1.1 	A bill for an act
1.2 	relating to energy; modifying community-based energy development program;
1.3 	amending Minnesota Statutes 2008, section 216B.1612, subdivisions 3, 5, 7, by 
1.4 	adding a subdivision; Minnesota Statutes 2009 Supplement, section 216B.1612, 
1.5 	subdivision 2.
1.6 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.7 	Section 1. Minnesota Statutes 2009 Supplement, section 216B.1612, subdivision 2, 
1.8 	is amended to read:
1.9 		Subd. 2.Definitions. (a) The terms used in this section have the meanings given 
1.10 	them in this subdivision.
1.11 	(b) "C-BED tariff" or "tariff" means a community-based energy development tariff.
1.12 	(c) "Qualifying owner beneficiary" means:
1.13 	(1) a Minnesota resident individually or as a member of a Minnesota limited liability 
1.14 	company organized under chapter 322B and formed for the purpose of developing a 
1.15 	C-BED project;
1.16 	(2) a limited liability company that is organized under chapter 322B and that is made 
1.17 	up of members who are Minnesota residents;
1.18 	(3) (2) a Minnesota nonprofit organization organized under chapter 317A;
1.19 	(4) (3) a Minnesota cooperative association organized under chapter 308A or 
1.20 	308B, including a rural electric cooperative association or a generation and transmission 
1.21 	cooperative on behalf of and at the request of a member distribution utility;
1.22 	(5) (4) a Minnesota political subdivision or local government including, but not 
1.23 	limited to, a municipal electric utility, or a municipal power agency on behalf of and at 
1.24 	the request of a member distribution utility; the office of the commissioner of Iron Range 
1.25 	resources and rehabilitation; a county, statutory or home rule charter city, town, school 
2.1 	district, or public or private higher education institution; or any other local or regional 
2.2 	governmental organization such as a board, commission, or association; or
2.3 	(6) (5) a tribal council.; or
2.4 	(6) a legal entity (i) formed for a purpose other than to participate in C-BED 
2.5 	projects; (ii) whose principal place of business or principal executive office is located 
2.6 	in Minnesota; and (iii) that provides labor, services, equipment, components, or debt 
2.7 	financing to a C-BED project.
2.8 	A public utility, as defined in section 216B.02, subdivision 4, is not a qualifying 
2.9 	beneficiary.
2.10 	(d) "Net present value rate" means a rate equal to the net present value of the 
2.11 	nominal payments to a project divided by the total expected energy production of the 
2.12 	project over the life of its power purchase agreement. "Qualifying revenue" includes, 
2.13 	but is not limited to:
2.14 	(1) royalties, distributions, dividends, and other payments flowing directly or 
2.15 	indirectly to individuals who are qualifying beneficiaries;
2.16 	(2) reasonable fees for consulting, development, professional, construction, and 
2.17 	operations and maintenance services paid to qualifying beneficiaries;
2.18 	(3) interest and fees paid to financial institutions that are qualifying beneficiaries;
2.19 	(4) the value-added portion of payments for goods manufactured in Minnesota; and
2.20 	(5) production taxes.
2.21 	(e) "Discount rate" means the ten-year United States Treasury Yield as quoted in 
2.22 	the Wall Street Journal as of the date of application for determination under subdivision 
2.23 	10, plus five percent; except that the discount rate applicable to any qualifying revenues 
2.24 	contingent upon an equity investor earning a specified internal rate of return is the ten-year 
2.25 	United States Treasury Yield, plus eight percent.
2.26 	(f) "Standard reliability criteria" means:
2.27 	(1) can be safely integrated into and operated within the utility's grid without causing 
2.28 	any adverse or unsafe consequences; and
2.29 	(2) is consistent with the utility's resource needs as identified in its most recent 
2.30 	resource plan submitted under section 216B.2422.
2.31 	(f)(g) "Renewable" refers to a technology listed in section 216B.1691, subdivision 
2.32 	1, paragraph (a).
2.33 	(g)(h) "Community-based energy development project" or "C-BED project" means 
2.34 	a new renewable energy project that either as a stand-alone project or part of a partnership 
2.35 	under subdivision 8:
3.1 	(1) has no single qualifying owner beneficiary, including any parent company or 
3.2 	subsidiary of the qualifying beneficiary, owning more than 15 percent of a C-BED wind 
3.3 	energy project unless: (i) the C-BED wind energy project consists of only one or two 
3.4 	turbines; or (ii) the qualifying owner beneficiary is a public entity listed under paragraph 
3.5 	(c), clause (5), that is not a municipal utility (4);
3.6 	(2) demonstrates that at least 51 percent of the net present value of the gross 
3.7 	revenues from a power purchase agreement over the life of the project will flow toare 
3.8 	qualifying owners and other local entities revenues; and
3.9 	(3) has a resolution of support adopted by the county board of each county in which 
3.10 	the project is to be located, or in the case of a project located within the boundaries of a 
3.11 	reservation, the tribal council for that reservation. 
3.12 	(i) "Value-added portion" means the difference between the total sales price and the 
3.13 	total cost of components, materials, and services purchased from or provided outside 
3.14 	of Minnesota.

3.15 	Sec. 2. Minnesota Statutes 2008, section 216B.1612, subdivision 3, is amended to read:
3.16 		Subd. 3.Tariff rate. (a) The tariff described in subdivision 4 must have a rate 
3.17 	schedule that allows for a net present value rate over the 20-year life of the power 
3.18 	purchase agreement. The tariff must provide for a rate that is higher in the first ten years 
3.19 	of the power purchase agreement than in the last ten years. The discount rate required 
3.20 	to calculate the net present value must be the utility's normal discount rate used for its 
3.21 	other business purposes.
3.22 	(b) The commission shall consider mechanisms to encourage the aggregation 
3.23 	of C-BED projects.
3.24 	(c) The commission shall require that qualifying and nonqualifying ownersC-BED 
3.25 	projects provide sufficient security to secure performance under the power purchase 
3.26 	agreement, and shall prohibit the transfer of the C-BED project to a nonqualifying owner 
3.27 	during the initial 20 years of the contract and shall prohibit transfer of a C-BED project 
3.28 	during the initial term of a power purchase agreement if the transfer will result in the 
3.29 	project's no longer qualifying under section 216B.1612, subdivision 2, paragraph (h).

3.30 	Sec. 3. Minnesota Statutes 2008, section 216B.1612, subdivision 5, is amended to read:
3.31 		Subd. 5.Priority for C-BED projects. (a) A utility subject to section 216B.1691that 
3.32 	needs to construct new generation, or purchase the output from new generation, as part 
3.33 	of its plan to satisfy its good faith objective and standard under that section must take 
3.34 	reasonable steps to determine if one or more C-BED projects are available that meet the 
4.1 	utility's cost and reliability requirements, applying standard reliability criteria, to fulfill 
4.2 	some or all of the identified need at minimal impact to customer rates.
4.3 	Nothing in this section shall be construed to obligate a utility to enter into a power 
4.4 	purchase agreement under a C-BED tariff developed under this section.
4.5 	(b) Each utility shall include in its resource plan submitted under section 216B.2422 
4.6 	a description of its efforts to purchase energy from C-BED projects, including a list of the 
4.7 	projects under contract and the amount of C-BED energy purchased.
4.8 	(c) The commission shall consider the efforts and activities of a utility to purchase 
4.9 	energy from C-BED projects when evaluating its good faith effort towards meeting the 
4.10 	renewable energy objective under section 216B.1691.
4.11 	(d) A municipal power agency or generation and transmission cooperative shall, 
4.12 	when issuing a request for proposals for C-BED projects to satisfy its standard obligation 
4.13 	under section 216B.1691, provide notice to its member distribution utilities that they may 
4.14 	propose, in partnership with other qualifying owners beneficiaries, a C-BED project for the 
4.15 	consideration of the municipal power agency or generation and transmission cooperative.

4.16 	Sec. 4. Minnesota Statutes 2008, section 216B.1612, subdivision 7, is amended to read:
4.17 		Subd. 7.Other C-BED tariff issues. (a) A community-based project developer 
4.18 	and a utility shall negotiate the rate and power purchase agreement terms consistent with 
4.19 	the tariff established under subdivision 4.
4.20 	(b) At the discretion of the developer, a community-based project developer and 
4.21 	a utility may negotiate a power purchase agreement with terms different from the tariff 
4.22 	established under subdivision 4.
4.23 	(c) A qualifying owner, or any combination of qualifying owners, may develop a 
4.24 	joint venture project with a nonqualifying renewable energy project developer C-BED 
4.25 	project may be jointly developed with a non-C-BED project. However, the terms of the 
4.26 	C-BED tariff may only apply to the portion of the energy production of the total project 
4.27 	that is directly proportional to the equity share of the project owned by the qualifying 
4.28 	owners energy produced by the C-BED project.
4.29 	(d) A project that is operating under a power purchase agreement under a C-BED 
4.30 	tariff is not eligible for net energy billing under section 216B.164, subdivision 3, or for 
4.31 	production incentives under section 216C.41.
4.32 	(e)(d) A public utility must receive commission approval of a power purchase 
4.33 	agreement for a C-BED tariffed project. The commission shall provide the utility's 
4.34 	ratepayers an opportunity to address the reasonableness of the proposed power purchase 
5.1 	agreement. Unless a party objects to a contract within 30 days of submission of the 
5.2 	contract to the commission the contract is deemed approved.

5.3 	Sec. 5. Minnesota Statutes 2008, section 216B.1612, is amended by adding a 
5.4 	subdivision to read:
5.5 		Subd. 10.C-BED eligibility determination. (a) A developer of a C-BED project 
5.6 	may seek a predetermination of C-BED eligibility from the commissioner of commerce at 
5.7 	any time, and must obtain a determination of C-BED eligibility from the commissioner of 
5.8 	commerce, based on the project's final financing terms, before construction may begin. 
5.9 	In seeking a determination of eligibility under this subdivision, a developer of a C-BED 
5.10 	project must submit to the commissioner of commerce detailed financial projections 
5.11 	demonstrating that, based on a net present value analysis, and applying the discount rate to 
5.12 	qualifying revenues and gross revenues from a power purchase agreement, the project 
5.13 	meets the requirements of subdivision 2, paragraph (h), clause (1).
5.14 	(b) A project is not required to obtain a determination of C-BED eligibility under 
5.15 	paragraph (a) if it has received, prior to the effective date of this act, an opinion letter 
5.16 	from the commissioner indicating that the project qualifies as a C-BED project under 
5.17 	this section. 
5.18 	(c) The commissioner's determination of C-BED eligibility of a project that obtained 
5.19 	its initial opinion letter regarding C-BED eligibility from the commissioner or written 
5.20 	notification from the Midwest Independent Systems Operator (MISO) that the project 
5.21 	retains a position in the interconnection queue before the effective date of this act must 
5.22 	be based on the laws applicable at the time the initial opinion letter of C-BED eligibility 
5.23 	was issued or the Midwest Independent System Operator interconnection queue position 
5.24 	was obtained. A project subject to this paragraph may elect to have the determination of 
5.25 	eligibility governed by the law in effect at the time of the determination.

5.26 	Sec. 6. EFFECTIVE DATE.
 5.27 	Sections 1 to 5 are effective the day following final enactment.