1.1A bill for an act1.2relating 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 12.2GENERAL PROVISIONS2.3    Section 1. TITLE.2.4    This act may be cited as the Next Generation Energy Act of 2007.2.5    Sec. 2. Minnesota Statutes 2006, section 216C.05, is amended to read:2.6216C.05 FINDINGS AND PURPOSE.2.7    Subdivision 1.Energy planning. 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    Subd. 2.Energy policy goals.It is the energy policy of the state of Minnesota that:2.24    (1) the per capita use of fossil fuel as an energy input be reduced by 15 percent by 2.25the year 2015, through increased reliance on energy efficiency and renewable energy 2.26alternatives; and2.27    (2) 25 percent of the total energy used in the state be derived from renewable energy 2.28resources by the year 2025.2.29ARTICLE 22.30ENERGY EFFICIENCY AND CONSERVATION2.31    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 energy 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. A filing utility subject to 3.9rate regulation under section 216B.026 shall reference in its notice the energy conservation 3.10improvement plans of the generation and transmission cooperative providing energy 3.11conservation improvement programs to members of the filing utility pursuant to section 3.12216B.241. 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) (i), 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 (i) 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); or (ii) just and reasonable 3.28gas rates for large energy facilities. 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 216B.241.3.32    (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,. 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), and to reduce the 4.5gas rate applicable to a large energy facility 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 2007. 4.13    (d) Investments and expenses of a public utility shall not include electric utility 4.14infrastructure costs as defined in section 216B.1636, subdivision 1, paragraph (b).4.15    Sec. 3. [216B.1636] RECOVERY OF ELECTRIC UTILITY INFRASTRUCTURE 4.16COSTS.4.17    Subdivision 1.Definitions.(a) "Electric utility" means a public utility as defined in 4.18section 216B.02, subdivision 4, that furnishes electric service to retail customers.4.19    (b) "Electric utility infrastructure costs" or "EUIC" means costs for electric utility 4.20infrastructure projects that were not included in the electric utility's rate base in its most 4.21recent general rate case.4.22    (c) "Electric utility infrastructure projects" means projects owned by an electric 4.23utility that:4.24    (1) replace or modify existing electric utility infrastructure, including utility-owned 4.25buildings, if the replacement or modification is shown to conserve energy or use energy 4.26more efficiently, consistent with section 216B.241, subdivision 1c; or 4.27    (2) conserve energy or use energy more efficiently by using waste heat recovery 4.28converted into electricity as defined in section 216B.241, subdivision 1, paragraph (n).4.29    Subd. 2.Filing.(a) The commission may approve an electric utility's petition for 4.30a rate schedule to recover EUIC under this section. An electric utility may petition the 4.31commission to recover a rate of return, income taxes on the rate of return, incremental 4.32property taxes, if any, plus incremental depreciation expense associated with EUIC.4.33    (b) The filing is subject to the following:4.34    (1) an electric utility may submit a filing under this section no more than once 4.35per year; and5.1    (2) an electric utility must file sufficient information to satisfy the commission 5.2regarding the proposed EUIC or be subject to denial by the commission, which 5.3information includes, but is not limited to:5.4    (i) the location, description, and costs associated with the project;5.5    (ii) evidence that the electric utility infrastructure project will conserve energy or use 5.6energy more efficiently than similar utility facilities currently used by the electric utility;5.7    (iii) the proposed schedule for implementation;5.8    (iv) a description of the costs, and salvage value, if any, associated with the existing 5.9infrastructure replaced or modified as a result of the project;5.10    (v) the proposed rate design and an explanation of why the proposed rate design 5.11is in the public interest;5.12    (vi) the magnitude and timing of any known future electric utility projects that the 5.13utility may seek to recover under this section;5.14    (vii) the magnitude of EUIC in relation to the electric utility's base revenue as 5.15approved by the commission in the electric utility's most recent general rate case, 5.16exclusive of fuel cost adjustments; 5.17    (viii) the magnitude of EUIC in relation to the electric utility's capital expenditures 5.18since its most recent general rate case;5.19    (ix) the amount of time since the utility last filed a general rate case and the utility's 5.20reasons for seeking recovery outside of a general rate case; 5.21    (x) documentation supporting the calculation of the EUIC; and5.22    (xi) a cost and benefit analysis showing that the electric utility infrastructure project 5.23is in the public interest.5.24    (c) Upon approval of the proposed projects and associated EUIC rate schedule, the 5.25utility may implement the electric utility infrastructure projects.5.26    Subd. 3.Commission authority; orders.The commission may issue orders 5.27necessary to implement and administer this section.5.28    Sec. 4. [216B.2401] ENERGY CONSERVATION POLICY GOAL.5.29    It is the energy policy of the state of Minnesota to achieve annual energy savings 5.30equal to 1.5 percent of annual retail energy sales of electricity and natural gas directly 5.31through energy conservation improvement programs and rate design, and indirectly 5.32through energy codes and appliance standards, programs designed to transform the market 5.33or change consumer behavior, energy savings resulting from efficiency improvements to 5.34the utility infrastructure and system, and other efforts to promote energy efficiency and 5.35energy conservation.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 energy 6.14efficiency or energy conservation. Energy conservation improvement may include waste 6.15heat recovery converted into electricity but does not include electric utility infrastructure 6.16projects approved by the commission under section 216B.1636.6.17    (g) "Energy efficiency" refers to measures or programs, including energy 6.18conservation measures or programs, that target consumer behavior, equipment, processes, 6.19or devices designed to produce either an absolute decrease in consumption of electric 6.20energy or natural gas or a decrease in consumption of electric energy or natural gas on a 6.21per unit of production basis without a reduction in the quality or level of service provided 6.22to the energy consumer.6.23    (g) (h) "Gross annual retail energy sales" means annual electric sales to all retail 6.24customers in a utility's or association's Minnesota service territory or natural gas 6.25throughput to all retail customers, including natural gas transportation customers, on a 6.26utility's distribution system in Minnesota. For purposes of this section, gross annual 6.27retail energy sales exclude gas sales to a large energy facility and gas and electric sales 6.28to a large electric customer facility exempted by the commissioner under subdivision 6.291a, paragraph (b).6.30    (i)  "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) (j) "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) (k) "Large energy facility" has the meaning given it in section 216B.2421, 7.10subdivision 2, clause (1).7.11    (l) "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 peak demand for 7.14energy or capacity.7.15    (m) "Low-income programs" means energy conservation improvement programs 7.16that directly serve the needs of low-income persons, including low-income renters.7.17    (n) "Waste heat recovery converted into electricity" means an energy recovery 7.18process that converts otherwise lost energy from the heat of exhaust stacks or pipes used 7.19for engines or manufacturing or industrial processes, or the reduction of high pressure 7.20in water or gas pipelines.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; and7.30    (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 the 8.13customer is not continuing to make reasonable efforts to identify, evaluate, and implement8.14energy 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; or8.32    (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; and9.10    (3) a municipality with gross operating revenues in excess of $5,000,000 from 9.11sales of more than 1,000,000,000 cubic feet in annual throughput sales to 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; and9.20    (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 large energy facility or a 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,Each municipality or cooperative shall file 10.17energy  conservation improvement plans by June 1 on a schedule determined by order 10.18of the commissioner, but at least every three years. Plans received by June 1 must be 10.19approved or approved as modified by the commissioner by December 1 of the same year. 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) (h) 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 11.15expiresuntil July 1, 2007. From July 1, 2007, through June 30, 2011, expenditures made 11.16to refurbish a district heating or cooling system are considered to be load-management 11.17activities under paragraph (e). This paragraph expires July 1, 2011.11.18    (i) The commissioner shall consider and may require a utility, association, or 11.19other entity providing energy efficiency and conservation services under this section to 11.20undertake a program suggested by an outside source, including a political subdivision, 11.21nonprofit corporation, or community organization.11.22    Subd. 1c. Energy-saving goals.(a) 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    (b) Each individual utility and association shall have an annual energy-savings 11.26goal equivalent to 1.5 percent of gross annual retail energy sales unless modified by the 11.27commissioner under paragraph (d). The savings goals must be calculated based on the 11.28most recent three-year weather normalized average.11.29    (c) The commissioner must adopt a filing schedule that is designed to have all 11.30utilities and associations operating under an energy savings plan by calendar year 2010.11.31    (d) In its energy conservation improvement plan filing, a utility or association may 11.32request the commissioner to adjust its annual energy savings percentage goal based on 11.33its historical conservation investment experience, customer class makeup, load growth, 11.34a conservation potential study, or other factors the commissioner determines warrants 11.35an adjustment. The commissioner may not approve a plan that provides for an annual 11.36energy savings goal of less than one percent of gross annual retail energy sales from 12.1energy conservation improvements. A utility or association may include in its energy 12.2conservation plan energy savings from electric utility infrastructure projects approved 12.3by the commission under section 216B.1636 or waste heat recovery converted into 12.4electricity projects that may count as energy savings in addition to the minimum energy 12.5savings goal of at least one percent for energy conservation improvements. Electric utility 12.6infrastructure projects must result in increased energy conservation or energy efficiency 12.7greater than that which would have occurred through normal maintenance activity.12.8    (e) An energy savings goal is not satisfied by attaining the revenue expenditure 12.9requirements of subdivisions 1a and 1b, but can only be satisfied by meeting the energy 12.10savings goal established in this subdivision.12.11    (f) An association or utility is not required to make energy conservation investments 12.12to attain the energy savings goals of this subdivision that are not cost-effective even 12.13if the investment is necessary to attain the energy savings goals. For the purpose of 12.14this paragraph, in determining cost-effectiveness, the commissioner shall consider the 12.15costs and benefits to ratepayers, the utility, participants, and society. In addition, the 12.16commissioner shall consider the rate at which an association or municipal utility is 12.17increasing its energy savings and its expenditures on energy conservation.12.18    (g) On an annual basis, the commissioner shall produce and make publicly available 12.19a report on the annual energy savings and estimated carbon dioxide reductions achieved 12.20by the energy conservation improvement programs for the two most recent years for 12.21which data is available. The commissioner shall report on program performance both in 12.22the aggregate and for each entity filing an energy conservation improvement plan for 12.23approval or review by the commissioner.12.24    (h) By January 15, 2010, the commissioner shall report to the legislature whether the 12.25spending requirements under subdivisions 1a and 1b are necessary to achieve the energy 12.26savings goals established in this subdivision.12.27    Subd. 1d. Cooperative conservation investment increase phase-in Technical 12.28assistance.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; and12.35    (4) all of the increase shall be effective in year 2005 and thereafter.13.1    The commissioner shall evaluate energy conservation improvement programs 13.2on the basis of cost-effectiveness and the reliability of the technologies employed. 13.3The commissioner shall, by order, establish, maintain, and update energy savings 13.4assumptions that must be used when filing energy conservation improvement programs. 13.5The commissioner shall establish an inventory of the most effective energy conservation 13.6programs, techniques, and technologies, and encourage all Minnesota utilities to 13.7implement them, where appropriate, in their service territories. The commissioner shall 13.8describe these programs in sufficient detail to provide a utility reasonable guidance 13.9concerning implementation. The commissioner shall prioritize the opportunities in 13.10order of potential energy savings and in order of cost-effectiveness. The commissioner 13.11may contract with a third party to carry out any of the commissioner's duties under 13.12this subdivision, and to obtain technical assistance to evaluate the effectiveness of any 13.13conservation improvement program. The commissioner may assess up to $800,000 13.14annually until June 30, 2009, and $450,000 annually thereafter for the purposes of this 13.15subdivision. The assessments must be deposited in the state treasury and credited to the 13.16energy and conservation account created under subdivision 2a. An assessment made under 13.17this subdivision is not subject to the cap on assessments provided by section 216B.62, or 13.18any other law.13.19    Subd. 1e.Applied research and development grants.The commissioner may, by 13.20order, approve and make grants for applied research and development projects of general 13.21applicability that identify new technologies or strategies to maximize energy savings, 13.22improve the effectiveness of energy conservation programs, or document the carbon 13.23dioxide reductions from energy conservation programs. When approving projects, the 13.24commissioner shall consider proposals and comments from utilities and other interested 13.25parties. The commissioner may assess up to $3,600,000 annually for the purposes of this 13.26subdivision. The assessments must be deposited in the state treasury and credited to the 13.27energy and conservation account created under subdivision 2a. An assessment made under 13.28this subdivision is not subject to the cap on assessments provided by section 216B.62, or 13.29any other law.13.30    Subd. 1f.Facilities energy efficiency.(a) The commissioner of administration and 13.31the commissioner of commerce shall maintain and, as needed, revise the sustainable 13.32building design guidelines developed under section 16B.325.13.33    (b) The commissioner of administration and the commissioner of commerce shall 13.34maintain and update the benchmarking tool developed under Laws 2001, chapter 212, 13.35article 1, section 3, so that all public buildings can use the benchmarking tool to maintain 13.36energy use information for the purposes of establishing energy efficiency benchmarks, 14.1tracking building performance, and measuring the results of energy efficiency and 14.2conservation improvements.14.3    (c) The commissioner shall require that utilities include in their conservation 14.4improvement plans programs that facilitate professional engineering verification to qualify 14.5a building as Energy Star-labeled or as Leadership in Energy and Environmental Design 14.6(LEED) certified. The state goal is to achieve certification of 1,000 commercial buildings 14.7as Energy Star-labeled, and 100 commercial buildings as LEED-certified by December 14.831, 2010.14.9    (d) The commissioner may assess up to $500,000 annually for the purposes of this 14.10subdivision. The assessments must be deposited in the state treasury and credited to the 14.11energy and conservation account created under subdivision 2a. An assessment made under 14.12this subdivision is not subject to the cap on assessments provided by section 216B.62, or 14.13any other law.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 three-year14.18period. 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 three 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 large energy facility or a 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, a nonprofit corporation, 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) (e) 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) (f) 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.The energy and conservation 16.14account is established in the special revenue fund in the state treasury. The commissioner 16.15must deposit money contributed under subdivisions 1a and 1b assessed or contributed 16.16under subdivisions 1d, 1e, 1f, and 7 in the state treasury and credit it to the energy and 16.17conservation account in the generalspecial revenue fund. Money in the account is 16.18appropriated to the departmentcommissioner 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 116.22the purposes of subdivisions 1d, 1e, 1f, and 7. 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 and assessments to the energy and conservation account, unless the 17.4recovery would be inconsistent with a financial incentive proposal approved by the 17.5commission. The commission shall allow a cooperative electric association subject 17.6to rate regulation under section 216B.026, to recover expenses resulting from energy 17.7conservation improvement programs, load management programs, and assessments 17.8and contributions to the energy and conservation account unless the recovery would be 17.9inconsistent with a financial incentive proposal approved by the commission. 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    Subd. 2c.Performance incentives.By December 31, 2008, the commission 17.25shall review any incentive plan for energy conservation improvement it has approved 17.26under section 216B.16, subdivision 6c, and adjust the utility performance incentives to 17.27recognize making progress toward and meeting the energy savings goals established 17.28in subdivision 1c.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; and19.26    (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    Subd. 7.Low-income programs.(a) The commissioner shall ensure that each 19.33utility and association provides low-income programs. When approving spending and 19.34energy savings goals for low-income programs, the commissioner shall consider historic 19.35spending and participation levels, energy savings for low-income programs, and the 19.36number of low-income persons residing in the utility's service territory. A utility that 20.1furnishes gas service must spend at least 0.2 percent of its gross operating revenue from 20.2residential customers in the state on low-income programs. A utility or association that 20.3furnishes electric service must spend at least 0.1 percent of its gross operating revenue 20.4from residential customers in the state on low-income programs. For a generation and 20.5transmission cooperative association, this requirement shall apply to each association's 20.6members' aggregate gross operating revenue from sale of electricity to residential 20.7customers in the state. Beginning in 2010, a utility or association that furnishes electric 20.8service must spend 0.2 percent of its gross operating revenue from residential customers 20.9in the state on low-income programs.20.10    (b) To meet the requirements of paragraph (a), a utility or association may contribute 20.11money to the energy and conservation account. An energy conservation improvement plan 20.12must state the amount, if any, of low-income energy conservation improvement funds the 20.13utility or association will contribute to the energy and conservation account. Contributions 20.14must be remitted to the commissioner by February 1 of each year.20.15    (c) The commissioner shall establish low-income programs to utilize money 20.16contributed to the energy and conservation account under paragraph (b). In establishing 20.17low-income programs, the commissioner shall consult political subdivisions, utilities, and 20.18nonprofit and community organizations, especially organizations engaged in providing 20.19energy and weatherization assistance to low-income persons. Money contributed to 20.20the energy and conservation account under paragraph (b) must provide programs for 20.21low-income persons, including low-income renters, in the service territory of the utility or 20.22association providing the money. The commissioner shall record and report expenditures 20.23and energy savings achieved as a result of low-income programs funded through the 20.24energy and conservation account in the report required under subdivision 1c, paragraph 20.25(g). The commissioner may contract with a political subdivision, nonprofit or community 20.26organization, public utility, municipality, or cooperative electric association to implement 20.27low-income programs funded through the energy and conservation account.20.28    (d) A utility or association may petition the commissioner to modify its required 20.29spending under paragraph (a) if the utility or association and the commissioner have been 20.30unable to expend the amount required under paragraph (a) for three consecutive years.20.31    Subd. 8.Assessment.The commission or department may assess utilities subject to 20.32this section in proportion to their respective gross operating revenue from sales of gas or 20.33electric service within the state during the last calendar year to carry out the purposes of 20.34subdivisions 1d, 1e, and 1f. Those assessments are not subject to the cap on assessments 20.35provided by section 216B.62, or any other law.21.1    Sec. 6. [216B.2412] DECOUPLING OF ENERGY SALES FROM REVENUES.21.2    Subdivision 1.Definition and purpose.For the purpose of this section, 21.3"decoupling" means a regulatory tool designed to separate a utility's revenue from changes 21.4in energy sales. The purpose of decoupling is to reduce a utility's disincentive to promote 21.5energy efficiency.21.6    Subd. 2.Decoupling criteria.The commission shall, by order, establish criteria 21.7and standards for decoupling. The commission shall design the criteria and standards to 21.8mitigate the impact on public utilities of the energy savings goals under section 216B.241 21.9without adversely affecting utility ratepayers.  In designing the criteria, the commission 21.10shall consider energy efficiency, weather, and cost of capital, among other factors.21.11    Subd. 3.Pilot programs.The commission shall allow one or more rate-regulated 21.12utilities to participate in a pilot program to assess the merits of a rate-decoupling strategy 21.13to promote energy efficiency and conservation. Each pilot program must utilize the 21.14criteria and standards established in subdivision 2 and be designed to determine whether 21.15a rate-decoupling strategy achieves energy savings. On or before a date established by 21.16the commission, the commission shall require electric and gas utilities that intend to 21.17implement a decoupling program to file a decoupling pilot plan which shall be approved 21.18or approved as modified by the commission. A pilot program may not exceed three years 21.19in length. Any extension beyond three years can only be approved in a general rate case, 21.20unless that decoupling program was previously approved as part of a general rate case. 21.21The commission shall report on the programs annually to the chairs of the house of 21.22representatives and senate committees with primary jurisdiction over energy policy.21.23    Sec. 7. [216C.03] STATE GOVERNMENT ENERGY SAVINGS PLAN.21.24    The commissioner of commerce, in coordination with the commissioners of the 21.25agencies listed in section 15.01, the chancellor of the Minnesota State Colleges and 21.26Universities, and the president of the University of Minnesota, shall identify policy 21.27options, barriers, and economic benefits and costs for state government operations to 21.28achieve the energy savings goals in section 216B.2401 and the resulting carbon emission 21.29reductions. The commissioner of commerce must issue a report to the legislature by 21.30February 1, 2008.21.31    Sec. 8. REVISOR'S INSTRUCTION.21.32    The revisor of statutes shall change the reference to "section 216B.241, subdivision 21.331, paragraph (i)" found in section 216B.2411, subdivision 1, to read "section 216B.241, 21.34subdivision 1."22.1    Sec. 9. EFFECTIVE DATE.22.2    This article is effective July 1, 2007.22.3ARTICLE 322.4MISCELLANEOUS22.5    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    (c) The board must provide a copy of any contract entered into under paragraph (a) 22.30and the report provided under paragraph (b), clause (4), to the commissioner of commerce 22.31within 30 days of the effective date of the contract.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; and23.9    (3) the amount of shoreline damaged by flooding and erosion and the amount of 23.10shoreline restored and cleaned.23.11    Nothing in this section shall be construed as a directive to the government of Canada 23.12or the province of Manitoba.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 the training 23.30and qualifications necessary for the auditing of residential and commercial buildings under 23.31the auspices of a program created under section 216B.241.23.32    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    A municipality entering into a guaranteed energy savings contract shall provide a 25.21copy of the contract and the report from the qualified provider to the commissioner of 25.22commerce within 30 days of the effective date of the contract.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.(a) 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; and26.3    (3) to make the premises reasonably energy efficient by installing weatherstripping, 26.4caulking, storm windows, and storm doors when any such measure will result in energy 26.5procurement cost savings, based on current and projected average residential energy costs 26.6in Minnesota, that will exceed the cost of implementing that measure, including interest, 26.7amortized over the ten-year period following the incurring of the cost; and 26.8    (4) to 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    (b) 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.  REPEALER.26.18Minnesota Statutes 2006, sections 216B.165; 216C.27; and 216C.30, subdivision 5,26.19and Minnesota Rules, parts 7635.0100; 7635.0110; 7635.0120; 7635.0130; 7635.0140; 26.207635.0150; 7635.0160; 7635.0170; 7635.0180; 7635.0200; 7635.0210; 7635.0220; 26.217635.0230; 7635.0240; 7635.0250; 7635.0260; 7635.0300; 7635.0310; 7635.0320; 26.227635.0330; 7635.0340; 7635.0400; 7635.0410; 7635.0420; 7635.0500; 7635.0510; 26.237635.0520; 7635.0530; 7635.0600; 7635.0610; 7635.0620; 7635.0630; 7635.0640; 26.247635.1000; 7635.1010; 7635.1020; 7635.1030; 7655.0100; 7655.0120; 7655.0200; 26.257655.0210; 7655.0220; 7655.0230; 7655.0240; 7655.0250; 7655.0260; 7655.0270; 26.267655.0280; 7655.0290; 7655.0300; 7655.0310; 7655.0320; 7655.0330; 7655.0400; 26.277655.0410; and 7655.0420, are repealed, effective July 1, 2007.26.28    Sec. 7. NUCLEAR ENERGY STUDY.26.29    Subdivision 1.Scope of study.The Legislative Electric Energy Task Force 26.30shall contract with an entity to conduct a comprehensive study of the economic and 26.31environmental costs and benefits of constructing a new nuclear-powered electric 26.32generating plant in Minnesota. The study must investigate, at a minimum:26.33    (1) advances in technology that would be reflected in the plant's design and 26.34operation, compared with the technology embodied in nuclear-powered electric generating 27.1plants currently operating in Minnesota, and their impact on the plant's useful life, its 27.2operation and maintenance costs, and its health and safety risks;27.3    (2) predesign, design, and construction costs of constructing a 600-megawatt 27.4nuclear-powered generating plant in Minnesota, and comparable costs of delivering an 27.5equivalent amount of energy by:27.6    (i) constructing a conventional coal plant;27.7    (ii) constructing a coal plant using "clean-coal" technology;27.8    (iii) constructing a coal gasification plant; and27.9    (iv) a combination of cost-effective energy conservation investments, including the 27.10implementation of statewide efficiency standards for a range of electric appliances, and 27.11energy generated from renewable sources including wind, solar, biomass, and geothermal;27.12    (3) estimated costs of storing the plant's nuclear waste on site and security issues 27.13associated with nuclear waste transportation;27.14    (4) the projected retail rate per kilowatt hour from the plant, compared with the 27.15projected rate from the alternatives listed in clause (2), items (i) through (iv). These 27.16projected rates must include, as applicable, different estimates of a regulatory tax imposed 27.17on electric generation plants based on the amount of carbon emitted;27.18    (5) environmental impacts of the plant's operation, compared with those associated 27.19with each alternative listed in clause (2), items (i) through (iv), to water, to land, and to 27.20air, including greenhouse gas emissions and particulates;27.21    (6) the health effects associated with human exposure to the plant's emissions; and27.22(7) costs and benefits associated with a phase-out and decommissioning of nuclear 27.23energy in Minnesota.27.24    Subd. 2.Report.The study's findings must be submitted in a report to the 27.25Legislative Electric Energy Task Force no later than March 1, 2008.27.26    Sec. 8. EFFECTIVE DATE.27.27    This article is effective July 1, 2007.27.28ARTICLE 427.29COMMUNITY-BASED ENERGY DEVELOPMENT27.30    Section 1. CITATION.27.31    This article may be cited as the Community-Based Energy Development Act of 2007.27.32    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 renewable energy development and to facilitate 28.3widespread development of community-based wind renewable 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 chapter 28.11322B 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 including a rural electric cooperative association or a generation and 28.15transmission cooperative on behalf of and at the request of a member distribution utility;28.16    (5) a Minnesota political subdivision or local government other than including, 28.17but not limited to, a municipal electric utility or a municipal power agency on behalf 28.18of and at the request of a member distribution utility, 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; or28.22    (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; and28.29    (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) "Renewable" means a technology listed in section 216B.1691, subdivision 1, 28.32paragraph (a).28.33    (g) "Community-based energy project" or "C-BED project" means a new wind28.34renewable 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; or29.1    (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; and29.4    (1) provides that at least 51 percent of the total payments made as a direct result of a 29.5power purchase agreement or similar agreement with a utility accrue to: 29.6    (i) qualifying owners, in the form of net cash payments under the power purchase 29.7agreement that amount to no less than 35 percent made over the term of the power 29.8purchase agreement; 29.9    (ii) owners of land upon which a project is sited, in the form of easement or lease 29.10payments; 29.11    (iii) local units of government, in the form of taxes paid under section 272.029; and 29.12    (iv) lenders chartered under section 46.044, in the form of interest paid on C-BED 29.13project debt financed by a lender; 29.14    (2) allows, if the project is a wind energy project consisting of more than two 29.15turbines, no single qualifying owner to own more than 15 percent of the project; 29.16    (3) allows, if the project is a wind energy project, a public entity listed in paragraph 29.17(b), clause (5), except for a municipal utility, to own more than 15 percent of the project; 29.18and 29.19    (3) (4) 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 and nonqualifying 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 2007, 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.169130.5that needs to construct new generation, or purchase the output from new generation, as 30.6part of its plan to satisfy its good faith objective and standard under that section should30.7must 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. A utility whose 30.12renewable energy plan has been approved by the commission under section 216B.1645, 30.13subdivision 2a, must negotiate in good faith with developers of C-BED projects that meet 30.14the specifications of this paragraph and whose aggregated capacity is equal to the capacity 30.15of C-BED projects identified in the plan from which the utility intends to purchase energy.30.16    (b) Each utility shall include in its resource plan submitted under section 
         216B.242230.17a 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    (d) A municipal power agency or generation and transmission cooperative shall, 30.23when issuing a request for proposals for C-BED projects to satisfy its standard obligation 30.24under section 216B.1691, provide notice to its member distribution utilities that they 30.25may propose, in partnership with other qualifying owners, a C-BED project for the 30.26consideration of the municipal power agency or generation and transmission cooperative.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 renewable 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    Subd. 8.Community energy partnerships.A utility providing electric service 31.18to retail or wholesale customers in Minnesota and an independent power producer may 31.19participate, and are encouraged to participate, in a community-based energy project, as 31.20owner, equity partner, or provider of technical or financial assistance, subject to the limits 31.21specified in this section.31.22    Subd. 9.C-BED advisory determination.A developer of a proposed project may 31.23request the commissioner of commerce to issue an advisory determination as to whether 31.24the proposed project qualifies as a C-BED project under this section. The request must 31.25be made on a form and under a procedure approved by the commissioner. A positive 31.26advisory determination of the commissioner under this subdivision establishes a rebuttable 31.27presumption that the project qualifies as a C-BED project.31.28    Sec. 3. Minnesota Statutes 2006, section 216B.1645, is amended by adding a 31.29subdivision to read:31.30    Subd. 2a.Utility ownership of renewable resources.(a) A utility may construct, 31.31own, and operate generation facilities used to satisfy the requirements of section 31.32216B.1691, notwithstanding any competitive resource acquisition process established 31.33under section 216B.2422, subdivision 5. 31.34    (b) In lieu of any competitive resource acquisition process, a utility that owns a 31.35nuclear generation facility and intends to construct, own, or operate facilities under this 32.1section shall file with the commission on or before March 1, 2008, a renewable energy 32.2plan setting forth the manner in which the utility proposes to meet the requirements of 32.3section 216B.1691, including a proposed schedule for purchasing renewable energy from 32.4C-BED and non-C-BED projects, a proposed schedule of acquisition and construction 32.5of generation facilities and their expected in-service dates, and proposed transmission 32.6resources associated with the facilities, including a proposed construction schedule and 32.7expected in-service date for any transmission sources that need to be constructed to 32.8deliver the electricity generated by the facilities. The plan must also contain alternative 32.9means of providing the energy generated by the facilities described in the plan, and 32.10must compare the costs of delivering energy from these alternative means and from the 32.11facilities identified in the plan. The utility shall update the plan as necessary in its filing 32.12under section 216B.2422. 32.13    (c) The commission shall approve the plan unless it determines, after public hearing 32.14and comment, that the plan: 32.15    (1) imposes excessive costs on ratepayers; 32.16    (2) does not reasonably allocate resources among utility-owned generation facilities, 32.17energy purchased from C-BED and non-C-BED projects, and generation facilities selected 32.18in a competitive selection process under section 216B.2422, subdivision 5; or 32.19    (3) does not maximize benefits to Minnesota citizens, as required by section 32.20216B.1691, subdivision 9. 32.21Nothing in this section prohibits a utility from seeking and securing approval from the 32.22commission to implement projects prior to submission of the plan required under this 32.23section.32.24    Sec. 4. Minnesota Statutes 2006, section 216B.1645, is amended by adding a 32.25subdivision to read:32.26    Subd. 2b.Cost recovery for owned renewable facilities.(a) A utility may petition 32.27the commission to approve a rate schedule that provides for the automatic adjustment of 32.28charges to recover prudently incurred investments, expenses, or costs associated with 32.29facilities constructed, owned, or operated by a utility to satisfy the requirements of section 32.30216B.1691, provided those facilities were previously approved by the commission under 32.31section 216B.2422 or 216B.243. The commission may approve, or approve as modified, a 32.32rate schedule that: 32.33    (1) allows a utility to recover directly from customers on a timely basis the costs of 32.34qualifying renewable energy projects, including: 32.35    (i) return on investment; 33.1    (ii) depreciation; 33.2    (iii) ongoing operation and maintenance costs; 33.3    (iv) taxes; and 33.4    (v) costs of transmission and other ancillary expenses directly allocable to 33.5transmitting electricity generated from a project meeting the specifications of this 33.6paragraph; 33.7    (2) provides a current return on construction work in progress, provided that recovery 33.8of these costs from Minnesota ratepayers is not sought through any other mechanism; 33.9    (3) allows recovery of other expenses incurred that are directly related to a renewable 33.10energy project, provided that the utility demonstrates to the commission's satisfaction that 33.11the expenses improve project economics, ensure project implementation, or facilitate 33.12coordination with the development of transmission necessary to transport energy produced 33.13by the project to market; 33.14    (4) allocates recoverable costs appropriately between wholesale and retail customers; 33.15    (5) terminates recovery when costs have been fully recovered or have otherwise 33.16been reflected in a utility's rates. 33.17    (b) A petition filed under this subdivision must include: 33.18    (1) a description of the facilities for which costs are to be recovered; 33.19    (2) an implementation schedule for the facilities; 33.20    (3) the utility's costs for the facilities; 33.21    (4) a description of the utility's efforts to ensure that costs of the facilities are 33.22reasonable and were prudently incurred; and 33.23    (5) a description of the benefits of the project in promoting the development of 33.24renewable energy in a manner consistent with this chapter.33.25    Sec. 5. [216B.1681] CURTAILMENT PAYMENTS.33.26    The commission shall, by September 1, 2007, initiate a review of curtailment 33.27payments for wind energy projects to assess whether utilities are unduly discriminating 33.28among project ownership structures in regard to the contractual availability of curtailment 33.29payments.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 COMMUNITY-BASED ENERGY DEVELOPMENT GREEN PRICING 33.33OPTION.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) "Eligible energy technology" has the meaning given in section 216B.1691, 34.7subdivision 1. 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 "Community-based energy development project" or "C-BED project" has the 34.12meaning given in section 216B.1612, subdivision 2, paragraph (g).34.13    Subd. 2. Renewable and high-efficiency energy rate options C-BED green 34.14pricing programs. (a) Each utility shall offer its customers, and shall advertise 34.15the offer at least annually quarterly, 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 a 34.19community-based energy development project or is provided through the purchase of 34.20renewable energy credits from a C-BED project.34.21    (b) Each public utility shall file an implementation plan within 90 days of July 1, 34.222001 2007, 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 renewable34.26C-BED energy or credits and the cost of generating or purchasing the same amount of 34.27nonrenewable energy or credits from non-C-BED sources; and34.28    (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 must acquire the 34.32energy demanded by customers, in whole or in part, through procuring or generating 34.33the renewable C-BED energy directly, or through the purchase of credits from a provider 34.34that has received certification of eligible power supply pursuant to subdivision 3 issued 34.35under the program established by the commission under section 216B.1691, subdivision 34.364, if available. If a utility is not able to arrange an adequate supply of renewable or 35.1high-efficiency C-BED energy or credits 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 meets the requirements of section 216B.1612; and35.9    (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    Subd. 4.C-BED logo.(a) The commissioner of commerce shall design or 35.14contract for the design of a logo that qualifying entities may affix to their products and 35.15to advertising for their products that contains the words "100% Minnesota Renewable 35.16Energy." The logo may also contain a standardized pictorial representation or design. 35.17    (b) The commissioner of commerce shall certify in writing that an entity is 35.18authorized to use the logo if the commissioner determines that all the electricity consumed 35.19by an applicant is purchased directly, or by purchasing credits from a C-BED project. 35.20The commissioner of commerce shall develop forms and procedures to govern the 35.21application and certification processes and the use of the logo by an entity that receives 35.22certification. No person may use the logo without certification from the commissioner. 35.23For the purposes of this subdivision, "qualifying entity" means a person or entity that has 35.24received certification from the commissioner of commerce granting the entity authority to 35.25use the C-BED logo in the manner prescribed by the commissioner.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 Department of Commerce. The 35.30administrator shall act as a source of independent expertise and a technical advisor to 35.31the commissioner, 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 commissioner in administering and implementing the commission's35.34department's duties under sections 216B.1612, 216B.1691,216B.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 and shall also: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 commissioncommissioner may select the 36.18administrator who shall serve for a four-year term. The administrator must demonstrate 36.19technical training, expertise, or experience in energy reliability issues, and 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 commissioner. The commission commissioner36.22shall 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 Department of Commerce 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 commissioner under 36.36paragraph (a). The commission department 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; and37.4    (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 department 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 commission37.12department 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 department 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 and the department by other law.37.19    Subd. 3. Assessment and appropriation. In addition to the amount noted in 37.20subdivision 2, the commission commissioner 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 commission37.23commissioner, 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 2012. Subdivision 37.273 expires June 30, 2008.37.28    Sec. 8. [216F.011] SIZE DETERMINATION.37.29    (a) The total size of a combination of wind energy conversion systems for the 37.30purpose of determining jurisdictional siting authority under sections 216F.01 to 216F.07 37.31must be determined according to this section. The nameplate capacity of one wind energy 37.32conversion system must be combined with the nameplate capacity of any other wind 37.33energy conversion system that: 37.34    (1) is located within five miles of the wind energy conversion system; 38.1    (2) is constructed within the same 12-month period as the wind energy conversion 38.2system; and 38.3    (3) exhibits characteristics of being a single development, including but not limited 38.4to ownership structure, an umbrella sales arrangement, shared interconnection, revenue 38.5sharing arrangements, and common debt or equity financing. 38.6    (b) The commissioner shall prepare and make available the necessary forms and 38.7guidance for project developers to make a request for determination. Upon written 38.8request of a project developer, the commissioner of commerce shall provide a written 38.9determination under this section within 30 days of receipt of the request and information 38.10necessary to make a determination. In the case of a dispute, the chair of the Public Utilities 38.11Commission shall determine the total size of the system and shall draw all reasonable 38.12inferences in favor of combining the systems. 38.13    (c) An application to a county for a permit for a wind energy conversion system is 38.14not complete without a jurisdictional determination made under this section.38.15    Sec. 9. [216F.08] PERMIT AUTHORITY; ASSUMPTION BY COUNTIES.38.16    Subdivision 1.Definition.For the purposes of this subdivision, the term 38.17"processing" means: 38.18    (1) the distribution to applicants of application and determination forms provided 38.19by the commission; 38.20    (2) the receipt and examination of completed application forms, and the certification, 38.21in writing, to the commission either that the LWECS for which a permit was issued by the 38.22county will comply with applicable rules and standards or, if the facility will not comply, 38.23the respects in which a variance is required for the issuance of a permit; and 38.24    (3) rendering to applicants, upon request, assistance for the proper completion of 38.25an application.38.26    Subd. 2.Counties; processing applications for LWECS site permits.(a) Any 38.27Minnesota county board may, by resolution and upon written notice to the Public Utilities 38.28Commission, assume responsibility for processing applications for permits required 38.29under this chapter for LWECS with a combined nameplate capacity of less than 25,000 38.30kilowatts. The responsibility for permit application processing, if assumed by a county, 38.31may be delegated by the county board to an appropriate county officer or employee. 38.32Processing by a county must be done in accordance with procedures and processes 38.33established under chapter 394. 38.34    (b) A county board that exercises its option under paragraph (a) and assumes 38.35responsibility for processing applications for permits for LWECS within its borders 39.1is responsible for issuing, denying, modifying, imposing conditions upon, or revoking 39.2permits under this section or rules adopted pursuant to it. The action of the county board 39.3with regard to a permit application is final, subject to appeal as provided in section 394.27. 39.4    (c) In adopting and enforcing rules or standards under this subdivision, the 39.5commission shall cooperate closely with counties and other governmental agencies.39.6    (d) The commission shall work with counties and wind developers to notify and 39.7educate stakeholders with regard to rules or standards under this section at the time the 39.8rules or standards are being developed and adopted and at least every two years thereafter. 39.9    (e) The commission shall, by order, establish general permit standards governing site 39.10permits for LWECS under this section. These general permit standards must apply both to 39.11permits issued by counties and to permits issued by the commission directly for LWECS 39.12with a combined nameplate capacity of less than 25,000 kilowatts. The order must contain 39.13minimum standards necessary to ensure the protection of human health and safety and 39.14wind resources on adjacent land and must be consistent with the general provisions of wind 39.15permits issued by the commission in the five years prior to enactment of this provision. 39.16    (f) The commission and the commissioner of commerce shall provide technical 39.17assistance to a county with respect to the processing of LWECS site permit applications 39.18by the county. 39.19    (g) A county may adopt by ordinance standards for LWECS that are more stringent 39.20than standards in commission rules or in the commission's permit standards. The 39.21commission, in considering a permit for LWECS in a county that has adopted more 39.22stringent standards, shall incorporate and apply those more stringent standards, unless the 39.23commission finds there is good cause not to do so.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. A wind easement 39.33or lease of wind rights shall also terminate after five years from the date the easement is 39.34created or lease is entered into, if a wind energy project on the property to which the 39.35easement or lease applies does not begin commercial operation within the five-year period.40.1EFFECTIVE DATE.This section is effective the day following final enactment, 40.2and applies to wind easements created and wind rights leases entered into on and after 40.3the effective date of this section.40.4    Sec. 11. STATEWIDE STUDY OF DISPERSED GENERATION POTENTIAL.40.5    Subdivision 1.Definition."Dispersed generation" means an electric generation 40.6project with a generating capacity between ten and 40 megawatts that utilizes an eligible 40.7energy technology, as defined in Minnesota Statutes, section 216B.1691, subdivision 1, 40.8paragraph (a).40.9    Subd. 2.Study participants.Each electric utility subject to Minnesota Statutes, 40.10section 216B.1691, must participate collaboratively in conducting a two-phase study of 40.11the potential for dispersed generation projects that can be developed in Minnesota.40.12    Subd. 3.First phase study content; report.In the first phase of the study, 40.13participants must analyze the impacts of the addition of a total of 600 megawatts of 40.14new dispersed generation projects distributed among the following Minnesota electric 40.15transmission planning zones: the Northeast zone, the Northwest zone, the Southeast 40.16zone, the Southwest zone, and the West-Central zone. Study participants must use a 40.17generally accepted 2010 year transmission system model including all transmission 40.18facilities expected to be operating in 2010. The study must take into consideration 40.19regional projected load growth, planned changes in the bulk transmission network, and the 40.20long-range transmission conceptual plan being developed under Laws 2007, chapter 3, 40.21section 2. In determining locations for the installation of dispersed generation projects 40.22that consist of wind energy conversion systems, the study should consider, at a minimum, 40.23wind resource availability, existing and contracted wind projects, and current dispersed 40.24generation projects in the Midwest Independent System Operator interconnection queue. 40.25The study must analyze the impacts of individual projects and all projects in aggregate on 40.26the transmission system, and identify specific modifications to the transmission system 40.27necessary to remedy any problems caused by the installation of dispersed generation 40.28projects, including cost estimates for the modifications. The study must analyze the 40.29additional dispersed generation projects connected at the lowest voltage level transmission 40.30that exists in the vicinity of the projected generation sites. A preliminary analysis to 40.31identify transmission system problems must be conducted with the projects installed 40.32at initially selected locations. The technical review committee may, after reviewing 40.33the locations selected for installation, recommend moving the installation sites to new 40.34locations to reduce undesirable transmission system impacts. The commissioner of 41.1commerce must submit a report containing the findings and recommendations of the first 41.2phase of the study to the commission no later than June 15, 2008.41.3    Subd. 4.Second phase study content; report.In the second phase of the study, 41.4participants must analyze the impacts of an additional total of 600 megawatts of dispersed 41.5generation projects installed among the five transmission planning zones, or a higher total 41.6capacity amount if agreed to by both the utilities and the technical review committee. The 41.7utilities must employ an analysis method similar to that used in the first phase of the study, 41.8and must use the most recent information available, including information developed in 41.9the first phase. The second phase of the study must use a generally accepted 2013 year 41.10transmission system model including all transmission facilities that are expected to be 41.11in service at that time. The commissioner of commerce must submit a report containing 41.12the findings and recommendations of the second phase of the study to the commission no 41.13later than September 15, 2009.41.14    Subd. 5.Technical review committee.Prior to the start of the first phase of 41.15the study, the commissioner of commerce shall appoint a technical review committee 41.16consisting of between ten and 15 individuals with experience and expertise in electric 41.17transmission system engineering, renewable energy generation technology, and dispersed 41.18generation project development, including representatives from the federal Department 41.19of Energy, the Midwest Independent System Operator, and stakeholder interests. The 41.20technical review committee must oversee both phases of the study, and must: 41.21    (1) make recommendations to the utilities regarding the proposed methods and 41.22assumptions to be used in the technical study; 41.23    (2) in conjunction with the appropriate utilities, hold public meetings on each phase 41.24of the study in each electricity transmission planning zone prior to the beginning of each 41.25phase of study, after the impact analysis is completed, and when a draft final report is 41.26available; and 41.27    (3) review the initial and final drafts of the study and make recommendations for 41.28improvement, including with respect to problems associated with the interconnections 41.29among utility systems that may be amenable to solution through cooperation between the 41.30utilities in each zone. During each phase of the study, the technical review committee 41.31may recommend that the installation of dispersed generation projects be moved to new 41.32locations that cause fewer undesirable transmission system impacts.41.33    Sec. 12. TRANSFERRING RELIABILITY ADMINISTRATOR 41.34RESPONSIBILITIES.42.1    All responsibilities, as defined in Minnesota Statutes, section 15.039, subdivision 42.21, held by the Public Utilities Commission relating to the reliability administrator under 42.3Minnesota Statutes, section 216C.052, are transferred to the Minnesota Department of 42.4Commerce under Minnesota Statutes, section 15.039.42.5    Sec. 13. TRANSMISSION AUTHORITY AND INTERCONNECTION 42.6EVALUATIONS.42.7    The reliability administrator shall, in consultation with interested stakeholders: 42.8    (1) review the structures, powers, and duties for constructing, owning, maintaining, 42.9and operating transmission facilities of state transmission authorities established in 42.10Kansas, North Dakota, South Dakota, and Wyoming, and evaluate whether the existence 42.11of a similar organization in Minnesota would have the potential to increase the reliability 42.12and efficiency of the electrical grid in the state; hasten the development of needed 42.13transmission lines; accelerate the development of renewable energy projects, especially in 42.14rural areas of the state; and reduce delivered energy costs to Minnesota ratepayers; and 42.15    (2) assess the potential for and barriers to interconnecting dispersed generation 42.16projects to locations on the electric grid where a generator interconnection would not be 42.17subject to the interconnection rules of the Federal Energy Regulatory Commission or the 42.18Midwest Independent System Operator. 42.19No technical or engineering analyses are necessary in order to complete these duties. The 42.20reliability administrator must report its findings and any recommendations to the chairs of 42.21the senate and house of representatives committees with jurisdiction over energy policy by 42.22February 15, 2008.42.23    Sec. 14.  REPEALER.42.24Laws 2007, chapter 3, section 3, is repealed.42.25ARTICLE 542.26GLOBAL WARMING MITIGATION42.27    Section 1. [216H.001] FINDINGS; CITATION.42.28    (a) The legislature finds that the state has a vital interest in preventing or mitigating 42.29harms associated with global warming and in reducing Minnesota's greenhouse gas 42.30emissions. The legislature recognizes that substantial reductions in emissions of 42.31greenhouse gases are necessary to avoid dangerous climate changes in the future. The 42.32legislature finds that taking steps to reduce Minnesota's greenhouse gas emissions today 42.33and planning for long-term reductions will reduce the need for more disruptive emission 43.1reductions later, and that to achieve the purposes of this act, all emissions associated 43.2with electricity generated or consumed within the state must be subject to the state's 43.3emissions-reduction goals. The legislature further finds that Minnesota's economy will 43.4benefit by showing leadership in the transition away from climate-damaging technologies 43.5and toward renewable power, biofuels, and energy efficiency. The legislature recognizes 43.6that achieving these ends will only occur by close cooperation with other states and may 43.7require the state to enter into binding agreements with other units of government.43.8    (b) This chapter may be referred to as the Global Warming Mitigation Act of 2007.43.9    Sec. 2. [216H.01] DEFINITIONS.43.10    Subdivision 1.Scope.For the purposes of this chapter, the terms defined in this 43.11section have the meanings given them.43.12    Subd. 2.Allowance."Allowance" means limited authorization from a state 43.13regulatory agency to emit up to one ton of carbon dioxide or carbon dioxide equivalent 43.14into the atmosphere. This limited authorization does not constitute a property right.43.15    Subd. 3.Cap and trade system."Cap and trade system" means a regulatory system 43.16that imposes a limit on the aggregate air pollutant emissions of a group of sources, requires 43.17those subject to the cap to own an allowance for each ton of the air pollutant emitted, and 43.18allows for market-based trading of those allowances.43.19    Subd. 4.Carbon dioxide equivalent."Carbon dioxide equivalent" means the 43.20quantity of a given greenhouse gas multiplied by its global warming potential. 43.21    Subd. 5.Global warming potential."Global warming potential" means a measure 43.22of the radiative efficiency or heat-absorbing ability of a particular gas relative to that of 43.23carbon dioxide after taking into account the decay rate of each gas, that is, the amount 43.24removed from the atmosphere over a given number of years, relative to that of carbon 43.25dioxide.43.26    Subd. 6.Greenhouse gas emissions source."Greenhouse gas emissions source" 43.27means any anthropogenic physical unit or process that releases greenhouse gases into 43.28the atmosphere.43.29    Subd. 7.Greenhouse gases."Greenhouse gases" include carbon dioxide, methane, 43.30nitrous oxide, hydrofluorocarbons, perfluorocarbons, and sulfur hexafluoride or any other 43.31chemical that is determined by the Pollution Control Agency to contribute comparably to 43.32global climate change and that is emitted by anthropogenic sources.43.33    Subd. 8.New large energy facility."New large energy facility" means a large 43.34energy facility, as defined in section 216B.2421, subdivision 2, clauses (1) to (8), that is 43.35not in operation as of January 1, 2007, but does not include a facility that (1) uses natural 44.1gas as a primary fuel, (2) is designed to provide peaking, intermediate, emergency backup, 44.2or contingency services, (3) uses a simple cycle or combined cycle turbine technology, 44.3(4) is capable of achieving full load operations within 45 minutes of startup for a simple 44.4cycle facility, or is capable of achieving minimum load operations within 185 minutes 44.5of startup for a combined cycle facility, and (5) has received a certificate of need under 44.6section 216B.243.44.7    Subd. 9.Person."Person" has the meaning given in section 216E.01.44.8    Subd. 10.Statewide greenhouse gas emissions."Statewide greenhouse gas 44.9emissions" means the total annual emissions of greenhouse gases within the state and all 44.10emissions of greenhouse gases from the generation of electricity imported from outside the 44.11state and consumed in Minnesota. Emissions associated with transmission and distribution 44.12line losses are included in this definition. Statewide emissions are expressed in tons of 44.13carbon dioxide equivalent. Carbon dioxide that is injected into geological formations to 44.14prevent its release to the atmosphere in compliance with applicable laws, and emissions 44.15associated with the combustion of fuels other than coal, petroleum, and natural gas are not 44.16counted as contributing to statewide greenhouse gas emissions.44.17    Subd. 11.Statewide power sector carbon dioxide emissions."Statewide power 44.18sector carbon dioxide emissions" means the total annual emissions of carbon dioxide  from 44.19the generation of electricity within the state and all emissions of carbon dioxide from the 44.20generation of electricity imported from outside the state and consumed in Minnesota. 44.21Emissions associated with transmission and distribution line losses are included in this 44.22definition. Carbon dioxide that is injected into geological formations to prevent its release 44.23to the atmosphere in compliance with applicable laws, and emissions associated with 44.24the combustion of fuels other than coal, petroleum, and natural gas are not counted as 44.25contributing to statewide power sector carbon dioxide emissions.44.26    Sec. 3. [216H.02] GREENHOUSE GAS EMISSIONS-REDUCTION GOALS. 44.27    It is the state's goal to reduce statewide greenhouse gas emissions to a level at least 44.2815 percent below 2005 emission levels by 2015, to a level at least 30 percent below 2005 44.29emission levels by 2025, and to a level at least 80 percent below 2005 emission levels 44.30by 2050.44.31    Sec. 4. [216H.04] GREENHOUSE GAS EMISSIONS-REDUCTION PLAN.44.32    Subdivision 1.Plan for achieving reductions.(a) By February 1, 2008, the 44.33commissioners of the Pollution Control Agency and the Department of Commerce shall 44.34submit a plan to the chairs of the senate and house of representatives committees with 45.1jurisdiction over energy and environmental policy that contains recommendations on how 45.2best to achieve the statewide greenhouse gas emissions-reduction goals established under 45.3section 216H.02. The plan must also identify how best to reduce statewide greenhouse gas 45.4emissions to a level at least 45 percent below 2005 levels by 2025. The plan must identify, 45.5develop, and integrate a full range of greenhouse gas emissions-reduction activities across 45.6all economic sectors, regions, and energy uses in the state, and estimate the costs and 45.7benefits of each action. The plan must:45.8    (1) estimate statewide greenhouse gas emissions for 2005 and make projections of 45.9statewide greenhouse gas emissions for 2015, 2025, and 2050;45.10    (2) estimate the statewide greenhouse gas emissions reductions anticipated from 45.11implementation of existing state policies;45.12    (3) include a cap and trade system as described in subdivision 3;45.13    (4) recommend additional policies to achieve statewide greenhouse gas 45.14emissions-reduction goals;45.15    (5) include provisions that will ensure that existing policies are evaluated, and that at 45.16least every five years any policy changes needed to achieve the statewide greenhouse gas 45.17emissions-reduction goals are developed and recommended for legislative action;45.18    (6) recommend a system to require the reporting of statewide greenhouse gas 45.19emissions, identifying which facilities must report, how emission estimates should be 45.20made, and other reporting requirements that will ensure the collection of emissions 45.21information needed to reliably document statewide greenhouse gas emission levels and 45.22implement the plan; and45.23    (7) evaluate the option of exempting a project from the prohibitions contained in 45.24section 216H.05, subdivision 1, if the project contributes a specified fee per ton of carbon 45.25dioxide emissions emitted annually by the project, the proceeds of which would be used to 45.26fund permanent, quantifiable, verifiable, and enforceable reductions in greenhouse gas 45.27emissions that would not otherwise have occurred.45.28    (b) In formulating the plan, the commissioners shall consider the broadest possible 45.29set of mechanisms to reduce emissions, including, but not limited to, expanding the 45.30electric sector cap and trade system established under subdivision 3 to include emissions 45.31sources other than electricity generation and greenhouse gases other than carbon dioxide; 45.32scheduling reductions of the emissions cap; imposing greenhouse gas taxes, fines, and 45.33other penalties; adopting emissions-reduction performance standards for sources of 45.34greenhouse gases; establishing financial or other incentives to promote activities that will 45.35reduce greenhouse gases; and enhancing existing policies that have the effect of lowering 45.36greenhouse gas emissions.46.1    Subd. 2.Planning process.The plan required under subdivision 1 must be 46.2developed through a structured, broadly inclusive stakeholder-based review of potential 46.3policies and initiatives that can be implemented in Minnesota to reduce greenhouse gas 46.4emissions. The stakeholder-based review process must be conducted by a nationally 46.5recognized independent expert entity. The commissioner of commerce shall coordinate 46.6executive branch participation with this stakeholder process. 46.7    Subd. 3.Cap and trade system.(a) The plan must include a cap and trade system 46.8incorporating, at a minimum, statewide power sector carbon dioxide emissions. The 46.9cap and trade plan must: 46.10    (1) set an emissions cap at an initial level to prevent significant increases in statewide 46.11greenhouse gas emissions above current levels, with a schedule for lowering the cap 46.12periodically to help meet the state's emissions-reduction targets; 46.13    (2) maximize Minnesota's ability to enter into allowance trading relationships with 46.14other states that have established or are in the process of establishing a cap and trade 46.15system regulating greenhouse gas emissions; 46.16    (3) evaluate the feasibility of implementing a cap and trade system that does not 46.17encompass the entire United States, and identify the impacts on the efficiency and 46.18effectiveness of the cap and trade system if restricted to Minnesota alone, if expanded 46.19to include surrounding midwestern states, and if Minnesota were to join other emerging 46.20regional systems with states that are planning to implement  a cap and trade system;46.21    (4) evaluate whether and to what extent a party subject to the cap should receive 46.22credit for offsetting emissions by implementing projects that reduce greenhouse gas 46.23emissions from sources not subject to the cap or absorb and sequester greenhouse gases 46.24from the atmosphere; 46.25    (5) include methods to ensure that all emissions reductions associated with projects 46.26listed in clause (4) are permanent, quantifiable, verifiable, enforceable, and would not 46.27have otherwise occurred; 46.28    (6) be designed to ensure that the proceeds from auctioning allowances are used to 46.29benefit the public, including to help meet the state's emissions-reduction goals in the most 46.30efficient and least disruptive way; 46.31    (7) estimate likely allowance prices under various scenarios, including the impact 46.32on allowance prices of constructing additional power plants subject to the cap and trade 46.33system; 46.34    (8) recommend ways to minimize any rate impacts on energy consumers; 47.1    (9) suggest procedures to award appropriate credit to entities that have voluntarily 47.2reduced their greenhouse gas emissions prior to implementation of the cap and trade 47.3system; 47.4    (10) ensure to the extent practicable that emissions reductions made in this state do 47.5not cause emissions increases outside the state; 47.6    (11) identify technologies and industries likely to thrive in a carbon-constrained 47.7future; 47.8    (12) maximize economic development in rural areas from the development of 47.9renewable energy sources and proven terrestrial sequestration practices; and 47.10    (13) suggest methods to calculate carbon dioxide emissions associated with 47.11electricity imported from outside the state.47.12    Subd. 4.Regional activities.It shall be an executive branch responsibility to work 47.13with other states in the midwest region to develop and implement a regional approach to 47.14reducing greenhouse gas emissions from activities in the region, including consulting 47.15on expanding the cap and trade system described in subdivision 3. The commissioner 47.16of commerce shall coordinate Minnesota's regional activities under this subdivision 47.17and report to the legislative committees in the senate and house of representatives with 47.18jurisdiction over energy and environmental policy by February 1, 2008, and February 1, 47.192009, on the progress made and recommendations for further action.47.20    Sec. 5. [216H.05] NO LONG-TERM INCREASE FROM POWER PLANTS.47.21    Subdivision 1.Long-term increased emissions from power plants prohibited.47.22    Until the cap and trade system described in section 216H.04, subdivision 3, is fully 47.23implemented, and except as allowed in subdivision 2, no person shall: 47.24    (1) construct within the state a new large energy facility that would contribute to 47.25statewide power sector carbon dioxide emissions; 47.26    (2) import or commit to import from outside the state power from a new large energy 47.27facility that would contribute to statewide power sector carbon dioxide emissions; or 47.28    (3) enter into a new long-term power purchase agreement that would increase 47.29statewide power sector carbon dioxide emissions. For purposes of this section, a long-term 47.30power purchase agreement means an agreement to purchase 50 megawatts of capacity or 47.31more for a term exceeding five years. This prohibition does not apply to an agreement in 47.32effect as of January 1, 2007, nor to the renewal of such an agreement.47.33    Subd. 2.Exception for facilities that offset emissions.(a) The prohibitions in 47.34subdivision 1 do not apply if the project proponent demonstrates to the Public Utilities 47.35Commission's satisfaction that it will offset the new contribution to statewide power sector 48.1carbon dioxide emissions with a carbon dioxide reduction project identified in paragraph 48.2(b) and in compliance with paragraph (c).48.3    (b) A project proponent may offset the new contribution to statewide power sector 48.4carbon dioxide emissions in either, or a combination of both, of the following ways:48.5    (1) by reducing an existing facility's contribution to statewide power sector carbon 48.6dioxide emissions in an amount equal to or greater than the proposed new contribution to 48.7statewide power sector carbon dioxide emissions; or48.8    (2) by purchasing carbon dioxide allowances from a state or group of states that 48.9has a mandatory carbon dioxide cap and trade system in place that produces verifiable 48.10emissions reductions.48.11    (c) The Public Utilities Commission shall not find that a proposed carbon dioxide 48.12reduction project identified in paragraph (b) acceptably offsets a new contribution 48.13to statewide power sector carbon dioxide emissions unless the proposed offsets are 48.14permanent, quantifiable, verifiable, enforceable, and would not have otherwise occurred. 48.15Emissions that have been offset under this subdivision and emissions exempted under 48.16subdivision 3 continue to be subject to the requirements of the cap and trade system 48.17described in section 216H.04, subdivision 3, when implemented.48.18    Subd. 3.Exception for new steel production facility.The prohibitions in 48.19subdivision 1 do not apply to increases in statewide power sector carbon dioxide 48.20emissions from a new steel production project located in a taconite relief area that has 48.21filed an application for an air quality permit from the Pollution Control Agency prior 48.22to January 1, 2007.48.23    Subd. 4.Pending proceedings.The prohibitions in subdivision 1 do not apply to a 48.24new large energy facility or a power purchase agreement under consideration by the Public 48.25Utilities Commission pursuant to proposals or applications filed with the Public Utilities 48.26Commission before April 1, 2007. The exclusion of pending proposals and applications 48.27from the prohibitions in subdivision 1 does not limit the applicability of any other law 48.28and is not an expression of legislative intent regarding whether any pending proposal or 48.29application should be approved or denied.48.30    Subd. 5.Enforcement.Whenever the commission or department determines that 48.31any person is violating or about to violate this section, it shall refer the matter to the 48.32attorney general who shall take appropriate legal action. This section may be enforced by 48.33the attorney general on the same basis as a law listed in section 8.31, subdivision 1.48.34    Sec. 6. [216H.06] GREENHOUSE GAS EMISSIONS CONSIDERATION IN 48.35RESOURCE PLANNING.49.1    By January 1, 2008, the Public Utilities Commission shall establish an estimate of 49.2the likely range of costs of future carbon dioxide regulation on electricity generation. 49.3The estimate, which may be made in a commission order, must be used in all electricity 49.4generation resource acquisition proceedings. The estimates, and annual updates, must be 49.5made following informal proceedings that allow interested parties to submit comments.49.6    Sec. 7. [216H.07] ENFORCEABILITY.49.7    In addition to any other remedies provided by law, the failure to carry out any 49.8requirement established by or pursuant to this chapter shall be treated as a violation of an 49.9environmental standard and is enforceable under chapter 116B.49.10ARTICLE 649.11RENEWABLE ENERGY STANDARDS49.12    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 through fuel blending or co-firing under paragraph (b) 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; or49.19    (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) (5), 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. The commission must deposit financial penalties imposed under this subdivision 50.4in the energy and conservation account established in the special revenue fund under 50.5section 216B.241, subdivision 2a. This subdivision is in addition to and does not limit any 50.6other authority of the commission to enforce this section.