1.1                          A bill for an act 
  1.2             relating to utilities; modifying and adding provisions 
  1.3             relating to alternative, clean, or renewable energy 
  1.4             resource development; regulating public utilities, 
  1.5             power transmission companies and facilities, and 
  1.6             energy facilities; authorizing local power quality 
  1.7             zones; authorizing community-based energy development 
  1.8             tariff; transferring various siting authorities from 
  1.9             Environmental Quality Board to Public Utilities 
  1.10            Commission; providing for commission oversight of 
  1.11            reliability administrator; modifying provisions 
  1.12            relating to energy conservation; requiring commission 
  1.13            to establish e-filing system; requiring creation of 
  1.14            stakeholder and working groups; regulating gas 
  1.15            infrastructure cost recovery; requiring studies and 
  1.16            reports; making clarifying and technical changes; 
  1.17            appropriating money; amending Minnesota Statutes 2004, 
  1.18            sections 116C.52, subdivisions 2, 4; 116C.53, 
  1.19            subdivision 2; 116C.57, subdivisions 1, 2c, by adding 
  1.20            a subdivision; 116C.575, subdivision 5; 116C.577; 
  1.21            116C.58; 116C.61, subdivision 3; 116C.69, subdivisions 
  1.22            2, 2a; 216B.02, by adding a subdivision; 216B.16, 
  1.23            subdivision 6d, by adding subdivisions; 216B.1645, 
  1.24            subdivision 1; 216B.241, subdivisions 1b, 2; 
  1.25            216B.2421, subdivision 2; 216B.2425, subdivision 2, by 
  1.26            adding a subdivision; 216B.243, subdivisions 3, 4, 5, 
  1.27            6, 7, 8; 216B.50, subdivision 1; 216B.62, subdivision 
  1.28            5, by adding a subdivision; 216B.79; 216C.052; 
  1.29            216C.41, subdivision 1; proposing coding for new law 
  1.30            in Minnesota Statutes, chapters 216B; 216C; repealing 
  1.31            Laws 1999, chapter 125, section 4, as amended. 
  1.32  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.33                             ARTICLE 1 
  1.34                       TRANSMISSION COMPANIES 
  1.35     Section 1.  Minnesota Statutes 2004, section 216B.02, is 
  1.36  amended by adding a subdivision to read: 
  1.37     Subd. 10.  [TRANSMISSION COMPANY.] "Transmission company" 
  1.38  means persons, corporations, or other legal entities and their 
  2.1   lessees, trustees, and receivers, now or hereafter engaged in 
  2.2   the business of owning, operating, maintaining, or controlling 
  2.3   in this state equipment or facilities for furnishing electric 
  2.4   transmission service in Minnesota, but does not include public 
  2.5   utilities, municipal electric utilities, municipal power 
  2.6   agencies, cooperative electric associations, or generation and 
  2.7   transmission cooperative power associations. 
  2.8      Sec. 2.  Minnesota Statutes 2004, section 216B.16, is 
  2.9   amended by adding a subdivision to read: 
  2.10     Subd. 7b.  [TRANSMISSION COST ADJUSTMENT.] (a) 
  2.11  Notwithstanding any other provision of this chapter, the 
  2.12  commission may approve a tariff mechanism for the automatic 
  2.13  annual adjustment of charges for the Minnesota jurisdictional 
  2.14  costs of new transmission facilities that have been separately 
  2.15  filed and reviewed and approved by the commission under sections 
  2.16  216B.2425 and 216B.243 or are deemed to be a priority 
  2.17  transmission project under section 216B.2425. 
  2.18     (b) Upon filing by a public utility or utilities providing 
  2.19  transmission service, the commission may approve, reject, or 
  2.20  modify, after notice and comment, a tariff that: 
  2.21     (1) allows the utility to recover on a timely basis the 
  2.22  costs net of revenues of facilities approved under sections 
  2.23  216B.2425 and 216B.243; 
  2.24     (2) allows a return on investment at the level approved in 
  2.25  the utility's last general rate case, unless a different return 
  2.26  is found to be consistent with the public interest; 
  2.27     (3) provides a current return on construction work in 
  2.28  progress, provided that recovery from Minnesota retail customers 
  2.29  for the allowance for funds used during construction is not 
  2.30  sought through any other mechanism; 
  2.31     (4) allows for recovery of other expenses if shown to 
  2.32  promote a least-cost project option or is otherwise in the 
  2.33  public interest; 
  2.34     (5) allocates project costs appropriately between wholesale 
  2.35  and retail customers; 
  2.36     (6) provides a mechanism for recovery above cost, if 
  3.1   necessary to improve the overall economics of the project or 
  3.2   projects or is otherwise in the public interest; and 
  3.3      (7) terminates recovery once costs have been fully 
  3.4   recovered or have otherwise been reflected in the utility's 
  3.5   general rates. 
  3.6      (c) A public utility may file annual rate adjustments to be 
  3.7   applied to customer bills paid under the tariff approved in 
  3.8   paragraph (b).  In its filing, the public utility shall provide: 
  3.9      (1) a description of and context for the facilities 
  3.10  included for recovery; 
  3.11     (2) a schedule for implementation of applicable projects; 
  3.12     (3) the utility's costs for these projects; 
  3.13     (4) a description of the utility's efforts to ensure the 
  3.14  lowest costs to ratepayers for the project; and 
  3.15     (5) calculations to establish that the rate adjustment is 
  3.16  consistent with the terms of the tariff established in paragraph 
  3.17  (b). 
  3.18     (d) Upon receiving a filing for a rate adjustment pursuant 
  3.19  to the tariff established in paragraph (b), the commission shall 
  3.20  approve the annual rate adjustments provided that, after notice 
  3.21  and comment, the costs included for recovery through the tariff 
  3.22  were or are expected to be prudently incurred and achieve 
  3.23  transmission system improvements at the lowest feasible and 
  3.24  prudent cost to ratepayers. 
  3.25     Sec. 3.  Minnesota Statutes 2004, section 216B.16, is 
  3.26  amended by adding a subdivision to read: 
  3.27     Subd. 7c.  [TRANSMISSION ASSETS TRANSFER.] (a) Subject to 
  3.28  prior approval of the commission under this subdivision, a 
  3.29  public utility that owns transmission facilities may transfer 
  3.30  operational control or ownership of those assets to a 
  3.31  transmission company subject to Federal Energy Regulatory 
  3.32  Commission jurisdiction.  For asset transfers by a public 
  3.33  utility, the Public Utilities Commission may review the request 
  3.34  to transfer in the context of a general rate case under this 
  3.35  section or may initiate other proceedings it determines provide 
  3.36  adequate review of the effect on retail rates of an asset 
  4.1   transfer approved under this section sufficient to protect 
  4.2   ratepayers.  The commission may only approve a transfer sought 
  4.3   after the effective date of this section if it finds that the 
  4.4   transfer: 
  4.5      (1) is consistent with the public interest; 
  4.6      (2) facilitates the development of transmission 
  4.7   infrastructure necessary to ensure reliability, encourages the 
  4.8   development of renewable resources, and accommodates energy 
  4.9   transfers within and between states; 
  4.10     (3) protects Minnesota ratepayers against the subsidization 
  4.11  of wholesale transactions through retail rates; and 
  4.12     (4) ensures, in the case of operational control of 
  4.13  transmission assets, that the state retains jurisdiction over 
  4.14  the transferring utility for all aspects of service under this 
  4.15  chapter. 
  4.16     (b) A transfer of operational control or ownership of 
  4.17  assets by a public utility under this subdivision is subject to 
  4.18  section 216B.50.  The relationship between a public utility 
  4.19  transferring operational control of assets to another entity 
  4.20  under this subdivision is subject to the provisions of section 
  4.21  216B.48.  If a public utility transfers ownership of its 
  4.22  transmission assets to a transmission provider subject to the 
  4.23  jurisdiction of the Federal Energy Regulatory Commission, the 
  4.24  Public Utilities Commission may permit the utility to file a 
  4.25  rate schedule providing for the automatic adjustment of charges 
  4.26  to recover the cost of transmission services purchased under 
  4.27  tariff rates approved by the Federal Energy Regulatory 
  4.28  Commission. 
  4.29     Sec. 4.  Minnesota Statutes 2004, section 216B.2421, 
  4.30  subdivision 2, is amended to read: 
  4.31     Subd. 2.  [LARGE ENERGY FACILITY.] "Large energy facility" 
  4.32  means: 
  4.33     (1) any electric power generating plant or combination of 
  4.34  plants at a single site with a combined capacity of 50,000 
  4.35  kilowatts or more and transmission lines directly associated 
  4.36  with the plant that are necessary to interconnect the plant to 
  5.1   the transmission system; 
  5.2      (2) any high-voltage transmission line with a capacity of 
  5.3   200 kilovolts or more and greater than 1,500 feet in length; 
  5.4      (3) any high-voltage transmission line with a capacity of 
  5.5   100 kilovolts or more with more than ten miles of its length in 
  5.6   Minnesota or that crosses a state line; 
  5.7      (4) any pipeline greater than six inches in diameter and 
  5.8   having more than 50 miles of its length in Minnesota used for 
  5.9   the transportation of coal, crude petroleum or petroleum fuels 
  5.10  or oil, or their derivatives; 
  5.11     (5) any pipeline for transporting natural or synthetic gas 
  5.12  at pressures in excess of 200 pounds per square inch with more 
  5.13  than 50 miles of its length in Minnesota; 
  5.14     (6) any facility designed for or capable of storing on a 
  5.15  single site more than 100,000 gallons of liquefied natural gas 
  5.16  or synthetic gas; 
  5.17     (7) any underground gas storage facility requiring a permit 
  5.18  pursuant to section 103I.681; 
  5.19     (8) any nuclear fuel processing or nuclear waste storage or 
  5.20  disposal facility; and 
  5.21     (9) any facility intended to convert any material into any 
  5.22  other combustible fuel and having the capacity to process in 
  5.23  excess of 75 tons of the material per hour. 
  5.24     Sec. 5.  Minnesota Statutes 2004, section 216B.2425, 
  5.25  subdivision 2, is amended to read: 
  5.26     Subd. 2.  [LIST DEVELOPMENT; TRANSMISSION PROJECTS REPORT.] 
  5.27  (a) By November 1 of each odd-numbered year, each a transmission 
  5.28  projects report must be submitted to the commission by each 
  5.29  utility, organization, or company that: 
  5.30     (1) is a public utility, a municipal utility, and a 
  5.31  cooperative electric association, or the generation and 
  5.32  transmission organization that serves each utility or 
  5.33  association, that or a transmission company; and 
  5.34     (2) owns or operates electric transmission lines in 
  5.35  Minnesota shall.  
  5.36     (b) The report may be submitted jointly or individually 
  6.1   submit a transmission projects report to the commission.  
  6.2      (c) The report must: 
  6.3      (1) list specific present and reasonably foreseeable future 
  6.4   inadequacies in the transmission system in Minnesota; 
  6.5      (2) identify alternative means of addressing each 
  6.6   inadequacy listed; 
  6.7      (3) identify general economic, environmental, and social 
  6.8   issues associated with each alternative; and 
  6.9      (4) provide a summary of public input the utilities and 
  6.10  associations have gathered related to the list of inadequacies 
  6.11  and the role of local government officials and other interested 
  6.12  persons in assisting to develop the list and analyze 
  6.13  alternatives. 
  6.14     (b) (d) To meet the requirements of this subdivision, 
  6.15  entities reporting parties may rely on available information and 
  6.16  analysis developed by a regional transmission organization or 
  6.17  any subgroup of a regional transmission organization and may 
  6.18  develop and include additional information as necessary.  
  6.19     Sec. 6.  [216B.2426] [OPPORTUNITIES FOR DISTRIBUTED 
  6.20  GENERATION.] 
  6.21     The commission shall ensure that opportunities for the 
  6.22  installation of distributed generation, as that term is defined 
  6.23  in section 216B.169, subdivision 1, paragraph (c), are 
  6.24  considered in any proceeding under section 216B.2422, 216B.2425, 
  6.25  or 216B.243. 
  6.26     Sec. 7.  Minnesota Statutes 2004, section 216B.243, 
  6.27  subdivision 3, is amended to read: 
  6.28     Subd. 3.  [SHOWING REQUIRED FOR CONSTRUCTION.] No proposed 
  6.29  large energy facility shall be certified for construction unless 
  6.30  the applicant can show that demand for electricity cannot be met 
  6.31  more cost effectively through energy conservation and 
  6.32  load-management measures and unless the applicant has otherwise 
  6.33  justified its need.  In assessing need, the commission shall 
  6.34  evaluate: 
  6.35     (1) the accuracy of the long-range energy demand forecasts 
  6.36  on which the necessity for the facility is based; 
  7.1      (2) the effect of existing or possible energy conservation 
  7.2   programs under sections 216C.05 to 216C.30 and this section or 
  7.3   other federal or state legislation on long-term energy demand; 
  7.4      (3) the relationship of the proposed facility to overall 
  7.5   state energy needs, as described in the most recent state energy 
  7.6   policy and conservation report prepared under section 216C.18, 
  7.7   or, in the case of a high-voltage transmission line, the 
  7.8   relationship of the proposed line to regional energy needs, as 
  7.9   presented in the transmission plan submitted under section 
  7.10  216B.2425; 
  7.11     (4) promotional activities that may have given rise to the 
  7.12  demand for this facility; 
  7.13     (5) benefits of this facility, including its uses to 
  7.14  protect or enhance environmental quality, and to increase 
  7.15  reliability of energy supply in Minnesota and the region; 
  7.16     (6) possible alternatives for satisfying the energy demand 
  7.17  or transmission needs including but not limited to potential for 
  7.18  increased efficiency and upgrading of existing energy generation 
  7.19  and transmission facilities, load-management programs, and 
  7.20  distributed generation; 
  7.21     (7) the policies, rules, and regulations of other state and 
  7.22  federal agencies and local governments; and 
  7.23     (8) any feasible combination of energy conservation 
  7.24  improvements, required under section 216B.241, that can (i) 
  7.25  replace part or all of the energy to be provided by the proposed 
  7.26  facility, and (ii) compete with it economically.; 
  7.27     (9) with respect to a high-voltage transmission line, the 
  7.28  benefits of enhanced regional reliability, access, or 
  7.29  deliverability to improve the robustness of the transmission 
  7.30  system or to lower costs to electric consumers; 
  7.31     (10) whether the applicant or applicants are in compliance 
  7.32  with applicable provisions of sections 216B.1691 and 216B.2425, 
  7.33  subdivision 8, and have filed or will file by a date certain an 
  7.34  application for certificate of need under this section or for 
  7.35  certification as a priority electric transmission project under 
  7.36  section 216B.2425 for any transmission facilities or upgrades 
  8.1   identified under section 216B.2425, subdivision 8; 
  8.2      (11) whether the applicant has made the demonstrations 
  8.3   required under subdivision 3a; and 
  8.4      (12) if the applicant is proposing a nonrenewable 
  8.5   generating plan, the applicant's assessment of the risk of 
  8.6   environmental costs and regulation on that proposed facility 
  8.7   over the expected useful life of the plant, including a proposed 
  8.8   means of allocating costs associated with that risk. 
  8.9      Sec. 8.  Minnesota Statutes 2004, section 216B.50, 
  8.10  subdivision 1, is amended to read: 
  8.11     Subdivision 1.  [COMMISSION APPROVAL REQUIRED.] No public 
  8.12  utility shall sell, acquire, lease, or rent any plant as an 
  8.13  operating unit or system in this state for a total consideration 
  8.14  in excess of $100,000, or merge or consolidate with another 
  8.15  public utility or transmission company operating in this state, 
  8.16  without first being authorized so to do by the commission.  Upon 
  8.17  the filing of an application for the approval and consent of the 
  8.18  commission thereto, the commission shall investigate, with or 
  8.19  without public hearing, and in case of.  The commission shall 
  8.20  hold a public hearing, upon such notice as the commission may 
  8.21  require, and if it shall find.  If the commission finds that the 
  8.22  proposed action is consistent with the public interest, it shall 
  8.23  give its consent and approval by order in writing.  In reaching 
  8.24  its determination, the commission shall take into consideration 
  8.25  the reasonable value of the property, plant, or securities to be 
  8.26  acquired or disposed of, or merged and consolidated.  The 
  8.27  provisions of 
  8.28     This section shall does not be construed as 
  8.29  applicable apply to the purchase of units of property for 
  8.30  replacement or to the addition to replace or add to the plant of 
  8.31  the public utility by construction. 
  8.32     Sec. 9.  Minnesota Statutes 2004, section 216B.62, is 
  8.33  amended by adding a subdivision to read: 
  8.34     Subd. 5a.  [ASSESSING TRANSMISSION COMPANIES.] The 
  8.35  commission and department may charge transmission companies 
  8.36  their proportionate share of the expenses incurred in the review 
  9.1   and disposition of proceedings under sections 216B.2425, 
  9.2   216B.243, 216B.48, 216B.50, and 216B.79.  A transmission company 
  9.3   is not liable for costs and expenses in a calendar year in 
  9.4   excess of the limitation on costs that may be assessed against 
  9.5   public utilities under subdivision 2.  A transmission company 
  9.6   may object to and appeal bills of the commission and department 
  9.7   as provided in subdivision 4. 
  9.8      Sec. 10.  Minnesota Statutes 2004, section 216B.79, is 
  9.9   amended to read: 
  9.10     216B.79 [PREVENTATIVE MAINTENANCE.] 
  9.11     The commission may order public utilities to make adequate 
  9.12  infrastructure investments and undertake sufficient preventative 
  9.13  maintenance with regard to generation, transmission, and 
  9.14  distribution facilities.  The commission's authority under this 
  9.15  section also applies to any transmission company that owns or 
  9.16  operates electric transmission lines in Minnesota.  
  9.17     Sec. 11.  [216B.82] [LOCAL POWER QUALITY ZONES.] 
  9.18     (a) Upon joint petition of a public utility as defined in 
  9.19  section 216B.02, subdivision 4, and any customer located within 
  9.20  the utility's service territory, the commission may establish a 
  9.21  zone within that utility's service territory where the utility 
  9.22  will install additional, redundant, or upgraded components of 
  9.23  the electric distribution infrastructure that are designed to 
  9.24  decrease the risk of power outages; provided, the utility and 
  9.25  all of its customers located within the proposed zone have 
  9.26  approved the installation of the components and the financial 
  9.27  recovery plan prior to the creation of the zone. 
  9.28     (b) The commission shall authorize the utility to collect 
  9.29  all costs of the installation of any components under this 
  9.30  section, including initial investment, operation, and 
  9.31  maintenance costs and taxes from all customers within the zone, 
  9.32  through tariffs and surcharges for service in a zone that 
  9.33  appropriately reflect the cost of service to those customers, 
  9.34  provided the customers agree to pay all costs for a 
  9.35  predetermined period, including costs of component removal, if 
  9.36  appropriate. 
 10.1      (c) Nothing in this section limits the ability of the 
 10.2   utility and any customer to enter into customer-specific 
 10.3   agreements pursuant to applicable statutory, rule, or tariff 
 10.4   provisions. 
 10.5      Sec. 12.  [STAKEHOLDER PROCESS AND REPORT.] 
 10.6      Subdivision 1.  [MEMBERSHIP.] By June 15, 2005, the 
 10.7   Legislative Electric Energy Task Force shall convene a 
 10.8   stakeholder group consisting of one representative from each of 
 10.9   the following groups:  transmission-owning investor-owned 
 10.10  utilities, electric cooperatives, municipal power agencies, 
 10.11  energy consumer advocates, business energy consumer advocates, 
 10.12  residential energy consumer advocates, environmental 
 10.13  organizations, the Minnesota Department of Commerce, the 
 10.14  Minnesota Environmental Quality Board, and the Minnesota Public 
 10.15  Utilities Commission. 
 10.16     Subd. 2.  [CHARGE.] (a) The stakeholder group shall explore 
 10.17  whether increased efficiencies and effectiveness can be obtained 
 10.18  through modifying current state statutes and administrative 
 10.19  processes to certify and route high-voltage transmission lines, 
 10.20  including modifications to Minnesota Statutes, section 216B.243. 
 10.21     (b) In developing its recommendations, the stakeholder 
 10.22  group shall consider: 
 10.23     (1) whether the certification process established under 
 10.24  Minnesota Statutes, section 216B.2425, subdivision 3, can be 
 10.25  modified to encourage utilities to apply for certification under 
 10.26  that section; 
 10.27     (2) whether alternative certification processes are 
 10.28  feasible for different types of transmission facilities; and 
 10.29     (3) whether additional cooperation between state agencies 
 10.30  is needed to enhance the efficiency of the certification and 
 10.31  routing processes, and whether modifications to those processes 
 10.32  are appropriate. 
 10.33     (c) The stakeholder group shall also consider and make 
 10.34  recommendations regarding whether and how to provide 
 10.35  compensation above traditional eminent domain payments to 
 10.36  landowners over whose property a new transmission facility is 
 11.1   constructed. 
 11.2      Subd. 3.  [REPORT.] By January 15, 2006, the task force 
 11.3   shall submit a report to the legislature summarizing the 
 11.4   stakeholder group findings and any recommended changes to the 
 11.5   certification and routing processes for high-voltage 
 11.6   transmission lines.  
 11.7                              ARTICLE 2
 11.8                    COMMUNITY-BASED ENERGY TARIFF 
 11.9      Section 1.  [216B.1612] [COMMUNITY-BASED ENERGY 
 11.10  DEVELOPMENT; TARIFF.] 
 11.11     Subdivision 1.  [TARIFF ESTABLISHMENT.] A tariff shall be 
 11.12  established to optimize local, regional, and state benefits from 
 11.13  wind energy development, and to facilitate development of 
 11.14  community-based wind energy projects throughout Minnesota. 
 11.15     Subd. 2.  [DEFINITIONS.] (a) The terms used in this section 
 11.16  have the meanings given them in this subdivision. 
 11.17     (b) "C-BED tariff" or "tariff" means a community-based 
 11.18  energy development tariff. 
 11.19     (c) "Qualifying owner" means: 
 11.20     (1) a Minnesota resident; 
 11.21     (2) a limited liability corporation that is organized under 
 11.22  the laws of this state and that is made up of members who are 
 11.23  Minnesota residents; 
 11.24     (3) a Minnesota nonprofit organization organized under 
 11.25  chapter 317A; 
 11.26     (4) a Minnesota cooperative association organized under 
 11.27  chapter 308A or 308B, other than a rural electric cooperative 
 11.28  association or a generation and transmission cooperative; 
 11.29     (5) a Minnesota political subdivision or local government 
 11.30  other than a municipal electric utility or municipal power 
 11.31  agency, including, but not limited to, a county, statutory or 
 11.32  home rule charter city, town, school district, or public or 
 11.33  private higher education institution or any other local or 
 11.34  regional governmental organization such as a board, commission, 
 11.35  or association; or 
 11.36     (6) a tribal council. 
 12.1      (d) "Net present value rate" means a rate equal to the net 
 12.2   present value of the nominal payments to a project divided by 
 12.3   the total expected energy production of the project over the 
 12.4   life of its power purchase agreement.  
 12.5      (e) "Standard reliability criteria" means: 
 12.6      (1) can be safely integrated into and operated within the 
 12.7   utility's grid without causing any adverse or unsafe 
 12.8   consequences; and 
 12.9      (2) is consistent with the utility's resource needs as 
 12.10  identified in its most recent resource plan submitted under 
 12.11  section 216B.2422. 
 12.12     (f) "Community-based energy project" or "C-BED project" 
 12.13  means a new wind energy project that: 
 12.14     (1) has no single qualifying owner owning more than 15 
 12.15  percent of a C-BED project that consists of more than two 
 12.16  turbines; or 
 12.17     (2) for C-BED projects of one or two turbines, is owned 
 12.18  entirely by one or more qualifying owners, with at least 51 
 12.19  percent of the total financial benefits over the life of the 
 12.20  project flowing to qualifying owners; and 
 12.21     (3) has a resolution of support adopted by the county board 
 12.22  of each county in which the project is to be located, or in the 
 12.23  case of a project located within the boundaries of a 
 12.24  reservation, the tribal council for that reservation. 
 12.25     Subd. 3.  [TARIFF RATE.] (a) The tariff described in 
 12.26  subdivision 4 must have a rate schedule that allows for a rate 
 12.27  up to a 2.7 cents per kilowatt hour net present value rate over 
 12.28  the 20-year life of the power purchase agreement.  The tariff 
 12.29  must provide for a rate that is higher in the first ten years of 
 12.30  the power purchase agreement than in the last ten years.  The 
 12.31  discount rate required to calculate the net present value must 
 12.32  be the utility's normal discount rate used for its other 
 12.33  business purposes. 
 12.34     (b) The commission shall consider mechanisms to encourage 
 12.35  the aggregation of C-BED projects. 
 12.36     (c) The commission shall require that qualifying owners 
 13.1   provide sufficient security to secure performance under the 
 13.2   power purchase agreement, and shall prohibit the transfer of the 
 13.3   C-BED project to a nonqualifying owner during the initial 20 
 13.4   years of the contract. 
 13.5      Subd. 4.  [UTILITIES TO OFFER TARIFF.] By December 1, 2005, 
 13.6   each public utility providing electric service at retail shall 
 13.7   file for commission approval a community-based energy 
 13.8   development tariff consistent with subdivision 3.  Within 90 
 13.9   days of the first commission approval order under this 
 13.10  subdivision, each municipal power agency and generation and 
 13.11  transmission cooperative electric association shall adopt a 
 13.12  community-based energy development tariff as consistent as 
 13.13  possible under subdivision 3. 
 13.14     Subd. 5.  [PRIORITY FOR C-BED PROJECTS.] (a) A utility 
 13.15  subject to section 216B.1691 that needs to construct new 
 13.16  generation, or purchase the output from new generation, as part 
 13.17  of its plan to satisfy its good faith objective under that 
 13.18  section shall take reasonable steps to determine if one or more 
 13.19  C-BED projects are available that meet the utility's cost and 
 13.20  reliability requirements, applying standard reliability 
 13.21  criteria, to fulfill some or all of the identified need at 
 13.22  minimal impact to customer rates. 
 13.23     Nothing in this section shall be construed to obligate a 
 13.24  utility to enter into a power purchase agreement under a C-BED 
 13.25  tariff developed under this section. 
 13.26     (b) Each utility shall include in its resource plan 
 13.27  submitted under section 216B.2422 a description of its efforts 
 13.28  to purchase energy from C-BED projects, including a list of the 
 13.29  projects under contract and the amount of C-BED energy purchased.
 13.30     (c) The commission shall consider the efforts and 
 13.31  activities of a utility to purchase energy from C-BED projects 
 13.32  when evaluating its good faith effort towards meeting the 
 13.33  renewable energy objective under section 216B.1691. 
 13.34     Subd. 6.  [PROPERTY OWNER PARTICIPATION.] To the extent 
 13.35  feasible, a developer of a C-BED project must provide, in 
 13.36  writing, an opportunity to invest in the C-BED project to each 
 14.1   property owner on whose property a high voltage transmission 
 14.2   line transmitting the energy generated by the C-BED project to 
 14.3   market currently exists or is to be constructed and who resides 
 14.4   in the county where the C-BED project is located or in an 
 14.5   adjacent Minnesota county. 
 14.6      Subd. 7.  [OTHER C-BED TARIFF ISSUES.] (a) A 
 14.7   community-based project developer and a utility shall negotiate 
 14.8   the rate and power purchase agreement terms consistent with the 
 14.9   tariff established under subdivision 4. 
 14.10     (b) At the discretion of the developer, a community-based 
 14.11  project developer and a utility may negotiate a power purchase 
 14.12  agreement with terms different from the tariff established under 
 14.13  subdivision 4. 
 14.14     (c) A qualifying owner, or any combination of qualifying 
 14.15  owners, may develop a joint venture project with a nonqualifying 
 14.16  wind energy project developer.  However, the terms of the C-BED 
 14.17  tariff may only apply to the portion of the energy production of 
 14.18  the total project that is directly proportional to the equity 
 14.19  share of the project owned by the qualifying owners. 
 14.20     (d) A project that is operating under a power purchase 
 14.21  agreement under a C-BED tariff is not eligible for net energy 
 14.22  billing under section 216B.164, subdivision 3, or for production 
 14.23  incentives under section 216C.41. 
 14.24     (e) A public utility must receive commission approval of a 
 14.25  power purchase agreement for a C-BED project that is operating 
 14.26  under a rate that is higher in the first ten years of the 
 14.27  agreement than in the last ten years.  The commission shall 
 14.28  provide the utility's ratepayers an opportunity to address the 
 14.29  reasonableness of the proposed power purchase agreement. 
 14.30     Unless a party objects to the contract within 30 days, the 
 14.31  contract will be deemed approved. 
 14.32     Sec. 2.  Minnesota Statutes 2004, section 216B.1645, 
 14.33  subdivision 1, is amended to read: 
 14.34     Subdivision 1.  [COMMISSION AUTHORITY.] Upon the petition 
 14.35  of a public utility, the Public Utilities Commission shall 
 14.36  approve or disapprove power purchase contracts, investments, or 
 15.1   expenditures entered into or made by the utility to satisfy the 
 15.2   wind and biomass mandates contained in sections 216B.169, 
 15.3   216B.2423, and 216B.2424, and to satisfy the renewable energy 
 15.4   objectives set forth in section 216B.1691, including reasonable 
 15.5   investments and expenditures made to: 
 15.6      (1) transmit the electricity generated from sources 
 15.7   developed under those sections that is ultimately used to 
 15.8   provide service to the utility's retail customers, or to 
 15.9   including studies necessary to identify new transmission 
 15.10  facilities needed to transmit electricity to Minnesota retail 
 15.11  customers from generating facilities constructed to satisfy the 
 15.12  renewable energy objectives, provided that the costs of the 
 15.13  studies have not been recovered previously under existing 
 15.14  tariffs and the utility has filed an application for a 
 15.15  certificate of need for the new transmission facilities 
 15.16  identified in the studies; or 
 15.17     (2) develop renewable energy sources from the account 
 15.18  required in section 116C.779.  
 15.19     Sec. 3.  Minnesota Statutes 2004, section 216B.2425, is 
 15.20  amended by adding a subdivision to read: 
 15.21     Subd. 8.  [PRIORITY TRANSMISSION PROJECTS.] (a) Until 
 15.22  January 1, 2010, transmission projects determined by the 
 15.23  commission to be necessary to support a utility's plan under 
 15.24  section 216B.1691 to meet its obligations under that section 
 15.25  must be certified as a priority electric transmission project, 
 15.26  satisfying the requirements of section 216B.243.  In determining 
 15.27  that a proposed transmission project is necessary to support a 
 15.28  utility's plan under section 216B.1691, the commission must find 
 15.29  that the applicant has met the following factors: 
 15.30     (1) that the transmission facility is necessary to allow 
 15.31  the delivery of power from renewable sources of energy to retail 
 15.32  customers in Minnesota; 
 15.33     (2) that the applicant has signed or will sign power 
 15.34  purchase agreements, subject to commission approval, for 
 15.35  resources to meet the renewable energy objective that are 
 15.36  dependent upon or will use the capacity of the transmission 
 16.1   facility to serve retail customers in Minnesota; 
 16.2      (3) that the installation and commercial operation date of 
 16.3   the renewable resources to satisfy the renewable energy 
 16.4   objective will match the planned in-service date of the 
 16.5   transmission facility; and 
 16.6      (4) that the proposed transmission facility is consistent 
 16.7   with a least-cost solution to the utility's need for additional 
 16.8   electricity. 
 16.9      (b) This subdivision expires January 1, 2010. 
 16.10     Sec. 4.  Minnesota Statutes 2004, section 216B.243, 
 16.11  subdivision 8, is amended to read: 
 16.12     Subd. 8.  [EXEMPTIONS.] This section does not apply to: 
 16.13     (1) cogeneration or small power production facilities as 
 16.14  defined in the Federal Power Act, United States Code, title 16, 
 16.15  section 796, paragraph (17), subparagraph (A), and paragraph 
 16.16  (18), subparagraph (A), and having a combined capacity at a 
 16.17  single site of less than 80,000 kilowatts or to; plants or 
 16.18  facilities for the production of ethanol or fuel alcohol nor in; 
 16.19  or any case where the commission shall determine has determined 
 16.20  after being advised by the attorney general that its application 
 16.21  has been preempted by federal law; 
 16.22     (2) a high-voltage transmission line proposed primarily to 
 16.23  distribute electricity to serve the demand of a single customer 
 16.24  at a single location, unless the applicant opts to request that 
 16.25  the commission determine need under this section or section 
 16.26  216B.2425; 
 16.27     (3) the upgrade to a higher voltage of an existing 
 16.28  transmission line that serves the demand of a single customer 
 16.29  that primarily uses existing rights-of-way, unless the applicant 
 16.30  opts to request that the commission determine need under this 
 16.31  section or section 216B.2425; 
 16.32     (4) a high-voltage transmission line of one mile or less 
 16.33  required to connect a new or upgraded substation to an existing, 
 16.34  new, or upgraded high-voltage transmission line; 
 16.35     (5) conversion of the fuel source of an existing electric 
 16.36  generating plant to using natural gas; or 
 17.1      (6) the modification of an existing electric generating 
 17.2   plant to increase efficiency, as long as the capacity of the 
 17.3   plant is not increased more than ten percent or more than 100 
 17.4   megawatts, whichever is greater.; or 
 17.5      (7) a large energy facility that (i) generates electricity 
 17.6   from wind energy conversion systems, (ii) will serve retail 
 17.7   customers in Minnesota, (iii) is specifically intended to be 
 17.8   used to meet the renewable energy objective under section 
 17.9   216B.1691 or addresses a resource need identified in a current 
 17.10  commission-approved or commission-reviewed resource plan under 
 17.11  section 216B.2422, and (iv) derives at least ten percent of the 
 17.12  total nameplate capacity of the proposed project from one or 
 17.13  more C-BED projects, as defined under section 216B.1612, 
 17.14  subdivision 2, paragraph (f). 
 17.15     Sec. 5.  [216C.053] [RENEWABLE ENERGY DEVELOPMENT.] 
 17.16     The Department of Commerce shall assist utilities, 
 17.17  renewable energy developers, regulators, regional transmission 
 17.18  grid managers, and the public on issues related to renewable 
 17.19  energy development.  The department shall work to ensure 
 17.20  cost-effective renewable energy development throughout the state.
 17.21     Sec. 6.  [WIND INTEGRATION STUDY.] 
 17.22     The Public Utilities Commission shall order all electric 
 17.23  utilities, as defined in Minnesota Statutes, section 216B.1691, 
 17.24  subdivision 1, paragraph (b), to participate in a statewide wind 
 17.25  integration study.  Utilities subject to Minnesota Statutes, 
 17.26  section 216B.1691, shall jointly contract with an independent 
 17.27  firm selected by the reliability administrator to conduct an 
 17.28  engineering study of the impacts on reliability and costs 
 17.29  associated with increasing wind capacity to 20 percent of 
 17.30  Minnesota retail electric energy sales by the year 2020, and to 
 17.31  identify and develop options for utilities to use to manage the 
 17.32  intermittent nature of wind resources.  The contracting 
 17.33  utilities shall cooperate with the firm conducting the study by 
 17.34  providing data requested.  The reliability administrator shall 
 17.35  manage the study process and shall appoint a group of 
 17.36  stakeholders with experience in engineering and expertise in 
 18.1   power systems or wind energy to review the study's proposed 
 18.2   methods and assumptions and preliminary data.  The study must be 
 18.3   completed by November 30, 2006.  Using the study results, the 
 18.4   contracting utilities shall provide the commissioner of commerce 
 18.5   with estimates of the impact on their electric rates of 
 18.6   increasing wind capacity to 20 percent, assuming no reduction in 
 18.7   reliability.  Electric utilities shall incorporate the study's 
 18.8   findings into their utility integrated resource plans prepared 
 18.9   under Minnesota Statutes, section 216B.2422.  The costs of the 
 18.10  study are recoverable under Minnesota Statutes, section 
 18.11  216C.052, subdivision 2, paragraph (c), clause (2). 
 18.12     Sec. 7.  [LANDOWNER PAYMENTS WORKING GROUP.] 
 18.13     Subdivision 1.  [MEMBERSHIP.] By June 15, 2005, the 
 18.14  Legislative Electric Energy Task Force shall convene a Landowner 
 18.15  Payments Working Group consisting of up to 12 members, including 
 18.16  representatives from each of the following groups: 
 18.17  transmission-owning investor-owned utilities, electric 
 18.18  cooperatives, municipal power agencies, Farm Bureau, Farmers 
 18.19  Union, county commissioners, real estate appraisers, and others 
 18.20  with an interest and expertise in landowner rights and the 
 18.21  market value of rural property. 
 18.22     Subd. 2.  [APPOINTMENT.] The chairs of the Legislative 
 18.23  Electric Energy Task Force and the chairs of the senate and 
 18.24  house committees with primary jurisdiction over energy policy 
 18.25  shall jointly appoint the working group members. 
 18.26     Subd. 3.  [CHARGE.] (a) The Landowner Payments Working 
 18.27  Group shall research alternative methods of remunerating 
 18.28  landowners on whose land high-voltage transmission lines have 
 18.29  been constructed. 
 18.30     (b) In developing its recommendations, the working group 
 18.31  shall: 
 18.32     (1) examine different methods of landowner payments that 
 18.33  operate in other states and countries; 
 18.34     (2) consider innovative alternatives to lump-sum payments 
 18.35  that extend payments over the life of the transmission line and 
 18.36  that run with the land if the land is conveyed to another owner; 
 19.1   and 
 19.2      (3) consider alternative ways of structuring payments that 
 19.3   are equitable to landowners and utilities. 
 19.4      Subd. 4.  [EXPENSES.] Members of the working group must be 
 19.5   reimbursed for expenses as provided in Minnesota Statutes, 
 19.6   section 15.059, subdivision 6.  Expenses of the Landowner 
 19.7   Payments Working Group must not exceed $10,000 without the 
 19.8   approval of the chairs of the Legislative Electric Energy Task 
 19.9   Force. 
 19.10     Subd. 5.  [REPORT.] The Landowner Payments Working Group 
 19.11  shall present its findings and recommendations, including 
 19.12  legislative recommendations and model legislation, if any, in a 
 19.13  report to the Legislative Electric Energy Task Force by January 
 19.14  15, 2006. 
 19.15                             ARTICLE 3
 19.16              TRANSFER OF SITING AND ROUTING AUTHORITY 
 19.17                     FOR LARGE ENERGY FACILITIES 
 19.18     Section 1.  Minnesota Statutes 2004, section 116C.52, 
 19.19  subdivision 2, is amended to read: 
 19.20     Subd. 2.  [BOARD COMMISSION.] "Board" shall mean the 
 19.21  Minnesota Environmental Quality Board "Commission" means the 
 19.22  Public Utilities Commission. 
 19.23     Sec. 2.  Minnesota Statutes 2004, section 116C.52, 
 19.24  subdivision 4, is amended to read: 
 19.25     Subd. 4.  [HIGH VOLTAGE TRANSMISSION LINE.] "High voltage 
 19.26  transmission line" means a conductor of electric energy and 
 19.27  associated facilities designed for and capable of operation at a 
 19.28  nominal voltage of 100 kilovolts or more and is greater than 
 19.29  1,500 feet in length. 
 19.30     Sec. 3.  Minnesota Statutes 2004, section 116C.53, 
 19.31  subdivision 2, is amended to read: 
 19.32     Subd. 2.  [JURISDICTION.] The board commission is hereby 
 19.33  given the authority to provide for site and route selection for 
 19.34  large electric power facilities.  The board commission shall 
 19.35  issue permits for large electric power facilities in a timely 
 19.36  fashion.  When the Public Utilities Commission has determined 
 20.1   the and in a manner consistent with the overall determination of 
 20.2   need for the project under section 216B.243 or 216B.2425,.  
 20.3   Questions of need, including size, type, and timing; alternative 
 20.4   system configurations; and voltage are not within the board's 
 20.5   siting and routing authority and must not be included in the 
 20.6   scope of environmental review conducted under sections 116C.51 
 20.7   to 116C.69. 
 20.8      Sec. 4.  Minnesota Statutes 2004, section 116C.57, 
 20.9   subdivision 1, is amended to read: 
 20.10     Subdivision 1.  [SITE PERMIT.] No person may construct a 
 20.11  large electric generating plant without a site permit from the 
 20.12  board commission.  A large electric generating plant may be 
 20.13  constructed only on a site approved by the board commission.  
 20.14  The board commission must incorporate into one proceeding the 
 20.15  route selection for a high voltage transmission line that is 
 20.16  directly associated with and necessary to interconnect the large 
 20.17  electric generating plant to the transmission system and whose 
 20.18  need is certified as part of the generating plant project by the 
 20.19  Public Utilities Commission under section 216B.243. 
 20.20     Sec. 5.  Minnesota Statutes 2004, section 116C.57, 
 20.21  subdivision 2c, is amended to read: 
 20.22     Subd. 2c.  [ENVIRONMENTAL REVIEW.] The board commissioner 
 20.23  of the Department of Commerce shall prepare for the commission 
 20.24  an environmental impact statement on each proposed large 
 20.25  electric generating plant or high voltage transmission line for 
 20.26  which a complete application has been submitted.  For any 
 20.27  project that has obtained a certificate of need from the Public 
 20.28  Utilities Commission, the board The commissioner shall not 
 20.29  consider whether or not the project is needed.  No other state 
 20.30  environmental review documents shall be are required.  The board 
 20.31  commissioner shall study and evaluate any site or route proposed 
 20.32  by an applicant and any other site or route the board commission 
 20.33  deems necessary that was proposed in a manner consistent with 
 20.34  rules adopted by the board concerning the form, content, and 
 20.35  timeliness of proposals for alternate sites or routes.  
 20.36     Sec. 6.  Minnesota Statutes 2004, section 116C.57, is 
 21.1   amended by adding a subdivision to read: 
 21.2      Subd. 9.  [DEPARTMENT OF COMMERCE TO PROVIDE TECHNICAL 
 21.3   EXPERTISE AND OTHER ASSISTANCE.] The commissioner of the 
 21.4   Department of Commerce shall provide technical expertise and 
 21.5   other assistance to the commission for activities and 
 21.6   proceedings under this section, sections 116C.51 to 116C.697, 
 21.7   and chapter 116I.  This assistance shall include the sharing of 
 21.8   staff resources as necessary.  The commissioner shall 
 21.9   periodically report to the commission concerning the Department 
 21.10  of Commerce's costs of providing assistance.  The report must 
 21.11  conform to the schedule and include the required contents 
 21.12  specified by the commission.  The commission shall include the 
 21.13  costs of the assistance in assessments for activities and 
 21.14  proceedings under those sections and reimburse the special 
 21.15  revenue fund for those costs.  If either the commissioner or the 
 21.16  commission deems it necessary, the Department of Commerce and 
 21.17  the commission shall enter into an interagency agreement 
 21.18  establishing terms and conditions for the provision of 
 21.19  assistance and resources under this subdivision.  
 21.20     Sec. 7.  Minnesota Statutes 2004, section 116C.575, 
 21.21  subdivision 5, is amended to read: 
 21.22     Subd. 5.  [ENVIRONMENTAL REVIEW.] For the projects 
 21.23  identified in subdivision 2 and following these procedures, the 
 21.24  board commissioner of the Department of Commerce shall prepare 
 21.25  for the commission an environmental assessment.  The 
 21.26  environmental assessment shall contain information on the human 
 21.27  and environmental impacts of the proposed project and other 
 21.28  sites or routes identified by the board commission and shall 
 21.29  address mitigating measures for all of the sites or routes 
 21.30  considered.  The environmental assessment shall be the only 
 21.31  state environmental review document required to be prepared on 
 21.32  the project.  
 21.33     Sec. 8.  Minnesota Statutes 2004, section 116C.577, is 
 21.34  amended to read: 
 21.35     116C.577 [EMERGENCY PERMIT.] 
 21.36     (a) Any utility whose electric power system requires the 
 22.1   immediate construction of a large electric power generating 
 22.2   plant or high voltage transmission line due to a major 
 22.3   unforeseen event may apply to the board commission for an 
 22.4   emergency permit after providing.  The application must provide 
 22.5   notice in writing to the Public Utilities Commission of the 
 22.6   major unforeseen event and the need for immediate construction.  
 22.7   The permit must be issued in a timely manner, no later than 195 
 22.8   days after the board's commission's acceptance of the 
 22.9   application and upon a finding by the board commission that (1) 
 22.10  a demonstrable emergency exists, (2) the emergency requires 
 22.11  immediate construction, and (3) adherence to the procedures and 
 22.12  time schedules specified in section 116C.57 would jeopardize the 
 22.13  utility's electric power system or would jeopardize the 
 22.14  utility's ability to meet the electric needs of its customers in 
 22.15  an orderly and timely manner. 
 22.16     (b) A public hearing to determine if an emergency exists 
 22.17  must be held within 90 days of the application.  The 
 22.18  board commission, after notice and hearing, shall adopt rules 
 22.19  specifying the criteria for emergency certification.  
 22.20     Sec. 9.  Minnesota Statutes 2004, section 116C.58, is 
 22.21  amended to read: 
 22.22     116C.58 [ANNUAL HEARING.] 
 22.23     The board commission shall hold an annual public hearing at 
 22.24  a time and place prescribed by rule in order to afford 
 22.25  interested persons an opportunity to be heard regarding any 
 22.26  matters relating to the siting of large electric generating 
 22.27  power plants and routing of high voltage transmission lines.  At 
 22.28  the meeting, the board commission shall advise the public of the 
 22.29  permits issued by the board commission in the past year.  
 22.30  The board commission shall provide at least ten days but no more 
 22.31  than 45 days' notice of the annual meeting by mailing notice to 
 22.32  those persons who have requested notice and by publication in 
 22.33  the EQB Monitor and the commission's weekly calendar. 
 22.34     Sec. 10.  Minnesota Statutes 2004, section 116C.61, 
 22.35  subdivision 3, is amended to read: 
 22.36     Subd. 3.  [STATE AGENCY PARTICIPATION.] (a) State agencies 
 23.1   authorized to issue permits required for construction or 
 23.2   operation of large electric power generating plants or high 
 23.3   voltage transmission lines shall participate during routing and 
 23.4   siting at public hearings and all other activities of the board 
 23.5   on specific site or route designations and design considerations 
 23.6   of the board, and shall clearly state whether the site or route 
 23.7   being considered for designation or permit and other design 
 23.8   matters under consideration for approval will be in compliance 
 23.9   with state agency standards, rules, or policies. 
 23.10     (b) An applicant for a permit under this section or under 
 23.11  chapter 116I shall notify the commissioner of agriculture if the 
 23.12  proposed project will impact cultivated agricultural land, as 
 23.13  defined in section 1116I.01, subdivision 4.  The commissioner 
 23.14  may participate in any proceeding on the application, may advise 
 23.15  the commission as to whether to grant a permit for the project, 
 23.16  and may make recommendations regarding mitigating adverse 
 23.17  impacts to agricultural lands if the permit is granted.  The 
 23.18  Department of Agriculture shall be the lead agency in developing 
 23.19  an agricultural mitigation plan required for the project. 
 23.20     Sec. 11.  Minnesota Statutes 2004, section 116C.69, 
 23.21  subdivision 2, is amended to read: 
 23.22     Subd. 2.  [SITE APPLICATION FEE.] Every applicant for a 
 23.23  site permit shall pay to the board commission a fee in an amount 
 23.24  equal to $500 for each $1,000,000 of production plant investment 
 23.25  in the proposed installation as defined in the Federal Power 
 23.26  Commission Uniform System of Accounts.  The board shall specify 
 23.27  the time and manner of payment of the fee.  If any single 
 23.28  payment requested by the board is in excess of 25 percent of the 
 23.29  total estimated fee, the board shall show that the excess is 
 23.30  reasonably necessary.  The applicant shall pay within 30 days of 
 23.31  notification any additional fees reasonably necessary for 
 23.32  completion of the site evaluation and designation process by the 
 23.33  board.  In no event shall the total fees required of the 
 23.34  applicant under this subdivision exceed an amount equal to 0.001 
 23.35  of said production plant investment ($1,000 for each $1,000,000) 
 23.36  to cover the necessary and reasonable costs incurred by the 
 24.1   commission in acting on the permit application and carrying out 
 24.2   the requirements of sections 116C.51 to 116C.69.  The commission 
 24.3   may adopt rules providing for the payment of the fee.  Section 
 24.4   16A.1283 does not apply to establishment of this fee.  All money 
 24.5   received pursuant to this subdivision shall be deposited in a 
 24.6   special account.  Money in the account is appropriated to 
 24.7   the board commission to pay expenses incurred in processing 
 24.8   applications for site permits in accordance with sections 
 24.9   116C.51 to 116C.69 and in the event the expenses are less than 
 24.10  the fee paid, to refund the excess to the applicant.  
 24.11     Sec. 12.  Minnesota Statutes 2004, section 116C.69, 
 24.12  subdivision 2a, is amended to read: 
 24.13     Subd. 2a.  [ROUTE APPLICATION FEE.] Every applicant for a 
 24.14  transmission line route permit shall pay to the board commission 
 24.15  a base fee of $35,000 plus a fee in an amount equal to $1,000 
 24.16  per mile length of the longest proposed route.  The board shall 
 24.17  specify the time and manner of payment of the fee.  If any 
 24.18  single payment requested by the board is in excess of 25 percent 
 24.19  of the total estimated fee, the board shall show that the excess 
 24.20  is reasonably necessary.  In the event the actual cost of 
 24.21  processing an application up to the board's final decision to 
 24.22  designate a route exceeds the above fee schedule, the board may 
 24.23  assess the applicant any additional fees necessary to cover the 
 24.24  actual costs, not to exceed an amount equal to $500 per mile 
 24.25  length of the longest proposed route fee to cover the necessary 
 24.26  and reasonable costs incurred by the commission in acting on the 
 24.27  permit application and carrying out the requirements of sections 
 24.28  116C.51 to 116C.69.  The commission may adopt rules providing 
 24.29  for the payment of the fee.  Section 16A.1283 does not apply to 
 24.30  the establishment of this fee.  All money received pursuant to 
 24.31  this subdivision shall be deposited in a special account.  Money 
 24.32  in the account is appropriated to the board commission to pay 
 24.33  expenses incurred in processing applications for route permits 
 24.34  in accordance with sections 116C.51 to 116C.69 and in the event 
 24.35  the expenses are less than the fee paid, to refund the excess to 
 24.36  the applicant.  
 25.1      Sec. 13.  Minnesota Statutes 2004, section 216B.243, 
 25.2   subdivision 4, is amended to read: 
 25.3      Subd. 4.  [APPLICATION FOR CERTIFICATE; HEARING.] Any 
 25.4   person proposing to construct a large energy facility shall 
 25.5   apply for a certificate of need prior to applying and for a site 
 25.6   or route permit under sections 116C.51 to 116C.69 or 
 25.7   construction of the facility.  The application shall be on forms 
 25.8   and in a manner established by the commission.  In reviewing 
 25.9   each application the commission shall hold at least one public 
 25.10  hearing pursuant to chapter 14.  The public hearing shall be 
 25.11  held at a location and hour reasonably calculated to be 
 25.12  convenient for the public.  An objective of the public hearing 
 25.13  shall be to obtain public opinion on the necessity of granting a 
 25.14  certificate of need and, if a joint hearing is held, a site or 
 25.15  route permit.  The commission shall designate a commission 
 25.16  employee whose duty shall be to facilitate citizen participation 
 25.17  in the hearing process.  If Unless the commission and the 
 25.18  Environmental Quality Board determine determines that a joint 
 25.19  hearing on siting and need under this subdivision and section 
 25.20  116C.57, subdivision 2d, is not feasible, or more efficient, and 
 25.21  may further or otherwise not in the public interest, a joint 
 25.22  hearing under those subdivisions may shall be held. 
 25.23     Sec. 14.  Minnesota Statutes 2004, section 216B.243, 
 25.24  subdivision 5, is amended to read: 
 25.25     Subd. 5.  [APPROVAL, DENIAL, OR MODIFICATION.] Within 
 25.26  six 12 months of the submission of an application, the 
 25.27  commission shall approve or deny a certificate of need for the 
 25.28  facility.  Approval or denial of the certificate shall be 
 25.29  accompanied by a statement of the reasons for the decision.  
 25.30  Issuance of the certificate may be made contingent upon 
 25.31  modifications required by the commission.  If the commissioner 
 25.32  has not issued an order on the application within the 12 months 
 25.33  provided, the commission may extent the time period upon 
 25.34  receiving the consent of the parties or on its own motion, for 
 25.35  good cause, by issuing an order explaining the good cause 
 25.36  justification for extension.  
 26.1      Sec. 15.  Minnesota Statutes 2004, section 216B.243, 
 26.2   subdivision 7, is amended to read: 
 26.3      Subd. 7.  [PARTICIPATION BY OTHER AGENCY OR POLITICAL 
 26.4   SUBDIVISION.] (a) Other state agencies authorized to issue 
 26.5   permits for siting, construction or operation of large energy 
 26.6   facilities, and those state agencies authorized to participate 
 26.7   in matters before the commission involving utility rates and 
 26.8   adequacy of utility services, shall present their position 
 26.9   regarding need and participate in the public hearing process 
 26.10  prior to the issuance or denial of a certificate of need.  
 26.11  Issuance or denial of certificates of need shall be the sole and 
 26.12  exclusive prerogative of the commission and these determinations 
 26.13  and certificates shall be binding upon other state departments 
 26.14  and agencies, regional, county, and local governments and 
 26.15  special purpose government districts except as provided in 
 26.16  sections 116C.01 to 116C.08 and 116D.04, subdivision 9. 
 26.17     (b) An applicant for a permit under this section or under 
 26.18  chapter 116I shall notify the commissioner of agriculture if the 
 26.19  proposed project will impact cultivated agricultural land, as 
 26.20  defined in section 1116I.01, subdivision 4.  The commissioner 
 26.21  may participate in any proceeding on the application, may advise 
 26.22  the commission as to whether to grant a permit for the project, 
 26.23  and may make recommendations regarding mitigating adverse 
 26.24  impacts to agricultural lands if the permit is granted.  The 
 26.25  Department of Agriculture shall be the lead agency in developing 
 26.26  an agricultural mitigation plan required for the project. 
 26.27     Sec. 16.  Minnesota Statutes 2004, section 216C.052, is 
 26.28  amended to read: 
 26.29     216C.052 [RELIABILITY ADMINISTRATOR.] 
 26.30     Subdivision 1.  [RESPONSIBILITIES.] (a) There is 
 26.31  established the position of reliability administrator in the 
 26.32  Department of Commerce Public Utilities Commission.  The 
 26.33  administrator shall act as a source of independent expertise and 
 26.34  a technical advisor to the commissioner, the commission, and the 
 26.35  public, and the Legislative Electric Energy Task Force on issues 
 26.36  related to the reliability of the electric system.  In 
 27.1   conducting its work, the administrator shall provide assistance 
 27.2   to the commission in administering and implementing the 
 27.3   commission's duties under sections 116C.51 to 116C.69; sections 
 27.4   116C.691 to 116C.697; chapter 116I; and rules associated with 
 27.5   those sections.  Subject to resource constraints, the 
 27.6   reliability administrator may also: 
 27.7      (1) model and monitor the use and operation of the energy 
 27.8   infrastructure in the state, including generation facilities, 
 27.9   transmission lines, natural gas pipelines, and other energy 
 27.10  infrastructure; 
 27.11     (2) develop and present to the commission and parties 
 27.12  technical analyses of proposed infrastructure projects, and 
 27.13  provide technical advice to the commission; 
 27.14     (3) present independent, factual, expert, and technical 
 27.15  information on infrastructure proposals and reliability issues 
 27.16  at public meetings hosted by the task force, the Environmental 
 27.17  Quality Board, the department, or the commission. 
 27.18     (b) Upon request and subject to resource constraints, the 
 27.19  administrator shall provide technical assistance regarding 
 27.20  matters unrelated to applications for infrastructure 
 27.21  improvements to the task force, the department, or the 
 27.22  commission. 
 27.23     (c) The administrator may not advocate for any particular 
 27.24  outcome in a commission proceeding, but may give technical 
 27.25  advice to the commission as to the impact on the reliability of 
 27.26  the energy system of a particular project or projects.  The 
 27.27  administrator must not be considered a party or a participant in 
 27.28  any proceeding before the commission. 
 27.29     Subd. 2.  [ADMINISTRATIVE ISSUES.] (a) The commissioner 
 27.30  commission may select the administrator who shall serve for a 
 27.31  four-year term.  The administrator may not have been a party or 
 27.32  a participant in a commission energy proceeding for at least one 
 27.33  year prior to selection by the commissioner commission.  
 27.34  The commissioner commission shall oversee and direct the work of 
 27.35  the administrator, annually review the expenses of the 
 27.36  administrator, and annually approve the budget of the 
 28.1   administrator.  The administrator may hire staff and may 
 28.2   contract for technical expertise in performing duties when 
 28.3   existing state resources are required for other state 
 28.4   responsibilities or when special expertise is required.  The 
 28.5   salary of the administrator is governed by section 15A.0815, 
 28.6   subdivision 2. 
 28.7      (b) Costs relating to a specific proceeding, analysis, or 
 28.8   project are not general administrative costs.  For purposes of 
 28.9   this section, "energy utility" means public utilities, 
 28.10  generation and transmission cooperative electric associations, 
 28.11  and municipal power agencies providing natural gas or electric 
 28.12  service in the state.  
 28.13     (c) The Department of Commerce commission shall pay: 
 28.14     (1) the general administrative costs of the administrator, 
 28.15  not to exceed $1,000,000 in a fiscal year, and shall assess 
 28.16  energy utilities for those administrative costs.  These costs 
 28.17  must be consistent with the budget approved by the commissioner 
 28.18  commission under paragraph (a).  The department shall apportion 
 28.19  the costs among all energy utilities in proportion to their 
 28.20  respective gross operating revenues from sales of gas or 
 28.21  electric service within the state during the last calendar year, 
 28.22  and shall then render a bill to each utility on a regular basis; 
 28.23  and 
 28.24     (2) costs relating to a specific proceeding analysis or 
 28.25  project and shall render a bill to the specific energy utility 
 28.26  or utilities participating in the proceeding, analysis, or 
 28.27  project directly, either at the conclusion of a particular 
 28.28  proceeding, analysis, or project, or from time to time during 
 28.29  the course of the proceeding, analysis, or project. 
 28.30     (d) For purposes of administrative efficiency, the 
 28.31  department shall assess energy utilities and issue bills in 
 28.32  accordance with the billing and assessment procedures provided 
 28.33  in section 216B.62, to the extent that these procedures do not 
 28.34  conflict with this subdivision.  The amount of the bills 
 28.35  rendered by the department under paragraph (c) must be paid by 
 28.36  the energy utility into an account in the special revenue fund 
 29.1   in the state treasury within 30 days from the date of billing 
 29.2   and is appropriated to the commissioner commission for the 
 29.3   purposes provided in this section.  The commission shall approve 
 29.4   or approve as modified a rate schedule providing for the 
 29.5   automatic adjustment of charges to recover amounts paid by 
 29.6   utilities under this section.  All amounts assessed under this 
 29.7   section are in addition to amounts appropriated to the 
 29.8   commission and the department by other law. 
 29.9      Subd. 3.  [ASSESSMENT AND APPROPRIATION.] In addition to 
 29.10  the amount noted in subdivision 2, the commissioner commission 
 29.11  may assess utilities, using the mechanism specified in that 
 29.12  subdivision, up to an additional $500,000 annually through June 
 29.13  30, 2006.  The amounts assessed under this subdivision are 
 29.14  appropriated to the commissioner commission, and some or all of 
 29.15  the amounts assessed may be transferred to the commissioner of 
 29.16  administration, for the purposes specified in section 16B.325 
 29.17  and Laws 2001, chapter 212, article 1, section 3, as needed to 
 29.18  implement those sections. 
 29.19     Subd. 4.  [EXPIRATION.] This section expires June 30, 
 29.20  2006 2007. 
 29.21     Sec. 17.  [TRANSFERRING POWER PLANT SITING 
 29.22  RESPONSIBILITIES.] 
 29.23     To ensure greater public participation in energy 
 29.24  infrastructure approval proceedings and to better integrate and 
 29.25  align state energy and environmental policy goals with economic 
 29.26  decisions involving large energy infrastructure, all 
 29.27  responsibilities, as defined in Minnesota Statutes, section 
 29.28  15.039, subdivision 1, held by the Environmental Quality Board 
 29.29  relating to power plant siting and routing under Minnesota 
 29.30  Statutes, sections 116C.51 to 116C.69; wind energy conversion 
 29.31  systems under Minnesota Statutes, sections 116C.691 to 116C.697; 
 29.32  pipelines under Minnesota Statutes, chapter 116I; and rules 
 29.33  associated with those sections are transferred to the Public 
 29.34  Utilities Commission under Minnesota Statutes, section 15.039, 
 29.35  except that the responsibilities of the Environmental Quality 
 29.36  Board under Minnesota Statutes, section 116C.83, subdivision 6, 
 30.1   and Minnesota Rules, parts 4400.1700, 4400.2750, and 4410.7010 
 30.2   to 4410.7070, are transferred to the commissioner of the 
 30.3   Department of Commerce.  The power plan siting staff of the 
 30.4   Environmental Quality Board are transferred to the Department of 
 30.5   Commerce.  The department's budget shall be adjusted to reflect 
 30.6   the transfer.  The Department of Commerce and the Public 
 30.7   Utilities Commission shall perform these duties in accord with 
 30.8   the provisions set forth in section 116D.03. 
 30.9      Sec. 18.  [TRANSFERRING RELIABILITY ADMINISTRATOR 
 30.10  RESPONSIBILITIES.] 
 30.11     All responsibilities, as defined in Minnesota Statutes 
 30.12  2004, section 15.039, subdivision 1, held by the Minnesota 
 30.13  Department of Commerce relating to the reliability administrator 
 30.14  under Minnesota Statutes, section 216C.052, and the staff 
 30.15  currently performing those duties, are transferred to the 
 30.16  Minnesota Public Utilities Commission under Minnesota Statutes, 
 30.17  section 15.039. 
 30.18     Sec. 19.  [REVISOR'S INSTRUCTION.] 
 30.19     (a) The revisor of statutes shall change the words 
 30.20  "Environmental Quality Board," "board," "chair of the board," 
 30.21  "chair," "board's," and similar terms, when they refer to the 
 30.22  Environmental Quality Board or chair of the Environmental 
 30.23  Quality Board, to the term "Public Utilities Commission," 
 30.24  "commission," or "commission's," as appropriate, where they 
 30.25  appear in Minnesota Statutes, sections 13.741, subdivision 3, 
 30.26  116C.51 to 116C.697, and chapter 116I.  The revisor shall also 
 30.27  make those changes in Minnesota Rules, chapters 4400, 4401, and 
 30.28  4415, except as specified in paragraph (b). 
 30.29     (b) The revisor of statutes shall change the words 
 30.30  "Environmental Quality Board," "board," "chair of the board," 
 30.31  "chair," "board's," and similar terms, when they refer to the 
 30.32  Environmental Quality Board or chair of the Environmental 
 30.33  Quality Board, to the term "commissioner of the Department of 
 30.34  Commerce," "commissioner," or "commissioner's," as appropriate, 
 30.35  where they appear in Minnesota Statutes, section 116C.83, 
 30.36  subdivision 6; and Minnesota Rules, parts 4400.1700, subparts 1 
 31.1   to 9, 11, and 12; 4400.2750; and 4410.7010 to 4410.7070. 
 31.2      Sec. 20.  [EFFECTIVE DATE.] 
 31.3      Sections 1 to 18 are effective July 1, 2005.  
 31.4                              ARTICLE 4 
 31.5                   GAS INFRASTRUCTURE COST RECOVERY 
 31.6      Section 1.  [216B.1635] [RECOVERY OF ELIGIBLE 
 31.7   INFRASTRUCTURE REPLACEMENT COSTS BY GAS UTILITIES.] 
 31.8      Subdivision 1.  [DEFINITIONS.] (a) "Gas utility" means a 
 31.9   public utility as defined in section 216B.02, subdivision 4, 
 31.10  that furnishes natural gas service to retail customers. 
 31.11     (b) "Gas utility infrastructure costs" or "GUIC" means gas 
 31.12  utility projects that: 
 31.13     (1) do not serve to increase revenues by directly 
 31.14  connecting the infrastructure replacement to new customers; 
 31.15     (2) are in service but were not included in the gas 
 31.16  utility's rate base in its most recent general rate case; and 
 31.17     (3) replace or modify existing infrastructure if the 
 31.18  replacement or modification does not constitute a betterment, 
 31.19  unless the betterment is required by a political subdivision, as 
 31.20  evidenced by specific documentation from the government entity 
 31.21  requiring the replacement or modification of infrastructure. 
 31.22     (c) "Gas utility projects" means relocation and replacement 
 31.23  of natural gas facilities located in the public right-of-way 
 31.24  required by the construction or improvement of a highway, road, 
 31.25  street, public building, or other public work by or on behalf of 
 31.26  the United States, the state of Minnesota, or a political 
 31.27  subdivision. 
 31.28     Subd. 2.  [FILING.] (a) The commission may approve a gas 
 31.29  utility's petition for a rate schedule to recover GUIC under 
 31.30  this section.  A gas utility may petition the commission to 
 31.31  recover a rate of return, income taxes on the rate of return, 
 31.32  incremental property taxes, plus incremental depreciation 
 31.33  expense associated with GUIC.  
 31.34     (b) The filing is subject to the following: 
 31.35     (1) a gas utility may submit a filing under this section no 
 31.36  more than once per year; 
 32.1      (2) a gas utility must file sufficient information to 
 32.2   satisfy the commission regarding the proposed GUIC or be subject 
 32.3   to denial by the commission.  The information includes, but is 
 32.4   not limited to: 
 32.5      (i) the government entity ordering the gas utility project 
 32.6   and the purpose for which the project is undertaken; 
 32.7      (ii) the location, description, and costs associated with 
 32.8   the project; 
 32.9      (iii) a description of the costs and salvage value, if any, 
 32.10  associated with the existing infrastructure replaced or modified 
 32.11  as a result of the project; 
 32.12     (iv) the proposed rate design and an explanation of why the 
 32.13  proposed rate design is in the public interest; 
 32.14     (v) the magnitude and timing of any known future gas 
 32.15  utility projects that the utility may seek to recover under this 
 32.16  section; 
 32.17     (vi) the magnitude of GUIC in relation to the gas utility's 
 32.18  base revenue as approved by the commission in the gas utility's 
 32.19  most recent general rate case, exclusive of gas purchase costs 
 32.20  and transportation charges; 
 32.21     (vii) the magnitude of GUIC in relation to the gas 
 32.22  utility's capital expenditures since its most recent general 
 32.23  rate case; 
 32.24     (viii) the amount of time since the utility last filed a 
 32.25  general rate case and the utility's reasons for seeking recovery 
 32.26  outside of a general rate case; and 
 32.27     (ix) documentation supporting the calculation of the GUIC. 
 32.28     Subd. 3.  [COMMISSION AUTHORITY.] The commission may issue 
 32.29  orders and adopt rules necessary to implement and administer 
 32.30  this section. 
 32.31     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 32.32  following final enactment. 
 32.33     Sec. 2.  [REPORT TO LEGISLATURE.] 
 32.34     The Department of Commerce shall review the operation and 
 32.35  impact of the GUIC recovery mechanism established under 
 32.36  Minnesota Statutes, section 216B.1635, on ratepayers and the 
 33.1   utility and submit a report of its findings and recommendations 
 33.2   to the legislature four years after the effective date of this 
 33.3   section. 
 33.4      Sec. 3.  [SUNSET.] 
 33.5      Sections 1 and 2 expire on June 30, 2015. 
 33.6                              ARTICLE 5
 33.7                            MISCELLANEOUS 
 33.8      Section 1.  Minnesota Statutes 2004, section 216B.16, 
 33.9   subdivision 6d, is amended to read: 
 33.10     Subd. 6d.  [WIND ENERGY; PROPERTY TAX.] An owner of a wind 
 33.11  energy conversion facility which is required to pay property 
 33.12  taxes under section 272.02, subdivision 22, or production taxes 
 33.13  under section 272.029, and any related or successor provisions, 
 33.14  or a public utility regulated by the Public Utilities Commission 
 33.15  which purchases the wind-generated electricity may petition the 
 33.16  commission to include in any power purchase agreement between 
 33.17  the owner of the facility and the public utility the amount of 
 33.18  property taxes and production taxes paid by the owner of the 
 33.19  facility.  The Public Utilities Commission shall require the 
 33.20  public utility to amend the power purchase agreement to include 
 33.21  the property taxes and production taxes paid by the owner of the 
 33.22  facility in the price paid by the utility for wind-generated 
 33.23  electricity if the commission finds: 
 33.24     (1) the owner of the facility has paid the property taxes 
 33.25  or production taxes required by this subdivision; 
 33.26     (2) the power purchase agreement between the public utility 
 33.27  and the owner does not already require the utility to pay the 
 33.28  amount of property taxes or production taxes the owner has paid 
 33.29  under this subdivision, or, in the case of a power purchase 
 33.30  agreement entered into prior to 1997, the amount of property or 
 33.31  production taxes paid by the owner in any year of the power 
 33.32  purchase agreement exceeds the amount of such property or 
 33.33  production taxes included in the price paid by the utility to 
 33.34  the owner, as reflected in the owner's bid documents; and 
 33.35     (3) the commission has approved a rate schedule containing 
 33.36  provisions for the automatic adjustment of charges for utility 
 34.1   service in direct relation to the charges ordered by the 
 34.2   commission under section 272.02, subdivision 22, or 272.029. 
 34.3      Sec. 2.  Minnesota Statutes 2004, section 216B.241, 
 34.4   subdivision 1b, is amended to read: 
 34.5      Subd. 1b.  [CONSERVATION IMPROVEMENT BY COOPERATIVE 
 34.6   ASSOCIATION OR MUNICIPALITY.] (a) This subdivision applies to: 
 34.7      (1) a cooperative electric association that provides retail 
 34.8   service to its members; 
 34.9      (2) a municipality that provides electric service to retail 
 34.10  customers; and 
 34.11     (3) a municipality with gross operating revenues in excess 
 34.12  of $5,000,000 from sales of natural gas to retail customers.  
 34.13     (b) Each cooperative electric association and municipality 
 34.14  subject to this subdivision shall spend and invest for energy 
 34.15  conservation improvements under this subdivision the following 
 34.16  amounts: 
 34.17     (1) for a municipality, 0.5 percent of its gross operating 
 34.18  revenues from the sale of gas and 1.5 percent of its gross 
 34.19  operating revenues from the sale of electricity, excluding gross 
 34.20  operating revenues from electric and gas service provided in the 
 34.21  state to large electric customer facilities; and 
 34.22     (2) for a cooperative electric association, 1.5 percent of 
 34.23  its gross operating revenues from service provided in the state, 
 34.24  excluding gross operating revenues from service provided in the 
 34.25  state to large electric customer facilities indirectly through a 
 34.26  distribution cooperative electric association. 
 34.27     (c) Each municipality and cooperative electric association 
 34.28  subject to this subdivision shall identify and implement energy 
 34.29  conservation improvement spending and investments that are 
 34.30  appropriate for the municipality or association, except that a 
 34.31  municipality or association may not spend or invest for energy 
 34.32  conservation improvements that directly benefit a large electric 
 34.33  customer facility for which the commissioner has issued an 
 34.34  exemption under subdivision 1a, paragraph (b). 
 34.35     (d) Each municipality and cooperative electric association 
 34.36  subject to this subdivision may spend and invest annually up to 
 35.1   ten percent of the total amount required to be spent and 
 35.2   invested on energy conservation improvements under this 
 35.3   subdivision on research and development projects that meet the 
 35.4   definition of energy conservation improvement in subdivision 1 
 35.5   and that are funded directly by the municipality or cooperative 
 35.6   electric association.  
 35.7      (e) Load-management activities that do not reduce energy 
 35.8   use but that increase the efficiency of the electric system may 
 35.9   be used to meet the following percentage 50 percent of the 
 35.10  conservation investment and spending requirements of this 
 35.11  subdivision: 
 35.12     (1) 2002 - 90 percent; 
 35.13     (2) 2003 - 80 percent; 
 35.14     (3) 2004 - 65 percent; and 
 35.15     (4) 2005 and thereafter - 50 percent. 
 35.16     (f) A generation and transmission cooperative electric 
 35.17  association that provides energy services to cooperative 
 35.18  electric associations that provide electric service at retail to 
 35.19  consumers may invest in energy conservation improvements on 
 35.20  behalf of the associations it serves and may fulfill the 
 35.21  conservation, spending, reporting, and energy savings goals on 
 35.22  an aggregate basis.  A municipal power agency or other 
 35.23  not-for-profit entity that provides energy service to municipal 
 35.24  utilities that provide electric service at retail may invest in 
 35.25  energy conservation improvements on behalf of the municipal 
 35.26  utilities it serves and may fulfill the conservation, spending, 
 35.27  reporting, and energy savings goals on an aggregate basis, under 
 35.28  an agreement between the municipal power agency or 
 35.29  not-for-profit entity and each municipal utility for funding the 
 35.30  investments. 
 35.31     (g) At least every two four years, on a schedule determined 
 35.32  by the commissioner, each municipality or cooperative shall file 
 35.33  an overview of its conservation improvement plan with the 
 35.34  commissioner.  With this overview, the municipality or 
 35.35  cooperative shall also provide an evaluation to the commissioner 
 35.36  detailing its energy conservation improvement spending and 
 36.1   investments for the previous period.  The evaluation must 
 36.2   briefly describe each conservation program and must specify the 
 36.3   energy savings or increased efficiency in the use of energy 
 36.4   within the service territory of the utility or association that 
 36.5   is the result of the spending and investments.  The evaluation 
 36.6   must analyze the cost-effectiveness of the utility's or 
 36.7   association's conservation programs, using a list of baseline 
 36.8   energy and capacity savings assumptions developed in 
 36.9   consultation with the department.  The commissioner shall review 
 36.10  each evaluation and make recommendations, where appropriate, to 
 36.11  the municipality or association to increase the effectiveness of 
 36.12  conservation improvement activities.  Up to three percent of a 
 36.13  utility's conservation spending obligation under this section 
 36.14  may be used for program pre-evaluation, testing, and monitoring 
 36.15  and program evaluation.  The overview and evaluation filed by a 
 36.16  municipality with less than 60,000,000 kilowatt hours in annual 
 36.17  retail sales of electric service may consist of a letter from 
 36.18  the governing board of the municipal utility to the department 
 36.19  providing the amount of annual conservation spending required of 
 36.20  that municipality and certifying that the required amount has 
 36.21  been spent on conservation programs pursuant to this subdivision.
 36.22     (h) The commissioner shall also review each evaluation for 
 36.23  whether a portion of the money spent on residential conservation 
 36.24  improvement programs is devoted to programs that directly 
 36.25  address the needs of renters and low-income persons unless an 
 36.26  insufficient number of appropriate programs are available.  For 
 36.27  the purposes of this subdivision and subdivision 2, "low-income" 
 36.28  means an income at or below 50 percent of the state median 
 36.29  income.  
 36.30     (i) As part of its spending for conservation improvement, a 
 36.31  municipality or association may contribute to the energy and 
 36.32  conservation account.  A municipality or association may propose 
 36.33  to the commissioner to designate that all or a portion of funds 
 36.34  contributed to the account be used for research and development 
 36.35  projects that can best be implemented on a statewide basis.  Any 
 36.36  amount contributed must be remitted to the commissioner by 
 37.1   February 1 of each year. 
 37.2      (j) A municipality may spend up to 50 percent of its 
 37.3   required spending under this section to refurbish an existing 
 37.4   district heating or cooling system.  This paragraph expires July 
 37.5   1, 2007.  
 37.6      Sec. 3.  Minnesota Statutes 2004, section 216B.241, 
 37.7   subdivision 2, is amended to read: 
 37.8      Subd. 2.  [PROGRAMS.] (a) The commissioner may require 
 37.9   public utilities to make investments and expenditures in energy 
 37.10  conservation improvements, explicitly setting forth the interest 
 37.11  rates, prices, and terms under which the improvements must be 
 37.12  offered to the customers.  The required programs must cover no 
 37.13  more than a two-year four-year period.  Public utilities shall 
 37.14  file conservation improvement plans by June 1, on a schedule 
 37.15  determined by order of the commissioner, but at least every four 
 37.16  years.  Plans received by a public utility by June 1 must be 
 37.17  approved or approved as modified by the commissioner by December 
 37.18  1 of that same year.  The commissioner shall give special 
 37.19  consideration and encouragement to programs that bring about 
 37.20  significant net savings through the use of energy-efficient 
 37.21  lighting.  The commissioner shall evaluate the program on the 
 37.22  basis of cost-effectiveness and the reliability of technologies 
 37.23  employed.  The commissioner's order must provide to the extent 
 37.24  practicable for a free choice, by consumers participating in the 
 37.25  program, of the device, method, material, or project 
 37.26  constituting the energy conservation improvement and for a free 
 37.27  choice of the seller, installer, or contractor of the energy 
 37.28  conservation improvement, provided that the device, method, 
 37.29  material, or project seller, installer, or contractor is duly 
 37.30  licensed, certified, approved, or qualified, including under the 
 37.31  residential conservation services program, where applicable.  
 37.32     (b) The commissioner may require a utility to make an 
 37.33  energy conservation improvement investment or expenditure 
 37.34  whenever the commissioner finds that the improvement will result 
 37.35  in energy savings at a total cost to the utility less than the 
 37.36  cost to the utility to produce or purchase an equivalent amount 
 38.1   of new supply of energy.  The commissioner shall nevertheless 
 38.2   ensure that every public utility operate one or more programs 
 38.3   under periodic review by the department.  
 38.4      (c) Each public utility subject to subdivision 1a may spend 
 38.5   and invest annually up to ten percent of the total amount 
 38.6   required to be spent and invested on energy conservation 
 38.7   improvements under this section by the utility on research and 
 38.8   development projects that meet the definition of energy 
 38.9   conservation improvement in subdivision 1 and that are funded 
 38.10  directly by the public utility.  
 38.11     (d) A public utility may not spend for or invest in energy 
 38.12  conservation improvements that directly benefit a large electric 
 38.13  customer facility for which the commissioner has issued an 
 38.14  exemption pursuant to subdivision 1a, paragraph (b).  The 
 38.15  commissioner shall consider and may require a utility to 
 38.16  undertake a program suggested by an outside source, including a 
 38.17  political subdivision or a nonprofit or community organization. 
 38.18     (e) The commissioner may, by order, establish a list of 
 38.19  programs that may be offered as energy conservation improvements 
 38.20  by a public utility, municipal utility, cooperative electric 
 38.21  association, or other entity providing conservation services 
 38.22  pursuant to this section.  The list of programs may include 
 38.23  rebates for high-efficiency appliances, rebates or subsidies for 
 38.24  high-efficiency lamps, small business energy audits, and 
 38.25  building recommissioning.  The commissioner may, by order, 
 38.26  change this list to add or subtract programs as the commissioner 
 38.27  determines is necessary to promote efficient and effective 
 38.28  conservation programs. 
 38.29     (f) The commissioner shall ensure that a portion of the 
 38.30  money spent on residential conservation improvement programs is 
 38.31  devoted to programs that directly address the needs of renters 
 38.32  and low-income persons, in proportion to the amount the utility 
 38.33  has historically spent on such programs based on the most recent 
 38.34  three-year average relative to the utility's total conservation 
 38.35  spending under this section, unless an insufficient number of 
 38.36  appropriate programs are available. 
 39.1      (g) A utility, a political subdivision, or a nonprofit or 
 39.2   community organization that has suggested a program, the 
 39.3   attorney general acting on behalf of consumers and small 
 39.4   business interests, or a utility customer that has suggested a 
 39.5   program and is not represented by the attorney general under 
 39.6   section 8.33 may petition the commission to modify or revoke a 
 39.7   department decision under this section, and the commission may 
 39.8   do so if it determines that the program is not cost-effective, 
 39.9   does not adequately address the residential conservation 
 39.10  improvement needs of low-income persons, has a long-range 
 39.11  negative effect on one or more classes of customers, or is 
 39.12  otherwise not in the public interest.  The commission shall 
 39.13  reject a petition that, on its face, fails to make a reasonable 
 39.14  argument that a program is not in the public interest. 
 39.15     (h) The commissioner may order a public utility to include, 
 39.16  with the filing of the utility's proposed conservation 
 39.17  improvement plan under paragraph (a), the results of an 
 39.18  independent audit of the utility's conservation improvement 
 39.19  programs and expenditures performed by the department or an 
 39.20  auditor with experience in the provision of energy conservation 
 39.21  and energy efficiency services approved by the commissioner and 
 39.22  chosen by the utility.  The audit must specify the energy 
 39.23  savings or increased efficiency in the use of energy within the 
 39.24  service territory of the utility that is the result of the 
 39.25  spending and investments.  The audit must evaluate the 
 39.26  cost-effectiveness of the utility's conservation programs. 
 39.27     (i) Up to three percent of a utility's conservation 
 39.28  spending obligation under this section may be used for program 
 39.29  pre-evaluation, testing, and monitoring and program audit and 
 39.30  evaluation.  
 39.31     Sec. 4.  Minnesota Statutes 2004, section 216B.243, 
 39.32  subdivision 6, is amended to read: 
 39.33     Subd. 6.  [APPLICATION FEES; RULES.] Any application for a 
 39.34  certificate of need shall be accompanied by the application fee 
 39.35  required pursuant to this subdivision.  The application fee is 
 39.36  to be applied toward the total costs reasonably necessary to 
 40.1   complete the evaluation of need for the proposed facility.  The 
 40.2   maximum application fee shall be $50,000, except for an 
 40.3   application for an electric power generating plant as defined in 
 40.4   section 216B.2421, subdivision 2, clause (1), or a high-voltage 
 40.5   transmission line as defined in section 216B.2421, subdivision 
 40.6   2, clause (2), for which the maximum application fee shall be 
 40.7   $100,000.  The commission may require an additional fee to 
 40.8   recover the costs of any rehearing.  The fee for a rehearing 
 40.9   shall not be greater than the actual cost of the rehearing or 
 40.10  the maximum fee specified above, whichever is less. Costs 
 40.11  exceeding the application fee and reasonably necessary to 
 40.12  complete the evaluation of need for the proposed facility shall 
 40.13  be recovered from the applicant.  If the applicant is a public 
 40.14  utility, a cooperative electric association, a generation and 
 40.15  transmission cooperative electric association, a municipal power 
 40.16  agency, a municipal electric utility, or a transmission company, 
 40.17  the recovery shall be made as provided under section 216B.62.  
 40.18  The commission shall establish by rule pursuant to chapter 14 
 40.19  and sections 216C.05 to 216C.30 and this section, a schedule of 
 40.20  fees based on the output or capacity of the facility and the 
 40.21  difficulty of assessment of need.  Money collected in this 
 40.22  manner shall be credited to the general fund of the state 
 40.23  treasury. 
 40.24     Sec. 5.  Minnesota Statutes 2004, section 216B.62, 
 40.25  subdivision 5, is amended to read: 
 40.26     Subd. 5.  [ASSESSING COOPERATIVES AND MUNICIPALS.] The 
 40.27  commission and department may charge cooperative electric 
 40.28  associations, generation and transmission cooperative electric 
 40.29  associations, municipal power agencies, and municipal electric 
 40.30  utilities their proportionate share of the expenses incurred in 
 40.31  the review and disposition of resource plans, adjudication of 
 40.32  service area disputes, proceedings under section 216B.1691, 
 40.33  216B.2425, or 216B.243, and the costs incurred in the 
 40.34  adjudication of complaints over service standards, practices, 
 40.35  and rates.  Cooperative electric associations electing to become 
 40.36  subject to rate regulation by the commission pursuant to section 
 41.1   216B.026, subdivision 4, are also subject to this section.  
 41.2   Neither a cooperative electric association nor a municipal 
 41.3   electric utility is liable for costs and expenses in a calendar 
 41.4   year in excess of the limitation on costs that may be assessed 
 41.5   against public utilities under subdivision 2.  A cooperative 
 41.6   electric association, generation and transmission cooperative 
 41.7   electric association, municipal power agency, or municipal 
 41.8   electric utility may object to and appeal bills of the 
 41.9   commission and department as provided in subdivision 4.  
 41.10     The department shall assess cooperatives and municipalities 
 41.11  for the costs of alternative energy engineering activities under 
 41.12  section 216C.261.  Each cooperative and municipality shall be 
 41.13  assessed in proportion that its gross operating revenues for the 
 41.14  sale of gas and electric service within the state for the last 
 41.15  calendar year bears to the total of those revenues for all 
 41.16  public utilities, cooperatives, and municipalities. 
 41.17     Sec. 6.  Minnesota Statutes 2004, section 216C.41, 
 41.18  subdivision 1, is amended to read: 
 41.19     Subdivision 1.  [DEFINITIONS.] (a) The definitions in this 
 41.20  subdivision apply to this section. 
 41.21     (b) "Qualified hydroelectric facility" means a 
 41.22  hydroelectric generating facility in this state that: 
 41.23     (1) is located at the site of a dam, if the dam was in 
 41.24  existence as of March 31, 1994; and 
 41.25     (2) begins generating electricity after July 1, 1994, or 
 41.26  generates electricity after substantial refurbishing of a 
 41.27  facility that begins after July 1, 2001. 
 41.28     (c) "Qualified wind energy conversion facility" means a 
 41.29  wind energy conversion system in this state that: 
 41.30     (1) produces two megawatts or less of electricity as 
 41.31  measured by nameplate rating and begins generating electricity 
 41.32  after December 31, 1996, and before July 1, 1999; 
 41.33     (2) begins generating electricity after June 30, 1999, 
 41.34  produces two megawatts or less of electricity as measured by 
 41.35  nameplate rating, and is: 
 41.36     (i) owned by a resident of Minnesota or an entity that is 
 42.1   organized under the laws of this state, is not prohibited from 
 42.2   owning agricultural land under section 500.24, and owns the land 
 42.3   where the facility is sited; 
 42.4      (ii) owned by a Minnesota small business as defined in 
 42.5   section 645.445; 
 42.6      (iii) owned by a Minnesota nonprofit organization; 
 42.7      (iv) owned by a tribal council if the facility is located 
 42.8   within the boundaries of the reservation; 
 42.9      (v) owned by a Minnesota municipal utility or a Minnesota 
 42.10  cooperative electric association; or 
 42.11     (vi) owned by a Minnesota political subdivision or local 
 42.12  government, including, but not limited to, a county, statutory 
 42.13  or home rule charter city, town, school district, or any other 
 42.14  local or regional governmental organization such as a board, 
 42.15  commission, or association; or 
 42.16     (3) begins generating electricity after June 30, 1999, 
 42.17  produces seven megawatts or less of electricity as measured by 
 42.18  nameplate rating, and: 
 42.19     (i) is owned by a cooperative organized under chapter 308A 
 42.20  other than a Minnesota cooperative electric association; and 
 42.21     (ii) all shares and membership in the cooperative are held 
 42.22  by an entity that is not prohibited from owning agricultural 
 42.23  land under section 500.24. 
 42.24     (d) "Qualified on-farm biogas recovery facility" means an 
 42.25  anaerobic digester system that: 
 42.26     (1) is located at the site of an agricultural 
 42.27  operation; and 
 42.28     (2) is owned by an entity that is not prohibited from 
 42.29  owning agricultural land under section 500.24 and that owns or 
 42.30  rents the land where the facility is located; and 
 42.31     (3) begins generating electricity after July 1, 2001.  
 42.32     (e) "Anaerobic digester system" means a system of 
 42.33  components that processes animal waste based on the absence of 
 42.34  oxygen and produces gas used to generate electricity. 
 42.35     Sec. 7.  [LEGISLATIVE FINDINGS.] 
 42.36     The legislature finds that broad participation by the 
 43.1   public and other interested and affected parties in proceedings 
 43.2   of the Minnesota Public Utilities Commission serves the public 
 43.3   interest.  The utilization of the Internet by the commission and 
 43.4   the Minnesota Department of Commerce, which maintains the 
 43.5   commission's records, to allow electronic access to commission 
 43.6   documents has expanded access to the commission's proceedings.  
 43.7   E-filing, which will enable individuals to electronically file 
 43.8   documents in ongoing proceedings via the Internet and permit the 
 43.9   electronic retrieval of all documents filed, is an effective way 
 43.10  to lower the costs and increase the ease and efficiency of 
 43.11  participation. 
 43.12     Sec. 8.  [ESTABLISHMENT OF E-FILING SYSTEM; ACCOUNT; 
 43.13  APPROPRIATION.] 
 43.14     (a) The Public Utilities Commission's e-filing account is 
 43.15  established.  The commission shall make a onetime assessment to 
 43.16  regulated utilities of $315,000, which must be deposited in the 
 43.17  account.  Each public utility, municipal utility, electric 
 43.18  cooperative association, and telecommunications carrier must be 
 43.19  assessed in proportion to its respective gross operating 
 43.20  revenues for retail sales of gas, electric, or 
 43.21  telecommunications service in the state in the last calendar 
 43.22  year.  
 43.23     (b) Revenue in the account is appropriated to the 
 43.24  commission for the costs associated with establishing an 
 43.25  e-filing system that allows documents to be filed and retrieved 
 43.26  via the Internet.  Revenue in the account remains available 
 43.27  until expended. 
 43.28     (c) The e-filing system must be operational by September 
 43.29  30, 2005.  
 43.30     Sec. 9.  [STUDY; BIODIESEL FUEL FOR HOME HEATING.] 
 43.31     (a) From the money available to the commissioner of 
 43.32  commerce for purposes of studies and technical assistance by the 
 43.33  reliability administrator under Minnesota Statutes, section 
 43.34  216C.052, and in conformity with the goals and directives of 
 43.35  Minnesota Statutes, section 16B.325, the reliability 
 43.36  administrator shall perform a comprehensive technical and 
 44.1   economic analysis of the benefits to be derived from using 
 44.2   biodiesel fuel as defined in Minnesota Statutes, section 239.77, 
 44.3   subdivision 1, or biodiesel fuel blends, as a home heating 
 44.4   fuel.  The analysis must consider blends ranging from B2 to 
 44.5   B100.  No more than $25,000 may be expended for the analysis.  
 44.6      (b) Not later than March 15, 2007, the reliability 
 44.7   administrator shall report the results of the study and analysis 
 44.8   to the appropriate standing committees of the Minnesota senate 
 44.9   and house of representatives. 
 44.10     Sec. 10.  [JOINT VENTURE AUTHORITY.] 
 44.11     (a) The city of Alexandria may enter into a joint venture 
 44.12  or joint ventures with one, two, or three of the entities known 
 44.13  as Runestone Telephone Association, Runestone Electric 
 44.14  Association, and Gardonville Telephone Cooperative for the 
 44.15  purpose of providing local niche service, including Internet 
 44.16  services, and point-to-point transmission of digital information.
 44.17     (b) For purposes of this section, with respect to the 
 44.18  services described in paragraph (a), the city of Alexandria and 
 44.19  a joint venture to which it is a party shall have the rights and 
 44.20  authority granted by, and be subject to, Minnesota Statutes 2001 
 44.21  Supplement, section 452.25, except for the provisions of that 
 44.22  section which relate specifically and only to electric utilities.
 44.23     (c) For the purposes of this section, "local niche service" 
 44.24  refers to point-to-point connections between end-user locations 
 44.25  within a service area and any telecommunications services under 
 44.26  the Public Utilities Commission's jurisdiction under Minnesota 
 44.27  Statutes, chapter 237, that do not fall within the definition of 
 44.28  local service or the definition of interexchange service. 
 44.29     (d) If the city of Alexandria obtains authority to provide 
 44.30  local service or interexchange service under Minnesota Statutes, 
 44.31  chapter 237, it may enter into a joint venture with the entities 
 44.32  identified in paragraph (a) for those purposes. 
 44.33     [<b>EFFECTIVE DATE; LOCAL APPROVAL.</b>] This section is effective 
 44.34  as to the city of Alexandria the day after the city of 
 44.35  Alexandria's governing body and its chief clerical officer 
 44.36  timely complete compliance with Minnesota Statutes, section 
 45.1   645.021, subdivisions 2 and 3. 
 45.2      Sec. 11.  [REPEALER.] 
 45.3      Laws 1999, chapter 125, section 4, as amended by Laws 2002, 
 45.4   chapter 398, section 7, is repealed. 
 45.5      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 45.6   following final enactment.