1.1                          A bill for an act 
  1.2             relating to energy; extending eligibility to receive 
  1.3             the renewable energy production incentive under 
  1.4             certain circumstances; amending Minnesota Statutes 
  1.5             2004, section 216C.41, subdivisions 1, 5, 7. 
  1.6   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.7      Section 1.  Minnesota Statutes 2004, section 216C.41, 
  1.8   subdivision 1, is amended to read: 
  1.9      Subdivision 1.  [DEFINITIONS.] (a) The definitions in this 
  1.10  subdivision apply to this section. 
  1.11     (b) "Qualified hydroelectric facility" means a 
  1.12  hydroelectric generating facility in this state that: 
  1.13     (1) is located at the site of a dam, if the dam was in 
  1.14  existence as of March 31, 1994; and 
  1.15     (2) begins generating electricity after July 1, 1994, or 
  1.16  generates electricity after substantial refurbishing of a 
  1.17  facility that begins after July 1, 2001. 
  1.18     (c) "Qualified wind energy conversion facility" means a 
  1.19  wind energy conversion system in this state that: 
  1.20     (1) produces two megawatts or less of electricity as 
  1.21  measured by nameplate rating and begins generating electricity 
  1.22  after December 31, 1996, and before July 1, 1999; 
  1.23     (2) begins generating electricity after June 30, 1999, 
  1.24  produces two megawatts or less of electricity as measured by 
  1.25  nameplate rating, and is: 
  2.1      (i) owned by a resident of Minnesota or an entity that is 
  2.2   organized under the laws of this state, is not prohibited from 
  2.3   owning agricultural land under section 500.24, and owns the land 
  2.4   where the facility is sited; 
  2.5      (ii) owned by a Minnesota small business as defined in 
  2.6   section 645.445; 
  2.7      (iii) owned by a Minnesota nonprofit organization; 
  2.8      (iv) owned by a tribal council if the facility is located 
  2.9   within the boundaries of the reservation; 
  2.10     (v) owned by a Minnesota municipal utility or a Minnesota 
  2.11  cooperative electric association and filed an application prior 
  2.12  to January 1, 2005; or 
  2.13     (vi) owned by a Minnesota political subdivision or local 
  2.14  government, including, but not limited to, a county, statutory 
  2.15  or home rule charter city, town, school district, or any other 
  2.16  local or regional governmental organization such as a board, 
  2.17  commission, or association; or 
  2.18     (3) begins generating electricity after June 30, 1999, 
  2.19  produces seven megawatts or less of electricity as measured by 
  2.20  nameplate rating, and: 
  2.21     (i) is owned by a cooperative organized under chapter 308A 
  2.22  other than a Minnesota cooperative electric association; and 
  2.23     (ii) all shares and membership in the cooperative are held 
  2.24  by an entity that is not prohibited from owning agricultural 
  2.25  land under section 500.24. 
  2.26     (d) "Qualified on-farm biogas recovery facility" means an 
  2.27  anaerobic digester system that: 
  2.28     (1) is located at the site of an agricultural operation; 
  2.29     (2) is owned by an entity that is not prohibited from 
  2.30  owning agricultural land under section 500.24 and that owns or 
  2.31  rents the land where the facility is located; and 
  2.32     (3) begins generating electricity after July 1, 2001.  
  2.33     (e) "Anaerobic digester system" means a system of 
  2.34  components that processes animal waste based on the absence of 
  2.35  oxygen and produces gas used to generate electricity. 
  2.36     Sec. 2.  Minnesota Statutes 2004, section 216C.41, 
  3.1   subdivision 5, is amended to read: 
  3.2      Subd. 5.  [AMOUNT OF PAYMENT; WIND FACILITIES LIMIT.] (a) 
  3.3   An incentive payment is based on the number of kilowatt hours of 
  3.4   electricity generated. The amount of the payment is: 
  3.5      (1) for a facility described under subdivision 2, paragraph 
  3.6   (a), clause (4), 1.0 cent per kilowatt hour; and 
  3.7      (2) for all other facilities, except as provided in clause 
  3.8   (3), 1.5 cents per kilowatt hour; and 
  3.9      (3) for a facility that receives, after January 1, 2005, an 
  3.10  extension or a letter of approval under subdivision 7, 1.0 cent 
  3.11  per kilowatt hour.  
  3.12  For electricity generated by qualified wind energy conversion 
  3.13  facilities, the incentive payment under this section is limited 
  3.14  to no more than 100 megawatts of nameplate capacity.  
  3.15     (b) For wind energy conversion systems installed and 
  3.16  contracted for after January 1, 2002, the total size of a wind 
  3.17  energy conversion system under this section must be determined 
  3.18  according to this paragraph.  Unless the systems are 
  3.19  interconnected with different distribution systems, the 
  3.20  nameplate capacity of one wind energy conversion system must be 
  3.21  combined with the nameplate capacity of any other wind energy 
  3.22  conversion system that is: 
  3.23     (1) located within five miles of the wind energy conversion 
  3.24  system; 
  3.25     (2) constructed within the same calendar year as the wind 
  3.26  energy conversion system; and 
  3.27     (3) under common ownership. 
  3.28  In the case of a dispute, the commissioner of commerce shall 
  3.29  determine the total size of the system, and shall draw all 
  3.30  reasonable inferences in favor of combining the systems. 
  3.31     (c) In making a determination under paragraph (b), the 
  3.32  commissioner of commerce may determine that two wind energy 
  3.33  conversion systems are under common ownership when the 
  3.34  underlying ownership structure contains similar persons or 
  3.35  entities, even if the ownership shares differ between the two 
  3.36  systems.  Wind energy conversion systems are not under common 
  4.1   ownership solely because the same person or entity provided 
  4.2   equity financing for the systems. 
  4.3      Sec. 3.  Minnesota Statutes 2004, section 216C.41, 
  4.4   subdivision 7, is amended to read: 
  4.5      Subd. 7.  [ELIGIBILITY PROCESS.] (a) A qualifying project 
  4.6   is eligible for the incentive on the date the commissioner 
  4.7   receives: 
  4.8      (1) an application for payment of the incentive; 
  4.9      (2) one of the following: 
  4.10     (i) a copy of a signed power purchase agreement; 
  4.11     (ii) a copy of a binding agreement other than a power 
  4.12  purchase agreement to sell electricity generated by the project 
  4.13  to a third person; or 
  4.14     (iii) if the project developer or owner will sell 
  4.15  electricity to its own members or customers, a copy of the 
  4.16  purchase order for equipment to construct the project with a 
  4.17  delivery date and a copy of a signed receipt for a nonrefundable 
  4.18  deposit; and 
  4.19     (3) any other information the commissioner deems necessary 
  4.20  to determine whether the proposed project qualifies for the 
  4.21  incentive under this section.  
  4.22     (b) The commissioner shall determine whether a project 
  4.23  qualifies for the incentive and respond in writing to the 
  4.24  applicant approving or denying the application within 15 working 
  4.25  days of receipt of the information required in paragraph (a).  A 
  4.26  project that is not operational within 18 months of receipt of a 
  4.27  letter of approval is no longer approved for the incentive, 
  4.28  except as provided in paragraphs (c) to (i).  The commissioner 
  4.29  shall notify an applicant of potential loss of approval not less 
  4.30  than 60 days prior to the end of the 18-month period, and shall 
  4.31  advise the applicant of the mechanism available to extend the 
  4.32  eligibility period under paragraph (c), if applicable.  
  4.33  Eligibility for a project that loses approval may be 
  4.34  reestablished as of the date the commissioner receives a new 
  4.35  completed application. 
  4.36     (c) If the federal production tax credit, as provided by 
  5.1   United States Code, title 26, section 45, as amended through 
  5.2   December 31, 2004, is unavailable during a portion of the 
  5.3   18-month eligibility period, an applicant may seek to extend the 
  5.4   18-month eligibility period by submitting to the commissioner 
  5.5   the following: 
  5.6      (1) evidence that all required interconnection and delivery 
  5.7   studies for the qualifying project have been completed and an 
  5.8   interconnection agreement signed by all the parties has been 
  5.9   executed.  If the interconnection agreement requires 
  5.10  improvements to be made to the transmission system, the 
  5.11  applicant must provide evidence that equity and debt financing 
  5.12  sufficient to pay the cost of those improvements is secured and 
  5.13  that construction of the improvements will be completed by the 
  5.14  date the proposed extension will expire, as determined under 
  5.15  paragraph (d); and 
  5.16     (2) documents demonstrating that the qualifying project has 
  5.17  secured equity and debt financing sufficient to complete the 
  5.18  project by the date the proposed extension will expire, as 
  5.19  determined under paragraph (d). 
  5.20     (d) If the commissioner determines that the applicant has 
  5.21  submitted the documents listed in paragraph (c), clauses (1) and 
  5.22  (2), the commissioner shall, within 30 days of receiving the 
  5.23  documents, notify the applicant that the 18-month period is 
  5.24  extended by the length of time the credit was unavailable during 
  5.25  the 18-month period, notwithstanding any provision making the 
  5.26  credit retroactive.  If the credit is not available when the 
  5.27  commissioner determines whether the applicant has submitted the 
  5.28  documents listed in paragraph (c), clauses (1) and (2), the 
  5.29  commissioner shall extend the 18-month eligibility period for 12 
  5.30  months.  
  5.31     (e) If the commissioner determines that an applicant has 
  5.32  failed to comply with paragraph (c), the commissioner shall 
  5.33  notify the applicant that an extension of the 18-month 
  5.34  eligibility period is denied. 
  5.35     (f) An applicant who filed an application prior to January 
  5.36  1, 2005, but who has not received a letter of approval may 
  6.1   qualify to receive the incentive by submitting the documents 
  6.2   described in paragraph (c), clauses (1) and (2), to the 
  6.3   commissioner.  If the commissioner determines that an applicant 
  6.4   has submitted the documents listed in paragraph (c), clauses (1) 
  6.5   and (2), the commissioner shall, within 30 days of receiving the 
  6.6   documents, notify the applicant that the project qualifies to 
  6.7   receive the incentive and shall provide the applicant with a 
  6.8   letter of approval. 
  6.9      (g) An applicant receiving a letter of approval dated 
  6.10  January 1, 2005, or later shall be required to demonstrate that 
  6.11  the electricity generated by the project and associated 
  6.12  renewable energy credits have first been offered for sale to the 
  6.13  public utility transferring funds to the renewable development 
  6.14  account under section 116C.779, subdivision 1.  The parties 
  6.15  shall negotiate a price within 120 days.  The public utility 
  6.16  transferring funds to the renewable development account shall 
  6.17  provide its last best price offer to the applicant in writing, 
  6.18  which is binding for no less than 120 days.  The applicant may 
  6.19  negotiate with any other utility and may accept a price higher 
  6.20  than the binding price offered by the public utility 
  6.21  transferring funds to the renewable development account.  If 
  6.22  another utility offers a price equal to or lower than the 
  6.23  binding price offered by the public utility transferring funds 
  6.24  to the renewable development account, the applicant must 
  6.25  contract with the public utility transferring funds to the 
  6.26  renewable development account at the binding price. 
  6.27     (h) If funds in the renewable development account, as 
  6.28  provided in section 116C.779, subdivision 2, are insufficient to 
  6.29  fully fund renewable energy production incentives under this 
  6.30  subdivision, the amounts required to eliminate the deficiency 
  6.31  must be paid for that purpose from the balance of the renewable 
  6.32  development account, as provided in section 116C.779, 
  6.33  subdivision 1. 
  6.34     (i) The commissioner shall not accept applications to 
  6.35  receive a renewable energy production incentive after January 1, 
  6.36  2005. 
  7.1      Sec. 4.  [EFFECTIVE DATE.] 
  7.2      Sections 1 to 3 are effective the day following final 
  7.3   enactment.