1.1 	A bill for an act
1.2 	relating to energy; modifying provisions related to utility report filings, 
1.3 	weatherization programs, and public utility commission assessments; 
1.4 	removing obsolete and redundant language; providing for nuclear power 
1.5 	plant decommissioning and storage of used nuclear fuel; providing for certain 
1.6 	reporting requirements; defining certain terms; requiring utility rates be based 
1.7 	primarily on cost of service between and among consumer classes; exempting 
1.8 	certain gas customers from the conservation improvement program; making 
1.9 	clarifying and technical changes; authorizing the Public Utilities Commission 
1.10 	to approve a multiyear rate plan for certain utilities; providing for cost recovery 
1.11 	for certain pollution control products; requiring certain rate impact information 
1.12 	related to compliance with renewable energy standard; modifying conservation 
1.13 	improvement program; modifying provision relating to transmission projects 
1.14 	reports; regulating charitable contributions and securities issuance by utilities; 
1.15 	relieving Energy Conservation Information Center from certain data-gathering 
1.16 	responsibilities;amending Minnesota Statutes 2010, sections 16E.15, subdivision 
1.17 	2; 216B.02, by adding a subdivision; 216B.026, subdivision 1; 216B.03; 
1.18 	216B.07; 216B.16, subdivisions 6b, 7, 9, 15, by adding subdivisions; 216B.1636, 
1.19 	subdivision 1; 216B.1691, subdivision 1, by adding a subdivision; 216B.2401; 
1.20 	216B.241, subdivisions 1, 1a, 1c, 2; 216B.2425, subdivision 2; 216B.49, 
1.21 	subdivision 3; 216C.11; 216C.264; 216E.18, subdivision 3; proposing coding 
1.22 	for new law in Minnesota Statutes, chapter 216B; repealing Minnesota Statutes 
1.23 	2010, section 216B.242.
1.24 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.25 	Section 1. Minnesota Statutes 2010, section 16E.15, subdivision 2, is amended to read:
1.26 		Subd. 2.Software sale fund. (a) Except as provided in paragraphs paragraph (b) 
1.27 	and (c), proceeds of the sale or licensing of software products or services by the chief 
1.28 	information officer must be credited to the enterprise technology revolving fund. If a state 
1.29 	agency other than the Office of Enterprise Technology has contributed to the development 
1.30 	of software sold or licensed under this section, the chief information officer may reimburse 
1.31 	the agency by discounting computer services provided to that agency.
2.1 	(b) Proceeds of the sale or licensing of software products or services developed by 
2.2 	the Pollution Control Agency, or custom developed by a vendor for the agency, must be 
2.3 	credited to the environmental fund.
2.4 	(c) Proceeds of the sale or licensing of software products or services developed by 
2.5 	the Department of Education, or custom developed by a vendor for the agency, to support 
2.6 	the achieved savings assessment program, must be appropriated to the commissioner of 
2.7 	education and credited to the weatherization program to support weatherization activities.

2.8 	Sec. 2. Minnesota Statutes 2010, section 216B.02, is amended by adding a subdivision 
2.9 	to read:
2.10 		Subd. 1b.Commissioner. "Commissioner" means the commissioner of the 
2.11 	Minnesota Department of Commerce.

2.12 	Sec. 3. Minnesota Statutes 2010, section 216B.026, subdivision 1, is amended to read:
2.13 		Subdivision 1.Election. (a) A cooperative electric association may elect to become 
2.14 	subject to rate regulation by the commission pursuant to sections 216B.03 to 216B.23. 
2.15 	The election shall be approved by a majority of members or stockholders voting by mail 
2.16 	ballot initiated by petition of not less than five percent of the members or stockholders of 
2.17 	the association, as determined by membership figures submitted by the association to the 
2.18 	Rural Electric Administration for the month in which the petition was submitted. 
2.19 	(b) For a cooperative electric association that is the product of a merger or 
2.20 	consolidation of three or more associations between December 30, 1996, and January 1, 
2.21 	2001, the number of members or stockholders necessary to initiate the petition shall be no 
2.22 	less than one percent of the members or stockholders of the association.

2.23 	Sec. 4. Minnesota Statutes 2010, section 216B.03, is amended to read:
2.24 	216B.03 REASONABLE RATE.
2.25 	Every rate made, demanded, or received by any public utility, or by any two or 
2.26 	more public utilities jointly, shall be just and reasonable. Rates shall not be unreasonably 
2.27 	preferential, unreasonably prejudicial, or discriminatory, but shall be sufficient, equitable, 
2.28 	and consistent in application to a class of consumers and among classes of consumers. 
2.29 	To the maximum reasonable extent, the commission shall set rates to encourage energy 
2.30 	conservation and renewable energy use and to further the goals of sections 216B.164, 
2.31 	216B.241, and 216C.05. Any doubt as to reasonableness should be resolved in favor of the 
2.32 	consumer. For rate-making purposes a public utility may treat two or more municipalities 
3.1 	served by it as a single class wherever the populations are comparable in size or the 
3.2 	conditions of service are similar.

3.3 	Sec. 5. Minnesota Statutes 2010, section 216B.07, is amended to read:
3.4 	216B.07 RATE PREFERENCE PROHIBITED.
3.5 	No public utility shall, as to rates or service, make or grant any unreasonable 
3.6 	preference or advantage to any person or class of consumers or subject any person or class 
3.7 	of consumers to any unreasonable prejudice or disadvantage.

3.8 	Sec. 6. Minnesota Statutes 2010, section 216B.16, subdivision 6b, is amended to read:
3.9 		Subd. 6b.Energy conservation improvement. (a) Except as otherwise provided 
3.10 	in this subdivision, all investments and expenses of a public utility as defined in section 
3.11 	216B.241, subdivision 1, paragraph (i), incurred in connection with energy conservation 
3.12 	improvements shall be recognized and included by the commission in the determination of 
3.13 	just and reasonable rates as if the investments and expenses were directly made or incurred 
3.14 	by the utility in furnishing utility service.
3.15 	(b) The commission shall not include investments and expenses for energy 
3.16 	conservation improvements shall not be included by the commission in the determination 
3.17 	of determining (i) just and reasonable electric and gas rates for retail electric and gas 
3.18 	service provided to large electric customer facilities that have been exempted by the 
3.19 	commissioner of the department pursuant to under section 216B.241, subdivision 1a, 
3.20 	paragraph (b); or (ii) just and reasonable gas rates for large energy facilities, large gas 
3.21 	customer facilities that have been exempted by the commissioner under section 216B.241, 
3.22 	subdivision 1a, paragraph (d), or commercial gas customer facilities that have been 
3.23 	exempted by the commissioner under section 216B.241, subdivision 1a, paragraph (e).
3.24 	(c) The commission may permit a public utility to file rate schedules providing for 
3.25 	annual recovery of the costs of energy conservation improvements. These rate schedules 
3.26 	may be applicable to less than all the customers in a class of retail customers if necessary 
3.27 	to reflect the requirements of section 216B.241. The commission shall allow a public 
3.28 	utility, without requiring a general rate filing under this section, to reduce the electric and 
3.29 	gas rates applicable to large electric customer facilities that have been exempted by the 
3.30 	commissioner of the department pursuant to under section 216B.241, subdivision 1a, 
3.31 	paragraph (b), and to reduce the gas rate applicable to a large energy facility, a large 
3.32 	gas customer facility or commercial gas customer facility that has been exempted by 
3.33 	the commissioner under section 216B.241, subdivision 1a, paragraph (d) or (e), or by 
3.34 	the commission under section 216B.241, subdivision 2, by an amount that reflects the 
4.1 	elimination of energy conservation improvement investments or expenditures for those 
4.2 	facilities. In the event that the commission has set electric or gas rates based on the use of 
4.3 	an accounting methodology that results in the cost of conservation improvements being 
4.4 	recovered from utility customers over a period of years, the rate reduction may occur in a 
4.5 	series of steps to coincide with the recovery of balances due to the utility for conservation 
4.6 	improvements made by the utility on or before December 31, 2007.
4.7 	(d) Investments and expenses of a public utility shall not include electric utility 
4.8 	infrastructure costs as defined in section 216B.1636, subdivision 1, paragraph (b).

4.9 	Sec. 7. Minnesota Statutes 2010, section 216B.16, is amended by adding a subdivision 
4.10 	to read:
4.11 		Subd. 6e.Revenue allocation among consumer classes. Cost of service shall 
4.12 	be the primary consideration in the commission's determination of revenue allocation 
4.13 	among consumer classes. Factors other than cost of service, including impact on business 
4.14 	development and job growth, may also be considered and evaluated by the commission in 
4.15 	determining revenue allocations. Factors used in determining revenue allocation must 
4.16 	be supported by record evidence.

4.17 	EFFECTIVE DATE. This section is effective the day following final enactment 
4.18 	and applies to filings for rate changes filed on and after that date.

4.19 	Sec. 8. Minnesota Statutes 2010, section 216B.16, subdivision 7, is amended to read:
4.20 		Subd. 7.Energy and emission control products cost adjustment. Notwithstanding 
4.21 	any other provision of this chapter, the commission may permit a public utility to file 
4.22 	rate schedules containing provisions for the automatic adjustment of charges for public 
4.23 	utility service in direct relation to changes in:
4.24 	(1) federally regulated wholesale rates for energy delivered through interstate 
4.25 	facilities;
4.26 	(2) direct costs for natural gas delivered; or
4.27 	(3) costs for fuel used in generation of electricity or the manufacture of gas; or
4.28 	(4) prudent costs incurred by a public utility for sorbents, reagents, or chemicals 
4.29 	used to control emissions from an electric generation facility, provided that these costs are 
4.30 	not recovered elsewhere in rates. The utility must track and report annually the volumes 
4.31 	and costs of sorbents, reagents, or chemicals using separate accounts by generating plant.

4.32 	Sec. 9. Minnesota Statutes 2010, section 216B.16, subdivision 9, is amended to read:
5.1 		Subd. 9.Charitable contribution. The commission shall allow as operating 
5.2 	expenses only those charitable contributions whichthat the commission deems prudent and 
5.3 	whichthat qualify under section 290.21, subdivision 3, clause (b) 300.66, subdivision 3. 
5.4 	Only 50 percent of the qualified contributions shall beare allowed as operating expenses.

5.5 	Sec. 10. Minnesota Statutes 2010, section 216B.16, subdivision 15, is amended to read:
5.6 		Subd. 15.Low-income affordability programs. (a) The commission must 
5.7 	consider ability to pay as a factor in setting utility rates and may establish affordability 
5.8 	programs for low-income residential ratepayers in order to ensure affordable, reliable, 
5.9 	and continuous service to low-income utility customers. Affordability programs may 
5.10 	include inverted block rates in which lower energy prices are made available to lower 
5.11 	usage customers. By September 1, 2007, A public utility serving low-income residential 
5.12 	ratepayers who use natural gas for heating must file an affordability program with the 
5.13 	commission. For purposes of this subdivision, "low-income residential ratepayers" means 
5.14 	ratepayers who receive energy assistance from the low-income home energy assistance 
5.15 	program (LIHEAP).
5.16 	(b) Any affordability program the commission orders a utility to implement must:
5.17 	(1) lower the percentage of income that participating low-income households devote 
5.18 	to energy bills;
5.19 	(2) increase participating customer payments over time by increasing the frequency 
5.20 	of payments;
5.21 	(3) decrease or eliminate participating customer arrears;
5.22 	(4) lower the utility costs associated with customer account collection activities; and
5.23 	(5) coordinate the program with other available low-income bill payment assistance 
5.24 	and conservation resources.
5.25 	(c) In ordering affordability programs, the commission may require public utilities to 
5.26 	file program evaluations that measure the effect of the affordability program on:
5.27 	(1) the percentage of income that participating households devote to energy bills;
5.28 	(2) service disconnections; and
5.29 	(3) frequency of customer payments, utility collection costs, arrearages, and bad 
5.30 	debt.
5.31 	(d) The commission must issue orders necessary to implement, administer, and 
5.32 	evaluate affordability programs, and to allow a utility to recover program costs, including 
5.33 	administrative costs, on a timely basis. The commission may not allow a utility to recover 
5.34 	administrative costs, excluding start-up costs, in excess of five percent of total program 
5.35 	costs, or program evaluation costs in excess of two percent of total program costs. The 
6.1 	commission must permit deferred accounting, with carrying costs, for recovery of program 
6.2 	costs incurred during the period between general rate cases.
6.3 	(e) Public utilities may use information collected or created for the purpose of 
6.4 	administering energy assistance to administer affordability programs.

6.5 	Sec. 11. Minnesota Statutes 2010, section 216B.16, is amended by adding a subdivision 
6.6 	to read:
6.7 		Subd. 19.Multiyear rate plan. (a) A public utility may propose, and the 
6.8 	commission may approve, approve as modified, or reject, a multiyear rate plan as provided 
6.9 	in this subdivision. The term "multiyear rate plan" refers to a plan establishing the rates the 
6.10 	utility may charge for each year of the specified period of years to be covered by the plan. 
6.11 	The commission may approve a multiyear rate plan only if it finds that the plan establishes 
6.12 	just and reasonable rates for the utility, applying the factors described in subdivision 6.
6.13 	(b) Rates charged under a multiyear rate plan must be based only upon the utility's 
6.14 	reasonable and prudent costs of service over the term of the plan, as determined by the 
6.15 	commission, provided that the costs are not being recovered elsewhere in rates. Rate 
6.16 	adjustments authorized under subdivisions 6b and 7 may continue outside of a plan 
6.17 	authorized under this subdivision.
6.18 	(c) The commission may, by order, establish terms, conditions, and procedures 
6.19 	necessary to implement this subdivision, including a mechanism to periodically examine 
6.20 	a multiyear rate plan to ensure rates charged under the plan remain just and reasonable. 
6.21 	In reviewing a multiyear rate plan proposed in a general rate case under this section, 
6.22 	the commission may extend the time requirements for issuance of a final determination 
6.23 	prescribed in this section by an additional 90 days beyond its existing authority under 
6.24 	subdivision 2, paragraph (f).

6.25 	Sec. 12. [216B.1614] NUCLEAR POWER PLANT DECOMMISSIONING AND 
6.26 	STORAGE OF USED NUCLEAR FUEL.
6.27 		Subdivision 1.Decommissioning costs. (a) The Public Utilities Commission shall, 
6.28 	when considering approval of a plan for the accrual of funds for the decommissioning of 
6.29 	nuclear facilities filed in accordance with a commission order, include an evaluation of the 
6.30 	costs, if any, arising from storage of used nuclear fuel that may be incurred by the state of 
6.31 	Minnesota, and any tribal community, county, city, or township where used nuclear fuel is 
6.32 	located following the cessation of operations at a nuclear plant.
6.33 	(b) To assist the commission in making the determination required in paragraph 
6.34 	(a), the filing shall provide cost estimates, including ratepayer impacts, assuming used 
7.1 	nuclear fuel will be stored in the state for 60 years, 100 years, and 200 years following the 
7.2 	cessation of operation of the nuclear plant.
7.3 		Subd. 2.Rate. A public utility filing a decommissioning plan in accordance with 
7.4 	a commission order and this section may include, as part of a general rate case petition, 
7.5 	the costs of decommissioning accrual incurred in complying with a commission order 
7.6 	implementing this section.
7.7 		Subd. 3.Commission report. The commission shall prepare a nuclear 
7.8 	decommissioning report after each of the commission's periodic review of nuclear 
7.9 	decommissioning costs. The report shall be submitted within 180 days of the date of 
7.10 	the final order related to that review to the chairs and ranking minority members of the 
7.11 	legislative committees with primary jurisdiction over energy policy and public safety. 
7.12 	That report shall, without limitation, include the following:
7.13 	(1) an explanation of the commission's funding decisions regarding nuclear 
7.14 	decommissioning; 
7.15 	(2) the progress of the United States Department of Energy to remove from 
7.16 	Minnesota spent fuel produced by nuclear generating plants in Minnesota;
7.17 	(3) an analysis of the financial and other obligations related to decommissioning and 
7.18 	storage of used fuel of the utility holding title to spent nuclear fuel to the state and to host 
7.19 	communities, including affected tribal communities; and
7.20 	(4) any recommendations to the legislature on legislation or other actions that may 
7.21 	be necessary for addressing long-term or indefinite storage costs.

7.22 	Sec. 13. Minnesota Statutes 2010, section 216B.1636, subdivision 1, is amended to 
7.23 	read:
7.24 		Subdivision 1.Definitions. (a) "Electric utility" means a public utility as defined in 
7.25 	section 216B.02, subdivision 4, that furnishes electric service to retail customers.
7.26 	(b) "Electric utility infrastructure costs" or "EUIC" means costs for electric utility 
7.27 	infrastructure projects that were not included in the electric utility's rate base in its most 
7.28 	recent general rate case.
7.29 	(c) "Electric utility infrastructure projects" means projects owned by an electric 
7.30 	utility that:
7.31 	(1) replace or modify existing electric utility infrastructure, including utility-owned 
7.32 	buildings, if the replacement or modification is shown to conserve energy or use energy 
7.33 	more efficiently, consistent with section 216B.241, subdivision 1c; or
7.34 	(2) conserve energy or use energy more efficiently by using waste heat recovery 
7.35 	converted into electricity as defined in section 216B.241, subdivision 1, paragraph (n) (o).

8.1 	Sec. 14. Minnesota Statutes 2010, section 216B.1691, subdivision 1, is amended to 
8.2 	read:
8.3 		Subdivision 1.Definitions. (a) Unless otherwise specified in law, "eligible energy 
8.4 	technology" means an energy technology that generates electricity from the following 
8.5 	renewable energy sources:
8.6 	(1) solar;
8.7 	(2) wind;
8.8 	(3) hydroelectric with a capacity of less than 100 megawatts;
8.9 	(4) hydrogen, provided that after January 1, 2010, the hydrogen must be generated 
8.10 	from the resources listed in this paragraph; or
8.11 	(5) biomass, which includes, without limitation, landfill gas; an anaerobic digester 
8.12 	system; the predominantly organic components of wastewater effluent, sludge, or related 
8.13 	by-products from publicly owned treatment works, but not including incineration of 
8.14 	wastewater sludge to produce electricity; and an energy recovery facility used to capture 
8.15 	the heat value of mixed municipal solid waste or refuse-derived fuel from mixed municipal 
8.16 	solid waste as a primary fuel.
8.17 	(b) "Electric utility" means a public utility providing electric service, a generation 
8.18 	and transmission cooperative electric association, a municipal power agency, or a power 
8.19 	district.
8.20 	(c) "Total retail electric sales" means the kilowatt-hours of electricity sold in a year 
8.21 	by an electric utility to retail customers of the electric utility or to a distribution utility 
8.22 	for distribution to the retail customers of the distribution utility. "Total retail electric 
8.23 	sales" does not include the sale of hydroelectricity supplied by a federal power marketing 
8.24 	administration or other federal agency, regardless of whether the sales are directly to a 
8.25 	distribution utility or are made to a generation and transmission utility and pooled for 
8.26 	further allocation to a distribution utility.

8.27 	EFFECTIVE DATE. This section is effective retroactively from January 1, 2010, 
8.28 	and applies to sales of electricity made on and after that date.

8.29 	Sec. 15. Minnesota Statutes 2010, section 216B.1691, is amended by adding a 
8.30 	subdivision to read:
8.31 		Subd. 2e.Rate impact of standard compliance; report. Each electric utility must 
8.32 	submit to the commission and the legislative committees with primary jurisdiction over 
8.33 	energy policy a report containing an estimation of the rate impact of activities of the 
8.34 	electric utility necessary to comply with section 216B.1691. The rate impact estimate 
8.35 	must be for wholesale rates and, if the electric utility makes retail sales, the estimate 
9.1 	shall also be for the impact on the electric utility's retail rates. Those activities include, 
9.2 	without limitation, energy purchases, generation facility acquisition and construction, 
9.3 	and transmission improvements. An initial report must be submitted within 150 days of 
9.4 	the effective date of this section. After the initial report, a report must be updated and 
9.5 	submitted as part of each integrated resource plan or plan modification filed by the electric 
9.6 	utility under section 216B.2422. The reporting obligation of an electric utility under 
9.7 	this subdivision expires December 31, 2025, for an electric utility subject to subdivision 
9.8 	2a, paragraph (a), and December 31, 2020, for an electric utility subject to subdivision 
9.9 	2a, paragraph (b).

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

9.11 	Sec. 16. Minnesota Statutes 2010, section 216B.2401, is amended to read:
9.12 	216B.2401 ENERGY CONSERVATION POLICY GOAL.
9.13 	It is the energy policy of the state of Minnesota to achieve annual energy savings 
9.14 	equal to 1.5 percent of annual retail energy sales of electricity and natural gas directly 
9.15 	through energy conservation improvement programs and rate design, such as inverted 
9.16 	block rates in which lower energy prices are made available to lower-usage residential 
9.17 	customers, and indirectly through energy codes and appliance standards, programs 
9.18 	designed to transform the market or change consumer behavior, energy savings resulting 
9.19 	from efficiency improvements to the utility infrastructure and system, and other efforts to 
9.20 	promote energy efficiency and energy conservation.

9.21 	Sec. 17. Minnesota Statutes 2010, section 216B.241, subdivision 1, is amended to read:
9.22 		Subdivision 1.Definitions. For purposes of this section and section 216B.16, 
9.23 	subdivision 6b, the terms defined in this subdivision have the meanings given them.
9.24 	(a) "Commission" means the Public Utilities Commission.
9.25 	(b) "Commissioner" means the commissioner of commerce.
9.26 	(c) "Customer facility" means all buildings, structures, equipment, and installations 
9.27 	at a single site.
9.28 	(d) "Department" means the Department of Commerce.
9.29 	(e) "Energy conservation" means demand-side management of energy supplies 
9.30 	resulting in a net reduction in energy use. Load management that reduces overall energy 
9.31 	use is energy conservation.
9.32 	(f) "Energy conservation improvement" means a project that results in energy 
9.33 	efficiency or energy conservation. Energy conservation improvement may include waste 
10.1 	heat recovery converted into electricity but does not include electric utility infrastructure 
10.2 	projects approved by the commission under section 216B.1636.
10.3 	(g) "Energy efficiency" means measures or programs, including energy conservation 
10.4 	measures or programs, that target consumer behavior, equipment, processes, or devices 
10.5 	designed to produce either an absolute decrease in consumption of electric energy or 
10.6 	natural gas or a decrease in consumption of electric energy or natural gas on a per unit 
10.7 	of production basis without a reduction in the quality or level of service provided to 
10.8 	the energy consumer.
10.9 	(h) "Gross annual retail energy sales" means annual electric sales to all retail 
10.10 	customers in a utility's or association's Minnesota service territory or natural gas 
10.11 	throughput to all retail customers, including natural gas transportation customers, on a 
10.12 	utility's distribution system in Minnesota. For purposes of this section, gross annual 
10.13 	retail energy sales exclude:
10.14 	(1) gas sales to:
10.15 	(i)  a large energy facility;
10.16 	(ii) a large gas customer facility exempted by the commissioner under subdivision 
10.17 	1a, paragraph (d); and
10.18 	(iii) a commercial gas customer facility exempted by the commissioner under 
10.19 	subdivision 1a, paragraph (e); and
10.20 	(2) gas and electric sales to a large electric customer facility exempted by the 
10.21 	commissioner under subdivision 1a, paragraph (b), or by the commission under 
10.22 	subdivision 2.
10.23 	(i) "Investments and expenses of a public utility" includes the investments and 
10.24 	expenses incurred by a public utility in connection with an energy conservation 
10.25 	improvement, including but not limited to:
10.26 	(1) the differential in interest cost between the market rate and the rate charged on a 
10.27 	no-interest or below-market interest loan made by a public utility to a customer for the 
10.28 	purchase or installation of an energy conservation improvement;
10.29 	(2) the difference between the utility's cost of purchase or installation of energy 
10.30 	conservation improvements and any price charged by a public utility to a customer for 
10.31 	such improvements.
10.32 	(j) "Large electric customer facility" means a customer facility that imposes a 
10.33 	peak electrical demand on an electric utility's system of not less than 20,000 kilowatts, 
10.34 	measured in the same way as the utility that serves the customer facility measures 
10.35 	electrical demand for billing purposes, and for which electric services are provided at 
10.36 	retail on a single bill by a utility operating in the state.
11.1 	(k) "Large energy facility" has the meaning given it in section 216B.2421, 
11.2 	subdivision 2, clause (1).
11.3 	(l) "Large gas customer facility" means a customer facility that consumes 500 
11.4 	million cubic feet or more of natural gas annually.
11.5 	(m) "Load management" means an activity, service, or technology to change the 
11.6 	timing or the efficiency of a customer's use of energy that allows a utility or a customer to 
11.7 	respond to wholesale market fluctuations or to reduce peak demand for energy or capacity.
11.8 	(m) (n) "Low-income programs" means energy conservation improvement programs 
11.9 	that directly serve the needs of low-income persons, including low-income renters.
11.10 	(n) (o) "Waste heat recovery converted into electricity" means an energy recovery 
11.11 	process that converts otherwise lost energy from the heat of exhaust stacks or pipes used 
11.12 	for engines or manufacturing or industrial processes, or the reduction of high pressure 
11.13 	in water or gas pipelines.

11.14 	Sec. 18. Minnesota Statutes 2010, section 216B.241, subdivision 1a, is amended to 
11.15 	read:
11.16 		Subd. 1a.Investment, expenditure, and contribution; public utility. (a) For 
11.17 	purposes of this subdivision and subdivision 2, "public utility" has the meaning given it 
11.18 	in section 216B.02, subdivision 4. Each public utility shall spend and invest for energy 
11.19 	conservation improvements under this subdivision and subdivision 2 the following 
11.20 	amounts:
11.21 	(1) for a utility that furnishes gas service, 0.5 percent of its gross operating revenues 
11.22 	from service provided in the state;
11.23 	(2) for a utility that furnishes electric service, 1.5 percent of its gross operating 
11.24 	revenues from service provided in the state; and
11.25 	(3) for a utility that furnishes electric service and that operates a nuclear-powered 
11.26 	electric generating plant within the state, two percent of its gross operating revenues 
11.27 	from service provided in the state.
11.28 	For purposes of this paragraph (a), "gross operating revenues" do not include 
11.29 	revenues from large electric customer facilities exempted by the commissioner under 
11.30 	paragraph (b).
11.31 	(b) The owner of a large electric customer facility may petition the commissioner 
11.32 	to exempt both electric and gas utilities serving the large energy customer facility from 
11.33 	the investment and expenditure requirements of paragraph (a) with respect to retail 
11.34 	revenues attributable to the facility. At a minimum, the petition must be supported by 
11.35 	evidence relating to competitive or economic pressures on the customer and a showing 
12.1 	by the customer of reasonable efforts to identify, evaluate, and implement cost-effective 
12.2 	conservation improvements at the facility. If a petition is filed on or before October 1 of 
12.3 	any year, the order of the commissioner to exempt revenues attributable to the facility can 
12.4 	be effective no earlier than January 1 of the following year. The commissioner shall not 
12.5 	grant an exemption if the commissioner determines that granting the exemption is contrary 
12.6 	to the public interest. The commissioner may, after investigation, rescind any exemption 
12.7 	granted under this paragraph upon a determination that the customer is not continuing 
12.8 	to make reasonable efforts to identify, evaluate, and implement energy conservation 
12.9 	improvements at the large electric customer facility. For the purposes of investigations by 
12.10 	the commissioner under this paragraph, the owner of any large electric customer facility 
12.11 	shall, upon request, provide the commissioner with updated information comparable to 
12.12 	that originally supplied in or with the owner's original petition under this paragraph.
12.13 	(c) The commissioner may require investments or spending greater than the amounts 
12.14 	required under this subdivision for a public utility whose most recent advance forecast 
12.15 	required under section 216B.2422 or 216C.17 projects a peak demand deficit of 100 
12.16 	megawatts or greater within five years under midrange forecast assumptions.
12.17 	(d) The owner of a large gas customer facility may petition the commissioner 
12.18 	to exempt a gas utility serving the large gas customer facility from the investment and 
12.19 	expenditure requirements of paragraph (a) with respect to retail revenues attributable 
12.20 	to the facility. At a minimum, the petition must be supported by evidence relating to 
12.21 	competitive or economic pressures on the customer and a showing by the customer 
12.22 	of reasonable efforts to identify, evaluate, and implement cost-effective conservation 
12.23 	improvements at the facility. If a petition is filed on or before October 1 of any year, the 
12.24 	order of the commissioner to exempt revenues attributable to the facility can be effective 
12.25 	no earlier than January 1 of the following year. The commissioner shall not grant an 
12.26 	exemption if the commissioner determines that granting the exemption is contrary to the 
12.27 	public interest. The commissioner may, after investigation, rescind any exemption granted 
12.28 	under this paragraph upon a determination that the customer is not continuing to make 
12.29 	reasonable efforts to identify, evaluate, and implement energy conservation improvements 
12.30 	at the exempt facility. For the purposes of investigations by the commissioner under this 
12.31 	paragraph and paragraph (e), the owner of any large gas customer facility shall, upon 
12.32 	request, provide the commissioner with updated information comparable to that originally 
12.33 	supplied in or with the owner's original petition under this paragraph.  For large gas 
12.34 	customer facilities that have been exempted by the commissioner under this paragraph, or 
12.35 	commercial gas customer facilities that have been exempted by the commissioner under 
12.36 	paragraph (e), an audit or other report prepared by an independent third party with expertise 
13.1 	in energy conservation shall be prepared verifying that the customer has taken reasonable 
13.2 	and appropriate measures to implement cost-effective conservation improvements.
13.3 	(e) A commercial gas customer facility that is not a large gas customer facility may 
13.4 	petition the commissioner to exempt gas utilities with fewer than 600,000 customers 
13.5 	serving the commercial gas customer facility from the investment and expenditure 
13.6 	requirements of paragraph (a) with respect to retail revenues attributable to the facility. 
13.7 	The petition must be supported by evidence demonstrating that the commercial gas 
13.8 	customer facility has or can reasonably acquire the capability to bypass use of the utility's 
13.9 	gas distribution system by obtaining natural gas directly from a supplier not regulated 
13.10 	by the commission.
13.11 	(f) A public utility or owner of a large electric or large gas customer facility, or of a 
13.12 	commercial gas customer facility that is not a large gas customer facility, may appeal a 
13.13 	decision of the commissioner under paragraph (b) or, (c), (d), or (e) to the commission 
13.14 	under subdivision 2. In reviewing a decision of the commissioner under paragraph (b) 
13.15 	or, (c), (d), or (e), the commission shall rescind the decision if it finds that the required 
13.16 	investments or spending will:
13.17 	(1) not result in cost-effective energy conservation improvements; or
13.18 	(2) otherwise not be in the public interest.

13.19 	Sec. 19. Minnesota Statutes 2010, section 216B.241, subdivision 1c, is amended to 
13.20 	read:
13.21 		Subd. 1c.Energy-saving goals. (a) The commissioner shall establish energy-saving 
13.22 	goals for energy conservation improvement expenditures and shall evaluate an energy 
13.23 	conservation improvement program on how well it meets the goals set.
13.24 	(b) Each individual utility and association shall have an annual energy-savings 
13.25 	goal equivalent to 1.5 percent of gross annual retail energy sales unless modified by the 
13.26 	commissioner under paragraph (d). The savings goals must be calculated based on the 
13.27 	most recent three-year weather normalized average. A utility or association may elect to 
13.28 	carry forward energy savings in excess of 1.5 percent for a year to the succeeding three 
13.29 	calendar years, except that savings from electric utility infrastructure projects allowed 
13.30 	under paragraph (d) may be carried forward for five years. A particular energy savings can 
13.31 	be used only for one year's goal.
13.32 	(c) The commissioner must adopt a filing schedule that is designed to have all 
13.33 	utilities and associations operating under an energy-savings plan by calendar year 2010.
13.34 	(d) In its energy conservation improvement plan filing, a utility or association may 
13.35 	request the commissioner to adjust its annual energy-savings percentage goal based on 
14.1 	its historical conservation investment experience, customer class makeup, load growth, a 
14.2 	conservation potential study, or other factors the commissioner determines warrants an 
14.3 	adjustment. The commissioner may not approve a plan of a public utility that provides for 
14.4 	an annual energy-savings goal of less than one percent of gross annual retail energy sales 
14.5 	from energy conservation improvements.
14.6 	A utility or association may include in its energy conservation plan energy savings 
14.7 	from electric utility infrastructure projects approved by the commission under section 
14.8 	216B.1636 or waste heat recovery converted into electricity projects that may count as 
14.9 	energy savings in addition to the a minimum energy-savings goal of at least one percent 
14.10 	for energy conservation improvements. Electric utility infrastructure projects must result 
14.11 	in increased energy efficiency greater than that which would have occurred through 
14.12 	normal maintenance activity.
14.13 	(e) An energy-savings goal is not satisfied by attaining the revenue expenditure 
14.14 	requirements of subdivisions 1a and 1b, but can only be satisfied by meeting the 
14.15 	energy-savings goal established in this subdivision.
14.16 	(f) An association or utility is not required to make energy conservation investments 
14.17 	to attain the energy-savings goals of this subdivision that are not cost-effective even 
14.18 	if the investment is necessary to attain the energy-savings goals. For the purpose of 
14.19 	this paragraph, in determining cost-effectiveness, the commissioner shall consider the 
14.20 	costs and benefits to ratepayers, the utility, participants, and society. In addition, the 
14.21 	commissioner shall consider the rate at which an association or municipal utility is 
14.22 	increasing its energy savings and its expenditures on energy conservation.
14.23 	(g) On an annual basis, the commissioner shall produce and make publicly available 
14.24 	a report on the annual energy savings and estimated carbon dioxide reductions achieved 
14.25 	by the energy conservation improvement programs for the two most recent years for 
14.26 	which data is available. The commissioner shall report on program performance both in 
14.27 	the aggregate and for each entity filing an energy conservation improvement plan for 
14.28 	approval or review by the commissioner.
14.29 	(h) By January 15, 2010, the commissioner shall report to the legislature whether 
14.30 	the spending requirements under subdivisions 1a and 1b are necessary to achieve the 
14.31 	energy-savings goals established in this subdivision.

14.32 	EFFECTIVE DATE. This section is effective the day following final enactment 
14.33 	and applies to energy savings plans for calendar year 2012 and thereafter.

14.34 	Sec. 20. Minnesota Statutes 2010, section 216B.241, subdivision 2, is amended to read:
15.1 		Subd. 2.Programs. (a) The commissioner may require public utilities to make 
15.2 	investments and expenditures in energy conservation improvements, explicitly setting 
15.3 	forth the interest rates, prices, and terms under which the improvements must be offered to 
15.4 	the customers. The required programs must cover no more than a three-year period. Public 
15.5 	utilities shall file conservation improvement plans by June 1, on a schedule determined by 
15.6 	order of the commissioner, but at least every three years. Plans received by a public utility 
15.7 	by June 1 must be approved or approved as modified by the commissioner by December 
15.8 	1 of that same year. The commissioner shall evaluate the program on the basis of 
15.9 	cost-effectiveness and the reliability of technologies employed. The commissioner's order 
15.10 	must provide to the extent practicable for a free choice, by consumers participating in the 
15.11 	program, of the device, method, material, or project constituting the energy conservation 
15.12 	improvement and for a free choice of the seller, installer, or contractor of the energy 
15.13 	conservation improvement, provided that the device, method, material, or project seller, 
15.14 	installer, or contractor is duly licensed, certified, approved, or qualified, including under 
15.15 	the residential conservation services program, where applicable.
15.16 	(b) The commissioner may require a utility to make an energy conservation 
15.17 	improvement investment or expenditure whenever the commissioner finds that the 
15.18 	improvement will result in energy savings at a total cost to the utility less than the cost 
15.19 	to the utility to produce or purchase an equivalent amount of new supply of energy. The 
15.20 	commissioner shall nevertheless ensure that every public utility operate one or more 
15.21 	programs under periodic review by the department.
15.22 	(c) Each public utility subject to subdivision 1a may spend and invest annually up to 
15.23 	ten percent of the total amount required to be spent and invested on energy conservation 
15.24 	improvements under this section by the utility on research and development projects 
15.25 	that meet the definition of energy conservation improvement in subdivision 1 and that 
15.26 	are funded directly by the public utility.
15.27 	(d) A public utility may not spend for or invest in energy conservation improvements 
15.28 	that directly benefit a large energy facility or a large electric customer facility for which 
15.29 	the commissioner has issued an exemption pursuant to subdivision 1a, paragraph (b). 
15.30 	The commissioner shall consider and may require a utility to undertake a program 
15.31 	suggested by an outside source, including a political subdivision, a nonprofit corporation, 
15.32 	or community organization.
15.33 	(e) A utility, a political subdivision, or a nonprofit or community organization 
15.34 	that has suggested a program, the attorney general acting on behalf of consumers and 
15.35 	small business interests, or a utility customer that has suggested a program and is not 
15.36 	represented by the attorney general under section 8.33 may petition the commission to 
16.1 	modify or revoke a department decision under this section, and the commission may do 
16.2 	so if it determines that the program is not cost-effective, does not adequately address the 
16.3 	residential conservation improvement needs of low-income persons, has a long-range 
16.4 	negative effect on one or more classes of customers, or is otherwise not in the public 
16.5 	interest. The commission shall reject a petition that, on its face, fails to make a reasonable 
16.6 	argument that a program is not in the public interest.
16.7 	(f) The commissioner may order a public utility to include, with the filing of the 
16.8 	utility's proposed conservation improvement plan under paragraph (a), the results of an 
16.9 	independent audit of the utility's conservation improvement programs and expenditures 
16.10 	performed by the department or an auditor with experience in the provision of energy 
16.11 	conservation and energy efficiency services approved by the commissioner and chosen by 
16.12 	the utility. The audit must specify the energy savings or increased efficiency in the use 
16.13 	of energy within the service territory of the utility that is the result of the spending and 
16.14 	investments. The audit must evaluate the cost-effectiveness of the utility's conservation 
16.15 	programs.
16.16 	(g) A gas utility may not spend for or invest in energy conservation improvements 
16.17 	that directly benefit a large gas customer facility or commercial gas customer facility for 
16.18 	which the commissioner has issued an exemption pursuant to subdivision 1a, paragraph 
16.19 	(d) or (e). The commissioner shall consider and may require a utility to undertake a 
16.20 	program suggested by an outside source, including a political subdivision, a nonprofit 
16.21 	corporation, or community organization.

16.22 	Sec. 21. Minnesota Statutes 2010, section 216B.2425, subdivision 2, is amended to 
16.23 	read:
16.24 		Subd. 2.List development; transmission projects report. (a) By November 
16.25 	1 of each odd-numbered year, a transmission projects report must be submitted to the 
16.26 	commission by each utility, organization, or company that:
16.27 	(1) is a public utility, a municipal utility, a cooperative electric association, the 
16.28 	generation and transmission organization that serves each utility or association, or a 
16.29 	transmission company; and
16.30 	(2) owns or operates electric transmission lines in Minnesota, except a company or 
16.31 	organization that owns a transmission line that serves a single customer or interconnects a 
16.32 	single generating facility.
16.33 	(b) The report may be submitted jointly or individually to the commission.
16.34 	(c) The report must:
17.1 	(1) list specific present and reasonably foreseeable future inadequacies in the 
17.2 	transmission system in Minnesota;
17.3 	(2) identify alternative means of addressing each inadequacy listed;
17.4 	(3) identify general economic, environmental, and social issues associated with 
17.5 	each alternative; and
17.6 	(4) provide a summary of public input related to the list of inadequacies and the role 
17.7 	of local government officials and other interested persons in assisting to develop the list 
17.8 	and analyze alternatives.
17.9 	(d) To meet the requirements of this subdivision, reporting parties may rely on 
17.10 	available information and analysis developed by a regional transmission organization 
17.11 	or any subgroup of a regional transmission organization and may develop and include 
17.12 	additional information as necessary.

17.13 	Sec. 22. Minnesota Statutes 2010, section 216B.49, subdivision 3, is amended to read:
17.14 		Subd. 3.Commission approval required. It shall beis unlawful for any public 
17.15 	utility organized under the laws of this state to offer or sell any security or, if organized 
17.16 	under the laws of any other state or foreign country, to subject property in this state to 
17.17 	an encumbrance for the purpose of securing the payment of any indebtedness unless the 
17.18 	security issuance of the public utility shallis first be approved by the commission, either 
17.19 	as an individual issuance or as one of multiple possible issuances approved in the course 
17.20 	of a periodic proceeding reviewing the utility's proposed sources and uses of capital funds. 
17.21 	Approval by the commission shallmust be by formal written order.

17.22 	Sec. 23. Minnesota Statutes 2010, section 216C.11, is amended to read:
17.23 	216C.11 ENERGY CONSERVATION INFORMATION CENTER.
17.24 	The commissioner shall establish an Energy Information Center in the department's 
17.25 	offices in St. Paul. The information center shall maintain a toll-free telephone information 
17.26 	service and disseminate printed materials on energy conservation topics, including but 
17.27 	not limited to, availability of loans and other public and private financing methods 
17.28 	for energy conservation physical improvements, the techniques and materials used to 
17.29 	conserve energy in buildings, including retrofitting or upgrading insulation and installing 
17.30 	weatherstripping, the projected prices and availability of different sources of energy, 
17.31 	and alternative sources of energy.
17.32 	The Energy Information Center shall serve as the official Minnesota Alcohol Fuels 
17.33 	Information Center and shall disseminate information, printed, by the toll-free telephone 
17.34 	information service, or otherwise on the applicability and technology of alcohol fuels.
18.1 	The information center shall include information on the potential hazards of energy 
18.2 	conservation techniques and improvements in the printed materials disseminated. The 
18.3 	commissioner shall not be liable for damages arising from the installation or operation of 
18.4 	equipment or materials recommended by the information center.
18.5 	The information center shall use the information collected under section 216C.02, 
18.6 	subdivision 1, to maintain a central source of information on conservation and other 
18.7 	energy-related programs, including both programs required by law or rule and programs 
18.8 	developed and carried on voluntarily. In particular, the information center shall compile 
18.9 	and maintain information on policies covering disconnections or denials of fuel during 
18.10 	cold weather adopted by public utilities and other fuel suppliers not governed by section 
18.11 	216B.096 or 216B.097, including the number of households disconnected or denied fuel 
18.12 	and the duration of the disconnections or denials.

18.13 	Sec. 24. Minnesota Statutes 2010, section 216C.264, is amended to read:
18.14 	216C.264 COORDINATING RESIDENTIAL WEATHERIZATION 
18.15 	PROGRAMS.
18.16 		Subdivision 1.Agency designation. The department is the state agency to apply 
18.17 	for, receive, and disburse money made available to the state by federal law for the purpose 
18.18 	of weatherizing the residences of low-income persons. The commissioner must coordinate 
18.19 	available federal money with state money appropriated for this purpose.
18.20 		Subd. 2.Grants. The commissioner must make grants of federal and state money 
18.21 	to community action agencies and other public or private nonprofit agencies for the 
18.22 	purpose of weatherizing the residences of low-income persons. Grant applications must 
18.23 	be submitted in accordance with rules promulgated by the commissioner.
18.24 		Subd. 3.Benefits of weatherization. In the case of any grant made to an owner of a 
18.25 	rental dwelling unit for weatherization, the commissioner must require that (1) the benefits 
18.26 	of weatherization assistance in connection with the dwelling unit accrue primarily to the 
18.27 	low-income family that resides in the unit; (2) the rents on the dwelling unit will not be 
18.28 	raised because of any increase in value due solely to the weatherization assistance; and (3) 
18.29 	no undue or excessive enhancement will occur to the value of the dwelling unit.
18.30 		Subd. 4.Rules. The commissioner must promulgate rules that describe procedures 
18.31 	for the administration of grants, data to be reported by grant recipients, and compliance 
18.32 	with relevant federal regulations. The commissioner must require that a rental unit 
18.33 	weatherized under this section be rented to a household meeting the income limits of 
18.34 	the program for 24 of the 36 months after weatherization is complete. In applying this 
18.35 	restriction to multiunit buildings weatherized under this section, the commissioner must 
19.1 	require that occupancy continue to reflect the proportion of eligible households in the 
19.2 	building at the time of weatherization.
19.3 		Subd. 5.Grant allocation. The commissioner must distribute supplementary 
19.4 	state grants in a manner consistent with the goal of producing the maximum number of 
19.5 	weatherized units. Supplementary state grants are provided primarily for the payment of 
19.6 	additional labor costs for the federal weatherization program, and as an incentive for the 
19.7 	increased production of weatherized units.
19.8 	Criteria for the allocation of state grants to local agencies include existing local 
19.9 	agency production levels, emergency needs, and the potential for maintaining or increasing 
19.10 	acceptable levels of production in the area.
19.11 	An eligible local agency may receive advance funding for 90 days' production, but 
19.12 	thereafter must receive grants solely on the basis of program criteria.
19.13 		Subd. 6.Eligibility criteria. To the extent allowed by federal regulations, the 
19.14 	commissioner must ensure that the same income eligibility criteria apply to both the 
19.15 	weatherization program and the energy assistance program.

19.16 	Sec. 25. Minnesota Statutes 2010, section 216E.18, subdivision 3, is amended to read:
19.17 		Subd. 3.Funding; assessment. The commission shall finance its baseline studies, 
19.18 	general environmental studies, development of criteria, inventory preparation, monitoring 
19.19 	of conditions placed on site and route permits, and all other work, other than specific site 
19.20 	and route designation, from an assessment made quarterly, at least 30 days before the start 
19.21 	of each quarter, by the commission against all utilities with annual retail kilowatt-hour 
19.22 	sales greater than 4,000,000 kilowatt-hours in the previous calendar year.
19.23 	Each share shall be determined as follows: (1) the ratio that the annual retail 
19.24 	kilowatt-hour sales in the state of each utility bears to the annual total retail kilowatt-hour 
19.25 	sales in the state of all these utilities, multiplied by 0.667, plus (2) the ratio that the annual 
19.26 	gross revenue from retail kilowatt-hour sales in the state of each utility bears to the annual 
19.27 	total gross revenues from retail kilowatt-hour sales in the state of all these utilities, 
19.28 	multiplied by 0.333, as determined by the commission. The assessment shall be credited 
19.29 	to the special revenue fund and shall be paid to the state treasury within 30 days after 
19.30 	receipt of the bill, which shall constitute notice of said assessment and demand of payment 
19.31 	thereof. The total amount which may be assessed to the several utilities under authority 
19.32 	of this subdivision shall not exceed the sum of the annual budget of the commission 
19.33 	for carrying out the purposes of this subdivision. The assessment for the second third
19.34 	quarter of each fiscal year shall be adjusted to compensate for the amount by which actual 
20.1 	expenditures by the commission for the preceding fiscal year were more or less than the 
20.2 	estimated expenditures previously assessed.

20.3 	Sec. 26.  REPEALER.
 20.4 	Minnesota Statutes 2010, section 216B.242, is repealed.