1.1 	A bill for an act
1.2 	relating to energy; exempting certain wind energy
1.3 	facilities from obtaining a certificate of need;
1.4 	providing for automatic recovery of certain
1.5 	electricity transmission costs; requiring owners of
1.6 	certain wind transmission facilities to apply for a
1.7 	certificate of need; requiring a study; amending
1.8 	Minnesota Statutes 2004, sections 216B.1645,
1.9 	subdivisions 1, 2; 216B.2425, subdivision 7; 216B.243,
1.10 	subdivision 8.
1.11 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.12 	Section 1. Minnesota Statutes 2004, section 216B.1645,
1.13 	subdivision 1, is amended to read:
1.14 		Subdivision 1.Commission authority.  Upon the petition
1.15 	of a public utility, the Public Utilities Commission shall
1.16 	approve or disapprove power purchase contracts, investments, or
1.17 	expenditures entered into or made by the utility to satisfy the
1.18 	wind and biomass mandates contained in sections 216B.169,
1.19 	216B.2423, and 216B.2424, and to satisfy the renewable energy
1.20 	objectives set forth in section 216B.1691,including reasonable
1.21 	investments and expenditures made to;
1.22 	(1) transmit the electricity generated from sources
1.23 	developed under those sections that is ultimately used to
1.24 	provide service to the utility's retail customers, or to 
1.25 	including studies necessary to identify new transmission
1.26 	facilities needed to transmit electricity to Minnesota retail
1.27 	customers from generating facilities constructed to satisfy the
1.28 	renewable energy objectives, provided that the costs of the
2.1 	studies have not been recovered previously under existing
2.2 	tariffs and the utility has filed an application for a
2.3 	certificate of need for the new transmission facilities
2.4 	identified in the studies;
2.5 	(2) manage the intermittent nature of wind energy resources
2.6 	it owns or has contracted for; or 
2.7 	(3) develop renewable energy sources from the account
2.8 	required in section 116C.779.

2.9 	Sec. 2. Minnesota Statutes 2004, section 216B.1645,
2.10 	subdivision 2, is amended to read:
2.11 		Subd. 2.Cost recovery. (a) The expenses incurred by the
2.12 	utility over the duration of the approved contract or useful
2.13 	life of the investment and expenditures made pursuant to section
2.14 	116C.779 shall be recoverable from the ratepayers of the
2.15 	utility, to the extent they are not offset by utility revenues
2.16 	attributable to the contracts, investments, or expenditures.
2.17 	Upon petition by a public utility, the commission shall approve
2.18 	or approve as modified a rate schedule providing for the
2.19 	automatic adjustment of charges to recover the expenses or costs
2.20 	approved by the commission, which, in the case of transmission
2.21 	expenditures, are limited to the portion of actual transmission
2.22 	costs that are directly allocable to the need to transmit power
2.23 	from the renewable sources of energy.  The commission may not
2.24 	approve recovery of the costs for that portion of the power
2.25 	generated from sources governed by this section that the utility
2.26 	sells into the wholesale market.
2.27 	(b) Upon petition of any utility, the commission shall
2.28 	approve or approve as modified a rate schedule providing for the
2.29 	automatic adjustment of charges to recover the expenses or costs
2.30 	approved by the commission for construction of transmission
2.31 	facilities necessary to satisfy the utility's renewable energy
2.32 	objectives, as set forth in subdivision 1, provided that the
2.33 	utility has met all of the following conditions:
2.34 	(1) demonstrated that the proposed transmission facilities
2.35 	will transmit electricity primarily from renewable sources of
2.36 	energy to Minnesota retail customers;
3.1 	(2) signed power purchase agreements with electricity
3.2 	generators supplying resources to meet the utility's renewable
3.3 	energy objectives that will utilize the new transmission
3.4 	resources to serve Minnesota retail customers, or made a
3.5 	commitment to sign power purchase agreements prior to the
3.6 	in-service date of the transmission line; and 
3.7 	(3) demonstrated that the proposed commercial operation
3.8 	date of the generation resources matches the planned in-service
3.9 	date of the new transmission facilities.

3.10 	Sec. 3. Minnesota Statutes 2004, section 216B.2425,
3.11 	subdivision 7, is amended to read:
3.12 		Subd. 7.Transmission needed to support renewable
3.13 	resources.  Each entity subject to this section shall determine
3.14 	necessary transmission upgrades to support development of
3.15 	renewable energy resources required to meet objectives under
3.16 	section 216B.1691 and shall include those upgrades in its report
3.17 	under subdivision 2. By December 31, 2005, each entity shall
3.18 	file an application for a certificate of need, if applicable,
3.19 	with the Minnesota Public Utilities Commission for the necessary
3.20 	transmission upgrades and new transmission facilities identified
3.21 	in its most recent report under subdivision 2.  If the
3.22 	identified transmission facilities require approval from
3.23 	multiple jurisdictions, each entity or group of entities shall
3.24 	work with the applicable regulatory authorities to receive
3.25 	approval to construct the transmission facilities.

3.26 	Sec. 4. Minnesota Statutes 2004, section 216B.243,
3.27 	subdivision 8, is amended to read:
3.28 		Subd. 8.Exemptions.  This section does not apply to:
3.29 	(1) cogeneration or small power production facilities as
3.30 	defined in the Federal Power Act, United States Code, title 16,
3.31 	section 796, paragraph (17), subparagraph (A), and paragraph
3.32 	(18), subparagraph (A), and having a combined capacity at a
3.33 	single site of less than 80,000 kilowatts or to plants or
3.34 	facilities for the production of ethanol or fuel alcohol nor in
3.35 	any case where the commission shall determine after being
3.36 	advised by the attorney general that its application has been
4.1 	preempted by federal law;
4.2 	(2) a high-voltage transmission line proposed primarily to
4.3 	distribute electricity to serve the demand of a single customer
4.4 	at a single location, unless the applicant opts to request that
4.5 	the commission determine need under this section or section
4.6 	216B.2425;
4.7 	(3) the upgrade to a higher voltage of an existing
4.8 	transmission line that serves the demand of a single customer
4.9 	that primarily uses existing rights-of-way, unless the applicant
4.10 	opts to request that the commission determine need under this
4.11 	section or section 216B.2425;
4.12 	(4) a high-voltage transmission line of one mile or less
4.13 	required to connect a new or upgraded substation to an existing,
4.14 	new, or upgraded high-voltage transmission line;
4.15 	(5) conversion of the fuel source of an existing electric
4.16 	generating plant to using natural gas; or 
4.17 	(6) modification of an existing electric generating plant
4.18 	to increase efficiency, as long as the capacity of the plant is
4.19 	not increased more than ten percent or more than 100 megawatts,
4.20 	whichever is greater; or 
4.21 	(7) an aggregation of proximate wind energy conversion
4.22 	systems as defined in section 216C.06, subdivision 19, that has
4.23 	a combined capacity of 50 megawatts or more and that serves
4.24 	Minnesota retail customers.

4.25 	Sec. 5. WIND INTEGRATION STUDY.
 4.26 	The commission shall order all electric utilities, as
4.27 	defined in Minnesota Statutes, section 216B.1691, subdivision 1,
4.28 	paragraph (b), to participate in a statewide wind integration
4.29 	study.  Utilities shall jointly contract with an independent
4.30 	firm selected by the commissioner of commerce through a
4.31 	competitive bidding process to conduct an engineering study of
4.32 	the impacts on reliability and operating costs of increasing
4.33 	wind capacity to comprise 20 percent of Minnesota retail
4.34 	electric energy sales by the year 2020, and to identify and
4.35 	develop options for utilities to use to manage the intermittent
4.36 	nature of wind resources.  Utilities shall cooperate with the
5.1 	firm conducting the study by providing data requested.  The
5.2 	Department of Commerce shall manage the study process and shall
5.3 	appoint a group of stakeholders with experience in engineering
5.4 	and expertise in power systems or wind energy to review the
5.5 	study's proposed methods and assumptions and preliminary data.
5.6 	The study must be completed by November 30, 2006.  Electric
5.7 	utilities shall incorporate the study's findings into their
5.8 	utility integrated resource plans prepared under Minnesota
5.9 	Statutes, section 216B.2422.  The costs of the study are
5.10 	recoverable under Minnesota Statutes, section 216B.1645,
5.11 	subdivision 1.

5.12 	Sec. 6. EFFECTIVE DATE.
 5.13 	Sections 1 to 5 are effective the day following final
5.14 	enactment.