1.1CONFERENCE COMMITTEE REPORT ON S.F. No. 5501.2A bill for an act1.3relating to energy; providing for energy conservation; regulating utility rates; 1.4removing prohibition on issuing certificate of need for new nuclear power 1.5plant; providing for various Legislative Energy Commission studies; regulating 1.6utilities; amending Minnesota Statutes 2008, sections 216A.03, subdivision 6, by 1.7adding a subdivision; 216B.16, subdivisions 2, 6c, 7b, by adding a subdivision; 1.8216B.1645, subdivision 2a; 216B.169, subdivision 2; 216B.1691, subdivision 2a; 1.9216B.23, by adding a subdivision; 216B.241, subdivisions 1c, 5a, 9; 216B.2411, 1.10subdivisions 1, 2; 216B.2424, subdivision 5a; 216B.243, subdivisions 3b, 8, 9; 1.11216C.11; proposing coding for new law in Minnesota Statutes, chapter 216C; 1.12repealing Laws 2007, chapter 3, section 3.1.13May 13, 20091.14The Honorable James P. Metzen1.15President of the Senate1.16The Honorable Margaret Anderson Kelliher1.17Speaker of the House of Representatives1.18We, the undersigned conferees for S.F. No. 550 report that we have agreed upon the 1.19items in dispute and recommend as follows:1.20That the House recede from its amendments and that S.F. No. 550 be further 1.21amended as follows:1.22Delete everything after the enacting clause and insert:1.23    "Section 1. Minnesota Statutes 2008, section 116C.779, subdivision 2, is amended to 1.24read:1.25    Subd. 2. Renewable energy production incentive. (a) Until January 1, 2018 2021, 1.26up to $10,900,000 annually must be allocated from available funds in the account to 1.27fund renewable energy production incentives. $9,400,000 of this annual amount is for 1.28incentives for up to 200 megawatts of electricity generated by wind energy conversion 1.29systems that are eligible for the incentives under section 
         216C.41 or Laws 2005, chapter 1.3040. 2.1(b) The balance of this amount, up to $1,500,000 annually, may be used for 2.2production incentives for on-farm biogas recovery facilities and hydroelectric facilities 2.3that are eligible for the incentive under section 
         216C.41 or for production incentives for 2.4other renewables, to be provided in the same manner as under section 
         216C.41. 2.5(c) Any portion of the $10,900,000 not expended in any calendar year for the 2.6incentive is available for other spending purposes under this section. This subdivision 2.7does not create an obligation to contribute funds to the account.2.8(b) (d) The Department of Commerce shall determine eligibility of projects under 2.9section 
         216C.41 for the purposes of this subdivision. At least quarterly, the Department of 2.10Commerce shall notify the public utility of the name and address of each eligible project 2.11owner and the amount due to each project under section 
         216C.41. The public utility shall 2.12make payments within 15 working days after receipt of notification of payments due.2.13    Sec. 2. Minnesota Statutes 2008, section 116C.779, is amended by adding a subdivision 2.14to read:2.15    Subd. 3.Initiative for Renewable Energy and the Environment (a) Beginning 2.16July 1, 2009, and each July 1 through 2012, $5,000,000 must be allocated from the 2.17renewable development account to fund a grant to the Board of Regents of the University 2.18of Minnesota for the Initiative for Renewable Energy and the Environment for the purposes 2.19described in paragraph (b). The Initiative for Renewable Energy and the Environment 2.20must set aside at least 15 percent of the funds received annually under the grant for 2.21qualified projects conducted at a rural campus or experiment station. Any set-aside funds 2.22not awarded to a rural campus or experiment station at the end of the fiscal year revert 2.23back to the Initiative for Renewable Energy and the Environment for its exclusive use. 2.24This subdivision does not create an obligation to contribute funds to the account.   2.25(b) Activities funded under this grant may include, but are not limited to:2.26(1) environmentally sound production of energy from a renewable energy source, 2.27including biomass and agricultural crops;2.28(2) environmentally sound production of hydrogen from biomass and any other 2.29renewable energy source for energy storage and energy utilization;2.30(3) development of energy conservation and efficient energy utilization technologies;2.31(4) energy storage technologies; and2.32(5) analysis of policy options to facilitate adoption of technologies that use or 2.33produce low-carbon renewable energy.2.34(c) For the purposes of this subdivision:2.35(1) "biomass" means plant and animal material, agricultural and forest residues, 2.36mixed municipal solid waste, and sludge from wastewater treatment; and3.1(2) "renewable energy source" means hydro, wind, solar, biomass, and geothermal 3.2energy, and microorganisms used as an energy source.3.3(d) Beginning January 15 of 2010, and each year thereafter, the director of the 3.4Initiative for Renewable Energy and the Environment at the University of Minnesota shall 3.5submit a report to the chair and ranking minority members of the senate and house of 3.6representatives committees with primary jurisdiction over energy finance describing the 3.7activities conducted during the previous year funded under this subdivision.3.8EFFECTIVE DATE.This section is effective the day following final enactment.3.9    Sec. 3. Minnesota Statutes 2008, section 117.189, is amended to read:3.10117.189 PUBLIC SERVICE CORPORATION EXCEPTIONS.3.11 Sections 
         117.031; 
         117.036; 
         117.055, subdivision 2, paragraph (b); 
         117.186; 
         117.187; 3.12117.188
         ; and 
         117.52, subdivisions 1a and 4, do not apply to public service corporations. 3.13For purposes of an award of appraisal fees under section 
         117.085, the fees awarded may 3.14not exceed $500 $1,500 for all types of property except for a public service corporation's 3.15use of eminent domain for a high-voltage transmission line, where the award may not 3.16exceed $3,000.3.17EFFECTIVE DATE.This section is effective the day following final enactment.3.18    Sec. 4. Minnesota Statutes 2008, section 216A.03, subdivision 6, is amended to read:3.19    Subd. 6. Record of proceedings. An audio magnetic or audio electronic recording 3.20device shall be used to keep a record of all proceedings before the commission unless the3.21commission provides a hearing reporter to record the proceeding.3.22EFFECTIVE DATE.This section is effective the day following final enactment.3.23    Sec. 5. Minnesota Statutes 2008, section 216A.03, is amended by adding a subdivision 3.24to read:3.25    Subd. 6a.Hearing reporter.The commission may delegate to the executive 3.26secretary authority to require hearing reporter services. The cost of hearing reporter 3.27services must be borne by the utility, telephone company, or telecommunications carrier 3.28that is the subject of the proceeding. If more than one company is the subject of a 3.29proceeding, the commission or, if the commission so delegates, the executive secretary, 3.30shall determine how the hearing reporter costs are to be allocated for the proceeding.3.31EFFECTIVE DATE.This section is effective the day following final enactment.3.32    Sec. 6. Minnesota Statutes 2008, section 216B.16, subdivision 2, is amended to read:4.1    Subd. 2. Suspension of proposed rate; hearing; final determination defined. (a) 4.2Whenever there is filed with the commission a schedule modifying or resulting in a change 4.3in any rates then in force as provided in subdivision 1, the commission may suspend the 4.4operation of the schedule by filing with the schedule of rates and delivering to the affected 4.5utility a statement in writing of its reasons for the suspension at any time before the rates 4.6become effective. The suspension shall not be for a longer period than ten months beyond 4.7the initial filing date except as provided in this subdivision or subdivision 1a.4.8(b) During the suspension the commission shall determine whether all questions of 4.9the reasonableness of the rates requested raised by persons deemed interested or by the 4.10department can be resolved to the satisfaction of the commission. If the commission 4.11finds that all significant issues raised have not been resolved to its satisfaction, or upon 4.12petition by ten percent of the affected customers or 250 affected customers, whichever is 4.13less, it shall refer the matter to the Office of Administrative Hearings with instructions 4.14for a public hearing as a contested case pursuant to chapter 14, except as otherwise 4.15provided in this section.4.16(c) The commission may order that the issues presented by the proposed rate 4.17changes be bifurcated into two separate hearings as follows: (1) determination of the 4.18utility's revenue requirements and (2) determination of the rate design. Upon issuance of 4.19both administrative law judge reports, the issues shall again be joined for consideration 4.20and final determination by the commission.4.21(d) All prehearing discovery activities of state agency intervenors shall be 4.22consolidated and conducted by the Department of Commerce.4.23(e) If the commission does not make a final determination concerning a schedule of 4.24rates within ten months after the initial filing date, the schedule shall be deemed to have 4.25been approved by the commission; except if:4.26(1) an extension of the procedural schedule has been granted under paragraph (f) or 4.27subdivision 1a, in which case the schedule of rates is deemed to have been approved by 4.28the commission on the last day of the extended period of suspension; or4.29(2) a settlement has been submitted to and rejected by the commission and the 4.30commission does not make a final determination concerning the schedule of rates, the 4.31schedule of rates is deemed to have been approved 60 days after the initial or, if applicable, 4.32the extended period of suspension.4.33(f) If the commission finds that it has insufficient time during the suspension period 4.34to make a final determination of a case involving changes in general rates because of the 4.35need to make a final determination of another previously filed any pending case involving 4.36changes in general rates under this section or section 
         237.075, the commission may extend 5.1the suspension period to the extent necessary to allow itself 20 working days to allow up 5.2to a total of 90 additional calendar days to make the final determination after it has made a 5.3final determination in the previously filed case. An extension of the suspension period 5.4under this paragraph does not alter the setting of interim rates under subdivision 3. 5.5(g) For the purposes of this section, "final determination" means the initial decision 5.6of the commission and not any order which may be entered by the commission in response 5.7to a petition for rehearing or other further relief. The commission may further suspend 5.8rates until it determines all those petitions.5.9EFFECTIVE DATE.This section is effective the day following final enactment.5.10    Sec. 7. Minnesota Statutes 2008, section 216B.16, subdivision 6c, is amended to read:5.11    Subd. 6c. Incentive plan for energy conservation improvement. (a) The 5.12commission may order public utilities to develop and submit for commission approval 5.13incentive plans that describe the method of recovery and accounting for utility 5.14conservation expenditures and savings. In developing the incentive plans the commission 5.15shall ensure the effective involvement of interested parties.5.16(b) In approving incentive plans, the commission shall consider:5.17(1) whether the plan is likely to increase utility investment in cost-effective energy 5.18conservation;5.19(2) whether the plan is compatible with the interest of utility ratepayers and other 5.20interested parties;5.21(3) whether the plan links the incentive to the utility's performance in achieving 5.22cost-effective conservation; and5.23(4) whether the plan is in conflict with other provisions of this chapter.5.24(c) The commission may set rates to encourage the vigorous and effective 5.25implementation of utility conservation programs. The commission may:5.26(1) increase or decrease any otherwise allowed rate of return on net investment based 5.27upon the utility's skill, efforts, and success in conserving energy;5.28(2) share between ratepayers and utilities the net savings resulting from energy 5.29conservation programs to the extent justified by the utility's skill, efforts, and success in 5.30conserving energy; and5.31(3) compensate the utility for earnings lost as a result of its conservation 5.32programs adopt any mechanism that satisfies the criteria of this subdivision, such that 5.33implementation of cost-effective conservation is a preferred resource choice for the public 5.34utility considering the impact of conservation on earnings of the public utility.5.35EFFECTIVE DATE.This section is effective the day following final enactment.6.1    Sec. 8. Minnesota Statutes 2008, section 216B.16, subdivision 7b, is amended to read:6.2    Subd. 7b.  Transmission cost adjustment. (a) Notwithstanding any other provision 6.3of this chapter, the commission may approve a tariff mechanism for the automatic annual 6.4adjustment of charges for the Minnesota jurisdictional costs of (i) new transmission 6.5facilities that have been separately filed and reviewed and approved by the commission 6.6under section 
         216B.243or are certified as a priority project or deemed to be a priority 6.7transmission project under section 
         216B.2425; and (ii) charges incurred by a utility that 6.8accrue from other transmission owners' regionally planned transmission projects that have 6.9been determined by the Midwest Independent System Operator to benefit the utility, as 6.10provided for under a federally approved tariff. 6.11    (b) Upon filing by a public utility or utilities providing transmission service, the 6.12commission may approve, reject, or modify, after notice and comment, a tariff that: 6.13    (1) allows the utility to recover on a timely basis the costs net of revenues of 6.14facilities approved under section 
         216B.243 or certified or deemed to be certified under 6.15section 
         216B.2425 or exempt from the requirements of section 
         216B.243; 6.16    (2) allows the charges incurred by a utility that accrue from other transmission 6.17owners' regionally planned transmission projects that have been determined by the 6.18Midwest Independent System Operator to benefit the utility, as provided for under a 6.19federally approved tariff. These charges must be reduced or offset by revenues received 6.20by the utility and by amounts the utility charges to other regional transmission owners, to 6.21the extent those revenues and charges have not been otherwise offset; 6.22    (3) allows a return on investment at the level approved in the utility's last general 6.23rate case, unless a different return is found to be consistent with the public interest; 6.24    (4) provides a current return on construction work in progress, provided that 6.25recovery from Minnesota retail customers for the allowance for funds used during 6.26construction is not sought through any other mechanism; 6.27    (5) allows for recovery of other expenses if shown to promote a least-cost project 6.28option or is otherwise in the public interest; 6.29    (6) allocates project costs appropriately between wholesale and retail customers; 6.30    (7) provides a mechanism for recovery above cost, if necessary to improve the 6.31overall economics of the project or projects or is otherwise in the public interest; and 6.32    (8) terminates recovery once costs have been fully recovered or have otherwise 6.33been reflected in the utility's general rates. 6.34    (c) A public utility may file annual rate adjustments to be applied to customer bills 6.35paid under the tariff approved in paragraph (b). In its filing, the public utility shall provide: 6.36    (1) a description of and context for the facilities included for recovery; 7.1    (2) a schedule for implementation of applicable projects; 7.2    (3) the utility's costs for these projects; 7.3    (4) a description of the utility's efforts to ensure the lowest costs to ratepayers for 7.4the project; and 7.5    (5) calculations to establish that the rate adjustment is consistent with the terms 7.6of the tariff established in paragraph (b). 7.7    (d) Upon receiving a filing for a rate adjustment pursuant to the tariff established in 7.8paragraph (b), the commission shall approve the annual rate adjustments provided that, 7.9after notice and comment, the costs included for recovery through the tariff were or are 7.10expected to be prudently incurred and achieve transmission system improvements at the 7.11lowest feasible and prudent cost to ratepayers. 7.12EFFECTIVE DATE.This section is effective the day following final enactment.7.13    Sec. 9. Minnesota Statutes 2008, section 216B.16, is amended by adding a subdivision 7.14to read:7.15    Subd. 7d.Central Corridor utility zone cost adjustment.(a) The Central 7.16Corridor utility zone is the area extending from the Union Depot Station in St. Paul to the 7.17proposed multimodal station in Minneapolis along the route of the light rail transit project 7.18connecting those two points, and an area extending approximately one-quarter mile from 7.19that route and including the entire University of Minnesota, Minneapolis campus.7.20(b) A public utility that provides retail electric service within the Central Corridor 7.21utility zone and that is required to replace, relocate, construct, or install new facilities, 7.22may apply to the commission for approval of new facilities in the Central Corridor 7.23utility zone and facilities outside the zone that the utility demonstrates must be changed 7.24as a direct result of changes within the zone. Facilities proposed under this subdivision 7.25may include transmission facilities, distribution facilities, generation facilities, advanced 7.26technology-assisted efficiency devices, and energy storage facilities not otherwise subject 7.27to section 216B.243, or chapter 216E, 216F, or 216G. Upon approval under paragraph (c), 7.28the utility may construct and install the facilities.7.29(c) The commission may approve the construction and installation of facilities in 7.30the Central Corridor mass transit utility zone proposed by a utility under paragraph (b) 7.31upon a finding:7.32(1) that the facilities:7.33(i) are necessary to provide electric service;7.34(ii) assist future development of renewable energy, conservation, electric vehicles, 7.35and advanced technology-assisted efficiency programs and devices; or8.1(iii) are exploratory, experimental, or research facilities to advance the use of 8.2renewable energy, conservation, electric vehicles, and advanced technology-assisted 8.3efficiency programs and devices;8.4(2) that the utility has engaged in a cooperative process with affected local and state 8.5government agencies in the design, planning, or construction of the Central Corridor 8.6utility zone project and changes to utility facilities;8.7(3) that the utility and local units of government have made reasonable efforts to seek 8.8federal, state, or private funds that may be available to mass transit and energy projects;8.9(4) that the utility has made reasonable efforts to minimize the project costs and 8.10maximize the value of the facilities to customers;8.11(5) that the utility has a plan to offer a comprehensive array of programs for 8.12residential, commercial, and industrial customers located within the mass transit zone;8.13(6) that the utility direct existing and planned solar energy programs to develop solar 8.14energy along the mass transit utility zone; and8.15(7) that the utility has made reasonable efforts to apply for federal funds to develop 8.16technology-assisted efficiency programs and devices within the mass transit utility zone.8.17(d) Upon request of the commission, the utility shall submit periodic reports to 8.18the commission reviewing the cost and benefits of the facilities constructed within the 8.19Central Corridor utility zone and their potential applicability to other areas outside the 8.20Central Corridor utility zone.8.21(e) Notwithstanding any other provision of this chapter, the commission may approve 8.22a tariff mechanism for automatic adjustment of charges for new, replaced, or relocated 8.23facilities installed under this subdivision in a manner consistent with this subdivision and 8.24the standards and procedures contained in subdivision 7b, except that no approval under 8.25section 216B.243 or certification under section 216B.2425 is required unless otherwise 8.26required by law. This section does not authorize a city-requested facilities surcharge.8.27(f) For the purpose of this subdivision, "technology-assisted efficiency programs and 8.28devices" includes, but is not limited to, infrastructure that integrates digital information and 8.29controls technology to improve the reliability, security, and efficiency of the electric grid.8.30EFFECTIVE DATE.This section is effective the day following final enactment.8.31    Sec. 10. [216B.1613] STANDARDIZED CONTRACT.8.32Within 60 days of the effective date of this section, each utility, as defined in section 8.33216B.1691, subdivision 1, paragraph (b), shall file with the commission a standardized 8.34contract form for the purchase of electricity from projects with a nameplate capacity 8.35of 5 megawatts or less. The standardized contract form must be similar in all material 8.36respects to the standard contract form previously filed with the commission under 9.1section 216B.2423, subdivision 3, including any revisions to that contract on file with 9.2the commission as of the effective date of this section. After consultation with wind 9.3developers and producers, a utility governed by this section may modify the standardized 9.4contract currently on file under section 216B.2423 prior to submitting its standard contract 9.5form under this section if the modifications are reasonably necessary to account for 9.6circumstances that are unique to that particular utility. The commission shall not approve 9.7a contract that is not in compliance with this section.9.8EFFECTIVE DATE.This section is effective the day following final enactment.9.9    Sec. 11. Minnesota Statutes 2008, section 216B.1645, subdivision 2a, is amended to 9.10read:9.11    Subd. 2a.  Cost recovery for utility's renewable facilities. (a) A utility may petition 9.12the commission to approve a rate schedule that provides for the automatic adjustment of 9.13charges to recover prudently incurred investments, expenses, or costs associated with 9.14facilities constructed, owned, or operated by a utility to satisfy the requirements of section 9.15216B.1691
         , provided those facilities were previously approved by the commission under 9.16section 216B.2422 or 
         216B.243, or were determined by the commission to be reasonable 9.17and prudent under section 216B.243, subdivision 9. For facilities not subject to review 9.18by the commission under section 216B.2422 or 216B.243, a utility shall petition the 9.19commission for eligibility for cost recovery under this section prior to requesting cost 9.20recovery for the facility. The commission may approve, or approve as modified, a rate 9.21schedule that: 9.22    (1) allows a utility to recover directly from customers on a timely basis the costs of 9.23qualifying renewable energy projects, including: 9.24    (i) return on investment; 9.25    (ii) depreciation; 9.26    (iii) ongoing operation and maintenance costs; 9.27    (iv) taxes; and 9.28    (v) costs of transmission and other ancillary expenses directly allocable to 9.29transmitting electricity generated from a project meeting the specifications of this 9.30paragraph; 9.31    (2) provides a current return on construction work in progress, provided that recovery 9.32of these costs from Minnesota ratepayers is not sought through any other mechanism; 9.33    (3) allows recovery of other expenses incurred that are directly related to a 9.34renewable energy project, including expenses for energy storage, provided that the 9.35utility demonstrates to the commission's satisfaction that the expenses improve project 10.1economics, ensure project implementation, advance research and understanding of how 10.2storage devices may improve renewable energy projects, or facilitate coordination with 10.3the development of transmission necessary to transport energy produced by the project 10.4to market; 10.5    (4) allocates recoverable costs appropriately between wholesale and retail customers; 10.6    (5) terminates recovery when costs have been fully recovered or have otherwise 10.7been reflected in a utility's rates. 10.8    (b) A petition filed under this subdivision must include: 10.9    (1) a description of the facilities for which costs are to be recovered; 10.10    (2) an implementation schedule for the facilities; 10.11    (3) the utility's costs for the facilities; 10.12    (4) a description of the utility's efforts to ensure that costs of the facilities are 10.13reasonable and were prudently incurred; and 10.14    (5) a description of the benefits of the project in promoting the development of 10.15renewable energy in a manner consistent with this chapter. 10.16    Sec. 12. Minnesota Statutes 2008, section 216B.169, subdivision 2, is amended to read:10.17    Subd. 2. Renewable and high-efficiency energy rate options. (a) Each A10.18utility shall may offer its customers, and shall advertise the offer at least annually,10.19one or more options that allow a customer to determine that a certain amount of the 10.20electricity generated or purchased on behalf of the customer is renewable energy or energy 10.21generated by high-efficiency, low-emissions, distributed generation such as fuel cells and 10.22microturbines fueled by a renewable fuel.10.23(b) Each public utility shall file an implementation plan within 90 days of July 1, 10.242001, to implement paragraph (a).10.25(c) (b) Rates charged to customers must be calculated using the utility's cost of 10.26acquiring the energy for the customer and must:10.27(1) reflect the difference between the cost of generating or purchasing the 10.28additional renewable energy and the cost of generating or purchasing the same amount 10.29of nonrenewable energy and the cost that would otherwise be attributed to the customer 10.30for the same amount of energy based on the utility's mix of renewable and nonrenewable 10.31energy sources; and10.32(2) be distributed on a per kilowatt-hour basis among all customers who choose to 10.33participate in the program.10.34(d) Implementation of these rate options may reflect a reasonable amount of lead 10.35time necessary to arrange acquisition of the energy.(c) The utility may acquire the 10.36energy demanded by customers, in whole or in part, through procuring or generating the 11.1renewable energy directly, or through the purchase of credits from a provider that has 11.2received certification of eligible power supply pursuant to subdivision 3. If a utility is not 11.3able to arrange an adequate supply of renewable or high-efficiency energy to meet its 11.4customers' demand under this section, the utility must file a report with the commission 11.5detailing its efforts and reasons for its failure.11.6(d) For the purposes of this section, "renewable energy" has the meaning given to 11.7"eligible energy technology" in section 216B.1691, subdivision 1, paragraph (a), but 11.8does not include energy recovered from combustion of mixed municipal solid waste or 11.9refuse-derived fuel from mixed municipal solid waste.11.10    Sec. 13. Minnesota Statutes 2008, section 216B.1691, subdivision 2a, is amended to 11.11read:11.12    Subd. 2a. Eligible energy technology standard. (a) Except as provided in 11.13paragraph (b), each electric utility shall generate or procure sufficient electricity generated 11.14by an eligible energy technology to provide its retail customers in Minnesota, or the 11.15retail customers of a distribution utility to which the electric utility provides wholesale 11.16electric service, so that at least the following standard percentages of the electric utility's 11.17total retail electric sales to retail customers in Minnesota are generated by eligible energy 11.18technologies by the end of the year indicated:

11.19(1)201212 percent11.20(2)201617 percent11.21(3)202020 percent11.22(4)202525 percent.

11.23    (b) An electric utility that owned a nuclear generating facility as of January 1, 2007, 11.24must meet the requirements of this paragraph rather than paragraph (a). An electric utility 11.25subject to this paragraph must generate or procure sufficient electricity generated by 11.26an eligible energy technology to provide its retail customers in Minnesota or the retail 11.27customer of a distribution utility to which the electric utility provides wholesale electric 11.28service so that at least the following percentages of the electric utility's total retail electric 11.29sales to retail customers in Minnesota are generated by eligible energy technologies by the 11.30end of the year indicated:

11.31(1)201015 percent11.32(2)201218 percent12.1(3)201625 percent12.2(4)202030 percent.

12.3Of the 30 percent in 2020, at least 25 percent must be generated by solar energy or12.4wind energy conversion systems and the remaining five percent by other eligible energy 12.5technology. Of the 25 percent that must be generated by wind or solar, no more than 12.6one percent may be solar generated and the remaining 24 percent or greater must be 12.7wind generated.12.8EFFECTIVE DATE.This section is effective the day following final enactment.12.9    Sec. 14. Minnesota Statutes 2008, section 216B.23, is amended by adding a 12.10subdivision to read:12.11    Subd. 1a.Authority to issue refund.(a) On determining that a public utility has 12.12charged a rate in violation of this chapter, a commission rule, or a commission order, the 12.13commission, after conducting a proceeding, may require the public utility to refund to its 12.14customers, in a manner approved by the commission, any revenues the commission finds 12.15were collected as a result of the unlawful conduct. Any refund authorized by this section 12.16is permitted in addition to any remedies authorized by section 216B.16 or any other law 12.17governing rates. Exercising authority under this section does not preclude the commission 12.18from pursuing penalties under sections 216B.57 to 216B.61 for the same conduct.12.19(b) This section must not be construed as allowing:12.20(1) retroactive ratemaking;12.21(2) refunds based on claims that prior or current approved rates have been unjust, 12.22unreasonable, unreasonably preferential, discriminatory, insufficient, inequitable, or 12.23inconsistent in application to a class of customers; or12.24(3) refunds based on claims that approved rates have not encouraged energy 12.25conservation or renewable energy use, or have not furthered the goals of section 216B.164, 12.26216B.241, or 216C.05.12.27    (c) A refund under this subdivision does not apply to revenues collected more than 12.28six years before the date of the notice of the commission proceeding required under this 12.29subdivision.12.30EFFECTIVE DATE.This section is effective the day following final enactment.12.31    Sec. 15. Minnesota Statutes 2008, section 216B.241, subdivision 1c, is amended to 12.32read:13.1    Subd. 1c. Energy-saving goals. (a) The commissioner shall establish energy-saving 13.2goals for energy conservation improvement expenditures and shall evaluate an energy 13.3conservation improvement program on how well it meets the goals set.13.4    (b) Each individual utility and association shall have an annual energy-savings 13.5goal equivalent to 1.5 percent of gross annual retail energy sales unless modified by the 13.6commissioner under paragraph (d). The savings goals must be calculated based on the 13.7most recent three-year weather normalized average. A utility or association may elect to 13.8carry forward energy savings in excess of 1.5 percent for a year to the succeeding three 13.9calendar years, except that savings from electric utility infrastructure projects allowed 13.10under paragraph (d) may be carried forward for five years. A particular energy savings can 13.11be used only for one year's goal.13.12    (c) The commissioner must adopt a filing schedule that is designed to have all 13.13utilities and associations operating under an energy-savings plan by calendar year 2010.13.14    (d) In its energy conservation improvement plan filing, a utility or association may 13.15request the commissioner to adjust its annual energy-savings percentage goal based on 13.16its historical conservation investment experience, customer class makeup, load growth, 13.17a conservation potential study, or other factors the commissioner determines warrants 13.18an adjustment. The commissioner may not approve a plan that provides for an annual 13.19energy-savings goal of less than one percent of gross annual retail energy sales from 13.20energy conservation improvements. 13.21A utility or association may include in its energy conservation plan energy savings 13.22from electric utility infrastructure projects approved by the commission under section 13.23216B.1636
          or waste heat recovery converted into electricity projects that may count as 13.24energy savings in addition to the minimum energy-savings goal of at least one percent for 13.25energy conservation improvements. Electric utility infrastructure projects must result in 13.26increased energy efficiency greater than that which would have occurred through normal 13.27maintenance activity.13.28    (e) An energy-savings goal is not satisfied by attaining the revenue expenditure 13.29requirements of subdivisions 1a and 1b, but can only be satisfied by meeting the 13.30energy-savings goal established in this subdivision.13.31    (f) An association or utility is not required to make energy conservation investments 13.32to attain the energy-savings goals of this subdivision that are not cost-effective even 13.33if the investment is necessary to attain the energy-savings goals. For the purpose of 13.34this paragraph, in determining cost-effectiveness, the commissioner shall consider the 13.35costs and benefits to ratepayers, the utility, participants, and society. In addition, the 14.1commissioner shall consider the rate at which an association or municipal utility is 14.2increasing its energy savings and its expenditures on energy conservation.14.3    (g) On an annual basis, the commissioner shall produce and make publicly available 14.4a report on the annual energy savings and estimated carbon dioxide reductions achieved 14.5by the energy conservation improvement programs for the two most recent years for 14.6which data is available. The commissioner shall report on program performance both in 14.7the aggregate and for each entity filing an energy conservation improvement plan for 14.8approval or review by the commissioner.14.9    (h) By January 15, 2010, the commissioner shall report to the legislature whether 14.10the spending requirements under subdivisions 1a and 1b are necessary to achieve the 14.11energy-savings goals established in this subdivision.14.12EFFECTIVE DATE.This section is effective the day following final enactment.14.13    Sec. 16. Minnesota Statutes 2008, section 216B.241, subdivision 5a, is amended to 14.14read:14.15    Subd. 5a. Qualifying solar energy project. (a) A utility or association may include 14.16in its conservation plan programs for the installation of qualifying solar energy projects as 14.17defined by section 
         216B.2411 to the extent of the spending allowed for generation projects 14.18by section 
         216B.2411. The cost-effectiveness of a qualifying solar energy project may 14.19be determined by a different standard than for other energy conservation improvements 14.20under this section if the commissioner determines it is in the public interest to do so to 14.21encourage solar energy projects. Energy savings from qualifying solar energy projects 14.22may not be counted toward the minimum energy-savings goal of at least one percent 14.23for energy conservation improvements required under subdivision 1c, but may, if the 14.24conservation plan is approved:14.25    (1) be counted toward energy savings above that minimum percentage; and14.26    (2) be considered when establishing performance incentives under section 216B.241, 14.27subdivision 2c eligible for a performance incentive under section 216B.16, subdivision 6c, 14.28or 216B.241, subdivision 2c, that is distinct from the incentive for energy conservation 14.29and is based on the competitiveness and cost-effectiveness of solar projects in relation to 14.30other potential solar projects available to the utility.14.31    (b) Qualifying solar energy projects may not be considered when establishing 14.32demand-side management targets under section 
         216B.2422, 
         216B.243, or any other 14.33section of this chapter.14.34EFFECTIVE DATE.This section is effective the day following final enactment.15.1    Sec. 17. Minnesota Statutes 2008, section 216B.241, is amended by adding a 15.2subdivision to read:15.3    Subd. 5b.Biomethane purchases.(a) A natural gas utility may include in its 15.4conservation plan purchases of biomethane, and may use up to five percent of the total 15.5amount to be spent on energy conservation improvements under this section for that 15.6purpose. The cost-effectiveness of biomethane purchases may be determined by a 15.7different standard than for other energy conservation improvements under this section if 15.8the commissioner determines that doing so is in the public interest in order to encourage 15.9biomethane purchases. Energy savings from purchasing biomethane may not be counted 15.10toward the minimum energy-savings goal of at least one percent for energy conservation 15.11improvements required under subdivision 1c, but may, if the conservation plan is approved:15.12(1) be counted toward energy savings above that minimum percentage; and15.13(2) be considered when establishing performance incentives under subdivision 2c.15.14(b) For the purposes of this subdivision, "biomethane" means biogas produced 15.15through anaerobic digestion of biomass, gasification of biomass, or other effective 15.16conversion processes, that is cleaned and purified into biomethane that meets natural gas 15.17utility quality specifications for use in a natural gas utility distribution system.15.18EFFECTIVE DATE.This section is effective the day following final enactment.15.19    Sec. 18. Minnesota Statutes 2008, section 216B.241, subdivision 9, is amended to read:15.20    Subd. 9. Building performance standards; Sustainable Building 2030. (a) The 15.21purpose of this subdivision is to establish cost-effective energy-efficiency performance 15.22standards for new and substantially reconstructed commercial, industrial, and institutional 15.23buildings that can significantly reduce carbon dioxide emissions by lowering energy use in 15.24new and substantially reconstructed buildings. For the purposes of this subdivision, the 15.25establishment of these standards may be referred to as Sustainable Building 2030.15.26    (b) The commissioner shall contract with the Center for Sustainable Building 15.27Research at the University of Minnesota to coordinate development and implementation 15.28of energy-efficiency performance standards, strategic planning, research, data analysis, 15.29technology transfer, training, and other activities related to the purpose of Sustainable 15.30Building 2030. The commissioner and the Center for Sustainable Building Research 15.31shall, in consultation with utilities, builders, developers, building operators, and experts 15.32in building design and technology, develop a Sustainable Building 2030 implementation 15.33plan that must address, at a minimum, the following issues:15.34    (1) training architects to incorporate the performance standards in building design;16.1    (2) incorporating the performance standards in utility conservation improvement 16.2programs; and16.3    (3) developing procedures for ongoing monitoring of energy use in buildings that 16.4have adopted the performance standards.16.5The plan must be submitted to the chairs and ranking minority members of the senate and 16.6house of representatives committees with primary jurisdiction over energy policy by 16.7July 1, 2009.16.8    (c) Sustainable Building 2030 energy-efficiency performance standards must be firm, 16.9quantitative measures of total building energy use and associated carbon dioxide emissions 16.10per square foot for different building types and uses, that allow for accurate determinations 16.11of a building's conformance with a performance standard. The energy-efficiency 16.12performance standards must be updated every three or five years to incorporate all 16.13cost-effective measures. The performance standards must reflect the reductions in carbon 16.14dioxide emissions per square foot resulting from actions taken by utilities to comply 16.15with the renewable energy standards in section 
         216B.1691. The performance standards 16.16should be designed to achieve reductions equivalent to the following reduction schedule, 16.17measured against energy consumption by an average building in each applicable building 16.18sector in 2003: (1) 60 percent in 2010; (2) 70 percent in 2015; (3) 80 percent in 2020; 16.19and (4) 90 percent in 2025. A performance standard must not be established or increased 16.20absent a conclusive engineering analysis that it is cost-effective based upon established 16.21practices used in evaluating utility conservation improvement programs.16.22    (d) The annual amount of the contract with the Center for Sustainable Building 16.23Research is up to $500,000. The Center for Sustainable Building Research shall expend 16.24no more than $150,000 of this amount each year on administration, coordination, and 16.25oversight activities related to Sustainable Building 2030. The balance of contract funds 16.26must be spent on substantive programmatic activities allowed under this subdivision that 16.27may be conducted by the Center for Sustainable Building Research and others, and for 16.28subcontracts with not-for-profit energy organizations, architecture and engineering firms, 16.29and other qualified entities to undertake technical projects and activities in support of 16.30Sustainable Building 2030. The primary work to be accomplished each year by qualified 16.31technical experts under subcontracts is the development and thorough justification of 16.32recommendations for specific energy-efficiency performance standards. Additional work 16.33may include:16.34    (1) research, development, and demonstration of new energy-efficiency technologies 16.35and techniques suitable for commercial, industrial, and institutional buildings;17.1    (2) analysis and evaluation of practices in building design, construction, 17.2commissioning and operations, and analysis and evaluation of energy use in the 17.3commercial, industrial, and institutional sectors;17.4    (3) analysis and evaluation of the effectiveness and cost-effectiveness of Sustainable 17.5Building 2030 performance standards, conservation improvement programs, and building 17.6energy codes;17.7    (4) development and delivery of training programs for architects, engineers, 17.8commissioning agents, technicians, contractors, equipment suppliers, developers, and 17.9others in the building industries; and17.10    (5) analyze and evaluate the effect of building operations on energy use. 17.11    (e) The commissioner shall require utilities to develop and implement conservation 17.12improvement programs that are expressly designed to achieve energy efficiency goals 17.13consistent with the Sustainable Building 2030 performance standards. These programs 17.14must include offerings of design assistance and modeling, financial incentives, and the 17.15verification of the proper installation of energy-efficient design components in new and 17.16substantially reconstructed buildings. A utility's design assistance program must consider 17.17the strategic planting of trees and shrubs around buildings as an energy conservation 17.18strategy for the designed project. A utility making an expenditure under its conservation 17.19improvement program that results in a building meeting the Sustainable Building 2030 17.20performance standards may claim the energy savings toward its energy-savings goal 17.21established in subdivision 1c.17.22    (f) The commissioner shall report to the legislature every three years, beginning 17.23January 15, 2010, on the cost-effectiveness and progress of implementing the Sustainable 17.24Building 2030 performance standards and shall make recommendations on the need to 17.25continue the program as described in this section.17.26EFFECTIVE DATE.This section is effective the day following final enactment.17.27    Sec. 19. Minnesota Statutes 2008, section 216B.2411, subdivision 1, is amended to 17.28read:17.29    Subdivision 1.  Generation projects. (a) Any municipality or rural electric 17.30association providing electric service and subject to section 
         216B.241 may, and each 17.31public utility may, use five percent of the total amount to be spent on energy conservation 17.32improvements under section 
         216B.241, on: 17.33    (1) projects in Minnesota to construct an electric generating facility that utilizes 17.34eligible renewable energy sources as defined in subdivision 2, such as methane or other 17.35combustible gases derived from the processing of plant or animal wastes, biomass fuels 18.1such as short-rotation woody or fibrous agricultural crops, or other renewable fuel, as 18.2its primary fuel source; 18.3    (2) projects in Minnesota to install a distributed generation facility of ten megawatts 18.4or less of interconnected capacity that is fueled by natural gas, renewable fuels, or another 18.5similarly clean fuel; or 18.6    (3) projects in Minnesota to install a qualifying solar energy project as defined in 18.7subdivision 2. 18.8    (b) A municipality, rural electric association, or public utility that offers a program 18.9to customers to promote installing qualifying solar energy projects may request authority 18.10from the commissioner to exceed the five percent limit in paragraph (a), but not to 18.11exceed ten percent, to meet customer demand for installation of qualifying solar energy 18.12projects. In considering this request, the commissioner shall consider customer interest in 18.13qualifying solar energy and the impact on other customers. A municipality, rural electric 18.14association, or public utility may not participate in a qualifying solar energy project on 18.15a property unless it is provided evidence that all reasonable cost-effective conservation 18.16investments have previously been made to the property.18.17For public utilities, as defined under section 216B.02, subdivision 4,(c) For a 18.18municipality, rural electric association, or public utility, projects under this section must 18.19be considered energy conservation improvements as defined in section 
         216B.241. For 18.20cooperative electric associations and municipal utilities, projects under this section must 18.21be considered load-management activities described in section 216B.241, subdivision 1.18.22    Sec. 20. Minnesota Statutes 2008, section 216B.2411, subdivision 2, is amended to 18.23read:18.24    Subd. 2.  Definitions. (a) For the purposes of this section, the terms defined in this 18.25subdivision and section 
         216B.241, subdivision 1, have the meanings given them. 18.26    (b) "Eligible renewable energy sources" means fuels and technologies to generate 18.27electricity through the use of any of the resources listed in section 
         216B.1691, subdivision 18.281
         , paragraph (a), except that the incineration of wastewater sludge is not an eligible 18.29renewable energy source, "biomass" has the meaning provided under paragraph (c), and 18.30"solar" must be from a qualified solar energy project as defined in paragraph (d). 18.31    (c) "Biomass" includes: 18.32    (1) methane or other combustible gases derived from the processing of plant or 18.33animal material; 18.34    (2) alternative fuels derived from soybean and other agricultural plant oils or animal 18.35fats; 19.1    (3) combustion of barley hulls, corn, soy-based products, or other agricultural 19.2products; 19.3    (4) wood residue from the wood products industry in Minnesota or other wood 19.4products such as short-rotation woody or fibrous agricultural crops; 19.5    (5) landfill gas;19.6(6) the predominantly organic components of wastewater effluent, sludge, or related 19.7byproducts from publicly owned treatment works; and 19.8(7) mixed municipal solid waste, and refuse-derived fuel from mixed municipal 19.9solid waste. 19.10    (d) "Qualifying solar energy project" means a qualifying solar thermal project or 19.11qualifying solar electric project. 19.12    (e) "Qualifying solar thermal project" means a flat plate or evacuated tube that meets 19.13the requirements of section 
         216C.25 with a fixed orientation that collects the sun's radiant 19.14energy and transfers it to a storage medium for distribution as energy to heat or cool air or 19.15water, but does not include equipment used to heat water at a residential property (1) for 19.16domestic use if less than one-half of the energy used for that purpose is derived from the 19.17sun or (2) for use in a hot tub or swimming pool. 19.18    (f) "Qualifying solar electric project" means:19.19(1) solar electric equipment that: (i) meets the requirements of section 
         216C.2519.20with a total; (ii) has a peak generating capacity of 100 kilowatts or less; and (iii) is19.21used for generating to generate electricity primarily for use in a residential property or 19.22small business to reduce the effective electric load for that residence or small business, 19.23commercial, or publicly owned property or facility; and19.24(2) if applicable, equipment that is used to store the electricity generated by a 19.25qualified solar electric project under clause (1) and that is located proximate to the 19.26property or facility using the electricity. 19.27    (g) "Residential property" means the principal residence of a homeowner at the time 19.28the solar equipment is placed in service. 19.29    (h) "Small business" has the meaning given to it in section 645.445. 19.30EFFECTIVE DATE.This section is effective the day following final enactment.19.31    Sec. 21. Minnesota Statutes 2008, section 216B.2412, subdivision 2, is amended to 19.32read:19.33    Subd. 2. Decoupling criteria. The commission shall, by order, establish criteria and 19.34standards for decoupling. The commission may establish these criteria and standards in 19.35a separate proceeding or in a general rate case or other proceeding in which it approves 20.1a pilot program, and shall design the criteria and standards to mitigate the impact on 20.2public utilities of the energy-savings goals under section 
         216B.241 without adversely 20.3affecting utility ratepayers. In designing the criteria, the commission shall consider energy 20.4efficiency, weather, and cost of capital, among other factors.20.5EFFECTIVE DATE.This section is effective the day following final enactment.20.6    Sec. 22. Minnesota Statutes 2008, section 216B.2424, subdivision 5a, is amended to 20.7read:20.8    Subd. 5a. Reduction of biomass mandate. (a) Notwithstanding subdivision 5, the 20.9biomass electric energy mandate must be reduced from 125 megawatts to 110 megawatts.20.10(b) The Public Utilities Commission shall approve a request pending before the 20.11commission as of May 15, 2003, for amendments to and assignment of a power purchase 20.12agreement with the owner of a facility that uses short-rotation, woody crops as its primary 20.13fuel previously approved to satisfy a portion of the biomass mandate if the owner of 20.14the project agrees to reduce the size of its project from 50 megawatts to 35 megawatts, 20.15while maintaining an average price for energy in nominal dollars measured over the term 20.16of the power purchase agreement at or below $104 per megawatt-hour, exclusive of any 20.17price adjustments that may take effect subsequent to commission approval of the power 20.18purchase agreement, as amended. The commission shall also approve, as necessary, any 20.19subsequent assignment or sale of the power purchase agreement or ownership of the 20.20project to an entity owned or controlled, directly or indirectly, by two municipal utilities 20.21located north of Constitutional Route No. 8, as described in section 
         161.114, which 20.22currently own electric and steam generation facilities using coal as a fuel and which 20.23propose to retrofit their existing municipal electrical generating facilities to utilize biomass 20.24fuels in order to perform the power purchase agreement.20.25(c) If the power purchase agreement described in paragraph (b) is assigned to an 20.26entity that is, or becomes, owned or controlled, directly or indirectly, by two municipal 20.27entities as described in paragraph (b), and the power purchase agreement meets the 20.28price requirements of paragraph (b), the commission shall approve any amendments to 20.29the power purchase agreement necessary to reflect the changes in project location and 20.30ownership and any other amendments made necessary by those changes. The commission 20.31shall also specifically find that:20.32(1) the power purchase agreement complies with and fully satisfies the provisions of 20.33this section to the full extent of its 35-megawatt capacity;21.1(2) all costs incurred by the public utility and all amounts to be paid by the public 21.2utility to the project owner under the terms of the power purchase agreement are fully 21.3recoverable pursuant to section 
         216B.1645;21.4(3) subject to prudency review by the commission, the public utility may recover 21.5from its Minnesota retail customers the Minnesota jurisdictional portion of the amounts 21.6that may be incurred and paid by the public utility during the full term of the power 21.7purchase agreement; and21.8(4) if the purchase power agreement meets the requirements of this subdivision, 21.9it is reasonable and in the public interest.21.10(d) The commission shall specifically approve recovery by the public utility of 21.11any and all Minnesota jurisdictional costs incurred by the public utility to improve, 21.12construct, install, or upgrade transmission, distribution, or other electrical facilities owned 21.13by the public utility or other persons in order to permit interconnection of the retrofitted 21.14biomass-fueled generating facilities or to obtain transmission service for the energy 21.15provided by the facilities to the public utility pursuant to section 
         216B.1645, and shall 21.16disapprove any provision in the power purchase agreement that requires the developer 21.17or owner of the project to pay the jurisdictional costs or that permit the public utility to 21.18terminate the power purchase agreement as a result of the existence of those costs or the 21.19public utility's obligation to pay any or all of those costs.21.20(e) Upon request by the project owner, the public utility shall agree to amend the 21.21power purchase agreement described in paragraph (b) and approved by the commission 21.22as required by paragraph (c). The amendment must be negotiated and executed within 21.2345 days of the effective date of this section and must apply to prices paid after January 21.241, 2009. The average price for energy in nominal dollars measured over the term of the 21.25power purchase agreement must not exceed $104 per megawatt hour by more than five 21.26percent. The public utility shall request approval of the amendment by the commission 21.27within 30 days of execution of the amended power purchase agreement. The amendment 21.28is not effective until approval by the commission. The commission shall act on the 21.29amendment within 90 days of submission of the request by the public utility. Upon 21.30approval of the amended power purchase agreement, the commission shall allow the 21.31public utility to recover the costs of the amended power purchase agreement, as provided 21.32in section 216B.1645.21.33EFFECTIVE DATE.This section is effective the day following final enactment.21.34    Sec. 23. Minnesota Statutes 2008, section 216B.243, subdivision 8, is amended to read:21.35    Subd. 8. Exemptions. This section does not apply to:22.1(1) cogeneration or small power production facilities as defined in the Federal Power 22.2Act, United States Code, title 16, section 796, paragraph (17), subparagraph (A), and 22.3paragraph (18), subparagraph (A), and having a combined capacity at a single site of less 22.4than 80,000 kilowatts; plants or facilities for the production of ethanol or fuel alcohol; or 22.5any case where the commission has determined after being advised by the attorney general 22.6that its application has been preempted by federal law;22.7(2) a high-voltage transmission line proposed primarily to distribute electricity to 22.8serve the demand of a single customer at a single location, unless the applicant opts to 22.9request that the commission determine need under this section or section 
         216B.2425;22.10(3) the upgrade to a higher voltage of an existing transmission line that serves 22.11the demand of a single customer that primarily uses existing rights-of-way, unless the 22.12applicant opts to request that the commission determine need under this section or section 22.13216B.2425
         ;22.14(4) a high-voltage transmission line of one mile or less required to connect a new or 22.15upgraded substation to an existing, new, or upgraded high-voltage transmission line;22.16(5) conversion of the fuel source of an existing electric generating plant to using 22.17natural gas; or22.18(6) the modification of an existing electric generating plant to increase efficiency, 22.19as long as the capacity of the plant is not increased more than ten percent or more than 22.20100 megawatts, whichever is greater; or22.21(7) a large energy facility that (i) generates electricity from wind energy conversion 22.22systems, (ii) will serve retail customers in Minnesota, (iii) is specifically intended to be 22.23used to meet the renewable energy objective under section 216B.1691 or addresses a 22.24resource need identified in a current commission-approved or commission-reviewed 22.25resource plan under section 216B.2422, and (iv) derives at least ten percent of the total 22.26nameplate capacity of the proposed project from one or more C-BED projects, as defined 22.27under section 216B.1612, subdivision 2, paragraph (f).22.28EFFECTIVE DATE.This section is effective the day following final enactment.22.29    Sec. 24. Minnesota Statutes 2008, section 216B.243, subdivision 9, is amended to read:22.30    Subd. 9.  Renewable energy standard facilities.The requirements of This section 22.31dodoes not apply to a wind energy conversion system or a solar electric generation 22.32facility that is intended to be used to meet or exceed the obligations of section 
         216B.1691; 22.33provided that, after notice and comment, the commission determines that the facility is 22.34a reasonable and prudent approach to meeting a utility's obligations under that section. 22.35When making this determination, the commission maymust consider:23.1(1) the size of the facility relative to a utility's total need for renewable resources and;23.2(2) alternative approaches for supplying the renewable energy to be supplied by 23.3the proposed facility, and must consider;23.4(3) the facility's ability to promote economic development, as required under section 23.5216B.1691
         , subdivision 9,;23.6(4) the facility's ability to maintain electric system reliability and consider;23.7(5) impacts on ratepayers,;  and 23.8(6) other criteria as the commission may determine are relevant. 23.9EFFECTIVE DATE.This section is effective the day following final enactment.23.10    Sec. 25. Minnesota Statutes 2008, section 216B.62, subdivision 3, is amended to read:23.11    Subd. 3. Assessing all public utilities. The department and commission shall 23.12quarterly, at least 30 days before the start of each quarter, estimate the total of their 23.13expenditures in the performance of their duties relating to (1) public utilities under section 23.14216A.085
         , sections 
         216B.01 to 
         216B.67, other than amounts chargeable to public utilities 23.15under subdivision 2 or, 6, or 7 and (2) alternative energy engineering activity under 23.16section 
         216C.261. The remainder, except the amount assessed against cooperatives and 23.17municipalities for alternative energy engineering activity under subdivision 5, shall be 23.18assessed by the commission and department to the several public utilities in proportion 23.19to their respective gross operating revenues from retail sales of gas or electric service 23.20within the state during the last calendar year. The assessment shall be paid into the state 23.21treasury within 30 days after the bill has been transmitted via mail, personal delivery, 23.22or electronic service to the several public utilities, which shall constitute notice of the 23.23assessment and demand of payment thereof. The total amount which may be assessed to 23.24the public utilities, under authority of this subdivision, shall not exceed one-sixth of one 23.25percent of the total gross operating revenues of the public utilities during the calendar year 23.26from retail sales of gas or electric service within the state. The assessment for the third 23.27quarter of each fiscal year shall be adjusted to compensate for the amount by which actual 23.28expenditures by the commission and department for the preceding fiscal year were more 23.29or less than the estimated expenditures previously assessed. 23.30EFFECTIVE DATE.This section is effective the day following final enactment.23.31    Sec. 26. Minnesota Statutes 2008, section 216B.62, subdivision 4, is amended to read:23.32    Subd. 4. Objections. Within 30 days after the date of the transmittal of any bill as 23.33provided by subdivisions 2 and, 3, and 7 the public utility against which the bill has been 23.34rendered may file with the commission objections setting out the grounds upon which it is 24.1claimed the bill is excessive, erroneous, unlawful or invalid. The commission shall within 24.260 days hold a hearing and issue an order in accordance with its findings. The order shall 24.3be appealable in the same manner as other final orders of the commission.24.4EFFECTIVE DATE.This section is effective the day following final enactment.24.5    Sec. 27. Minnesota Statutes 2008, section 216B.62, is amended by adding a 24.6subdivision to read:24.7    Subd. 7.Audit investigation costs.The audit investigation account is created as a 24.8separate account in the special revenue fund in the state treasury.  If the commission, in a 24.9proceeding upon its own motion, on complaint, or upon an application to it, determines 24.10that it is necessary, in order to carry out its duties imposed under this chapter or chapter 24.11216, 216A, 216E, 216F, or 216G, to conduct an investigation or audit of any public utility 24.12operations, practices, or policies requiring specialized technical professional investigative 24.13services for the inquiry, the commission may request the commissioner of commerce to 24.14seek authority from the commissioner of finance to incur costs reasonably attributable to 24.15the specialized services. If the investigation or audit is approved by the commissioner of 24.16finance, the commissioner of commerce shall carry out the investigation in the manner 24.17directed by the commission and shall render separate bills to the public utility for the 24.18costs incurred for such technical professional investigative services. The bill constitutes 24.19notice of the assessment and demand for payment. The amount assessed must be paid 24.20by the public utility to the commissioner of commerce within 30 days after the date of 24.21assessment. Money received under this subdivision must be deposited in the state treasury 24.22and credited to the audit investigation account, and is appropriated to the commissioner of 24.23commerce for the purposes of this subdivision.24.24EFFECTIVE DATE.This section is effective the day following final enactment.24.25    Sec. 28. [216C.054] ANNUAL TRANSMISSION ADEQUACY REPORT TO 24.26LEGISLATURE.24.27The commissioner of commerce, in consultation with the Public Utilities 24.28Commission, shall annually by January 15 submit a written report to the chairs and the 24.29ranking minority members of the legislative committees with primary jurisdiction over 24.30energy policy that contains a narrative describing what electric transmission infrastructure 24.31is needed within the state over the next 15 years and what specific progress is being 24.32made to meet that need. To the extent possible, the report must contain a description 24.33of specific transmission needs and the current status of proposals to address that need. 24.34The report must identify any barriers to meeting transmission infrastructure needs and 24.35make recommendations, including any legislation, that are necessary to overcome those 25.1barriers. The report must be based on the best available information and must describe 25.2what assumptions are made as the basis for the report. If the commissioner determines 25.3that there are difficulties in accurately assessing future transmission infrastructure needs, 25.4the commissioner shall explain those difficulties as part of the report. The commissioner is 25.5not required to conduct original research to support the report. The commissioner may 25.6utilize information the commissioner, the commission, and the Office of Energy Security 25.7possess and utilize in carrying out their existing statutory duties related to the state's 25.8transmission infrastructure. The report must be in easily understood, nontechnical terms. 25.9EFFECTIVE DATE.This section is effective the day following final enactment.25.10    Sec. 29. [216C.055] KEY ROLE OF SOLAR AND BIOMASS RESOURCES IN 25.11PRODUCING THERMAL ENERGY.25.12The annual legislative proposals required to be submitted by the commissioners 25.13of commerce and the Pollution Control Agency under section 216H.07, subdivision 25.144, must include proposals regarding the use of solar energy and the combustion of 25.15grasses, agricultural wastes, trees, and other vegetation to produce thermal energy for 25.16heating commercial, industrial, and residential buildings and for industrial processes if 25.17the commissioners determine that such policies are appropriate to achieve the state's 25.18greenhouse gas emissions reduction goals. No legal claim against any person is allowed 25.19under this section. This section does not apply to the combustion of municipal solid waste 25.20or refuse-derived fuel to produce thermal energy. For purposes of this section, removal 25.21of woody biomass from publicly owned forests must be consistent with the principles of 25.22sustainable forest management.25.23EFFECTIVE DATE.This section is effective the day following final enactment.25.24    Sec. 30. Minnesota Statutes 2008, section 216C.11, is amended to read:25.25216C.11 ENERGY CONSERVATION INFORMATION CENTER.25.26The commissioner shall establish an Energy Information Center in the department's 25.27offices in St. Paul. The information center shall maintain a toll-free telephone information 25.28service and disseminate printed materials on energy conservation topics, including but 25.29not limited to, availability of loans and other public and private financing methods 25.30for energy conservation physical improvements, the techniques and materials used to 25.31conserve energy in buildings, including retrofitting or upgrading insulation and installing 25.32weatherstripping, the projected prices and availability of different sources of energy, 25.33and alternative sources of energy.26.1The Energy Information Center shall serve as the official Minnesota Alcohol Fuels 26.2Information Center and shall disseminate information, printed, by the toll-free telephone 26.3information service, or otherwise on the applicability and technology of alcohol fuels.26.4The information center shall include information on the potential hazards of energy 26.5conservation techniques and improvements in the printed materials disseminated. The 26.6commissioner shall not be liable for damages arising from the installation or operation of 26.7equipment or materials recommended by the information center.26.8The information center shall use the information collected under section 
         216C.02, 26.9subdivision 1
         , to maintain a central source of information on conservation and other 26.10energy-related programs, including both programs required by law or rule and programs 26.11developed and carried on voluntarily. In particular, the information center shall compile 26.12and maintain information on policies covering disconnections or denials of fuel 26.13during cold weather adopted by public utilities and other fuel suppliers not governed 26.14by Minnesota Rules, parts 7820.1500 to 7820.2300 section 216B.096 or 216B.097, 26.15including the number of households disconnected or denied fuel and the duration of the 26.16disconnections or denials.  26.17EFFECTIVE DATE.This section is effective the day following final enactment.26.18    Sec. 31. Minnesota Statutes 2008, section 216C.41, subdivision 5a, is amended to read:26.19    Subd. 5a. Renewable development account. The Department of Commerce 26.20shall authorize payment of the renewable energy production incentive to wind energy 26.21conversion systems for 200 megawatts of nameplate capacity and that are eligible under 26.22this section or Laws 2005, chapter 40, to on-farm biogas recovery facilities, and to 26.23hydroelectric facilities. Payment of the incentive shall be made from the renewable energy 26.24development account as provided under section 
         116C.779, subdivision 2.26.25EFFECTIVE DATE.This section is effective the day following final enactment.26.26    Sec. 32. NATURAL GAS UTILITIES; INTERIM ENERGY SAVINGS PLAN.26.27(a) The commissioner of commerce may approve an energy conservation 26.28improvement plan under Minnesota Statutes, section 216B.241, subdivision 1c, paragraph 26.29(d), that:26.30(1) is submitted to the commissioner in calendar year 2009 by a utility that provides 26.31natural gas service at retail;26.32(2) governs the conservation improvements to be undertaken by the utility over the 26.33next three-year time period; and26.34(3) is accompanied by a study that specifies how the utility may:27.1(i) average savings of at least 0.75 percent over the three years following submission 27.2of the plan;27.3(ii) meet and exceed the minimum energy savings goal of one percent of gross 27.4annual retail sales within five years of submission of the plan; and27.5(iii) achieve average annual savings of at least one percent over years four through 27.6nine following submission of the plan.27.7(b) The plan must include projections of the total amount spent by the utility to 27.8achieve energy savings each year and the cost per unit of energy saved.27.9(c) Nothing in this section precludes the commissioner from requiring additional 27.10energy conservation improvement activities and programs beyond those proposed by a 27.11utility in its proposed plan so long as those additional activities and programs meet the 27.12requirements of Minnesota Statutes, section 216B.241. The commissioner shall require 27.13all reasonable actions by a utility that will increase the likelihood of the utility's meeting 27.14and exceeding the minimum one percent energy savings goal and the 1.5 percent goal 27.15as soon as reasonably feasible.27.16EFFECTIVE DATE.This section is effective the day following final enactment.27.17    Sec. 33. UTILITY RATES STUDY.27.18The Public Utilities Commission, in consultation with the Office of Energy 27.19Security, shall conduct a study of automatic cost-recovery mechanisms and alternative 27.20forms of utility rate regulation. This study shall include an assessment of the impact of 27.21automatic cost-recovery mechanisms on prices charged to utility consumers compared 27.22to traditional cost-recovery mechanisms, an assessment of the impact of automatic 27.23recovery mechanisms on the level of customer understanding of utility rates compared to 27.24traditional cost-recovery mechanisms, and an assessment of alternative forms of utility 27.25rate regulation that may be used in place of automatic cost-recovery mechanisms. The 27.26study shall also address methods to improve administration and customer understanding 27.27of automatic cost-recovery mechanisms. The commission shall submit this report to the 27.28legislature on or before June 30, 2010. The commission may assess public utilities for 27.29the cost of the study. The assessment is not subject to a cap on assessments provided by 27.30section 216B.62 or any other law.27.31EFFECTIVE DATE.This section is effective the day following final enactment.27.32    Sec. 34. MOUNTAIN IRON ECONOMIC DEVELOPMENT AUTHORITY; 27.33WIND ENERGY PROJECT.27.34(a) The Mountain Iron Economic Development Authority may form or become a 27.35member of a limited liability company organized under Minnesota Statutes, chapter 322B, 28.1for the purpose of developing a community-based energy development project pursuant 28.2to Minnesota Statutes, section 216B.1612. A limited liability company formed or joined 28.3under this section is subject to the open meeting requirements established in Minnesota 28.4Statutes, chapter 13D. A project authorized by this section may not sell, transmit, or 28.5distribute the electrical energy at retail or provide for end use of the electricity to an 28.6off-site facility of the economic development corporation or the limited liability company. 28.7Nothing in this section modifies the exclusive service territories or exclusive right to serve 28.8as provided in Minnesota Statutes, sections 216B.37 to 216B.43.28.9(b) The authority may acquire a leasehold interest in property outside its corporate 28.10boundaries for the purpose of developing a community-based energy development project 28.11as provided in Minnesota Statutes, section 216B.1612.28.12EFFECTIVE DATE.This section is effective the day after the city of Mountain 28.13Iron and its chief clerical officer comply with Minnesota Statutes, section 645.021, 28.14subdivisions 2 and 3.28.15    Sec. 35. SOLAR CITIES REPORT.28.16The cities of Minneapolis and St. Paul, designated as solar cities under the federal 28.17Department of Energy's Solar America Initiative, shall, by October 1, 2009, and October 28.181, 2010, submit a report to the cochairs of the Legislative Energy Commission containing 28.19strategies to accelerate the rate of solar thermal and solar electric energy installations 28.20in all building types throughout the state.  The report must, at a minimum, address the 28.21following issues:28.22(1) identify legal, administrative, financial, and operational barriers to increasing the 28.23installation of solar energy, and measures to overcome them;28.24(2) identify financial and regulatory mechanisms that stimulate the development of 28.25solar energy;28.26(3) identify ways to link solar energy development with energy conservation and 28.27energy efficiency strategies and programs;28.28(4) how efforts and initiatives undertaken by St. Paul and Minneapolis can be 28.29integrated with activities undertaken in other parts of the state; and28.30(5) how projected trends in solar technologies and the costs of solar generation can 28.31be integrated into the state's strategy to advance adoption of solar energy.28.32In preparing these reports, the cities may confer with any person whose experience 28.33and expertise will assist in preparing the reports, including utilities, businesses providing 28.34solar energy installation services, nonprofit organizations promoting solar energy, and 28.35others.29.1    Sec. 36. CANCELLATION AND APPROPRIATION.29.2(a) Of the amount remaining from the appropriation to the commissioner of 29.3commerce to provide competitive, cost-share grants to fund renewable energy research 29.4in this state under Laws 2007, chapter 57, article 2, section 3, subdivision 6, $750,000 is 29.5canceled to the special revenue fund.29.6(b) $750,000 in fiscal year 2010 is appropriated from the special revenue fund to the 29.7commissioner of commerce for a onetime grant to BioBusiness Alliance of Minnesota 29.8for bioscience business development programs to promote and position the state as 29.9a global leader in bioscience business activities. These funds may be used to create, 29.10recruit, retain, and expand biobusiness activity in Minnesota; implement the destination 29.112025 statewide plan; update a statewide assessment of the bioscience industry and the 29.12competitive position of Minnesota-based bioscience businesses relative to other states and 29.13other nations; and develop and implement business and scenario-planning models to 29.14create, recruit, retain, and expand biobusiness activity in Minnesota.29.15EFFECTIVE DATE.This section is effective the day following final enactment.29.16    Sec. 37. REVISOR'S INSTRUCTION.29.17(a) The revisor of statutes shall replace the phrase "parts 7820.1500 to 7820.2300" in 29.18Minnesota Rules, part 7826.0200, with the phrase "Minnesota Statutes, sections 216B.096 29.19and 216B.097."29.20(b) The revisor of statutes shall replace the phrase "chapter 7820" in Minnesota 29.21Rules, part 7826.1500, item B, with the phrase "Minnesota Statutes, sections 216B.096 29.22and 216B.097."29.23EFFECTIVE DATE.This section is effective the day following final enactment.29.24    Sec. 38.  REPEALER.29.25Laws 2007, chapter 3, section 3, is repealed."29.26Delete the title and insert:29.27"A bill for an act29.28relating to energy; providing for energy conservation; regulating utilities and 29.29utility rates; modifying or adding provisions relating to renewable energy 29.30production incentives and initiatives, high-voltage transmission lines, central 29.31corridor utility zone cost adjustments, contracts, renewable energy purchases, 29.32decoupling criteria, certain appraisal fees, energy conservation, utility costs 29.33and refunds, renewable and high-efficiency energy rate options, solar energy, 29.34utility energy savings, biomethane purchases, Sustainable Building 2030, 29.35certificate of need exemptions, energy facilities, renewable development account, 29.36and Mountain Iron Economic Development Authority; providing for audit 29.37investigation costs and appropriating money; requiring studies, legislative reports 29.38and proposals; cancelling appropriations; appropriating money;amending 29.39Minnesota Statutes 2008, sections 116C.779, subdivision 2, by adding a 30.1subdivision; 117.189; 216A.03, subdivision 6, by adding a subdivision; 216B.16, 30.2subdivisions 2, 6c, 7b, by adding a subdivision; 216B.1645, subdivision 2a; 30.3216B.169, subdivision 2; 216B.1691, subdivision 2a; 216B.23, by adding 30.4a subdivision; 216B.241, subdivisions 1c, 5a, 9, by adding a subdivision; 30.5216B.2411, subdivisions 1, 2; 216B.2412, subdivision 2; 216B.2424, subdivision 30.65a; 216B.243, subdivisions 8, 9; 216B.62, subdivisions 3, 4, by adding a 30.7subdivision; 216C.11; 216C.41, subdivision 5a; proposing coding for new law 30.8in Minnesota Statutes, chapters 216B; 216C; repealing Laws 2007, chapter 3, 30.9section 3."
         		We request the adoption of this report and repassage of the bill.Senate Conferees: (Signed) Yvonne Prettner Solon, John Doll, D. Scott Dibble, David Senjem, Dan SparksHouse Conferees: (Signed) Bill Hilty, Andrew Falk, Sheldon Johnson, Jeremy Kalin, Michael Beard

31.1We request the adoption of this report and repassage of the bill.31.2Senate Conferees:(Signed)31.3
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                     						31.4Yvonne Prettner SolonJohn Doll31.5
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                     						31.6D. Scott DibbleDavid Senjem31.7
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                     						31.8Dan Sparks31.9House Conferees:(Signed)31.10
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                     						31.11Bill HiltyAndrew Falk31.12
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                     						31.13Sheldon JohnsonJeremy Kalin31.14
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                     						31.15Michael Beard