1.1 	A bill for an act
1.2 	relating to energy; creating programs for government energy conservation 
1.3 	investments; removing rulemaking requirement for certain loan and grant 
1.4 	programs; establishing microenergy loan program; authorizing issuance of 
1.5 	state revenue bonds; modifying provision allowing guaranteed energy savings 
1.6 	contracts; requiring a report; appropriating money;amending Minnesota Statutes 
1.7 	2006, section 216C.09; Minnesota Statutes 2007 Supplement, section 471.345, 
1.8 	subdivision 13; proposing coding for new law in Minnesota Statutes, chapters 
1.9 	16B; 216C; repealing Laws 2007, chapter 57, article 2, section 30.
1.10 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.11 	Section 1. [16B.321] DEFINITIONS.
1.12 		Subdivision 1.Scope. For the purpose of this section and section 16B.322, the terms 
1.13 	defined in this section have the meanings given them.
1.14 		Subd. 2.Energy improvement project. "Energy improvement project" means:
1.15 	(1) a project to improve energy efficiency in a building or facility, including the 
1.16 	design, acquisition, installation, construction, and commissioning of equipment or 
1.17 	improvements to a building or facility, and training of building or facility staff necessary 
1.18 	to properly operate and maintain the equipment or improvements; or
1.19 	(2) a project to design, acquire, install, construct, and commission equipment or 
1.20 	products to utilize solar, wind, geothermal, biomass, or other alternative energy sources in 
1.21 	heating, cooling, or providing electricity for a building or facility owned or operated by a 
1.22 	state agency and training of building or facility staff necessary to properly operate and 
1.23 	maintain the equipment or improvements.
1.24 		Subd. 3.Energy project study. "Energy project study" means a technical and 
1.25 	financial study of one or more energy improvement projects, including:
1.26 	(1) an analysis of historical energy consumption and cost data;
2.1 	(2) a description of existing equipment, structural elements, operating characteristics, 
2.2 	and other conditions affecting energy use;
2.3 	(3) a description of the proposed energy improvement projects;
2.4 	(4) a detailed budget for the proposed project; and
2.5 	(5) calculations sufficient to demonstrate the expected energy and operational cost 
2.6 	savings and reduction in fossil-fuel use.
2.7 		Subd. 4.Financing agreement. "Financing agreement" means a tax-exempt 
2.8 	lease-purchase agreement entered into by the commissioner of administration and a 
2.9 	financial institution under a standard project financing agreement offered under section 
2.10 	16B.322, subdivision 4.
2.11 		Subd. 5.State agency. "State agency" means any office, board, commission, 
2.12 	authority, department, or other agency of the executive branch of state government.

2.13 	Sec. 2. [16B.322] ENERGY IMPROVEMENT FINANCING PROGRAM FOR 
2.14 	STATE GOVERNMENT.
2.15 		Subdivision 1.Commissioner's authority and duties; state agency authority.
 2.16 	The commissioner shall administer the energy improvement financing program created 
2.17 	by this section. A state agency may enter into contracts for the purposes of this section 
2.18 	with the commissioner and participating financial institutions. All technical services and 
2.19 	construction contracts shall be executed through the appropriate procurement procedure in 
2.20 	chapters 16B, 16C, and other applicable law.
2.21 		Subd. 2.Program eligibility; voluntary program participation; targeted 
2.22 	technical services. A state agency may elect to participate in the program. The 
2.23 	commissioner may prioritize and target technical services offered under subdivision 3 to 
2.24 	state agencies with state buildings or facilities that the commissioner determines offer the 
2.25 	greatest potential to improve energy efficiency or reduce use of fossil-fuel energy.
2.26 		Subd. 3.Target technical services. The commissioner may require full or partial 
2.27 	reimbursement of costs for technical services provided to a state agency, subject to terms 
2.28 	and conditions specified and agreed to by contract prior to the delivery of technical 
2.29 	services.
2.30 		Subd. 4.Financing agreement. The commissioner shall solicit proposals from 
2.31 	private financial institutions and may enter into a financing agreement with one or more 
2.32 	financial institutions. The term of the financing agreement shall not exceed 15 years 
2.33 	from the date of final completion of the energy improvement project. The financing 
2.34 	agreement is assignable to the state agency operating or managing the state building or 
2.35 	facility improved by the energy improvement project. The proceeds from the financing 
3.1 	agreement are appropriated to the commissioner and may be used for the purposes of 
3.2 	this section and are available until spent.
3.3 		Subd. 5.Qualifying energy improvement projects. The commissioner may 
3.4 	approve an energy improvement project and enter into a financing agreement if the 
3.5 	commissioner determines that:
3.6 	(1) the project and financing agreement have been approved by the governing body 
3.7 	or head of the state agency that operates or manages the state building or facility to be 
3.8 	improved;
3.9 	(2) the project is technically and economically feasible;
3.10 	(3) the state agency that operates or manages the state building or facility has made 
3.11 	adequate provision for the operation and maintenance of the project;
3.12 	(4) if an energy efficiency improvement, the project has a substantial likelihood to 
3.13 	result in a positive cash flow in each year the financing agreement is in effect; 
3.14 	(5) the project proposer has fully explored the use of conservation investment plan 
3.15 	opportunities under section 216B.241 with the utilities providing gas and electric service 
3.16 	to the energy improvement project;
3.17 	(6) if a renewable energy improvement, the project has a substantial likelihood to 
3.18 	reduce use of fossil-fuel energy; and
3.19 	(7) if a geothermal energy improvement, the project has a substantial likelihood to 
3.20 	produce savings in terms of nongeothermal energy and costs.
3.21 		Subd. 6.Program costs. Program costs incurred by the commissioner or a state 
3.22 	agency that are not reimbursed or paid directly under a financing agreement may be paid 
3.23 	with money made available to the commissioner under section 216C.43, subdivision 10.
3.24 		Subd. 7.Conservation investment plan savings goals. A utility or association 
3.25 	may count toward its energy savings goals under section 216B.241, subdivision 1c, the 
3.26 	energy savings resulting from its investment in an energy improvement project.

3.27 	Sec. 3. Minnesota Statutes 2006, section 216C.09, is amended to read:
3.28 	216C.09 COMMISSIONER DUTIES.
3.29 	(a) The commissioner shall:
3.30 	(1) manage the department as the central repository within the state government for 
3.31 	the collection of data on energy;
3.32 	(2) prepare and adopt an emergency allocation plan specifying actions to be taken 
3.33 	in the event of an impending serious shortage of energy, or a threat to public health, 
3.34 	safety, or welfare;
4.1 	(3) undertake a continuing assessment of trends in the consumption of all forms of 
4.2 	energy and analyze the social, economic, and environmental consequences of these trends;
4.3 	(4) carry out energy conservation measures as specified by the legislature and 
4.4 	recommend to the governor and the legislature additional energy policies and conservation 
4.5 	measures as required to meet the objectives of sections 216C.05 to 216C.30;
4.6 	(5) collect and analyze data relating to present and future demands and resources 
4.7 	for all sources of energy;
4.8 	(6) evaluate policies governing the establishment of rates and prices for energy 
4.9 	as related to energy conservation, and other goals and policies of sections 216C.05 to 
4.10 	216C.30, and make recommendations for changes in energy pricing policies and rate 
4.11 	schedules;
4.12 	(7) study the impact and relationship of the state energy policies to international, 
4.13 	national, and regional energy policies;
4.14 	(8) design and implement a state program for the conservation of energy; this 
4.15 	program shall include but not be limited to, general commercial, industrial, and residential, 
4.16 	and transportation areas; such program shall also provide for the evaluation of energy 
4.17 	systems as they relate to lighting, heating, refrigeration, air conditioning, building design 
4.18 	and operation, and appliance manufacturing and operation;
4.19 	(9) inform and educate the public about the sources and uses of energy and the 
4.20 	ways in which persons can conserve energy;
4.21 	(10) dispense funds made available for the purpose of research studies and projects 
4.22 	of professional and civic orientation, which are related to either energy conservation, 
4.23 	resource recovery, or the development of alternative energy technologies which conserve 
4.24 	nonrenewable energy resources while creating minimum environmental impact;
4.25 	(11) charge other governmental departments and agencies involved in energy-related 
4.26 	activities with specific information gathering goals and require that those goals be met;
4.27 	(12) design a comprehensive program for the development of indigenous energy 
4.28 	resources. The program shall include, but not be limited to, providing technical, 
4.29 	informational, educational, and financial services and materials to persons, businesses, 
4.30 	municipalities, and organizations involved in the development of solar, wind, hydropower, 
4.31 	peat, fiber fuels, biomass, and other alternative energy resources. The program shall be 
4.32 	evaluated by the alternative energy technical activity; and
4.33 	(13) dispense loans, grants, or other financial aid from money received from 
4.34 	litigation or settlement of alleged violations of federal petroleum-pricing regulations 
4.35 	made available to the department for that purpose. The commissioner shall adopt rules 
4.36 	under chapter 14 for this purpose.
5.1 	(b) Further, the commissioner may participate fully in hearings before the 
5.2 	Public Utilities Commission on matters pertaining to rate design, cost allocation, 
5.3 	efficient resource utilization, utility conservation investments, small power production, 
5.4 	cogeneration, and other rate issues. The commissioner shall support the policies stated in 
5.5 	section 216C.05 and shall prepare and defend testimony proposed to encourage energy 
5.6 	conservation improvements as defined in section 216B.241.

5.7 	Sec. 4. [216C.145] MICROENERGY LOAN PROGRAM.
5.8 		Subdivision 1.Definitions. (a) The definitions in this subdivision apply to this 
5.9 	section.
5.10 	(b) "Small-scale renewable energy" projects include solar thermal water heating, 
5.11 	solar electric or photovoltaic equipment, small wind energy conversion systems of less 
5.12 	than 250 kW, anaerobic digester gas systems, microhydro systems up to 100 kW, and 
5.13 	heating and cooling applications using geothermal energy. 
5.14 	(c) "Unit of local government" means any home rule charter or statutory city, county, 
5.15 	commission, district, authority, or other political subdivision or instrumentality of this 
5.16 	state, including a sanitary district, the Metropolitan Council, a port authority, an economic 
5.17 	development authority, or a housing and redevelopment authority.
5.18 		Subd. 2.Program established. The commissioner of commerce shall develop, 
5.19 	implement, and administer a microenergy loan program under this section.
5.20 		Subd. 3.Loan purposes. (a) The commissioner may issue low-interest, long-term 
5.21 	loans to units of local government to finance community-owned or publicly owned small 
5.22 	scale renewable energy systems or to provide loans or other aids to small businesses to 
5.23 	install small-scale renewable energy systems.
5.24 	(b) The commissioner may participate in loans made by the Housing Finance 
5.25 	Agency to residential property owners, private developers, nonprofit organizations, or 
5.26 	units of local government under sections 462A.05, subdivisions 14 and 18; and 462A.33 
5.27 	for the construction, purchase, or rehabilitation of residential housing, to facilitate 
5.28 	the installation of small-scale renewable energy systems in residential housing and 
5.29 	cost-effective energy conservation improvements identified in an energy efficiency audit. 
5.30 	The commissioner shall assist the Housing Finance Agency in assessing the technical 
5.31 	qualifications of loan applicants.
5.32 		Subd. 4.Technical standards. The commissioner shall determine technical 
5.33 	standards for small-scale renewable energy systems to qualify for loans under this section.
5.34 		Subd. 5.Loan proposals. (a) At least once a year, the commissioner shall publish in 
5.35 	the State Register a request for proposals from units of local government for a loan under 
6.1 	this section. Within 45 days after the deadline for receipt of proposals, the commissioner 
6.2 	shall select proposals based on the following criteria:
6.3 	(1) the reliability and cost-effectiveness of the renewable technology to be installed 
6.4 	under the proposal;
6.5 	(2) the extent to which the proposal effectively integrates with the conservation and 
6.6 	energy efficiency programs of the energy utilities serving the proposer;
6.7 	(3) the total life cycle energy use and greenhouse gas emissions reductions per 
6.8 	dollar of installed cost;
6.9 	(4) the diversity of the renewable energy technology installed under the proposal;
6.10 	(5) the geographic distribution of projects throughout the state;
6.11 	(6) the percentage of total project cost requested;
6.12 	(7) the proposed security for payback of the loan; and
6.13 	(8) other criteria the commissioner may determine to be necessary and appropriate.
6.14 		Subd. 6.Loan terms. A loan under this section must be issued at the lowest interest 
6.15 	required to recover the costs of issuing the loan, and must be for a minimum of 15 years, 
6.16 	unless the commissioner determines that a shorter loan period of no less than ten years 
6.17 	is necessary and feasible.
6.18 		Subd. 7.Account. A microenergy loan account is established in the state treasury. 
6.19 	Money in the account consists of the proceeds of revenue bonds issued under section 
6.20 	216C.146, interest and other earnings on money in the account, money received in 
6.21 	repayment of loans from the account, legislative appropriations, and money from any 
6.22 	other source credited to the account. 
6.23 		Subd. 8.Appropriation. Money in the account is appropriated to the commissioner 
6.24 	of commerce to make microenergy loans under this section and to the commissioner of 
6.25 	finance to pay debt service and other costs under section 216C.146. Payment of debt 
6.26 	service costs and funding reserves take priority over use of money in the account for 
6.27 	any other purpose.

6.28 	EFFECTIVE DATE. This section is effective the day following final enactment.

6.29 	Sec. 5. [216C.146] MICROENERGY LOAN REVENUE BONDS.
6.30 		Subdivision 1.Bonding authority. (a) The commissioner of finance, if requested by 
6.31 	the commissioner of commerce, shall sell and issue state revenue bonds for the following 
6.32 	purposes:
6.33 	(1) to make microenergy loans under section 216C.145;
6.34 	(2) to pay the costs of issuance, debt service, and bond insurance or other credit 
6.35 	enhancements, and to fund reserves; and
7.1 	(3) to refund bonds issued under this section.
7.2 	(b) The aggregate principal amount of bonds for the purposes of paragraph (a), 
7.3 	clause (1), that may be outstanding at any time may not exceed $20,000,000; the principal 
7.4 	amount of bonds that may be issued for the purposes of paragraph (a), clauses (2) and 
7.5 	(3), is not limited.
7.6 		Subd. 2.Procedure. The commissioner may sell and issue the bonds on the terms 
7.7 	and conditions the commissioner determines to be in the best interests of the state. The 
7.8 	bonds may be sold at public or private sale. The commissioner may enter into any 
7.9 	agreements or pledges the commissioner determines necessary or useful to sell the bonds 
7.10 	that are not inconsistent with section 216C.145. Sections 16A.672 to 16A.675 apply to 
7.11 	the bonds. The proceeds of the bonds issued under this section must be credited to the 
7.12 	microenergy loan account created under section 216C.145.
7.13 		Subd. 3.Revenue sources. The debt service on the bonds is payable only from the 
7.14 	following sources:
7.15 	(1) revenue credited to the microenergy loan account from the sources identified in 
7.16 	section 216C.145 or from any other source; and
7.17 	(2) other revenues pledged to the payment of the bonds.
7.18 		Subd. 4.Refunding bonds. The commissioner may issue bonds to refund 
7.19 	outstanding bonds issued under subdivision 1, including the payment of any redemption 
7.20 	premiums on the bonds and any interest accrued or to accrue to the first redemption date 
7.21 	after delivery of the refunding bonds. The proceeds of the refunding bonds may, at the 
7.22 	discretion of the commissioner, be applied to the purchases or payment at maturity of the 
7.23 	bonds to be refunded, or the redemption of the outstanding bonds on the first redemption 
7.24 	date after delivery of the refunding bonds and may, until so used, be placed in escrow to 
7.25 	be applied to the purchase, retirement, or redemption. Refunding bonds issued under this 
7.26 	subdivision must be issued and secured in the manner provided by the commissioner.
7.27 		Subd. 5.Not a general or moral obligation. Bonds issued under this section are 
7.28 	not public debt, and the full faith, credit, and taxing powers of the state are not pledged 
7.29 	for their payment. The bonds may not be paid, directly in whole or in part from a tax of 
7.30 	statewide application on any class of property, income, transaction, or privilege. Payment 
7.31 	of the bonds is limited to the revenues explicitly authorized to be pledged under this 
7.32 	section. The state neither makes nor has a moral obligation to pay the bonds if the pledged 
7.33 	revenues and other legal security for them is insufficient.
7.34 		Subd. 6.Trustee. The commissioner may contract with and appoint a trustee for 
7.35 	bond holders. The trustee has the powers and authority vested in it by the commissioner 
7.36 	under the bond and trust indentures.
8.1 		Subd. 7.Pledges. A pledge made by the commissioner is valid and binding from 
8.2 	the time the pledge is made. The money or property pledged and later received by the 
8.3 	commissioner is immediately subject to the lien of the pledge without any physical 
8.4 	delivery of the property or money or further act, and the lien of the pledge is valid and 
8.5 	binding as against all parties having claims of any kind in tort, contract, or otherwise 
8.6 	against the commissioner, whether or not those parties have notice of the lien or pledge. 
8.7 	Neither the order nor any other instrument by which a pledge is created need be recorded.
8.8 		Subd. 8.Bonds; purchase and cancellation. The commissioner, subject to 
8.9 	agreements with bondholders that may then exist, may, out of any money available for the 
8.10 	purpose, purchase bonds of the commissioner at a price not exceeding (1) if the bonds are 
8.11 	then redeemable, the redemption price then applicable plus accrued interest to the next 
8.12 	interest payment date thereon, or (2) if the bonds are not redeemable, the redemption price 
8.13 	applicable on the first date after the purchase upon which the bonds become subject to 
8.14 	redemption plus accrued interest to that date.
8.15 		Subd. 9.State pledge against impairment of contracts. The state pledges and 
8.16 	agrees with the holders of any bonds that the state will not limit or alter the rights vested in 
8.17 	the commissioner to fulfill the terms of any agreements made with the bondholders, or 
8.18 	in any way impair the rights and remedies of the holders until the bonds, together with 
8.19 	interest on them, with interest on any unpaid installments of interest, and all costs and 
8.20 	expenses in connection with any action or proceeding by or on behalf of the bondholders, 
8.21 	are fully met and discharged. The commissioner may include this pledge and agreement 
8.22 	of the state in any agreement with the holders of bonds issued under this section.

8.23 	EFFECTIVE DATE. This section is effective the day following final enactment.

8.24 	Sec. 6. [216C.42] DEFINITIONS.
8.25 		Subdivision 1.Scope. For the purpose of this section and section 216C.43, the terms 
8.26 	defined in this section have the meanings given them.
8.27 		Subd. 2.Energy improvement project. "Energy improvement project" means 
8.28 	a project to improve energy efficiency in a building or facility, including the design, 
8.29 	acquisition, installation, construction, and commissioning of equipment or improvements 
8.30 	to a building or facility, and training of building or facility staff necessary to properly 
8.31 	operate and maintain the equipment or improvements.
8.32 		Subd. 3.Energy project study. "Energy project study" means a technical and 
8.33 	financial study of one or more energy improvement projects, including:
8.34 	(1) an analysis of historical energy consumption and cost data;
9.1 	(2) a description of existing equipment, structural elements, operating characteristics, 
9.2 	and other conditions affecting energy use;
9.3 	(3) a description of the proposed energy improvement projects;
9.4 	(4) a detailed budget for the proposed project; 
9.5 	(5) calculations sufficient to demonstrate the expected energy savings; and
9.6 	(6) if a geothermal energy improvement, whether the project has a substantial 
9.7 	likelihood to produce savings in terms of nongeothermal energy and costs.
9.8 		Subd. 4.Financing agreement. "Financing agreement" means a tax-exempt 
9.9 	lease-purchase agreement entered into by a local government and a financial institution 
9.10 	under a standard project financing agreement offered under section 216C.43.
9.11 		Subd. 5.Local government. "Local government" means a county, statutory or 
9.12 	home rule charter city, town, school district, park district, or any combination of those 
9.13 	units operating under an agreement to exercise powers jointly.
9.14 		Subd. 6.Program. "Program" means the energy improvement financing program 
9.15 	for local governments authorized by section 216C.43.
9.16 		Subd. 7.Supplemental cash flow agreement. "Supplemental cash flow agreement" 
9.17 	means an agreement by the state to guarantee a positive budget impact for an energy 
9.18 	improvement as provided in section 216C.43, subdivision 7.

9.19 	Sec. 7. [216C.43] ENERGY IMPROVEMENT FINANCING PROGRAM FOR 
9.20 	LOCAL GOVERNMENT.
9.21 		Subdivision 1.Commissioner's authority and duties; local government 
9.22 	authority. The commissioner shall administer this section. A local government may 
9.23 	enter into contracts for the purposes of this section with the commissioner, the primary 
9.24 	contractor, other contracted technical service providers, and participating financial 
9.25 	institutions.
9.26 		Subd. 2.Program eligibility; voluntary program participation; targeted 
9.27 	technical services. A local government may elect to participate in the program. The 
9.28 	commissioner may prioritize and target technical services offered under subdivision 
9.29 	4 to public entities that the commissioner determines offer the greatest potential for 
9.30 	cost-effective energy improvement projects.
9.31 		Subd. 3.Primary contractor for technical, financial, and program management 
9.32 	services. The commissioner may enter into a contract for the delivery of technical 
9.33 	services, financial management, marketing, and administrative services necessary for 
9.34 	implementation of the program.
10.1 		Subd. 4.Targeted technical services. The commissioner shall offer technical 
10.2 	services to targeted public entities to conduct energy project studies. The commissioner 
10.3 	may contract with one or more qualified technical service providers to conduct energy 
10.4 	project studies for targeted public entities. The commissioner may require full or partial 
10.5 	reimbursement of costs for technical services provided to a local government, subject to 
10.6 	terms and conditions specified and agreed to by contract before the delivery of technical 
10.7 	services. A local government may independently procure technical services to conduct an 
10.8 	energy project study, but the energy project study must be reviewed and approved by the 
10.9 	commissioner to qualify an energy improvement project for a financing agreement under 
10.10 	subdivision 6 or a supplemental cash flow agreement under subdivision 7.
10.11 		Subd. 5.Participation of technical service providers statewide. Program 
10.12 	activities must be implemented to encourage statewide participation of engineers, 
10.13 	architects, energy auditors, contractors, and other technical service providers. The 
10.14 	commissioner may provide training on energy project study requirements and procedures 
10.15 	to technical service providers.
10.16 		Subd. 6.Standard project financing agreement. The commissioner shall solicit 
10.17 	proposals from private financial institutions and may enter into a standard project 
10.18 	financing agreement with one or more financial institutions. A standard project financing 
10.19 	agreement must specify terms and conditions uniformly available to all participating 
10.20 	public entities for financing to implement energy improvement projects under this section. 
10.21 	A local government may choose to finance an energy improvement project by means other 
10.22 	than a standard project financing agreement, but a supplemental cash flow agreement 
10.23 	under subdivision 7 must not be offered unless the commissioner determines that the other 
10.24 	financing means creates no greater potential obligation under a supplemental cash flow 
10.25 	agreement than would be created through a standard project financing agreement.
10.26 		Subd. 7.Supplemental cash flow agreement. (a) The commissioner shall 
10.27 	offer a supplemental cash flow agreement for the term of the financing agreement 
10.28 	to a participating local government for qualifying energy improvement projects. A 
10.29 	supplemental cash flow agreement is an agreement by the commissioner to lend money 
10.30 	to a local government in an amount necessary so that the cumulative payments made 
10.31 	by the local government under a financing agreement minus the amount loaned by the 
10.32 	commissioner do not exceed the actual energy and operating cost savings attributable to 
10.33 	the energy improvement project for the term of the supplemental cash flow agreement. 
10.34 	Money loaned to a local government by the commissioner in fulfillment of a supplemental 
10.35 	cash flow agreement is repayable only to the extent that a positive budget impact is 
10.36 	maintained during the term of the supplemental cash flow agreement. Terms and 
11.1 	conditions of a supplemental cash flow agreement must be agreed to by contract before a 
11.2 	local government enters into a financing agreement. A supplemental cash flow agreement 
11.3 	shall not exceed 15 years from the date of final completion of the energy improvement 
11.4 	project.
11.5 	(b) A supplemental cash flow agreement must include, but is not limited to:
11.6 	(1) specification of methods and procedures to measure and verify energy cost 
11.7 	savings;
11.8 	(2) obligations of the local government to operate and maintain the energy 
11.9 	improvements;
11.10 	(3) procedures to modify the supplemental cash flow agreement if the local 
11.11 	government modifies operating characteristics of its building or facility in a manner that 
11.12 	adversely affects energy cost savings;
11.13 	(4) interest charged on the loan, which may not exceed the interest on the related 
11.14 	financial agreement; and
11.15 	(5) procedures for resolution of disputes.
11.16 	(c) The commissioner must limit aggregate exposure to liability for payments under 
11.17 	existing supplemental cash flow agreements to an amount no more than the appropriation 
11.18 	available to make those payments.
11.19 		Subd. 8.Qualifying energy improvement projects. A local government may 
11.20 	submit to the commissioner, on a form prescribed by the commissioner, an application for 
11.21 	a financing agreement authorization and supplemental cash flow agreement for energy 
11.22 	improvement projects. The commissioner shall approve an energy improvement project 
11.23 	for a supplemental cash flow agreement and authorize eligibility for a financing agreement 
11.24 	if the commissioner determines that:
11.25 	(1) the application has been approved by the governing body or agency head of the 
11.26 	local government;
11.27 	(2) the project is technically and economically feasible;
11.28 	(3) the local government has made adequate provision for the operation and 
11.29 	maintenance of the project;
11.30 	(4) the project proposer has fully explored the use of conservation investment plan 
11.31 	opportunities under section 216B.241 with the utilities providing gas and electric service 
11.32 	to the project;
11.33 	(5) the project has a substantial likelihood of resulting in a positive cash flow in each 
11.34 	year the financing agreement is in effect; and
11.35 	(6) adequate money will be available to the commissioner to fulfill the supplemental 
11.36 	cash flow agreement.
12.1 	Energy improvement projects under this section are not subject to section 123B.71.
12.2 		Subd. 9.Program costs. Program costs incurred by the commissioner or a public 
12.3 	entity that are not direct costs to implement energy improvement projects may be paid 
12.4 	with program money appropriated under subdivision 10.
12.5 		Subd. 10.Funding; appropriation; receipts. Petroleum violation escrow funds 
12.6 	appropriated to the commissioner by Laws 1988, chapter 686, article 1, section 38, for 
12.7 	state energy loan programs for schools, hospitals, and public buildings, and reappropriated 
12.8 	by Laws 2007, chapter 57, article 2, section 30, are appropriated to the commissioner 
12.9 	for the purposes of this section and are available until spent. The commissioner may 
12.10 	transfer up to $1,000,000 of this appropriation to the commissioner of administration for 
12.11 	the purposes of section 16B.322.
12.12 		Subd. 11.CIP energy savings goals. A utility or association may count toward its 
12.13 	energy savings goals under section 216B.241, subdivision 1c, the energy savings resulting 
12.14 	from its investment in an energy improvement project.

12.15 	Sec. 8. Minnesota Statutes 2007 Supplement, section 471.345, subdivision 13, is 
12.16 	amended to read:
12.17 		Subd. 13.Energy efficiency projects. The following definitions apply to this 
12.18 	subdivision.
12.19 	(a) "Energy conservation measure" means a training program or facility alteration 
12.20 	designed to reduce energy consumption or operating costs and includes:
12.21 	(1) insulation of the building structure and systems within the building;
12.22 	(2) storm windows and doors, caulking or weatherstripping, multiglazed windows 
12.23 	and doors, heat absorbing or heat reflective glazed and coated window and door 
12.24 	systems, additional glazing, reductions in glass area, and other window and door system 
12.25 	modifications that reduce energy consumption;
12.26 	(3) automatic energy control systems;
12.27 	(4) heating, ventilating, or air conditioning system modifications or replacements;
12.28 	(5) replacement or modifications of lighting fixtures to increase the energy efficiency 
12.29 	of the lighting system without increasing the overall illumination of a facility, unless an 
12.30 	increase in illumination is necessary to conform to the applicable state or local building 
12.31 	code for the lighting system after the proposed modifications are made;
12.32 	(6) energy recovery systems;
12.33 	(7) cogeneration systems that produce steam or forms of energy such as heat, as well 
12.34 	as electricity, for use primarily within a building or complex of buildings;
12.35 	(8) energy conservation measures that provide long-term operating cost reductions.
13.1 	(b) "Guaranteed energy savings contract" means a contract for the evaluation 
13.2 	and recommendations of energy conservation measures, and for one or more energy 
13.3 	conservation measures. The contract must provide that all payments, except obligations 
13.4 	on termination of the contract before its expiration, are to be made over time, but not to 
13.5 	exceed 1520 years from the date of final installation, and the savings are guaranteed to 
13.6 	the extent necessary to make payments for the systems.
13.7 	(c) "Qualified provider" means a person or business experienced in the design, 
13.8 	implementation, and installation of energy conservation measures. A qualified provider 
13.9 	to whom the contract is awarded shall give a sufficient bond to the municipality for its 
13.10 	faithful performance.
13.11 	Notwithstanding any law to the contrary, a municipality may enter into a guaranteed 
13.12 	energy savings contract with a qualified provider to significantly reduce energy or 
13.13 	operating costs.
13.14 	Before entering into a contract under this subdivision, the municipality shall provide 
13.15 	published notice of the meeting in which it proposes to award the contract, the names of 
13.16 	the parties to the proposed contract, and the contract's purpose.
13.17 	Before installation of equipment, modification, or remodeling, the qualified provider 
13.18 	shall first issue a report, summarizing estimates of all costs of installations, modifications, 
13.19 	or remodeling, including costs of design, engineering, installation, maintenance, repairs, 
13.20 	or debt service, and estimates of the amounts by which energy or operating costs will be 
13.21 	reduced.
13.22 	A guaranteed energy savings contract that includes a written guarantee that savings 
13.23 	will meet or exceed the cost of energy conservation measures is not subject to competitive 
13.24 	bidding requirements of section 471.345 or other law or city charter. The contract is 
13.25 	not subject to section 123B.52. 
13.26 	A municipality may enter into a guaranteed energy savings contract with a qualified 
13.27 	provider if, after review of the report, it finds that the amount it would spend on the energy 
13.28 	conservation measures recommended in the report is not likely to exceed the amount to be 
13.29 	saved in energy and operation costs over 1520 years from the date of final installation if 
13.30 	the recommendations in the report were followed, and the qualified provider provides a 
13.31 	written guarantee that the energy or operating cost savings will meet or exceed the costs 
13.32 	of the system. The guaranteed energy savings contract may provide for payments over a 
13.33 	period of time, not to exceed 1520 years.
13.34 	A municipality may enter into an installment payment contract for the purchase and 
13.35 	installation of energy conservation measures. The contract must provide for payments of 
13.36 	not less than 1/151/20 of the price to be paid within two years from the date of the first 
14.1 	operation, and the remaining costs to be paid monthly, not to exceed a 15-year20-year 
14.2 	term from the date of the first operation final acceptance.
14.3 	A municipality entering into a guaranteed energy savings contract shall provide a 
14.4 	copy of the contract and the report from the qualified provider to the commissioner of 
14.5 	commerce within 30 days of the effective date of the contract.
14.6 	Guaranteed energy savings contracts may extend beyond the fiscal year in which 
14.7 	they become effective. The municipality shall include in its annual appropriations measure 
14.8 	for each later fiscal year any amounts payable under guaranteed energy savings contracts 
14.9 	during the year. Failure of a municipality to make such an appropriation does not affect 
14.10 	the validity of the guaranteed energy savings contract or the municipality's obligations 
14.11 	under the contracts.

14.12 	Sec. 9. REPORT TO COMMISSIONER OF EDUCATION.
 14.13 	The commissioner of commerce must report to the commissioner of education by 
14.14 	January 15, 2009, and January 15, 2010, the school districts that have applied for loans 
14.15 	under Minnesota Statutes, section 216C.243. The report must indicate the type of project 
14.16 	for which each district requested approval, the amount of the loan requested, and whether 
14.17 	the project was approved. If the district's project was not approved, the commissioner 
14.18 	must report the reason for the lack of approval. This section expires January 16, 2010.

14.19 	Sec. 10.  REPEALER.
 14.20 	Laws 2007, chapter 57, article 2, section 30, is repealed.

14.21 	EFFECTIVE DATE. This section is effective the day following final enactment.