrator, 
 22.9   not to exceed $1,500,000 $1,000,000 in a fiscal year, and shall 
 22.10  assess energy utilities for reimbursement for those 
 22.11  administrative costs.  These costs must be consistent with the 
 22.12  budget approved by the commissioner under paragraph (a).  The 
 22.13  department shall apportion the costs among all energy utilities 
 22.14  in proportion to their respective gross operating revenues from 
 22.15  sales of gas or electric service within the state during the 
 22.16  last calendar year, and shall then render a bill to each utility 
 22.17  on a regular basis; and 
 22.18     (2) costs relating to a specific proceeding analysis or 
 22.19  project and shall render a bill for reimbursement to the 
 22.20  specific energy utility or utilities participating in the 
 22.21  proceeding, analysis, or project directly, either at the 
 22.22  conclusion of a particular proceeding, analysis, or project, or 
 22.23  from time to time during the course of the proceeding, analysis, 
 22.24  or project. 
 22.25     (d) For purposes of administrative efficiency, the 
 22.26  department shall assess energy utilities and issue bills in 
 22.27  accordance with the billing and assessment procedures provided 
 22.28  in section 216B.62, to the extent that these procedures do not 
 22.29  conflict with this subdivision.  The amount of the bills 
 22.30  rendered by the department under paragraph (c) must be paid by 
 22.31  the energy utility into an account in the special revenue fund 
 22.32  in the state treasury within 30 days from the date of billing 
 22.33  and is appropriated to the commissioner for the purposes 
 22.34  provided in this section.  The commission shall approve or 
 22.35  approve as modified a rate schedule providing for the automatic 
 22.36  adjustment of charges to recover amounts paid by utilities under 
 23.1   this section.  All amounts assessed under this section are in 
 23.2   addition to amounts appropriated to the commission and the 
 23.3   department by other law. 
 23.4      Sec. 23.  Minnesota Statutes 2002, section 216C.052, 
 23.5   subdivision 3, is amended to read:  
 23.6      Subd. 3.  [ASSESSMENT AND APPROPRIATION.] In addition to 
 23.7   the amount noted in subdivision 2, the commissioner of commerce 
 23.8   shall transfer may assess utilities, using the mechanism 
 23.9   specified in that subdivision, up to an additional $500,000 
 23.10  annually of the amounts provided for in subdivision 2 to the 
 23.11  commissioner of administration through June 30, 2006.  The 
 23.12  amounts assessed under this subdivision are appropriated to the 
 23.13  commissioner, and some or all of the amounts assessed may be 
 23.14  transferred to the commissioner of administration, for the 
 23.15  purposes provided specified in section 16B.325 and Laws 2001, 
 23.16  chapter 212, article 1, section 3, as needed to implement that 
 23.17  section those sections. 
 23.18     Sec. 24.  Minnesota Statutes 2002, section 216C.41, 
 23.19  subdivision 1, is amended to read: 
 23.20     Subdivision 1.  [DEFINITIONS.] (a) The definitions in this 
 23.21  subdivision apply to this section. 
 23.22     (b) "Qualified hydroelectric facility" means a 
 23.23  hydroelectric generating facility in this state that: 
 23.24     (1) is located at the site of a dam, if the dam was in 
 23.25  existence as of March 31, 1994; and 
 23.26     (2) begins generating electricity after July 1, 1994, or 
 23.27  generates electricity after substantial refurbishing of a 
 23.28  facility that begins after July 1, 2001. 
 23.29     (c) "Qualified wind energy conversion facility" means a 
 23.30  wind energy conversion system in this state that: 
 23.31     (1) produces two megawatts or less of electricity as 
 23.32  measured by nameplate rating and begins generating electricity 
 23.33  after December 31, 1996, and before July 1, 1999; 
 23.34     (2) begins generating electricity after June 30, 1999, 
 23.35  produces two megawatts or less of electricity as measured by 
 23.36  nameplate rating, and is: 
 24.1      (i) located within one county and owned by a natural person 
 24.2   who owns the land where the facility is sited; 
 24.3      (ii) owned by a Minnesota small business as defined in 
 24.4   section 645.445; 
 24.5      (iii) owned by a Minnesota nonprofit organization; or 
 24.6      (iv) owned by a tribal council if the facility is located 
 24.7   within the boundaries of the reservation; or 
 24.8      (v) owned by a Minnesota municipal utility or a Minnesota 
 24.9   cooperative electric association; or 
 24.10     (vi) owned by a Minnesota political subdivision or local 
 24.11  government, including, but not limited to, a county, statutory 
 24.12  or home rule charter city, town, school district, or any other 
 24.13  local or regional governmental organization such as a board, 
 24.14  commission, or association; or 
 24.15     (3) begins generating electricity after June 30, 1999, 
 24.16  produces seven megawatts or less of electricity as measured by 
 24.17  nameplate rating, and: 
 24.18     (i) is owned by a cooperative organized under chapter 
 24.19  308A other than a Minnesota cooperative electric association; 
 24.20  and 
 24.21     (ii) all shares and membership in the cooperative are held 
 24.22  by natural persons or estates, at least 51 percent of whom 
 24.23  reside in a county or contiguous to a county where the wind 
 24.24  energy production facilities of the cooperative are 
 24.25  located Minnesota residents or estates of persons who were 
 24.26  Minnesota residents. 
 24.27     (d) "Qualified on-farm biogas recovery facility" means an 
 24.28  anaerobic digester system that: 
 24.29     (1) is located at the site of an agricultural operation; 
 24.30     (2) is owned by a natural person who owns or rents the land 
 24.31  where the facility is located; and 
 24.32     (3) begins generating electricity after July 1, 2001.  
 24.33     (e) "Anaerobic digester system" means a system of 
 24.34  components that processes animal waste based on the absence of 
 24.35  oxygen and produces gas used to generate electricity. 
 24.36     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 25.1   following final enactment.  
 25.2      Sec. 25.  Minnesota Statutes 2002, section 216C.41, 
 25.3   subdivision 2, is amended to read: 
 25.4      Subd. 2.  [INCENTIVE PAYMENT; APPROPRIATION.] (a) Incentive 
 25.5   payments must be made according to this section to (1) a 
 25.6   qualified on-farm biogas recovery facility, (2) the owner or 
 25.7   operator of a qualified hydropower facility or qualified wind 
 25.8   energy conversion facility for electric energy generated and 
 25.9   sold by the facility, (3) a publicly owned hydropower facility 
 25.10  for electric energy that is generated by the facility and used 
 25.11  by the owner of the facility outside the facility, or (4) the 
 25.12  owner of a publicly owned dam that is in need of substantial 
 25.13  repair, for electric energy that is generated by a hydropower 
 25.14  facility at the dam and the annual incentive payments will be 
 25.15  used to fund the structural repairs and replacement of 
 25.16  structural components of the dam, or to retire debt incurred to 
 25.17  fund those repairs. 
 25.18     (b) Payment may only be made upon receipt by the 
 25.19  commissioner of finance of an incentive payment application that 
 25.20  establishes that the applicant is eligible to receive an 
 25.21  incentive payment and that satisfies other requirements the 
 25.22  commissioner deems necessary.  The application must be in a form 
 25.23  and submitted at a time the commissioner establishes.  
 25.24     (c) There is annually appropriated from the general fund to 
 25.25  the commissioner of commerce sums sufficient to make the 
 25.26  payments required under this section, other than the amounts 
 25.27  funded by the renewable development account as specified in 
 25.28  subdivision 5a. 
 25.29     Sec. 26.  Minnesota Statutes 2002, section 216C.41, 
 25.30  subdivision 3, is amended to read: 
 25.31     Subd. 3.  [ELIGIBILITY WINDOW.] Payments may be made under 
 25.32  this section only for electricity generated: 
 25.33     (1) from a qualified hydroelectric facility that is 
 25.34  operational and generating electricity before December 31, 2005; 
 25.35     (2) from a qualified wind energy conversion facility that 
 25.36  is operational and generating electricity before January 1, 2005 
 26.1   2007; or 
 26.2      (3) from a qualified on-farm biogas recovery facility from 
 26.3   July 1, 2001, through December 31, 2015. 
 26.4      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 26.5   following final enactment.  
 26.6      Sec. 27.  Minnesota Statutes 2002, section 216C.41, 
 26.7   subdivision 4, is amended to read: 
 26.8      Subd. 4.  [PAYMENT PERIOD.] (a) A facility may receive 
 26.9   payments under this section for a ten-year period.  No payment 
 26.10  under this section may be made for electricity generated: 
 26.11     (1) by a qualified hydroelectric facility after December 
 26.12  31, 2015; 
 26.13     (2) by a qualified wind energy conversion facility after 
 26.14  December 31, 2015 2017; or 
 26.15     (3) by a qualified on-farm biogas recovery facility after 
 26.16  December 31, 2015.  
 26.17     (b) The payment period begins and runs consecutively from 
 26.18  the first year in which electricity generated from the facility 
 26.19  is eligible for incentive payment the date the facility begins 
 26.20  generating electricity or, in the case of refurbishment of a 
 26.21  hydropower facility, after substantial repairs to the hydropower 
 26.22  facility dam funded by the incentive payments are initiated. 
 26.23     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 26.24  following final enactment.  
 26.25     Sec. 28.  Minnesota Statutes 2002, section 216C.41, 
 26.26  subdivision 5, is amended to read: 
 26.27     Subd. 5.  [AMOUNT OF PAYMENT; WIND FACILITIES LIMIT.] (a) 
 26.28  An incentive payment is based on the number of kilowatt hours of 
 26.29  electricity generated. The amount of the payment is: 
 26.30     (1) for a facility described under subdivision 2, paragraph 
 26.31  (a), clause (4), 1.0 cent per kilowatt hour; and 
 26.32     (2) for all other facilities, 1.5 cents per kilowatt hour.  
 26.33  For electricity generated by qualified wind energy conversion 
 26.34  facilities greater than 40 kilowatts nameplate capacity, the 
 26.35  incentive payment under this section is limited to no more than 
 26.36  100 megawatts of nameplate capacity.  During any period in which 
 27.1   qualifying claims for incentive payments exceed 100 megawatts of 
 27.2   nameplate capacity, the payments must be made to producers in 
 27.3   the order in which the production capacity was brought into 
 27.4   production.  
 27.5      (b) For wind energy conversion systems installed and 
 27.6   contracted for after January 1, 2002, the total size of a wind 
 27.7   energy conversion system under this section must be determined 
 27.8   according to this paragraph.  Unless the systems are 
 27.9   interconnected with different distribution systems, the 
 27.10  nameplate capacity of one wind energy conversion system must be 
 27.11  combined with the nameplate capacity of any other wind energy 
 27.12  conversion system that is: 
 27.13     (1) located within five miles of the wind energy conversion 
 27.14  system; 
 27.15     (2) constructed within the same calendar year as the wind 
 27.16  energy conversion system; and 
 27.17     (3) under common ownership. 
 27.18  In the case of a dispute, the commissioner of commerce shall 
 27.19  determine the total size of the system, and shall draw all 
 27.20  reasonable inferences in favor of combining the systems. 
 27.21     (c) In making a determination under paragraph (b), the 
 27.22  commissioner of commerce may determine that two wind energy 
 27.23  conversion systems are under common ownership when the 
 27.24  underlying ownership structure contains similar persons or 
 27.25  entities, even if the ownership shares differ between the two 
 27.26  systems.  Wind energy conversion systems are not under common 
 27.27  ownership solely because the same person or entity provided 
 27.28  equity financing for the systems. 
 27.29     (d) A qualified wind energy conversion system is eligible 
 27.30  for the incentive on the date the commissioner receives: 
 27.31     (1) an application for payment of the incentive; 
 27.32     (2) one of the following: 
 27.33     (i) a copy of a signed power purchase agreement; 
 27.34     (ii) a copy of a binding agreement other than a power 
 27.35  purchase agreement to sell electricity generated by the facility 
 27.36  to a third person; or 
 28.1      (iii) if the facility developer or owner will sell 
 28.2   electricity to its own members or customers, a copy of the 
 28.3   purchase order for equipment to construct the facility with a 
 28.4   delivery date and a copy of a signed receipt for a nonrefundable 
 28.5   deposit; and 
 28.6      (3) any other information the commissioner deems necessary 
 28.7   to determine whether the proposed facility qualifies for the 
 28.8   incentive under this section.  
 28.9      (e) The commissioner or the commissioner's designee shall 
 28.10  determine whether a facility qualifies for the incentive and 
 28.11  respond in writing to the applicant approving or denying the 
 28.12  application within 15 working days of receipt of the information 
 28.13  required in paragraph (d).  A facility that is not operational 
 28.14  within 18 months of receipt of a letter of approval is no longer 
 28.15  approved for the incentive.  The commissioner shall notify an 
 28.16  applicant of potential loss of approval not less than 60 days 
 28.17  prior to the end of the 18-month period.  Eligibility for a 
 28.18  facility that loses approval may be reestablished as of the date 
 28.19  the commissioner receives a new completed application.  Approval 
 28.20  applies only to the person or persons who applied for the 
 28.21  incentive and may not be transferred to any other person or 
 28.22  persons. 
 28.23     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 28.24  following final enactment.  
 28.25     Sec. 29.  Minnesota Statutes 2002, section 216C.41, is 
 28.26  amended by adding a subdivision to read: 
 28.27     Subd. 5a.  [ADDITIONAL SMALL WIND ENERGY PRODUCTION 
 28.28  INCENTIVE.] The department of commerce shall authorize payment 
 28.29  of the renewable energy production incentive to wind energy 
 28.30  conversion systems larger than 40 kilowatts in size for 150 
 28.31  megawatts of nameplate capacity in addition to the capacity 
 28.32  authorized under subdivision 5.  Payment of the incentive shall 
 28.33  be made from the renewable energy development account as 
 28.34  provided under section 116C.779, subdivision 3.  Any amount 
 28.35  needed to fully fund incentive payments under this subdivision 
 28.36  in addition to funds available in the renewable energy 
 29.1   development account will be provided under subdivision 2, 
 29.2   notwithstanding the limit specified in subdivision 5. 
 29.3      Sec. 30.  [REDUCTION OF BIOMASS MANDATE.] 
 29.4      Notwithstanding Minnesota Statutes, section 216B.2424, the 
 29.5   biomass electric energy mandate shall be reduced from 125 
 29.6   megawatts to 88 megawatts.  The public utilities commission 
 29.7   shall not approve any request for a deadline extension for 
 29.8   obtaining financing beyond September 1, 2004, for any contract 
 29.9   previously approved to satisfy a portion of the biomass mandate. 
 29.10     Sec. 31.  [REFURBISHMENT OF METROPOLITAN GENERATING 
 29.11  PLANTS.] 
 29.12     (a) The public utility that owns the Prairie Island nuclear 
 29.13  generation facility shall immediately provide all remaining 
 29.14  information that the commission may request with regard to its 
 29.15  plans to undertake the repowering and upgrading of its electric 
 29.16  generation facilities located in the metropolitan area, as 
 29.17  described in its metropolitan emission reduction plan filed with 
 29.18  the public utilities commission in July 2002.  The commission 
 29.19  shall within six months render its decision on the plan. 
 29.20     (b) Notwithstanding Minnesota Statutes, section 216B.1692, 
 29.21  subdivision 1, clause (2), and subdivision 5, paragraphs (c) and 
 29.22  (d), all investments in repowering, emissions reduction 
 29.23  technologies and equipment, and power plant rehabilitation and 
 29.24  life extension described in the primary emission reduction 
 29.25  proposal filed in July 2002 and currently pending before the 
 29.26  commission are deemed qualifying projects under Minnesota 
 29.27  Statutes, section 216B.1692, and all costs related to all such 
 29.28  investments are eligible for rider recovery under Minnesota 
 29.29  Statutes, section 216B.1692, subdivision 5.  
 29.30     Sec. 32.  [CREATION OF AN ENERGY ENTERPRISE ZONE.] 
 29.31     Subdivision 1.  [PURPOSE.] In order to encourage the 
 29.32  state's interest in innovative clean energy sources and in 
 29.33  recovery in the most economically problematic regions of the 
 29.34  state, an energy enterprise zone is hereby authorized, to 
 29.35  consist of: 
 29.36     (1) one or more industrial sites capable of hosting at 
 30.1   least 750 megawatts of baseload or intermediate electrical 
 30.2   generation capacity, which shall not exceed 5,000 acres; and 
 30.3      (2) one or more sites capable of hosting up to 250 
 30.4   megawatts of renewable or hydrogen-fueled electrical generation 
 30.5   capacity not to exceed the aggregate of 250 megawatts.  
 30.6      Subd. 2.  [ELIGIBILITY FOR ENERGY ENTERPRISE ZONE 
 30.7   DESIGNATION.] In order to be eligible for designation as an 
 30.8   energy enterprise zone under this section, a proposed energy 
 30.9   project must: 
 30.10     (1) make use of an innovative generation technology with 
 30.11  production efficiencies greater than traditional generation 
 30.12  technologies and with significantly reduced emissions; 
 30.13     (2) be located in the taconite tax relief area of the state 
 30.14  on a site with infrastructure to support new or expanded 
 30.15  development and be designated by the commissioner of the iron 
 30.16  range resources and rehabilitation board under subdivision 3; 
 30.17  and 
 30.18     (3) for the renewable or hydrogen-fueled project sites, use 
 30.19  as a primary fuel source solar, wind, fuel cells, pumped 
 30.20  storage, or biomass energy, hydrogen, or hydroelectric energy 
 30.21  with a capacity of less than 60 megawatts.  
 30.22     Subd. 3.  [DESIGNATION OF ELIGIBLE AREA.] Upon receiving a 
 30.23  proposal for an energy enterprise zone under this section, the 
 30.24  commissioner of the iron range resources and rehabilitation 
 30.25  board shall determine whether the energy project satisfies the 
 30.26  criteria in subdivision 1 and shall designate the energy 
 30.27  enterprise zone.  The commissioner shall give priority to any 
 30.28  projects that have received prior financial and other support 
 30.29  from the board.  
 30.30     Subd. 4.  [REGULATORY INCENTIVES.] (a) Projects designated 
 30.31  as energy enterprise zones under this section: 
 30.32     (1) are granted a certificate of need under Minnesota 
 30.33  Statutes, section 216B.243, for the generation facilities and 
 30.34  transmission infrastructure associated with the generation 
 30.35  facilities, but are subject to all applicable environmental 
 30.36  review and permitting procedures of Minnesota Statutes, sections 
 31.1   116C.51 to 116C.69; 
 31.2      (2) once permitted and constructed, are eligible to 
 31.3   increase the capacity of the associated transmission facilities 
 31.4   without additional state review upon filing notice with the 
 31.5   commission; 
 31.6      (3) have the power of eminent domain, which shall be 
 31.7   limited to the sites and routes approved by the environmental 
 31.8   quality board for the project facilities; 
 31.9      (4) shall qualify as an "eligible energy technology" for 
 31.10  purposes of Minnesota Statutes, section 216B.1691; 
 31.11     (5) shall, prior to the approval by the commission of any 
 31.12  arrangement of an eligible entity to build or expand a 
 31.13  fossil-fuel-fired generation facility, or enter into an 
 31.14  agreement to purchase capacity or energy from such a facility 
 31.15  for a term exceeding five years, be considered as a supply 
 31.16  option for such generation facility, and the commission shall 
 31.17  ensure such consideration and take any action with respect to 
 31.18  such supply proposal that it deems to be in the best interest of 
 31.19  ratepayers.  "Eligible entity" means any entity subject to the 
 31.20  resource planning requirements of state law, and whose most 
 31.21  recent resource plan demonstrates a need for at least 450 
 31.22  megawatts of new generation capacity or energy resources; 
 31.23     (6) shall, subject to approval of the terms and conditions 
 31.24  thereof by the commission, be entitled to enter into a contract 
 31.25  with an eligible entity to provide 450 megawatts of baseload 
 31.26  capacity and energy under a long-term contract; and 
 31.27     (7) shall make a good-faith effort to secure funding from 
 31.28  the United States Department of Energy and the United States 
 31.29  Department of Agriculture to conduct a demonstration project at 
 31.30  the facility for either geologic or terrestrial carbon 
 31.31  sequestration projects to achieve reductions in facility 
 31.32  emissions or carbon dioxide.  
 31.33     (b) This subdivision does not apply to a proposal to add 
 31.34  utility-owned resources that is pending before the public 
 31.35  utilities commission.  
 31.36     Sec. 33.  [RENEWABLE DEVELOPMENT FUND ADMINISTRATION.] 
 32.1      The public utilities commission may review the 
 32.2   appropriateness of the transfer of the administration of the 
 32.3   renewable development account under Minnesota Statutes, section 
 32.4   116C.779, to an organization with a board of directors that 
 32.5   includes representatives from the public utility currently 
 32.6   administering the fund, environmental organizations, the 
 32.7   Mdewakanton Dakota Community, and other affected communities. 
 32.8      Sec. 34.  [DEPARTMENT OF TRADE AND ECONOMIC DEVELOPMENT; 
 32.9   PROGRAM DEVELOPMENT.] 
 32.10     Subdivision 1. [DEVELOPMENT OF BUSINESSES ENGAGED IN 
 32.11  HYDROGEN PRODUCTION.] The department of trade and economic 
 32.12  development must develop a targeted program to promote and 
 32.13  encourage the development and attraction of businesses engaged 
 32.14  in the biocatalysis of agricultural and forestry plant products 
 32.15  for the production of hydrogen, the manufacture of hydrogen fuel 
 32.16  cells, and hydrogen electrolysis from renewable energy sources.  
 32.17  The program may make use of existing departmental programs, 
 32.18  either alone or in combination.  The department shall report to 
 32.19  the legislature by January 15, 2004, on legislative changes or 
 32.20  additional funding needed, if any, to accomplish the purposes of 
 32.21  this section.  
 32.22     Subd. 2.  [ENERGY INNOVATION ZONES.] (a) The commissioner 
 32.23  of trade and economic development, in consultation with the 
 32.24  commissioners of commerce and revenue, shall develop a plan to 
 32.25  designate not more than three energy innovation zones to spur 
 32.26  the development of fuel cells, fuel cell components, hydrogen 
 32.27  infrastructure, and other energy efficiency and renewable energy 
 32.28  technologies in the state.  In developing the criteria for the 
 32.29  designations, the commissioner shall consider: 
 32.30     (1) the availability of business, academic, and government 
 32.31  partners; 
 32.32     (2) the likelihood of establishing a distributed, renewable 
 32.33  energy microgrid to power the zone, providing below-market 
 32.34  electricity and heat to businesses from within the zone; 
 32.35     (3) the prospect of tenants for the zone that will 
 32.36  represent net new jobs to the state; and 
 33.1      (4) the likelihood of the production, storage, 
 33.2   distribution, and use of hydrogen, including its use in fuel 
 33.3   cells, for electricity and heat. 
 33.4      (b) Energy under paragraph (a), clause (2), must come from 
 33.5   one or more of the following renewable sources:  wind, water, 
 33.6   sun, biomass, not including municipal solid waste, or hydrogen 
 33.7   reformed from natural gas up to 2010. 
 33.8      (c) The plan must allow for interested parties to form 
 33.9   energy innovation cooperatives.  In addition, the commissioner 
 33.10  must consider the feasibility of the sale of energy innovation 
 33.11  bonds for the construction of qualifying facilities. 
 33.12     (d) In drafting the plan, the commissioner must consider 
 33.13  incentives for investment in the zone, including 
 33.14     (1) subsidization of construction of qualifying facilities; 
 33.15     (2) long-term contracts for market-rate heat and power 
 33.16     (3) exemption from laws giving exclusive service territory; 
 33.17     (4) streamlined interconnection to the existing power grid; 
 33.18     (5) exemptions from property tax; 
 33.19     (6) expedited permitting; 
 33.20     (7) methods for providing technical assistance; and 
 33.21     (8) other methods of encouraging the development and use 
 33.22  and development of fuel cell and hydrogen generation 
 33.23  technologies. 
 33.24     (e) The commissioner shall report to the legislature by 
 33.25  January 15, 2004, on legislative changes and necessary funding 
 33.26  to accomplish the purposes of this subdivision. 
 33.27     Sec. 35.  [DEMONSTRATION PROJECT.] 
 33.28     (a) The department of commerce, in cooperation with the 
 33.29  department of trade and economic development, must develop and 
 33.30  issue a request for proposal for the construction of a 
 33.31  hydrogen-to-electricity demonstration project with the following 
 33.32  components:  
 33.33     (1) commercial-scale windmill-powered electrolysis of water 
 33.34  to hydrogen; 
 33.35     (2) on-site storage of hydrogen and fuel cells for 
 33.36  hydrogen-to-electricity conversion to maintain the supply of 
 34.1   electricity in the absence of wind; 
 34.2      (3) a hydrogen pipeline of less than ten miles to a public 
 34.3   facility demonstration site; and 
 34.4      (4) a public facility with on-site hydrogen fuel cells 
 34.5   providing hydrogen-to-electricity and, if practicable, 
 34.6   heating/cooling function.  
 34.7      (b) For purposes of this section, a "public facility" is a 
 34.8   municipal building, public school, state college or university, 
 34.9   or other public building. 
 34.10     Sec. 36.  [SUNSET.] 
 34.11     Minnesota Statutes, section 116C.779, subdivision 2, 
 34.12  expires June 30, 2007.  Minnesota Statutes, section 216B.241, 
 34.13  subdivision 1b, paragraph (j), expires July 1, 2007.  
 34.14     Sec. 37.  [REPEALER.] 
 34.15     Minnesota Statutes 2002, section 216C.051, subdivisions 1, 
 34.16  4, and 5, are repealed.  
 34.17     Sec. 38.  [EFFECTIVE DATE.] 
 34.18     Sections 1 to 37 are effective the day following final 
 34.19  enactment.