1.1A bill for an act1.2relating to energy; creating program for government energy improvement 1.3investments; requiring a report; appropriating money;amending Minnesota 1.4Statutes 2006, section 216C.09; Minnesota Statutes 2007 Supplement, section 1.5216B.241, by adding a subdivision; proposing coding for new law in Minnesota 1.6Statutes, chapters 16B; 216C; repealing Laws 2007, chapter 57, article 2, section 1.730.1.8BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:1.9    Section 1. [16B.321] DEFINITIONS.1.10    Subdivision 1.Scope.For the purpose of this section and section 16B.322, the terms 1.11defined in this section have the meanings given them.1.12    Subd. 2.Energy improvement project."Energy improvement project" means:1.13    (1) a project to improve energy efficiency in a building or facility, including the 1.14design, acquisition, installation, construction, and commissioning of equipment or 1.15improvements to a building or facility owned or operated by a state agency, and training 1.16of building or facility staff necessary to properly operate and maintain the equipment or 1.17improvements; or1.18    (2) a project to design, acquire, install, construct, and commission equipment or 1.19products to utilize solar, wind, geothermal, biomass, or other alternative energy sources in 1.20heating, cooling, or providing electricity for a building or facility owned or operated by a 1.21state agency and training of building or facility staff necessary to properly operate and 1.22maintain the equipment or improvements.1.23    Subd. 3.Energy project study."Energy project study" means a technical and 1.24financial study of one or more energy improvement projects, including:1.25    (1) an analysis of historical energy consumption and cost data;2.1    (2) a description of existing equipment, structural elements, operating characteristics, 2.2and 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; and2.5    (5) calculations sufficient to demonstrate the expected energy and operational cost 2.6savings and reduction in fossil-fuel use.2.7    Subd. 4.Financing agreement."Financing agreement" means a tax-exempt 2.8lease-purchase agreement entered into by the commissioner of administration and a 2.9financial institution under a standard project financing agreement offered under section 2.1016B.322, subdivision 4.2.11    Subd. 5.State agency."State agency" means any state officer, employee, board, 2.12commission, authority, department, or other agency of the executive branch of state 2.13government.2.14    Sec. 2. [16B.322] ENERGY IMPROVEMENT FINANCING PROGRAM FOR 2.15STATE GOVERNMENT.2.16    Subdivision 1.Commissioner's authority and duties; state agency authority.The 2.17commissioner shall administer this section. A state agency may enter into contracts for the 2.18purposes of this section with the commissioner and participating financial institutions. All 2.19technical services and construction contracts must be executed through the appropriate 2.20procurement procedure in chapters 16B, 16C, and other applicable law.2.21    Subd. 2.Program eligibility; voluntary program participation; targeted 2.22technical services.A state agency may elect to participate in the program. The 2.23commissioner may prioritize and target technical services offered under subdivision 3 to 2.24state agencies with state buildings or facilities that the commissioner determines offer the 2.25greatest 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 2.27partial reimbursement of costs for technical services provided to a state agency, subject 2.28to terms and conditions specified and agreed to by contract prior to the delivery of 2.29technical services. The commissioner of commerce may transfer up to $1,000,000 of the 2.30appropriation in Laws 1988, chapter 686, article 1, section 38, to the commissioner of 2.31administration for the purposes of this section.2.32    Subd. 4.Financing agreement.The commissioner shall solicit proposals from 2.33private financial institutions and may enter into a financing agreement with one or more 2.34financial institutions. The term of the financing agreement must not exceed 15 years 2.35from the date of final completion of the energy improvement project. The financing 3.1agreement is assignable to the state agency operating or managing the state building or 3.2facility improved by the energy improvement project. The proceeds from the financing 3.3agreement are appropriated to the commissioner and may be used for the purposes of 3.4this section and are available until spent.3.5    Subd. 5.Qualifying energy improvement projects.The commissioner may 3.6approve an energy improvement project and enter into a financing agreement if the 3.7commissioner determines that:3.8    (1) the project and financing agreement have been approved by the governing body 3.9or head of the state agency that operates or manages the state building or facility to be 3.10improved;3.11    (2) the project is technically and economically feasible;3.12    (3) the state agency that operates or manages the state building or facility has made 3.13adequate provision for the operation and maintenance of the project;3.14    (4) if an energy efficiency improvement, the project has a substantial likelihood to 3.15result in a positive cash flow in each year the financing agreement is in effect; and3.16    (5) if a renewable energy improvement, the project has a substantial likelihood to 3.17reduce use of fossil-fuel energy.3.18    Subd. 6.Program costs.Program costs incurred by the commissioner or a state 3.19agency that are not reimbursed or paid directly under a financing agreement may be paid 3.20with funds made available to the commissioner under section 216C.43, subdivision 10.3.21    Sec. 3. Minnesota Statutes 2007 Supplement, section 216B.241, is amended by adding 3.22a subdivision to read:3.23    Subd. 9.Coordination with utility conservation improvement programs.The 3.24contractor selected by the commissioner in subdivision 2 shall ensure that the local 3.25government makes use of all applicable conservation improvement programs provided 3.26by utilities providing electric or natural gas service. Consistent with direction from the 3.27commissioner, a utility may count the savings resulting from its energy improvement 3.28projects under sections 16B.322 and 216C.43 towards the utility's energy-saving goal 3.29under section 216B.241, subdivision 1c.3.30    Sec. 4. Minnesota Statutes 2006, section 216C.09, is amended to read:3.31216C.09 COMMISSIONER DUTIES.3.32    (a) The commissioner shall:3.33    (1) manage the department as the central repository within the state government for 3.34the collection of data on energy;4.1    (2) prepare and adopt an emergency allocation plan specifying actions to be taken 4.2in the event of an impending serious shortage of energy, or a threat to public health, 4.3safety, or welfare;4.4    (3) undertake a continuing assessment of trends in the consumption of all forms of 4.5energy and analyze the social, economic, and environmental consequences of these trends;4.6    (4) carry out energy conservation measures as specified by the legislature and 4.7recommend to the governor and the legislature additional energy policies and conservation 4.8measures as required to meet the objectives of sections 
         216C.05 to 
         216C.30;4.9    (5) collect and analyze data relating to present and future demands and resources 4.10for all sources of energy;4.11    (6) evaluate policies governing the establishment of rates and prices for energy 4.12as related to energy conservation, and other goals and policies of sections 
         216C.05 to 4.13216C.30
         , and make recommendations for changes in energy pricing policies and rate 4.14schedules;4.15    (7) study the impact and relationship of the state energy policies to international, 4.16national, and regional energy policies;4.17    (8) design and implement a state program for the conservation of energy; this 4.18program shall include but not be limited to, general commercial, industrial, and residential, 4.19and transportation areas; such program shall also provide for the evaluation of energy 4.20systems as they relate to lighting, heating, refrigeration, air conditioning, building design 4.21and operation, and appliance manufacturing and operation;4.22    (9) inform and educate the public about the sources and uses of energy and the 4.23ways in which persons can conserve energy;4.24    (10) dispense funds made available for the purpose of research studies and projects 4.25of professional and civic orientation, which are related to either energy conservation, 4.26resource recovery, or the development of alternative energy technologies which conserve 4.27nonrenewable energy resources while creating minimum environmental impact;4.28    (11) charge other governmental departments and agencies involved in energy-related 4.29activities with specific information gathering goals and require that those goals be met;4.30    (12) design a comprehensive program for the development of indigenous energy 4.31resources. The program shall include, but not be limited to, providing technical, 4.32informational, educational, and financial services and materials to persons, businesses, 4.33municipalities, and organizations involved in the development of solar, wind, hydropower, 4.34peat, fiber fuels, biomass, and other alternative energy resources. The program shall be 4.35evaluated by the alternative energy technical activity; and5.1    (13) dispense loans, grants, or other financial aid from money received from 5.2litigation or settlement of alleged violations of federal petroleum-pricing regulations 5.3made available to the department for that purpose. The commissioner shall adopt rules 5.4under chapter 14 for this purpose.5.5    (b) Further, the commissioner may participate fully in hearings before the 5.6Public Utilities Commission on matters pertaining to rate design, cost allocation, 5.7efficient resource utilization, utility conservation investments, small power production, 5.8cogeneration, and other rate issues. The commissioner shall support the policies stated in 5.9section 
         216C.05 and shall prepare and defend testimony proposed to encourage energy 5.10conservation improvements as defined in section 
         216B.241.5.11    Sec. 5. [216C.42] DEFINITIONS.5.12    Subdivision 1.Scope.For the purpose of this section and section 216C.43, the terms 5.13defined in this section have the meanings given them.5.14    Subd. 2.Energy improvement project."Energy improvement project" means 5.15a project to improve energy efficiency in a building or facility, including the design, 5.16acquisition, installation, and commissioning of equipment or improvements to a building 5.17or facility, and training of building or facility staff necessary to properly operate and 5.18maintain the equipment or improvements.5.19    Subd. 3.Energy project study."Energy project study" means a technical and 5.20financial study of one or more energy improvement projects, including:5.21    (1) an analysis of historical energy consumption and cost data;5.22    (2) a description of existing equipment, structural elements, operating characteristics, 5.23and other conditions affecting energy use;5.24    (3) a description of the proposed energy improvement projects;5.25    (4) a detailed budget for the proposed project; and5.26    (5) calculations sufficient to demonstrate the expected energy savings.5.27    Subd. 4.Financing agreement."Financing agreement" means a tax-exempt 5.28lease-purchase agreement entered into by a local government and a financial institution 5.29under a standard project financing agreement offered under section 216C.43, subdivision 6.5.30    Subd. 5.Local government."Local government" means a Minnesota county, 5.31statutory or home rule charter city, town, school district, or any combination of those units 5.32operating under an agreement to exercise powers jointly.5.33    Subd. 6.Program."Program" means the energy improvement financing program 5.34for local governments authorized by section 216C.43.6.1    Subd. 7.Supplemental cash flow agreement."Supplemental cash flow agreement" 6.2means an agreement by the commissioner to lend funds to a local government up to an 6.3amount necessary to ensure that the cumulative payments made by the local government 6.4under a financing agreement minus the amount loaned by the commissioner do not exceed 6.5the actual energy and operating cost savings attributable to the energy improvement 6.6project for the term of the supplemental cash flow agreement.6.7    Sec. 6. [216C.43] ENERGY IMPROVEMENT FINANCING PROGRAM FOR 6.8LOCAL GOVERNMENT.6.9    Subdivision 1.Commissioner's authority and duties; local government 6.10authority.The commissioner shall administer this section. A local government may 6.11enter into contracts for the purposes of this section with the commissioner, the primary 6.12contractor, other contracted technical service providers, and participating financial 6.13institutions.6.14    Subd. 2.Program eligibility; voluntary program participation; targeted 6.15technical services.A local government may elect to participate in the program. The 6.16commissioner may prioritize and target technical services offered under subdivision 6.175 to public entities that the commissioner determines offer the greatest potential for 6.18cost-effective energy improvement projects.6.19    Subd. 3.Primary contractor for technical, financial, and program management 6.20services.The commissioner may enter into a contract for the delivery of technical 6.21services, financial management, marketing, and administrative services necessary for 6.22implementation of the program.6.23    Subd. 4.Targeted technical services.The commissioner shall offer technical 6.24services to targeted public entities to conduct energy project studies. The commissioner 6.25may contract with one or more qualified technical service providers to conduct energy 6.26project studies for targeted public entities. The commissioner may require full or partial 6.27reimbursement of costs for technical services provided to a local government, subject to 6.28terms and conditions specified and agreed to by contract prior to the delivery of technical 6.29services. A local government may independently procure technical services to conduct an 6.30energy project study, but the energy project study must be reviewed and approved by the 6.31commissioner to qualify an energy improvement project for a financing agreement under 6.32subdivision 6 or a supplemental cash flow agreement under subdivision 7.6.33    Subd. 5.Participation of technical service providers statewide.Program 6.34activities must be implemented to encourage statewide participation of engineers, 6.35architects, energy auditors, contractors, and other technical service providers. The 7.1commissioner may provide training on energy project study requirements and procedures 7.2to technical service providers.7.3    Subd. 6.Standard project financing agreement.The commissioner shall solicit 7.4proposals from private financial institutions and may enter into a standard project 7.5financing agreement with one or more financial institutions. A standard project financing 7.6agreement must specify terms and conditions uniformly available to all participating 7.7public entities for financing to implement energy improvement projects under this section. 7.8A local government may choose to finance an energy improvement project by means other 7.9than a standard project financing agreement, but a supplemental cash flow agreement 7.10under subdivision 7 must not be offered unless the commissioner determines that the other 7.11financing means creates no greater potential obligation under a supplemental cash flow 7.12agreement than would be created through a standard project financing agreement.7.13    Subd. 7.Supplemental cash flow agreement.(a) The commissioner may offer 7.14a supplemental cash flow agreement to a participating local government for qualifying 7.15energy improvement projects. The term of a supplemental cash flow agreement may not 7.16exceed 15 years. Terms and conditions of a supplemental cash flow agreement must be 7.17agreed to by contract prior to a local government entering into a financing agreement.7.18    (b) A supplemental cash flow agreement contract must include, but is not limited to:7.19    (1) specification of methods and procedures to measure and verify energy cost 7.20savings;7.21    (2) obligations of the local government to operate and maintain the energy 7.22improvements;7.23    (3) procedures to modify the supplemental cash flow agreement if the local 7.24government modifies operating characteristics of its building or facility in a manner that 7.25adversely affects energy cost savings;7.26    (4) interest charged on the loan, which may not exceed the interest on the related 7.27financial agreement; and7.28    (5) procedures for resolution of disputes.7.29    Subd. 8.Qualifying energy improvement projects.A local government may 7.30submit to the commissioner, on a form prescribed by the commissioner, an application for 7.31a financing agreement authorization and supplemental cash flow agreement for energy 7.32improvement projects. The commissioner shall approve an energy improvement project 7.33for a supplemental cash flow agreement and authorize eligibility for a financing agreement 7.34if the commissioner determines that:7.35    (1) the application has been approved by the governing body or agency head of the 7.36local government;8.1    (2) the project is technically and economically feasible;8.2    (3) the local government has made adequate provision for the operation and 8.3maintenance of the project;8.4    (4) the project has a substantial likelihood to result in a positive cash flow in each 8.5year the financing agreement is in effect; and8.6    (5) adequate funds will be available to the commissioner to fulfill the supplemental 8.7cash flow agreement.8.8    Subd. 9.Program costs.Program costs incurred by the commissioner or a public 8.9entity that are not direct costs to implement energy improvement projects may be paid 8.10with program funds appropriated under subdivision 10.8.11    Subd. 10.Funding; appropriation; receipts.Petroleum violation escrow funds 8.12appropriated to the commissioner by Laws 1988, chapter 686, article 1, section 38, for 8.13state energy loan programs for schools, hospitals, and public buildings, and reappropriated 8.14by Laws 2007, chapter 57, article 2, section 30, are appropriated to the commissioner 8.15for the purposes of this section and are available until spent. The commissioner may 8.16transfer up to $1,000,000 of this appropriation to the commissioner of administration for 8.17the purposes of section 16B.322.8.18    Sec. 7. REPORT; GREEN STAR AWARD EXPANSION.8.19    The Pollution Control Agency and the Office of Energy Security in the Department 8.20of Commerce shall, in collaboration with the clean energy resource teams (CERT's), 8.21submit a report by February 2, 2009, to the chairs and ranking minority members of the 8.22senate and house of representatives committees with primary jurisdiction over energy 8.23policy that makes recommendations regarding how to expand eligibility to receive the 8.24Green Star award, described in Minnesota Statutes, section 114C.25, to include cities and 8.25communities that take action to help meet the state's greenhouse gas emissions reduction 8.26goals established in Minnesota Statutes, section 216H.02, subdivision 1. The report must 8.27address, at a minimum, the following issues:8.28    (1) the criteria for actions cities and communities must take in order to receive a 8.29Green Star award;8.30    (2) what entity or entities would issue the award;8.31    (3) the length of time during which the award may be displayed;8.32    (4) existing state financial and technical assistance available to communities and 8.33cities to assist them to reduce greenhouse gas emissions;8.34    (5) sources of additional funding needed to implement the program; and8.35    (6) any other issues that need to be resolved in order to implement the program.9.1    Sec. 8.  REPEALER.9.2Laws 2007, chapter 57, article 2, section 30, is repealed.9.3EFFECTIVE DATE.This section is effective the day following final enactment.