1.1                          A bill for an act 
  1.2             relating to energy; providing for expedited cost 
  1.3             recovery for certain transmission investments; 
  1.4             authorizing and regulating transmission companies; 
  1.5             permitting the transfer of transmission assets and 
  1.6             operation to transmission companies; providing for 
  1.7             expedited regulatory approval of transmission projects 
  1.8             related to renewable generation; providing new 
  1.9             criteria to analyze the need for transmission 
  1.10            projects; establishing the framework for a wind energy 
  1.11            tariff related to community development; requiring a 
  1.12            wind integration study; transferring generation plant 
  1.13            siting and transmission line routing authority from 
  1.14            the Minnesota Environmental Quality Board to the 
  1.15            Public Utilities Commission; providing for technical 
  1.16            corrections to the energy assistance program; 
  1.17            providing for a sustainably managed woody biomass 
  1.18            generation project to satisfy the biomass mandate; 
  1.19            providing for an electronic mail filing system at the 
  1.20            Public Utilities Commission and Department of 
  1.21            Commerce; making changes to the conservation 
  1.22            investment program recommended by the legislative 
  1.23            auditor; authorizing the creation of energy quality 
  1.24            zones; regulating eligibility of biogas projects for 
  1.25            the renewable energy production incentive; providing 
  1.26            for the recovery of certain infrastructure investments 
  1.27            by gas utilities; requiring a study of compensation of 
  1.28            landowners for transmission easements; providing for a 
  1.29            geothermal rebate program under the conservation 
  1.30            investment program; promoting the use of soy-diesel; 
  1.31            providing for the adjustment of power purchase 
  1.32            agreements to account for production tax payments; 
  1.33            promoting the use of hydrogen as an energy source; 
  1.34            amending Minnesota Statutes 2004, sections 13.681, by 
  1.35            adding a subdivision; 116C.52, subdivisions 2, 4; 
  1.36            116C.53, subdivision 2; 116C.57, subdivisions 1, 2c, 
  1.37            by adding a subdivision; 116C.575, subdivision 5; 
  1.38            116C.577; 116C.58; 116C.61, subdivision 3; 116C.69, 
  1.39            subdivisions 2, 2a; 119A.15, subdivision 5a; 216B.02, 
  1.40            by adding a subdivision; 216B.16, subdivision 6d, by 
  1.41            adding subdivisions; 216B.1645, subdivision 1; 
  1.42            216B.241, subdivisions 1b, 2; 216B.2421, subdivision 
  1.43            2; 216B.2424, subdivisions 1, 2, 5a, 6, 8, by adding a 
  1.44            subdivision; 216B.2425, subdivisions 2, 7; 216B.243, 
  1.45            subdivisions 3, 4, 5, 6, 7, 8; 216B.50, subdivision 1; 
  1.46            216B.62, subdivision 5, by adding a subdivision; 
  2.1             216B.79; 216C.052; 216C.09; 216C.41, subdivision 1; 
  2.2             462A.05, subdivisions 21, 23; proposing coding for new 
  2.3             law in Minnesota Statutes, chapters 216B; 216C. 
  2.4   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  2.5                              ARTICLE 1
  2.6                        TRANSMISSION COMPANIES 
  2.7      Section 1.  Minnesota Statutes 2004, section 216B.02, is 
  2.8   amended by adding a subdivision to read: 
  2.9      Subd. 10.  [TRANSMISSION COMPANY.] "Transmission company" 
  2.10  means persons, corporations, or other legal entities and their 
  2.11  lessees, trustees, and receivers, engaged in the business of 
  2.12  owning, operating, maintaining, or controlling in this state 
  2.13  equipment or facilities for furnishing electric transmission 
  2.14  service in Minnesota, but does not include public utilities, 
  2.15  municipal electric utilities, municipal power agencies, 
  2.16  cooperative electric associations, or generation and 
  2.17  transmission cooperative power associations. 
  2.18     Sec. 2.  Minnesota Statutes 2004, section 216B.16, is 
  2.19  amended by adding a subdivision to read: 
  2.20     Subd. 7b.  [TRANSMISSION COST ADJUSTMENT.] (a) 
  2.21  Notwithstanding any other provision of this chapter, the 
  2.22  commission may approve a tariff mechanism for the automatic 
  2.23  annual adjustment of charges for the Minnesota jurisdictional 
  2.24  costs of new transmission facilities that have been separately 
  2.25  filed and reviewed and approved by the commission under section 
  2.26  216B.243 or are certified as a priority project or deemed to be 
  2.27  a priority transmission project under section 216B.2425. 
  2.28     (b) Upon filing by a public utility or utilities providing 
  2.29  transmission service, the commission may approve, reject or 
  2.30  modify, after notice and comment, a tariff that: 
  2.31     (1) allows the utility to recover on a timely basis the 
  2.32  costs net of revenues of facilities approved under section 
  2.33  216B.243 or certified or deemed to be certified under section 
  2.34  216B.2425; 
  2.35     (2) allows a return on investment at the level approved in 
  2.36  the utility's last general rate case, unless a different return 
  2.37  is found to be consistent with the public interest; 
  3.1      (3) provides a current return on construction work in 
  3.2   progress, provided that recovery from Minnesota retail customers 
  3.3   for the allowance for funds used during construction is not 
  3.4   sought through any other mechanism; 
  3.5      (4) allows for recovery of other expenses if shown to 
  3.6   promote a least-cost project option or is otherwise in the 
  3.7   public interest; 
  3.8      (5) allocates project costs appropriately between wholesale 
  3.9   and retail customers; 
  3.10     (6) provides a mechanism for recovery above cost, if 
  3.11  necessary to improve the overall economics of the project or 
  3.12  projects or is otherwise in the public interest; and 
  3.13     (7) terminates recovery once costs have been fully 
  3.14  recovered or have otherwise been reflected in the utility's 
  3.15  general rates. 
  3.16     (c) A public utility may file annual rate adjustments to be 
  3.17  applied to customer bills paid under the tariff approved in 
  3.18  paragraph (b).  In its filing, the public utility shall provide: 
  3.19     (1) a description of and context for the facilities 
  3.20  included for recovery; 
  3.21     (2) a schedule for implementation of applicable projects; 
  3.22     (3) the utility's costs for these projects; 
  3.23     (4) a description of the utility's efforts to ensure the 
  3.24  lowest costs to ratepayers for the project; and 
  3.25     (5) calculations to establish that the rate adjustment is 
  3.26  consistent with the terms of the tariff established in paragraph 
  3.27  (b). 
  3.28     (d) Upon receiving a filing for a rate adjustment pursuant 
  3.29  to the tariff established in paragraph (b), the commission shall 
  3.30  approve the annual rate adjustments provided that, after notice 
  3.31  and comment, the costs included for recovery through the tariff 
  3.32  were or are expected to be prudently incurred and achieve 
  3.33  transmission system improvements at the lowest feasible and 
  3.34  prudent cost to ratepayers. 
  3.35     Sec. 3.  Minnesota Statutes 2004, section 216B.16, is 
  3.36  amended by adding a subdivision to read: 
  4.1      Subd. 7c.  [TRANSMISSION ASSETS TRANSFER.] (a) Owners of 
  4.2   transmission facilities may transfer operational control or 
  4.3   ownership of those assets to a transmission company subject to 
  4.4   Federal Energy Regulatory Commission jurisdiction.  For asset 
  4.5   transfers by a public utility, the Public Utilities Commission 
  4.6   may review the request to transfer in the context of a general 
  4.7   rate case under this section or may initiate other proceedings 
  4.8   it determines provide adequate review of the effect on retail 
  4.9   rates of an asset transfer approved under this section 
  4.10  sufficient to protect ratepayers.  The commission may only 
  4.11  approve a transfer sought after the effective date of this 
  4.12  section if it finds that the transfer: 
  4.13     (1) is consistent with the public interest; 
  4.14     (2) facilitates the development of transmission 
  4.15  infrastructure necessary to ensure reliability, encourages the 
  4.16  development of renewable resources, and accommodates energy 
  4.17  transfers within and between states; 
  4.18     (3) protects Minnesota ratepayers against the subsidization 
  4.19  of wholesale transactions through retail rates; and 
  4.20     (4) ensures, in the case of operational control of 
  4.21  transmission assets, that the state retains jurisdiction over 
  4.22  the transferring utility for all aspects of service under 
  4.23  chapter 216B. 
  4.24     (b) A transfer of operational control or ownership of 
  4.25  assets by a public utility under this subdivision is subject to 
  4.26  section 216B.50.  The relationship between a public utility 
  4.27  transferring operational control of assets to another entity 
  4.28  under this subdivision is subject to the provisions of section 
  4.29  216B.48.  If a public utility transfers ownership of its 
  4.30  transmission assets to a transmission provider subject to the 
  4.31  jurisdiction of the Federal Energy Regulatory Commission, the 
  4.32  Public Utilities Commission may permit the utility to file a 
  4.33  rate schedule providing for the automatic adjustment of charges 
  4.34  to recover the cost of transmission services purchased under 
  4.35  tariff rates approved by the Federal Energy Regulatory 
  4.36  Commission. 
  5.1      Sec. 4.  Minnesota Statutes 2004, section 216B.2421, 
  5.2   subdivision 2, is amended to read: 
  5.3      Subd. 2.  [LARGE ENERGY FACILITY.] "Large energy facility" 
  5.4   means: 
  5.5      (1) any electric power generating plant or combination of 
  5.6   plants at a single site with a combined capacity of 50,000 
  5.7   kilowatts or more and transmission lines directly associated 
  5.8   with the plant that are necessary to interconnect the plant to 
  5.9   the transmission system; 
  5.10     (2) any high-voltage transmission line with a capacity of 
  5.11  200 kilovolts or more and greater than 1,500 feet in length; 
  5.12     (3) any high-voltage transmission line with a capacity of 
  5.13  100 kilovolts or more with more than ten miles of its length in 
  5.14  Minnesota or that crosses a state line; 
  5.15     (4) any pipeline greater than six inches in diameter and 
  5.16  having more than 50 miles of its length in Minnesota used for 
  5.17  the transportation of coal, crude petroleum or petroleum fuels 
  5.18  or oil, or their derivatives; 
  5.19     (5) any pipeline for transporting natural or synthetic gas 
  5.20  at pressures in excess of 200 pounds per square inch with more 
  5.21  than 50 miles of its length in Minnesota; 
  5.22     (6) any facility designed for or capable of storing on a 
  5.23  single site more than 100,000 gallons of liquefied natural gas 
  5.24  or synthetic gas; 
  5.25     (7) any underground gas storage facility requiring a permit 
  5.26  pursuant to section 103I.681; 
  5.27     (8) any nuclear fuel processing or nuclear waste storage or 
  5.28  disposal facility; and 
  5.29     (9) any facility intended to convert any material into any 
  5.30  other combustible fuel and having the capacity to process in 
  5.31  excess of 75 tons of the material per hour. 
  5.32     Sec. 5.  Minnesota Statutes 2004, section 216B.243, 
  5.33  subdivision 3, is amended to read: 
  5.34     Subd. 3.  [SHOWING REQUIRED FOR CONSTRUCTION.] No proposed 
  5.35  large energy facility shall be certified for construction unless 
  5.36  the applicant can show that demand for electricity cannot be met 
  6.1   more cost effectively through energy conservation and 
  6.2   load-management measures and unless the applicant has otherwise 
  6.3   justified its need.  In assessing need, the commission shall 
  6.4   evaluate: 
  6.5      (1) the accuracy of the long-range energy demand forecasts 
  6.6   on which the necessity for the facility is based; 
  6.7      (2) the effect of existing or possible energy conservation 
  6.8   programs under sections 216C.05 to 216C.30 and this section or 
  6.9   other federal or state legislation on long-term energy demand; 
  6.10     (3) the relationship of the proposed facility to overall 
  6.11  state energy needs, as described in the most recent state energy 
  6.12  policy and conservation report prepared under section 216C.18, 
  6.13  or, in the case of a high-voltage transmission line, the 
  6.14  relationship of the proposed line to regional energy needs, as 
  6.15  presented in the transmission plan submitted under section 
  6.16  216B.2425; 
  6.17     (4) promotional activities that may have given rise to the 
  6.18  demand for this facility; 
  6.19     (5) benefits of this facility, including its uses to 
  6.20  protect or enhance environmental quality, and to increase 
  6.21  reliability of energy supply in Minnesota and the region; 
  6.22     (6) possible alternatives for satisfying the energy demand 
  6.23  or transmission needs including but not limited to potential for 
  6.24  increased efficiency and upgrading of existing energy generation 
  6.25  and transmission facilities, load-management programs, and 
  6.26  distributed generation; 
  6.27     (7) the policies, rules, and regulations of other state and 
  6.28  federal agencies and local governments; and 
  6.29     (8) any feasible combination of energy conservation 
  6.30  improvements, required under section 216B.241, that can (i) 
  6.31  replace part or all of the energy to be provided by the proposed 
  6.32  facility, and (ii) compete with it economically; 
  6.33     (9) with respect to a high-voltage transmission line, the 
  6.34  benefits of enhanced regional reliability, access, or 
  6.35  deliverability to improve the robustness of the transmission 
  6.36  system or to lower costs to electric consumers; 
  7.1      (10) whether the applicant or applicants are in compliance 
  7.2   with applicable provisions of sections 216B.1691 and 216B.2425, 
  7.3   subdivision 7, and have filed or will file by a date certain an 
  7.4   application for certificate of need under this section or for 
  7.5   certification as a priority electric transmission project under 
  7.6   section 216B.2425 for any transmission facilities or upgrades 
  7.7   identified under section 216B.2425, subdivision 7; 
  7.8      (11) whether the applicant has made the demonstrations 
  7.9   required under subdivision 3a; and 
  7.10     (12) if the applicant is proposing a nonrenewable 
  7.11  generating plant, the applicant's assessment of the risk of 
  7.12  environmental costs and regulation on that proposed facility 
  7.13  over the expected useful life of the plant, including a proposed 
  7.14  means of allocating costs associated with that risk. 
  7.15     Sec. 6.  Minnesota Statutes 2004, section 216B.243, 
  7.16  subdivision 6, is amended to read: 
  7.17     Subd. 6.  [APPLICATION FEES; RULES.] Any application for a 
  7.18  certificate of need shall be accompanied by the application fee 
  7.19  required pursuant to this subdivision.  The application fee is 
  7.20  to be applied toward the total costs reasonably necessary to 
  7.21  complete the evaluation of need for the proposed facility.  The 
  7.22  maximum application fee shall be $50,000, except for an 
  7.23  application for an electric power generating plant as defined in 
  7.24  section 216B.2421, subdivision 2, clause (1), or a high-voltage 
  7.25  transmission line as defined in section 216B.2421, subdivision 
  7.26  2, clause (2), for which the maximum application fee shall be 
  7.27  $100,000.  The commission may require an additional fee to 
  7.28  recover the costs of any rehearing.  The fee for a rehearing 
  7.29  shall not be greater than the actual cost of the rehearing or 
  7.30  the maximum fee specified above, whichever is less. Costs 
  7.31  exceeding the application fee and reasonably necessary to 
  7.32  complete the evaluation of need for the proposed facility shall 
  7.33  be recovered from the applicant.  If the applicant is a public 
  7.34  utility, a cooperative electric association, a generation and 
  7.35  transmission cooperative electric association, a municipal power 
  7.36  agency, a municipal electric utility, or a transmission company, 
  8.1   the recovery shall be done pursuant to section 216B.62.  The 
  8.2   commission shall establish by rule pursuant to chapter 14 and 
  8.3   sections 216C.05 to 216C.30 and this section, a schedule of fees 
  8.4   based on the output or capacity of the facility and the 
  8.5   difficulty of assessment of need.  Money collected in this 
  8.6   manner shall be credited to the general fund of the state 
  8.7   treasury. 
  8.8      Sec. 7.  Minnesota Statutes 2004, section 216B.2425, 
  8.9   subdivision 2, is amended to read: 
  8.10     Subd. 2.  [LIST DEVELOPMENT; TRANSMISSION PROJECTS REPORT.] 
  8.11  (a) By November 1 of each odd-numbered year, each a transmission 
  8.12  projects report must be submitted to the commission by each 
  8.13  utility, organization, or company that: 
  8.14     (1) is a public utility, a municipal utility, and a 
  8.15  cooperative electric association, or the generation and 
  8.16  transmission organization that serves each utility or 
  8.17  association, that or a transmission company; and 
  8.18     (2) owns or operates electric transmission lines in 
  8.19  Minnesota shall.  
  8.20     (b) The report may be submitted jointly or individually 
  8.21  submit a transmission projects report to the commission.  
  8.22     (c) The report must: 
  8.23     (1) list specific present and reasonably foreseeable future 
  8.24  inadequacies in the transmission system in Minnesota; 
  8.25     (2) identify alternative means of addressing each 
  8.26  inadequacy listed; 
  8.27     (3) identify general economic, environmental, and social 
  8.28  issues associated with each alternative; and 
  8.29     (4) provide a summary of public input the utilities and 
  8.30  associations have gathered related to the list of inadequacies 
  8.31  and the role of local government officials and other interested 
  8.32  persons in assisting to develop the list and analyze 
  8.33  alternatives. 
  8.34     (b) (d) To meet the requirements of this subdivision, 
  8.35  entities reporting parties may rely on available information and 
  8.36  analysis developed by a regional transmission organization or 
  9.1   any subgroup of a regional transmission organization and may 
  9.2   develop and include additional information as necessary.  
  9.3      Sec. 8.  Minnesota Statutes 2004, section 216B.50, 
  9.4   subdivision 1, is amended to read: 
  9.5      Subdivision 1.  [COMMISSION APPROVAL REQUIRED.] No public 
  9.6   utility shall sell, acquire, lease, or rent any plant as an 
  9.7   operating unit or system in this state for a total consideration 
  9.8   in excess of $100,000, or merge or consolidate with another 
  9.9   public utility or transmission company operating in this state, 
  9.10  without first being authorized so to do by the commission.  Upon 
  9.11  the filing of an application for the approval and consent of the 
  9.12  commission thereto, the commission shall investigate, with or 
  9.13  without public hearing, and in case of.  The commission shall 
  9.14  hold a public hearing, upon such notice as the commission may 
  9.15  require, and if it shall find.  If the commission finds that the 
  9.16  proposed action is consistent with the public interest, it shall 
  9.17  give its consent and approval by order in writing.  In reaching 
  9.18  its determination, the commission shall take into consideration 
  9.19  the reasonable value of the property, plant, or securities to be 
  9.20  acquired or disposed of, or merged and consolidated.  The 
  9.21  provisions of 
  9.22     This section shall does not be construed as 
  9.23  applicable apply to the purchase of units of property for 
  9.24  replacement or to the addition to replace or add to the plant of 
  9.25  the public utility by construction. 
  9.26     Sec. 9.  Minnesota Statutes 2004, section 216B.62, 
  9.27  subdivision 5, is amended to read: 
  9.28     Subd. 5.  [ASSESSING COOPERATIVES AND MUNICIPALS.] The 
  9.29  commission and department may charge cooperative electric 
  9.30  associations, generation and transmission cooperative electric 
  9.31  associations, municipal power agencies, and municipal electric 
  9.32  utilities their proportionate share of the expenses incurred in 
  9.33  the review and disposition of resource plans, adjudication of 
  9.34  service area disputes, proceedings under section 216B.1691, 
  9.35  216B.2425, or 216B.243, and the costs incurred in the 
  9.36  adjudication of complaints over service standards, practices, 
 10.1   and rates.  Cooperative electric associations electing to become 
 10.2   subject to rate regulation by the commission pursuant to section 
 10.3   216B.026, subdivision 4, are also subject to this section.  
 10.4   Neither a cooperative electric association nor a municipal 
 10.5   electric utility is liable for costs and expenses in a calendar 
 10.6   year in excess of the limitation on costs that may be assessed 
 10.7   against public utilities under subdivision 2.  A cooperative 
 10.8   electric association, generation and transmission cooperative 
 10.9   electric association, municipal power agency, or municipal 
 10.10  electric utility may object to and appeal bills of the 
 10.11  commission and department as provided in subdivision 4.  
 10.12     The department shall assess cooperatives and municipalities 
 10.13  for the costs of alternative energy engineering activities under 
 10.14  section 216C.261.  Each cooperative and municipality shall be 
 10.15  assessed in proportion that its gross operating revenues for the 
 10.16  sale of gas and electric service within the state for the last 
 10.17  calendar year bears to the total of those revenues for all 
 10.18  public utilities, cooperatives, and municipalities. 
 10.19     Sec. 10.  Minnesota Statutes 2004, section 216B.62, is 
 10.20  amended by adding a subdivision to read: 
 10.21     Subd. 5a.  [ASSESSING TRANSMISSION COMPANIES.] The 
 10.22  commission and department may charge transmission companies 
 10.23  their proportionate share of the expenses incurred in the review 
 10.24  and disposition of proceedings under sections 216B.2425, 
 10.25  216B.243, 216B.48, 216B.50, and 216B.79.  A transmission company 
 10.26  is not liable for costs and expenses in a calendar year in 
 10.27  excess of the limitation on costs that may be assessed against 
 10.28  public utilities under subdivision 2.  A transmission company 
 10.29  may object to and appeal bills of the commission and department 
 10.30  as provided in subdivision 4. 
 10.31     Sec. 11.  Minnesota Statutes 2004, section 216B.79, is 
 10.32  amended to read: 
 10.33     216B.79 [PREVENTATIVE MAINTENANCE.] 
 10.34     The commission may order public utilities to make adequate 
 10.35  infrastructure investments and undertake sufficient preventative 
 10.36  maintenance with regard to generation, transmission, and 
 11.1   distribution facilities.  The commission's authority under this 
 11.2   section also applies to any transmission company that owns or 
 11.3   operates electric transmission lines in Minnesota.  
 11.4      Sec. 12.  [STAKEHOLDER PROCESS AND REPORT.] 
 11.5      Subdivision 1.  [MEMBERSHIP.] By June 15, 2005, the 
 11.6   Legislative Electric Energy Task Force shall convene a 
 11.7   stakeholder group consisting of one representative from each of 
 11.8   the following groups:  transmission-owning investor-owned 
 11.9   utilities, electric cooperatives, municipal power agencies, 
 11.10  energy consumer advocates, business energy consumer advocates, 
 11.11  residential energy consumer advocates, environmental 
 11.12  organizations, the Minnesota Department of Commerce, the 
 11.13  Minnesota Environmental Quality Board, and the Minnesota Public 
 11.14  Utilities Commission. 
 11.15     Subd. 2.  [CHARGE.] (a) The stakeholder group shall explore 
 11.16  whether increased efficiencies and effectiveness can be obtained 
 11.17  through modifying current state statutes and administrative 
 11.18  processes to certify and route high-voltage transmission lines, 
 11.19  including modifications to section 216B.243. 
 11.20     (b) In developing its recommendations, the stakeholder 
 11.21  group shall consider: 
 11.22     (1) whether the certification process established under 
 11.23  section 216B.2425, subdivision 3, can be modified to encourage 
 11.24  utilities to apply for certification under that section; 
 11.25     (2) whether alternative certification processes are 
 11.26  feasible for different types of transmission facilities; and 
 11.27     (3) whether additional cooperation between state agencies 
 11.28  is needed to enhance the efficiency of the certification and 
 11.29  routing processes, and whether modifications to those processes 
 11.30  are appropriate. 
 11.31     (c) The stakeholder group shall also consider and make 
 11.32  recommendations regarding whether and how to provide 
 11.33  compensation above traditional eminent domain payments to 
 11.34  landowners over whose property a new transmission facility is 
 11.35  constructed. 
 11.36     Subd. 3.  [REPORT.] By January 15, 2006, the task force 
 12.1   shall submit a report to the legislature summarizing the 
 12.2   stakeholder group findings and any recommended changes to the 
 12.3   certification and routing processes for high-voltage 
 12.4   transmission lines. 
 12.5                              ARTICLE 2
 12.6                   C-BED AND RENEWABLE TRANSMISSION
 12.7      Section 1.  [216B.1612] [COMMUNITY-BASED ENERGY 
 12.8   DEVELOPMENT; TARIFF.] 
 12.9      Subdivision 1.  [TARIFF ESTABLISHMENT.] A tariff shall be 
 12.10  established to optimize local, regional, and state benefits from 
 12.11  wind energy development, and to facilitate widespread 
 12.12  development of community-based wind energy projects throughout 
 12.13  Minnesota. 
 12.14     Subd. 2.  [DEFINITIONS.] (a) The terms used in this section 
 12.15  have the meanings given them in this subdivision. 
 12.16     (b) "C-BED tariff" or "tariff" means a community-based 
 12.17  energy development tariff. 
 12.18     (c) "Qualifying owner" means: 
 12.19     (1) a Minnesota resident; 
 12.20     (2) a limited liability corporation that is organized under 
 12.21  the laws of this state and that is made up of members who are 
 12.22  Minnesota residents; 
 12.23     (3) a Minnesota nonprofit organization organized under 
 12.24  chapter 317A; 
 12.25     (4) a Minnesota cooperative association organized under 
 12.26  chapter 308A or 308B, other than a rural electric cooperative 
 12.27  association or a generation and transmission cooperative; 
 12.28     (5) a Minnesota political subdivision or local government 
 12.29  other than a municipal electric utility or municipal power 
 12.30  agency, including, but not limited to, a county, statutory or 
 12.31  home rule charter city, town, school district, or public or 
 12.32  private higher education institution or any other local or 
 12.33  regional governmental organization such as a board, commission, 
 12.34  or association; or 
 12.35     (6) a tribal council. 
 12.36     (d) "Net present value rate" means a rate equal to the net 
 13.1   present value of the nominal payments to a project divided by 
 13.2   the total expected energy production of the project over the 
 13.3   life of its power purchase agreement.  
 13.4      (e) "Standard reliability criteria" means: 
 13.5      (1) can be safely integrated into and operated within the 
 13.6   utility's grid without causing any adverse or unsafe 
 13.7   consequences; and 
 13.8      (2) is consistent with the utility's resource needs as 
 13.9   identified in its most recent resource plan submitted under 
 13.10  section 216B.2422. 
 13.11     (f) "Community-based energy project" or "C-BED project" 
 13.12  means a new wind energy project that: 
 13.13     (1) has no single qualifying owner owning more than 15 
 13.14  percent of a C-BED project that consists of more than two 
 13.15  turbines; or 
 13.16     (2) for C-BED projects of one or two turbines, is owned 
 13.17  entirely by one or more qualifying owners, with at least 51 
 13.18  percent of the total financial benefits over the life of the 
 13.19  project flowing to qualifying owners; and 
 13.20     (3) has a resolution of support adopted by the county board 
 13.21  of each county in which the project is to be located, or in the 
 13.22  case of a project located within the boundaries of a 
 13.23  reservation, the tribal council for that reservation. 
 13.24     Subd. 3.  [TARIFF RATE.] (a) The tariff described in 
 13.25  subdivision 4 must have a rate schedule that allows for a rate 
 13.26  up to a 2.7 cents per kilowatt hour net present value rate over 
 13.27  the 20-year life of the power purchase agreement.  The tariff 
 13.28  must provide for a rate that is higher in the first ten years of 
 13.29  the power purchase agreement than in the last ten years.  The 
 13.30  discount rate required to calculate the net present value must 
 13.31  be the utility's normal discount rate used for its other 
 13.32  business purposes. 
 13.33     (b) The commission shall consider mechanisms to encourage 
 13.34  the aggregation of C-BED projects. 
 13.35     (c) The commission shall require that qualifying owners 
 13.36  provide sufficient security to secure performance under the 
 14.1   power purchase agreement, and shall prohibit the transfer of the 
 14.2   C-BED project to a nonqualifying owner during the initial 20 
 14.3   years of the contract. 
 14.4      Subd. 4.  [UTILITIES TO OFFER TARIFF.] By December 1, 2005, 
 14.5   each public utility providing electric service at retail shall 
 14.6   file for commission approval a community-based energy 
 14.7   development tariff consistent with subdivision 3.  Within 90 
 14.8   days of the first commission approval order under this 
 14.9   subdivision, each municipal power agency and generation and 
 14.10  transmission cooperative electric association shall adopt a 
 14.11  community-based energy development tariff as consistent as 
 14.12  possible with subdivision 3. 
 14.13     Subd. 5.  [PRIORITY FOR C-BED PROJECTS.] (a) A utility 
 14.14  subject to section 216B.1691 that needs to construct new 
 14.15  generation, or purchase the output from new generation, as part 
 14.16  of its plan to satisfy its good faith objective under that 
 14.17  section should take reasonable steps to determine if one or more 
 14.18  C-BED projects are available that meet the utility's cost and 
 14.19  reliability requirements, applying standard reliability 
 14.20  criteria, to fulfill some or all of the identified need at 
 14.21  minimal impact to customer rates. 
 14.22     Nothing in this section shall be construed to obligate a 
 14.23  utility to enter into a power purchase agreement under a C-BED 
 14.24  tariff developed under this section. 
 14.25     (b) Each utility shall include in its resource plan 
 14.26  submitted under section 216B.2422 a description of its efforts 
 14.27  to purchase energy from C-BED projects, including a list of the 
 14.28  projects under contract and the amount of C-BED energy purchased.
 14.29     (c) The commission shall consider the efforts and 
 14.30  activities of a utility to purchase energy from C-BED projects 
 14.31  when evaluating its good faith effort towards meeting the 
 14.32  renewable energy objective under section 216B.1691. 
 14.33     Subd. 6. [PROPERTY OWNER PARTICIPATION.] To the extent 
 14.34  feasible, a developer of a C-BED project must provide, in 
 14.35  writing, an opportunity to invest in the C-BED project to each 
 14.36  property owner on whose property a high voltage transmission 
 15.1   line transmitting the energy generated by the C-BED project to 
 15.2   market currently exists or is to be constructed and who resides 
 15.3   in the county where the C-BED project is located or in an 
 15.4   adjacent Minnesota county. 
 15.5      Subd. 7.  [OTHER C-BED TARIFF ISSUES.] (a) A 
 15.6   community-based project developer and a utility shall negotiate 
 15.7   the rate and power purchase agreement terms consistent with the 
 15.8   tariff established under subdivision 4. 
 15.9      (b) At the discretion of the developer, a community-based 
 15.10  project developer and a utility may negotiate a power purchase 
 15.11  agreement with terms different from the tariff established under 
 15.12  subdivision 4. 
 15.13     (c) A qualifying owner, or any combination of qualifying 
 15.14  owners, may develop a joint venture project with a nonqualifying 
 15.15  wind energy project developer.  However, the terms of the C-BED 
 15.16  tariff may only apply to the portion of the energy production of 
 15.17  the total project that is directly proportional to the equity 
 15.18  share of the project owned by the qualifying owners. 
 15.19     (d) A project that is operating under a power purchase 
 15.20  agreement under a C-BED tariff is not eligible for net energy 
 15.21  billing under section 216B.164, subdivision 3, or for production 
 15.22  incentives under section 216C.41. 
 15.23     (e) A public utility must receive commission approval of a 
 15.24  power purchase agreement for a C-BED tariffed project.  The 
 15.25  commission shall provide the utility's ratepayers an opportunity 
 15.26  to address the reasonableness of the proposed power purchase 
 15.27  agreement.  Unless a party objects to a contract within 30 days 
 15.28  of submission of the contract to the commission the contract is 
 15.29  deemed approved. 
 15.30     Sec. 2.  Minnesota Statutes 2004, section 216B.1645, 
 15.31  subdivision 1, is amended to read: 
 15.32     Subdivision 1.  [COMMISSION AUTHORITY.] Upon the petition 
 15.33  of a public utility, the Public Utilities Commission shall 
 15.34  approve or disapprove power purchase contracts, investments, or 
 15.35  expenditures entered into or made by the utility to satisfy the 
 15.36  wind and biomass mandates contained in sections 216B.169, 
 16.1   216B.2423, and 216B.2424, and to satisfy the renewable energy 
 16.2   objectives set forth in section 216B.1691, including reasonable 
 16.3   investments and expenditures made to: 
 16.4      (1) transmit the electricity generated from sources 
 16.5   developed under those sections that is ultimately used to 
 16.6   provide service to the utility's retail customers, or to 
 16.7   including studies necessary to identify new transmission 
 16.8   facilities needed to transmit electricity to Minnesota retail 
 16.9   customers from generating facilities constructed to satisfy the 
 16.10  renewable energy objectives, provided that the costs of the 
 16.11  studies have not been recovered previously under existing 
 16.12  tariffs and the utility has filed an application for a 
 16.13  certificate of need or for certification as a priority project 
 16.14  under section 216B.2425 for the new transmission facilities 
 16.15  identified in the studies; or 
 16.16     (2) develop renewable energy sources from the account 
 16.17  required in section 116C.779.  
 16.18     Sec. 3.  Minnesota Statutes 2004, section 216B.2425, 
 16.19  subdivision 7, is amended to read: 
 16.20     Subd. 7.  [TRANSMISSION NEEDED TO SUPPORT RENEWABLE 
 16.21  RESOURCES.] Each entity subject to this section shall determine 
 16.22  necessary transmission upgrades to support development of 
 16.23  renewable energy resources required to meet objectives under 
 16.24  section 216B.1691 and shall include those upgrades in its report 
 16.25  under subdivision 2.  Transmission projects determined by the 
 16.26  commission to be necessary to support a utility's plan under 
 16.27  section 216B.1691 to meet its obligations under that section 
 16.28  must be certified as a priority electric transmission project, 
 16.29  satisfying the requirements of section 216B.243.  In determining 
 16.30  that a proposed transmission project is necessary to support a 
 16.31  utility's plan under section 216B.1691, the commission must find 
 16.32  that the applicant has met the following factors: 
 16.33     (1) that the transmission facility is necessary to allow 
 16.34  the delivery of power from renewable sources of energy to retail 
 16.35  customers in Minnesota; 
 16.36     (2) that the applicant has signed or will sign power 
 17.1   purchase agreements, subject to commission approval, for 
 17.2   resources to meet the renewable energy objective that are 
 17.3   dependent upon or will use the capacity of the transmission 
 17.4   facility to serve retail customers in Minnesota; 
 17.5      (3) that the installation and commercial operation date of 
 17.6   the renewable resources to satisfy the renewable energy 
 17.7   objective will match the planned in-service date of the 
 17.8   transmission facility; and 
 17.9      (4) that the proposed transmission facility is consistent 
 17.10  with a least cost solution to the utility's need for additional 
 17.11  electricity. 
 17.12     Sec. 4.  Minnesota Statutes 2004, section 216B.243, 
 17.13  subdivision 8, is amended to read: 
 17.14     Subd. 8.  [EXEMPTIONS.] This section does not apply to: 
 17.15     (1) cogeneration or small power production facilities as 
 17.16  defined in the Federal Power Act, United States Code, title 16, 
 17.17  section 796, paragraph (17), subparagraph (A), and paragraph 
 17.18  (18), subparagraph (A), and having a combined capacity at a 
 17.19  single site of less than 80,000 kilowatts or to; plants or 
 17.20  facilities for the production of ethanol or fuel alcohol nor in; 
 17.21  or any case where the commission shall determine has determined 
 17.22  after being advised by the attorney general that its application 
 17.23  has been preempted by federal law; 
 17.24     (2) a high-voltage transmission line proposed primarily to 
 17.25  distribute electricity to serve the demand of a single customer 
 17.26  at a single location, unless the applicant opts to request that 
 17.27  the commission determine need under this section or section 
 17.28  216B.2425; 
 17.29     (3) the upgrade to a higher voltage of an existing 
 17.30  transmission line that serves the demand of a single customer 
 17.31  that primarily uses existing rights-of-way, unless the applicant 
 17.32  opts to request that the commission determine need under this 
 17.33  section or section 216B.2425; 
 17.34     (4) a high-voltage transmission line of one mile or less 
 17.35  required to connect a new or upgraded substation to an existing, 
 17.36  new, or upgraded high-voltage transmission line; 
 18.1      (5) conversion of the fuel source of an existing electric 
 18.2   generating plant to using natural gas; or 
 18.3      (6) the modification of an existing electric generating 
 18.4   plant to increase efficiency, as long as the capacity of the 
 18.5   plant is not increased more than ten percent or more than 100 
 18.6   megawatts, whichever is greater; or 
 18.7      (7) a large energy facility that (i) generates electricity 
 18.8   from wind energy conversion systems, (ii) will serve retail 
 18.9   customers in Minnesota, (iii) is specifically intended to be 
 18.10  used to meet the renewable energy objective under section 
 18.11  216B.1691 or addresses a resource need identified in a current 
 18.12  commission-approved or commission-reviewed resource plan under 
 18.13  section 216B.2422; and (iv) derives at least 10 percent of the 
 18.14  total nameplate capacity of the proposed project from one or 
 18.15  more C-BED projects, as defined under section 216B.1612, 
 18.16  subdivision 2, paragraph (f). 
 18.17     Sec. 5.  [216C.053] [RENEWABLE ENERGY DEVELOPMENT.] 
 18.18     The Department of Commerce shall assist utilities, 
 18.19  renewable energy developers, regulators, regional transmission 
 18.20  grid managers, and the public on issues related to renewable 
 18.21  energy development.  The department shall work to ensure 
 18.22  cost-effective renewable energy development throughout the state.
 18.23     Sec. 6.  [WIND INTEGRATION STUDY.] 
 18.24     The commission shall order all electric utilities, as 
 18.25  defined in Minnesota Statutes, section 216B.1691, subdivision 1, 
 18.26  paragraph (b), to participate in a statewide wind integration 
 18.27  study.  Utilities subject to Minnesota Statutes, section 
 18.28  216B.1691, shall jointly contract with an independent firm 
 18.29  selected by the reliability administrator to conduct an 
 18.30  engineering study of the impacts on reliability and costs 
 18.31  associated with increasing wind capacity to 20 percent of 
 18.32  Minnesota retail electric energy sales by the year 2020, and to 
 18.33  identify and develop options for utilities to use to manage the 
 18.34  intermittent nature of wind resources.  The contracting 
 18.35  utilities shall cooperate with the firm conducting the study by 
 18.36  providing data requested.  The reliability administrator shall 
 19.1   manage the study process and shall appoint a group of 
 19.2   stakeholders with experience in engineering and expertise in 
 19.3   power systems or wind energy to review the study's proposed 
 19.4   methods and assumptions and preliminary data.  The study must be 
 19.5   completed by November 30, 2006.  Using the study results, the 
 19.6   contracting utilities shall provide the commissioner of commerce 
 19.7   with estimates of the impact on their electric rates of 
 19.8   increasing wind capacity to 20 percent, assuming no reduction in 
 19.9   reliability.  Electric utilities shall incorporate the study's 
 19.10  findings into their utility integrated resource plans prepared 
 19.11  under Minnesota Statutes, section 216B.2422.  The costs of the 
 19.12  study are recoverable under Minnesota Statutes, section 
 19.13  216C.052, subdivision 2, paragraph (c), clause (2). 
 19.14     Sec. 7.  [EXPIRATION.] 
 19.15     Section 3 expires on January 1, 2010. 
 19.16                             ARTICLE 3 
 19.17               ROUTING AND SITING AUTHORITY TRANSFER 
 19.18     Section 1.  Minnesota Statutes 2004, section 116C.52, 
 19.19  subdivision 2, is amended to read: 
 19.20     Subd. 2.  [BOARD COMMISSION.] "Board" shall mean the 
 19.21  Minnesota Environmental Quality Board "Commission" means the 
 19.22  Public Utilities Commission. 
 19.23     Sec. 2.  Minnesota Statutes 2004, section 116C.52, 
 19.24  subdivision 4, is amended to read: 
 19.25     Subd. 4.  [HIGH VOLTAGE TRANSMISSION LINE.] "High voltage 
 19.26  transmission line" means a conductor of electric energy and 
 19.27  associated facilities designed for and capable of operation at a 
 19.28  nominal voltage of 100 kilovolts or more and is greater than 
 19.29  1,500 feet in length. 
 19.30     Sec. 3.  Minnesota Statutes 2004, section 116C.53, 
 19.31  subdivision 2, is amended to read: 
 19.32     Subd. 2.  [JURISDICTION.] The board commission is hereby 
 19.33  given the authority to provide for site and route selection for 
 19.34  large electric power facilities.  The board commission shall 
 19.35  issue permits for large electric power facilities in a timely 
 19.36  fashion.  When the Public Utilities Commission has determined 
 20.1   the and in a manner consistent with the overall determination of 
 20.2   need for the project under section 216B.243 or 216B.2425,.  
 20.3   Questions of need, including size, type, and timing; alternative 
 20.4   system configurations; and voltage are not within the board's 
 20.5   siting and routing authority and must not be included in the 
 20.6   scope of environmental review conducted under sections 116C.51 
 20.7   to 116C.69. 
 20.8      Sec. 4.  Minnesota Statutes 2004, section 116C.57, 
 20.9   subdivision 1, is amended to read: 
 20.10     Subdivision 1.  [SITE PERMIT.] No person may construct a 
 20.11  large electric generating plant without a site permit from the 
 20.12  board commission.  A large electric generating plant may be 
 20.13  constructed only on a site approved by the board commission.  
 20.14  The board commission must incorporate into one proceeding the 
 20.15  route selection for a high voltage transmission line that is 
 20.16  directly associated with and necessary to interconnect the large 
 20.17  electric generating plant to the transmission system and whose 
 20.18  need is certified as part of the generating plant project by the 
 20.19  Public Utilities Commission under section 216B.243. 
 20.20     Sec. 5.  Minnesota Statutes 2004, section 116C.57, 
 20.21  subdivision 2c, is amended to read: 
 20.22     Subd. 2c.  [ENVIRONMENTAL REVIEW.] The board commissioner 
 20.23  of the Department of Commerce shall prepare for the commission 
 20.24  an environmental impact statement on each proposed large 
 20.25  electric generating plant or high voltage transmission line for 
 20.26  which a complete application has been submitted.  For any 
 20.27  project that has obtained a certificate of need from the Public 
 20.28  Utilities Commission, the board The commissioner shall not 
 20.29  consider whether or not the project is needed.  No other state 
 20.30  environmental review documents shall be required.  The board 
 20.31  commissioner shall study and evaluate any site or route proposed 
 20.32  by an applicant and any other site or route the board commission 
 20.33  deems necessary that was proposed in a manner consistent with 
 20.34  rules adopted by the board concerning the form, content, and 
 20.35  timeliness of proposals for alternate sites or routes.  
 20.36     Sec. 6.  Minnesota Statutes 2004, section 116C.57, is 
 21.1   amended by adding a subdivision to read: 
 21.2      Subd. 9.  [DEPARTMENT OF COMMERCE TO PROVIDE TECHNICAL 
 21.3   EXPERTISE AND OTHER ASSISTANCE.] The commissioner of the 
 21.4   Department of Commerce shall consult with other state agencies 
 21.5   and provide technical expertise and other assistance to the 
 21.6   commission for activities and proceedings under this section, 
 21.7   sections 116C.51 to 116C.697, and chapter 116I.  The 
 21.8   commissioner shall periodically report to the commission 
 21.9   concerning the Department of Commerce's costs of providing 
 21.10  assistance.  The report shall conform to the schedule and 
 21.11  include the required contents specified by the commission.  The 
 21.12  commission shall include the costs of the assistance in 
 21.13  assessments for activities and proceedings under those sections 
 21.14  and reimburse the special revenue fund for those costs. 
 21.15     Sec. 7.  Minnesota Statutes 2004, section 116C.575, 
 21.16  subdivision 5, is amended to read: 
 21.17     Subd. 5.  [ENVIRONMENTAL REVIEW.] For the projects 
 21.18  identified in subdivision 2 and following these procedures, the 
 21.19  board commissioner of the Department of Commerce shall prepare 
 21.20  for the commission an environmental assessment.  The 
 21.21  environmental assessment shall contain information on the human 
 21.22  and environmental impacts of the proposed project and other 
 21.23  sites or routes identified by the board commission and shall 
 21.24  address mitigating measures for all of the sites or routes 
 21.25  considered.  The environmental assessment shall be the only 
 21.26  state environmental review document required to be prepared on 
 21.27  the project.  
 21.28     Sec. 8.  Minnesota Statutes 2004, section 116C.577, is 
 21.29  amended to read: 
 21.30     116C.577 [EMERGENCY PERMIT.] 
 21.31     (a) Any utility whose electric power system requires the 
 21.32  immediate construction of a large electric power generating 
 21.33  plant or high voltage transmission line due to a major 
 21.34  unforeseen event may apply to the board commission for an 
 21.35  emergency permit after providing.  The application shall provide 
 21.36  notice in writing to the Public Utilities Commission of the 
 22.1   major unforeseen event and the need for immediate construction.  
 22.2   The permit must be issued in a timely manner, no later than 195 
 22.3   days after the board's commission's acceptance of the 
 22.4   application and upon a finding by the board commission that (1) 
 22.5   a demonstrable emergency exists, (2) the emergency requires 
 22.6   immediate construction, and (3) adherence to the procedures and 
 22.7   time schedules specified in section 116C.57 would jeopardize the 
 22.8   utility's electric power system or would jeopardize the 
 22.9   utility's ability to meet the electric needs of its customers in 
 22.10  an orderly and timely manner. 
 22.11     (b) A public hearing to determine if an emergency exists 
 22.12  must be held within 90 days of the application.  The 
 22.13  board commission, after notice and hearing, shall adopt rules 
 22.14  specifying the criteria for emergency certification.  
 22.15     Sec. 9.  Minnesota Statutes 2004, section 116C.58, is 
 22.16  amended to read: 
 22.17     116C.58 [ANNUAL HEARING.] 
 22.18     The board commission shall hold an annual public hearing at 
 22.19  a time and place prescribed by rule in order to afford 
 22.20  interested persons an opportunity to be heard regarding any 
 22.21  matters relating to the siting of large electric generating 
 22.22  power plants and routing of high voltage transmission lines.  At 
 22.23  the meeting, the board commission shall advise the public of the 
 22.24  permits issued by the board commission in the past year.  
 22.25  The board commission shall provide at least ten days but no more 
 22.26  than 45 days' notice of the annual meeting by mailing notice to 
 22.27  those persons who have requested notice and by publication in 
 22.28  the EQB Monitor and the commission's weekly calendar. 
 22.29     Sec. 10.  Minnesota Statutes 2004, section 116C.61, 
 22.30  subdivision 3, is amended to read: 
 22.31     Subd. 3.  [STATE AGENCY PARTICIPATION.] (a) State agencies 
 22.32  authorized to issue permits required for construction or 
 22.33  operation of large electric power generating plants or high 
 22.34  voltage transmission lines shall participate during routing and 
 22.35  siting at public hearings and all other activities of the board 
 22.36  on specific site or route designations and design considerations 
 23.1   of the board, and shall clearly state whether the site or route 
 23.2   being considered for designation or permit and other design 
 23.3   matters under consideration for approval will be in compliance 
 23.4   with state agency standards, rules, or policies. 
 23.5      (b) An applicant for a permit under this section or under 
 23.6   chapter 116I shall notify the commissioner of agriculture if the 
 23.7   proposed project will impact cultivated agricultural land, as 
 23.8   that term is defined in section 116I.01, subdivision 4.  The 
 23.9   commissioner may participate and advise the commission as to 
 23.10  whether to grant a permit for the project and the best options 
 23.11  for mitigating adverse impacts to agricultural lands if the 
 23.12  permit is granted.  The Department of Agriculture shall be the 
 23.13  lead agency on the development of any agricultural mitigation 
 23.14  plan required for the project. 
 23.15     Sec. 11.  Minnesota Statutes 2004, section 116C.69, 
 23.16  subdivision 2, is amended to read: 
 23.17     Subd. 2.  [SITE APPLICATION FEE.] Every applicant for a 
 23.18  site permit shall pay to the board commission a fee in an amount 
 23.19  equal to $500 for each $1,000,000 of production plant investment 
 23.20  in the proposed installation as defined in the Federal Power 
 23.21  Commission Uniform System of Accounts.  The board shall specify 
 23.22  the time and manner of payment of the fee.  If any single 
 23.23  payment requested by the board is in excess of 25 percent of the 
 23.24  total estimated fee, the board shall show that the excess is 
 23.25  reasonably necessary.  The applicant shall pay within 30 days of 
 23.26  notification any additional fees reasonably necessary for 
 23.27  completion of the site evaluation and designation process by the 
 23.28  board.  In no event shall the total fees required of the 
 23.29  applicant under this subdivision exceed an amount equal to 0.001 
 23.30  of said production plant investment ($1,000 for each $1,000,000) 
 23.31  to cover the necessary and reasonable costs incurred by the 
 23.32  commission in acting on the permit application and carrying out 
 23.33  the requirements of sections 116C.51 to 116C.69.  The commission 
 23.34  may adopt rules providing for the payment of the fee.  Section 
 23.35  16A.1283 does not apply to establishment of this fee.  All money 
 23.36  received pursuant to this subdivision shall be deposited in a 
 24.1   special account.  Money in the account is appropriated to 
 24.2   the board commission to pay expenses incurred in processing 
 24.3   applications for site permits in accordance with sections 
 24.4   116C.51 to 116C.69 and in the event the expenses are less than 
 24.5   the fee paid, to refund the excess to the applicant.  
 24.6      Sec. 12.  Minnesota Statutes 2004, section 116C.69, 
 24.7   subdivision 2a, is amended to read: 
 24.8      Subd. 2a.  [ROUTE APPLICATION FEE.] Every applicant for a 
 24.9   transmission line route permit shall pay to the board commission 
 24.10  a base fee of $35,000 plus a fee in an amount equal to $1,000 
 24.11  per mile length of the longest proposed route.  The board shall 
 24.12  specify the time and manner of payment of the fee.  If any 
 24.13  single payment requested by the board is in excess of 25 percent 
 24.14  of the total estimated fee, the board shall show that the excess 
 24.15  is reasonably necessary.  In the event the actual cost of 
 24.16  processing an application up to the board's final decision to 
 24.17  designate a route exceeds the above fee schedule, the board may 
 24.18  assess the applicant any additional fees necessary to cover the 
 24.19  actual costs, not to exceed an amount equal to $500 per mile 
 24.20  length of the longest proposed route fee to cover the necessary 
 24.21  and reasonable costs incurred by the commission in acting on the 
 24.22  permit application and carrying out the requirements of sections 
 24.23  116C.51 to 116C.69.  The commission may adopt rules providing 
 24.24  for the payment of the fee.  Section 16A.1283 does not apply to 
 24.25  the establishment of this fee.  All money received pursuant to 
 24.26  this subdivision shall be deposited in a special account.  Money 
 24.27  in the account is appropriated to the board commission to pay 
 24.28  expenses incurred in processing applications for route permits 
 24.29  in accordance with sections 116C.51 to 116C.69 and in the event 
 24.30  the expenses are less than the fee paid, to refund the excess to 
 24.31  the applicant.  
 24.32     Sec. 13.  Minnesota Statutes 2004, section 216B.243, 
 24.33  subdivision 4, is amended to read: 
 24.34     Subd. 4.  [APPLICATION FOR CERTIFICATE; HEARING.] Any 
 24.35  person proposing to construct a large energy facility shall 
 24.36  apply for a certificate of need prior to applying and for a site 
 25.1   or route permit under sections 116C.51 to 116C.69 or prior to 
 25.2   construction of the facility.  The application shall be on forms 
 25.3   and in a manner established by the commission.  In reviewing 
 25.4   each application the commission shall hold at least one public 
 25.5   hearing pursuant to chapter 14.  The public hearing shall be 
 25.6   held at a location and hour reasonably calculated to be 
 25.7   convenient for the public.  An objective of the public hearing 
 25.8   shall be to obtain public opinion on the necessity of granting a 
 25.9   certificate of need and, if a joint hearing is held, a site or 
 25.10  route permit.  The commission shall designate a commission 
 25.11  employee whose duty shall be to facilitate citizen participation 
 25.12  in the hearing process.  If Unless the commission and the 
 25.13  Environmental Quality Board determine determines that a joint 
 25.14  hearing on siting and need under this subdivision and section 
 25.15  116C.57, subdivision 2d, is not feasible, or more efficient, and 
 25.16  may further or otherwise not in the public interest, a joint 
 25.17  hearing under those subdivisions may shall be held. 
 25.18     Sec. 14.  Minnesota Statutes 2004, section 216B.243, 
 25.19  subdivision 5, is amended to read: 
 25.20     Subd. 5.  [APPROVAL, DENIAL, OR MODIFICATION.] Within 
 25.21  six 12 months of the submission of an application, the 
 25.22  commission shall approve or deny a certificate of need for the 
 25.23  facility.  Approval or denial of the certificate shall be 
 25.24  accompanied by a statement of the reasons for the decision.  
 25.25  Issuance of the certificate may be made contingent upon 
 25.26  modifications required by the commission.  If the commission has 
 25.27  not issued an order on the application within the 12 months 
 25.28  provided, the commission may extend the time period upon 
 25.29  receiving the consent of the parties or on its own motion, for 
 25.30  good cause, by issuing an order explaining the good cause 
 25.31  justification for extension.  
 25.32     Sec. 15.  Minnesota Statutes 2004, section 216B.243, 
 25.33  subdivision 7, is amended to read: 
 25.34     Subd. 7.  [PARTICIPATION BY OTHER AGENCY OR POLITICAL 
 25.35  SUBDIVISION.] (a) Other state agencies authorized to issue 
 25.36  permits for siting, construction or operation of large energy 
 26.1   facilities, and those state agencies authorized to participate 
 26.2   in matters before the commission involving utility rates and 
 26.3   adequacy of utility services, shall present their position 
 26.4   regarding need and participate in the public hearing process 
 26.5   prior to the issuance or denial of a certificate of need.  
 26.6   Issuance or denial of certificates of need shall be the sole and 
 26.7   exclusive prerogative of the commission and these determinations 
 26.8   and certificates shall be binding upon other state departments 
 26.9   and agencies, regional, county, and local governments and 
 26.10  special purpose government districts except as provided in 
 26.11  sections 116C.01 to 116C.08 and 116D.04, subdivision 9. 
 26.12     (b) An applicant for a certificate of need shall notify the 
 26.13  commissioner of agriculture if the proposed project will impact 
 26.14  cultivated agricultural land, as that term is defined in section 
 26.15  116I.01, subdivision 4.  The commissioner may participate in any 
 26.16  proceeding on the application and advise the commission as to 
 26.17  whether to grant the certificate of need, and the best options 
 26.18  for mitigating adverse impacts to agricultural lands if the 
 26.19  certificate is granted.  The Department of Agriculture shall be 
 26.20  the lead agency on the development of any agricultural 
 26.21  mitigation plan required for the project. 
 26.22     Sec. 16.  Minnesota Statutes 2004, section 216C.052, is 
 26.23  amended to read: 
 26.24     216C.052 [RELIABILITY ADMINISTRATOR.] 
 26.25     Subdivision 1.  [RESPONSIBILITIES.] (a) There is 
 26.26  established the position of reliability administrator in the 
 26.27  Department of Commerce Public Utilities Commission.  The 
 26.28  administrator shall act as a source of independent expertise and 
 26.29  a technical advisor to the commissioner, the commission, and the 
 26.30  public, and the Legislative Electric Energy Task Force on issues 
 26.31  related to the reliability of the electric system.  In 
 26.32  conducting its work, the administrator shall provide assistance 
 26.33  to the commission in administering and implementing the 
 26.34  commission's duties under sections 116C.51 to 116C.69; 116C.691 
 26.35  to 116C.697; 216B.2422; 216B.2425; 216B.243; chapter 116I; and 
 26.36  rules associated with those sections.  Subject to resource 
 27.1   constraints, the reliability administrator may also: 
 27.2      (1) model and monitor the use and operation of the energy 
 27.3   infrastructure in the state, including generation facilities, 
 27.4   transmission lines, natural gas pipelines, and other energy 
 27.5   infrastructure; 
 27.6      (2) develop and present to the commission and parties 
 27.7   technical analyses of proposed infrastructure projects, and 
 27.8   provide technical advice to the commission; 
 27.9      (3) present independent, factual, expert, and technical 
 27.10  information on infrastructure proposals and reliability issues 
 27.11  at public meetings hosted by the task force, the Environmental 
 27.12  Quality Board, the department, or the commission. 
 27.13     (b) Upon request and subject to resource constraints, the 
 27.14  administrator shall provide technical assistance regarding 
 27.15  matters unrelated to applications for infrastructure 
 27.16  improvements to the task force, the department, or the 
 27.17  commission. 
 27.18     (c) The administrator may not advocate for any particular 
 27.19  outcome in a commission proceeding, but may give technical 
 27.20  advice to the commission as to the impact on the reliability of 
 27.21  the energy system of a particular project or projects.  The 
 27.22  administrator must not be considered a party or a participant in 
 27.23  any proceeding before the commission. 
 27.24     Subd. 2.  [ADMINISTRATIVE ISSUES.] (a) The commissioner 
 27.25  commission may select the administrator who shall serve for a 
 27.26  four-year term.  The administrator may not have been a party or 
 27.27  a participant in a commission energy proceeding for at least one 
 27.28  year prior to selection by the commissioner commission.  
 27.29  The commissioner commission shall oversee and direct the work of 
 27.30  the administrator, annually review the expenses of the 
 27.31  administrator, and annually approve the budget of the 
 27.32  administrator.  Pursuant to commission approval, the 
 27.33  administrator may hire staff and may contract for technical 
 27.34  expertise in performing duties when existing state resources are 
 27.35  required for other state responsibilities or when special 
 27.36  expertise is required.  The salary of the administrator is 
 28.1   governed by section 15A.0815, subdivision 2. 
 28.2      (b) Costs relating to a specific proceeding, analysis, or 
 28.3   project are not general administrative costs.  For purposes of 
 28.4   this section, "energy utility" means public utilities, 
 28.5   generation and transmission cooperative electric associations, 
 28.6   and municipal power agencies providing natural gas or electric 
 28.7   service in the state.  
 28.8      (c) The Department of Commerce commission shall pay: 
 28.9      (1) the general administrative costs of the administrator, 
 28.10  not to exceed $1,000,000 in a fiscal year, and shall assess 
 28.11  energy utilities for those administrative costs.  These costs 
 28.12  must be consistent with the budget approved by the commissioner 
 28.13  commission under paragraph (a).  The department commission shall 
 28.14  apportion the costs among all energy utilities in proportion to 
 28.15  their respective gross operating revenues from sales of gas or 
 28.16  electric service within the state during the last calendar year, 
 28.17  and shall then render a bill to each utility on a regular basis; 
 28.18  and 
 28.19     (2) costs relating to a specific proceeding analysis or 
 28.20  project and shall render a bill to the specific energy utility 
 28.21  or utilities participating in the proceeding, analysis, or 
 28.22  project directly, either at the conclusion of a particular 
 28.23  proceeding, analysis, or project, or from time to time during 
 28.24  the course of the proceeding, analysis, or project. 
 28.25     (d) For purposes of administrative efficiency, the 
 28.26  department commission shall assess energy utilities and issue 
 28.27  bills in accordance with the billing and assessment procedures 
 28.28  provided in section 216B.62, to the extent that these procedures 
 28.29  do not conflict with this subdivision.  The amount of the bills 
 28.30  rendered by the department commission under paragraph (c) must 
 28.31  be paid by the energy utility into an account in the special 
 28.32  revenue fund in the state treasury within 30 days from the date 
 28.33  of billing and is appropriated to the commissioner commission 
 28.34  for the purposes provided in this section.  The commission shall 
 28.35  approve or approve as modified a rate schedule providing for the 
 28.36  automatic adjustment of charges to recover amounts paid by 
 29.1   utilities under this section.  All amounts assessed under this 
 29.2   section are in addition to amounts appropriated to the 
 29.3   commission and the department by other law. 
 29.4      Subd. 3.  [ASSESSMENT AND APPROPRIATION.] In addition to 
 29.5   the amount noted in subdivision 2, the commissioner commission 
 29.6   may assess utilities, using the mechanism specified in that 
 29.7   subdivision, up to an additional $500,000 annually through June 
 29.8   30, 2006.  The amounts assessed under this subdivision are 
 29.9   appropriated to the commissioner commission, and some or all of 
 29.10  the amounts assessed may be transferred to the commissioner of 
 29.11  administration, for the purposes specified in section 16B.325 
 29.12  and Laws 2001, chapter 212, article 1, section 3, as needed to 
 29.13  implement those sections. 
 29.14     Subd. 4.  [EXPIRATION.] This section expires June 30, 
 29.15  2006 2007. 
 29.16     Sec. 17.  [TRANSFERRING POWER PLANT SITING 
 29.17  RESPONSIBILITIES.] 
 29.18     To ensure greater public participation in energy 
 29.19  infrastructure approval proceedings and to better integrate and 
 29.20  align state energy and environmental policy goals with economic 
 29.21  decisions involving large energy infrastructure, all 
 29.22  responsibilities, as defined in Minnesota Statutes, section 
 29.23  15.039, subdivision 1, held by the Environmental Quality Board 
 29.24  relating to power plant siting and routing under Minnesota 
 29.25  Statutes, sections 116C.51 to 116C.69; wind energy conversion 
 29.26  systems under Minnesota Statutes, sections 116C.691 to 116C.697; 
 29.27  pipelines under Minnesota Statutes, chapter 116I; and rules 
 29.28  associated with those sections are transferred to the Public 
 29.29  Utilities Commission under Minnesota Statutes, section 15.039, 
 29.30  except that the responsibilities of the Environmental Quality 
 29.31  Board under Minnesota Statutes, section 116C.83, subdivision 6, 
 29.32  and Minnesota Rules, parts 4400.1700, 4400.2750, and 4410.7010 
 29.33  to 4410.7070, are transferred to the commissioner of the 
 29.34  Department of Commerce.  The power plan siting staff of the 
 29.35  Environmental Quality Board are transferred to the Department of 
 29.36  Commerce.  The department's budget shall be adjusted to reflect 
 30.1   the transfer.  
 30.2   The Department of Commerce and the Public Utilities Commission 
 30.3   shall carry out these duties in accordance with the provisions 
 30.4   of Minnesota Statutes, section 116D.03. 
 30.5      Sec. 18.  [TRANSFERRING RELIABILITY ADMINISTRATOR 
 30.6   RESPONSIBILITIES.] 
 30.7      All responsibilities, as defined in Minnesota Statutes 
 30.8   2004, section 15.039, subdivision 1, held by the Minnesota 
 30.9   Department of Commerce relating to the reliability administrator 
 30.10  under Minnesota Statutes, section 216C.052, are transferred to 
 30.11  the Minnesota Public Utilities Commission under Minnesota 
 30.12  Statutes, section 15.039. 
 30.13     Sec. 19.  [REVISOR'S INSTRUCTION.] 
 30.14     (a) The revisor of statutes shall change the words 
 30.15  "Environmental Quality Board," "board," "chair of the board," 
 30.16  "chair," "board's," and similar terms, when they refer to the 
 30.17  Environmental Quality Board or chair of the Environmental 
 30.18  Quality Board, to the term "Public Utilities Commission," 
 30.19  "commission," or "commission's," as appropriate, where they 
 30.20  appear in Minnesota Statutes, sections 13.741, subdivision 3, 
 30.21  116C.51 to 116C.697, and chapter 116I.  The revisor shall also 
 30.22  make those changes in Minnesota Rules, chapters 4400, 4401, and 
 30.23  4415, except as specified in paragraph (b). 
 30.24     (b) The revisor of statutes shall change the words 
 30.25  "Environmental Quality Board," "board," "chair of the board," 
 30.26  "chair," "board's," and similar terms, when they refer to the 
 30.27  Environmental Quality Board or chair of the Environmental 
 30.28  Quality Board, to the term "commissioner of the Department of 
 30.29  Commerce," "commissioner," or "commissioner's," as appropriate, 
 30.30  where they appear in Minnesota Statutes, section 116C.83, 
 30.31  subdivision 6; and Minnesota Rules, parts 4400.1700, subparts 1 
 30.32  to 9, 11, and 12; 4400.2750; and 4410.7010 to 4410.7070. 
 30.33     Sec. 20.  [EFFECTIVE DATE.] 
 30.34     Sections 1 to 18 are effective July 1, 2005. 
 30.35                             ARTICLE 4 
 30.36              ENERGY ASSISTANCE TECHNICAL CORRECTIONS 
 31.1      Section 1.  Minnesota Statutes 2004, section 13.681, is 
 31.2   amended by adding a subdivision to read: 
 31.3      Subd. 5.  [ENERGY PROGRAMS.] Treatment of data on 
 31.4   individuals applying for benefits or services under energy 
 31.5   programs is governed by section 216C.266. 
 31.6      Sec. 2.  Minnesota Statutes 2004, section 119A.15, 
 31.7   subdivision 5a, is amended to read: 
 31.8      Subd. 5a.  [EXCLUDED PROGRAMS.] Programs transferred to the 
 31.9   Department of Education from the Department of Employment and 
 31.10  Economic Development may not be included in the consolidated 
 31.11  funding account and are ineligible for local consolidation.  The 
 31.12  commissioner may not apply for federal waivers to include these 
 31.13  programs in funding consolidation initiatives.  The programs 
 31.14  include the following: 
 31.15     (1) programs for the homeless under sections 116L.365 and 
 31.16  119A.43; 
 31.17     (2) emergency energy assistance and energy conservation 
 31.18  programs under sections 119A.40 and 119A.42 216C.263 and 
 31.19  216C.265; 
 31.20     (3) weatherization programs under section 119A.41 216C.264; 
 31.21     (4) foodshelf programs under section 119A.44 and the 
 31.22  emergency food assistance program; and 
 31.23     (5) lead abatement programs under section 119A.45. 
 31.24     Sec. 3.  Minnesota Statutes 2004, section 216C.09, is 
 31.25  amended to read: 
 31.26     216C.09 [COMMISSIONER DUTIES.] 
 31.27     (a) The commissioner shall: 
 31.28     (1) manage the department as the central repository within 
 31.29  the state government for the collection of data on energy; 
 31.30     (2) prepare and adopt an emergency allocation plan 
 31.31  specifying actions to be taken in the event of an impending 
 31.32  serious shortage of energy, or a threat to public health, 
 31.33  safety, or welfare; 
 31.34     (3) undertake a continuing assessment of trends in the 
 31.35  consumption of all forms of energy and analyze the social, 
 31.36  economic, and environmental consequences of these trends; 
 32.1      (4) carry out energy conservation measures as specified by 
 32.2   the legislature and recommend to the governor and the 
 32.3   legislature additional energy policies and conservation measures 
 32.4   as required to meet the objectives of sections 216C.05 to 
 32.5   216C.30; 
 32.6      (5) collect and analyze data relating to present and future 
 32.7   demands and resources for all sources of energy; 
 32.8      (6) evaluate policies governing the establishment of rates 
 32.9   and prices for energy as related to energy conservation, and 
 32.10  other goals and policies of sections 216C.05 to 216C.30, and 
 32.11  make recommendations for changes in energy pricing policies and 
 32.12  rate schedules; 
 32.13     (7) study the impact and relationship of the state energy 
 32.14  policies to international, national, and regional energy 
 32.15  policies; 
 32.16     (8) design and implement a state program for the 
 32.17  conservation of energy; this program shall include but not be 
 32.18  limited to, general commercial, industrial, and residential, and 
 32.19  transportation areas; such program shall also provide for the 
 32.20  evaluation of energy systems as they relate to lighting, 
 32.21  heating, refrigeration, air conditioning, building design and 
 32.22  operation, and appliance manufacturing and operation; 
 32.23     (9) inform and educate the public about the sources and 
 32.24  uses of energy and the ways in which persons can conserve 
 32.25  energy; 
 32.26     (10) dispense funds made available for the purpose of 
 32.27  research studies and projects of professional and civic 
 32.28  orientation, which are related to either energy conservation, 
 32.29  resource recovery, or the development of alternative energy 
 32.30  technologies which conserve nonrenewable energy resources while 
 32.31  creating minimum environmental impact; 
 32.32     (11) charge other governmental departments and agencies 
 32.33  involved in energy-related activities with specific information 
 32.34  gathering goals and require that those goals be met; 
 32.35     (12) design a comprehensive program for the development of 
 32.36  indigenous energy resources.  The program shall include, but not 
 33.1   be limited to, providing technical, informational, educational, 
 33.2   and financial services and materials to persons, businesses, 
 33.3   municipalities, and organizations involved in the development of 
 33.4   solar, wind, hydropower, peat, fiber fuels, biomass, and other 
 33.5   alternative energy resources.  The program shall be evaluated by 
 33.6   the alternative energy technical activity; and 
 33.7      (13) dispense loans, grants, or other financial aid from 
 33.8   money received from litigation or settlement of alleged 
 33.9   violations of federal petroleum-pricing regulations made 
 33.10  available to the department for that purpose.  The commissioner 
 33.11  shall adopt rules under chapter 14 for this purpose.  Money 
 33.12  dispersed under this clause must not include money received as a 
 33.13  result of the settlement of the parties and order of the United 
 33.14  States District Court for the District of Kansas in the case of 
 33.15  In Re Department of Energy Stripper Well Exemption Litigation, 
 33.16  578 F. Supp. 586 (D.Kan. 1983) and all money received after 
 33.17  August 1, 1988, by the governor, the commissioner of finance, or 
 33.18  any other state agency resulting from overcharges by oil 
 33.19  companies in violation of federal law.  
 33.20     (b) Further, the commissioner may participate fully in 
 33.21  hearings before the Public Utilities Commission on matters 
 33.22  pertaining to rate design, cost allocation, efficient resource 
 33.23  utilization, utility conservation investments, small power 
 33.24  production, cogeneration, and other rate issues.  The 
 33.25  commissioner shall support the policies stated in section 
 33.26  216C.05 and shall prepare and defend testimony proposed to 
 33.27  encourage energy conservation improvements as defined in section 
 33.28  216B.241. 
 33.29     Sec. 4.  Minnesota Statutes 2004, section 462A.05, 
 33.30  subdivision 21, is amended to read: 
 33.31     Subd. 21.  [RENTAL PROPERTY LOANS.] The agency may make or 
 33.32  purchase loans to owners of rental property that is occupied or 
 33.33  intended for occupancy primarily by low- and moderate-income 
 33.34  tenants and which does not comply with the standards established 
 33.35  in section 216C.27 16B.61, subdivision 3 1, for the purpose of 
 33.36  energy improvements necessary to bring the property into full or 
 34.1   partial compliance with these standards.  For property which 
 34.2   meets the other requirements of this subdivision, a loan may 
 34.3   also be used for moderate rehabilitation of the property.  The 
 34.4   authority granted in this subdivision is in addition to and not 
 34.5   in limitation of any other authority granted to the agency in 
 34.6   this chapter.  The limitations on eligible mortgagors contained 
 34.7   in section 462A.03, subdivision 13, do not apply to loans under 
 34.8   this subdivision.  Loans for the improvement of rental property 
 34.9   pursuant to this subdivision may contain provisions that 
 34.10  repayment is not required in whole or in part subject to terms 
 34.11  and conditions determined by the agency to be necessary and 
 34.12  desirable to encourage owners to maximize rehabilitation of 
 34.13  properties. 
 34.14     Sec. 5.  Minnesota Statutes 2004, section 462A.05, 
 34.15  subdivision 23, is amended to read: 
 34.16     Subd. 23.  [INSURING FINANCIAL INSTITUTION LOANS.] The 
 34.17  agency may participate in loans or establish a fund to insure 
 34.18  loans, or portions of loans, that are made by any banking 
 34.19  institution, savings association, or other lender approved by 
 34.20  the agency, organized under the laws of this or any other state 
 34.21  or of the United States having an office in this state, to 
 34.22  owners of renter occupied homes or apartments that do not comply 
 34.23  with standards set forth in section 216C.27 16B.61, 
 34.24  subdivision 3 1, without limitations relating to the maximum 
 34.25  incomes of the owners or tenants.  The proceeds of the insured 
 34.26  portion of the loan must be used to pay the costs of 
 34.27  improvements, including all related structural and other 
 34.28  improvements, that will reduce energy consumption.  
 34.29     Sec. 6.  [RECODIFICATION.] 
 34.30     Minnesota Statutes 2004, sections 119A.40; 119A.41; 
 34.31  119A.42; 119A.425; and 216C.27, subdivision 8, are recodified as 
 34.32  sections 216C.263; 216C.264; 216C.265; 216C.266; and 16B.61, 
 34.33  subdivision 8, respectively. 
 34.34                             ARTICLE 5 
 34.35                   WOODY BIOMASS MANDATE PROJECT 
 34.36     Section 1.  Minnesota Statutes 2004, section 216B.2424, 
 35.1   subdivision 1, is amended to read: 
 35.2      Subdivision 1.  [FARM-GROWN CLOSED-LOOP BIOMASS.] (a) For 
 35.3   the purposes of this section, "farm-grown closed-loop biomass" 
 35.4   means biomass, as defined in section 216C.051, subdivision 7, 
 35.5   that: 
 35.6      (1) is intentionally cultivated, harvested, and prepared 
 35.7   for use, in whole or in part, as a fuel for the generation of 
 35.8   electricity; 
 35.9      (2) when combusted, releases an amount of carbon dioxide 
 35.10  that is less than or approximately equal to the carbon dioxide 
 35.11  absorbed by the biomass fuel during its growing cycle; and 
 35.12     (3) is fired in a new or substantially retrofitted electric 
 35.13  generating facility that is: 
 35.14     (i) located within 400 miles of the site of the biomass 
 35.15  production; and 
 35.16     (ii) designed to use biomass to meet at least 75 percent of 
 35.17  its fuel requirements. 
 35.18     (b) The legislature finds that the negative environmental 
 35.19  impacts within 400 miles of the facility resulting from 
 35.20  transporting and combusting the biomass are offset in that 
 35.21  region by the environmental benefits to air, soil, and water of 
 35.22  the biomass production. 
 35.23     (c) Among the biomass fuel sources that meet the 
 35.24  requirements of paragraph (a), clause clauses (1) and (2) are 
 35.25  poplar, aspen, willow, switch grass, sorghum, alfalfa, and 
 35.26  cultivated prairie grass and sustainably managed woody biomass.  
 35.27     (d) For the purpose of this section, "sustainably managed 
 35.28  woody biomass" means:  
 35.29     (1) brush, trees, and other biomass harvested from within 
 35.30  designated utility, railroad, and road rights-of-way; 
 35.31     (2) upland and lowland brush harvested from lands 
 35.32  incorporated into brushland habitat management activities of the 
 35.33  Minnesota Department of Natural Resources; 
 35.34     (3) upland and lowland brush harvested from lands managed 
 35.35  in accordance with Minnesota Department of Natural Resources 
 35.36  "Best Management Practices for Managing Brushlands"; 
 36.1      (4) logging slash or waste wood that is created by harvest, 
 36.2   precommercial timber stand improvement to meet silvicultural 
 36.3   objectives, or by fire, disease, or insect control treatments, 
 36.4   and that is managed in compliance with the Minnesota Forest 
 36.5   Resources Council's "Sustaining Minnesota Forest Resources: 
 36.6   Voluntary Site-Level Forest Management Guidelines for 
 36.7   Landowners, Loggers and Resource Managers" as modified by the 
 36.8   requirement of this subdivision; and 
 36.9      (5) trees or parts of trees that do not meet the 
 36.10  utilization standards for pulpwood, posts, bolts, or sawtimber 
 36.11  as described in the Minnesota Department of Natural Resources 
 36.12  Division of Forestry Timber Sales Manual, 1998, as amended as of 
 36.13  May 1, 2005, and the Minnesota Department of Natural Resources 
 36.14  Timber Scaling Manual, 1981, as amended as of May 1, 2005, 
 36.15  except as provided in paragraph (a), clause (1), and this 
 36.16  paragraph, clauses (1) to (3). 
 36.17     Sec. 2.  Minnesota Statutes 2004, section 216B.2424, is 
 36.18  amended by adding a subdivision to read:  
 36.19     Subd. 1a.  [MUNICIPAL WASTE-TO-ENERGY PROJECT.] (a) This 
 36.20  subdivision applies only to a biomass project owned or 
 36.21  controlled, directly or indirectly, by two municipal utilities 
 36.22  as described in subdivision 5a, paragraph (b). 
 36.23     (b) Woody biomass from state-owned land must be harvested 
 36.24  in compliance with an adopted management plan and a program of 
 36.25  ecologically based third-party certification.  
 36.26     (c) The project must prepare a fuel plan on an annual basis 
 36.27  after commercial operation of the project as described in the 
 36.28  power contract between the project and the public utility, and 
 36.29  must also prepare annually certificates reflecting the types of 
 36.30  fuel used in the preceding year by the project, as described in 
 36.31  the power contract.  The fuel plans and certificates shall also 
 36.32  be filed with the Minnesota Department of Natural Resources and 
 36.33  the Minnesota Department of Commerce within 30 days after being 
 36.34  provided to the public utility, as provided by the power 
 36.35  contract.  Any person who believes the fuel plans, as amended, 
 36.36  and certificates show that the project does not or will not 
 37.1   comply with the fuel requirements of this subdivision may file a 
 37.2   petition with the commission seeking such a determination.  
 37.3      (d) The wood procurement process must utilize third-party 
 37.4   audit certification systems to verify that applicable best 
 37.5   management practices were utilized in the procurement of the 
 37.6   sustainably managed biomass.  If there is a failure to so verify 
 37.7   in any two consecutive years during the original contract term, 
 37.8   the farm-grown closed-loop biomass requirements of subdivision 2 
 37.9   must be increased to 50 percent for the remaining contract term 
 37.10  period; however, if in two consecutive subsequent years after 
 37.11  the increase has been implemented, it is verified that the 
 37.12  conditions in this subdivision have been met, then for the 
 37.13  remaining original contract term the closed-loop biomass mandate 
 37.14  reverts to 25 percent.  If there is a subsequent failure to 
 37.15  verify in a year after the first failure and implementation of 
 37.16  the 50 percent requirement, then the closed-loop percentage 
 37.17  shall remain at 50 percent for each remaining year of the 
 37.18  contract term.  
 37.19     (e) In the closed-loop plantation, no transgenic plants may 
 37.20  be used.  
 37.21     (f) No wood may be harvested from any lands identified by 
 37.22  the final or preliminary Minnesota County Biological Survey as 
 37.23  having statewide significance as native plant communities, large 
 37.24  populations or concentrations of rare species, or critical 
 37.25  animal habitat.  
 37.26     (g) A wood procurement plan must be prepared every five 
 37.27  years and public meetings must be held and written comments 
 37.28  taken on the plan and documentation must be provided on why or 
 37.29  why not the public inputs were used.  
 37.30     (h) Guidelines or best management practices for sustainably 
 37.31  managed woody biomass must be adopted by:  
 37.32     (1) the Minnesota Department of Natural Resources for 
 37.33  managing and maintaining brushland and open land habitat on 
 37.34  public and private lands, including, but not limited to, 
 37.35  provisions of sections 84.941, 84.942, and 97A.125; and 
 37.36     (2) the Minnesota Forest Resources Council for logging 
 38.1   slash, using the most recent available scientific information 
 38.2   regarding the removal of woody biomass from forest lands, to 
 38.3   sustain the management of forest resources as defined by section 
 38.4   89.001, subdivisions 8 and 9, with particular attention to soil 
 38.5   productivity, biological diversity as defined by section 89A.01, 
 38.6   subdivision 3, and wildlife habitat. 
 38.7      These guidelines must be completed by July 1, 2007, and the 
 38.8   process of developing them must incorporate public notification 
 38.9   and comment. 
 38.10     (i) The University of Minnesota Initiative for Renewable 
 38.11  Energy and the Environment is encouraged to solicit and fund 
 38.12  high-quality research projects to develop and consolidate 
 38.13  scientific information regarding the removal of woody biomass 
 38.14  from forest and brush lands, with particular attention to the 
 38.15  environmental impacts on soil productivity, biological 
 38.16  diversity, and sequestration of carbon.  The results of this 
 38.17  research shall be made available to the public. 
 38.18     (j) The two utilities owning or controlling, directly or 
 38.19  indirectly, the biomass project described in subdivision 5a, 
 38.20  paragraph (b), agree to fund or obtain funding of up to $150,000 
 38.21  to complete the guidelines or best management practices 
 38.22  described in paragraph (h).  The expenditures to be funded under 
 38.23  this paragraph do not include any of the expenditures to be 
 38.24  funded under paragraph (i). 
 38.25     Sec. 3.  Minnesota Statutes 2004, section 216B.2424, 
 38.26  subdivision 2, is amended to read: 
 38.27     Subd. 2.  [INTERIM EXEMPTION.] (a) A biomass project 
 38.28  proposing to use, as its primary fuel over the life of the 
 38.29  project, short-rotation woody crops, may use as an interim fuel 
 38.30  agricultural waste and other biomass which is not farm-grown 
 38.31  closed-loop biomass for up to six years after the project's 
 38.32  electric generating facility becomes operational; provided, the 
 38.33  project developer demonstrates the project will use the 
 38.34  designated short-rotation woody crops as its primary fuel after 
 38.35  the interim period and provided the location of the interim fuel 
 38.36  production meets the requirements of subdivision 1, paragraph 
 39.1   (a), clause (3). 
 39.2      (b) A biomass project proposing to use, as its primary fuel 
 39.3   over the life of the project, short-rotation woody crops, may 
 39.4   use as an interim fuel agricultural waste and other biomass 
 39.5   which is not farm-grown closed-loop biomass for up to three 
 39.6   years after the project's electric generating facility becomes 
 39.7   operational; provided, the project developer demonstrates the 
 39.8   project will use the designated short-rotation woody crops as 
 39.9   its primary fuel after the interim period. 
 39.10     (c) A biomass project that uses an interim fuel under the 
 39.11  terms of paragraph (b) may, in addition, use an interim fuel 
 39.12  under the terms of paragraph (a) for six years less the number 
 39.13  of years that an interim fuel was used under paragraph (b). 
 39.14     (d) A project developer proposing to use an exempt interim 
 39.15  fuel under paragraphs (a) and (b) must demonstrate to the public 
 39.16  utility that the project will have an adequate supply of 
 39.17  short-rotation woody crops which meet the requirements of 
 39.18  subdivision 1 to fuel the project after the interim period. 
 39.19     (e) If a biomass project using an interim fuel under this 
 39.20  subdivision is or becomes owned or controlled, directly or 
 39.21  indirectly, by two municipal utilities as described in 
 39.22  subdivision 5a, paragraph (b), the project is deemed to comply 
 39.23  with the requirement under this subdivision to use as its 
 39.24  primary fuel farm-grown closed-loop biomass if farm-grown 
 39.25  closed-loop biomass comprises no less than 25 percent of the 
 39.26  fuel used over the life of the project.  For purposes of this 
 39.27  subdivision, "life of the project" means 20 years from the date 
 39.28  the project becomes operational or the term of the applicable 
 39.29  power purchase agreement between the project owner and the 
 39.30  public utility, whichever is longer. 
 39.31     Sec. 4.  Minnesota Statutes 2004, section 216B.2424, 
 39.32  subdivision 5a, is amended to read: 
 39.33     Subd. 5a.  [REDUCTION OF BIOMASS MANDATE.] (a) 
 39.34  Notwithstanding subdivision 5, the biomass electric energy 
 39.35  mandate shall must be reduced from 125 megawatts to 110 
 39.36  megawatts.  
 40.1      (b) The Public Utilities Commission shall approve a request 
 40.2   pending before the Public Utilities commission as of May 15, 
 40.3   2003, for an amendment amendments to and assignment of a 
 40.4   contract for power from power purchase agreement with the owner 
 40.5   of a facility that uses short-rotation, woody crops as its 
 40.6   primary fuel previously approved to satisfy a portion of the 
 40.7   biomass mandate if the developer owner of the project agrees to 
 40.8   reduce the size of its project from 50 megawatts to 35 
 40.9   megawatts, while maintaining a an average price for energy at or 
 40.10  below the current contract price. in nominal dollars measured 
 40.11  over the term of the power purchase agreement at or below $104 
 40.12  per megawatt-hour, exclusive of any price adjustments that may 
 40.13  take effect subsequent to commission approval of the power 
 40.14  purchase agreement, as amended.  The commission shall also 
 40.15  approve, as necessary, any subsequent assignment or sale of the 
 40.16  power purchase agreement or ownership of the project to an 
 40.17  entity owned or controlled, directly or indirectly, by two 
 40.18  municipal utilities located north of Constitutional Route No. 8, 
 40.19  as described in section 161.114, which currently own electric 
 40.20  and steam generation facilities using coal as a fuel and which 
 40.21  propose to retrofit their existing municipal electrical 
 40.22  generating facilities to utilize biomass fuels in order to 
 40.23  perform the power purchase agreement. 
 40.24     (c) If the power purchase agreement described in paragraph 
 40.25  (b) is assigned to an entity that is, or becomes, owned or 
 40.26  controlled, directly or indirectly, by two municipal entities as 
 40.27  described in paragraph (b), and the power purchase agreement 
 40.28  meets the price requirements of paragraph (b), the commission 
 40.29  shall approve any amendments to the power purchase agreement 
 40.30  necessary to reflect the changes in project location and 
 40.31  ownership and any other amendments made necessary by those 
 40.32  changes.  The commission shall also specifically find that: 
 40.33     (1) the power purchase agreement complies with and fully 
 40.34  satisfies the provisions of this section to the full extent of 
 40.35  its 35-megawatt capacity; 
 40.36     (2) all costs incurred by the public utility and all 
 41.1   amounts to be paid by the public utility to the project owner 
 41.2   under the terms of the power purchase agreement are fully 
 41.3   recoverable pursuant to section 216B.1645; 
 41.4      (3) subject to prudency review by the commission, the 
 41.5   public utility may recover from its Minnesota retail customers 
 41.6   the Minnesota jurisdictional portion of the amounts that may be 
 41.7   incurred and paid by the public utility during the full term of 
 41.8   the power purchase agreement; and 
 41.9      (4) if the purchase power agreement meets the requirements 
 41.10  of this subdivision, it is reasonable and in the public interest.
 41.11     (d) The commission shall specifically approve recovery by 
 41.12  the public utility of any and all Minnesota jurisdictional costs 
 41.13  incurred by the public utility to improve, construct, install, 
 41.14  or upgrade transmission, distribution, or other electrical 
 41.15  facilities owned by the public utility or other persons in order 
 41.16  to permit interconnection of the retrofitted biomass-fueled 
 41.17  generating facilities or to obtain transmission service for the 
 41.18  energy provided by the facilities to the public utility pursuant 
 41.19  to section 216B.1645, and shall disapprove any provision in the 
 41.20  power purchase agreement that requires the developer or owner of 
 41.21  the project to pay the jurisdictional costs or that permit the 
 41.22  public utility to terminate the power purchase agreement as a 
 41.23  result of the existence of those costs or the public utility's 
 41.24  obligation to pay any or all of those costs. 
 41.25     Sec. 5.  Minnesota Statutes 2004, section 216B.2424, 
 41.26  subdivision 6, is amended to read: 
 41.27     Subd. 6.  [REMAINING MEGAWATT COMPLIANCE PROCESS.] (a) If 
 41.28  there remain megawatts of biomass power generating capacity to 
 41.29  fulfill the mandate in subdivision 5 after the commission has 
 41.30  taken final action on all contracts filed by September 1, 2000, 
 41.31  by a public utility, as amended and assigned, this subdivision 
 41.32  governs final compliance with the biomass energy mandate in 
 41.33  subdivision 5 subject to the requirements of subdivisions 7 and 
 41.34  8.  
 41.35     (b) To the extent not inconsistent with this subdivision, 
 41.36  the provisions of subdivisions 2, 3, 4, and 5 apply to proposals 
 42.1   subject to this subdivision. 
 42.2      (c) A public utility must submit proposals to the 
 42.3   commission to complete the biomass mandate.  The commission 
 42.4   shall require a public utility subject to this section to issue 
 42.5   a request for competitive proposals for projects for electric 
 42.6   generation utilizing biomass as defined in paragraph (f) of this 
 42.7   subdivision to provide the remaining megawatts of the mandate.  
 42.8   The commission shall set an expedited schedule for submission of 
 42.9   proposals to the utility, selection by the utility of proposals 
 42.10  or projects, negotiation of contracts, and review by the 
 42.11  commission of the contracts or projects submitted by the utility 
 42.12  to the commission. 
 42.13     (d) Notwithstanding the provisions of subdivisions 1 to 5 
 42.14  but subject to the provisions of subdivisions 7 and 8, a new or 
 42.15  existing facility proposed under this subdivision that is fueled 
 42.16  either by biomass or by co-firing biomass with nonbiomass may 
 42.17  satisfy the mandate in this section.  Such a facility need not 
 42.18  use biomass that complies with the definition in subdivision 1 
 42.19  if it uses biomass as defined in paragraph (f) of this 
 42.20  subdivision.  Generating capacity produced by co-firing of 
 42.21  biomass that is operational as of April 25, 2000, does not meet 
 42.22  the requirements of the mandate, except that additional 
 42.23  co-firing capacity added at an existing facility after April 25, 
 42.24  2000, may be used to satisfy this mandate.  Only the number of 
 42.25  megawatts of capacity at a facility which co-fires biomass that 
 42.26  are directly attributable to the biomass and that become 
 42.27  operational after April 25, 2000, count toward meeting the 
 42.28  biomass mandate in this section. 
 42.29     (e) Nothing in this subdivision precludes a facility 
 42.30  proposed and approved under this subdivision from using fuel 
 42.31  sources that are not biomass in compliance with subdivision 3. 
 42.32     (f) Notwithstanding the provisions of subdivision 1, for 
 42.33  proposals subject to this subdivision, "biomass" includes 
 42.34  farm-grown closed-loop biomass; agricultural wastes, including 
 42.35  animal, poultry, and plant wastes; and waste wood, including 
 42.36  chipped wood, bark, brush, residue wood, and sawdust. 
 43.1      (g) Nothing in this subdivision affects in any way 
 43.2   contracts entered into as of April 25, 2000, to satisfy the 
 43.3   mandate in subdivision 5.  
 43.4      (h) Nothing in this subdivision requires a public utility 
 43.5   to retrofit its own power plants for the purpose of co-firing 
 43.6   biomass fuel, nor is a utility prohibited from retrofitting its 
 43.7   own power plants for the purpose of co-firing biomass fuel to 
 43.8   meet the requirements of this subdivision. 
 43.9      Sec. 6.  Minnesota Statutes 2004, section 216B.2424, 
 43.10  subdivision 8, is amended to read: 
 43.11     Subd. 8.  [AGRICULTURAL BIOMASS REQUIREMENT.] Of the 125 
 43.12  megawatts mandated in subdivision 5, or 110 megawatts mandated 
 43.13  in subdivision 5a, at least 75 megawatts of the generating 
 43.14  capacity must be generated by facilities that use agricultural 
 43.15  biomass as the principal fuel source.  For purposes of this 
 43.16  subdivision, agricultural biomass includes only farm-grown 
 43.17  closed-loop biomass and agricultural waste, including animal, 
 43.18  poultry, and plant wastes.  For purposes of this subdivision, 
 43.19  "principal fuel source" means a fuel source that satisfies at 
 43.20  least 75 percent of the fuel requirements of an electric power 
 43.21  generating facility.  Nothing in this subdivision is intended to 
 43.22  expand the fuel source requirements of subdivision 5. 
 43.23                             ARTICLE 6 
 43.24                              E-FILING 
 43.25     Section 1.  [ESTABLISHMENT OF FUND.] 
 43.26     The Department of Commerce's e-filing account is 
 43.27  established.  The commission shall make a onetime assessment to 
 43.28  regulated utilities, no more than $300,000 to cover the actual 
 43.29  cost of implementing this section.  The funds assessed must be 
 43.30  deposited in the account.  Any excess funds in the account upon 
 43.31  completion must be refunded to the utilities proportionately. 
 43.32  Each public utility, municipal utility, electric cooperative 
 43.33  association, generation and transmission cooperative electric 
 43.34  association, municipal power agency, telephone company, and 
 43.35  telecommunications carrier must be assessed in proportion to its 
 43.36  respective gross operating revenues for retail sales of gas, 
 44.1   electric, or telecommunications service in the state in the last 
 44.2   calendar year.  Revenue in the account is appropriated to the 
 44.3   commission for the costs associated with establishing an 
 44.4   e-filing system that allows documents to be filed and retrieved 
 44.5   via the Internet.  Revenue in the account remains available 
 44.6   until expended. 
 44.7      Sec. 2.  [COMPLETION DATE.] 
 44.8      The e-filing system must be operational by July 1, 2006. 
 44.9      Sec. 3.  [EFFECTIVE DATE.] 
 44.10     Sections 1 and 2 are effective the day following final 
 44.11  enactment. 
 44.12                             ARTICLE 7 
 44.13                     CIP TECHNICAL CORRECTIONS 
 44.14     Section 1.  Minnesota Statutes 2004, section 216B.241, 
 44.15  subdivision 1b, is amended to read: 
 44.16     Subd. 1b.  [CONSERVATION IMPROVEMENT BY COOPERATIVE 
 44.17  ASSOCIATION OR MUNICIPALITY.] (a) This subdivision applies to: 
 44.18     (1) a cooperative electric association that provides retail 
 44.19  service to its members; 
 44.20     (2) a municipality that provides electric service to retail 
 44.21  customers; and 
 44.22     (3) a municipality with gross operating revenues in excess 
 44.23  of $5,000,000 from sales of natural gas to retail customers.  
 44.24     (b) Each cooperative electric association and municipality 
 44.25  subject to this subdivision shall spend and invest for energy 
 44.26  conservation improvements under this subdivision the following 
 44.27  amounts: 
 44.28     (1) for a municipality, 0.5 percent of its gross operating 
 44.29  revenues from the sale of gas and 1.5 percent of its gross 
 44.30  operating revenues from the sale of electricity, excluding gross 
 44.31  operating revenues from electric and gas service provided in the 
 44.32  state to large electric customer facilities; and 
 44.33     (2) for a cooperative electric association, 1.5 percent of 
 44.34  its gross operating revenues from service provided in the state, 
 44.35  excluding gross operating revenues from service provided in the 
 44.36  state to large electric customer facilities indirectly through a 
 45.1   distribution cooperative electric association. 
 45.2      (c) Each municipality and cooperative electric association 
 45.3   subject to this subdivision shall identify and implement energy 
 45.4   conservation improvement spending and investments that are 
 45.5   appropriate for the municipality or association, except that a 
 45.6   municipality or association may not spend or invest for energy 
 45.7   conservation improvements that directly benefit a large electric 
 45.8   customer facility for which the commissioner has issued an 
 45.9   exemption under subdivision 1a, paragraph (b). 
 45.10     (d) Each municipality and cooperative electric association 
 45.11  subject to this subdivision may spend and invest annually up to 
 45.12  ten percent of the total amount required to be spent and 
 45.13  invested on energy conservation improvements under this 
 45.14  subdivision on research and development projects that meet the 
 45.15  definition of energy conservation improvement in subdivision 1 
 45.16  and that are funded directly by the municipality or cooperative 
 45.17  electric association.  
 45.18     (e) Load-management activities that do not reduce energy 
 45.19  use but that increase the efficiency of the electric system may 
 45.20  be used to meet the following percentage 50 percent of the 
 45.21  conservation investment and spending requirements of this 
 45.22  subdivision: 
 45.23     (1) 2002 - 90 percent; 
 45.24     (2) 2003 - 80 percent; 
 45.25     (3) 2004 - 65 percent; and 
 45.26     (4) 2005 and thereafter - 50 percent. 
 45.27     (f) A generation and transmission cooperative electric 
 45.28  association that provides energy services to cooperative 
 45.29  electric associations that provide electric service at retail to 
 45.30  consumers may invest in energy conservation improvements on 
 45.31  behalf of the associations it serves and may fulfill the 
 45.32  conservation, spending, reporting, and energy savings goals on 
 45.33  an aggregate basis.  A municipal power agency or other 
 45.34  not-for-profit entity that provides energy service to municipal 
 45.35  utilities that provide electric service at retail may invest in 
 45.36  energy conservation improvements on behalf of the municipal 
 46.1   utilities it serves and may fulfill the conservation, spending, 
 46.2   reporting, and energy savings goals on an aggregate basis, under 
 46.3   an agreement between the municipal power agency or 
 46.4   not-for-profit entity and each municipal utility for funding the 
 46.5   investments. 
 46.6      (g) At least every two four years, on a schedule determined 
 46.7   by the commissioner, each municipality or cooperative shall file 
 46.8   an overview of its conservation improvement plan with the 
 46.9   commissioner.  With this overview, the municipality or 
 46.10  cooperative shall also provide an evaluation to the commissioner 
 46.11  detailing its energy conservation improvement spending and 
 46.12  investments for the previous period.  The evaluation must 
 46.13  briefly describe each conservation program and must specify the 
 46.14  energy savings or increased efficiency in the use of energy 
 46.15  within the service territory of the utility or association that 
 46.16  is the result of the spending and investments.  The evaluation 
 46.17  must analyze the cost-effectiveness of the utility's or 
 46.18  association's conservation programs, using a list of baseline 
 46.19  energy and capacity savings assumptions developed in 
 46.20  consultation with the department.  The commissioner shall review 
 46.21  each evaluation and make recommendations, where appropriate, to 
 46.22  the municipality or association to increase the effectiveness of 
 46.23  conservation improvement activities.  Up to three percent of a 
 46.24  utility's conservation spending obligation under this section 
 46.25  may be used for program pre-evaluation, testing, and monitoring 
 46.26  and program evaluation.  The overview and evaluation filed by a 
 46.27  municipality with less than 60,000,000 kilowatt hours in annual 
 46.28  retail sales of electric service may consist of a letter from 
 46.29  the governing board of the municipal utility to the department 
 46.30  providing the amount of annual conservation spending required of 
 46.31  that municipality and certifying that the required amount has 
 46.32  been spent on conservation programs pursuant to this subdivision.
 46.33     (h) The commissioner shall also review each evaluation for 
 46.34  whether a portion of the money spent on residential conservation 
 46.35  improvement programs is devoted to programs that directly 
 46.36  address the needs of renters and low-income persons unless an 
 47.1   insufficient number of appropriate programs are available.  For 
 47.2   the purposes of this subdivision and subdivision 2, "low-income" 
 47.3   means an income at or below 50 percent of the state median 
 47.4   income.  
 47.5      (i) As part of its spending for conservation improvement, a 
 47.6   municipality or association may contribute to the energy and 
 47.7   conservation account.  A municipality or association may propose 
 47.8   to the commissioner to designate that all or a portion of funds 
 47.9   contributed to the account be used for research and development 
 47.10  projects that can best be implemented on a statewide basis.  Any 
 47.11  amount contributed must be remitted to the commissioner by 
 47.12  February 1 of each year. 
 47.13     (j) A municipality may spend up to 50 percent of its 
 47.14  required spending under this section to refurbish an existing 
 47.15  district heating or cooling system.  This paragraph expires July 
 47.16  1, 2007.  
 47.17     Sec. 2.  Minnesota Statutes 2004, section 216B.241, 
 47.18  subdivision 2, is amended to read: 
 47.19     Subd. 2.  [PROGRAMS.] (a) The commissioner may require 
 47.20  public utilities to make investments and expenditures in energy 
 47.21  conservation improvements, explicitly setting forth the interest 
 47.22  rates, prices, and terms under which the improvements must be 
 47.23  offered to the customers.  The required programs must cover no 
 47.24  more than a two-year four-year period.  Public utilities shall 
 47.25  file conservation improvement plans by June 1, on a schedule 
 47.26  determined by order of the commissioner, but at least every four 
 47.27  years.  Plans received by a public utility by June 1 must be 
 47.28  approved or approved as modified by the commissioner by December 
 47.29  1 of that same year.  The commissioner shall give special 
 47.30  consideration and encouragement to programs that bring about 
 47.31  significant net savings through the use of energy-efficient 
 47.32  lighting.  The commissioner shall evaluate the program on the 
 47.33  basis of cost-effectiveness and the reliability of technologies 
 47.34  employed.  The commissioner's order must provide to the extent 
 47.35  practicable for a free choice, by consumers participating in the 
 47.36  program, of the device, method, material, or project 
 48.1   constituting the energy conservation improvement and for a free 
 48.2   choice of the seller, installer, or contractor of the energy 
 48.3   conservation improvement, provided that the device, method, 
 48.4   material, or project seller, installer, or contractor is duly 
 48.5   licensed, certified, approved, or qualified, including under the 
 48.6   residential conservation services program, where applicable.  
 48.7      (b) The commissioner may require a utility to make an 
 48.8   energy conservation improvement investment or expenditure 
 48.9   whenever the commissioner finds that the improvement will result 
 48.10  in energy savings at a total cost to the utility less than the 
 48.11  cost to the utility to produce or purchase an equivalent amount 
 48.12  of new supply of energy.  The commissioner shall nevertheless 
 48.13  ensure that every public utility operate one or more programs 
 48.14  under periodic review by the department.  
 48.15     (c) Each public utility subject to subdivision 1a may spend 
 48.16  and invest annually up to ten percent of the total amount 
 48.17  required to be spent and invested on energy conservation 
 48.18  improvements under this section by the utility on research and 
 48.19  development projects that meet the definition of energy 
 48.20  conservation improvement in subdivision 1 and that are funded 
 48.21  directly by the public utility.  
 48.22     (d) A public utility may not spend for or invest in energy 
 48.23  conservation improvements that directly benefit a large electric 
 48.24  customer facility for which the commissioner has issued an 
 48.25  exemption pursuant to subdivision 1a, paragraph (b).  The 
 48.26  commissioner shall consider and may require a utility to 
 48.27  undertake a program suggested by an outside source, including a 
 48.28  political subdivision or a nonprofit or community organization. 
 48.29     (e) The commissioner may, by order, establish a list of 
 48.30  programs that may be offered as energy conservation improvements 
 48.31  by a public utility, municipal utility, cooperative electric 
 48.32  association, or other entity providing conservation services 
 48.33  pursuant to this section.  The list of programs may include 
 48.34  rebates for high-efficiency appliances, rebates or subsidies for 
 48.35  high-efficiency lamps, small business energy audits, and 
 48.36  building recommissioning.  The commissioner may, by order, 
 49.1   change this list to add or subtract programs as the commissioner 
 49.2   determines is necessary to promote efficient and effective 
 49.3   conservation programs. 
 49.4      (f) The commissioner shall ensure that a portion of the 
 49.5   money spent on residential conservation improvement programs is 
 49.6   devoted to programs that directly address the needs of renters 
 49.7   and low-income persons, in proportion to the amount the utility 
 49.8   has historically spent on such programs based on the most recent 
 49.9   three-year average relative to the utility's total conservation 
 49.10  spending under this section,. The utility shall make a good 
 49.11  faith effort to ensure that its conservation spending for the 
 49.12  needs of renters and low-income persons increases and decreases 
 49.13  in approximately the same proportion as the total increase or 
 49.14  decrease in the utility's overall conservation spending, unless 
 49.15  an insufficient number of appropriate programs are available. 
 49.16     (g) A utility, a political subdivision, or a nonprofit or 
 49.17  community organization that has suggested a program, the 
 49.18  attorney general acting on behalf of consumers and small 
 49.19  business interests, or a utility customer that has suggested a 
 49.20  program and is not represented by the attorney general under 
 49.21  section 8.33 may petition the commission to modify or revoke a 
 49.22  department decision under this section, and the commission may 
 49.23  do so if it determines that the program is not cost-effective, 
 49.24  does not adequately address the residential conservation 
 49.25  improvement needs of low-income persons, has a long-range 
 49.26  negative effect on one or more classes of customers, or is 
 49.27  otherwise not in the public interest.  The commission shall 
 49.28  reject a petition that, on its face, fails to make a reasonable 
 49.29  argument that a program is not in the public interest. 
 49.30     (h) The commissioner may order a public utility to include, 
 49.31  with the filing of the utility's proposed conservation 
 49.32  improvement plan under paragraph (a), the results of an 
 49.33  independent audit of the utility's conservation improvement 
 49.34  programs and expenditures performed by the department or an 
 49.35  auditor with experience in the provision of energy conservation 
 49.36  and energy efficiency services approved by the commissioner and 
 50.1   chosen by the utility.  The audit must specify the energy 
 50.2   savings or increased efficiency in the use of energy within the 
 50.3   service territory of the utility that is the result of the 
 50.4   spending and investments.  The audit must evaluate the 
 50.5   cost-effectiveness of the utility's conservation programs. 
 50.6      (i) Up to three percent of a utility's conservation 
 50.7   spending obligation under this section may be used for program 
 50.8   pre-evaluation, testing, and monitoring and program audit and 
 50.9   evaluation. 
 50.10                             ARTICLE 8 
 50.11                        POWER QUALITY ZONES 
 50.12     Section 1.  [216B.2426] [OPPORTUNITIES FOR DISTRIBUTED 
 50.13  GENERATION.] 
 50.14     The commission shall ensure that opportunities for the 
 50.15  installation of distributed generation, as that term is defined 
 50.16  in section 216B.169, subdivision 1, paragraph (c), are 
 50.17  considered in any proceeding under section 216B.2422, 216B.2425, 
 50.18  or 216B.243. 
 50.19     Sec. 2.  [216B.82] [LOCAL POWER QUALITY ZONES.] 
 50.20     (a) Upon joint petition of a public utility as defined in 
 50.21  section 216B.02, subdivision 4, and any customer located within 
 50.22  the utility's service territory, the commission may establish a 
 50.23  zone within that utility's service territory where the utility 
 50.24  will install additional, redundant or upgraded components of the 
 50.25  electric distribution infrastructure that are designed to 
 50.26  decrease the risk of power outages, provided the utility and all 
 50.27  of its customers located within the proposed zone have approved 
 50.28  the installation of the components and the financial recovery 
 50.29  plan prior to the creation of the zone. 
 50.30     (b) The commission shall authorize the utility to collect 
 50.31  all costs of the installation of any components under this 
 50.32  section, including initial investment, operation and maintenance 
 50.33  costs and taxes from all customers within the zone, through 
 50.34  tariffs and surcharges for service in a zone that appropriately 
 50.35  reflect the cost of service to those customers, provided the 
 50.36  customers agree to pay all costs for a predetermined period, 
 51.1   including costs of component removal, if appropriate. 
 51.2      (c) Nothing in this section limits the ability of the 
 51.3   utility and any customer to enter into customer-specific 
 51.4   agreements pursuant to applicable statutory, rule, or tariff 
 51.5   provisions. 
 51.6                              ARTICLE 9 
 51.7                      BIOGAS INCENTIVE PAYMENTS 
 51.8      Section 1.  Minnesota Statutes 2004, section 216C.41, 
 51.9   subdivision 1, is amended to read: 
 51.10     Subdivision 1.  [DEFINITIONS.] (a) The definitions in this 
 51.11  subdivision apply to this section. 
 51.12     (b) "Qualified hydroelectric facility" means a 
 51.13  hydroelectric generating facility in this state that: 
 51.14     (1) is located at the site of a dam, if the dam was in 
 51.15  existence as of March 31, 1994; and 
 51.16     (2) begins generating electricity after July 1, 1994, or 
 51.17  generates electricity after substantial refurbishing of a 
 51.18  facility that begins after July 1, 2001. 
 51.19     (c) "Qualified wind energy conversion facility" means a 
 51.20  wind energy conversion system in this state that: 
 51.21     (1) produces two megawatts or less of electricity as 
 51.22  measured by nameplate rating and begins generating electricity 
 51.23  after December 31, 1996, and before July 1, 1999; 
 51.24     (2) begins generating electricity after June 30, 1999, 
 51.25  produces two megawatts or less of electricity as measured by 
 51.26  nameplate rating, and is: 
 51.27     (i) owned by a resident of Minnesota or an entity that is 
 51.28  organized under the laws of this state, is not prohibited from 
 51.29  owning agricultural land under section 500.24, and owns the land 
 51.30  where the facility is sited; 
 51.31     (ii) owned by a Minnesota small business as defined in 
 51.32  section 645.445; 
 51.33     (iii) owned by a Minnesota nonprofit organization; 
 51.34     (iv) owned by a tribal council if the facility is located 
 51.35  within the boundaries of the reservation; 
 51.36     (v) owned by a Minnesota municipal utility or a Minnesota 
 52.1   cooperative electric association; or 
 52.2      (vi) owned by a Minnesota political subdivision or local 
 52.3   government, including, but not limited to, a county, statutory 
 52.4   or home rule charter city, town, school district, or any other 
 52.5   local or regional governmental organization such as a board, 
 52.6   commission, or association; or 
 52.7      (3) begins generating electricity after June 30, 1999, 
 52.8   produces seven megawatts or less of electricity as measured by 
 52.9   nameplate rating, and: 
 52.10     (i) is owned by a cooperative organized under chapter 308A 
 52.11  other than a Minnesota cooperative electric association; and 
 52.12     (ii) all shares and membership in the cooperative are held 
 52.13  by an entity that is not prohibited from owning agricultural 
 52.14  land under section 500.24. 
 52.15     (d) "Qualified on-farm biogas recovery facility" means an 
 52.16  anaerobic digester system that: 
 52.17     (1) is located at the site of an agricultural 
 52.18  operation; and 
 52.19     (2) is owned by an entity that is not prohibited from 
 52.20  owning agricultural land under section 500.24 and that owns or 
 52.21  rents the land where the facility is located; and 
 52.22     (3) begins generating electricity after July 1, 2001.  
 52.23     (e) "Anaerobic digester system" means a system of 
 52.24  components that processes animal waste based on the absence of 
 52.25  oxygen and produces gas used to generate electricity. 
 52.26                             ARTICLE 10 
 52.27                      GAS INFRASTRUCTURE COST 
 52.28     Section 1.  [216B.1635] [RECOVERY OF ELIGIBLE 
 52.29  INFRASTRUCTURE REPLACEMENT COSTS BY GAS UTILITIES.] 
 52.30     Subdivision 1.  [DEFINITIONS.] (a) "Gas utility" means a 
 52.31  public utility as defined in section 216B.02, subdivision 4, 
 52.32  that furnishes natural gas service to retail customers. 
 52.33     (b) "Gas utility infrastructure costs" or "GUIC" means gas 
 52.34  utility projects that: 
 52.35     (1) do not serve to increase revenues by directly 
 52.36  connecting the infrastructure replacement to new customers; 
 53.1      (2) are in service but were not included in the gas 
 53.2   utility's rate base in its most recent general rate case; and 
 53.3      (3) replace or modify existing infrastructure if the 
 53.4   replacement or modification does not constitute a betterment, 
 53.5   unless the betterment is required by a political subdivision, as 
 53.6   evidenced by specific documentation from the government entity 
 53.7   requiring the replacement or modification of infrastructure. 
 53.8      (c) "Gas utility projects" means relocation and replacement 
 53.9   of natural gas facilities located in the public right-of-way 
 53.10  required by the construction or improvement of a highway, road, 
 53.11  street, public building, or other public work by or on behalf of 
 53.12  the United States, the State of Minnesota, or a political 
 53.13  subdivision. 
 53.14     Subd. 2.  [FILING.] (a) The commission may approve a gas 
 53.15  utility's petition for a rate schedule to recover GUIC under 
 53.16  this section.  A gas utility may petition the commission to 
 53.17  recover a rate of return, income taxes on the rate of return, 
 53.18  incremental property taxes, plus incremental depreciation 
 53.19  expense associated with GUIC.  
 53.20     (b) The filing is subject to the following: 
 53.21     (1) a gas utility may submit a filing under this section no 
 53.22  more than once per year; 
 53.23     (2) a gas utility must file sufficient information to 
 53.24  satisfy the commission regarding the proposed GUIC or be subject 
 53.25  to denial by the commission.  The information includes, but is 
 53.26  not limited to: 
 53.27     (i) the government entity ordering the gas utility project 
 53.28  and the purpose for which the project is undertaken; 
 53.29     (ii) the location, description, and costs associated with 
 53.30  the project; 
 53.31     (iii) a description of the costs, and salvage value, if 
 53.32  any, associated with the existing infrastructure replaced or 
 53.33  modified as a result of the project; 
 53.34     (iv) the proposed rate design and an explanation of why the 
 53.35  proposed rate design is in the public interest; 
 53.36     (v) the magnitude and timing of any known future gas 
 54.1   utility projects that the utility may seek to recover under this 
 54.2   section; 
 54.3      (vi) the magnitude of GUIC in relation to the gas utility's 
 54.4   base revenue as approved by the commission in the gas utility's 
 54.5   most recent general rate case, exclusive of gas purchase costs 
 54.6   and transportation charges; 
 54.7      (vii) the magnitude of GUIC in relation to the gas 
 54.8   utility's capital expenditures since its most recent general 
 54.9   rate case; 
 54.10     (viii) the amount of time since the utility last filed a 
 54.11  general rate case and the utility's reasons for seeking recovery 
 54.12  outside of a general rate case; and 
 54.13     (ix) documentation supporting the calculation of the GUIC. 
 54.14     Subd. 3.  [COMMISSION AUTHORITY.] The commission may issue 
 54.15  orders and adopt rules necessary to implement and administer 
 54.16  this section. 
 54.17     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 54.18  following final enactment. 
 54.19     Sec. 2.  [REPORT TO LEGISLATURE.] 
 54.20     The Department of Commerce shall review the operation and 
 54.21  impact of the GUIC recovery mechanism established under 
 54.22  Minnesota Statutes, section 216B.1635, on ratepayers and the 
 54.23  utility and submit a report of its findings and recommendations 
 54.24  to the legislature four years after the effective date of this 
 54.25  section. 
 54.26     Sec. 3.  [SUNSET.] 
 54.27     Sections 1 and 2 shall expire on June 30, 2015. 
 54.28                             ARTICLE 11 
 54.29               EMINENT DOMAIN LANDOWNER COMPENSATION 
 54.30     Section. 1.  [LANDOWNER PAYMENTS WORKING GROUP.] 
 54.31     Subdivision 1.  [MEMBERSHIP.] By June 15, 2005, the 
 54.32  Legislative Electric Energy Task Force shall convene a landowner 
 54.33  payments working group consisting of up to 12 members, including 
 54.34  representatives from each of the following groups: 
 54.35  transmission-owning investor-owned utilities, electric 
 54.36  cooperatives, municipal power agencies, Farm Bureau, Farmers 
 55.1   Union, county commissioners, real estate appraisers and others 
 55.2   with an interest and expertise in landowner rights and the 
 55.3   
 55.4   market value of rural property. 
 55.5      Subd. 2.  [APPOINTMENT.] The chairs of the Legislative 
 55.6   Electric Energy Task Force and the chairs of the senate and 
 55.7   house committees with primary jurisdiction over energy policy 
 55.8   shall jointly appoint the working group members. 
 55.9      Subd. 3.  [CHARGE.] (a) The landowner payments working 
 55.10  group shall research alternative methods of remunerating 
 55.11  landowners on whose land high voltage transmission lines have 
 55.12  been constructed. 
 55.13     (b) In developing its recommendations, the working group 
 55.14  shall: 
 55.15     (1) examine different methods of landowner payments that 
 55.16  operate in other states and countries; 
 55.17     (2) consider innovative alternatives to lump-sum payments 
 55.18  that extend payments over the life of the transmission line and 
 55.19  that run with the land if the land is conveyed to another owner; 
 55.20     (3) consider alternative ways of structuring payments that 
 55.21  are equitable to landowners and utilities. 
 55.22     Subd. 4.  [EXPENSES.] Members of the working group shall be 
 55.23  reimbursed for expenses as provided in Minnesota Statutes, 
 55.24  section 15.059, subdivision 6.  Expenses of the landowner 
 55.25  payments working group shall not exceed $10,000 without the 
 55.26  approval of the chairs of the Legislative Electric Energy Task 
 55.27  Force. 
 55.28     Subd. 5.  [REPORT.] The landowner payments working group 
 55.29  shall present its findings and recommendations, including 
 55.30  legislative recommendations and model legislation, if any, in a 
 55.31  report to the Legislative Electric Energy Task Force by January 
 55.32  15, 2006. 
 55.33                             ARTICLE 12
 55.34                        TECHNICAL CORRECTION
 55.35     Section 1.  Minnesota Statutes 2004, section 216B.16, 
 55.36  subdivision 6d, is amended to read: 
 55.37     Subd. 6d.  [WIND ENERGY; PROPERTY TAX.] An owner of a wind 
 56.1   energy conversion facility which is required to pay property 
 56.2   taxes under section 272.02, subdivision 22, or production taxes 
 56.3   under section 272.029, and any related or successor provisions, 
 56.4   or a public utility regulated by the Public Utilities Commission 
 56.5   which purchases the wind generated electricity may petition the 
 56.6   commission to include in any power purchase agreement between 
 56.7   the owner of the facility and the public utility the amount of 
 56.8   property taxes and production taxes paid by the owner of the 
 56.9   facility.  The Public Utilities Commission shall require the 
 56.10  public utility to amend the power purchase agreement to include 
 56.11  the property taxes and production taxes paid by the owner of the 
 56.12  facility in the price paid by the utility for wind generated 
 56.13  electricity if the commission finds: 
 56.14     (1) the owner of the facility has paid the property taxes 
 56.15  or production taxes required by this subdivision; 
 56.16     (2) the power purchase agreement between the public utility 
 56.17  and the owner does not already require the utility to pay the 
 56.18  amount of property taxes or production taxes the owner has paid 
 56.19  under this subdivision, or, in the case of a power purchase 
 56.20  agreement entered into prior to 1997, the amount of property or 
 56.21  production taxes paid by the owner in any year of the power 
 56.22  purchase agreement exceeds the amount of such property or 
 56.23  production taxes included in the price paid by the utility to 
 56.24  the owner, as reflected in the owner's bid documents; and 
 56.25     (3) the commission has approved a rate schedule containing 
 56.26  provisions for the automatic adjustment of charges for utility 
 56.27  service in direct relation to the charges ordered by the 
 56.28  commission under section 272.02, subdivision 22, or section 
 56.29  272.029. 
 56.30                             ARTICLE 13
 56.31                              HYDROGEN
 56.32     Section 1.  [216B.811] [DEFINITIONS.] 
 56.33     Subdivision 1.  [SCOPE.] For purposes of sections 216B.811 
 56.34  to 216B.815, the terms defined in this section have the meanings 
 56.35  given them.  
 56.36     Subd. 2.  [FUEL CELL.] "Fuel cell" means an electrochemical 
 57.1   device that produces useful electricity, heat, and water vapor, 
 57.2   and operates as long as it is provided fuel. 
 57.3      Subd. 3.  [HYDROGEN.] "Hydrogen" means hydrogen produced 
 57.4   using native energy sources.  
 57.5      Subd. 4.  [RELATED TECHNOLOGIES.] "Related technologies" 
 57.6   means balance of plant components necessary to make hydrogen and 
 57.7   fuel cell systems function; turbines, reciprocating, and other 
 57.8   combustion engines capable of operating on hydrogen; and 
 57.9   electrolyzers, reformers, and other equipment and processes 
 57.10  necessary to produce, purify, store, distribute, and use 
 57.11  hydrogen for energy.  
 57.12     Sec. 2.  [216B.812] [FOSTERING THE TRANSITION TOWARD ENERGY 
 57.13  SECURITY.] 
 57.14     Subdivision 1.  [EARLY PURCHASE AND DEPLOYMENT OF HYDROGEN, 
 57.15  FUEL CELLS, AND RELATED TECHNOLOGIES BY THE STATE.] The 
 57.16  Department of Administration shall identify opportunities for 
 57.17  demonstrating the use of hydrogen fuel cells within state-owned 
 57.18  facilities, vehicle fleets, and operations.  
 57.19     The department shall purchase and demonstrate hydrogen, 
 57.20  fuel cells, and related technologies in ways that strategically 
 57.21  contribute to realizing Minnesota's hydrogen economy goal as set 
 57.22  forth in section 216B.013, and which contribute to the following 
 57.23  nonexclusive list of objectives:  
 57.24     (1) provide needed performance data to the marketplace; 
 57.25     (2) identify code and regulatory issues to be resolved; 
 57.26     (3) advance or validate a critical area of research; 
 57.27     (4) foster economic development and job creation in the 
 57.28  state; 
 57.29     (5) raise public awareness of hydrogen, fuel cells, and 
 57.30  related technologies; or 
 57.31     (6) reduce emissions of carbon dioxide and other pollutants.
 57.32     Subd. 2.  [SUPPORT FOR STRATEGIC DEMONSTRATION PROJECTS 
 57.33  THAT ACCELERATE THE COMMERCIALIZATION OF HYDROGEN, FUEL CELLS, 
 57.34  AND RELATED TECHNOLOGIES.] (a) In consultation with appropriate 
 57.35  representatives from state agencies, local governments, 
 57.36  universities, businesses, and other interested parties, the 
 58.1   Department of Commerce shall report back to the legislature by 
 58.2   November 1, 2005, and every two years thereafter, with a slate 
 58.3   of proposed pilot projects that contribute to realizing 
 58.4   Minnesota's hydrogen economy goal as set forth in section 
 58.5   216B.013.  The Department of Commerce must consider the 
 58.6   following nonexclusive list of priorities in developing the 
 58.7   proposed slate of pilot projects: 
 58.8      (1) demonstrate "bridge" technologies such as 
 58.9   hybrid-electric, off-road, and fleet vehicles running on 
 58.10  hydrogen or fuels blended with hydrogen; 
 58.11     (2) develop cost-competitive, on-site hydrogen production 
 58.12  technologies; 
 58.13     (3) demonstrate nonvehicle applications for hydrogen; 
 58.14     (4) improve the cost and efficiency of hydrogen from 
 58.15  renewable energy sources; and 
 58.16     (5) improve the cost and efficiency of hydrogen production 
 58.17  using direct solar energy without electricity generation as an 
 58.18  intermediate step.  
 58.19     (b) For all demonstrations, individual system components of 
 58.20  the technology must meet commercial performance standards and 
 58.21  systems modeling must be completed to predict commercial 
 58.22  performance, risk, and synergies.  In addition, the proposed 
 58.23  pilots should meet as many of the following criteria as possible:
 58.24     (1) advance energy security; 
 58.25     (2) capitalize on the state's native resources; 
 58.26     (3) result in economically competitive infrastructure being 
 58.27  put in place; 
 58.28     (4) be located where it will link well with existing and 
 58.29  related projects and be accessible to the public, now or in the 
 58.30  future; 
 58.31     (5) demonstrate multiple, integrated aspects of hydrogen 
 58.32  infrastructure; 
 58.33     (6) include an explicit public education and awareness 
 58.34  component; 
 58.35     (7) be scalable to respond to changing circumstances and 
 58.36  market demands; 
 59.1      (8) draw on firms and expertise within the state where 
 59.2   possible; 
 59.3      (9) include an assessment of its economic, environmental, 
 59.4   and social impact; and 
 59.5      (10) serve other needs beyond hydrogen development.  
 59.6      Subd. 3.  [ESTABLISHING INITIAL, MULTIFUEL TRANSITION 
 59.7   INFRASTRUCTURE FOR HYDROGEN VEHICLES.] The commissioner of 
 59.8   commerce may accept federal funds, expend funds, and participate 
 59.9   in projects to design, site, and construct multifuel hydrogen 
 59.10  fueling stations that eventually link urban centers along key 
 59.11  trade corridors across the jurisdictions of Manitoba, the 
 59.12  Dakotas, Minnesota, Iowa, and Wisconsin.  
 59.13     These energy stations must serve the priorities listed in 
 59.14  subdivision 2 and, as transition infrastructure, should 
 59.15  accommodate a wide variety of vehicle technologies and fueling 
 59.16  platforms, including hybrid, flexible-fuel, and fuel cell 
 59.17  vehicles.  They may offer, but not be limited to, gasoline, 
 59.18  diesel, ethanol (E-85), biodiesel, and hydrogen, and may 
 59.19  simultaneously test the integration of on-site combined heat and 
 59.20  power technologies with the existing energy infrastructure.  
 59.21     The hydrogen portion of the stations may initially serve 
 59.22  local, dedicated on or off-road vehicles, but should eventually 
 59.23  support long-haul transport.  
 59.24     Sec. 3.  [216B.815] [AUTHORIZE AND ENCOURAGE THE STATE'S 
 59.25  PUBLIC RESEARCH INSTITUTIONS TO COORDINATE AND LEVERAGE THEIR 
 59.26  STRENGTHS THROUGH A REGIONAL ENERGY RESEARCH AND EDUCATION 
 59.27  PARTNERSHIP.] 
 59.28     The state's public research and higher education 
 59.29  institutions should work with one another and with similar 
 59.30  institutions in the region to establish Minnesota and the Upper 
 59.31  Midwest as a center of research, education, outreach, and 
 59.32  technology transfer for the production of renewable energy and 
 59.33  products, including hydrogen, fuel cells, and related 
 59.34  technologies.  The partnership should be designed to create a 
 59.35  critical mass of research and education capability that can 
 59.36  compete effectively for federal and private investment in these 
 60.1   areas.  
 60.2      The partnership must include an advisory committee 
 60.3   comprised of government, industry, academic, and nonprofit 
 60.4   representatives to help focus its research and education efforts 
 60.5   on the most critical issues.  Initiatives undertaken by the 
 60.6   partnership may include: 
 60.7      (1) collaborative and interdisciplinary research, 
 60.8   demonstration projects, and commercialization of market-ready 
 60.9   technologies; 
 60.10     (2) creation of undergraduate and graduate course offerings 
 60.11  and eventually degreed and vocational programs with reciprocity; 
 60.12     (3) establishment of fellows programs at the region's 
 60.13  institutes of higher learning that provide financial incentives 
 60.14  for relevant study, research, and exchange; and 
 60.15     (4) development and field-testing of relevant curricula, 
 60.16  teacher kits for all educational levels, and widespread teacher 
 60.17  training, in collaboration with state energy offices, teachers, 
 60.18  nonprofits, businesses, the United States Department of Energy, 
 60.19  and other interested parties.  
 60.20     Sec. 4.  [HYDROGEN REFUELING STATIONS; GRANTS.] 
 60.21     The commissioner of commerce shall make assessments under 
 60.22  Minnesota Statutes, section 216C.052, of $300,000 in fiscal year 
 60.23  2006 and $300,000 in fiscal year 2007 for the purpose of 
 60.24  matching federal and private investments in three multifuel 
 60.25  hydrogen refueling stations in Moorhead, Alexandria, and the 
 60.26  Twin Cities respectively.  The assessments and grants are 
 60.27  contingent upon securing the balance of the total project costs 
 60.28  from nonstate sources. 
 60.29     Sec. 5.  [FUEL CELL CURRICULUM DEVELOPMENT PILOT.] 
 60.30     The Board of Trustees of the Minnesota State Colleges and 
 60.31  Universities is encouraged to work with the Upper Midwest 
 60.32  Hydrogen Initiative and other interested parties to develop and 
 60.33  implement hydrogen and fuel cell curricula and training programs 
 60.34  that can be incorporated into existing relevant courses and 
 60.35  disciplines affected by these technologies.  These disciplines 
 60.36  include, but are not limited to, chemical, electrical, and 
 61.1   mechanical engineering, including lab technicians; fuel cell 
 61.2   production, installation, and maintenance; fuel cell and 
 61.3   internal combustion vehicles, including hybrids, running on 
 61.4   hydrogen or biofuels; and the construction, installation, and 
 61.5   maintenance of facilities that will produce, use, or serve 
 61.6   hydrogen.  The curricula should also be useful to secondary 
 61.7   educational institutions and should include, but not be limited 
 61.8   to, the production, purification, distribution, and use of 
 61.9   hydrogen in portable, stationary, and mobile applications such 
 61.10  as fuel cells, turbines, and reciprocating engines. 
 61.11                             ARTICLE 14
 61.12                      CIP GEOTHERMAL PROGRAMS
 61.13     Section 1.  Minnesota Statutes 2004, section 216B.241, 
 61.14  subdivision 1b, is amended to read: 
 61.15     Subd. 1b.  [CONSERVATION IMPROVEMENT BY COOPERATIVE 
 61.16  ASSOCIATION OR MUNICIPALITY.] (a) This subdivision applies to: 
 61.17     (1) a cooperative electric association that provides retail 
 61.18  service to its members; 
 61.19     (2) a municipality that provides electric service to retail 
 61.20  customers; and 
 61.21     (3) a municipality with gross operating revenues in excess 
 61.22  of $5,000,000 from sales of natural gas to retail customers.  
 61.23     (b) Each cooperative electric association and municipality 
 61.24  subject to this subdivision shall spend and invest for energy 
 61.25  conservation improvements under this subdivision the following 
 61.26  amounts: 
 61.27     (1) for a municipality, 0.5 percent of its gross operating 
 61.28  revenues from the sale of gas and 1.5 percent of its gross 
 61.29  operating revenues from the sale of electricity, excluding gross 
 61.30  operating revenues from electric and gas service provided in the 
 61.31  state to large electric customer facilities; and 
 61.32     (2) for a cooperative electric association, 1.5 percent of 
 61.33  its gross operating revenues from service provided in the state, 
 61.34  excluding gross operating revenues from service provided in the 
 61.35  state to large electric customer facilities indirectly through a 
 61.36  distribution cooperative electric association. 
 62.1      (c) Each municipality and cooperative electric association 
 62.2   subject to this subdivision shall identify and implement energy 
 62.3   conservation improvement spending and investments that are 
 62.4   appropriate for the municipality or association, except that a 
 62.5   municipality or association may not spend or invest for energy 
 62.6   conservation improvements that directly benefit a large electric 
 62.7   customer facility for which the commissioner has issued an 
 62.8   exemption under subdivision 1a, paragraph (b).  The spending 
 62.9   must include programs for rebates for geothermal heating and 
 62.10  cooling systems if programs are found to be cost effective.  
 62.11     (d) Each municipality and cooperative electric association 
 62.12  subject to this subdivision may spend and invest annually up to 
 62.13  ten percent of the total amount required to be spent and 
 62.14  invested on energy conservation improvements under this 
 62.15  subdivision on research and development projects that meet the 
 62.16  definition of energy conservation improvement in subdivision 1 
 62.17  and that are funded directly by the municipality or cooperative 
 62.18  electric association.  
 62.19     (e) Load-management activities that do not reduce energy 
 62.20  use but that increase the efficiency of the electric system may 
 62.21  be used to meet the following percentage of the conservation 
 62.22  investment and spending requirements of this subdivision: 
 62.23     (1) 2002 - 90 percent; 
 62.24     (2) 2003 - 80 percent; 
 62.25     (3) 2004 - 65 percent; and 
 62.26     (4) 2005 and thereafter - 50 percent. 
 62.27     (f) A generation and transmission cooperative electric 
 62.28  association that provides energy services to cooperative 
 62.29  electric associations that provide electric service at retail to 
 62.30  consumers may invest in energy conservation improvements on 
 62.31  behalf of the associations it serves and may fulfill the 
 62.32  conservation, spending, reporting, and energy savings goals on 
 62.33  an aggregate basis.  A municipal power agency or other 
 62.34  not-for-profit entity that provides energy service to municipal 
 62.35  utilities that provide electric service at retail may invest in 
 62.36  energy conservation improvements on behalf of the municipal 
 63.1   utilities it serves and may fulfill the conservation, spending, 
 63.2   reporting, and energy savings goals on an aggregate basis, under 
 63.3   an agreement between the municipal power agency or 
 63.4   not-for-profit entity and each municipal utility for funding the 
 63.5   investments. 
 63.6      (g) Every two years, on a schedule determined by the 
 63.7   commissioner, each municipality or cooperative shall file an 
 63.8   overview of its conservation improvement plan with the 
 63.9   commissioner.  With this overview, the municipality or 
 63.10  cooperative shall also provide an evaluation to the commissioner 
 63.11  detailing its energy conservation improvement spending and 
 63.12  investments for the previous period.  The evaluation must 
 63.13  briefly describe each conservation program, including the 
 63.14  geothermal heating and cooling system rebate program, and must 
 63.15  specify the energy savings or increased efficiency in the use of 
 63.16  energy within the service territory of the utility or 
 63.17  association that is the result of the spending and investments.  
 63.18  The evaluation must analyze the cost-effectiveness of the 
 63.19  utility's or association's conservation programs, using a list 
 63.20  of baseline energy and capacity savings assumptions developed in 
 63.21  consultation with the department.  The commissioner shall review 
 63.22  each evaluation and make recommendations, where appropriate, to 
 63.23  the municipality or association to increase the effectiveness of 
 63.24  conservation improvement activities.  Up to three percent of a 
 63.25  utility's conservation spending obligation under this section 
 63.26  may be used for program pre-evaluation, testing, and monitoring 
 63.27  and program evaluation.  The overview and evaluation filed by a 
 63.28  municipality with less than 60,000,000 kilowatt hours in annual 
 63.29  retail sales of electric service may consist of a letter from 
 63.30  the governing board of the municipal utility to the department 
 63.31  providing the amount of annual conservation spending required of 
 63.32  that municipality and certifying that the required amount has 
 63.33  been spent on conservation programs pursuant to this subdivision.
 63.34     (h) The commissioner shall also review each evaluation for 
 63.35  whether a portion of the money spent on residential conservation 
 63.36  improvement programs is devoted to programs that directly 
 64.1   address the needs of renters and low-income persons unless an 
 64.2   insufficient number of appropriate programs are available.  For 
 64.3   the purposes of this subdivision and subdivision 2, "low-income" 
 64.4   means an income at or below 50 percent of the state median 
 64.5   income.  
 64.6      (i) As part of its spending for conservation improvement, a 
 64.7   municipality or association may contribute to the energy and 
 64.8   conservation account.  A municipality or association may propose 
 64.9   to the commissioner to designate that all or a portion of funds 
 64.10  contributed to the account be used for research and development 
 64.11  projects that can best be implemented on a statewide basis.  Any 
 64.12  amount contributed must be remitted to the commissioner by 
 64.13  February 1 of each year. 
 64.14     (j) A municipality may spend up to 50 percent of its 
 64.15  required spending under this section to refurbish an existing 
 64.16  district heating or cooling system.  This paragraph expires July 
 64.17  1, 2007.  
 64.18     Sec. 2.  Minnesota Statutes 2004, section 216B.241, 
 64.19  subdivision 2, is amended to read: 
 64.20     Subd. 2.  [PROGRAMS.] (a) The commissioner may require 
 64.21  public utilities to make investments and expenditures in energy 
 64.22  conservation improvements, explicitly setting forth the interest 
 64.23  rates, prices, and terms under which the improvements must be 
 64.24  offered to the customers.  The required programs must cover a 
 64.25  two-year period.  Public utilities shall file conservation 
 64.26  improvement plans by June 1, on a schedule determined by order 
 64.27  of the commissioner.  Plans received by a public utility by June 
 64.28  1 must be approved or approved as modified by the commissioner 
 64.29  by December 1 of that same year.  The commissioner shall give 
 64.30  special consideration and encouragement to programs that bring 
 64.31  about significant net savings through the use of 
 64.32  energy-efficient lighting.  The commissioner shall require 
 64.33  public utilities to file programs offering rebates for the 
 64.34  installation of geothermal heating and cooling systems.  The 
 64.35  commissioner shall evaluate the program on the basis of 
 64.36  cost-effectiveness and the reliability of technologies 
 65.1   employed.  The commissioner's order must provide to the extent 
 65.2   practicable for a free choice, by consumers participating in the 
 65.3   program, of the device, method, material, or project 
 65.4   constituting the energy conservation improvement and for a free 
 65.5   choice of the seller, installer, or contractor of the energy 
 65.6   conservation improvement, provided that the device, method, 
 65.7   material, or project seller, installer, or contractor is duly 
 65.8   licensed, certified, approved, or qualified, including under the 
 65.9   residential conservation services program, where applicable.  
 65.10     (b) The commissioner may require a utility to make an 
 65.11  energy conservation improvement investment or expenditure 
 65.12  whenever the commissioner finds that the improvement will result 
 65.13  in energy savings at a total cost to the utility less than the 
 65.14  cost to the utility to produce or purchase an equivalent amount 
 65.15  of new supply of energy.  The commissioner shall nevertheless 
 65.16  ensure that every public utility operate one or more programs 
 65.17  under periodic review by the department.  
 65.18     (c) Each public utility subject to subdivision 1a may spend 
 65.19  and invest annually up to ten percent of the total amount 
 65.20  required to be spent and invested on energy conservation 
 65.21  improvements under this section by the utility on research and 
 65.22  development projects that meet the definition of energy 
 65.23  conservation improvement in subdivision 1 and that are funded 
 65.24  directly by the public utility.  
 65.25     (d) A public utility may not spend for or invest in energy 
 65.26  conservation improvements that directly benefit a large electric 
 65.27  customer facility for which the commissioner has issued an 
 65.28  exemption pursuant to subdivision 1a, paragraph (b).  The 
 65.29  commissioner shall consider and may require a utility to 
 65.30  undertake a program suggested by an outside source, including a 
 65.31  political subdivision or a nonprofit or community organization. 
 65.32     (e) The commissioner may, by order, establish a list of 
 65.33  programs that may be offered as energy conservation improvements 
 65.34  by a public utility, municipal utility, cooperative electric 
 65.35  association, or other entity providing conservation services 
 65.36  pursuant to this section.  The list of programs may include 
 66.1   rebates for high-efficiency appliances, rebates or subsidies for 
 66.2   high-efficiency lamps, small business energy audits, and 
 66.3   building recommissioning.  The commissioner may, by order, 
 66.4   change this list to add or subtract programs as the commissioner 
 66.5   determines is necessary to promote efficient and effective 
 66.6   conservation programs. 
 66.7      (f) The commissioner shall ensure that a portion of the 
 66.8   money spent on residential conservation improvement programs is 
 66.9   devoted to programs that directly address the needs of renters 
 66.10  and low-income persons, in proportion to the amount the utility 
 66.11  has historically spent on such programs based on the most recent 
 66.12  three-year average relative to the utility's total conservation 
 66.13  spending under this section, unless an insufficient number of 
 66.14  appropriate programs are available. 
 66.15     (g) A utility, a political subdivision, or a nonprofit or 
 66.16  community organization that has suggested a program, the 
 66.17  attorney general acting on behalf of consumers and small 
 66.18  business interests, or a utility customer that has suggested a 
 66.19  program and is not represented by the attorney general under 
 66.20  section 8.33 may petition the commission to modify or revoke a 
 66.21  department decision under this section, and the commission may 
 66.22  do so if it determines that the program is not cost-effective, 
 66.23  does not adequately address the residential conservation 
 66.24  improvement needs of low-income persons, has a long-range 
 66.25  negative effect on one or more classes of customers, or is 
 66.26  otherwise not in the public interest.  The commission shall 
 66.27  reject a petition that, on its face, fails to make a reasonable 
 66.28  argument that a program is not in the public interest. 
 66.29     (h) The commissioner may order a public utility to include, 
 66.30  with the filing of the utility's proposed conservation 
 66.31  improvement plan under paragraph (a), the results of an 
 66.32  independent audit of the utility's conservation improvement 
 66.33  programs and expenditures performed by the department or an 
 66.34  auditor with experience in the provision of energy conservation 
 66.35  and energy efficiency services approved by the commissioner and 
 66.36  chosen by the utility.  The audit must specify the energy 
 67.1   savings or increased efficiency in the use of energy within the 
 67.2   service territory of the utility that is the result of the 
 67.3   spending and investments.  The audit must evaluate the 
 67.4   cost-effectiveness of the utility's conservation programs. 
 67.5      (i) Up to three percent of a utility's conservation 
 67.6   spending obligation under this section may be used for program 
 67.7   pre-evaluation, testing, and monitoring and program audit and 
 67.8   evaluation. 
 67.9                              ARTICLE 15
 67.10                             SOY-DIESEL
 67.11     Section 1.  [APPROPRIATION; RENEWABLE DEVELOPMENT GRANT.] 
 67.12     Notwithstanding any contrary provision of Minnesota 
 67.13  Statutes, section 116C.779, $150,000 is appropriated in fiscal 
 67.14  year 2006 to the Agricultural Utilization Research Institute 
 67.15  from the renewable development account established under 
 67.16  Minnesota Statutes, section 116C.779.  The institute shall 
 67.17  disburse the money over three fiscal years as grants to an 
 67.18  applicant meeting the requirements of Minnesota Statutes, 
 67.19  section 216C.41, subdivision 1, paragraph (c), clause (2), item 
 67.20  (i), for a project that uses a soy-diesel generator to provide 
 67.21  backup power for a wind energy conversion system of one megawatt 
 67.22  or less of nameplate capacity.  The institute shall disburse up 
 67.23  to $50,000 of the grant each of the next three fiscal years 
 67.24  beginning July 1, 2005. 
 67.25     For the purpose of this section, "soy-diesel" means a 
 67.26  renewable, biodegradable, mono alkyl ester combustible liquid 
 67.27  fuel derived from agricultural plant oils that meets American 
 67.28  Society for Testing and Materials Specification D6751-02 for 
 67.29  Biodiesel Fuel (B100) Blend Stock for Distillate Fuels.  This 
 67.30  section only applies if the entity receives qualifying 
 67.31  applications.