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 construction of a high voltage
14.2 	transmission line transmitting the energy generated by the C-BED
14.3 	project to market begins after June 30, 2005, and who resides in
14.4 	the county where the C-BED project is located.
14.5 		Subd. 7.Other c-bed tariff issues. (a) A
14.6 	community-based project developer and a utility shall negotiate
14.7 	the rate and power purchase agreement terms consistent with the
14.8 	tariff established under subdivision 4.
14.9 	(b) At the discretion of the developer, a community-based
14.10 	project developer and a utility may negotiate a power purchase
14.11 	agreement with terms different from the tariff established under
14.12 	subdivision 4.
14.13 	(c) A qualifying owner, or any combination of qualifying
14.14 	owners, may develop a joint venture project with a nonqualifying
14.15 	wind energy project developer.  However, the terms of the C-BED
14.16 	tariff may only apply to the portion of the energy production of
14.17 	the total project that is directly proportional to the equity
14.18 	share of the project owned by the qualifying owners.
14.19 	(d) A project that is operating under a power purchase
14.20 	agreement under a C-BED tariff is not eligible for net energy
14.21 	billing under section 216B.164, subdivision 3, or for production
14.22 	incentives under section 216C.41.
14.23 	(e) A public utility must receive commission approval of a
14.24 	power purchase agreement for a C-BED project that is operating
14.25 	under a rate that is higher in the first ten years of the
14.26 	agreement than in the last ten years.  The commission shall
14.27 	provide the utility's ratepayers an opportunity to address the
14.28 	reasonableness of the proposed power purchase agreement.
14.29 	Unless a party objects to the contract within 30 days, the
14.30 	contract will be deemed approved.

14.31 	Sec. 2. Minnesota Statutes 2004, section 216B.1645,
14.32 	subdivision 1, is amended to read:
14.33 		Subdivision 1.Commission authority.  Upon the petition
14.34 	of a public utility, the Public Utilities Commission shall
14.35 	approve or disapprove power purchase contracts, investments, or
14.36 	expenditures entered into or made by the utility to satisfy the
15.1 	wind and biomass mandates contained in sections 216B.169,
15.2 	216B.2423, and 216B.2424, and to satisfy the renewable energy
15.3 	objectives set forth in section 216B.1691,including reasonable
15.4 	investments and expenditures made to:
15.5 	(1) transmit the electricity generated from sources
15.6 	developed under those sections that is ultimately used to
15.7 	provide service to the utility's retail customers, or to 
15.8 	including studies necessary to identify new transmission
15.9 	facilities needed to transmit electricity to Minnesota retail
15.10 	customers from generating facilities constructed to satisfy the
15.11 	renewable energy objectives, provided that the costs of the
15.12 	studies have not been recovered previously under existing
15.13 	tariffs and the utility has filed an application for a
15.14 	certificate of need for the new transmission facilities
15.15 	identified in the studies; or 
15.16 	(2) develop renewable energy sources from the account
15.17 	required in section 116C.779.

15.18 	Sec. 3. Minnesota Statutes 2004, section 216B.2425, is
15.19 	amended by adding a subdivision to read:
15.20 		Subd. 8.Priority transmission projects. (a) Until
15.21 	January 1, 2010, transmission projects determined by the
15.22 	commission to be necessary to support a utility's plan under
15.23 	section 216B.1691 to meet its obligations under that section
15.24 	must be certified as a priority electric transmission project,
15.25 	satisfying the requirements of section 216B.243.  In determining
15.26 	that a proposed transmission project is necessary to support a
15.27 	utility's plan under section 216B.1691, the commission must find
15.28 	that the applicant has met the following factors:
15.29 	(1) that the transmission facility is necessary to allow
15.30 	the delivery of power from renewable sources of energy to retail
15.31 	customers in Minnesota;
15.32 	(2) that the applicant has signed or will sign power
15.33 	purchase agreements, subject to commission approval, for
15.34 	resources to meet the renewable energy objective that are
15.35 	dependent upon or will use the capacity of the transmission
15.36 	facility to serve retail customers in Minnesota;
16.1 	(3) that the installation and commercial operation date of
16.2 	the renewable resources to satisfy the renewable energy
16.3 	objective will match the planned in-service date of the
16.4 	transmission facility; and 
16.5 	(4) that the proposed transmission facility is consistent
16.6 	with a least-cost solution to the utility's need for additional
16.7 	electricity.
16.8 	(b) This subdivision expires January 1, 2010.

16.9 	Sec. 4. Minnesota Statutes 2004, section 216B.243,
16.10 	subdivision 8, is amended to read:
16.11 		Subd. 8.Exemptions.  This section does not apply to:
16.12 	(1) cogeneration or small power production facilities as
16.13 	defined in the Federal Power Act, United States Code, title 16,
16.14 	section 796, paragraph (17), subparagraph (A), and paragraph
16.15 	(18), subparagraph (A), and having a combined capacity at a
16.16 	single site of less than 80,000 kilowatts or to ;plants or
16.17 	facilities for the production of ethanol or fuel alcohol nor in ;
16.18 	or any case where the commission shall determine has determined 
16.19 	after being advised by the attorney general that its application
16.20 	has been preempted by federal law;
16.21 	(2) a high-voltage transmission line proposed primarily to
16.22 	distribute electricity to serve the demand of a single customer
16.23 	at a single location, unless the applicant opts to request that
16.24 	the commission determine need under this section or section
16.25 	216B.2425;
16.26 	(3) the upgrade to a higher voltage of an existing
16.27 	transmission line that serves the demand of a single customer
16.28 	that primarily uses existing rights-of-way, unless the applicant
16.29 	opts to request that the commission determine need under this
16.30 	section or section 216B.2425;
16.31 	(4) a high-voltage transmission line of one mile or less
16.32 	required to connect a new or upgraded substation to an existing,
16.33 	new, or upgraded high-voltage transmission line;
16.34 	(5) conversion of the fuel source of an existing electric
16.35 	generating plant to using natural gas; or 
16.36 	(6) the modification of an existing electric generating
17.1 	plant to increase efficiency, as long as the capacity of the
17.2 	plant is not increased more than ten percent or more than 100
17.3 	megawatts, whichever is greater.; or 
17.4 	(7) a large energy facility that (i) generates electricity
17.5 	from wind energy conversion systems, (ii) will serve retail
17.6 	customers in Minnesota, (iii) is specifically intended to be
17.7 	used to meet the renewable energy objective under section
17.8 	216B.1691 or addresses a resource need identified in a current
17.9 	commission-approved or commission-reviewed resource plan under
17.10 	section 216B.2422, and (iv) derives at least ten percent of the
17.11 	total nameplate capacity of the proposed project from one or
17.12 	more C-BED projects, as defined under section 216B.1612,
17.13 	subdivision 2, paragraph (f).

17.14 	Sec. 5. [216C.053] RENEWABLE ENERGY DEVELOPMENT.
17.15 	The Department of Commerce shall assist utilities,
17.16 	renewable energy developers, regulators, regional transmission
17.17 	grid managers, and the public on issues related to renewable
17.18 	energy development.  The department shall work to ensure
17.19 	cost-effective renewable energy development throughout the state.

17.20 	Sec. 6. WIND INTEGRATION STUDY.
 17.21 	The Public Utilities Commission shall order all electric
17.22 	utilities, as defined in Minnesota Statutes, section 216B.1691,
17.23 	subdivision 1, paragraph (b), to participate in a statewide wind
17.24 	integration study.  Utilities subject to Minnesota Statutes,
17.25 	section 216B.1691, shall jointly contract with an independent
17.26 	firm selected by the reliability administrator to conduct an
17.27 	engineering study of the impacts on reliability and costs
17.28 	associated with increasing wind capacity to 20 percent of
17.29 	Minnesota retail electric energy sales by the year 2020, and to
17.30 	identify and develop options for utilities to use to manage the
17.31 	intermittent nature of wind resources.  The contracting
17.32 	utilities shall cooperate with the firm conducting the study by
17.33 	providing data requested.  The reliability administrator shall
17.34 	manage the study process and shall appoint a group of
17.35 	stakeholders with experience in engineering and expertise in
17.36 	power systems or wind energy to review the study's proposed
18.1 	methods and assumptions and preliminary data.  The study must be
18.2 	completed by November 30, 2006.  Using the study results, the
18.3 	contracting utilities shall provide the commissioner of commerce
18.4 	with estimates of the impact on their electric rates of
18.5 	increasing wind capacity to 20 percent, assuming no reduction in
18.6 	reliability.  Electric utilities shall incorporate the study's
18.7 	findings into their utility integrated resource plans prepared
18.8 	under Minnesota Statutes, section 216B.2422.  The costs of the
18.9 	study are recoverable under Minnesota Statutes, section
18.10 	216C.052, subdivision 2, paragraph (c), clause (2).

18.11 	Sec. 7. LANDOWNER PAYMENTS WORKING GROUP.
 18.12 		Subdivision 1.Membership. By June 15, 2005, the
18.13 	Legislative Electric Energy Task Force shall convene a Landowner
18.14 	Payments Working Group consisting of up to 12 members, including
18.15 	representatives from each of the following groups:
18.16 	transmission-owning investor-owned utilities, electric
18.17 	cooperatives, municipal power agencies, Farm Bureau, Farmers
18.18 	Union, county commissioners, real estate appraisers, and others
18.19 	with an interest and expertise in landowner rights and the
18.20 	market value of rural property.
18.21 		Subd. 2.Appointment. The chairs of the Legislative
18.22 	Electric Energy Task Force and the chairs of the senate and
18.23 	house committees with primary jurisdiction over energy policy
18.24 	shall jointly appoint the working group members.
18.25 		Subd. 3.Charge. (a) The Landowner Payments Working
18.26 	Group shall research alternative methods of remunerating
18.27 	landowners on whose land high-voltage transmission lines have
18.28 	been constructed.
18.29 	(b) In developing its recommendations, the working group
18.30 	shall:
18.31 	(1) examine different methods of landowner payments that
18.32 	operate in other states and countries;
18.33 	(2) consider innovative alternatives to lump-sum payments
18.34 	that extend payments over the life of the transmission line and
18.35 	that run with the land if the land is conveyed to another owner;
18.36 	and 
19.1 	(3) consider alternative ways of structuring payments that
19.2 	are equitable to landowners and utilities.
19.3 		Subd. 4.Expenses. Members of the working group must be
19.4 	reimbursed for expenses as provided in Minnesota Statutes,
19.5 	section 15.059, subdivision 6.  Expenses of the Landowner
19.6 	Payments Working Group must not exceed $10,000 without the
19.7 	approval of the chairs of the Legislative Electric Energy Task
19.8 	Force.
19.9 		Subd. 5.Report. The Landowner Payments Working Group
19.10 	shall present its findings and recommendations, including
19.11 	legislative recommendations and model legislation, if any, in a
19.12 	report to the Legislative Electric Energy Task Force by January
19.13 	15, 2006.

19.14 	ARTICLE 3
19.15 	TRANSFER OF SITING AND ROUTING AUTHORITY
19.16 	 FOR LARGE ENERGY FACILITIES

19.17 	Section 1. Minnesota Statutes 2004, section 116C.52,
19.18 	subdivision 2, is amended to read:
19.19 		Subd. 2.board commission. "Board" shall mean the
19.20 	Minnesota Environmental Quality Board "Commission" means the
19.21 	Public Utilities Commission.

19.22 	Sec. 2. Minnesota Statutes 2004, section 116C.52,
19.23 	subdivision 4, is amended to read:
19.24 		Subd. 4.High voltage transmission line.  "High voltage
19.25 	transmission line" means a conductor of electric energy and
19.26 	associated facilities designed for and capable of operation at a
19.27 	nominal voltage of 100 kilovolts or more and is greater than
19.28 	1,500 feet in length.

19.29 	Sec. 3. Minnesota Statutes 2004, section 116C.53,
19.30 	subdivision 2, is amended to read:
19.31 		Subd. 2.Jurisdiction.  The board commission is hereby 
19.32 	given the authority to provide for site and route selection for
19.33 	large electric power facilities.  The board commission shall
19.34 	issue permits for large electric power facilities in a timely
19.35 	fashion.  When the Public Utilities Commission has determined
19.36 	the and in a manner consistent with the overall determination of 
20.1 	need for the project under section 216B.243 or 216B.2425,.
20.2 	Questions of need, including size, type, and timing; alternative
20.3 	system configurations; and voltage are not within the board's
20.4 	siting and routing authority and must not be included in the
20.5 	scope of environmental review conducted under sections 116C.51
20.6 	to 116C.69.

20.7 	Sec. 4. Minnesota Statutes 2004, section 116C.57,
20.8 	subdivision 1, is amended to read:
20.9 		Subdivision 1.Site permit.  No person may construct a
20.10 	large electric generating plant without a site permit from the
20.11 	board commission.  A large electric generating plant may be
20.12 	constructed only on a site approved by the board commission.
20.13 	The board commission must incorporate into one proceeding the
20.14 	route selection for a high voltage transmission line that is
20.15 	directly associated with and necessary to interconnect the large
20.16 	electric generating plant to the transmission system and whose
20.17 	need is certified as part of the generating plant project by the
20.18 	Public Utilities Commission under section 216B.243.

20.19 	Sec. 5. Minnesota Statutes 2004, section 116C.57,
20.20 	subdivision 2c, is amended to read:
20.21 		Subd. 2c.Environmental review.  The board commissioner
20.22 	of the Department of Commerce shall prepare for the commission 
20.23 	an environmental impact statement on each proposed large
20.24 	electric generating plant or high voltage transmission line for
20.25 	which a complete application has been submitted. For any
20.26 	project that has obtained a certificate of need from the Public
20.27 	Utilities Commission, the board The commissioner shall not
20.28 	consider whether or not the project is needed.  No other state
20.29 	environmental review documents shall be are required.  The board 
20.30 	commissioner shall study and evaluate any site or route proposed
20.31 	by an applicant and any other site or route the board commission 
20.32 	deems necessary that was proposed in a manner consistent with
20.33 	rules adopted by the board concerning the form, content, and
20.34 	timeliness of proposals for alternate sites or routes.

20.35 	Sec. 6. Minnesota Statutes 2004, section 116C.57, is
20.36 	amended by adding a subdivision to read:
21.1 		Subd. 9.Department of commerce to provide technical
21.2 	expertise and other assistance. The commissioner of the
21.3 	Department of Commerce shall provide technical expertise and
21.4 	other assistance to the commission for activities and
21.5 	proceedings under this section, sections 116C.51 to 116C.697,
21.6 	and chapter 116I.  This assistance shall include the sharing of
21.7 	staff resources as necessary.  The commissioner shall
21.8 	periodically report to the commission concerning the Department
21.9 	of Commerce's costs of providing assistance.  The report must
21.10 	conform to the schedule and include the required contents
21.11 	specified by the commission.  The commission shall include the
21.12 	costs of the assistance in assessments for activities and
21.13 	proceedings under those sections and reimburse the special
21.14 	revenue fund for those costs.  If either the commissioner or the
21.15 	commission deems it necessary, the Department of Commerce and
21.16 	the commission shall enter into an interagency agreement
21.17 	establishing terms and conditions for the provision of
21.18 	assistance and resources under this subdivision.

21.19 	Sec. 7. Minnesota Statutes 2004, section 116C.575,
21.20 	subdivision 5, is amended to read:
21.21 		Subd. 5.Environmental review.  For the projects
21.22 	identified in subdivision 2 and following these procedures, the
21.23 	board commissioner of the Department of Commerce shall prepare
21.24 	for the commission an environmental assessment.  The
21.25 	environmental assessment shall contain information on the human
21.26 	and environmental impacts of the proposed project and other
21.27 	sites or routes identified by the board commission and shall
21.28 	address mitigating measures for all of the sites or routes
21.29 	considered.  The environmental assessment shall be the only
21.30 	state environmental review document required to be prepared on
21.31 	the project.

21.32 	Sec. 8. Minnesota Statutes 2004, section 116C.577, is
21.33 	amended to read:
21.34 	116C.577 EMERGENCY PERMIT.
21.35 	(a) Any utility whose electric power system requires the
21.36 	immediate construction of a large electric power generating
22.1 	plant or high voltage transmission line due to a major
22.2 	unforeseen event may apply to the board commission for an
22.3 	emergency permit after providing .  The application must provide 
22.4 	notice in writing to the Public Utilities Commission of the
22.5 	major unforeseen event and the need for immediate construction.
22.6 	The permit must be issued in a timely manner, no later than 195
22.7 	days after the board's commission's acceptance of the
22.8 	application and upon a finding by the board commission that (1)
22.9 	a demonstrable emergency exists, (2) the emergency requires
22.10 	immediate construction, and (3) adherence to the procedures and
22.11 	time schedules specified in section 116C.57 would jeopardize the
22.12 	utility's electric power system or would jeopardize the
22.13 	utility's ability to meet the electric needs of its customers in
22.14 	an orderly and timely manner.
22.15 	(b) A public hearing to determine if an emergency exists
22.16 	must be held within 90 days of the application.  The
22.17 	board commission, after notice and hearing, shall adopt rules
22.18 	specifying the criteria for emergency certification.

22.19 	Sec. 9. Minnesota Statutes 2004, section 116C.58, is
22.20 	amended to read:
22.21 	116C.58 ANNUAL HEARING.
22.22 	The board commission shall hold an annual public hearing at
22.23 	a time and place prescribed by rule in order to afford
22.24 	interested persons an opportunity to be heard regarding any
22.25 	matters relating to the siting of large electric generating
22.26 	power plants and routing of high voltage transmission lines.  At
22.27 	the meeting, the board commission shall advise the public of the
22.28 	permits issued by the board commission in the past year.
22.29 	The board commission shall provide at least ten days but no more
22.30 	than 45 days' notice of the annual meeting by mailing notice to
22.31 	those persons who have requested notice and by publication in
22.32 	the EQB Monitor and the commission's weekly calendar.

22.33 	Sec. 10. Minnesota Statutes 2004, section 116C.61,
22.34 	subdivision 3, is amended to read:
22.35 		Subd. 3.State agency participation. (a) State agencies
22.36 	authorized to issue permits required for construction or
23.1 	operation of large electric power generating plants or high
23.2 	voltage transmission lines shall participate during routing and
23.3 	siting at public hearings and all other activities of the board
23.4 	on specific site or route designations and design considerations
23.5 	of the board, and shall clearly state whether the site or route
23.6 	being considered for designation or permit and other design
23.7 	matters under consideration for approval will be in compliance
23.8 	with state agency standards, rules, or policies.
23.9 	(b) An applicant for a permit under this section or under
23.10 	chapter 116I shall notify the commissioner of agriculture if the
23.11 	proposed project will impact cultivated agricultural land, as
23.12 	defined in section 1116I.01, subdivision 4.  The commissioner
23.13 	may participate in any proceeding on the application, may advise
23.14 	the commission as to whether to grant a permit for the project,
23.15 	and may make recommendations regarding mitigating adverse
23.16 	impacts to agricultural lands if the permit is granted.  The
23.17 	Department of Agriculture shall be the lead agency in developing
23.18 	an agricultural mitigation plan required for the project.

23.19 	Sec. 11. Minnesota Statutes 2004, section 116C.69,
23.20 	subdivision 2, is amended to read:
23.21 		Subd. 2.Site application fee.  Every applicant for a
23.22 	site permit shall pay to the board commission a fee in an amount
23.23 	equal to $500 for each $1,000,000 of production plant investment
23.24 	in the proposed installation as defined in the Federal Power
23.25 	Commission Uniform System of Accounts.  The board shall specify
23.26 	the time and manner of payment of the fee.  If any single
23.27 	payment requested by the board is in excess of 25 percent of the
23.28 	total estimated fee, the board shall show that the excess is
23.29 	reasonably necessary.  The applicant shall pay within 30 days of
23.30 	notification any additional fees reasonably necessary for
23.31 	completion of the site evaluation and designation process by the
23.32 	board.  In no event shall the total fees required of the
23.33 	applicant under this subdivision exceed an amount equal to 0.001
23.34 	of said production plant investment ($1,000 for each $1,000,000) 
23.35 	to cover the necessary and reasonable costs incurred by the
23.36 	commission in acting on the permit application and carrying out
24.1 	the requirements of sections 116C.51 to 116C.69.  The commission
24.2 	may adopt rules providing for the payment of the fee.  Section
24.3 	16A.1283 does not apply to establishment of this fee.  All money
24.4 	received pursuant to this subdivision shall be deposited in a
24.5 	special account.  Money in the account is appropriated to
24.6 	the board commission to pay expenses incurred in processing
24.7 	applications for site permits in accordance with sections
24.8 	116C.51 to 116C.69 and in the event the expenses are less than
24.9 	the fee paid, to refund the excess to the applicant.

24.10 	Sec. 12. Minnesota Statutes 2004, section 116C.69,
24.11 	subdivision 2a, is amended to read:
24.12 		Subd. 2a.Route application fee.  Every applicant for a
24.13 	transmission line route permit shall pay to the board commission 
24.14 	a base fee of $35,000 plus a fee in an amount equal to $1,000
24.15 	per mile length of the longest proposed route.  The board shall
24.16 	specify the time and manner of payment of the fee.  If any
24.17 	single payment requested by the board is in excess of 25 percent
24.18 	of the total estimated fee, the board shall show that the excess
24.19 	is reasonably necessary.  In the event the actual cost of
24.20 	processing an application up to the board's final decision to
24.21 	designate a route exceeds the above fee schedule, the board may
24.22 	assess the applicant any additional fees necessary to cover the
24.23 	actual costs, not to exceed an amount equal to $500 per mile
24.24 	length of the longest proposed route fee to cover the necessary
24.25 	and reasonable costs incurred by the commission in acting on the
24.26 	permit application and carrying out the requirements of sections
24.27 	116C.51 to 116C.69.  The commission may adopt rules providing
24.28 	for the payment of the fee.  Section 16A.1283 does not apply to
24.29 	the establishment of this fee.  All money received pursuant to
24.30 	this subdivision shall be deposited in a special account.  Money
24.31 	in the account is appropriated to the board commission to pay
24.32 	expenses incurred in processing applications for route permits
24.33 	in accordance with sections 116C.51 to 116C.69 and in the event
24.34 	the expenses are less than the fee paid, to refund the excess to
24.35 	the applicant.

24.36 	Sec. 13. Minnesota Statutes 2004, section 216B.243,
25.1 	subdivision 4, is amended to read:
25.2 		Subd. 4.Application for certificate; hearing.  Any
25.3 	person proposing to construct a large energy facility shall
25.4 	apply for a certificate of need prior to applying and for a site
25.5 	or route permit under sections 116C.51 to 116C.69 or
25.6 	construction of the facility.  The application shall be on forms
25.7 	and in a manner established by the commission.  In reviewing
25.8 	each application the commission shall hold at least one public
25.9 	hearing pursuant to chapter 14.  The public hearing shall be
25.10 	held at a location and hour reasonably calculated to be
25.11 	convenient for the public.  An objective of the public hearing
25.12 	shall be to obtain public opinion on the necessity of granting a
25.13 	certificate of need and, if a joint hearing is held, a site or
25.14 	route permit.  The commission shall designate a commission
25.15 	employee whose duty shall be to facilitate citizen participation
25.16 	in the hearing process. If Unless the commission and the
25.17 	Environmental Quality Board determine determines that a joint
25.18 	hearing on siting and need under this subdivision and section
25.19 	116C.57, subdivision 2d, is not feasible,or more efficient, and
25.20 	may further or otherwise not in the public interest, a joint
25.21 	hearing under those subdivisions may shall be held.

25.22 	Sec. 14. Minnesota Statutes 2004, section 216B.243,
25.23 	subdivision 5, is amended to read:
25.24 		Subd. 5.Approval, denial, or modification.  Within
25.25 	six 12 months of the submission of an application, the
25.26 	commission shall approve or deny a certificate of need for the
25.27 	facility.  Approval or denial of the certificate shall be
25.28 	accompanied by a statement of the reasons for the decision.
25.29 	Issuance of the certificate may be made contingent upon
25.30 	modifications required by the commission. If the commissioner
25.31 	has not issued an order on the application within the 12 months
25.32 	provided, the commission may extent the time period upon
25.33 	receiving the consent of the parties or on its own motion, for
25.34 	good cause, by issuing an order explaining the good cause
25.35 	justification for extension.

25.36 	Sec. 15. Minnesota Statutes 2004, section 216B.243,
26.1 	subdivision 7, is amended to read:
26.2 		Subd. 7.Participation by other agency or political
26.3 	subdivision. (a) Other state agencies authorized to issue
26.4 	permits for siting, construction or operation of large energy
26.5 	facilities, and those state agencies authorized to participate
26.6 	in matters before the commission involving utility rates and
26.7 	adequacy of utility services, shall present their position
26.8 	regarding need and participate in the public hearing process
26.9 	prior to the issuance or denial of a certificate of need.
26.10 	Issuance or denial of certificates of need shall be the sole and
26.11 	exclusive prerogative of the commission and these determinations
26.12 	and certificates shall be binding upon other state departments
26.13 	and agencies, regional, county, and local governments and
26.14 	special purpose government districts except as provided in
26.15 	sections 116C.01 to 116C.08 and 116D.04, subdivision 9.
26.16 	(b) An applicant for a permit under this section or under
26.17 	chapter 116I shall notify the commissioner of agriculture if the
26.18 	proposed project will impact cultivated agricultural land, as
26.19 	defined in section 1116I.01, subdivision 4.  The commissioner
26.20 	may participate in any proceeding on the application, may advise
26.21 	the commission as to whether to grant a permit for the project,
26.22 	and may make recommendations regarding mitigating adverse
26.23 	impacts to agricultural lands if the permit is granted.  The
26.24 	Department of Agriculture shall be the lead agency in developing
26.25 	an agricultural mitigation plan required for the project.

26.26 	Sec. 16. Minnesota Statutes 2004, section 216C.052, is
26.27 	amended to read:
26.28 	216C.052 RELIABILITY ADMINISTRATOR.
26.29 		Subdivision 1.Responsibilities. (a) There is
26.30 	established the position of reliability administrator in the
26.31 	Department of Commerce Public Utilities Commission.  The
26.32 	administrator shall act as a source of independent expertise and
26.33 	a technical advisor to the commissioner,the commission,and the
26.34 	public, and the Legislative Electric Energy Task Force on issues
26.35 	related to the reliability of the electric system.  In
26.36 	conducting its work, the administrator shall provide assistance
27.1 	to the commission in administering and implementing the
27.2 	commission's duties under sections 116C.51 to 116C.69; sections
27.3 	116C.691 to 116C.697; chapter 116I; and rules associated with
27.4 	those sections.  Subject to resource constraints, the
27.5 	reliability administrator may also:
27.6 	(1) model and monitor the use and operation of the energy
27.7 	infrastructure in the state, including generation facilities,
27.8 	transmission lines, natural gas pipelines, and other energy
27.9 	infrastructure;
27.10 	(2) develop and present to the commission and parties
27.11 	technical analyses of proposed infrastructure projects, and
27.12 	provide technical advice to the commission;
27.13 	(3) present independent, factual, expert, and technical
27.14 	information on infrastructure proposals and reliability issues
27.15 	at public meetings hosted by the task force, the Environmental
27.16 	Quality Board, the department, or the commission.
27.17 	(b) Upon request and subject to resource constraints, the
27.18 	administrator shall provide technical assistance regarding
27.19 	matters unrelated to applications for infrastructure
27.20 	improvements to the task force, the department, or the
27.21 	commission.
27.22 	(c) The administrator may not advocate for any particular
27.23 	outcome in a commission proceeding, but may give technical
27.24 	advice to the commission as to the impact on the reliability of
27.25 	the energy system of a particular project or projects. The
27.26 	administrator must not be considered a party or a participant in
27.27 	any proceeding before the commission.
27.28 		Subd. 2.Administrative issues. (a) The commissioner 
27.29 	commission may select the administrator who shall serve for a
27.30 	four-year term.  The administrator may not have been a party or
27.31 	a participant in a commission energy proceeding for at least one
27.32 	year prior to selection by the commissioner commission.
27.33 	The commissioner commission shall oversee and direct the work of
27.34 	the administrator, annually review the expenses of the
27.35 	administrator, and annually approve the budget of the
27.36 	administrator.  The administrator may hire staff and may
28.1 	contract for technical expertise in performing duties when
28.2 	existing state resources are required for other state
28.3 	responsibilities or when special expertise is required.  The
28.4 	salary of the administrator is governed by section 15A.0815,
28.5 	subdivision 2.
28.6 	(b) Costs relating to a specific proceeding, analysis, or
28.7 	project are not general administrative costs.  For purposes of
28.8 	this section, "energy utility" means public utilities,
28.9 	generation and transmission cooperative electric associations,
28.10 	and municipal power agencies providing natural gas or electric
28.11 	service in the state.
28.12 	(c) The Department of Commerce commission shall pay:
28.13 	(1) the general administrative costs of the administrator,
28.14 	not to exceed $1,000,000 in a fiscal year, and shall assess
28.15 	energy utilities for those administrative costs.  These costs
28.16 	must be consistent with the budget approved by the commissioner 
28.17 	commission under paragraph (a).  The department shall apportion
28.18 	the costs among all energy utilities in proportion to their
28.19 	respective gross operating revenues from sales of gas or
28.20 	electric service within the state during the last calendar year,
28.21 	and shall then render a bill to each utility on a regular basis;
28.22 	and
28.23 	(2) costs relating to a specific proceeding analysis or
28.24 	project and shall render a bill to the specific energy utility
28.25 	or utilities participating in the proceeding, analysis, or
28.26 	project directly, either at the conclusion of a particular
28.27 	proceeding, analysis, or project, or from time to time during
28.28 	the course of the proceeding, analysis, or project.
28.29 	(d) For purposes of administrative efficiency, the
28.30 	department shall assess energy utilities and issue bills in
28.31 	accordance with the billing and assessment procedures provided
28.32 	in section 216B.62, to the extent that these procedures do not
28.33 	conflict with this subdivision.  The amount of the bills
28.34 	rendered by the department under paragraph (c) must be paid by
28.35 	the energy utility into an account in the special revenue fund
28.36 	in the state treasury within 30 days from the date of billing
29.1 	and is appropriated to the commissioner commission for the
29.2 	purposes provided in this section.  The commission shall approve
29.3 	or approve as modified a rate schedule providing for the
29.4 	automatic adjustment of charges to recover amounts paid by
29.5 	utilities under this section.  All amounts assessed under this
29.6 	section are in addition to amounts appropriated to the
29.7 	commission and the department by other law.
29.8 		Subd. 3.Assessment and appropriation. In addition to
29.9 	the amount noted in subdivision 2, the commissioner commission 
29.10 	may assess utilities, using the mechanism specified in that
29.11 	subdivision, up to an additional $500,000 annually through June
29.12 	30, 2006.  The amounts assessed under this subdivision are
29.13 	appropriated to the commissioner commission, and some or all of
29.14 	the amounts assessed may be transferred to the commissioner of
29.15 	administration, for the purposes specified in section 16B.325
29.16 	and Laws 2001, chapter 212, article 1, section 3, as needed to
29.17 	implement those sections.
29.18 		Subd. 4.Expiration. This section expires June 30,
29.19 	2006 2007.

29.20 	Sec. 17. TRANSFERRING POWER PLANT SITING
29.21 	RESPONSIBILITIES.
 29.22 	To ensure greater public participation in energy
29.23 	infrastructure approval proceedings and to better integrate and
29.24 	align state energy and environmental policy goals with economic
29.25 	decisions involving large energy infrastructure, all
29.26 	responsibilities, as defined in Minnesota Statutes, section
29.27 	15.039, subdivision 1, held by the Environmental Quality Board
29.28 	relating to power plant siting and routing under Minnesota
29.29 	Statutes, sections 116C.51 to 116C.69; wind energy conversion
29.30 	systems under Minnesota Statutes, sections 116C.691 to 116C.697;
29.31 	pipelines under Minnesota Statutes, chapter 116I; and rules
29.32 	associated with those sections are transferred to the Public
29.33 	Utilities Commission under Minnesota Statutes, section 15.039,
29.34 	except that the responsibilities of the Environmental Quality
29.35 	Board under Minnesota Statutes, section 116C.83, subdivision 6,
29.36 	and Minnesota Rules, parts 4400.1700, 4400.2750, and 4410.7010
30.1 	to 4410.7070, are transferred to the commissioner of the
30.2 	Department of Commerce.  The power plan siting staff of the
30.3 	Environmental Quality Board are transferred to the Department of
30.4 	Commerce.  The department's budget shall be adjusted to reflect
30.5 	the transfer.  The Department of Commerce and the Public
30.6 	Utilities Commission shall perform these duties in accord with
30.7 	the provisions set forth in section 116D.03.

30.8 	Sec. 18. TRANSFERRING RELIABILITY ADMINISTRATOR
30.9 	RESPONSIBILITIES.
 30.10 	All responsibilities, as defined in Minnesota Statutes
30.11 	2004, section 15.039, subdivision 1, held by the Minnesota
30.12 	Department of Commerce relating to the reliability administrator
30.13 	under Minnesota Statutes, section 216C.052, and the staff
30.14 	currently performing those duties, are transferred to the
30.15 	Minnesota Public Utilities Commission under Minnesota Statutes,
30.16 	section 15.039.

30.17 	Sec. 19. REVISOR'S INSTRUCTION.
 30.18 	(a) The revisor of statutes shall change the words
30.19 	"Environmental Quality Board," "board," "chair of the board,"
30.20 	"chair," "board's," and similar terms, when they refer to the
30.21 	Environmental Quality Board or chair of the Environmental
30.22 	Quality Board, to the term "Public Utilities Commission,"
30.23 	"commission," or "commission's," as appropriate, where they
30.24 	appear in Minnesota Statutes, sections 13.741, subdivision 3,
30.25 	116C.51 to 116C.697, and chapter 116I.  The revisor shall also
30.26 	make those changes in Minnesota Rules, chapters 4400, 4401, and
30.27 	4415, except as specified in paragraph (b).
30.28 	(b) The revisor of statutes shall change the words
30.29 	"Environmental Quality Board," "board," "chair of the board,"
30.30 	"chair," "board's," and similar terms, when they refer to the
30.31 	Environmental Quality Board or chair of the Environmental
30.32 	Quality Board, to the term "commissioner of the Department of
30.33 	Commerce," "commissioner," or "commissioner's," as appropriate,
30.34 	where they appear in Minnesota Statutes, section 116C.83,
30.35 	subdivision 6; and Minnesota Rules, parts 4400.1700, subparts 1
30.36 	to 9, 11, and 12; 4400.2750; and 4410.7010 to 4410.7070.

31.1 	Sec. 20. EFFECTIVE DATE.
 31.2 	Sections 1 to 18 are effective July 1, 2005.

31.3 	ARTICLE 4
31.4 	GAS INFRASTRUCTURE COST RECOVERY

31.5 	Section 1. [216B.1635] RECOVERY OF ELIGIBLE
31.6 	INFRASTRUCTURE REPLACEMENT COSTS BY GAS UTILITIES.
31.7 		Subdivision 1.Definitions. (a) "Gas utility" means a
31.8 	public utility as defined in section 216B.02, subdivision 4,
31.9 	that furnishes natural gas service to retail customers.
31.10 	(b) "Gas utility infrastructure costs" or "GUIC" means gas
31.11 	utility projects that:
31.12 	(1) do not serve to increase revenues by directly
31.13 	connecting the infrastructure replacement to new customers;
31.14 	(2) are in service but were not included in the gas
31.15 	utility's rate base in its most recent general rate case; and 
31.16 	(3) replace or modify existing infrastructure if the
31.17 	replacement or modification does not constitute a betterment,
31.18 	unless the betterment is required by a political subdivision, as
31.19 	evidenced by specific documentation from the government entity
31.20 	requiring the replacement or modification of infrastructure.
31.21 	(c) "Gas utility projects" means relocation and replacement
31.22 	of natural gas facilities located in the public right-of-way
31.23 	required by the construction or improvement of a highway, road,
31.24 	street, public building, or other public work by or on behalf of
31.25 	the United States, the state of Minnesota, or a political
31.26 	subdivision.
31.27 		Subd. 2.Filing. (a) The commission may approve a gas
31.28 	utility's petition for a rate schedule to recover GUIC under
31.29 	this section.  A gas utility may petition the commission to
31.30 	recover a rate of return, income taxes on the rate of return,
31.31 	incremental property taxes, plus incremental depreciation
31.32 	expense associated with GUIC.
31.33 	(b) The filing is subject to the following:
31.34 	(1) a gas utility may submit a filing under this section no
31.35 	more than once per year;
31.36 	(2) a gas utility must file sufficient information to
32.1 	satisfy the commission regarding the proposed GUIC or be subject
32.2 	to denial by the commission.  The information includes, but is
32.3 	not limited to:
32.4 	(i) the government entity ordering the gas utility project
32.5 	and the purpose for which the project is undertaken;
32.6 	(ii) the location, description, and costs associated with
32.7 	the project;
32.8 	(iii) a description of the costs and salvage value, if any,
32.9 	associated with the existing infrastructure replaced or modified
32.10 	as a result of the project;
32.11 	(iv) the proposed rate design and an explanation of why the
32.12 	proposed rate design is in the public interest;
32.13 	(v) the magnitude and timing of any known future gas
32.14 	utility projects that the utility may seek to recover under this
32.15 	section;
32.16 	(vi) the magnitude of GUIC in relation to the gas utility's
32.17 	base revenue as approved by the commission in the gas utility's
32.18 	most recent general rate case, exclusive of gas purchase costs
32.19 	and transportation charges;
32.20 	(vii) the magnitude of GUIC in relation to the gas
32.21 	utility's capital expenditures since its most recent general
32.22 	rate case;
32.23 	(viii) the amount of time since the utility last filed a
32.24 	general rate case and the utility's reasons for seeking recovery
32.25 	outside of a general rate case; and 
32.26 	(ix) documentation supporting the calculation of the GUIC.
32.27 		Subd. 3.Commission authority. The commission may issue
32.28 	orders and adopt rules necessary to implement and administer
32.29 	this section.
32.30 	
EFFECTIVE DATE. This section is effective the day
32.31 	following final enactment.

32.32 	Sec. 2. REPORT TO LEGISLATURE.
 32.33 	The Department of Commerce shall review the operation and
32.34 	impact of the GUIC recovery mechanism established under
32.35 	Minnesota Statutes, section 216B.1635, on ratepayers and the
32.36 	utility and submit a report of its findings and recommendations
33.1 	to the legislature four years after the effective date of this
33.2 	section.

33.3 	Sec. 3. SUNSET.
 33.4 	Sections 1 and 2 expire on June 30, 2015.

33.5 	ARTICLE 5
33.6 	MISCELLANEOUS

33.7 	Section 1. Minnesota Statutes 2004, section 216B.16,
33.8 	subdivision 6d, is amended to read:
33.9 		Subd. 6d.Wind energy; property tax.  An owner of a wind
33.10 	energy conversion facility which is required to pay property
33.11 	taxes under section 272.02, subdivision 22, or production taxes
33.12 	under section 272.029, and any related or successor provisions,
33.13 	or a public utility regulated by the Public Utilities Commission
33.14 	which purchases the wind-generated electricity may petition the
33.15 	commission to include in any power purchase agreement between
33.16 	the owner of the facility and the public utility the amount of
33.17 	property taxes and production taxes paid by the owner of the
33.18 	facility.  The Public Utilities Commission shall require the
33.19 	public utility to amend the power purchase agreement to include
33.20 	the property taxes and production taxes paid by the owner of the
33.21 	facility in the price paid by the utility for wind-generated
33.22 	electricity if the commission finds:
33.23 	(1) the owner of the facility has paid the property taxes
33.24 	or production taxes required by this subdivision;
33.25 	(2) the power purchase agreement between the public utility
33.26 	and the owner does not already require the utility to pay the
33.27 	amount of property taxes or production taxes the owner has paid
33.28 	under this subdivision, or, in the case of a power purchase
33.29 	agreement entered into prior to 1997, the amount of property or
33.30 	production taxes paid by the owner in any year of the power
33.31 	purchase agreement exceeds the amount of such property or
33.32 	production taxes included in the price paid by the utility to
33.33 	the owner, as reflected in the owner's bid documents; and
33.34 	(3) the commission has approved a rate schedule containing
33.35 	provisions for the automatic adjustment of charges for utility
33.36 	service in direct relation to the charges ordered by the
34.1 	commission under section 272.02, subdivision 22, or 272.029.

34.2 	Sec. 2. Minnesota Statutes 2004, section 216B.241,
34.3 	subdivision 1b, is amended to read:
34.4 		Subd. 1b.Conservation improvement by cooperative
34.5 	association or municipality.  (a) This subdivision applies to:
34.6 	(1) a cooperative electric association that provides retail
34.7 	service to its members;
34.8 	(2) a municipality that provides electric service to retail
34.9 	customers; and
34.10 	(3) a municipality with gross operating revenues in excess
34.11 	of $5,000,000 from sales of natural gas to retail customers.
34.12 	(b) Each cooperative electric association and municipality
34.13 	subject to this subdivision shall spend and invest for energy
34.14 	conservation improvements under this subdivision the following
34.15 	amounts:
34.16 	(1) for a municipality, 0.5 percent of its gross operating
34.17 	revenues from the sale of gas and 1.5 percent of its gross
34.18 	operating revenues from the sale of electricity, excluding gross
34.19 	operating revenues from electric and gas service provided in the
34.20 	state to large electric customer facilities; and
34.21 	(2) for a cooperative electric association, 1.5 percent of
34.22 	its gross operating revenues from service provided in the state,
34.23 	excluding gross operating revenues from service provided in the
34.24 	state to large electric customer facilities indirectly through a
34.25 	distribution cooperative electric association.
34.26 	(c) Each municipality and cooperative electric association
34.27 	subject to this subdivision shall identify and implement energy
34.28 	conservation improvement spending and investments that are
34.29 	appropriate for the municipality or association, except that a
34.30 	municipality or association may not spend or invest for energy
34.31 	conservation improvements that directly benefit a large electric
34.32 	customer facility for which the commissioner has issued an
34.33 	exemption under subdivision 1a, paragraph (b).
34.34 	(d) Each municipality and cooperative electric association
34.35 	subject to this subdivision may spend and invest annually up to
34.36 	ten percent of the total amount required to be spent and
35.1 	invested on energy conservation improvements under this
35.2 	subdivision on research and development projects that meet the
35.3 	definition of energy conservation improvement in subdivision 1
35.4 	and that are funded directly by the municipality or cooperative
35.5 	electric association.
35.6 	(e) Load-management activities that do not reduce energy
35.7 	use but that increase the efficiency of the electric system may
35.8 	be used to meet the following percentage 50 percent of the
35.9 	conservation investment and spending requirements of this
35.10 	subdivision:
35.11 	(1) 2002 - 90 percent;
35.12 	(2) 2003 - 80 percent;
35.13 	(3) 2004 - 65 percent; and 
35.14 	(4) 2005 and thereafter - 50 percent.
35.15 	(f) A generation and transmission cooperative electric
35.16 	association that provides energy services to cooperative
35.17 	electric associations that provide electric service at retail to
35.18 	consumers may invest in energy conservation improvements on
35.19 	behalf of the associations it serves and may fulfill the
35.20 	conservation, spending, reporting, and energy savings goals on
35.21 	an aggregate basis.  A municipal power agency or other
35.22 	not-for-profit entity that provides energy service to municipal
35.23 	utilities that provide electric service at retail may invest in
35.24 	energy conservation improvements on behalf of the municipal
35.25 	utilities it serves and may fulfill the conservation, spending,
35.26 	reporting, and energy savings goals on an aggregate basis, under
35.27 	an agreement between the municipal power agency or
35.28 	not-for-profit entity and each municipal utility for funding the
35.29 	investments.
35.30 	(g) At least every two four years, on a schedule determined
35.31 	by the commissioner, each municipality or cooperative shall file
35.32 	an overview of its conservation improvement plan with the
35.33 	commissioner.  With this overview, the municipality or
35.34 	cooperative shall also provide an evaluation to the commissioner
35.35 	detailing its energy conservation improvement spending and
35.36 	investments for the previous period.  The evaluation must
36.1 	briefly describe each conservation program and must specify the
36.2 	energy savings or increased efficiency in the use of energy
36.3 	within the service territory of the utility or association that
36.4 	is the result of the spending and investments.  The evaluation
36.5 	must analyze the cost-effectiveness of the utility's or
36.6 	association's conservation programs, using a list of baseline
36.7 	energy and capacity savings assumptions developed in
36.8 	consultation with the department.  The commissioner shall review
36.9 	each evaluation and make recommendations, where appropriate, to
36.10 	the municipality or association to increase the effectiveness of
36.11 	conservation improvement activities.  Up to three percent of a
36.12 	utility's conservation spending obligation under this section
36.13 	may be used for program pre-evaluation, testing, and monitoring
36.14 	and program evaluation.  The overview and evaluation filed by a
36.15 	municipality with less than 60,000,000 kilowatt hours in annual
36.16 	retail sales of electric service may consist of a letter from
36.17 	the governing board of the municipal utility to the department
36.18 	providing the amount of annual conservation spending required of
36.19 	that municipality and certifying that the required amount has
36.20 	been spent on conservation programs pursuant to this subdivision.
36.21 	(h) The commissioner shall also review each evaluation for
36.22 	whether a portion of the money spent on residential conservation
36.23 	improvement programs is devoted to programs that directly
36.24 	address the needs of renters and low-income persons unless an
36.25 	insufficient number of appropriate programs are available.  For
36.26 	the purposes of this subdivision and subdivision 2, "low-income"
36.27 	means an income at or below 50 percent of the state median
36.28 	income.
36.29 	(i) As part of its spending for conservation improvement, a
36.30 	municipality or association may contribute to the energy and
36.31 	conservation account.  A municipality or association may propose
36.32 	to the commissioner to designate that all or a portion of funds
36.33 	contributed to the account be used for research and development
36.34 	projects that can best be implemented on a statewide basis.  Any
36.35 	amount contributed must be remitted to the commissioner by
36.36 	February 1 of each year.
37.1 	(j) A municipality may spend up to 50 percent of its
37.2 	required spending under this section to refurbish an existing
37.3 	district heating or cooling system.  This paragraph expires July
37.4 	1, 2007.

37.5 	Sec. 3. Minnesota Statutes 2004, section 216B.241,
37.6 	subdivision 2, is amended to read:
37.7 		Subd. 2.Programs.  (a) The commissioner may require
37.8 	public utilities to make investments and expenditures in energy
37.9 	conservation improvements, explicitly setting forth the interest
37.10 	rates, prices, and terms under which the improvements must be
37.11 	offered to the customers.  The required programs must cover no
37.12 	more than a two-year four-year period.  Public utilities shall
37.13 	file conservation improvement plans by June 1, on a schedule
37.14 	determined by order of the commissioner, but at least every four
37.15 	years.  Plans received by a public utility by June 1 must be
37.16 	approved or approved as modified by the commissioner by December
37.17 	1 of that same year.  The commissioner shall give special
37.18 	consideration and encouragement to programs that bring about
37.19 	significant net savings through the use of energy-efficient
37.20 	lighting.  The commissioner shall evaluate the program on the
37.21 	basis of cost-effectiveness and the reliability of technologies
37.22 	employed.  The commissioner's order must provide to the extent
37.23 	practicable for a free choice, by consumers participating in the
37.24 	program, of the device, method, material, or project
37.25 	constituting the energy conservation improvement and for a free
37.26 	choice of the seller, installer, or contractor of the energy
37.27 	conservation improvement, provided that the device, method,
37.28 	material, or project seller, installer, or contractor is duly
37.29 	licensed, certified, approved, or qualified, including under the
37.30 	residential conservation services program, where applicable.
37.31 	(b) The commissioner may require a utility to make an
37.32 	energy conservation improvement investment or expenditure
37.33 	whenever the commissioner finds that the improvement will result
37.34 	in energy savings at a total cost to the utility less than the
37.35 	cost to the utility to produce or purchase an equivalent amount
37.36 	of new supply of energy.  The commissioner shall nevertheless
38.1 	ensure that every public utility operate one or more programs
38.2 	under periodic review by the department.
38.3 	(c) Each public utility subject to subdivision 1a may spend
38.4 	and invest annually up to ten percent of the total amount
38.5 	required to be spent and invested on energy conservation
38.6 	improvements under this section by the utility on research and
38.7 	development projects that meet the definition of energy
38.8 	conservation improvement in subdivision 1 and that are funded
38.9 	directly by the public utility.
38.10 	(d) A public utility may not spend for or invest in energy
38.11 	conservation improvements that directly benefit a large electric
38.12 	customer facility for which the commissioner has issued an
38.13 	exemption pursuant to subdivision 1a, paragraph (b).  The
38.14 	commissioner shall consider and may require a utility to
38.15 	undertake a program suggested by an outside source, including a
38.16 	political subdivision or a nonprofit or community organization.
38.17 	(e) The commissioner may, by order, establish a list of
38.18 	programs that may be offered as energy conservation improvements
38.19 	by a public utility, municipal utility, cooperative electric
38.20 	association, or other entity providing conservation services
38.21 	pursuant to this section.  The list of programs may include
38.22 	rebates for high-efficiency appliances, rebates or subsidies for
38.23 	high-efficiency lamps, small business energy audits, and
38.24 	building recommissioning.  The commissioner may, by order,
38.25 	change this list to add or subtract programs as the commissioner
38.26 	determines is necessary to promote efficient and effective
38.27 	conservation programs.
38.28 	(f) The commissioner shall ensure that a portion of the
38.29 	money spent on residential conservation improvement programs is
38.30 	devoted to programs that directly address the needs of renters
38.31 	and low-income persons, in proportion to the amount the utility
38.32 	has historically spent on such programs based on the most recent
38.33 	three-year average relative to the utility's total conservation
38.34 	spending under this section, unless an insufficient number of
38.35 	appropriate programs are available.
38.36 	(g) A utility, a political subdivision, or a nonprofit or
39.1 	community organization that has suggested a program, the
39.2 	attorney general acting on behalf of consumers and small
39.3 	business interests, or a utility customer that has suggested a
39.4 	program and is not represented by the attorney general under
39.5 	section 8.33 may petition the commission to modify or revoke a
39.6 	department decision under this section, and the commission may
39.7 	do so if it determines that the program is not cost-effective,
39.8 	does not adequately address the residential conservation
39.9 	improvement needs of low-income persons, has a long-range
39.10 	negative effect on one or more classes of customers, or is
39.11 	otherwise not in the public interest.  The commission shall
39.12 	reject a petition that, on its face, fails to make a reasonable
39.13 	argument that a program is not in the public interest.
39.14 	(h) The commissioner may order a public utility to include,
39.15 	with the filing of the utility's proposed conservation
39.16 	improvement plan under paragraph (a), the results of an
39.17 	independent audit of the utility's conservation improvement
39.18 	programs and expenditures performed by the department or an
39.19 	auditor with experience in the provision of energy conservation
39.20 	and energy efficiency services approved by the commissioner and
39.21 	chosen by the utility.  The audit must specify the energy
39.22 	savings or increased efficiency in the use of energy within the
39.23 	service territory of the utility that is the result of the
39.24 	spending and investments.  The audit must evaluate the
39.25 	cost-effectiveness of the utility's conservation programs.
39.26 	(i) Up to three percent of a utility's conservation
39.27 	spending obligation under this section may be used for program
39.28 	pre-evaluation, testing, and monitoring and program audit and
39.29 	evaluation.

39.30 	Sec. 4. Minnesota Statutes 2004, section 216B.243,
39.31 	subdivision 6, is amended to read:
39.32 		Subd. 6.Application fees; rules.  Any application for a
39.33 	certificate of need shall be accompanied by the application fee
39.34 	required pursuant to this subdivision. The application fee is
39.35 	to be applied toward the total costs reasonably necessary to
39.36 	complete the evaluation of need for the proposed facility.The
40.1 	maximum application fee shall be $50,000, except for an
40.2 	application for an electric power generating plant as defined in
40.3 	section 216B.2421, subdivision 2, clause (1), or a high-voltage
40.4 	transmission line as defined in section 216B.2421, subdivision
40.5 	2, clause (2), for which the maximum application fee shall be
40.6 	$100,000. The commission may require an additional fee to
40.7 	recover the costs of any rehearing.  The fee for a rehearing
40.8 	shall not be greater than the actual cost of the rehearing or
40.9 	the maximum fee specified above, whichever is less.Costs
40.10 	exceeding the application fee and reasonably necessary to
40.11 	complete the evaluation of need for the proposed facility shall
40.12 	be recovered from the applicant.  If the applicant is a public
40.13 	utility, a cooperative electric association, a generation and
40.14 	transmission cooperative electric association, a municipal power
40.15 	agency, a municipal electric utility, or a transmission company,
40.16 	the recovery shall be made as provided under section 216B.62.
40.17 	The commission shall establish by rule pursuant to chapter 14
40.18 	and sections 216C.05 to 216C.30 and this section, a schedule of
40.19 	fees based on the output or capacity of the facility and the
40.20 	difficulty of assessment of need.  Money collected in this
40.21 	manner shall be credited to the general fund of the state
40.22 	treasury.

40.23 	Sec. 5. Minnesota Statutes 2004, section 216B.62,
40.24 	subdivision 5, is amended to read:
40.25 		Subd. 5.Assessing cooperatives and municipals.  The
40.26 	commission and department may charge cooperative electric
40.27 	associations, generation and transmission cooperative electric
40.28 	associations, municipal power agencies,and municipal electric
40.29 	utilities their proportionate share of the expenses incurred in
40.30 	the review and disposition of resource plans, adjudication of
40.31 	service area disputes, proceedings under section 216B.1691,
40.32 	216B.2425, or 216B.243,and the costs incurred in the
40.33 	adjudication of complaints over service standards, practices,
40.34 	and rates.  Cooperative electric associations electing to become
40.35 	subject to rate regulation by the commission pursuant to section
40.36 	216B.026, subdivision 4, are also subject to this section.
41.1 	Neither a cooperative electric association nor a municipal
41.2 	electric utility is liable for costs and expenses in a calendar
41.3 	year in excess of the limitation on costs that may be assessed
41.4 	against public utilities under subdivision 2.  A cooperative
41.5 	electric association, generation and transmission cooperative
41.6 	electric association, municipal power agency,or municipal
41.7 	electric utility may object to and appeal bills of the
41.8 	commission and department as provided in subdivision 4.
41.9 	The department shall assess cooperatives and municipalities
41.10 	for the costs of alternative energy engineering activities under
41.11 	section 216C.261.  Each cooperative and municipality shall be
41.12 	assessed in proportion that its gross operating revenues for the
41.13 	sale of gas and electric service within the state for the last
41.14 	calendar year bears to the total of those revenues for all
41.15 	public utilities, cooperatives, and municipalities.

41.16 	Sec. 6. Minnesota Statutes 2004, section 216C.41,
41.17 	subdivision 1, is amended to read:
41.18 		Subdivision 1.Definitions.  (a) The definitions in this
41.19 	subdivision apply to this section.
41.20 	(b) "Qualified hydroelectric facility" means a
41.21 	hydroelectric generating facility in this state that:
41.22 	(1) is located at the site of a dam, if the dam was in
41.23 	existence as of March 31, 1994; and
41.24 	(2) begins generating electricity after July 1, 1994, or
41.25 	generates electricity after substantial refurbishing of a
41.26 	facility that begins after July 1, 2001.
41.27 	(c) "Qualified wind energy conversion facility" means a
41.28 	wind energy conversion system in this state that:
41.29 	(1) produces two megawatts or less of electricity as
41.30 	measured by nameplate rating and begins generating electricity
41.31 	after December 31, 1996, and before July 1, 1999;
41.32 	(2) begins generating electricity after June 30, 1999,
41.33 	produces two megawatts or less of electricity as measured by
41.34 	nameplate rating, and is:
41.35 	(i) owned by a resident of Minnesota or an entity that is
41.36 	organized under the laws of this state, is not prohibited from
42.1 	owning agricultural land under section 500.24, and owns the land
42.2 	where the facility is sited;
42.3 	(ii) owned by a Minnesota small business as defined in
42.4 	section 645.445;
42.5 	(iii) owned by a Minnesota nonprofit organization;
42.6 	(iv) owned by a tribal council if the facility is located
42.7 	within the boundaries of the reservation;
42.8 	(v) owned by a Minnesota municipal utility or a Minnesota
42.9 	cooperative electric association; or
42.10 	(vi) owned by a Minnesota political subdivision or local
42.11 	government, including, but not limited to, a county, statutory
42.12 	or home rule charter city, town, school district, or any other
42.13 	local or regional governmental organization such as a board,
42.14 	commission, or association; or
42.15 	(3) begins generating electricity after June 30, 1999,
42.16 	produces seven megawatts or less of electricity as measured by
42.17 	nameplate rating, and:
42.18 	(i) is owned by a cooperative organized under chapter 308A
42.19 	other than a Minnesota cooperative electric association; and
42.20 	(ii) all shares and membership in the cooperative are held
42.21 	by an entity that is not prohibited from owning agricultural
42.22 	land under section 500.24.
42.23 	(d) "Qualified on-farm biogas recovery facility" means an
42.24 	anaerobic digester system that:
42.25 	(1) is located at the site of an agricultural
42.26 	operation; and 
42.27 	(2) is owned by an entity that is not prohibited from
42.28 	owning agricultural land under section 500.24 and that owns or
42.29 	rents the land where the facility is located; and 
42.30 	(3) begins generating electricity after July 1, 2001.
42.31 	(e) "Anaerobic digester system" means a system of
42.32 	components that processes animal waste based on the absence of
42.33 	oxygen and produces gas used to generate electricity.

42.34 	Sec. 7. LEGISLATIVE FINDINGS.
 42.35 	The legislature finds that broad participation by the
42.36 	public and other interested and affected parties in proceedings
43.1 	of the Minnesota Public Utilities Commission serves the public
43.2 	interest.  The utilization of the Internet by the commission and
43.3 	the Minnesota Department of Commerce, which maintains the
43.4 	commission's records, to allow electronic access to commission
43.5 	documents has expanded access to the commission's proceedings.
43.6 	E-filing, which will enable individuals to electronically file
43.7 	documents in ongoing proceedings via the Internet and permit the
43.8 	electronic retrieval of all documents filed, is an effective way
43.9 	to lower the costs and increase the ease and efficiency of
43.10 	participation.

43.11 	Sec. 8. ESTABLISHMENT OF E-FILING SYSTEM; ACCOUNT;
43.12 	APPROPRIATION.
 43.13 	(a) The Public Utilities Commission's e-filing account is
43.14 	established.  The commission shall make a onetime assessment to
43.15 	regulated utilities of $315,000, which must be deposited in the
43.16 	account.  Each public utility, municipal utility, electric
43.17 	cooperative association, and telecommunications carrier must be
43.18 	assessed in proportion to its respective gross operating
43.19 	revenues for retail sales of gas, electric, or
43.20 	telecommunications service in the state in the last calendar
43.21 	year.
43.22 	(b) Revenue in the account is appropriated to the
43.23 	commission for the costs associated with establishing an
43.24 	e-filing system that allows documents to be filed and retrieved
43.25 	via the Internet.  Revenue in the account remains available
43.26 	until expended.
43.27 	(c) The e-filing system must be operational by September
43.28 	30, 2005.

43.29 	Sec. 9. STUDY; BIODIESEL FUEL FOR HOME HEATING.
 43.30 	(a) From the money available to the commissioner of
43.31 	commerce for purposes of studies and technical assistance by the
43.32 	reliability administrator under Minnesota Statutes, section
43.33 	216C.052, and in conformity with the goals and directives of
43.34 	Minnesota Statutes, section 16B.325, the reliability
43.35 	administrator shall perform a comprehensive technical and
43.36 	economic analysis of the benefits to be derived from using
44.1 	biodiesel fuel as defined in Minnesota Statutes, section 239.77,
44.2 	subdivision 1, or biodiesel fuel blends, as a home heating
44.3 	fuel.  The analysis must consider blends ranging from B2 to
44.4 	B100.  No more than $25,000 may be expended for the analysis.
44.5 	(b) Not later than March 15, 2007, the reliability
44.6 	administrator shall report the results of the study and analysis
44.7 	to the appropriate standing committees of the Minnesota senate
44.8 	and house of representatives.

44.9 	Sec. 10. JOINT VENTURE AUTHORITY.
 44.10 	(a) The city of Alexandria may enter into a joint venture
44.11 	or joint ventures with one, two, or three of the entities known
44.12 	as Runestone Telephone Association, Runestone Electric
44.13 	Association, and Gardonville Telephone Cooperative for the
44.14 	purpose of providing local niche service, including Internet
44.15 	services, and point-to-point transmission of digital information.
44.16 	(b) For purposes of this section, with respect to the
44.17 	services described in paragraph (a), the city of Alexandria and
44.18 	a joint venture to which it is a party shall have the rights and
44.19 	authority granted by, and be subject to, Minnesota Statutes 2001
44.20 	Supplement, section 452.25, except for the provisions of that
44.21 	section which relate specifically and only to electric utilities.
44.22 	(c) For the purposes of this section, "local niche service"
44.23 	refers to point-to-point connections between end-user locations
44.24 	within a service area and any telecommunications services under
44.25 	the Public Utilities Commission's jurisdiction under Minnesota
44.26 	Statutes, chapter 237, that do not fall within the definition of
44.27 	local service or the definition of interexchange service.
44.28 	(d) If the city of Alexandria obtains authority to provide
44.29 	local service or interexchange service under Minnesota Statutes,
44.30 	chapter 237, it may enter into a joint venture with the entities
44.31 	identified in paragraph (a) for those purposes.
44.32 	[EFFECTIVE DATE; LOCAL APPROVAL.] This section is effective
44.33 	as to the city of Alexandria the day after the city of
44.34 	Alexandria's governing body and its chief clerical officer
44.35 	timely complete compliance with Minnesota Statutes, section
44.36 	645.021, subdivisions 2 and 3.

45.1 	Sec. 11. REPEALER.
 45.2 	Laws 1999, chapter 125, section 4, as amended by Laws 2002,
45.3 	chapter 398, section 7, is repealed.

45.4 	EFFECTIVE DATE. This section is effective the day
45.5 	following final enactment.