SF 145

2nd Unofficial Engrossment - 85th Legislature (2007 - 2008)

Posted on 12/15/2009 12:00 a.m.

1.1A bill for an act 1.2relating to energy; enacting the Next Generation Energy Act of 2007, the Global 1.3Warming Mitigation Act of 2007, and the Community-Based Development 1.4Act of 2007; modifying or adding provisions related to state energy policy 1.5goals for fossil fuel-use reduction and renewable energy use, energy efficiency, 1.6energy conservation improvement, recovery of energy-related utility costs, 1.7energy savings, information from the Manitoba Hydro-Electric Board, energy 1.8audits, electric utility renewable energy obligations of 25 percent by 2025, 1.9community-based energy development, the transition to an energy savings 1.10requirement for electric and natural gas utilities, addressing climate change, 1.11the reliability administrator, the delegation to counties for permitting wind 1.12projects under 25 megawatts, reducing greenhouse gas emissions, and allocation 1.13of financial penalties against utilities; requiring studies and reports; making 1.14technical and clarifying changes;amending Minnesota Statutes 2006, sections 1.15123B.65, subdivision 2; 216B.16, subdivisions 1, 6b; 216B.1612; 216B.1645, 1.16by adding subdivisions; 216B.169; 216B.1691, subdivisions 5, as amended, 7, 1.17as added; 216B.241; 216C.05; 216C.052; 216C.31; 471.345, subdivision 13; 1.18500.30, subdivision 2; 504B.161, subdivision 1; proposing coding for new law 1.19in Minnesota Statutes, chapters 216B; 216C; 216F; proposing coding for new 1.20law as Minnesota Statutes, chapter 216H; repealing Minnesota Statutes 2006, 1.21sections 216B.165; 216C.27; 216C.30, subdivision 5; Laws 2007, chapter 3, 1.22section 3; Minnesota Rules, parts 7635.0100; 7635.0110; 7635.0120; 7635.0130; 1.237635.0140; 7635.0150; 7635.0160; 7635.0170; 7635.0180; 7635.0200; 1.247635.0210; 7635.0220; 7635.0230; 7635.0240; 7635.0250; 7635.0260; 1.257635.0300; 7635.0310; 7635.0320; 7635.0330; 7635.0340; 7635.0400; 1.267635.0410; 7635.0420; 7635.0500; 7635.0510; 7635.0520; 7635.0530; 1.277635.0600; 7635.0610; 7635.0620; 7635.0630; 7635.0640; 7635.1000; 1.287635.1010; 7635.1020; 7635.1030; 7655.0100; 7655.0120; 7655.0200; 1.297655.0210; 7655.0220; 7655.0230; 7655.0240; 7655.0250; 7655.0260; 1.307655.0270; 7655.0280; 7655.0290; 7655.0300; 7655.0310; 7655.0320; 1.317655.0330; 7655.0400; 7655.0410; 7655.0420. 1.32BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 2.1ARTICLE 1 2.2GENERAL PROVISIONS 2.3    Section 1. new text begin TITLE. new text end 2.4     new text begin This act may be cited as the Next Generation Energy Act of 2007. new text end 2.5    Sec. 2. Minnesota Statutes 2006, section 216C.05, is amended to read: 2.6216C.05 FINDINGS AND PURPOSE. 2.7     new text begin Subdivision 1. new text end new text begin Energy planning. new text end The legislature finds and declares that continued 2.8growth in demand for energy will cause severe social and economic dislocations, and that 2.9the state has a vital interest in providing for: increased efficiency in energy consumption, 2.10the development and use of renewable energy resources wherever possible, and the 2.11creation of an effective energy forecasting, planning, and education program. 2.12    The legislature further finds and declares that the protection of life, safety, and 2.13financial security for citizens during an energy crisis is of paramount importance. 2.14    Therefore, the legislature finds that it is in the public interest to review, analyze, and 2.15encourage those energy programs that will minimize the need for annual increases in 2.16fossil fuel consumption by 1990 and the need for additional electrical generating plants, 2.17and provide for an optimum combination of energy sources consistent with environmental 2.18protection and the protection of citizens. 2.19    The legislature intends to monitor, through energy policy planning and 2.20implementation, the transition from historic growth in energy demand to a period when 2.21demand for traditional fuels becomes stable and the supply of renewable energy resources 2.22is readily available and adequately utilized. 2.23     new text begin Subd. 2. new text end new text begin Energy policy goals. new text end new text begin It is the energy policy of the state of Minnesota that: new text end 2.24     new text begin (1) the per capita use of fossil fuel as an energy input be reduced by 15 percent by new text end 2.25 new text begin the year 2015, through increased reliance on energy efficiency and renewable energy new text end 2.26 new text begin alternatives; and new text end 2.27     new text begin (2) 25 percent of the total energy used in the state be derived from renewable energy new text end 2.28 new text begin resources by the year 2025. new text end 2.29ARTICLE 2 2.30ENERGY EFFICIENCY AND CONSERVATION 2.31    Section 1. Minnesota Statutes 2006, section 216B.16, subdivision 1, is amended to read: 3.1    Subdivision 1. Notice. Unless the commission otherwise orders, no public utility 3.2shall change a rate which has been duly established under this chapter, except upon 60 3.3days' notice to the commission. The notice shall include statements of facts, expert 3.4opinions, substantiating documents, and exhibits, supporting the change requested, and 3.5state the change proposed to be made in the rates then in force and the time when the 3.6modified rates will go into effect. If the filing utility does not have an approved new text begin energy new text end 3.7conservation improvement plan on file with the department, it shall also include in its 3.8notice an energy conservation plan pursuant to section 216B.241. new text begin A filing utility subject to new text end 3.9 new text begin rate regulation under section 216B.026 shall reference in its notice the energy conservation new text end 3.10 new text begin improvement plans of the generation and transmission cooperative providing energy new text end 3.11 new text begin conservation improvement programs to members of the filing utility pursuant to section new text end 3.12 new text begin 216B.241. new text end The filing utility shall give written notice, as approved by the commission, of 3.13the proposed change to the governing body of each municipality and county in the area 3.14affected. All proposed changes shall be shown by filing new schedules or shall be plainly 3.15indicated upon schedules on file and in force at the time. 3.16    Sec. 2. Minnesota Statutes 2006, section 216B.16, subdivision 6b, is amended to read: 3.17    Subd. 6b. Energy conservation improvement. (a) Except as otherwise provided 3.18in this subdivision, all investments and expenses of a public utility as defined in 3.19section 216B.241, subdivision 1, paragraph (e) new text begin (i) new text end , incurred in connection with energy 3.20conservation improvements shall be recognized and included by the commission in the 3.21determination of just and reasonable rates as if the investments and expenses were directly 3.22made or incurred by the utility in furnishing utility service. 3.23    (b) After December 31, 1999, Investments and expenses for energy conservation 3.24improvements shall not be included by the commission in the determination of new text begin (i) new text end just and 3.25reasonable electric and gas rates for retail electric and gas service provided to large electric 3.26customer facilities that have been exempted by the commissioner of the department 3.27pursuant to section 216B.241, subdivision 1a, paragraph (b) new text begin ; or (ii) just and reasonable new text end 3.28 new text begin gas rates for large energy facilities new text end . However, no public utility shall be prevented from 3.29recovering its investment in energy conservation improvements from all customers that 3.30were made on or before December 31, 1999, in compliance with the requirements of 3.31section . 3.32    (c) The commission may permit a public utility to file rate schedules providing for 3.33annual recovery of the costs of energy conservation improvements. These rate schedules 3.34may be applicable to less than all the customers in a class of retail customers if necessary to 3.35reflect the differing minimum spending requirements of section 216B.241, subdivision 1a. 4.1After December 31, 1999, new text begin . new text end The commission shall allow a public utility, without requiring 4.2a general rate filing under this section, to reduce the electric and gas rates applicable to 4.3large electric customer facilities that have been exempted by the commissioner of the 4.4department pursuant to section 216B.241, subdivision 1a, paragraph (b), new text begin and to reduce the new text end 4.5 new text begin gas rate applicable to a large energy facility new text end by an amount that reflects the elimination 4.6of energy conservation improvement investments or expenditures for those facilities 4.7required on or before December 31, 1999. In the event that the commission has set 4.8electric or gas rates based on the use of an accounting methodology that results in the cost 4.9of conservation improvements being recovered from utility customers over a period of 4.10years, the rate reduction may occur in a series of steps to coincide with the recovery of 4.11balances due to the utility for conservation improvements made by the utility on or before 4.12December 31, 1999 new text begin 2007 new text end . 4.13     new text begin (d) Investments and expenses of a public utility shall not include electric utility new text end 4.14 new text begin infrastructure costs as defined in section 216B.1636, subdivision 1, paragraph (b). new text end 4.15    Sec. 3. new text begin [216B.1636] RECOVERY OF ELECTRIC UTILITY INFRASTRUCTURE new text end 4.16 new text begin COSTS. new text end 4.17     new text begin Subdivision 1. new text end new text begin Definitions. new text end new text begin (a) "Electric utility" means a public utility as defined in new text end 4.18 new text begin section 216B.02, subdivision 4, that furnishes electric service to retail customers. new text end 4.19     new text begin (b) "Electric utility infrastructure costs" or "EUIC" means costs for electric utility new text end 4.20 new text begin infrastructure projects that were not included in the electric utility's rate base in its most new text end 4.21 new text begin recent general rate case. new text end 4.22     new text begin (c) "Electric utility infrastructure projects" means projects owned by an electric new text end 4.23 new text begin utility that: new text end 4.24     new text begin (1) replace or modify existing electric utility infrastructure, including utility-owned new text end 4.25 new text begin buildings, if the replacement or modification is shown to conserve energy or use energy new text end 4.26 new text begin more efficiently, consistent with section 216B.241, subdivision 1c; or new text end 4.27     new text begin (2) conserve energy or use energy more efficiently by using waste heat recovery new text end 4.28 new text begin converted into electricity as defined in section 216B.241, subdivision 1, paragraph (n). new text end 4.29     new text begin Subd. 2. new text end new text begin Filing. new text end new text begin (a) The commission may approve an electric utility's petition for new text end 4.30 new text begin a rate schedule to recover EUIC under this section. An electric utility may petition the new text end 4.31 new text begin commission to recover a rate of return, income taxes on the rate of return, incremental new text end 4.32 new text begin property taxes, if any, plus incremental depreciation expense associated with EUIC. new text end 4.33     new text begin (b) The filing is subject to the following: new text end 4.34     new text begin (1) an electric utility may submit a filing under this section no more than once new text end 4.35 new text begin per year; and new text end 5.1     new text begin (2) an electric utility must file sufficient information to satisfy the commission new text end 5.2 new text begin regarding the proposed EUIC or be subject to denial by the commission, which new text end 5.3 new text begin information includes, but is not limited to: new text end 5.4     new text begin (i) the location, description, and costs associated with the project; new text end 5.5     new text begin (ii) evidence that the electric utility infrastructure project will conserve energy or use new text end 5.6 new text begin energy more efficiently than similar utility facilities currently used by the electric utility; new text end 5.7     new text begin (iii) the proposed schedule for implementation; new text end 5.8     new text begin (iv) a description of the costs, and salvage value, if any, associated with the existing new text end 5.9 new text begin infrastructure replaced or modified as a result of the project; new text end 5.10     new text begin (v) the proposed rate design and an explanation of why the proposed rate design new text end 5.11 new text begin is in the public interest; new text end 5.12     new text begin (vi) the magnitude and timing of any known future electric utility projects that the new text end 5.13 new text begin utility may seek to recover under this section; new text end 5.14     new text begin (vii) the magnitude of EUIC in relation to the electric utility's base revenue as new text end 5.15 new text begin approved by the commission in the electric utility's most recent general rate case, new text end 5.16 new text begin exclusive of fuel cost adjustments; new text end 5.17     new text begin (viii) the magnitude of EUIC in relation to the electric utility's capital expenditures new text end 5.18 new text begin since its most recent general rate case; new text end 5.19     new text begin (ix) the amount of time since the utility last filed a general rate case and the utility's new text end 5.20 new text begin reasons for seeking recovery outside of a general rate case; new text end 5.21     new text begin (x) documentation supporting the calculation of the EUIC; and new text end 5.22     new text begin (xi) a cost and benefit analysis showing that the electric utility infrastructure project new text end 5.23 new text begin is in the public interest. new text end 5.24     new text begin (c) Upon approval of the proposed projects and associated EUIC rate schedule, the new text end 5.25 new text begin utility may implement the electric utility infrastructure projects. new text end 5.26     new text begin Subd. 3. new text end new text begin Commission authority; orders. new text end new text begin The commission may issue orders new text end 5.27 new text begin necessary to implement and administer this section. new text end 5.28    Sec. 4. new text begin [216B.2401] ENERGY CONSERVATION POLICY GOAL. new text end 5.29     new text begin It is the energy policy of the state of Minnesota to achieve annual energy savings new text end 5.30 new text begin equal to 1.5 percent of annual retail energy sales of electricity and natural gas directly new text end 5.31 new text begin through energy conservation improvement programs and rate design, and indirectly new text end 5.32 new text begin through energy codes and appliance standards, programs designed to transform the market new text end 5.33 new text begin or change consumer behavior, energy savings resulting from efficiency improvements to new text end 5.34 new text begin the utility infrastructure and system, and other efforts to promote energy efficiency and new text end 5.35 new text begin energy conservation. new text end 6.1    Sec. 5. Minnesota Statutes 2006, section 216B.241, is amended to read: 6.2216B.241 ENERGY CONSERVATION IMPROVEMENT. 6.3    Subdivision 1. Definitions. For purposes of this section and section 216B.16, 6.4subdivision 6b , the terms defined in this subdivision have the meanings given them. 6.5    (a) "Commission" means the Public Utilities Commission. 6.6    (b) "Commissioner" means the commissioner of commerce. 6.7    (c) "Customer facility" means all buildings, structures, equipment, and installations 6.8at a single site. 6.9    (d) "Department" means the Department of Commerce. 6.10    (e) "Energy conservation" means demand-side management of energy supplies 6.11resulting in a net reduction in energy use. Load management that reduces overall energy 6.12use is energy conservation. 6.13    (f) "Energy conservation improvement" means a project that results in new text begin energy new text end 6.14 new text begin efficiency or new text end energy conservation. new text begin Energy conservation improvement may include waste new text end 6.15 new text begin heat recovery converted into electricity but does not include electric utility infrastructure new text end 6.16 new text begin projects approved by the commission under section 216B.1636. new text end 6.17     new text begin (g) "Energy efficiency" refers to measures or programs, including energy new text end 6.18 new text begin conservation measures or programs, that target consumer behavior, equipment, processes, new text end 6.19 new text begin or devices designed to produce either an absolute decrease in consumption of electric new text end 6.20 new text begin energy or natural gas or a decrease in consumption of electric energy or natural gas on a new text end 6.21 new text begin per unit of production basis without a reduction in the quality or level of service provided new text end 6.22 new text begin to the energy consumer. new text end 6.23    (g) new text begin (h) "Gross annual retail energy sales" means annual electric sales to all retail new text end 6.24 new text begin customers in a utility's or association's Minnesota service territory or natural gas new text end 6.25 new text begin throughput to all retail customers, including natural gas transportation customers, on a new text end 6.26 new text begin utility's distribution system in Minnesota. For purposes of this section, gross annual new text end 6.27 new text begin retail energy sales exclude gas sales to a large energy facility and gas and electric sales new text end 6.28 new text begin to a large electric customer facility exempted by the commissioner under subdivision new text end 6.29 new text begin 1a, paragraph (b). new text end 6.30     new text begin (i) new text end "Investments and expenses of a public utility" includes the investments and 6.31expenses incurred by a public utility in connection with an energy conservation 6.32improvement, including but not limited to: 6.33    (1) the differential in interest cost between the market rate and the rate charged on a 6.34no-interest or below-market interest loan made by a public utility to a customer for the 6.35purchase or installation of an energy conservation improvement; 7.1    (2) the difference between the utility's cost of purchase or installation of energy 7.2conservation improvements and any price charged by a public utility to a customer for 7.3such improvements. 7.4    (h) new text begin (j) new text end "Large electric customer facility" means a customer facility that imposes a 7.5peak electrical demand on an electric utility's system of not less than 20,000 kilowatts, 7.6measured in the same way as the utility that serves the customer facility measures 7.7electrical demand for billing purposes, and for which electric services are provided at 7.8retail on a single bill by a utility operating in the state. 7.9    (i) new text begin (k) "Large energy facility" has the meaning given it in section 216B.2421, new text end 7.10 new text begin subdivision 2, clause (1). new text end 7.11     new text begin (l) new text end "Load management" means an activity, service, or technology to change the 7.12timing or the efficiency of a customer's use of energy that allows a utility or a customer 7.13to respond to wholesale market fluctuations or to reduce the overall new text begin peak new text end demand for 7.14energy or capacity. 7.15     new text begin (m) "Low-income programs" means energy conservation improvement programs new text end 7.16 new text begin that directly serve the needs of low-income persons, including low-income renters. new text end 7.17     new text begin (n) "Waste heat recovery converted into electricity" means an energy recovery new text end 7.18 new text begin process that converts otherwise lost energy from the heat of exhaust stacks or pipes used new text end 7.19 new text begin for engines or manufacturing or industrial processes, or the reduction of high pressure new text end 7.20 new text begin in water or gas pipelines. new text end 7.21    Subd. 1a. Investment, expenditure, and contribution; public utility. (a) For 7.22purposes of this subdivision and subdivision 2, "public utility" has the meaning given it 7.23in section 216B.02, subdivision 4. Each public utility shall spend and invest for energy 7.24conservation improvements under this subdivision and subdivision 2 the following 7.25amounts: 7.26    (1) for a utility that furnishes gas service, 0.5 percent of its gross operating revenues 7.27from service provided in the state; 7.28    (2) for a utility that furnishes electric service, 1.5 percent of its gross operating 7.29revenues from service provided in the state; and 7.30    (3) for a utility that furnishes electric service and that operates a nuclear-powered 7.31electric generating plant within the state, two percent of its gross operating revenues 7.32from service provided in the state. 7.33    For purposes of this paragraph (a), "gross operating revenues" do not include 7.34revenues from large electric customer facilities exempted by the commissioner under 7.35paragraph (b). 8.1    (b) The owner of a large electric customer facility may petition the commissioner 8.2to exempt both electric and gas utilities serving the large energy customer facility from 8.3the investment and expenditure requirements of paragraph (a) with respect to retail 8.4revenues attributable to the facility. At a minimum, the petition must be supported by 8.5evidence relating to competitive or economic pressures on the customer and a showing 8.6by the customer of reasonable efforts to identify, evaluate, and implement cost-effective 8.7conservation improvements at the facility. If a petition is filed on or before October 1 of 8.8any year, the order of the commissioner to exempt revenues attributable to the facility can 8.9be effective no earlier than January 1 of the following year. The commissioner shall 8.10not grant an exemption if the commissioner determines that granting the exemption is 8.11contrary to the public interest. The commissioner may, after investigation, rescind any 8.12exemption granted under this paragraph upon a determination that cost-effective new text begin the new text end 8.13 new text begin customer is not continuing to make reasonable efforts to identify, evaluate, and implement new text end 8.14energy conservation improvements are available at the large electric customer facility. 8.15For the purposes of this paragraph, "cost-effective" means that the projected total cost of 8.16the energy conservation improvement at the large electric customer facility is less than 8.17the projected present value of the energy and demand savings resulting from the energy 8.18conservation improvement. For the purposes of investigations by the commissioner under 8.19this paragraph, the owner of any large electric customer facility shall, upon request, 8.20provide the commissioner with updated information comparable to that originally supplied 8.21in or with the owner's original petition under this paragraph. 8.22    (c) The commissioner may require investments or spending greater than the amounts 8.23required under this subdivision for a public utility whose most recent advance forecast 8.24required under section 216B.2422 or 216C.17 projects a peak demand deficit of 100 8.25megawatts or greater within five years under midrange forecast assumptions. 8.26    (d) A public utility or owner of a large electric customer facility may appeal 8.27a decision of the commissioner under paragraph (b) or (c) to the commission under 8.28subdivision 2. In reviewing a decision of the commissioner under paragraph (b) or (c), 8.29the commission shall rescind the decision if it finds that the required investments or 8.30spending will: 8.31    (1) not result in cost-effective energy conservation improvements; or 8.32    (2) otherwise not be in the public interest. 8.33    (e) Each utility shall determine what portion of the amount it sets aside for 8.34conservation improvement will be used for conservation improvements under subdivision 8.352 and what portion it will contribute to the energy and conservation account established in 8.36subdivision 2a. A public utility may propose to the commissioner to designate that all 9.1or a portion of funds contributed to the account established in subdivision 2a be used 9.2for research and development projects that can best be implemented on a statewide 9.3basis. Contributions must be remitted to the commissioner by February 1 of each year. 9.4Nothing in this subdivision prohibits a public utility from spending or investing for energy 9.5conservation improvement more than required in this subdivision. 9.6    Subd. 1b. Conservation improvement by cooperative association or 9.7municipality. (a) This subdivision applies to: 9.8    (1) a cooperative electric association that provides retail service to its members; 9.9    (2) a municipality that provides electric service to retail customers; and 9.10    (3) a municipality with gross operating revenues in excess of $5,000,000 from 9.11sales of new text begin more than 1,000,000,000 cubic feet in annual throughput sales to new text end natural gas 9.12to retail customers. 9.13    (b) Each cooperative electric association and municipality subject to this subdivision 9.14shall spend and invest for energy conservation improvements under this subdivision 9.15the following amounts: 9.16    (1) for a municipality, 0.5 percent of its gross operating revenues from the sale of 9.17gas and 1.5 percent of its gross operating revenues from the sale of electricity, excluding 9.18gross operating revenues from electric and gas service provided in the state to large 9.19electric customer facilities; and 9.20    (2) for a cooperative electric association, 1.5 percent of its gross operating revenues 9.21from service provided in the state, excluding gross operating revenues from service 9.22provided in the state to large electric customer facilities indirectly through a distribution 9.23cooperative electric association. 9.24    (c) Each municipality and cooperative electric association subject to this subdivision 9.25shall identify and implement energy conservation improvement spending and investments 9.26that are appropriate for the municipality or association, except that a municipality 9.27or association may not spend or invest for energy conservation improvements that 9.28directly benefit a new text begin large energy facility or a new text end large electric customer facility for which the 9.29commissioner has issued an exemption under subdivision 1a, paragraph (b). 9.30    (d) Each municipality and cooperative electric association subject to this subdivision 9.31may spend and invest annually up to ten percent of the total amount required to be spent 9.32and invested on energy conservation improvements under this subdivision on research 9.33and development projects that meet the definition of energy conservation improvement 9.34in subdivision 1 and that are funded directly by the municipality or cooperative electric 9.35association. 10.1    (e) Load-management activities that do not reduce energy use but that increase the 10.2efficiency of the electric system may be used to meet 50 percent of the conservation 10.3investment and spending requirements of this subdivision. 10.4    (f) A generation and transmission cooperative electric association that provides 10.5energy services to cooperative electric associations that provide electric service at retail to 10.6consumers may invest in energy conservation improvements on behalf of the associations 10.7it serves and may fulfill the conservation, spending, reporting, and energy savings goals on 10.8an aggregate basis. A municipal power agency or other not-for-profit entity that provides 10.9energy service to municipal utilities that provide electric service at retail may invest in 10.10energy conservation improvements on behalf of the municipal utilities it serves and may 10.11fulfill the conservation, spending, reporting, and energy savings goals on an aggregate 10.12basis, under an agreement between the municipal power agency or not-for-profit entity 10.13and each municipal utility for funding the investments. 10.14    (g) At least every four years, on a schedule determined by the commissioner, each 10.15municipality or cooperative shall file an overview of its conservation improvement plan 10.16with the commissioner. With this overview, new text begin Each municipality or cooperative shall file new text end 10.17 new text begin energy conservation improvement plans by June 1 on a schedule determined by order new text end 10.18 new text begin of the commissioner, but at least every three years. Plans received by June 1 must be new text end 10.19 new text begin approved or approved as modified by the commissioner by December 1 of the same year. new text end 10.20The municipality or cooperative shall also provide an evaluation to the commissioner 10.21detailing its energy conservation improvement spending and investments for the previous 10.22period. The evaluation must briefly describe each conservation program and must specify 10.23the energy savings or increased efficiency in the use of energy within the service territory 10.24of the utility or association that is the result of the spending and investments. The 10.25evaluation must analyze the cost-effectiveness of the utility's or association's conservation 10.26programs, using a list of baseline energy and capacity savings assumptions developed 10.27in consultation with the department. The commissioner shall review each evaluation 10.28and make recommendations, where appropriate, to the municipality or association to 10.29increase the effectiveness of conservation improvement activities. Up to three percent of 10.30a utility's conservation spending obligation under this section may be used for program 10.31pre-evaluation, testing, and monitoring and program evaluation. The overview and 10.32evaluation filed by a municipality with less than 60,000,000 kilowatt-hours in annual 10.33retail sales of electric service may consist of a letter from the governing board of the 10.34municipal utility to the department providing the amount of annual conservation spending 10.35required of that municipality and certifying that the required amount has been spent on 10.36conservation programs pursuant to this subdivision. 11.1    (h) The commissioner shall also review each evaluation for whether a portion of the 11.2money spent on residential conservation improvement programs is devoted to programs 11.3that directly address the needs of renters and low-income persons unless an insufficient 11.4number of appropriate programs are available. For the purposes of this subdivision and 11.5subdivision 2, "low-income" means an income at or below 50 percent of the state median 11.6income. 11.7    (i) As part of its spending for conservation improvement, a municipality or 11.8association may contribute to the energy and conservation account. A municipality or 11.9association may propose to the commissioner to designate that all or a portion of funds 11.10contributed to the account be used for research and development projects that can best 11.11be implemented on a statewide basis. Any amount contributed must be remitted to the 11.12commissioner by February 1 of each year. 11.13    (j) new text begin (h) new text end A municipality may spend up to 50 percent of its required spending under 11.14this section to refurbish an existing district heating or cooling system. This paragraph 11.15expires new text begin until new text end July 1, 2007. new text begin From July 1, 2007, through June 30, 2011, expenditures made new text end 11.16 new text begin to refurbish a district heating or cooling system are considered to be load-management new text end 11.17 new text begin activities under paragraph (e). This paragraph expires July 1, 2011. new text end 11.18     new text begin (i) The commissioner shall consider and may require a utility, association, or new text end 11.19 new text begin other entity providing energy efficiency and conservation services under this section to new text end 11.20 new text begin undertake a program suggested by an outside source, including a political subdivision, new text end 11.21 new text begin nonprofit corporation, or community organization. new text end 11.22    Subd. 1c. Energy-saving goals. new text begin (a) new text end The commissioner shall establish energy-saving 11.23goals for energy conservation improvement expenditures and shall evaluate an energy 11.24conservation improvement program on how well it meets the goals set. 11.25     new text begin (b) Each individual utility and association shall have an annual energy-savings new text end 11.26 new text begin goal equivalent to 1.5 percent of gross annual retail energy sales unless modified by the new text end 11.27 new text begin commissioner under paragraph (d). The savings goals must be calculated based on the new text end 11.28 new text begin most recent three-year weather normalized average. new text end 11.29     new text begin (c) The commissioner must adopt a filing schedule that is designed to have all new text end 11.30 new text begin utilities and associations operating under an energy savings plan by calendar year 2010. new text end 11.31     new text begin (d) In its energy conservation improvement plan filing, a utility or association may new text end 11.32 new text begin request the commissioner to adjust its annual energy savings percentage goal based on new text end 11.33 new text begin its historical conservation investment experience, customer class makeup, load growth, new text end 11.34 new text begin a conservation potential study, or other factors the commissioner determines warrants new text end 11.35 new text begin an adjustment. The commissioner may not approve a plan that provides for an annual new text end 11.36 new text begin energy savings goal of less than one percent of gross annual retail energy sales from new text end 12.1 new text begin energy conservation improvements. A utility or association may include in its energy new text end 12.2 new text begin conservation plan energy savings from electric utility infrastructure projects approved new text end 12.3 new text begin by the commission under section 216B.1636 or waste heat recovery converted into new text end 12.4 new text begin electricity projects that may count as energy savings in addition to the minimum energy new text end 12.5 new text begin savings goal of at least one percent for energy conservation improvements. Electric utility new text end 12.6 new text begin infrastructure projects must result in increased energy conservation or energy efficiency new text end 12.7 new text begin greater than that which would have occurred through normal maintenance activity. new text end 12.8     new text begin (e) An energy savings goal is not satisfied by attaining the revenue expenditure new text end 12.9 new text begin requirements of subdivisions 1a and 1b, but can only be satisfied by meeting the energy new text end 12.10 new text begin savings goal established in this subdivision. new text end 12.11     new text begin (f) An association or utility is not required to make energy conservation investments new text end 12.12 new text begin to attain the energy savings goals of this subdivision that are not cost-effective even new text end 12.13 new text begin if the investment is necessary to attain the energy savings goals. For the purpose of new text end 12.14 new text begin this paragraph, in determining cost-effectiveness, the commissioner shall consider the new text end 12.15 new text begin costs and benefits to ratepayers, the utility, participants, and society. In addition, the new text end 12.16 new text begin commissioner shall consider the rate at which an association or municipal utility is new text end 12.17 new text begin increasing its energy savings and its expenditures on energy conservation. new text end 12.18     new text begin (g) On an annual basis, the commissioner shall produce and make publicly available new text end 12.19 new text begin a report on the annual energy savings and estimated carbon dioxide reductions achieved new text end 12.20 new text begin by the energy conservation improvement programs for the two most recent years for new text end 12.21 new text begin which data is available. The commissioner shall report on program performance both in new text end 12.22 new text begin the aggregate and for each entity filing an energy conservation improvement plan for new text end 12.23 new text begin approval or review by the commissioner. new text end 12.24     new text begin (h) By January 15, 2010, the commissioner shall report to the legislature whether the new text end 12.25 new text begin spending requirements under subdivisions 1a and 1b are necessary to achieve the energy new text end 12.26 new text begin savings goals established in this subdivision. new text end 12.27    Subd. 1d. Cooperative conservation investment increase phase-in new text begin Technical new text end 12.28 new text begin assistance new text end . The increase in required conservation improvement expenditures by a 12.29cooperative electric association that results from the amendments in Laws 2001, chapter 12.30212, article 8, section 6, to subdivision 1b, paragraph (a), clause (1), must be phased 12.31in as follows: 12.32    (1) at least 25 percent shall be effective in year 2002; 12.33    (2) at least 50 percent shall be effective in year 2003; 12.34    (3) at least 75 percent shall be effective in year 2004; and 12.35    (4) all of the increase shall be effective in year 2005 and thereafter. 13.1     new text begin The commissioner shall evaluate energy conservation improvement programs new text end 13.2 new text begin on the basis of cost-effectiveness and the reliability of the technologies employed. new text end 13.3 new text begin The commissioner shall, by order, establish, maintain, and update energy savings new text end 13.4 new text begin assumptions that must be used when filing energy conservation improvement programs. new text end 13.5 new text begin The commissioner shall establish an inventory of the most effective energy conservation new text end 13.6 new text begin programs, techniques, and technologies, and encourage all Minnesota utilities to new text end 13.7 new text begin implement them, where appropriate, in their service territories. The commissioner shall new text end 13.8 new text begin describe these programs in sufficient detail to provide a utility reasonable guidance new text end 13.9 new text begin concerning implementation. The commissioner shall prioritize the opportunities in new text end 13.10 new text begin order of potential energy savings and in order of cost-effectiveness. The commissioner new text end 13.11 new text begin may contract with a third party to carry out any of the commissioner's duties under new text end 13.12 new text begin this subdivision, and to obtain technical assistance to evaluate the effectiveness of any new text end 13.13 new text begin conservation improvement program. The commissioner may assess up to $800,000 new text end 13.14 new text begin annually until June 30, 2009, and $450,000 annually thereafter for the purposes of this new text end 13.15 new text begin subdivision. The assessments must be deposited in the state treasury and credited to the new text end 13.16 new text begin energy and conservation account created under subdivision 2a. An assessment made under new text end 13.17 new text begin this subdivision is not subject to the cap on assessments provided by section 216B.62, or new text end 13.18 new text begin any other law. new text end 13.19     new text begin Subd. 1e. new text end new text begin Applied research and development grants. new text end new text begin The commissioner may, by new text end 13.20 new text begin order, approve and make grants for applied research and development projects of general new text end 13.21 new text begin applicability that identify new technologies or strategies to maximize energy savings, new text end 13.22 new text begin improve the effectiveness of energy conservation programs, or document the carbon new text end 13.23 new text begin dioxide reductions from energy conservation programs. When approving projects, the new text end 13.24 new text begin commissioner shall consider proposals and comments from utilities and other interested new text end 13.25 new text begin parties. The commissioner may assess up to $3,600,000 annually for the purposes of this new text end 13.26 new text begin subdivision. The assessments must be deposited in the state treasury and credited to the new text end 13.27 new text begin energy and conservation account created under subdivision 2a. An assessment made under new text end 13.28 new text begin this subdivision is not subject to the cap on assessments provided by section 216B.62, or new text end 13.29 new text begin any other law. new text end 13.30     new text begin Subd. 1f. new text end new text begin Facilities energy efficiency. new text end new text begin (a) The commissioner of administration and new text end 13.31 new text begin the commissioner of commerce shall maintain and, as needed, revise the sustainable new text end 13.32 new text begin building design guidelines developed under section 16B.325. new text end 13.33     new text begin (b) The commissioner of administration and the commissioner of commerce shall new text end 13.34 new text begin maintain and update the benchmarking tool developed under Laws 2001, chapter 212, new text end 13.35 new text begin article 1, section 3, so that all public buildings can use the benchmarking tool to maintain new text end 13.36 new text begin energy use information for the purposes of establishing energy efficiency benchmarks, new text end 14.1 new text begin tracking building performance, and measuring the results of energy efficiency and new text end 14.2 new text begin conservation improvements. new text end 14.3     new text begin (c) The commissioner shall require that utilities include in their conservation new text end 14.4 new text begin improvement plans programs that facilitate professional engineering verification to qualify new text end 14.5 new text begin a building as Energy Star-labeled or as Leadership in Energy and Environmental Design new text end 14.6 new text begin (LEED) certified. The state goal is to achieve certification of 1,000 commercial buildings new text end 14.7 new text begin as Energy Star-labeled, and 100 commercial buildings as LEED-certified by December new text end 14.8 new text begin 31, 2010. new text end 14.9     new text begin (d) The commissioner may assess up to $500,000 annually for the purposes of this new text end 14.10 new text begin subdivision. The assessments must be deposited in the state treasury and credited to the new text end 14.11 new text begin energy and conservation account created under subdivision 2a. An assessment made under new text end 14.12 new text begin this subdivision is not subject to the cap on assessments provided by section 216B.62, or new text end 14.13 new text begin any other law. new text end 14.14    Subd. 2. Programs. (a) The commissioner may require public utilities to make 14.15investments and expenditures in energy conservation improvements, explicitly setting 14.16forth the interest rates, prices, and terms under which the improvements must be offered to 14.17the customers. The required programs must cover no more than a four-year new text begin three-year new text end 14.18period. Public utilities shall file conservation improvement plans by June 1, on a schedule 14.19determined by order of the commissioner, but at least every four new text begin three new text end years. Plans 14.20received by a public utility by June 1 must be approved or approved as modified by the 14.21commissioner by December 1 of that same year. The commissioner shall give special 14.22consideration and encouragement to programs that bring about significant net savings 14.23through the use of energy-efficient lighting. The commissioner shall evaluate the program 14.24on the basis of cost-effectiveness and the reliability of technologies employed. The 14.25commissioner's order must provide to the extent practicable for a free choice, by consumers 14.26participating in the program, of the device, method, material, or project constituting the 14.27energy conservation improvement and for a free choice of the seller, installer, or contractor 14.28of the energy conservation improvement, provided that the device, method, material, or 14.29project seller, installer, or contractor is duly licensed, certified, approved, or qualified, 14.30including under the residential conservation services program, where applicable. 14.31    (b) The commissioner may require a utility to make an energy conservation 14.32improvement investment or expenditure whenever the commissioner finds that the 14.33improvement will result in energy savings at a total cost to the utility less than the cost 14.34to the utility to produce or purchase an equivalent amount of new supply of energy. The 14.35commissioner shall nevertheless ensure that every public utility operate one or more 14.36programs under periodic review by the department. 15.1    (c) Each public utility subject to subdivision 1a may spend and invest annually up to 15.2ten percent of the total amount required to be spent and invested on energy conservation 15.3improvements under this section by the utility on research and development projects 15.4that meet the definition of energy conservation improvement in subdivision 1 and that 15.5are funded directly by the public utility. 15.6    (d) A public utility may not spend for or invest in energy conservation improvements 15.7that directly benefit a new text begin large energy facility or a new text end large electric customer facility for which 15.8the commissioner has issued an exemption pursuant to subdivision 1a, paragraph (b). The 15.9commissioner shall consider and may require a utility to undertake a program suggested 15.10by an outside source, including a political subdivision or new text begin , new text end a nonprofit new text begin corporation, new text end or 15.11community organization. 15.12    (e) The commissioner may, by order, establish a list of programs that may be 15.13offered as energy conservation improvements by a public utility, municipal utility, 15.14cooperative electric association, or other entity providing conservation services pursuant 15.15to this section. The list of programs may include rebates for high-efficiency appliances, 15.16rebates or subsidies for high-efficiency lamps, small business energy audits, and building 15.17recommissioning. The commissioner may, by order, change this list to add or subtract 15.18programs as the commissioner determines is necessary to promote efficient and effective 15.19conservation programs. 15.20    (f) The commissioner shall ensure that a portion of the money spent on residential 15.21conservation improvement programs is devoted to programs that directly address the 15.22needs of renters and low-income persons, in proportion to the amount the utility has 15.23historically spent on such programs based on the most recent three-year average relative to 15.24the utility's total conservation spending under this section, unless an insufficient number of 15.25appropriate programs are available. 15.26    (g) new text begin (e) new text end A utility, a political subdivision, or a nonprofit or community organization 15.27that has suggested a program, the attorney general acting on behalf of consumers and 15.28small business interests, or a utility customer that has suggested a program and is not 15.29represented by the attorney general under section 8.33 may petition the commission to 15.30modify or revoke a department decision under this section, and the commission may do 15.31so if it determines that the program is not cost-effective, does not adequately address the 15.32residential conservation improvement needs of low-income persons, has a long-range 15.33negative effect on one or more classes of customers, or is otherwise not in the public 15.34interest. The commission shall reject a petition that, on its face, fails to make a reasonable 15.35argument that a program is not in the public interest. 16.1    (h) new text begin (f) new text end The commissioner may order a public utility to include, with the filing of the 16.2utility's proposed conservation improvement plan under paragraph (a), the results of an 16.3independent audit of the utility's conservation improvement programs and expenditures 16.4performed by the department or an auditor with experience in the provision of energy 16.5conservation and energy efficiency services approved by the commissioner and chosen by 16.6the utility. The audit must specify the energy savings or increased efficiency in the use 16.7of energy within the service territory of the utility that is the result of the spending and 16.8investments. The audit must evaluate the cost-effectiveness of the utility's conservation 16.9programs. 16.10    (i) Up to three percent of a utility's conservation spending obligation under this 16.11section may be used for program pre-evaluation, testing, and monitoring and program 16.12audit and evaluation. 16.13    Subd. 2a. Energy and conservation account. new text begin The energy and conservation new text end 16.14 new text begin account is established in the special revenue fund in the state treasury. new text end The commissioner 16.15must deposit money contributed under subdivisions 1a and 1b new text begin assessed or contributed new text end 16.16 new text begin under subdivisions 1d, 1e, 1f, and 7 new text end in the new text begin state treasury and credit it to the new text end energy and 16.17conservation account in the general new text begin special revenue new text end fund. Money in the account is 16.18appropriated to the department new text begin commissioner new text end for programs designed to meet the energy 16.19conservation needs of low-income persons and to make energy conservation improvements 16.20in areas not adequately served under subdivision 2, including research and development 16.21projects included in the definition of energy conservation improvement in subdivision 1 new text begin new text end 16.22 new text begin the purposes of subdivisions 1d, 1e, 1f, and 7 new text end . Interest on money in the account accrues to 16.23the account. Using information collected under section 216C.02, subdivision 1, paragraph 16.24(b) , the commissioner must, to the extent possible, allocate enough money to programs 16.25for low-income persons to assure that their needs are being adequately addressed. 16.26The commissioner must request the commissioner of finance to transfer money from 16.27the account to the commissioner of education for an energy conservation program for 16.28low-income persons. In establishing programs, the commissioner must consult political 16.29subdivisions and nonprofit and community organizations, especially organizations 16.30engaged in providing energy and weatherization assistance to low-income persons. At 16.31least one program must address the need for energy conservation improvements in areas 16.32in which a high percentage of residents use fuel oil or propane to fuel their source of 16.33home heating. The commissioner may contract with a political subdivision, a nonprofit 16.34or community organization, a public utility, a municipality, or a cooperative electric 16.35association to implement its programs. The commissioner may provide grants to any 16.36person to conduct research and development projects in accordance with this section. 17.1    Subd. 2b. Recovery of expenses. The commission shall allow a utility to recover 17.2expenses resulting from a conservation improvement program required by the department 17.3and contributions new text begin and assessments new text end to the energy and conservation account, unless the 17.4recovery would be inconsistent with a financial incentive proposal approved by the 17.5commission. new text begin The commission shall allow a cooperative electric association subject new text end 17.6 new text begin to rate regulation under section 216B.026, to recover expenses resulting from energy new text end 17.7 new text begin conservation improvement programs, load management programs, and assessments new text end 17.8 new text begin and contributions to the energy and conservation account unless the recovery would be new text end 17.9 new text begin inconsistent with a financial incentive proposal approved by the commission. new text end In addition, 17.10a utility may file annually, or the Public Utilities Commission may require the utility 17.11to file, and the commission may approve, rate schedules containing provisions for the 17.12automatic adjustment of charges for utility service in direct relation to changes in the 17.13expenses of the utility for real and personal property taxes, fees, and permits, the amounts 17.14of which the utility cannot control. A public utility is eligible to file for adjustment for real 17.15and personal property taxes, fees, and permits under this subdivision only if, in the year 17.16previous to the year in which it files for adjustment, it has spent or invested at least 1.75 17.17percent of its gross revenues from provision of electric service, excluding gross operating 17.18revenues from electric service provided in the state to large electric customer facilities for 17.19which the commissioner has issued an exemption under subdivision 1a, paragraph (b), and 17.200.6 percent of its gross revenues from provision of gas service, excluding gross operating 17.21revenues from gas services provided in the state to large electric customer facilities for 17.22which the commissioner has issued an exemption under subdivision 1a, paragraph (b), for 17.23that year for energy conservation improvements under this section. 17.24     new text begin Subd. 2c. new text end new text begin Performance incentives. new text end new text begin By December 31, 2008, the commission new text end 17.25 new text begin shall review any incentive plan for energy conservation improvement it has approved new text end 17.26 new text begin under section 216B.16, subdivision 6c, and adjust the utility performance incentives to new text end 17.27 new text begin recognize making progress toward and meeting the energy savings goals established new text end 17.28 new text begin in subdivision 1c. new text end 17.29    Subd. 3. Ownership of energy conservation improvement. An energy 17.30conservation improvement made to or installed in a building in accordance with this 17.31section, except systems owned by the utility and designed to turn off, limit, or vary the 17.32delivery of energy, are the exclusive property of the owner of the building except to the 17.33extent that the improvement is subjected to a security interest in favor of the utility in case 17.34of a loan to the building owner. The utility has no liability for loss, damage or injury 17.35caused directly or indirectly by an energy conservation improvement except for negligence 17.36by the utility in purchase, installation, or modification of the product. 18.1    Subd. 4. Federal law prohibitions. If investments by public utilities in energy 18.2conservation improvements are in any manner prohibited or restricted by federal law 18.3and there is a provision under which the prohibition or restriction may be waived, then 18.4the commission, the governor, or any other necessary state agency or officer shall take 18.5all necessary and appropriate steps to secure a waiver with respect to those public utility 18.6investments in energy conservation improvements included in this section. 18.7    Subd. 5. Efficient lighting program. (a) Each public utility, cooperative electric 18.8association, and municipal utility that provides electric service to retail customers shall 18.9include as part of its conservation improvement activities a program to strongly encourage 18.10the use of fluorescent and high-intensity discharge lamps. The program must include at 18.11least a public information campaign to encourage use of the lamps and proper management 18.12of spent lamps by all customer classifications. 18.13    (b) A public utility that provides electric service at retail to 200,000 or more 18.14customers shall establish, either directly or through contracts with other persons, including 18.15lamp manufacturers, distributors, wholesalers, and retailers and local government units, a 18.16system to collect for delivery to a reclamation or recycling facility spent fluorescent and 18.17high-intensity discharge lamps from households and from small businesses as defined in 18.18section 645.445 that generate an average of fewer than ten spent lamps per year. 18.19    (c) A collection system must include establishing reasonably convenient locations 18.20for collecting spent lamps from households and financial incentives sufficient to encourage 18.21spent lamp generators to take the lamps to the collection locations. Financial incentives 18.22may include coupons for purchase of new fluorescent or high-intensity discharge lamps, 18.23a cash back system, or any other financial incentive or group of incentives designed to 18.24collect the maximum number of spent lamps from households and small businesses that is 18.25reasonably feasible. 18.26    (d) A public utility that provides electric service at retail to fewer than 200,000 18.27customers, a cooperative electric association, or a municipal utility that provides electric 18.28service at retail to customers may establish a collection system under paragraphs (b) and 18.29(c) as part of conservation improvement activities required under this section. 18.30    (e) The commissioner of the Pollution Control Agency may not, unless clearly 18.31required by federal law, require a public utility, cooperative electric association, or 18.32municipality that establishes a household fluorescent and high-intensity discharge lamp 18.33collection system under this section to manage the lamps as hazardous waste as long as 18.34the lamps are managed to avoid breakage and are delivered to a recycling or reclamation 18.35facility that removes mercury and other toxic materials contained in the lamps prior to 18.36placement of the lamps in solid waste. 19.1    (f) If a public utility, cooperative electric association, or municipal utility contracts 19.2with a local government unit to provide a collection system under this subdivision, 19.3the contract must provide for payment to the local government unit of all the unit's 19.4incremental costs of collecting and managing spent lamps. 19.5    (g) All the costs incurred by a public utility, cooperative electric association, or 19.6municipal utility for promotion and collection of fluorescent and high-intensity discharge 19.7lamps under this subdivision are conservation improvement spending under this section. 19.8    Subd. 6. Renewable energy research. (a) A public utility that owns a nuclear 19.9generation facility in the state shall spend five percent of the total amount that utility 19.10is required to spend under this section to support basic and applied research and 19.11demonstration activities at the University of Minnesota Initiative for Renewable Energy 19.12and the Environment for the development of renewable energy sources and technologies. 19.13The utility shall transfer the required amount to the University of Minnesota on or before 19.14July 1 of each year and that annual amount shall be deducted from the amount of money the 19.15utility is required to spend under this section. The University of Minnesota shall transfer 19.16at least ten percent of these funds to at least one rural campus or experiment station. 19.17    (b) Research funded under this subdivision shall include: 19.18    (1) development of environmentally sound production, distribution, and use of 19.19energy, chemicals, and materials from renewable sources; 19.20    (2) processing and utilization of agricultural and forestry plant products and other 19.21bio-based, renewable sources as a substitute for fossil-fuel-based energy, chemicals, and 19.22materials using a variety of means including biocatalysis, biorefining, and fermentation; 19.23    (3) conversion of state wind resources to hydrogen for energy storage and 19.24transportation to areas of energy demand; 19.25    (4) improvements in scalable hydrogen fuel cell technologies; and 19.26    (5) production of hydrogen from bio-based, renewable sources; and sequestration 19.27of carbon. 19.28    (c) Notwithstanding other law to the contrary, the utility may, but is not required to, 19.29spend more than two percent of its gross operating revenues from service provided in this 19.30state under this section or section 216B.2411. 19.31    (d) This subdivision expires June 30, 2008. 19.32     new text begin Subd. 7. new text end new text begin Low-income programs. new text end new text begin (a) The commissioner shall ensure that each new text end 19.33 new text begin utility and association provides low-income programs. When approving spending and new text end 19.34 new text begin energy savings goals for low-income programs, the commissioner shall consider historic new text end 19.35 new text begin spending and participation levels, energy savings for low-income programs, and the new text end 19.36 new text begin number of low-income persons residing in the utility's service territory. A utility that new text end 20.1 new text begin furnishes gas service must spend at least 0.2 percent of its gross operating revenue from new text end 20.2 new text begin residential customers in the state on low-income programs. A utility or association that new text end 20.3 new text begin furnishes electric service must spend at least 0.1 percent of its gross operating revenue new text end 20.4 new text begin from residential customers in the state on low-income programs. For a generation and new text end 20.5 new text begin transmission cooperative association, this requirement shall apply to each association's new text end 20.6 new text begin members' aggregate gross operating revenue from sale of electricity to residential new text end 20.7 new text begin customers in the state. Beginning in 2010, a utility or association that furnishes electric new text end 20.8 new text begin service must spend 0.2 percent of its gross operating revenue from residential customers new text end 20.9 new text begin in the state on low-income programs. new text end 20.10     new text begin (b) To meet the requirements of paragraph (a), a utility or association may contribute new text end 20.11 new text begin money to the energy and conservation account. An energy conservation improvement plan new text end 20.12 new text begin must state the amount, if any, of low-income energy conservation improvement funds the new text end 20.13 new text begin utility or association will contribute to the energy and conservation account. Contributions new text end 20.14 new text begin must be remitted to the commissioner by February 1 of each year. new text end 20.15     new text begin (c) The commissioner shall establish low-income programs to utilize money new text end 20.16 new text begin contributed to the energy and conservation account under paragraph (b). In establishing new text end 20.17 new text begin low-income programs, the commissioner shall consult political subdivisions, utilities, and new text end 20.18 new text begin nonprofit and community organizations, especially organizations engaged in providing new text end 20.19 new text begin energy and weatherization assistance to low-income persons. Money contributed to new text end 20.20 new text begin the energy and conservation account under paragraph (b) must provide programs for new text end 20.21 new text begin low-income persons, including low-income renters, in the service territory of the utility or new text end 20.22 new text begin association providing the money. The commissioner shall record and report expenditures new text end 20.23 new text begin and energy savings achieved as a result of low-income programs funded through the new text end 20.24 new text begin energy and conservation account in the report required under subdivision 1c, paragraph new text end 20.25 new text begin (g). The commissioner may contract with a political subdivision, nonprofit or community new text end 20.26 new text begin organization, public utility, municipality, or cooperative electric association to implement new text end 20.27 new text begin low-income programs funded through the energy and conservation account. new text end 20.28     new text begin (d) A utility or association may petition the commissioner to modify its required new text end 20.29 new text begin spending under paragraph (a) if the utility or association and the commissioner have been new text end 20.30 new text begin unable to expend the amount required under paragraph (a) for three consecutive years. new text end 20.31     new text begin Subd. 8. new text end new text begin Assessment. new text end new text begin The commission or department may assess utilities subject to new text end 20.32 new text begin this section in proportion to their respective gross operating revenue from sales of gas or new text end 20.33 new text begin electric service within the state during the last calendar year to carry out the purposes of new text end 20.34 new text begin subdivisions 1d, 1e, and 1f. Those assessments are not subject to the cap on assessments new text end 20.35 new text begin provided by section 216B.62, or any other law. new text end 21.1    Sec. 6. new text begin [216B.2412] DECOUPLING OF ENERGY SALES FROM REVENUES. new text end 21.2     new text begin Subdivision 1. new text end new text begin Definition and purpose. new text end new text begin For the purpose of this section, new text end 21.3 new text begin "decoupling" means a regulatory tool designed to separate a utility's revenue from changes new text end 21.4 new text begin in energy sales. The purpose of decoupling is to reduce a utility's disincentive to promote new text end 21.5 new text begin energy efficiency. new text end 21.6     new text begin Subd. 2. new text end new text begin Decoupling criteria. new text end new text begin The commission shall, by order, establish criteria new text end 21.7 new text begin and standards for decoupling. The commission shall design the criteria and standards to new text end 21.8 new text begin mitigate the impact on public utilities of the energy savings goals under section 216B.241 new text end 21.9 new text begin without adversely affecting utility ratepayers. In designing the criteria, the commission new text end 21.10 new text begin shall consider energy efficiency, weather, and cost of capital, among other factors. new text end 21.11     new text begin Subd. 3. new text end new text begin Pilot programs. new text end new text begin The commission shall allow one or more rate-regulated new text end 21.12 new text begin utilities to participate in a pilot program to assess the merits of a rate-decoupling strategy new text end 21.13 new text begin to promote energy efficiency and conservation. Each pilot program must utilize the new text end 21.14 new text begin criteria and standards established in subdivision 2 and be designed to determine whether new text end 21.15 new text begin a rate-decoupling strategy achieves energy savings. On or before a date established by new text end 21.16 new text begin the commission, the commission shall require electric and gas utilities that intend to new text end 21.17 new text begin implement a decoupling program to file a decoupling pilot plan which shall be approved new text end 21.18 new text begin or approved as modified by the commission. A pilot program may not exceed three years new text end 21.19 new text begin in length. Any extension beyond three years can only be approved in a general rate case, new text end 21.20 new text begin unless that decoupling program was previously approved as part of a general rate case. new text end 21.21 new text begin The commission shall report on the programs annually to the chairs of the house of new text end 21.22 new text begin representatives and senate committees with primary jurisdiction over energy policy. new text end 21.23    Sec. 7. new text begin [216C.03] STATE GOVERNMENT ENERGY SAVINGS PLAN. new text end 21.24     new text begin The commissioner of commerce, in coordination with the commissioners of the new text end 21.25 new text begin agencies listed in section 15.01, the chancellor of the Minnesota State Colleges and new text end 21.26 new text begin Universities, and the president of the University of Minnesota, shall identify policy new text end 21.27 new text begin options, barriers, and economic benefits and costs for state government operations to new text end 21.28 new text begin achieve the energy savings goals in section 216B.2401 and the resulting carbon emission new text end 21.29 new text begin reductions. The commissioner of commerce must issue a report to the legislature by new text end 21.30 new text begin February 1, 2008. new text end 21.31    Sec. 8. new text begin REVISOR'S INSTRUCTION. new text end 21.32     new text begin The revisor of statutes shall change the reference to "section 216B.241, subdivision new text end 21.33 new text begin 1, paragraph (i)" found in section 216B.2411, subdivision 1, to read "section 216B.241, new text end 21.34 new text begin subdivision 1." new text end 22.1    Sec. 9. new text begin EFFECTIVE DATE. new text end 22.2     new text begin This article is effective July 1, 2007. new text end 22.3ARTICLE 3 22.4MISCELLANEOUS 22.5    Section 1. Minnesota Statutes 2006, section 123B.65, subdivision 2, is amended to read: 22.6    Subd. 2. Energy efficiency contract. (a) Notwithstanding any law to the contrary, 22.7a school district may enter into a guaranteed energy savings contract with a qualified 22.8provider to significantly reduce energy or operating costs. 22.9    (b) Before entering into a contract under this subdivision, the board shall comply 22.10with clauses (1) to (5). 22.11    (1) The board must seek proposals from multiple qualified providers by publishing 22.12notice of the proposed guaranteed energy savings contract in the board's official newspaper 22.13and in other publications if the board determines that additional publication is necessary to 22.14notify multiple qualified providers. 22.15    (2) The school board must select the qualified provider that best meets the needs of 22.16the board. The board must provide public notice of the meeting at which it will select the 22.17qualified provider. 22.18    (3) The contract between the board and the qualified provider must describe the 22.19methods that will be used to calculate the costs of the contract and the operational and 22.20energy savings attributable to the contract. 22.21    (4) The qualified provider shall issue a report to the board giving a description of all 22.22costs of installations, modifications, or remodeling, including costs of design, engineering, 22.23installation, maintenance, repairs, or debt service, and giving detailed calculations of the 22.24amounts by which energy or operating costs will be reduced and the projected payback 22.25schedule in years. 22.26    (5) The board must provide published notice of the meeting in which it proposes to 22.27award the contract, the names of the parties to the proposed contract, and the contract's 22.28purpose. 22.29     new text begin (c) The board must provide a copy of any contract entered into under paragraph (a) new text end 22.30 new text begin and the report provided under paragraph (b), clause (4), to the commissioner of commerce new text end 22.31 new text begin within 30 days of the effective date of the contract. new text end 22.32    Sec. 2. Minnesota Statutes 2006, section 216C.052, subdivision 8a, as added by Laws 22.332007, chapter 57, article 2, section 26, is amended to read: 23.1    Subd. 8a. Manitoba Hydro information. By January 1, 2008, and each year 23.2thereafter, the task force shall request the Manitoba Hydro-Electric Board to provide 23.3the following information for each community that is a signatory to the Northern Flood 23.4Agreement, including South Indian Lake: 23.5    (1) median household income and number of residents employed full time and 23.6part time; 23.7    (2) the number of outstanding claims filed against Manitoba Hydro by individuals 23.8and communities and the number of claims settled by Manitoba Hydro; and 23.9    (3) the amount of shoreline damaged by flooding and erosion and the amount of 23.10shoreline restored and cleaned. 23.11     new text begin Nothing in this section shall be construed as a directive to the government of Canada new text end 23.12 new text begin or the province of Manitoba. new text end 23.13    For the purposes of this subdivision, "Northern Flood Agreement" means the 23.14agreement entered into by the Northern Flood Committee, Incorporated, the Manitoba 23.15Hydro-Electric Board, the province of Manitoba, and the government of Canada on 23.16December 16, 1977. 23.17    Sec. 3. Minnesota Statutes 2006, section 216C.31, is amended to read: 23.18216C.31 ENERGY AUDIT PROGRAMS. 23.19    The commissioner shall develop and administer state programs of energy audits of 23.20residential and commercial buildings including those required by United States Code, title 23.2142, sections 8211 to 8222 and sections 8281 to 8284. The commissioner shall continue 23.22to administer the residential energy audit program as originally established under the 23.23provisions of United States Code, title 42, sections 8211 to 8222; through July 1, 1986 23.24irrespective of any prior expiration date provided in United States Code, title 42, section 23.258216. The commissioner may approve temporary programs if they are likely to result 23.26in the installation of as many conservation measures as would have been installed had 23.27the utility met the requirements of United States Code, title 42, sections 8211 to 8222. 23.28The Consumer Services Division and the attorney general may release information on 23.29consumer comments about the operation of the program to the commissioner new text begin the training new text end 23.30 new text begin and qualifications necessary for the auditing of residential and commercial buildings under new text end 23.31 new text begin the auspices of a program created under section 216B.241 new text end . 23.32    Sec. 4. Minnesota Statutes 2006, section 471.345, subdivision 13, is amended to read: 23.33    Subd. 13. Energy efficiency projects. The following definitions apply to this 23.34subdivision. 24.1    (a) "Energy conservation measure" means a training program or facility alteration 24.2designed to reduce energy consumption or operating costs and includes: 24.3    (1) insulation of the building structure and systems within the building; 24.4    (2) storm windows and doors, caulking or weatherstripping, multiglazed windows 24.5and doors, heat absorbing or heat reflective glazed and coated window and door 24.6systems, additional glazing, reductions in glass area, and other window and door system 24.7modifications that reduce energy consumption; 24.8    (3) automatic energy control systems; 24.9    (4) heating, ventilating, or air conditioning system modifications or replacements; 24.10    (5) replacement or modifications of lighting fixtures to increase the energy efficiency 24.11of the lighting system without increasing the overall illumination of a facility, unless an 24.12increase in illumination is necessary to conform to the applicable state or local building 24.13code for the lighting system after the proposed modifications are made; 24.14    (6) energy recovery systems; 24.15    (7) cogeneration systems that produce steam or forms of energy such as heat, as well 24.16as electricity, for use primarily within a building or complex of buildings; 24.17    (8) energy conservation measures that provide long-term operating cost reductions. 24.18    (b) "Guaranteed energy savings contract" means a contract for the evaluation 24.19and recommendations of energy conservation measures, and for one or more energy 24.20conservation measures. The contract must provide that all payments, except obligations 24.21on termination of the contract before its expiration, are to be made over time, but not to 24.22exceed 15 years from the date of final installation, and the savings are guaranteed to the 24.23extent necessary to make payments for the systems. 24.24    (c) "Qualified provider" means a person or business experienced in the design, 24.25implementation, and installation of energy conservation measures. A qualified provider 24.26to whom the contract is awarded shall give a sufficient bond to the municipality for its 24.27faithful performance. 24.28    Notwithstanding any law to the contrary, a municipality may enter into a guaranteed 24.29energy savings contract with a qualified provider to significantly reduce energy or 24.30operating costs. 24.31    Before entering into a contract under this subdivision, the municipality shall provide 24.32published notice of the meeting in which it proposes to award the contract, the names of 24.33the parties to the proposed contract, and the contract's purpose. 24.34    Before installation of equipment, modification, or remodeling, the qualified provider 24.35shall first issue a report, summarizing estimates of all costs of installations, modifications, 24.36or remodeling, including costs of design, engineering, installation, maintenance, repairs, 25.1or debt service, and estimates of the amounts by which energy or operating costs will be 25.2reduced. 25.3    A guaranteed energy savings contract that includes a written guarantee that savings 25.4will meet or exceed the cost of energy conservation measures is not subject to competitive 25.5bidding requirements of section 471.345 or other law or city charter. The contract is 25.6not subject to section 123B.52. 25.7    A municipality may enter into a guaranteed energy savings contract with a qualified 25.8provider if, after review of the report, it finds that the amount it would spend on the energy 25.9conservation measures recommended in the report is not likely to exceed the amount 25.10to be saved in energy and operation costs over 15 years from the date of installation if 25.11the recommendations in the report were followed, and the qualified provider provides a 25.12written guarantee that the energy or operating cost savings will meet or exceed the costs 25.13of the system. The guaranteed energy savings contract may provide for payments over 25.14a period of time, not to exceed 15 years. 25.15    A municipality may enter into an installment payment contract for the purchase and 25.16installation of energy conservation measures. The contract must provide for payments 25.17of not less than 1/15 of the price to be paid within two years from the date of the first 25.18operation, and the remaining costs to be paid monthly, not to exceed a 15-year term from 25.19the date of the first operation. 25.20     new text begin A municipality entering into a guaranteed energy savings contract shall provide a new text end 25.21 new text begin copy of the contract and the report from the qualified provider to the commissioner of new text end 25.22 new text begin commerce within 30 days of the effective date of the contract. new text end 25.23    Guaranteed energy savings contracts may extend beyond the fiscal year in which 25.24they become effective. The municipality shall include in its annual appropriations measure 25.25for each later fiscal year any amounts payable under guaranteed energy savings contracts 25.26during the year. Failure of a municipality to make such an appropriation does not affect 25.27the validity of the guaranteed energy savings contract or the municipality's obligations 25.28under the contracts. 25.29    Sec. 5. Minnesota Statutes 2006, section 504B.161, subdivision 1, is amended to read: 25.30    Subdivision 1. Requirements. new text begin (a) new text end In every lease or license of residential premises, 25.31the landlord or licensor covenants: 25.32    (1) that the premises and all common areas are fit for the use intended by the parties; 25.33    (2) to keep the premises in reasonable repair during the term of the lease or license, 25.34except when the disrepair has been caused by the willful, malicious, or irresponsible 26.1conduct of the tenant or licensee or a person under the direction or control of the tenant or 26.2licensee; and 26.3    (3) to new text begin make the premises reasonably energy efficient by installing weatherstripping, new text end 26.4 new text begin caulking, storm windows, and storm doors when any such measure will result in energy new text end 26.5 new text begin procurement cost savings, based on current and projected average residential energy costs new text end 26.6 new text begin in Minnesota, that will exceed the cost of implementing that measure, including interest, new text end 26.7 new text begin amortized over the ten-year period following the incurring of the cost; and new text end 26.8     new text begin (4) to new text end maintain the premises in compliance with the applicable health and safety 26.9laws of the state, including the weatherstripping, caulking, storm window, and storm door 26.10energy efficiency standards for renter-occupied residences prescribed by section 216C.27, 26.11subdivisions 1 and 3 , and of the local units of government where the premises are located 26.12during the term of the lease or license, except when violation of the health and safety 26.13laws has been caused by the willful, malicious, or irresponsible conduct of the tenant or 26.14licensee or a person under the direction or control of the tenant or licensee. 26.15     new text begin (b) new text end The parties to a lease or license of residential premises may not waive or modify 26.16the covenants imposed by this section. 26.17    Sec. 6. new text begin REPEALER. new text end 26.18 new text begin Minnesota Statutes 2006, sections 216B.165; 216C.27; and 216C.30, subdivision 5, new text end new text begin new text end 26.19 new text begin and new text end new text begin Minnesota Rules, parts 7635.0100; 7635.0110; 7635.0120; 7635.0130; 7635.0140; new text end 26.20 new text begin 7635.0150; 7635.0160; 7635.0170; 7635.0180; 7635.0200; 7635.0210; 7635.0220; new text end 26.21 new text begin 7635.0230; 7635.0240; 7635.0250; 7635.0260; 7635.0300; 7635.0310; 7635.0320; new text end 26.22 new text begin 7635.0330; 7635.0340; 7635.0400; 7635.0410; 7635.0420; 7635.0500; 7635.0510; new text end 26.23 new text begin 7635.0520; 7635.0530; 7635.0600; 7635.0610; 7635.0620; 7635.0630; 7635.0640; new text end 26.24 new text begin 7635.1000; 7635.1010; 7635.1020; 7635.1030; 7655.0100; 7655.0120; 7655.0200; new text end 26.25 new text begin 7655.0210; 7655.0220; 7655.0230; 7655.0240; 7655.0250; 7655.0260; 7655.0270; new text end 26.26 new text begin 7655.0280; 7655.0290; 7655.0300; 7655.0310; 7655.0320; 7655.0330; 7655.0400; new text end 26.27 new text begin 7655.0410; and 7655.0420, new text end new text begin are repealed, effective July 1, 2007. new text end 26.28    Sec. 7. new text begin NUCLEAR ENERGY STUDY. new text end 26.29     new text begin Subdivision 1. new text end new text begin Scope of study. new text end new text begin The Legislative Electric Energy Task Force new text end 26.30 new text begin shall contract with an entity to conduct a comprehensive study of the economic and new text end 26.31 new text begin environmental costs and benefits of constructing a new nuclear-powered electric new text end 26.32 new text begin generating plant in Minnesota. The study must investigate, at a minimum: new text end 26.33     new text begin (1) advances in technology that would be reflected in the plant's design and new text end 26.34 new text begin operation, compared with the technology embodied in nuclear-powered electric generating new text end 27.1 new text begin plants currently operating in Minnesota, and their impact on the plant's useful life, its new text end 27.2 new text begin operation and maintenance costs, and its health and safety risks; new text end 27.3     new text begin (2) predesign, design, and construction costs of constructing a 600-megawatt new text end 27.4 new text begin nuclear-powered generating plant in Minnesota, and comparable costs of delivering an new text end 27.5 new text begin equivalent amount of energy by: new text end 27.6     new text begin (i) constructing a conventional coal plant; new text end 27.7     new text begin (ii) constructing a coal plant using "clean-coal" technology; new text end 27.8     new text begin (iii) constructing a coal gasification plant; and new text end 27.9     new text begin (iv) a combination of cost-effective energy conservation investments, including the new text end 27.10 new text begin implementation of statewide efficiency standards for a range of electric appliances, and new text end 27.11 new text begin energy generated from renewable sources including wind, solar, biomass, and geothermal; new text end 27.12     new text begin (3) estimated costs of storing the plant's nuclear waste on site and security issues new text end 27.13 new text begin associated with nuclear waste transportation; new text end 27.14     new text begin (4) the projected retail rate per kilowatt hour from the plant, compared with the new text end 27.15 new text begin projected rate from the alternatives listed in clause (2), items (i) through (iv). These new text end 27.16 new text begin projected rates must include, as applicable, different estimates of a regulatory tax imposed new text end 27.17 new text begin on electric generation plants based on the amount of carbon emitted; new text end 27.18     new text begin (5) environmental impacts of the plant's operation, compared with those associated new text end 27.19 new text begin with each alternative listed in clause (2), items (i) through (iv), to water, to land, and to new text end 27.20 new text begin air, including greenhouse gas emissions and particulates; new text end 27.21     new text begin (6) the health effects associated with human exposure to the plant's emissions; and new text end 27.22 new text begin (7) costs and benefits associated with a phase-out and decommissioning of nuclear new text end 27.23 new text begin energy in Minnesota. new text end 27.24     new text begin Subd. 2. new text end new text begin Report. new text end new text begin The study's findings must be submitted in a report to the new text end 27.25 new text begin Legislative Electric Energy Task Force no later than March 1, 2008. new text end 27.26    Sec. 8. new text begin EFFECTIVE DATE. new text end 27.27     new text begin This article is effective July 1, 2007. new text end 27.28ARTICLE 4 27.29COMMUNITY-BASED ENERGY DEVELOPMENT 27.30    Section 1. new text begin CITATION. new text end 27.31     new text begin This article may be cited as the Community-Based Energy Development Act of 2007. new text end 27.32    Sec. 2. Minnesota Statutes 2006, section 216B.1612, is amended to read: 27.33216B.1612 COMMUNITY-BASED ENERGY DEVELOPMENT; TARIFF. 28.1    Subdivision 1. Tariff establishment. A tariff shall be established to optimize local, 28.2regional, and state benefits from wind new text begin renewable new text end energy development and to facilitate 28.3widespread development of community-based wind new text begin renewable new text end energy projects throughout 28.4Minnesota. 28.5    Subd. 2. Definitions. (a) The terms used in this section have the meanings given 28.6them in this subdivision. 28.7    (b) "C-BED tariff" or "tariff" means a community-based energy development tariff. 28.8    (c) "Qualifying owner" means: 28.9    (1) a Minnesota resident; 28.10    (2) a limited liability company that is organized under the laws of this state new text begin chapter new text end 28.11 new text begin 322B new text end and that is made up of members who are Minnesota residents; 28.12    (3) a Minnesota nonprofit organization organized under chapter 317A; 28.13    (4) a Minnesota cooperative association organized under chapter 308A or 308B, 28.14other than new text begin including new text end a rural electric cooperative association or a generation and 28.15transmission cooperative new text begin on behalf of and at the request of a member distribution utility new text end ; 28.16    (5) a Minnesota political subdivision or local government other than new text begin including, new text end 28.17 new text begin but not limited to, new text end a municipal electric utility or new text begin a new text end municipal power agency new text begin on behalf new text end 28.18 new text begin of and at the request of a member distribution utility new text end , including, but not limited to, a 28.19county, statutory or home rule charter city, town, school district, or public or private 28.20higher education institution or any other local or regional governmental organization such 28.21as a board, commission, or association; or 28.22    (6) a tribal council. 28.23    (d) "Net present value rate" means a rate equal to the net present value of the 28.24nominal payments to a project divided by the total expected energy production of the 28.25project over the life of its power purchase agreement. 28.26    (e) "Standard reliability criteria" means: 28.27    (1) can be safely integrated into and operated within the utility's grid without causing 28.28any adverse or unsafe consequences; and 28.29    (2) is consistent with the utility's resource needs as identified in its most recent 28.30resource plan submitted under section 216B.2422. 28.31    (f) new text begin "Renewable" means a technology listed in section 216B.1691, subdivision 1, new text end 28.32 new text begin paragraph (a). new text end 28.33     new text begin (g) new text end "Community-based energy project" or "C-BED project" means a new wind 28.34 new text begin renewable new text end energy project that: 28.35    (1) has no single qualifying owner owning more than 15 percent of a C-BED project 28.36that consists of more than two turbines; or 29.1    (2) for C-BED projects of one or two turbines, is owned entirely by one or more 29.2qualifying owners, with at least 51 percent of the total financial benefits over the life of the 29.3project flowing to qualifying owners; and 29.4     new text begin (1) provides that at least 51 percent of the total payments made as a direct result of a new text end 29.5 new text begin power purchase agreement or similar agreement with a utility accrue to: new text end 29.6     new text begin (i) qualifying owners, in the form of net cash payments under the power purchase new text end 29.7 new text begin agreement that amount to no less than 35 percent made over the term of the power new text end 29.8 new text begin purchase agreement; new text end 29.9     new text begin (ii) owners of land upon which a project is sited, in the form of easement or lease new text end 29.10 new text begin payments; new text end 29.11     new text begin (iii) local units of government, in the form of taxes paid under section 272.029; and new text end 29.12     new text begin (iv) lenders chartered under section 46.044, in the form of interest paid on C-BED new text end 29.13 new text begin project debt financed by a lender; new text end 29.14     new text begin (2) allows, if the project is a wind energy project consisting of more than two new text end 29.15 new text begin turbines, no single qualifying owner to own more than 15 percent of the project; new text end 29.16     new text begin (3) allows, if the project is a wind energy project, a public entity listed in paragraph new text end 29.17 new text begin (b), clause (5), except for a municipal utility, to own more than 15 percent of the project; new text end 29.18 new text begin and new text end 29.19    (3) new text begin (4) new text end has a resolution of support adopted by the county board of each county in 29.20which the project is to be located, or in the case of a project located within the boundaries 29.21of a reservation, the tribal council for that reservation. 29.22    Subd. 3. Tariff rate. (a) The tariff described in subdivision 4 must have a rate 29.23schedule that allows for a rate up to a 2.7 cents per kilowatt-hour net present value rate 29.24over the 20-year life of the power purchase agreement. The tariff must provide for a rate 29.25that is higher in the first ten years of the power purchase agreement than in the last ten 29.26years. The discount rate required to calculate the net present value must be the utility's 29.27normal discount rate used for its other business purposes. 29.28    (b) The commission shall consider mechanisms to encourage the aggregation 29.29of C-BED projects. 29.30    (c) The commission shall require that qualifying new text begin and nonqualifying new text end owners provide 29.31sufficient security to secure performance under the power purchase agreement, and shall 29.32prohibit the transfer of the C-BED project to a nonqualifying owner during the initial 29.3320 years of the contract. 29.34    Subd. 4. Utilities to offer tariff. By December 1, 2005 new text begin 2007 new text end , each public utility 29.35providing electric service at retail shall file for commission approval a community-based 29.36energy development tariff consistent with subdivision 3. Within 90 days of the 30.1first commission approval order under this subdivision, each municipal power 30.2agency and generation and transmission cooperative electric association shall adopt a 30.3community-based energy development tariff as consistent as possible with subdivision 3. 30.4    Subd. 5. Priority for C-BED projects. (a) A utility subject to section 216B.1691 30.5that needs to construct new generation, or purchase the output from new generation, as 30.6part of its plan to satisfy its good faith objective new text begin and standard new text end under that section should new text begin new text end 30.7 new text begin must new text end take reasonable steps to determine if one or more C-BED projects are available that 30.8meet the utility's cost and reliability requirements, applying standard reliability criteria, to 30.9fulfill some or all of the identified need at minimal impact to customer rates. 30.10    Nothing in this section shall be construed to obligate a utility to enter into a power 30.11purchase agreement under a C-BED tariff developed under this section. new text begin A utility whose new text end 30.12 new text begin renewable energy plan has been approved by the commission under section 216B.1645, new text end 30.13 new text begin subdivision 2a, must negotiate in good faith with developers of C-BED projects that meet new text end 30.14 new text begin the specifications of this paragraph and whose aggregated capacity is equal to the capacity new text end 30.15 new text begin of C-BED projects identified in the plan from which the utility intends to purchase energy. new text end 30.16    (b) Each utility shall include in its resource plan submitted under section 216B.2422 30.17a description of its efforts to purchase energy from C-BED projects, including a list of the 30.18projects under contract and the amount of C-BED energy purchased. 30.19    (c) The commission shall consider the efforts and activities of a utility to purchase 30.20energy from C-BED projects when evaluating its good faith effort towards meeting the 30.21renewable energy objective under section 216B.1691. 30.22     new text begin (d) A municipal power agency or generation and transmission cooperative shall, new text end 30.23 new text begin when issuing a request for proposals for C-BED projects to satisfy its standard obligation new text end 30.24 new text begin under section 216B.1691, provide notice to its member distribution utilities that they new text end 30.25 new text begin may propose, in partnership with other qualifying owners, a C-BED project for the new text end 30.26 new text begin consideration of the municipal power agency or generation and transmission cooperative. new text end 30.27    Subd. 6. Property owner participation. To the extent feasible, a developer of a 30.28C-BED project must provide, in writing, an opportunity to invest in the C-BED project to 30.29each property owner on whose property a high-voltage transmission line is constructed 30.30that will transmit the energy generated by the C-BED project to market. This subdivision 30.31applies if the property is located and the owner resides in the county where the C-BED 30.32project is located. 30.33    Subd. 7. Other C-BED tariff issues. (a) A community-based project developer 30.34and a utility shall negotiate the rate and power purchase agreement terms consistent with 30.35the tariff established under subdivision 4. 31.1    (b) At the discretion of the developer, a community-based project developer and 31.2a utility may negotiate a power purchase agreement with terms different from the tariff 31.3established under subdivision 4. 31.4    (c) A qualifying owner, or any combination of qualifying owners, may develop a 31.5joint venture project with a nonqualifying wind new text begin renewable new text end energy project developer. 31.6However, the terms of the C-BED tariff may only apply to the portion of the energy 31.7production of the total project that is directly proportional to the equity share of the project 31.8owned by the qualifying owners. 31.9    (d) A project that is operating under a power purchase agreement under a C-BED 31.10tariff is not eligible for net energy billing under section 216B.164, subdivision 3, or for 31.11production incentives under section 216C.41. 31.12    (e) A public utility must receive commission approval of a power purchase 31.13agreement for a C-BED tariffed project. The commission shall provide the utility's 31.14ratepayers an opportunity to address the reasonableness of the proposed power purchase 31.15agreement. Unless a party objects to a contract within 30 days of submission of the 31.16contract to the commission the contract is deemed approved. 31.17     new text begin Subd. 8. new text end new text begin Community energy partnerships. new text end new text begin A utility providing electric service new text end 31.18 new text begin to retail or wholesale customers in Minnesota and an independent power producer may new text end 31.19 new text begin participate, and are encouraged to participate, in a community-based energy project, as new text end 31.20 new text begin owner, equity partner, or provider of technical or financial assistance, subject to the limits new text end 31.21 new text begin specified in this section. new text end 31.22     new text begin Subd. 9. new text end new text begin C-BED advisory determination. new text end new text begin A developer of a proposed project may new text end 31.23 new text begin request the commissioner of commerce to issue an advisory determination as to whether new text end 31.24 new text begin the proposed project qualifies as a C-BED project under this section. The request must new text end 31.25 new text begin be made on a form and under a procedure approved by the commissioner. A positive new text end 31.26 new text begin advisory determination of the commissioner under this subdivision establishes a rebuttable new text end 31.27 new text begin presumption that the project qualifies as a C-BED project. new text end 31.28    Sec. 3. Minnesota Statutes 2006, section 216B.1645, is amended by adding a 31.29subdivision to read: 31.30     new text begin Subd. 2a. new text end new text begin Utility ownership of renewable resources. new text end new text begin (a) A utility may construct, new text end 31.31 new text begin own, and operate generation facilities used to satisfy the requirements of section new text end 31.32 new text begin 216B.1691, notwithstanding any competitive resource acquisition process established new text end 31.33 new text begin under section 216B.2422, subdivision 5. new text end 31.34     new text begin (b) In lieu of any competitive resource acquisition process, a utility that owns a new text end 31.35 new text begin nuclear generation facility and intends to construct, own, or operate facilities under this new text end 32.1 new text begin section shall file with the commission on or before March 1, 2008, a renewable energy new text end 32.2 new text begin plan setting forth the manner in which the utility proposes to meet the requirements of new text end 32.3 new text begin section 216B.1691, including a proposed schedule for purchasing renewable energy from new text end 32.4 new text begin C-BED and non-C-BED projects, a proposed schedule of acquisition and construction new text end 32.5 new text begin of generation facilities and their expected in-service dates, and proposed transmission new text end 32.6 new text begin resources associated with the facilities, including a proposed construction schedule and new text end 32.7 new text begin expected in-service date for any transmission sources that need to be constructed to new text end 32.8 new text begin deliver the electricity generated by the facilities. The plan must also contain alternative new text end 32.9 new text begin means of providing the energy generated by the facilities described in the plan, and new text end 32.10 new text begin must compare the costs of delivering energy from these alternative means and from the new text end 32.11 new text begin facilities identified in the plan. The utility shall update the plan as necessary in its filing new text end 32.12 new text begin under section 216B.2422. new text end 32.13     new text begin (c) The commission shall approve the plan unless it determines, after public hearing new text end 32.14 new text begin and comment, that the plan: new text end 32.15     new text begin (1) imposes excessive costs on ratepayers; new text end 32.16     new text begin (2) does not reasonably allocate resources among utility-owned generation facilities, new text end 32.17 new text begin energy purchased from C-BED and non-C-BED projects, and generation facilities selected new text end 32.18 new text begin in a competitive selection process under section 216B.2422, subdivision 5; or new text end 32.19     new text begin (3) does not maximize benefits to Minnesota citizens, as required by section new text end 32.20 new text begin 216B.1691, subdivision 9. new text end 32.21 new text begin Nothing in this section prohibits a utility from seeking and securing approval from the new text end 32.22 new text begin commission to implement projects prior to submission of the plan required under this new text end 32.23 new text begin section. new text end 32.24    Sec. 4. Minnesota Statutes 2006, section 216B.1645, is amended by adding a 32.25subdivision to read: 32.26     new text begin Subd. 2b. new text end new text begin Cost recovery for owned renewable facilities. new text end new text begin (a) A utility may petition new text end 32.27 new text begin the commission to approve a rate schedule that provides for the automatic adjustment of new text end 32.28 new text begin charges to recover prudently incurred investments, expenses, or costs associated with new text end 32.29 new text begin facilities constructed, owned, or operated by a utility to satisfy the requirements of section new text end 32.30 new text begin 216B.1691, provided those facilities were previously approved by the commission under new text end 32.31 new text begin section 216B.2422 or 216B.243. The commission may approve, or approve as modified, a new text end 32.32 new text begin rate schedule that: new text end 32.33     new text begin (1) allows a utility to recover directly from customers on a timely basis the costs of new text end 32.34 new text begin qualifying renewable energy projects, including: new text end 32.35     new text begin (i) return on investment; new text end 33.1     new text begin (ii) depreciation; new text end 33.2     new text begin (iii) ongoing operation and maintenance costs; new text end 33.3     new text begin (iv) taxes; and new text end 33.4     new text begin (v) costs of transmission and other ancillary expenses directly allocable to new text end 33.5 new text begin transmitting electricity generated from a project meeting the specifications of this new text end 33.6 new text begin paragraph; new text end 33.7     new text begin (2) provides a current return on construction work in progress, provided that recovery new text end 33.8 new text begin of these costs from Minnesota ratepayers is not sought through any other mechanism; new text end 33.9     new text begin (3) allows recovery of other expenses incurred that are directly related to a renewable new text end 33.10 new text begin energy project, provided that the utility demonstrates to the commission's satisfaction that new text end 33.11 new text begin the expenses improve project economics, ensure project implementation, or facilitate new text end 33.12 new text begin coordination with the development of transmission necessary to transport energy produced new text end 33.13 new text begin by the project to market; new text end 33.14     new text begin (4) allocates recoverable costs appropriately between wholesale and retail customers; new text end 33.15     new text begin (5) terminates recovery when costs have been fully recovered or have otherwise new text end 33.16 new text begin been reflected in a utility's rates. new text end 33.17     new text begin (b) A petition filed under this subdivision must include: new text end 33.18     new text begin (1) a description of the facilities for which costs are to be recovered; new text end 33.19     new text begin (2) an implementation schedule for the facilities; new text end 33.20     new text begin (3) the utility's costs for the facilities; new text end 33.21     new text begin (4) a description of the utility's efforts to ensure that costs of the facilities are new text end 33.22 new text begin reasonable and were prudently incurred; and new text end 33.23     new text begin (5) a description of the benefits of the project in promoting the development of new text end 33.24 new text begin renewable energy in a manner consistent with this chapter. new text end 33.25    Sec. 5. new text begin [216B.1681] CURTAILMENT PAYMENTS. new text end 33.26     new text begin The commission shall, by September 1, 2007, initiate a review of curtailment new text end 33.27 new text begin payments for wind energy projects to assess whether utilities are unduly discriminating new text end 33.28 new text begin among project ownership structures in regard to the contractual availability of curtailment new text end 33.29 new text begin payments. new text end 33.30    Sec. 6. Minnesota Statutes 2006, section 216B.169, is amended to read: 33.31216B.169 RENEWABLE AND HIGH-EFFICIENCY ENERGY RATE 33.32OPTIONS new text begin COMMUNITY-BASED ENERGY DEVELOPMENT GREEN PRICING new text end 33.33 new text begin OPTION new text end . 34.1    Subdivision 1. Definitions. For the purposes of this section, the following terms 34.2have the meanings given them. 34.3    (a) "Utility" means a public utility, municipal utility, or cooperative electric 34.4association providing electric service at retail to Minnesota consumers. 34.5    (b) "Renewable energy" has the meaning given in section 216B.2422, subdivision 1, 34.6paragraph (c) new text begin "Eligible energy technology" has the meaning given in section 216B.1691, new text end 34.7 new text begin subdivision 1 new text end . 34.8    (c) "High-efficiency, low-emissions, distributed generation" means a distributed 34.9generation facility of no more than ten megawatts of interconnected capacity that is 34.10certified by the commissioner under subdivision 3 as a high-efficiency, low-emissions 34.11facility new text begin "Community-based energy development project" or "C-BED project" has the new text end 34.12 new text begin meaning given in section 216B.1612, subdivision 2, paragraph (g) new text end . 34.13    Subd. 2. Renewable and high-efficiency energy rate options new text begin C-BED green new text end 34.14 new text begin pricing programs new text end . (a) Each utility shall offer its customers, and shall advertise 34.15the offer at least annually new text begin quarterly new text end , one or more options that allow a customer to 34.16determine that a certain amount of the electricity generated or purchased on behalf of the 34.17customer is renewable energy or energy generated by high-efficiency, low-emissions, 34.18distributed generation such as fuel cells and microturbines fueled by a renewable fuel new text begin a new text end 34.19 new text begin community-based energy development project or is provided through the purchase of new text end 34.20 new text begin renewable energy credits from a C-BED project new text end . 34.21    (b) Each public utility shall file an implementation plan within 90 days of July 1, 34.222001 new text begin 2007 new text end , to implement paragraph (a). 34.23    (c) Rates charged to customers must be calculated using the utility's cost of acquiring 34.24the energy for the customer and must: 34.25    (1) reflect the difference between the cost of generating or purchasing the renewable new text begin new text end 34.26 new text begin C-BED new text end energy new text begin or credits new text end and the cost of generating or purchasing the same amount of 34.27nonrenewable energy new text begin or credits from non-C-BED sources new text end ; and 34.28    (2) be distributed on a per kilowatt-hour basis among all customers who choose to 34.29participate in the program. 34.30    (d) Implementation of these rate options may reflect a reasonable amount of lead 34.31time necessary to arrange acquisition of the energy. The utility may new text begin must new text end acquire the 34.32energy demanded by customers, in whole or in part, through procuring or generating 34.33the renewable new text begin C-BED new text end energy directly, or through the purchase of credits from a provider 34.34that has received certification of eligible power supply pursuant to subdivision 3 new text begin issued new text end 34.35 new text begin under the program established by the commission under section 216B.1691, subdivision new text end 34.36 new text begin 4, if available new text end . If a utility is not able to arrange an adequate supply of renewable or 35.1high-efficiency new text begin C-BED new text end energy new text begin or credits new text end to meet its customers' demand under this section, 35.2the utility must file a report with the commission detailing its efforts and reasons for 35.3its failure. 35.4    Subd. 3. Certification and tradeable credits. (a) The commissioner shall certify a 35.5power supply or supplies as eligible to satisfy customer requirements under this section 35.6upon finding: 35.7    (1) the power supply is renewable energy or energy generated by high-efficiency, 35.8low-emissions, distributed generation new text begin meets the requirements of section 216B.1612 new text end ; and 35.9    (2) the sales arrangements of energy from the supplies are such that the power 35.10supply is only sold once to retail consumers. 35.11    (b) To facilitate compliance with this section, the commission may, by order, 35.12establish a program for tradeable credits for eligible power supplies. 35.13     new text begin Subd. 4. new text end new text begin C-BED logo. new text end new text begin (a) The commissioner of commerce shall design or new text end 35.14 new text begin contract for the design of a logo that qualifying entities may affix to their products and new text end 35.15 new text begin to advertising for their products that contains the words "100% Minnesota Renewable new text end 35.16 new text begin Energy." The logo may also contain a standardized pictorial representation or design. new text end 35.17     new text begin (b) The commissioner of commerce shall certify in writing that an entity is new text end 35.18 new text begin authorized to use the logo if the commissioner determines that all the electricity consumed new text end 35.19 new text begin by an applicant is purchased directly, or by purchasing credits from a C-BED project. new text end 35.20 new text begin The commissioner of commerce shall develop forms and procedures to govern the new text end 35.21 new text begin application and certification processes and the use of the logo by an entity that receives new text end 35.22 new text begin certification. No person may use the logo without certification from the commissioner. new text end 35.23 new text begin For the purposes of this subdivision, "qualifying entity" means a person or entity that has new text end 35.24 new text begin received certification from the commissioner of commerce granting the entity authority to new text end 35.25 new text begin use the C-BED logo in the manner prescribed by the commissioner. new text end 35.26    Sec. 7. Minnesota Statutes 2006, section 216C.052, is amended to read: 35.27216C.052 RELIABILITY ADMINISTRATOR. 35.28    Subdivision 1. Responsibilities. (a) There is established the position of reliability 35.29administrator in the Public Utilities Commission new text begin Department of Commerce new text end . The 35.30administrator shall act as a source of independent expertise and a technical advisor to 35.31 new text begin the commissioner, new text end the commission and the public on issues related to the reliability of 35.32the electric system. In conducting its work, the administrator shall provide assistance 35.33to the commission new text begin commissioner new text end in administering and implementing the commission's new text begin new text end 35.34 new text begin department's new text end duties under sections new text begin 216B.1612, 216B.1691, new text end 216B.2422, 216B.2425, and 36.1216B.243 ; chapters 216E, 216F, and 216G; and rules associated with those provisions. 36.2Subject to resource constraints, the reliability administrator may also new text begin and shall also new text end : 36.3    (1) model and monitor the use and operation of the energy infrastructure in the 36.4state, including generation facilities, transmission lines, natural gas pipelines, and other 36.5energy infrastructure; 36.6    (2) develop and present to the commission and parties technical analyses of proposed 36.7infrastructure projects, and provide technical advice to the commission; 36.8    (3) present independent, factual, expert, and technical information on infrastructure 36.9proposals and reliability issues at public meetings hosted by the task force, the 36.10Environmental Quality Board, the department, or the commission. 36.11    (b) Upon request and subject to resource constraints, the administrator shall 36.12provide technical assistance regarding matters unrelated to applications for infrastructure 36.13improvements to the task force, the department, or the commission. 36.14    (c) The administrator may not advocate for any particular outcome in a commission 36.15proceeding, but may give technical advice to the commission as to the impact on the 36.16reliability of the energy system of a particular project or projects. 36.17    Subd. 2. Administrative issues. (a) The commission new text begin commissioner new text end may select the 36.18administrator who shall serve for a four-year term. The administrator new text begin must demonstrate new text end 36.19 new text begin technical training, expertise, or experience in energy reliability issues, and new text end may not have 36.20been a party or a participant in a commission energy proceeding for at least one year 36.21prior to selection by the commission new text begin commissioner new text end . The commission new text begin commissioner new text end 36.22shall oversee and direct the work of the administrator, annually review the expenses of 36.23the administrator, and annually approve the budget of the administrator. Pursuant to 36.24commission approval, The administrator may hire staff and may contract for technical 36.25expertise in performing duties when existing state resources are required for other state 36.26responsibilities or when special expertise is required. The salary of the administrator is 36.27governed by section 15A.0815, subdivision 2. 36.28    (b) Costs relating to a specific proceeding, analysis, or project are not general 36.29administrative costs. For purposes of this section, "energy utility" means public utilities, 36.30generation and transmission cooperative electric associations, and municipal power 36.31agencies providing natural gas or electric service in the state. 36.32    (c) The commission new text begin Department of Commerce new text end shall pay: 36.33    (1) the general administrative costs of the administrator, not to exceed $1,000,000 in 36.34a fiscal year, and shall assess energy utilities for those administrative costs. These costs 36.35must be consistent with the budget approved by the commission new text begin commissioner new text end under 36.36paragraph (a). The commission new text begin department new text end shall apportion the costs among all energy 37.1utilities in proportion to their respective gross operating revenues from sales of gas or 37.2electric service within the state during the last calendar year, and shall then render a 37.3bill to each utility on a regular basis; and 37.4    (2) costs relating to a specific proceeding analysis or project and shall render a bill to 37.5the specific energy utility or utilities participating in the proceeding, analysis, or project 37.6directly, either at the conclusion of a particular proceeding, analysis, or project, or from 37.7time to time during the course of the proceeding, analysis, or project. 37.8    (d) For purposes of administrative efficiency, the commission new text begin department new text end shall 37.9assess energy utilities and issue bills in accordance with the billing and assessment 37.10procedures provided in section 216B.62, to the extent that these procedures do not 37.11conflict with this subdivision. The amount of the bills rendered by the commission new text begin new text end 37.12 new text begin department new text end under paragraph (c) must be paid by the energy utility into an account in the 37.13special revenue fund in the state treasury within 30 days from the date of billing and is 37.14appropriated to the commission new text begin department new text end for the purposes provided in this section. 37.15The commission shall approve or approve as modified a rate schedule providing for the 37.16automatic adjustment of charges to recover amounts paid by utilities under this section. 37.17All amounts assessed under this section are in addition to amounts appropriated to the 37.18commission new text begin and the department new text end by other law. 37.19    Subd. 3. Assessment and appropriation. In addition to the amount noted in 37.20subdivision 2, the commission new text begin commissioner new text end may assess utilities, using the mechanism 37.21specified in that subdivision, up to an additional $500,000 annually through June 30, 37.222008. The amounts assessed under this subdivision are appropriated to the commission new text begin new text end 37.23 new text begin commissioner new text end , and some or all of the amounts assessed may be transferred to the 37.24commissioner of administration, for the purposes specified in section 16B.325 and Laws 37.252001, chapter 212, article 1, section 3, as needed to implement those sections. 37.26    Subd. 4. Expiration. Subdivisions 1 and 2 expire June 30, 2007 new text begin 2012 new text end . Subdivision 37.273 expires June 30, 2008. 37.28    Sec. 8. new text begin [216F.011] SIZE DETERMINATION. new text end 37.29     new text begin (a) The total size of a combination of wind energy conversion systems for the new text end 37.30 new text begin purpose of determining jurisdictional siting authority under sections 216F.01 to 216F.07 new text end 37.31 new text begin must be determined according to this section. The nameplate capacity of one wind energy new text end 37.32 new text begin conversion system must be combined with the nameplate capacity of any other wind new text end 37.33 new text begin energy conversion system that: new text end 37.34     new text begin (1) is located within five miles of the wind energy conversion system; new text end 38.1     new text begin (2) is constructed within the same 12-month period as the wind energy conversion new text end 38.2 new text begin system; and new text end 38.3     new text begin (3) exhibits characteristics of being a single development, including but not limited new text end 38.4 new text begin to ownership structure, an umbrella sales arrangement, shared interconnection, revenue new text end 38.5 new text begin sharing arrangements, and common debt or equity financing. new text end 38.6     new text begin (b) The commissioner shall prepare and make available the necessary forms and new text end 38.7 new text begin guidance for project developers to make a request for determination. Upon written new text end 38.8 new text begin request of a project developer, the commissioner of commerce shall provide a written new text end 38.9 new text begin determination under this section within 30 days of receipt of the request and information new text end 38.10 new text begin necessary to make a determination. In the case of a dispute, the chair of the Public Utilities new text end 38.11 new text begin Commission shall determine the total size of the system and shall draw all reasonable new text end 38.12 new text begin inferences in favor of combining the systems. new text end 38.13     new text begin (c) An application to a county for a permit for a wind energy conversion system is new text end 38.14 new text begin not complete without a jurisdictional determination made under this section. new text end 38.15    Sec. 9. new text begin [216F.08] PERMIT AUTHORITY; ASSUMPTION BY COUNTIES. new text end 38.16     new text begin Subdivision 1. new text end new text begin Definition. new text end new text begin For the purposes of this subdivision, the term new text end 38.17 new text begin "processing" means: new text end 38.18     new text begin (1) the distribution to applicants of application and determination forms provided new text end 38.19 new text begin by the commission; new text end 38.20     new text begin (2) the receipt and examination of completed application forms, and the certification, new text end 38.21 new text begin in writing, to the commission either that the LWECS for which a permit was issued by the new text end 38.22 new text begin county will comply with applicable rules and standards or, if the facility will not comply, new text end 38.23 new text begin the respects in which a variance is required for the issuance of a permit; and new text end 38.24     new text begin (3) rendering to applicants, upon request, assistance for the proper completion of new text end 38.25 new text begin an application. new text end 38.26     new text begin Subd. 2. new text end new text begin Counties; processing applications for LWECS site permits. new text end new text begin (a) Any new text end 38.27 new text begin Minnesota county board may, by resolution and upon written notice to the Public Utilities new text end 38.28 new text begin Commission, assume responsibility for processing applications for permits required new text end 38.29 new text begin under this chapter for LWECS with a combined nameplate capacity of less than 25,000 new text end 38.30 new text begin kilowatts. The responsibility for permit application processing, if assumed by a county, new text end 38.31 new text begin may be delegated by the county board to an appropriate county officer or employee. new text end 38.32 new text begin Processing by a county must be done in accordance with procedures and processes new text end 38.33 new text begin established under chapter 394. new text end 38.34     new text begin (b) A county board that exercises its option under paragraph (a) and assumes new text end 38.35 new text begin responsibility for processing applications for permits for LWECS within its borders new text end 39.1 new text begin is responsible for issuing, denying, modifying, imposing conditions upon, or revoking new text end 39.2 new text begin permits under this section or rules adopted pursuant to it. The action of the county board new text end 39.3 new text begin with regard to a permit application is final, subject to appeal as provided in section 394.27. new text end 39.4     new text begin (c) In adopting and enforcing rules or standards under this subdivision, the new text end 39.5 new text begin commission shall cooperate closely with counties and other governmental agencies. new text end 39.6     new text begin (d) The commission shall work with counties and wind developers to notify and new text end 39.7 new text begin educate stakeholders with regard to rules or standards under this section at the time the new text end 39.8 new text begin rules or standards are being developed and adopted and at least every two years thereafter. new text end 39.9     new text begin (e) The commission shall, by order, establish general permit standards governing site new text end 39.10 new text begin permits for LWECS under this section. These general permit standards must apply both to new text end 39.11 new text begin permits issued by counties and to permits issued by the commission directly for LWECS new text end 39.12 new text begin with a combined nameplate capacity of less than 25,000 kilowatts. The order must contain new text end 39.13 new text begin minimum standards necessary to ensure the protection of human health and safety and new text end 39.14 new text begin wind resources on adjacent land and must be consistent with the general provisions of wind new text end 39.15 new text begin permits issued by the commission in the five years prior to enactment of this provision. new text end 39.16     new text begin (f) The commission and the commissioner of commerce shall provide technical new text end 39.17 new text begin assistance to a county with respect to the processing of LWECS site permit applications new text end 39.18 new text begin by the county. new text end 39.19     new text begin (g) A county may adopt by ordinance standards for LWECS that are more stringent new text end 39.20 new text begin than standards in commission rules or in the commission's permit standards. The new text end 39.21 new text begin commission, in considering a permit for LWECS in a county that has adopted more new text end 39.22 new text begin stringent standards, shall incorporate and apply those more stringent standards, unless the new text end 39.23 new text begin commission finds there is good cause not to do so. new text end 39.24    Sec. 10. Minnesota Statutes 2006, section 500.30, subdivision 2, is amended to read: 39.25    Subd. 2. Like any conveyance. Any property owner may grant a solar or wind 39.26easement in the same manner and with the same effect as a conveyance of an interest in 39.27real property. The easements shall be created in writing and shall be filed, duly recorded, 39.28and indexed in the office of the recorder of the county in which the easement is granted. 39.29No duly recorded easement shall be unenforceable on account of lack of privity of estate or 39.30privity of contract; such easements shall run with the land or lands benefited and burdened 39.31and shall constitute a perpetual easement, except that an easement may terminate upon the 39.32conditions stated therein or pursuant to the provisions of section 500.20. new text begin A wind easement new text end 39.33 new text begin or lease of wind rights shall also terminate after five years from the date the easement is new text end 39.34 new text begin created or lease is entered into, if a wind energy project on the property to which the new text end 39.35 new text begin easement or lease applies does not begin commercial operation within the five-year period. new text end 40.1 new text begin EFFECTIVE DATE. new text end new text begin This section is effective the day following final enactment, new text end 40.2 new text begin and applies to wind easements created and wind rights leases entered into on and after new text end 40.3 new text begin the effective date of this section. new text end 40.4    Sec. 11. new text begin STATEWIDE STUDY OF DISPERSED GENERATION POTENTIAL. new text end 40.5     new text begin Subdivision 1. new text end new text begin Definition. new text end new text begin "Dispersed generation" means an electric generation new text end 40.6 new text begin project with a generating capacity between ten and 40 megawatts that utilizes an eligible new text end 40.7 new text begin energy technology, as defined in Minnesota Statutes, section 216B.1691, subdivision 1, new text end 40.8 new text begin paragraph (a). new text end 40.9     new text begin Subd. 2. new text end new text begin Study participants. new text end new text begin Each electric utility subject to Minnesota Statutes, new text end 40.10 new text begin section 216B.1691, must participate collaboratively in conducting a two-phase study of new text end 40.11 new text begin the potential for dispersed generation projects that can be developed in Minnesota. new text end 40.12     new text begin Subd. 3. new text end new text begin First phase study content; report. new text end new text begin In the first phase of the study, new text end 40.13 new text begin participants must analyze the impacts of the addition of a total of 600 megawatts of new text end 40.14 new text begin new dispersed generation projects distributed among the following Minnesota electric new text end 40.15 new text begin transmission planning zones: the Northeast zone, the Northwest zone, the Southeast new text end 40.16 new text begin zone, the Southwest zone, and the West-Central zone. Study participants must use a new text end 40.17 new text begin generally accepted 2010 year transmission system model including all transmission new text end 40.18 new text begin facilities expected to be operating in 2010. The study must take into consideration new text end 40.19 new text begin regional projected load growth, planned changes in the bulk transmission network, and the new text end 40.20 new text begin long-range transmission conceptual plan being developed under Laws 2007, chapter 3, new text end 40.21 new text begin section 2. In determining locations for the installation of dispersed generation projects new text end 40.22 new text begin that consist of wind energy conversion systems, the study should consider, at a minimum, new text end 40.23 new text begin wind resource availability, existing and contracted wind projects, and current dispersed new text end 40.24 new text begin generation projects in the Midwest Independent System Operator interconnection queue. new text end 40.25 new text begin The study must analyze the impacts of individual projects and all projects in aggregate on new text end 40.26 new text begin the transmission system, and identify specific modifications to the transmission system new text end 40.27 new text begin necessary to remedy any problems caused by the installation of dispersed generation new text end 40.28 new text begin projects, including cost estimates for the modifications. The study must analyze the new text end 40.29 new text begin additional dispersed generation projects connected at the lowest voltage level transmission new text end 40.30 new text begin that exists in the vicinity of the projected generation sites. A preliminary analysis to new text end 40.31 new text begin identify transmission system problems must be conducted with the projects installed new text end 40.32 new text begin at initially selected locations. The technical review committee may, after reviewing new text end 40.33 new text begin the locations selected for installation, recommend moving the installation sites to new new text end 40.34 new text begin locations to reduce undesirable transmission system impacts. The commissioner of new text end 41.1 new text begin commerce must submit a report containing the findings and recommendations of the first new text end 41.2 new text begin phase of the study to the commission no later than June 15, 2008. new text end 41.3     new text begin Subd. 4. new text end new text begin Second phase study content; report. new text end new text begin In the second phase of the study, new text end 41.4 new text begin participants must analyze the impacts of an additional total of 600 megawatts of dispersed new text end 41.5 new text begin generation projects installed among the five transmission planning zones, or a higher total new text end 41.6 new text begin capacity amount if agreed to by both the utilities and the technical review committee. The new text end 41.7 new text begin utilities must employ an analysis method similar to that used in the first phase of the study, new text end 41.8 new text begin and must use the most recent information available, including information developed in new text end 41.9 new text begin the first phase. The second phase of the study must use a generally accepted 2013 year new text end 41.10 new text begin transmission system model including all transmission facilities that are expected to be new text end 41.11 new text begin in service at that time. The commissioner of commerce must submit a report containing new text end 41.12 new text begin the findings and recommendations of the second phase of the study to the commission no new text end 41.13 new text begin later than September 15, 2009. new text end 41.14     new text begin Subd. 5. new text end new text begin Technical review committee. new text end new text begin Prior to the start of the first phase of new text end 41.15 new text begin the study, the commissioner of commerce shall appoint a technical review committee new text end 41.16 new text begin consisting of between ten and 15 individuals with experience and expertise in electric new text end 41.17 new text begin transmission system engineering, renewable energy generation technology, and dispersed new text end 41.18 new text begin generation project development, including representatives from the federal Department new text end 41.19 new text begin of Energy, the Midwest Independent System Operator, and stakeholder interests. The new text end 41.20 new text begin technical review committee must oversee both phases of the study, and must: new text end 41.21     new text begin (1) make recommendations to the utilities regarding the proposed methods and new text end 41.22 new text begin assumptions to be used in the technical study; new text end 41.23     new text begin (2) in conjunction with the appropriate utilities, hold public meetings on each phase new text end 41.24 new text begin of the study in each electricity transmission planning zone prior to the beginning of each new text end 41.25 new text begin phase of study, after the impact analysis is completed, and when a draft final report is new text end 41.26 new text begin available; and new text end 41.27     new text begin (3) review the initial and final drafts of the study and make recommendations for new text end 41.28 new text begin improvement, including with respect to problems associated with the interconnections new text end 41.29 new text begin among utility systems that may be amenable to solution through cooperation between the new text end 41.30 new text begin utilities in each zone. During each phase of the study, the technical review committee new text end 41.31 new text begin may recommend that the installation of dispersed generation projects be moved to new new text end 41.32 new text begin locations that cause fewer undesirable transmission system impacts. new text end 41.33    Sec. 12. new text begin TRANSFERRING RELIABILITY ADMINISTRATOR new text end 41.34 new text begin RESPONSIBILITIES. new text end 42.1     new text begin All responsibilities, as defined in Minnesota Statutes, section 15.039, subdivision new text end 42.2 new text begin 1, held by the Public Utilities Commission relating to the reliability administrator under new text end 42.3 new text begin Minnesota Statutes, section 216C.052, are transferred to the Minnesota Department of new text end 42.4 new text begin Commerce under Minnesota Statutes, section 15.039. new text end 42.5    Sec. 13. new text begin TRANSMISSION AUTHORITY AND INTERCONNECTION new text end 42.6 new text begin EVALUATIONS. new text end 42.7     new text begin The reliability administrator shall, in consultation with interested stakeholders: new text end 42.8     new text begin (1) review the structures, powers, and duties for constructing, owning, maintaining, new text end 42.9 new text begin and operating transmission facilities of state transmission authorities established in new text end 42.10 new text begin Kansas, North Dakota, South Dakota, and Wyoming, and evaluate whether the existence new text end 42.11 new text begin of a similar organization in Minnesota would have the potential to increase the reliability new text end 42.12 new text begin and efficiency of the electrical grid in the state; hasten the development of needed new text end 42.13 new text begin transmission lines; accelerate the development of renewable energy projects, especially in new text end 42.14 new text begin rural areas of the state; and reduce delivered energy costs to Minnesota ratepayers; and new text end 42.15     new text begin (2) assess the potential for and barriers to interconnecting dispersed generation new text end 42.16 new text begin projects to locations on the electric grid where a generator interconnection would not be new text end 42.17 new text begin subject to the interconnection rules of the Federal Energy Regulatory Commission or the new text end 42.18 new text begin Midwest Independent System Operator. new text end 42.19 new text begin No technical or engineering analyses are necessary in order to complete these duties. The new text end 42.20 new text begin reliability administrator must report its findings and any recommendations to the chairs of new text end 42.21 new text begin the senate and house of representatives committees with jurisdiction over energy policy by new text end 42.22 new text begin February 15, 2008. new text end 42.23    Sec. 14. new text begin REPEALER. new text end 42.24 new text begin Laws 2007, chapter 3, section 3, new text end new text begin is repealed. new text end 42.25ARTICLE 5 42.26GLOBAL WARMING MITIGATION 42.27    Section 1. new text begin [216H.001] FINDINGS; CITATION. new text end 42.28     new text begin (a) The legislature finds that the state has a vital interest in preventing or mitigating new text end 42.29 new text begin harms associated with global warming and in reducing Minnesota's greenhouse gas new text end 42.30 new text begin emissions. The legislature recognizes that substantial reductions in emissions of new text end 42.31 new text begin greenhouse gases are necessary to avoid dangerous climate changes in the future. The new text end 42.32 new text begin legislature finds that taking steps to reduce Minnesota's greenhouse gas emissions today new text end 42.33 new text begin and planning for long-term reductions will reduce the need for more disruptive emission new text end 43.1 new text begin reductions later, and that to achieve the purposes of this act, all emissions associated new text end 43.2 new text begin with electricity generated or consumed within the state must be subject to the state's new text end 43.3 new text begin emissions-reduction goals. The legislature further finds that Minnesota's economy will new text end 43.4 new text begin benefit by showing leadership in the transition away from climate-damaging technologies new text end 43.5 new text begin and toward renewable power, biofuels, and energy efficiency. The legislature recognizes new text end 43.6 new text begin that achieving these ends will only occur by close cooperation with other states and may new text end 43.7 new text begin require the state to enter into binding agreements with other units of government. new text end 43.8     new text begin (b) This chapter may be referred to as the Global Warming Mitigation Act of 2007. new text end 43.9    Sec. 2. new text begin [216H.01] DEFINITIONS. new text end 43.10     new text begin Subdivision 1. new text end new text begin Scope. new text end new text begin For the purposes of this chapter, the terms defined in this new text end 43.11 new text begin section have the meanings given them. new text end 43.12     new text begin Subd. 2. new text end new text begin Allowance. new text end new text begin "Allowance" means limited authorization from a state new text end 43.13 new text begin regulatory agency to emit up to one ton of carbon dioxide or carbon dioxide equivalent new text end 43.14 new text begin into the atmosphere. This limited authorization does not constitute a property right. new text end 43.15     new text begin Subd. 3. new text end new text begin Cap and trade system. new text end new text begin "Cap and trade system" means a regulatory system new text end 43.16 new text begin that imposes a limit on the aggregate air pollutant emissions of a group of sources, requires new text end 43.17 new text begin those subject to the cap to own an allowance for each ton of the air pollutant emitted, and new text end 43.18 new text begin allows for market-based trading of those allowances. new text end 43.19     new text begin Subd. 4. new text end new text begin Carbon dioxide equivalent. new text end new text begin "Carbon dioxide equivalent" means the new text end 43.20 new text begin quantity of a given greenhouse gas multiplied by its global warming potential. new text end 43.21     new text begin Subd. 5. new text end new text begin Global warming potential. new text end new text begin "Global warming potential" means a measure new text end 43.22 new text begin of the radiative efficiency or heat-absorbing ability of a particular gas relative to that of new text end 43.23 new text begin carbon dioxide after taking into account the decay rate of each gas, that is, the amount new text end 43.24 new text begin removed from the atmosphere over a given number of years, relative to that of carbon new text end 43.25 new text begin dioxide. new text end 43.26     new text begin Subd. 6. new text end new text begin Greenhouse gas emissions source. new text end new text begin "Greenhouse gas emissions source" new text end 43.27 new text begin means any anthropogenic physical unit or process that releases greenhouse gases into new text end 43.28 new text begin the atmosphere. new text end 43.29     new text begin Subd. 7. new text end new text begin Greenhouse gases. new text end new text begin "Greenhouse gases" include carbon dioxide, methane, new text end 43.30 new text begin nitrous oxide, hydrofluorocarbons, perfluorocarbons, and sulfur hexafluoride or any other new text end 43.31 new text begin chemical that is determined by the Pollution Control Agency to contribute comparably to new text end 43.32 new text begin global climate change and that is emitted by anthropogenic sources. new text end 43.33     new text begin Subd. 8. new text end new text begin New large energy facility. new text end new text begin "New large energy facility" means a large new text end 43.34 new text begin energy facility, as defined in section 216B.2421, subdivision 2, clauses (1) to (8), that is new text end 43.35 new text begin not in operation as of January 1, 2007, but does not include a facility that (1) uses natural new text end 44.1 new text begin gas as a primary fuel, (2) is designed to provide peaking, intermediate, emergency backup, new text end 44.2 new text begin or contingency services, (3) uses a simple cycle or combined cycle turbine technology, new text end 44.3 new text begin (4) is capable of achieving full load operations within 45 minutes of startup for a simple new text end 44.4 new text begin cycle facility, or is capable of achieving minimum load operations within 185 minutes new text end 44.5 new text begin of startup for a combined cycle facility, and (5) has received a certificate of need under new text end 44.6 new text begin section 216B.243. new text end 44.7     new text begin Subd. 9. new text end new text begin Person. new text end new text begin "Person" has the meaning given in section 216E.01. new text end 44.8     new text begin Subd. 10. new text end new text begin Statewide greenhouse gas emissions. new text end new text begin "Statewide greenhouse gas new text end 44.9 new text begin emissions" means the total annual emissions of greenhouse gases within the state and all new text end 44.10 new text begin emissions of greenhouse gases from the generation of electricity imported from outside the new text end 44.11 new text begin state and consumed in Minnesota. Emissions associated with transmission and distribution new text end 44.12 new text begin line losses are included in this definition. Statewide emissions are expressed in tons of new text end 44.13 new text begin carbon dioxide equivalent. Carbon dioxide that is injected into geological formations to new text end 44.14 new text begin prevent its release to the atmosphere in compliance with applicable laws, and emissions new text end 44.15 new text begin associated with the combustion of fuels other than coal, petroleum, and natural gas are not new text end 44.16 new text begin counted as contributing to statewide greenhouse gas emissions. new text end 44.17     new text begin Subd. 11. new text end new text begin Statewide power sector carbon dioxide emissions. new text end new text begin "Statewide power new text end 44.18 new text begin sector carbon dioxide emissions" means the total annual emissions of carbon dioxide from new text end 44.19 new text begin the generation of electricity within the state and all emissions of carbon dioxide from the new text end 44.20 new text begin generation of electricity imported from outside the state and consumed in Minnesota. new text end 44.21 new text begin Emissions associated with transmission and distribution line losses are included in this new text end 44.22 new text begin definition. Carbon dioxide that is injected into geological formations to prevent its release new text end 44.23 new text begin to the atmosphere in compliance with applicable laws, and emissions associated with new text end 44.24 new text begin the combustion of fuels other than coal, petroleum, and natural gas are not counted as new text end 44.25 new text begin contributing to statewide power sector carbon dioxide emissions. new text end 44.26    Sec. 3. new text begin [216H.02] GREENHOUSE GAS EMISSIONS-REDUCTION GOALS. new text end 44.27     new text begin It is the state's goal to reduce statewide greenhouse gas emissions to a level at least new text end 44.28 new text begin 15 percent below 2005 emission levels by 2015, to a level at least 30 percent below 2005 new text end 44.29 new text begin emission levels by 2025, and to a level at least 80 percent below 2005 emission levels new text end 44.30 new text begin by 2050. new text end 44.31    Sec. 4. new text begin [216H.04] GREENHOUSE GAS EMISSIONS-REDUCTION PLAN. new text end 44.32     new text begin Subdivision 1. new text end new text begin Plan for achieving reductions. new text end new text begin (a) By February 1, 2008, the new text end 44.33 new text begin commissioners of the Pollution Control Agency and the Department of Commerce shall new text end 44.34 new text begin submit a plan to the chairs of the senate and house of representatives committees with new text end 45.1 new text begin jurisdiction over energy and environmental policy that contains recommendations on how new text end 45.2 new text begin best to achieve the statewide greenhouse gas emissions-reduction goals established under new text end 45.3 new text begin section 216H.02. The plan must also identify how best to reduce statewide greenhouse gas new text end 45.4 new text begin emissions to a level at least 45 percent below 2005 levels by 2025. The plan must identify, new text end 45.5 new text begin develop, and integrate a full range of greenhouse gas emissions-reduction activities across new text end 45.6 new text begin all economic sectors, regions, and energy uses in the state, and estimate the costs and new text end 45.7 new text begin benefits of each action. The plan must: new text end 45.8     new text begin (1) estimate statewide greenhouse gas emissions for 2005 and make projections of new text end 45.9 new text begin statewide greenhouse gas emissions for 2015, 2025, and 2050; new text end 45.10     new text begin (2) estimate the statewide greenhouse gas emissions reductions anticipated from new text end 45.11 new text begin implementation of existing state policies; new text end 45.12     new text begin (3) include a cap and trade system as described in subdivision 3; new text end 45.13     new text begin (4) recommend additional policies to achieve statewide greenhouse gas new text end 45.14 new text begin emissions-reduction goals; new text end 45.15     new text begin (5) include provisions that will ensure that existing policies are evaluated, and that at new text end 45.16 new text begin least every five years any policy changes needed to achieve the statewide greenhouse gas new text end 45.17 new text begin emissions-reduction goals are developed and recommended for legislative action; new text end 45.18     new text begin (6) recommend a system to require the reporting of statewide greenhouse gas new text end 45.19 new text begin emissions, identifying which facilities must report, how emission estimates should be new text end 45.20 new text begin made, and other reporting requirements that will ensure the collection of emissions new text end 45.21 new text begin information needed to reliably document statewide greenhouse gas emission levels and new text end 45.22 new text begin implement the plan; and new text end 45.23     new text begin (7) evaluate the option of exempting a project from the prohibitions contained in new text end 45.24 new text begin section 216H.05, subdivision 1, if the project contributes a specified fee per ton of carbon new text end 45.25 new text begin dioxide emissions emitted annually by the project, the proceeds of which would be used to new text end 45.26 new text begin fund permanent, quantifiable, verifiable, and enforceable reductions in greenhouse gas new text end 45.27 new text begin emissions that would not otherwise have occurred. new text end 45.28     new text begin (b) In formulating the plan, the commissioners shall consider the broadest possible new text end 45.29 new text begin set of mechanisms to reduce emissions, including, but not limited to, expanding the new text end 45.30 new text begin electric sector cap and trade system established under subdivision 3 to include emissions new text end 45.31 new text begin sources other than electricity generation and greenhouse gases other than carbon dioxide; new text end 45.32 new text begin scheduling reductions of the emissions cap; imposing greenhouse gas taxes, fines, and new text end 45.33 new text begin other penalties; adopting emissions-reduction performance standards for sources of new text end 45.34 new text begin greenhouse gases; establishing financial or other incentives to promote activities that will new text end 45.35 new text begin reduce greenhouse gases; and enhancing existing policies that have the effect of lowering new text end 45.36 new text begin greenhouse gas emissions. new text end 46.1     new text begin Subd. 2. new text end new text begin Planning process. new text end new text begin The plan required under subdivision 1 must be new text end 46.2 new text begin developed through a structured, broadly inclusive stakeholder-based review of potential new text end 46.3 new text begin policies and initiatives that can be implemented in Minnesota to reduce greenhouse gas new text end 46.4 new text begin emissions. The stakeholder-based review process must be conducted by a nationally new text end 46.5 new text begin recognized independent expert entity. The commissioner of commerce shall coordinate new text end 46.6 new text begin executive branch participation with this stakeholder process. new text end 46.7     new text begin Subd. 3. new text end new text begin Cap and trade system. new text end new text begin (a) The plan must include a cap and trade system new text end 46.8 new text begin incorporating, at a minimum, statewide power sector carbon dioxide emissions. The new text end 46.9 new text begin cap and trade plan must: new text end 46.10     new text begin (1) set an emissions cap at an initial level to prevent significant increases in statewide new text end 46.11 new text begin greenhouse gas emissions above current levels, with a schedule for lowering the cap new text end 46.12 new text begin periodically to help meet the state's emissions-reduction targets; new text end 46.13     new text begin (2) maximize Minnesota's ability to enter into allowance trading relationships with new text end 46.14 new text begin other states that have established or are in the process of establishing a cap and trade new text end 46.15 new text begin system regulating greenhouse gas emissions; new text end 46.16     new text begin (3) evaluate the feasibility of implementing a cap and trade system that does not new text end 46.17 new text begin encompass the entire United States, and identify the impacts on the efficiency and new text end 46.18 new text begin effectiveness of the cap and trade system if restricted to Minnesota alone, if expanded new text end 46.19 new text begin to include surrounding midwestern states, and if Minnesota were to join other emerging new text end 46.20 new text begin regional systems with states that are planning to implement a cap and trade system; new text end 46.21     new text begin (4) evaluate whether and to what extent a party subject to the cap should receive new text end 46.22 new text begin credit for offsetting emissions by implementing projects that reduce greenhouse gas new text end 46.23 new text begin emissions from sources not subject to the cap or absorb and sequester greenhouse gases new text end 46.24 new text begin from the atmosphere; new text end 46.25     new text begin (5) include methods to ensure that all emissions reductions associated with projects new text end 46.26 new text begin listed in clause (4) are permanent, quantifiable, verifiable, enforceable, and would not new text end 46.27 new text begin have otherwise occurred; new text end 46.28     new text begin (6) be designed to ensure that the proceeds from auctioning allowances are used to new text end 46.29 new text begin benefit the public, including to help meet the state's emissions-reduction goals in the most new text end 46.30 new text begin efficient and least disruptive way; new text end 46.31     new text begin (7) estimate likely allowance prices under various scenarios, including the impact new text end 46.32 new text begin on allowance prices of constructing additional power plants subject to the cap and trade new text end 46.33 new text begin system; new text end 46.34     new text begin (8) recommend ways to minimize any rate impacts on energy consumers; new text end 47.1     new text begin (9) suggest procedures to award appropriate credit to entities that have voluntarily new text end 47.2 new text begin reduced their greenhouse gas emissions prior to implementation of the cap and trade new text end 47.3 new text begin system; new text end 47.4     new text begin (10) ensure to the extent practicable that emissions reductions made in this state do new text end 47.5 new text begin not cause emissions increases outside the state; new text end 47.6     new text begin (11) identify technologies and industries likely to thrive in a carbon-constrained new text end 47.7 new text begin future; new text end 47.8     new text begin (12) maximize economic development in rural areas from the development of new text end 47.9 new text begin renewable energy sources and proven terrestrial sequestration practices; and new text end 47.10     new text begin (13) suggest methods to calculate carbon dioxide emissions associated with new text end 47.11 new text begin electricity imported from outside the state. new text end 47.12     new text begin Subd. 4. new text end new text begin Regional activities. new text end new text begin It shall be an executive branch responsibility to work new text end 47.13 new text begin with other states in the midwest region to develop and implement a regional approach to new text end 47.14 new text begin reducing greenhouse gas emissions from activities in the region, including consulting new text end 47.15 new text begin on expanding the cap and trade system described in subdivision 3. The commissioner new text end 47.16 new text begin of commerce shall coordinate Minnesota's regional activities under this subdivision new text end 47.17 new text begin and report to the legislative committees in the senate and house of representatives with new text end 47.18 new text begin jurisdiction over energy and environmental policy by February 1, 2008, and February 1, new text end 47.19 new text begin 2009, on the progress made and recommendations for further action. new text end 47.20    Sec. 5. new text begin [216H.05] NO LONG-TERM INCREASE FROM POWER PLANTS. new text end 47.21     new text begin Subdivision 1. new text end new text begin Long-term increased emissions from power plants prohibited. new text end 47.22     new text begin Until the cap and trade system described in section 216H.04, subdivision 3, is fully new text end 47.23 new text begin implemented, and except as allowed in subdivision 2, no person shall: new text end 47.24     new text begin (1) construct within the state a new large energy facility that would contribute to new text end 47.25 new text begin statewide power sector carbon dioxide emissions; new text end 47.26     new text begin (2) import or commit to import from outside the state power from a new large energy new text end 47.27 new text begin facility that would contribute to statewide power sector carbon dioxide emissions; or new text end 47.28     new text begin (3) enter into a new long-term power purchase agreement that would increase new text end 47.29 new text begin statewide power sector carbon dioxide emissions. For purposes of this section, a long-term new text end 47.30 new text begin power purchase agreement means an agreement to purchase 50 megawatts of capacity or new text end 47.31 new text begin more for a term exceeding five years. This prohibition does not apply to an agreement in new text end 47.32 new text begin effect as of January 1, 2007, nor to the renewal of such an agreement. new text end 47.33     new text begin Subd. 2. new text end new text begin Exception for facilities that offset emissions. new text end new text begin (a) The prohibitions in new text end 47.34 new text begin subdivision 1 do not apply if the project proponent demonstrates to the Public Utilities new text end 47.35 new text begin Commission's satisfaction that it will offset the new contribution to statewide power sector new text end 48.1 new text begin carbon dioxide emissions with a carbon dioxide reduction project identified in paragraph new text end 48.2 new text begin (b) and in compliance with paragraph (c). new text end 48.3     new text begin (b) A project proponent may offset the new contribution to statewide power sector new text end 48.4 new text begin carbon dioxide emissions in either, or a combination of both, of the following ways: new text end 48.5     new text begin (1) by reducing an existing facility's contribution to statewide power sector carbon new text end 48.6 new text begin dioxide emissions in an amount equal to or greater than the proposed new contribution to new text end 48.7 new text begin statewide power sector carbon dioxide emissions; or new text end 48.8     new text begin (2) by purchasing carbon dioxide allowances from a state or group of states that new text end 48.9 new text begin has a mandatory carbon dioxide cap and trade system in place that produces verifiable new text end 48.10 new text begin emissions reductions. new text end 48.11     new text begin (c) The Public Utilities Commission shall not find that a proposed carbon dioxide new text end 48.12 new text begin reduction project identified in paragraph (b) acceptably offsets a new contribution new text end 48.13 new text begin to statewide power sector carbon dioxide emissions unless the proposed offsets are new text end 48.14 new text begin permanent, quantifiable, verifiable, enforceable, and would not have otherwise occurred. new text end 48.15 new text begin Emissions that have been offset under this subdivision and emissions exempted under new text end 48.16 new text begin subdivision 3 continue to be subject to the requirements of the cap and trade system new text end 48.17 new text begin described in section 216H.04, subdivision 3, when implemented. new text end 48.18     new text begin Subd. 3. new text end new text begin Exception for new steel production facility. new text end new text begin The prohibitions in new text end 48.19 new text begin subdivision 1 do not apply to increases in statewide power sector carbon dioxide new text end 48.20 new text begin emissions from a new steel production project located in a taconite relief area that has new text end 48.21 new text begin filed an application for an air quality permit from the Pollution Control Agency prior new text end 48.22 new text begin to January 1, 2007. new text end 48.23     new text begin Subd. 4. new text end new text begin Pending proceedings. new text end new text begin The prohibitions in subdivision 1 do not apply to a new text end 48.24 new text begin new large energy facility or a power purchase agreement under consideration by the Public new text end 48.25 new text begin Utilities Commission pursuant to proposals or applications filed with the Public Utilities new text end 48.26 new text begin Commission before April 1, 2007. The exclusion of pending proposals and applications new text end 48.27 new text begin from the prohibitions in subdivision 1 does not limit the applicability of any other law new text end 48.28 new text begin and is not an expression of legislative intent regarding whether any pending proposal or new text end 48.29 new text begin application should be approved or denied. new text end 48.30     new text begin Subd. 5. new text end new text begin Enforcement. new text end new text begin Whenever the commission or department determines that new text end 48.31 new text begin any person is violating or about to violate this section, it shall refer the matter to the new text end 48.32 new text begin attorney general who shall take appropriate legal action. This section may be enforced by new text end 48.33 new text begin the attorney general on the same basis as a law listed in section 8.31, subdivision 1. new text end 48.34    Sec. 6. new text begin [216H.06] GREENHOUSE GAS EMISSIONS CONSIDERATION IN new text end 48.35 new text begin RESOURCE PLANNING. new text end 49.1     new text begin By January 1, 2008, the Public Utilities Commission shall establish an estimate of new text end 49.2 new text begin the likely range of costs of future carbon dioxide regulation on electricity generation. new text end 49.3 new text begin The estimate, which may be made in a commission order, must be used in all electricity new text end 49.4 new text begin generation resource acquisition proceedings. The estimates, and annual updates, must be new text end 49.5 new text begin made following informal proceedings that allow interested parties to submit comments. new text end 49.6    Sec. 7. new text begin [216H.07] ENFORCEABILITY. new text end 49.7     new text begin In addition to any other remedies provided by law, the failure to carry out any new text end 49.8 new text begin requirement established by or pursuant to this chapter shall be treated as a violation of an new text end 49.9 new text begin environmental standard and is enforceable under chapter 116B. new text end 49.10ARTICLE 6 49.11RENEWABLE ENERGY STANDARDS 49.12    Section 1. Minnesota Statutes 2006, section 216B.1691, subdivision 5, as amended by 49.13Laws 2007, chapter 3, section 1, subdivision 5, is amended to read: 49.14    Subd. 5. Technology based on fuel combustion. (a) Electricity produced by fuel 49.15combustion new text begin through fuel blending or co-firing under paragraph (b) new text end may only count toward 49.16a utility's objectives or standards if the generation facility: 49.17    (1) was constructed in compliance with new source performance standards 49.18promulgated under the federal Clean Air Act for a generation facility of that type; or 49.19    (2) employs the maximum achievable or best available control technology available 49.20for a generation facility of that type. 49.21    (b) An eligible energy technology may blend or co-fire a fuel listed in subdivision 49.221, paragraph (a), clause (1) new text begin (5) new text end , with other fuels in the generation facility, but only the 49.23percentage of electricity that is attributable to a fuel listed in that clause can be counted 49.24toward an electric utility's renewable energy objectives. 49.25    Sec. 2. Minnesota Statutes 2006, section 216B.1691, subdivision 7, as added by Laws 49.262007, chapter 3, section 1, subdivision 7, is amended to read: 49.27    Subd. 7. Compliance. The commission must regularly investigate whether an 49.28electric utility is in compliance with its good-faith objective under subdivision 2 and 49.29standard obligation under subdivision 2a. If the commission finds noncompliance, it may 49.30order the electric utility to construct facilities, purchase energy generated by eligible 49.31energy technology, purchase renewable energy credits, or engage in other activities 49.32to achieve compliance. If an electric utility fails to comply with an order under this 49.33subdivision, the commission may impose a financial penalty on the electric utility in an 50.1amount not to exceed the estimated cost of the electric utility to achieve compliance. The 50.2penalty may not exceed the lesser of the cost of constructing facilities or purchasing 50.3credits. new text begin The commission must deposit financial penalties imposed under this subdivision new text end 50.4 new text begin in the energy and conservation account established in the special revenue fund under new text end 50.5 new text begin section 216B.241, subdivision 2a. new text end This subdivision is in addition to and does not limit any 50.6other authority of the commission to enforce this section.