SF 550

2nd Unofficial Engrossment - 86th Legislature (2009 - 2010)

Posted on 12/26/2012 11:17 p.m.

1.1A bill for an act 1.2relating to energy; modifying or adding provisions relating to renewable energy 1.3production incentives and initiatives, C-BED contracts, renewable energy 1.4purchases, certain appraisal fees, energy conservation, utility costs and refunds, 1.5renewable and high-efficiency energy rate options, solar energy, utility energy 1.6savings, renewable residential heating, biomethane purchases, Sustainable 1.7Building 2030, power purchase agreements, power transmission, certificate 1.8of need exemptions, energy facilities, renewable development account, the 1.9reliability administrator, wind energy conversion systems, and Mountain 1.10Iron Economic Development Authority; requiring legislative reports and 1.11proposals; appropriating money;amending Minnesota Statutes 2008, sections 1.12116C.779, subdivision 2, by adding a subdivision; 117.189; 117.225; 216B.16, 1.13subdivision 6c, by adding a subdivision; 216B.1612, by adding a subdivision; 1.14216B.1645, subdivision 2a; 216B.169, subdivision 2; 216B.1691, subdivision 1.152a; 216B.23, by adding a subdivision; 216B.241, subdivisions 1c, 9, by adding 1.16subdivisions; 216B.2411, subdivisions 1, 2; 216B.2424, subdivision 5a; 1.17216B.243, subdivisions 8, 9; 216C.052, subdivision 2; 216C.41, subdivision 5a; 1.18216F.01, subdivisions 2, 3; 216F.012; 216F.02; 216F.08; proposing coding for 1.19new law in Minnesota Statutes, chapters 216B; 216C; repealing Laws 2007, 1.20chapter 3, section 3. 1.21BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 1.22    Section 1. Minnesota Statutes 2008, section 116C.779, subdivision 2, is amended to 1.23read: 1.24    Subd. 2. Renewable energy production incentive. (a) Until January 1, 2018 new text begin 2021 new text end , 1.25up to $10,900,000 annually must be allocated from available funds in the account to 1.26fund renewable energy production incentives. $9,400,000 of this annual amount is for 1.27incentives for up to 200 megawatts of electricity generated by wind energy conversion 1.28systems that are eligible for the incentives under section 216C.41 new text begin or Laws 2005, chapter new text end 1.29 new text begin 40 new text end . 2.1 new text begin (b) new text end The balance of this amount, up to $1,500,000 annually, may be used for 2.2production incentives for on-farm biogas recovery facilities new text begin and hydroelectric facilities new text end 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 . 2.5 new text begin (c) Any funds allocated to incentive payments for wind energy conversion systems new text end 2.6 new text begin under paragraph (a) that are not expended for that purpose must be allocated to incentive new text end 2.7 new text begin payments under paragraph (b) if necessary to fully pay eligible claims for incentive new text end 2.8 new text begin payments to qualified on-farm biogas recovery facilities and hydroelectric facilities. new text end 2.9 new text begin (d) If funds allocated in calendar year 2010 under paragraphs (b) and (c) are new text end 2.10 new text begin insufficient to fully pay eligible claims for incentive payments to qualified on-farm biogas new text end 2.11 new text begin recovery facilities and hydroelectric facilities, up to $500,000 of additional funds in the new text end 2.12 new text begin renewable development account must be allocated to make up the insufficiency. new text end 2.13 new text begin (e) new text end Any portion of the $10,900,000 not expended in any calendar year for the 2.14incentive is available for other spending purposes under this section. This subdivision 2.15does not create an obligation to contribute funds to the account. 2.16(b) new text begin (f) new text end The Department of Commerce shall determine eligibility of projects under 2.17section 216C.41 for the purposes of this subdivision. At least quarterly, the Department of 2.18Commerce shall notify the public utility of the name and address of each eligible project 2.19owner and the amount due to each project under section 216C.41. The public utility shall 2.20make payments within 15 working days after receipt of notification of payments due. 2.21    Sec. 2. Minnesota Statutes 2008, section 116C.779, is amended by adding a subdivision 2.22to read: 2.23     new text begin Subd. 3. new text end new text begin Initiative for Renewable Energy and the Environment new text end new text begin (a) Beginning new text end 2.24 new text begin July 1, 2011, and each July 1 thereafter, $5,000,000 must be allocated from the renewable new text end 2.25 new text begin development account to fund a grant to the Board of Regents of the University of new text end 2.26 new text begin Minnesota for the Initiative for Renewable Energy and the Environment for the purposes new text end 2.27 new text begin described in paragraph (b). The Initiative for Renewable Energy and the Environment new text end 2.28 new text begin must set aside at least 15 percent of the funds received annually under the grant for new text end 2.29 new text begin qualified projects conducted at a rural campus or experiment station. Any set-aside funds new text end 2.30 new text begin not awarded to a rural campus or experiment station at the end of the fiscal year revert new text end 2.31 new text begin back to the Initiative for Renewable Energy and the Environment for its exclusive use. new text end 2.32 new text begin This subdivision does not create an obligation to contribute funds to the account. new text end 2.33 new text begin (b) Activities funded under this grant may include, but are not limited to: new text end 2.34 new text begin (1) environmentally sound production of energy from a renewable energy source, new text end 2.35 new text begin including biomass and agricultural crops; new text end 3.1 new text begin (2) environmentally sound production of hydrogen from biomass and any other new text end 3.2 new text begin renewable energy source for energy storage and energy utilization; new text end 3.3 new text begin (3) development of energy conservation and efficient energy utilization technologies; new text end 3.4 new text begin (4) energy storage technologies; and new text end 3.5 new text begin (5) analysis of policy options to facilitate adoption of technologies that use or new text end 3.6 new text begin produce low-carbon renewable energy. new text end 3.7 new text begin (c) For the purposes of this subdivision: new text end 3.8 new text begin (1) "biomass" means plant and animal material, agricultural and forest residues, new text end 3.9 new text begin mixed municipal solid waste, and sludge from wastewater treatment; and new text end 3.10 new text begin (2) "renewable energy source" means hydro, wind, solar, biomass, and geothermal new text end 3.11 new text begin energy, and microorganisms used as an energy source. new text end 3.12 new text begin "(d) Beginning January 15 of 2011, and each year thereafter, the director of the new text end 3.13 new text begin Initiative for Renewable Energy and the Environment at the University of Minnesota new text end 3.14 new text begin shall submit a report to the chair and ranking minority members of the senate and house new text end 3.15 new text begin committees with primary jurisdiction over energy finance describing the activities new text end 3.16 new text begin conducted during the previous year funded under this subdivision. new text end 3.17    Sec. 3. Minnesota Statutes 2008, section 117.189, is amended to read: 3.18117.189 PUBLIC SERVICE CORPORATION EXCEPTIONS. 3.19 new text begin (a) new text end Sections 117.031; 117.036; 117.055, subdivision 2, paragraph (b); 117.186; 3.20117.187 ; 117.188; and 117.52, subdivisions 1a and 4, do not apply to public service 3.21corporations. For purposes of an award of appraisal fees under section 117.085, the fees 3.22awarded may not exceed $500 new text begin $1,500 new text end for all types of property. 3.23 new text begin (b) Paragraph (a) does not apply to a public service corporation's use of eminent new text end 3.24 new text begin domain for a high-voltage transmission line. new text end 3.25    Sec. 4. Minnesota Statutes 2008, section 117.225, is amended to read: 3.26117.225 EASEMENT DISCHARGE. 3.27Whenever claiming that an easement acquired by condemnation is not being used for 3.28the purposes for which it was acquired, the underlying fee owner may apply to the district 3.29court of the county in which the land is situated for an order discharging the easement, 3.30upon such terms as are just and equitable. Due notice of said application shall be given to 3.31all interested parties. Provided, however, This section shall new text begin does new text end not apply to easements new text begin , new text end 3.32 new text begin other than easements for a high-voltage transmission line, new text end acquired by condemnation by a 3.33public service corporation now or hereafter doing business in the state of Minnesota. 4.1    Sec. 5. Minnesota Statutes 2008, section 216B.16, subdivision 6c, is amended to read: 4.2    Subd. 6c. Incentive plan for energy conservation improvement. (a) The 4.3commission may order public utilities to develop and submit for commission approval 4.4incentive plans that describe the method of recovery and accounting for utility 4.5conservation expenditures and savings. In developing the incentive plans the commission 4.6shall ensure the effective involvement of interested parties. 4.7(b) In approving incentive plans, the commission shall consider: 4.8(1) whether the plan is likely to increase utility investment in cost-effective energy 4.9conservation; 4.10(2) whether the plan is compatible with the interest of utility ratepayers and other 4.11interested parties; 4.12(3) whether the plan links the incentive to the utility's performance in achieving 4.13cost-effective conservation; and 4.14(4) whether the plan is in conflict with other provisions of this chapter. 4.15(c) The commission may set rates to encourage the vigorous and effective 4.16implementation of utility conservation programs. The commission may: 4.17(1) increase or decrease any otherwise allowed rate of return on net investment based 4.18upon the utility's skill, efforts, and success in conserving energy; 4.19(2) share between ratepayers and utilities the net savings resulting from energy 4.20conservation programs to the extent justified by the utility's skill, efforts, and success in 4.21conserving energy; and 4.22(3) compensate the utility for earnings lost as a result of its conservation programs new text begin new text end 4.23 new text begin adopt any mechanism that satisfies the criteria of this subdivision new text end . 4.24 new text begin (d) In its review under section 216B.241, subdivision 2c, the commission shall new text end 4.25 new text begin provide an incentive that makes effective implementation of cost-effective conservation new text end 4.26 new text begin the most profitable resource choice for public utilities. new text end 4.27    Sec. 6. Minnesota Statutes 2008, section 216B.16, is amended by adding a subdivision 4.28to read: 4.29     new text begin Subd. 7d. new text end new text begin University Avenue light rail transit utility zone cost adjustment. new text end new text begin (a) new text end 4.30 new text begin "University Avenue light rail transit utility zone" or "utility zone" means an area extending new text end 4.31 new text begin no more than one-half mile on either side of the route for the planned light rail transit new text end 4.32 new text begin system connecting the cities of Minneapolis and St. Paul along University Avenue. new text end 4.33 new text begin (b) A public utility that provides retail electric service within the utility zone, new text end 4.34 new text begin and which is required to replace, relocate, construct, or install facilities because of the new text end 4.35 new text begin mass transit system, may apply to the commission for approval of new facilities in the new text end 5.1 new text begin utility zone. Facilities proposed under this subdivision are not limited to those facilities new text end 5.2 new text begin that actually replace dislocated facilities and may include any transmission facilities, new text end 5.3 new text begin distribution facilities, generation facilities, advanced technology-assisted efficiency new text end 5.4 new text begin devices, and energy storage facilities within the utility zone. Upon approval under new text end 5.5 new text begin paragraph (c), the utility may construct and install the facilities. new text end 5.6 new text begin (c) The commission may approve the construction and installation of facilities in a new text end 5.7 new text begin mass transit utility zone proposed by a utility under paragraph (b) upon a finding: new text end 5.8 new text begin (1) that the facilities: new text end 5.9 new text begin (i) are necessary to provide electric service; new text end 5.10 new text begin (ii) assist future development of renewable energy, conservation, electric vehicles, or new text end 5.11 new text begin advanced technology-assisted efficiency programs and devices; or new text end 5.12 new text begin (iii) are exploratory, experimental, or research facilities to advance the use of new text end 5.13 new text begin renewable energy, conservation, electric vehicles, or advanced technology-assisted new text end 5.14 new text begin efficiency programs and devices; new text end 5.15 new text begin (2) that the utility has engaged in a cooperative process with affected local and state new text end 5.16 new text begin government agencies in the design, planning, or construction of the utility zone project new text end 5.17 new text begin and changes to utility facilities; new text end 5.18 new text begin (3) that the utility and local units of government have made reasonable efforts to seek new text end 5.19 new text begin federal, state, or private funds that may be available to mass transit and energy projects; new text end 5.20 new text begin (4) that the utility has made reasonable efforts to minimize the costs and maximize new text end 5.21 new text begin the value to customers of the facilities; new text end 5.22 new text begin (5) that the utility has a plan to offer a comprehensive array of programs for new text end 5.23 new text begin residential, commercial, and industrial customers located within the mass transit zone; new text end 5.24 new text begin (6) that the utility direct existing and planned solar energy programs to develop solar new text end 5.25 new text begin energy along the mass transit utility zone; and new text end 5.26 new text begin (7) that the utility has made reasonable efforts to apply for federal funds to develop new text end 5.27 new text begin technology-assisted efficiency programs and devices within the mass transit utility zone. new text end 5.28 new text begin (d) Notwithstanding any other provision of this chapter, the commission may approve new text end 5.29 new text begin a tariff mechanism for automatic adjustment of charges for new, replaced, or relocated new text end 5.30 new text begin facilities installed under this subdivision in a manner consistent with this subdivision and new text end 5.31 new text begin the standards and procedures contained in subdivision 7b, except that no approval under new text end 5.32 new text begin section 216B.243 or certification under section 216B.2425 is required unless otherwise new text end 5.33 new text begin required by law. This section does not authorize a city-requested facilities surcharge. new text end 5.34 new text begin (e) For the purpose of this subdivision, "technology-assisted efficiency programs and new text end 5.35 new text begin devices" includes, but is not limited to, infrastructure that integrates digital information and new text end 5.36 new text begin controls technology to improve the reliability, security, and efficiency of the electric grid. new text end 6.1    Sec. 7. Minnesota Statutes 2008, section 216B.1612, is amended by adding a 6.2subdivision to read: 6.3     new text begin Subd. 10. new text end new text begin Certification of compliance for C-BED projects. new text end new text begin Beginning February new text end 6.4 new text begin 1, 2010, and each year thereafter, each qualifying owner of a C-BED project must new text end 6.5 new text begin certify to the commissioner in writing that the qualifying owner is in compliance with new text end 6.6 new text begin the requirements of this section. new text end 6.7 new text begin EFFECTIVE DATE. new text end new text begin This section is effective the day following final enactment. new text end 6.8    Sec. 8. Minnesota Statutes 2008, section 216B.1612, is amended by adding a 6.9subdivision to read: 6.10     new text begin Subd. 10. new text end new text begin Certification of residency for C-BED projects. new text end new text begin Beginning February 1, new text end 6.11 new text begin 2010, and each year thereafter, each qualifying owner of a C-BED project must certify new text end 6.12 new text begin to the commissioner in writing that the qualifying owner is in compliance with the new text end 6.13 new text begin requirements of subdivision 2, paragraph (c). new text end 6.14 new text begin EFFECTIVE DATE. new text end new text begin This section is effective the day following final enactment. new text end 6.15    Sec. 9. new text begin [216B.1613] STANDARDIZED C-BED CONTRACT. new text end 6.16 new text begin (a) Within 60 days of the effective date of this section, the commission shall initiate new text end 6.17 new text begin a proceeding to standardize all contract provisions, except those establishing the power new text end 6.18 new text begin purchase price, for two classes of C-BED projects: new text end 6.19 new text begin (1) projects with a nameplate capacity of five megawatts or less; and new text end 6.20 new text begin (2) projects with a nameplate capacity of greater than five megawatts. new text end 6.21     new text begin (b) The proceeding shall provide for participation by the public and stakeholders. new text end 6.22 new text begin The commission shall issue an order containing standardized contract language for each new text end 6.23 new text begin class of C-BED project identified in this section no later than 90 days after the opening of new text end 6.24 new text begin the proceeding. The standardized contract form must be similar in all material respects to new text end 6.25 new text begin the standard contract form previously filed with the commission under section 216B.2423, new text end 6.26 new text begin subdivision 3, including any revisions to that contract on file with the commission as of new text end 6.27 new text begin the effective date of this section. Any applicable C-BED contract signed after the date of new text end 6.28 new text begin the commission's order whose provisions are not identical to the standardized contract new text end 6.29 new text begin contained in the commission's order is invalid. new text end 6.30 new text begin EFFECTIVE DATE. new text end new text begin This section is effective the day following final enactment. new text end 6.31    Sec. 10. new text begin [216B.1614] SMALL RENEWABLE PROJECTS PURCHASE. new text end 7.1 new text begin Between the effective date of this section and December 31, 2010, electric utilities, new text end 7.2 new text begin as defined in section 216B.1691, subdivision 1, paragraph (b), must purchase or contract to new text end 7.3 new text begin purchase energy from a sufficient number of renewable energy projects with a nameplate new text end 7.4 new text begin capacity of five megawatts or less so as to total at least 200 megawatts in the aggregate. new text end 7.5 new text begin Such projects must be constructed or under construction by December 31, 2010, and must new text end 7.6 new text begin meet the eligibility requirements for a renewable energy incentive under the American new text end 7.7 new text begin Recovery and Reinvestment Act of 2009, the federal Rural Energy for America Program, new text end 7.8 new text begin or other renewable energy incentive program. Before December 31, 2010, an electric new text end 7.9 new text begin utility must undertake such projects in approximate proportion to its share of the total new text end 7.10 new text begin amount of electrical energy sold within this state. This requirement does not prevent an new text end 7.11 new text begin electric utility from developing or acquiring electrical energy from other sources either new text end 7.12 new text begin within or outside the state regardless of whether such sources use renewable energy. No new text end 7.13 new text begin person may participate financially in more than one project that counts towards the 200 new text end 7.14 new text begin megawatt requirement established in this section. new text end 7.15    Sec. 11. Minnesota Statutes 2008, section 216B.1645, subdivision 2a, is amended to 7.16read: 7.17    Subd. 2a. Cost recovery for utility's renewable facilities. (a) A utility may petition 7.18the commission to approve a rate schedule that provides for the automatic adjustment of 7.19charges to recover prudently incurred investments, expenses, or costs associated with 7.20facilities constructed, owned, or operated by a utility to satisfy the requirements of section 7.21216B.1691 , provided those facilities were previously approved by the commission under 7.22section 216B.2422 or 216B.243, or were determined by the commission to be reasonable 7.23and prudent under section 216B.243, subdivision 9. new text begin For a facility not subject to review new text end 7.24 new text begin by the commission under section 216B.2422 or 216B.243, a utility shall first petition new text end 7.25 new text begin the commission to determine the utility's eligibility to apply for cost recovery for the new text end 7.26 new text begin facility under this section. new text end The commission may approve, or approve as modified, a 7.27rate schedule that: 7.28    (1) allows a utility to recover directly from customers on a timely basis the costs of 7.29qualifying renewable energy projects, including: 7.30    (i) return on investment; 7.31    (ii) depreciation; 7.32    (iii) ongoing operation and maintenance costs; 7.33    (iv) taxes; and 8.1    (v) costs of transmission and other ancillary expenses directly allocable to 8.2transmitting electricity generated from a project meeting the specifications of this 8.3paragraph; 8.4    (2) provides a current return on construction work in progress, provided that recovery 8.5of these costs from Minnesota ratepayers is not sought through any other mechanism; 8.6    (3) allows recovery of other expenses incurred that are directly related to a 8.7renewable energy project, including expenses for energy storage, provided that the 8.8utility demonstrates to the commission's satisfaction that the expenses improve project 8.9economics, ensure project implementation, new text begin advance research and understanding of how new text end 8.10 new text begin storage devices may improve renewable energy projects, new text end or facilitate coordination with 8.11the development of transmission necessary to transport energy produced by the project 8.12to market; 8.13    (4) allocates recoverable costs appropriately between wholesale and retail customers; 8.14    (5) terminates recovery when costs have been fully recovered or have otherwise 8.15been reflected in a utility's rates. 8.16    (b) A petition filed under this subdivision must include: 8.17    (1) a description of the facilities for which costs are to be recovered; 8.18    (2) an implementation schedule for the facilities; 8.19    (3) the utility's costs for the facilities; 8.20    (4) a description of the utility's efforts to ensure that costs of the facilities are 8.21reasonable and were prudently incurred; and 8.22    (5) a description of the benefits of the project in promoting the development of 8.23renewable energy in a manner consistent with this chapter. 8.24    Sec. 12. Minnesota Statutes 2008, section 216B.169, subdivision 2, is amended to read: 8.25    Subd. 2. Renewable and high-efficiency energy rate options. (a) Each new text begin A new text end 8.26utility shall new text begin may new text end offer its customers, and shall advertise the offer at least annually, 8.27one or more options that allow a customer to determine that a certain amount of the 8.28electricity generated or purchased on behalf of the customer is renewable energy or energy 8.29generated by high-efficiency, low-emissions, distributed generation such as fuel cells and 8.30microturbines fueled by a renewable fuel. 8.31(b) Each public utility shall file an implementation plan within 90 days of July 1, 8.322001, to implement paragraph (a). 8.33(c) new text begin (b) new text end Rates charged to customers must be calculated using the utility's cost of 8.34acquiring the energy for the customer and must: 9.1(1) reflect the difference between the cost of generating or purchasing the 9.2 new text begin additional new text end renewable energy and the cost of generating or purchasing the same amount 9.3of nonrenewable energy new text begin and the cost that would otherwise be attributed to the customer new text end 9.4 new text begin for the same amount of energy based on the utility's mix of renewable and nonrenewable new text end 9.5 new text begin energy sources new text end ; and 9.6(2) be distributed on a per kilowatt-hour basis among all customers who choose to 9.7participate in the program. 9.8(d) Implementation of these rate options may reflect a reasonable amount of 9.9lead time necessary to arrange acquisition of the energy. The utility may acquire the 9.10energy demanded by customers, in whole or in part, through procuring or generating the 9.11renewable energy directly, or through the purchase of credits from a provider that has 9.12received certification of eligible power supply pursuant to subdivision 3. If a utility is not 9.13able to arrange an adequate supply of renewable or high-efficiency energy to meet its 9.14customers' demand under this section, the utility must file a report with the commission 9.15detailing its efforts and reasons for its failure. 9.16 new text begin EFFECTIVE DATE. new text end new text begin This section is effective the day following final enactment. new text end 9.17    Sec. 13. Minnesota Statutes 2008, section 216B.1691, subdivision 2a, is amended to 9.18read: 9.19    Subd. 2a. Eligible energy technology standard. (a) Except as provided in 9.20paragraph (b), each electric utility shall generate or procure sufficient electricity generated 9.21by an eligible energy technology to provide its retail customers in Minnesota, or the 9.22retail customers of a distribution utility to which the electric utility provides wholesale 9.23electric service, so that at least the following standard percentages of the electric utility's 9.24total retail electric sales to retail customers in Minnesota are generated by eligible energy 9.25technologies by the end of the year indicated: 9.26 (1) 2012 12 percent 9.27 (2) 2016 17 percent 9.28 (3) 2020 20 percent 9.29 (4) 2025 25 percent. 9.30    (b) An electric utility that owned a nuclear generating facility as of January 1, 2007, 9.31must meet the requirements of this paragraph rather than paragraph (a). An electric utility 9.32subject to this paragraph must generate or procure sufficient electricity generated by 9.33an eligible energy technology to provide its retail customers in Minnesota or the retail 9.34customer of a distribution utility to which the electric utility provides wholesale electric 9.35service so that at least the following percentages of the electric utility's total retail electric 10.1sales to retail customers in Minnesota are generated by eligible energy technologies by the 10.2end of the year indicated: 10.3 (1) 2010 15 percent 10.4 (2) 2012 18 percent 10.5 (3) 2016 25 percent 10.6 (4) 2020 30 percent. 10.7Of the 30 percent in 2020, at least 25 percent must be generated by wind new text begin or solar new text end 10.8energy conversion systems and the remaining five percent by other eligible energy 10.9technology. 10.10    Sec. 14. Minnesota Statutes 2008, section 216B.23, is amended by adding a 10.11subdivision to read: 10.12     new text begin Subd. 1a. new text end new text begin Authority to issue refund. new text end new text begin (a) On determining that a public utility has new text end 10.13 new text begin charged a rate in violation of this chapter, a commission rule, or a commission order, the new text end 10.14 new text begin commission, after conducting a proceeding, may require the public utility to refund to its new text end 10.15 new text begin customers, in a manner approved by the commission, any revenues the commission finds new text end 10.16 new text begin were collected as a result of the unlawful conduct. Any refund authorized by this section new text end 10.17 new text begin is permitted in addition to any remedies authorized by section 216B.16 or any other law new text end 10.18 new text begin governing rates. Exercising authority under this section does not preclude the commission new text end 10.19 new text begin from pursuing penalties under sections 216B.57 to 216B.61 for the same conduct. new text end 10.20 new text begin (b) This section must not be construed as allowing: new text end 10.21 new text begin (1) retroactive ratemaking; new text end 10.22 new text begin (2) refunds based on claims that prior or current approved rates have been unjust, new text end 10.23 new text begin unreasonable, unreasonably preferential, discriminatory, insufficient, inequitable, or new text end 10.24 new text begin inconsistent in application to a class of customers; or new text end 10.25 new text begin (3) refunds based on claims that approved rates have not encouraged energy new text end 10.26 new text begin conservation or renewable energy use, or have not furthered the goals of section 216B.164, new text end 10.27 new text begin 216B.241, or 216C.05. new text end 10.28     new text begin (c) A refund under this subdivision does not apply to revenues collected more than new text end 10.29 new text begin six years before the date of the notice of the commission proceeding required under this new text end 10.30 new text begin subdivision. new text end 10.31    Sec. 15. Minnesota Statutes 2008, section 216B.241, subdivision 1c, is amended to 10.32read: 11.1    Subd. 1c. Energy-saving goals. (a) The commissioner shall establish energy-saving 11.2goals for energy conservation improvement expenditures and shall evaluate an energy 11.3conservation improvement program on how well it meets the goals set. 11.4    (b) Each individual utility and association shall have an annual energy-savings 11.5goal equivalent to 1.5 percent of gross annual retail energy sales unless modified by the 11.6commissioner under paragraph (d). The savings goals must be calculated based on the 11.7most recent three-year weather normalized average. new text begin A utility or association may elect to new text end 11.8 new text begin carry forward energy savings in excess of 1.5 percent for a year to the succeeding three new text end 11.9 new text begin calendar years, provided that a particular energy savings can apply only to one year's goal. new text end 11.10    (c) The commissioner must adopt a filing schedule that is designed to have all 11.11utilities and associations operating under an energy-savings plan by calendar year 2010. 11.12    (d) In its energy conservation improvement plan filing, a utility or association may 11.13request the commissioner to adjust its annual energy-savings percentage goal based on 11.14its historical conservation investment experience, customer class makeup, load growth, 11.15a conservation potential study, or other factors the commissioner determines warrants 11.16an adjustment. The commissioner may not approve a plan that provides for an annual 11.17energy-savings goal of less than one percent of gross annual retail energy sales from 11.18energy conservation improvements. 11.19A utility or association may include in its energy conservation plan energy savings 11.20from electric utility infrastructure projects approved by the commission under section 11.21216B.1636 or waste heat recovery converted into electricity projects that may count as 11.22energy savings in addition to the minimum energy-savings goal of at least one percent for 11.23energy conservation improvements. Electric utility infrastructure projects must result in 11.24increased energy efficiency greater than that which would have occurred through normal 11.25maintenance activity. 11.26    (e) An energy-savings goal is not satisfied by attaining the revenue expenditure 11.27requirements of subdivisions 1a and 1b, but can only be satisfied by meeting the 11.28energy-savings goal established in this subdivision. 11.29    (f) An association or utility is not required to make energy conservation investments 11.30to attain the energy-savings goals of this subdivision that are not cost-effective even 11.31if the investment is necessary to attain the energy-savings goals. For the purpose of 11.32this paragraph, in determining cost-effectiveness, the commissioner shall consider the 11.33costs and benefits to ratepayers, the utility, participants, and society. In addition, the 11.34commissioner shall consider the rate at which an association or municipal utility is 11.35increasing its energy savings and its expenditures on energy conservation. 12.1    (g) On an annual basis, the commissioner shall produce and make publicly available 12.2a report on the annual energy savings and estimated carbon dioxide reductions achieved 12.3by the energy conservation improvement programs for the two most recent years for 12.4which data is available. The commissioner shall report on program performance both in 12.5the aggregate and for each entity filing an energy conservation improvement plan for 12.6approval or review by the commissioner. 12.7    (h) By January 15, 2010, the commissioner shall report to the legislature whether 12.8the spending requirements under subdivisions 1a and 1b are necessary to achieve the 12.9energy-savings goals established in this subdivision. 12.10 new text begin EFFECTIVE DATE. new text end new text begin This section is effective the day following final enactment. new text end 12.11    Sec. 16. Minnesota Statutes 2008, section 216B.241, is amended by adding a 12.12subdivision to read: 12.13     new text begin Subd. 2d. new text end new text begin Renewable residential heating. new text end new text begin (a) Up to five percent of a utility's new text end 12.14 new text begin conservation spending obligation under subdivision 1a or any amount expended in order new text end 12.15 new text begin to satisfy a utility's energy-savings goal under subdivision 1c may be used for a project new text end 12.16 new text begin located in this state that provides rebates to homeowners who install the following types of new text end 12.17 new text begin projects to heat the homeowner's primary residence: new text end 12.18 new text begin (1) a solar thermal project, as defined in section 216B.2411, subdivision 2, paragraph new text end 12.19 new text begin (e); new text end 12.20 new text begin (2) a geothermal project; new text end 12.21 new text begin (3) a heating unit that burns exclusively either biodiesel, shelled corn, or wood chips new text end 12.22 new text begin or wood pellets, provided that the heating unit is listed by Underwriters Laboratories. new text end 12.23     new text begin (b) A rebate awarded under this subdivision must not exceed the lesser of 25 percent new text end 12.24 new text begin of the purchase and installation costs of the project or $500. new text end 12.25 new text begin EFFECTIVE DATE. new text end new text begin This section is effective the day following final enactment. new text end 12.26    Sec. 17. Minnesota Statutes 2008, section 216B.241, is amended by adding a 12.27subdivision to read: 12.28     new text begin Subd. 5b. new text end new text begin Biomethane purchases. new text end new text begin (a) A natural gas utility may include in its new text end 12.29 new text begin conservation plan purchases of biomethane, and may use up to five percent of the total new text end 12.30 new text begin amount to be spent on energy conservation improvements under this section for that new text end 12.31 new text begin purpose. The cost-effectiveness of biomethane purchases may be determined by a new text end 12.32 new text begin different standard than for other energy conservation improvements under this section if new text end 12.33 new text begin the commissioner determines that doing so is in the public interest in order to encourage new text end 13.1 new text begin biomethane purchases. Energy savings from purchasing biomethane may not be counted new text end 13.2 new text begin toward the minimum energy-savings goal of at least one percent for energy conservation new text end 13.3 new text begin improvements required under subdivision 1c, but may, if the conservation plan is approved: new text end 13.4 new text begin (1) be counted toward energy savings above that minimum percentage; and new text end 13.5 new text begin (2) be considered when establishing performance incentives under subdivision 2c. new text end 13.6 new text begin (b) For the purposes of this subdivision, "biomethane" means biogas produced new text end 13.7 new text begin through anaerobic digestion of biomass, gasification of biomass, or other effective new text end 13.8 new text begin conversion processes, that is cleaned and purified into biomethane that meets natural gas new text end 13.9 new text begin utility quality specifications for use in a natural gas utility distribution system. new text end 13.10 new text begin EFFECTIVE DATE. new text end new text begin This section is effective the day following final enactment. new text end 13.11    Sec. 18. Minnesota Statutes 2008, section 216B.241, subdivision 9, is amended to read: 13.12    Subd. 9. Building performance standards; Sustainable Building 2030. (a) The 13.13purpose of this subdivision is to establish cost-effective energy-efficiency performance 13.14standards for new and substantially reconstructed commercial, industrial, and institutional 13.15buildings that can significantly reduce carbon dioxide emissions by lowering energy use in 13.16new and substantially reconstructed buildings. For the purposes of this subdivision, the 13.17establishment of these standards may be referred to as Sustainable Building 2030. 13.18    (b) The commissioner shall contract with the Center for Sustainable Building 13.19Research at the University of Minnesota to coordinate development and implementation 13.20of energy-efficiency performance standards, strategic planning, research, data analysis, 13.21technology transfer, training, and other activities related to the purpose of Sustainable 13.22Building 2030. The commissioner and the Center for Sustainable Building Research 13.23shall, in consultation with utilities, builders, developers, building operators, and experts 13.24in building design and technology, develop a Sustainable Building 2030 implementation 13.25plan that must address, at a minimum, the following issues: 13.26    (1) training architects to incorporate the performance standards in building design; 13.27    (2) incorporating the performance standards in utility conservation improvement 13.28programs; and 13.29    (3) developing procedures for ongoing monitoring of energy use in buildings that 13.30have adopted the performance standards. 13.31The plan must be submitted to the chairs and ranking minority members of the senate and 13.32house of representatives committees with primary jurisdiction over energy policy by 13.33July 1, 2009. 14.1    (c) Sustainable Building 2030 energy-efficiency performance standards must be firm, 14.2quantitative measures of total building energy use and associated carbon dioxide emissions 14.3per square foot for different building types and uses, that allow for accurate determinations 14.4of a building's conformance with a performance standard. The energy-efficiency 14.5performance standards must be updated every three or five years to incorporate all 14.6cost-effective measures. The performance standards must reflect the reductions in carbon 14.7dioxide emissions per square foot resulting from actions taken by utilities to comply 14.8with the renewable energy standards in section 216B.1691. The performance standards 14.9should be designed to achieve reductions equivalent to the following reduction schedule, 14.10measured against energy consumption by an average building in each applicable building 14.11sector in 2003: (1) 60 percent in 2010; (2) 70 percent in 2015; (3) 80 percent in 2020; 14.12and (4) 90 percent in 2025. A performance standard must not be established or increased 14.13absent a conclusive engineering analysis that it is cost-effective based upon established 14.14practices used in evaluating utility conservation improvement programs. 14.15    (d) The annual amount of the contract with the Center for Sustainable Building 14.16Research is up to $500,000. The Center for Sustainable Building Research shall expend 14.17no more than $150,000 of this amount each year on administration, coordination, and 14.18oversight activities related to Sustainable Building 2030. The balance of contract funds 14.19must be spent new text begin on substantive programmatic activities allowed under this subdivision new text end 14.20 new text begin that may be conducted by the Center for Sustainable Building Research and new text end for 14.21subcontracts with not-for-profit energy organizations, architecture and engineering firms, 14.22and other qualified entities to undertake technical projects and activities in support of 14.23Sustainable Building 2030. The primary work to be accomplished each year by qualified 14.24technical experts under subcontracts is the development and thorough justification of 14.25recommendations for specific energy-efficiency performance standards. Additional work 14.26may include: 14.27    (1) research, development, and demonstration of new energy-efficiency technologies 14.28and techniques suitable for commercial, industrial, and institutional buildings; 14.29    (2) analysis and evaluation of practices in building design, construction, 14.30commissioning and operations, and analysis and evaluation of energy use in the 14.31commercial, industrial, and institutional sectors; 14.32    (3) analysis and evaluation of the effectiveness and cost-effectiveness of Sustainable 14.33Building 2030 performance standards, conservation improvement programs, and building 14.34energy codes; 15.1    (4) development and delivery of training programs for architects, engineers, 15.2commissioning agents, technicians, contractors, equipment suppliers, developers, and 15.3others in the building industries; and 15.4    (5) analyze and evaluate the effect of building operations on energy use. 15.5    (e) The commissioner shall require utilities to develop and implement conservation 15.6improvement programs that are expressly designed to achieve energy efficiency goals 15.7consistent with the Sustainable Building 2030 performance standards. These programs 15.8must include offerings of design assistance and modeling, financial incentives, and the 15.9verification of the proper installation of energy-efficient design components in new and 15.10substantially reconstructed buildings. new text begin A utility's design assistance program must consider new text end 15.11 new text begin the strategic planting of trees and shrubs around buildings as an energy conservation new text end 15.12 new text begin strategy for the designed project. new text end A utility making an expenditure under its conservation 15.13improvement program that results in a building meeting the Sustainable Building 2030 15.14performance standards may claim the energy savings toward its energy-savings goal 15.15established in subdivision 1c. 15.16    (f) The commissioner shall report to the legislature every three years, beginning 15.17January 15, 2010, on the cost-effectiveness and progress of implementing the Sustainable 15.18Building 2030 performance standards and shall make recommendations on the need to 15.19continue the program as described in this section. 15.20 new text begin EFFECTIVE DATE. new text end new text begin This section is effective the day following final enactment. new text end 15.21    Sec. 19. Minnesota Statutes 2008, section 216B.2411, subdivision 1, is amended to 15.22read: 15.23    Subdivision 1. Generation projects. (a) Any municipality or rural electric 15.24association providing electric service and subject to section 216B.241 may, and each 15.25public utility may, use five percent of the total amount to be spent on energy conservation 15.26improvements under section 216B.241, on: 15.27    (1) projects in Minnesota to construct an electric generating facility that utilizes 15.28eligible renewable energy sources as defined in subdivision 2, such as methane or other 15.29combustible gases derived from the processing of plant or animal wastes, biomass fuels 15.30such as short-rotation woody or fibrous agricultural crops, or other renewable fuel, as 15.31its primary fuel source; 15.32    (2) projects in Minnesota to install a distributed generation facility of ten megawatts 15.33or less of interconnected capacity that is fueled by natural gas, renewable fuels, or another 15.34similarly clean fuel; or 16.1    (3) projects in Minnesota to install a qualifying solar energy project as defined in 16.2subdivision 2. 16.3    (b) new text begin A utility that offers a program to customers to promote installing qualifying solar new text end 16.4 new text begin energy projects may request authority from the commissioner to exceed the five percent new text end 16.5 new text begin limit in paragraph (a) to meet customer demand for installation of qualifying solar energy new text end 16.6 new text begin projects. In considering this request, the commissioner shall consider customer interest in new text end 16.7 new text begin qualifying solar energy and the impact on other customers. new text end 16.8For public utilities, as defined under section 216B.02, subdivision 4, new text begin (c) For a utility new text end 16.9 new text begin subject to this section, new text end projects under this section must be considered energy conservation 16.10improvements as defined in section 216B.241. For cooperative electric associations and 16.11municipal utilities, projects under this section must be considered load-management 16.12activities described in section 216B.241, subdivision 1. 16.13    Sec. 20. Minnesota Statutes 2008, section 216B.2411, subdivision 2, is amended to 16.14read: 16.15    Subd. 2. Definitions. (a) For the purposes of this section, the terms defined in this 16.16subdivision and section 216B.241, subdivision 1, have the meanings given them. 16.17    (b) "Eligible renewable energy sources" means fuels and technologies to generate 16.18electricity through the use of any of the resources listed in section 216B.1691, subdivision 16.191 , paragraph (a), except that the incineration of wastewater sludge is not an eligible 16.20renewable energy source, "biomass" has the meaning provided under paragraph (c), and 16.21"solar" must be from a qualified solar energy project as defined in paragraph (d). 16.22    (c) "Biomass" includes: 16.23    (1) methane or other combustible gases derived from the processing of plant or 16.24animal material; 16.25    (2) alternative fuels derived from soybean and other agricultural plant oils or animal 16.26fats; 16.27    (3) combustion of barley hulls, corn, soy-based products, or other agricultural 16.28products; 16.29    (4) wood residue from the wood products industry in Minnesota or other wood 16.30products such as short-rotation woody or fibrous agricultural crops; 16.31    (5) landfill gas; 16.32(6) the predominantly organic components of wastewater effluent, sludge, or related 16.33byproducts from publicly owned treatment works; and 16.34(7) mixed municipal solid waste, and refuse-derived fuel from mixed municipal 16.35solid waste. 17.1    (d) "Qualifying solar energy project" means a qualifying solar thermal project or 17.2qualifying solar electric project. 17.3    (e) "Qualifying solar thermal project" means a flat plate or evacuated tube that meets 17.4the requirements of section 216C.25 with a fixed orientation that collects the sun's radiant 17.5energy and transfers it to a storage medium for distribution as energy to heat or cool air or 17.6water, but does not include equipment used to heat water at a residential property (1) for 17.7domestic use if less than one-half of the energy used for that purpose is derived from the 17.8sun or (2) for use in a hot tub or swimming pool. 17.9    (f) "Qualifying solar electric project" means new text begin : new text end 17.10 new text begin (1) new text end solar electric equipment that new text begin : (i) new text end meets the requirements of section 216C.25 17.11with a total new text begin ; (ii) has a new text end peak generating capacity of 100 kilowatts or less new text begin ; and (iii) is new text end 17.12used for generating new text begin to generate new text end electricity primarily for use in a residential property or 17.13small business to reduce the effective electric load for that residence or small business new text begin , new text end 17.14 new text begin commercial, or publicly owned building or facility; and new text end 17.15 new text begin (2) if applicable, equipment that is used to store the electricity generated by a new text end 17.16 new text begin qualified solar electric project under clause (1) and that is located proximate to the new text end 17.17 new text begin building or facility using the electricity new text end . 17.18    (g) "Residential property new text begin building new text end " means the principal residence of a homeowner at 17.19the time the solar equipment is placed in service. 17.20    (h) "Small business" has the meaning given to it in section . 17.21 new text begin EFFECTIVE DATE. new text end new text begin This section is effective the day following final enactment. new text end 17.22    Sec. 21. Minnesota Statutes 2008, section 216B.2424, subdivision 5a, is amended to 17.23read: 17.24    Subd. 5a. Reduction of biomass mandate. (a) Notwithstanding subdivision 5, the 17.25biomass electric energy mandate must be reduced from 125 megawatts to 110 megawatts. 17.26(b) The Public Utilities Commission shall approve a request pending before the 17.27commission as of May 15, 2003, for amendments to and assignment of a power purchase 17.28agreement with the owner of a facility that uses short-rotation, woody crops as its primary 17.29fuel previously approved to satisfy a portion of the biomass mandate if the owner of 17.30the project agrees to reduce the size of its project from 50 megawatts to 35 megawatts, 17.31while maintaining an average price for energy in nominal dollars measured over the term 17.32of the power purchase agreement at or below $104 per megawatt-hour, exclusive of any 17.33price adjustments that may take effect subsequent to commission approval of the power 17.34purchase agreement, as amended. The commission shall also approve, as necessary, any 17.35subsequent assignment or sale of the power purchase agreement or ownership of the 18.1project to an entity owned or controlled, directly or indirectly, by two municipal utilities 18.2located north of Constitutional Route No. 8, as described in section 161.114, which 18.3currently own electric and steam generation facilities using coal as a fuel and which 18.4propose to retrofit their existing municipal electrical generating facilities to utilize biomass 18.5fuels in order to perform the power purchase agreement. 18.6(c) If the power purchase agreement described in paragraph (b) is assigned to an 18.7entity that is, or becomes, owned or controlled, directly or indirectly, by two municipal 18.8entities as described in paragraph (b), and the power purchase agreement meets the 18.9price requirements of paragraph (b), the commission shall approve any amendments to 18.10the power purchase agreement necessary to reflect the changes in project location and 18.11ownership and any other amendments made necessary by those changes. The commission 18.12shall also specifically find that: 18.13(1) the power purchase agreement complies with and fully satisfies the provisions of 18.14this section to the full extent of its 35-megawatt capacity; 18.15(2) all costs incurred by the public utility and all amounts to be paid by the public 18.16utility to the project owner under the terms of the power purchase agreement are fully 18.17recoverable pursuant to section 216B.1645; 18.18(3) subject to prudency review by the commission, the public utility may recover 18.19from its Minnesota retail customers the Minnesota jurisdictional portion of the amounts 18.20that may be incurred and paid by the public utility during the full term of the power 18.21purchase agreement; and 18.22(4) if the purchase power agreement meets the requirements of this subdivision, 18.23it is reasonable and in the public interest. 18.24(d) The commission shall specifically approve recovery by the public utility of 18.25any and all Minnesota jurisdictional costs incurred by the public utility to improve, 18.26construct, install, or upgrade transmission, distribution, or other electrical facilities owned 18.27by the public utility or other persons in order to permit interconnection of the retrofitted 18.28biomass-fueled generating facilities or to obtain transmission service for the energy 18.29provided by the facilities to the public utility pursuant to section 216B.1645, and shall 18.30disapprove any provision in the power purchase agreement that requires the developer 18.31or owner of the project to pay the jurisdictional costs or that permit the public utility to 18.32terminate the power purchase agreement as a result of the existence of those costs or the 18.33public utility's obligation to pay any or all of those costs. 18.34 new text begin (e) Upon request by the project owner, the public utility shall agree to amend the new text end 18.35 new text begin power purchase agreement described in paragraph (b) and approved by the commission new text end 18.36 new text begin as required by paragraph (c). The amendment must be negotiated and executed within new text end 19.1 new text begin 45 days of the effective date of this section and must apply to prices paid after January new text end 19.2 new text begin 1, 2009. The average price for energy in nominal dollars measured over the term of the new text end 19.3 new text begin power purchase agreement must not exceed $104 per megawatt hour by more than five new text end 19.4 new text begin percent. The public utility shall request approval of the amendment by the commission new text end 19.5 new text begin within 30 days of execution of the amended power purchase agreement. The amendment new text end 19.6 new text begin is not effective until approval by the commission. The commission shall act on the new text end 19.7 new text begin amendment within 90 days of submission of the request by the public utility. Upon new text end 19.8 new text begin approval of the amended power purchase agreement, the commission shall allow the new text end 19.9 new text begin public utility to recover the costs of the amended power purchase agreement, as provided new text end 19.10 new text begin in section 216B.1645. new text end 19.11 new text begin EFFECTIVE DATE. new text end new text begin This section is effective the day following final enactment. new text end 19.12    Sec. 22. Minnesota Statutes 2008, section 216B.243, subdivision 8, is amended to read: 19.13    Subd. 8. Exemptions. This section does not apply to: 19.14(1) cogeneration or small power production facilities as defined in the Federal Power 19.15Act, United States Code, title 16, section 796, paragraph (17), subparagraph (A), and 19.16paragraph (18), subparagraph (A), and having a combined capacity at a single site of less 19.17than 80,000 kilowatts; plants or facilities for the production of ethanol or fuel alcohol; or 19.18any case where the commission has determined after being advised by the attorney general 19.19that its application has been preempted by federal law; 19.20(2) a high-voltage transmission line proposed primarily to distribute electricity to 19.21serve the demand of a single customer at a single location, unless the applicant opts to 19.22request that the commission determine need under this section or section 216B.2425; 19.23(3) the upgrade to a higher voltage of an existing transmission line that serves 19.24the demand of a single customer that primarily uses existing rights-of-way, unless the 19.25applicant opts to request that the commission determine need under this section or section 19.26216B.2425 ; 19.27(4) a high-voltage transmission line of one mile or less required to connect a new or 19.28upgraded substation to an existing, new, or upgraded high-voltage transmission line; 19.29(5) conversion of the fuel source of an existing electric generating plant to using 19.30natural gas; 19.31(6) the modification of an existing electric generating plant to increase efficiency, 19.32as long as the capacity of the plant is not increased more than ten percent or more than 19.33100 megawatts, whichever is greater; or 19.34(7) a large energy facility that new text begin : new text end 19.35(i) generates electricity from wind energy conversion systems, new text begin ; new text end 20.1(ii) will serve retail customers in Minnesota, new text begin ; and new text end 20.2(iii) new text begin meets any of the following conditions: new text end 20.3 new text begin (A) new text end is specifically intended to be used to meet the renewable energy objective under 20.4section 216B.1691 or new text begin ; new text end 20.5 new text begin (B) new text end addresses a resource need identified in a current commission-approved or 20.6commission-reviewed resource plan under section 216B.2422, and (iv) new text begin ; or new text end 20.7 new text begin (C) new text end derives at least ten percent of the total nameplate capacity of the proposed project 20.8from one or more C-BED projects, as defined under section 216B.1612, subdivision 2, 20.9paragraph (f) . 20.10    Sec. 23. Minnesota Statutes 2008, section 216B.243, subdivision 9, is amended to read: 20.11    Subd. 9. Renewable energy standard facilities. The requirements of this section 20.12do not apply to a wind energy conversion system or a solar electric generation facility that 20.13is intended to be used to meet or exceed the obligations of section 216B.1691; provided 20.14that, after notice and comment, the commission determines that the facility is a reasonable 20.15and prudent approach to meeting a utility's obligations under that section. When making 20.16this determination, the commission may consider new text begin : new text end 20.17 new text begin (1) new text end the size of the facility relative to a utility's total need for renewable resources and new text begin ; new text end 20.18 new text begin (2) new text end alternative approaches for supplying the renewable energy to be supplied by 20.19the proposed facility, and must consider new text begin ; new text end 20.20 new text begin (3) new text end the facility's ability to promote economic development, as required under section 20.21216B.1691 , subdivision 9, maintain new text begin ; new text end 20.22 new text begin (4) maintenance of new text end electric system reliability and consider new text begin ; new text end 20.23 new text begin (5) new text end impacts on ratepayers, new text begin ; new text end and 20.24 new text begin (6) new text end other criteria as new text begin that new text end the commission may determine new text begin determines new text end are relevant. 20.25    Sec. 24. Minnesota Statutes 2008, section 216C.052, subdivision 2, is amended to read: 20.26    Subd. 2. Administrative issues. (a) The commissioner may select the administrator. 20.27The administrator must have at least five years of experience working as a power systems 20.28engineer new text begin planner new text end or transmission planner, or in a position dealing with power system 20.29reliability issues, and may not have been a party or a participant in a commission energy 20.30proceeding for at least one year prior to selection by the commissioner. The commissioner 20.31shall oversee and direct the work of the administrator, annually review the expenses of the 20.32administrator, and annually approve the budget of the administrator. The administrator 20.33may hire staff and may contract for technical expertise in performing duties when existing 21.1state resources are required for other state responsibilities or when special expertise is 21.2required. The salary of the administrator is governed by section 15A.0815, subdivision 2. 21.3    (b) Costs relating to a specific proceeding, analysis, or project are not general 21.4administrative costs. For purposes of this section, "energy utility" means public utilities, 21.5generation and transmission cooperative electric associations, and municipal power 21.6agencies providing natural gas or electric service in the state. 21.7    (c) The Department of Commerce shall pay: 21.8    (1) the general administrative costs of the administrator, not to exceed $1,000,000 21.9in a fiscal year, and shall assess energy utilities for those administrative costs. These 21.10costs must be consistent with the budget approved by the commissioner under paragraph 21.11(a). The department shall apportion the costs among all energy utilities in proportion to 21.12their respective gross operating revenues from sales of gas or electric service within 21.13the state during the last calendar year, and shall then render a bill to each utility on a 21.14regular basis; and 21.15    (2) costs relating to a specific proceeding analysis or project and shall render a bill to 21.16the specific energy utility or utilities participating in the proceeding, analysis, or project 21.17directly, either at the conclusion of a particular proceeding, analysis, or project, or from 21.18time to time during the course of the proceeding, analysis, or project. 21.19    (d) For purposes of administrative efficiency, the department shall assess energy 21.20utilities and issue bills in accordance with the billing and assessment procedures provided 21.21in section 216B.62, to the extent that these procedures do not conflict with this subdivision. 21.22The amount of the bills rendered by the department under paragraph (c) must be paid by 21.23the energy utility into an account in the special revenue fund in the state treasury within 21.2430 days from the date of billing and is appropriated to the department for the purposes 21.25provided in this section. The commission shall approve or approve as modified a rate 21.26schedule providing for the automatic adjustment of charges to recover amounts paid by 21.27utilities under this section. All amounts assessed under this section are in addition to 21.28amounts appropriated to the commission and the department by other law. 21.29    Sec. 25. new text begin [216C.055] KEY ROLE OF SOLAR AND BIOMASS RESOURCES IN new text end 21.30 new text begin PRODUCING THERMAL ENERGY. new text end 21.31 new text begin The legislature recognizes that the use of solar energy and the combustion of grasses, new text end 21.32 new text begin agricultural wastes, trees, and other vegetation to produce thermal energy for heating new text end 21.33 new text begin commercial, industrial, and residential buildings and for industrial process can play a new text end 21.34 new text begin significant role in helping Minnesota meet its future energy needs and its greenhouse gas new text end 21.35 new text begin emissions reduction goals. The annual legislative proposals required to be submitted by new text end 22.1 new text begin the commissioners of commerce and the Pollution Control Agency under section 216H.07, new text end 22.2 new text begin subdivision 4, must include proposals regarding the use of the renewable energy sources new text end 22.3 new text begin described in this section if the commissioners determine that such policies are appropriate new text end 22.4 new text begin to achieve the state's greenhouse gas emissions reduction goals. No legal claim against new text end 22.5 new text begin any person is allowed under this section. The combustion of municipal solid waste or new text end 22.6 new text begin refuse-derived fuel to produce thermal energy is not addressed under this section. For new text end 22.7 new text begin purposes of this section, removal of woody biomass from publicly owned forests must be new text end 22.8 new text begin consistent with the principles of sustainable forest management. new text end 22.9    Sec. 26. Minnesota Statutes 2008, section 216C.41, subdivision 5a, is amended to read: 22.10    Subd. 5a. Renewable development account. The Department of Commerce 22.11shall authorize payment of the renewable energy production incentive to wind energy 22.12conversion systems for 200 megawatts of nameplate capacity and new text begin that are eligible under new text end 22.13 new text begin this section or Laws 2005, chapter 40, new text end to on-farm biogas recovery facilities new text begin , and to new text end 22.14 new text begin hydroelectric facilities new text end . Payment of the incentive shall be made from the renewable energy 22.15development account as provided under section 116C.779, subdivision 2. 22.16    Sec. 27. Minnesota Statutes 2008, section 216F.01, subdivision 2, is amended to read: 22.17    Subd. 2. Large wind energy conversion system or LWECS. "Large wind energy 22.18conversion system" or "LWECS" means any combination of WECS with a combined 22.19nameplate capacity of 5,000 new text begin greater than 25,000 new text end kilowatts or more. 22.20 new text begin EFFECTIVE DATE. new text end new text begin This section is effective the day following final enactment. new text end 22.21    Sec. 28. Minnesota Statutes 2008, section 216F.01, subdivision 3, is amended to read: 22.22    Subd. 3. Small wind energy conversion system or SWECS. "Small wind energy 22.23conversion system" or "SWECS" means any combination of WECS with a combined 22.24nameplate capacity of less than 5,000 new text begin or equal to 25,000 new text end kilowatts. 22.25 new text begin EFFECTIVE DATE. new text end new text begin This section is effective the day following final enactment. new text end 22.26    Sec. 29. Minnesota Statutes 2008, section 216F.012, is amended to read: 22.27216F.012 SIZE ELECTION. 22.28    (a) A wind energy conversion system of less than 25 megawatts of nameplate 22.29capacity as determined under section is a small wind energy conversion system 22.30if, by July 1, 2009, the owner so elects in writing and submits a completed application for 22.31zoning approval and the written election to the county or counties in which the project is 23.1proposed to be located. The owner must notify the Public Utilities Commission of the 23.2election at the time the owner submits the election to the county. 23.3    (b) Notwithstanding paragraph (a), A wind energy conversion system with a 23.4nameplate capacity exceeding five megawatts that is proposed to be located wholly or 23.5partially within a wind access buffer adjacent to state lands that are part of the outdoor 23.6recreation system, as enumerated in section 86A.05, is a large wind energy conversion 23.7system. The Department of Natural Resources shall negotiate in good faith with a system 23.8owner regarding siting and may support the system owner in seeking a variance from the 23.9system setback requirements if it determines that a variance is in the public interest. 23.10    (c) new text begin (b) new text end The Public Utilities Commission shall issue an annual report to the chairs 23.11and ranking minority members of the house of representatives and senate committees 23.12with primary jurisdiction over energy policy and natural resource policy regarding any 23.13variances applied for and not granted for systems subject to paragraph (b). 23.14 new text begin EFFECTIVE DATE. new text end new text begin This section is effective July 1, 2009. new text end 23.15    Sec. 30. Minnesota Statutes 2008, section 216F.02, is amended to read: 23.16216F.02 EXEMPTIONS. 23.17(a) The requirements of chapter 216E do not apply to the siting of LWECS new text begin a WECS new text end 23.18 new text begin with a combined nameplate greater than 5,000 kilowatts that applies to the commission for new text end 23.19 new text begin a site permit new text end , except for sections 216E.01; 216E.03, subdivision 7; 216E.08; 216E.11; 23.20216E.12 ; 216E.14; 216E.15; 216E.17; and 216E.18, subdivision 3, which do apply. 23.21(b) Any person may construct an SWECS new text begin with a combined nameplate capacity less new text end 23.22 new text begin than or equal to 5,000 kilowatts new text end without complying with chapter 216E or this chapter. 23.23(c) Nothing in this chapter shall preclude new text begin precludes new text end a local governmental unit from 23.24establishing requirements for the siting and construction of SWECS. 23.25 new text begin EFFECTIVE DATE. new text end new text begin This section is effective the day following final enactment. new text end 23.26    Sec. 31. Minnesota Statutes 2008, section 216F.08, is amended to read: 23.27216F.08 PERMIT AUTHORITY; ASSUMPTION BY COUNTIES. 23.28    (a) A county board may, by resolution and upon written notice to the Public Utilities 23.29Commission, assume responsibility for processing applications for permits required under 23.30this chapter for LWECS with a combined nameplate capacity of less than 25,000 kilowatts new text begin new text end 23.31 new text begin SWECS new text end . The responsibility for permit application processing, if assumed by a county, 23.32may be delegated by the county board to an appropriate county officer or employee. 24.1Processing by A county shall be done new text begin process applications new text end in accordance with procedures 24.2and processes established under chapter 394. 24.3    (b) A county board that exercises its option under paragraph (a) may issue, deny, 24.4modify, impose conditions upon, or revoke permits pursuant to this section. The action of 24.5the new text begin a new text end county board about new text begin with respect to new text end a permit application is final, subject to appeal as 24.6provided in section 394.27. 24.7    (c) The commission shall, by order, establish general permit standards, including 24.8appropriate property line set-backs, governing site permits for LWECS under this section new text begin new text end 24.9 new text begin and SWECS new text end . The order must consider existing and historic commission standards for 24.10wind permits issued by the commission. The general permit standards shall new text begin may new text end apply 24.11to permits issued by counties and new text begin must apply new text end to permits issued by the commission for 24.12LWECS with a combined nameplate capacity of less than 25,000 kilowatts new text begin and SWECS new text end . new text begin new text end 24.13 new text begin The general permit standards must establish a setback for a SWECS from a road or new text end 24.14 new text begin property line equal to 1.1 times the maximum tip height of a rotor blade measured from new text end 24.15 new text begin ground level when the blade is in a vertical position. Counties are encouraged to consider new text end 24.16 new text begin an identical setback standard in permits they issue. new text end The commission or a county may grant 24.17a variance from a general permit standard if the variance is found to be in the public 24.18interest. new text begin Permit standards established by a county under this section supersede general new text end 24.19 new text begin permit standards established by the commission. new text end 24.20    (d) new text begin Upon request by a county, new text end the commission and the commissioner of commerce 24.21shall provide technical assistance to a county with respect to the processing of LWECS new text begin new text end 24.22 new text begin SWECS new text end site permit applications. 24.23 new text begin EFFECTIVE DATE. new text end new text begin This section is effective the day following final enactment. new text end 24.24    Sec. 32. new text begin MOUNTAIN IRON ECONOMIC DEVELOPMENT AUTHORITY; new text end 24.25 new text begin WIND ENERGY PROJECT. new text end 24.26 new text begin (a) The Mountain Iron Economic Development Authority may form or become a new text end 24.27 new text begin member of a limited liability company organized under Minnesota Statutes, chapter 322B, new text end 24.28 new text begin for the purpose of developing a community-based energy development project pursuant new text end 24.29 new text begin to Minnesota Statutes, section 216B.1612. A limited liability company formed or joined new text end 24.30 new text begin under this section is subject to the open meeting requirements established in Minnesota new text end 24.31 new text begin Statutes, chapter 13D. A project authorized by this section may not sell, transmit, or new text end 24.32 new text begin distribute the electrical energy at retail or provide for end use of the electricity to an new text end 24.33 new text begin off-site facility of the economic development corporation or the limited liability company. new text end 24.34 new text begin Nothing in this section modifies the exclusive service territories or exclusive right to serve new text end 24.35 new text begin as provided in Minnesota Statutes, sections 216B.37 to 216B.43. new text end 25.1 new text begin (b) The authority may acquire a leasehold interest in property outside its corporate new text end 25.2 new text begin boundaries for the purpose of developing a community-based energy development project new text end 25.3 new text begin as provided in Minnesota Statutes, section 216B.1612. new text end 25.4 new text begin EFFECTIVE DATE. new text end new text begin This section is effective the day after the city of Mountain new text end 25.5 new text begin Iron and its chief clerical officer comply with Minnesota Statutes, section 645.021, new text end 25.6 new text begin subdivisions 2 and 3. new text end 25.7    Sec. 33. new text begin SOLAR CITIES REPORT. new text end 25.8 new text begin The cities of Minneapolis and St. Paul, designated as solar cities under the federal new text end 25.9 new text begin Department of Energy's Solar America Initiative, shall, by October 1, 2009, and October new text end 25.10 new text begin 1, 2010, submit a report to the cochairs of the Legislative Energy Committee containing new text end 25.11 new text begin strategies to accelerate the rate of solar thermal and solar electric energy installations new text end 25.12 new text begin in all building types throughout the state. The report must, at a minimum, address the new text end 25.13 new text begin following issues: new text end 25.14 new text begin (1) identify legal, administrative, financial, and operational barriers to increasing the new text end 25.15 new text begin installation of solar energy, and measures to overcome them; new text end 25.16 new text begin (2) identify financial and regulatory mechanisms that stimulate the development of new text end 25.17 new text begin solar energy; new text end 25.18 new text begin (3) identify ways to link solar energy development with energy conservation and new text end 25.19 new text begin energy efficiency strategies and programs; new text end 25.20 new text begin (4) how efforts and initiatives undertaken by St. Paul and Minneapolis can be new text end 25.21 new text begin integrated with activities undertaken in other parts of the state; and new text end 25.22 new text begin (5) how projected trends in solar technologies and the costs of solar generation can new text end 25.23 new text begin be integrated into the state's strategy to advance adoption of solar energy. new text end 25.24 new text begin In preparing these reports, the cities may confer with any person whose experience new text end 25.25 new text begin and expertise will assist in preparing the reports, including utilities, businesses providing new text end 25.26 new text begin solar energy installation services, nonprofit organizations promoting solar energy, and new text end 25.27 new text begin others. new text end 25.28    Sec. 34. new text begin NATURAL GAS UTILITIES; INTERIM ENERGY SAVINGS PLAN. new text end 25.29 new text begin (a) The commissioner of commerce may approve an energy conservation new text end 25.30 new text begin improvement plan under Minnesota Statutes, section 216B.241, subdivision 1c, paragraph new text end 25.31 new text begin (d), that: new text end 25.32 new text begin (1) is submitted to the commissioner in calendar year 2009 by a utility that provides new text end 25.33 new text begin natural gas service at retail; new text end 26.1 new text begin (2) governs the conservation improvements to be undertaken by the utility over the new text end 26.2 new text begin next three-year time period; and new text end 26.3 new text begin (3) is accompanied by a study that specifies how the utility may: new text end 26.4 new text begin (i) average savings of at least 0.75 percent over the three years following submission new text end 26.5 new text begin of the plan; new text end 26.6 new text begin (ii) meet and exceed the minimum energy savings goal of one percent of gross new text end 26.7 new text begin annual retail sales within five years of submission of the plan; and new text end 26.8 new text begin (iii) achieve average annual savings of at least one percent over the nine years new text end 26.9 new text begin following submission of the plan. new text end 26.10 new text begin (b) The plan must include projections of the total amount spent by the utility to new text end 26.11 new text begin achieve energy savings each year and the cost per unit of energy saved. new text end 26.12 new text begin (c) Nothing in this section precludes the commissioner from requiring additional new text end 26.13 new text begin energy conservation improvement activities and programs beyond those proposed by a new text end 26.14 new text begin utility in its proposed plan so long as those additional activities and programs meet the new text end 26.15 new text begin requirements of Minnesota Statutes, section 216B.241. The commissioner shall require new text end 26.16 new text begin all reasonable actions by a utility that will increase the likelihood of the utility's meeting new text end 26.17 new text begin and exceeding the minimum one percent energy savings goal and the 1.5 percent goal new text end 26.18 new text begin as soon as reasonably feasible. new text end 26.19    Sec. 35. new text begin CLEAN ENERGY RESOURCE TEAMS; APPROPRIATION. new text end 26.20 new text begin The utility subject to Minnesota Statutes, section 116C.779, shall transfer $563,000 new text end 26.21 new text begin in fiscal year 2010 and $563,000 in fiscal year 2011 from the renewable development new text end 26.22 new text begin account established in Minnesota Statutes, section 116C.779, to the Department of new text end 26.23 new text begin Commerce on a schedule to be determined by the commissioner of commerce. The funds new text end 26.24 new text begin must be deposited in the special revenue fund and are appropriated to the commissioner new text end 26.25 new text begin for the purposes of this section. new text end 26.26 new text begin $563,000 in fiscal year 2010 and $563,000 in fiscal year 2011 are for continued new text end 26.27 new text begin funding of community energy technical assistance and outreach on renewable energy and new text end 26.28 new text begin energy efficiency, as described in Minnesota Statutes, section 216C.385. Of this amount, new text end 26.29 new text begin $113,000 each year is for technical assistance in the metropolitan area. new text end 26.30    Sec. 36. new text begin REPEALER. new text end 26.31 new text begin Laws 2007, chapter 3, section 3, new text end new text begin is repealed. new text end