1.1 	A bill for an act
1.2 	relating to energy; amending various provisions related to utilities; modifying 
1.3 	provisions governing cogeneration and small power production; establishing a 
1.4 	value of solar rate and related regulations; permitting community solar generating 
1.5 	facilities; creating various renewable energy incentives; requiring studies; 
1.6 	extending sunsets; making technical corrections;amending Minnesota Statutes 
1.7 	2012, sections 16C.144, subdivision 2; 116C.779, subdivision 3; 216B.02, 
1.8 	subdivision 4; 216B.03; 216B.16, subdivision 7b, by adding a subdivision; 
1.9 	216B.1611; 216B.1635; 216B.164, subdivisions 3, 4, 5, 6, by adding subdivisions; 
1.10 	216B.1691, subdivisions 1, 2a, 2e, by adding a subdivision; 216B.1692, 
1.11 	subdivisions 1, 8, by adding a subdivision; 216B.1695, subdivision 5, by adding a 
1.12 	subdivision; 216B.23, subdivision 1a; 216B.241, subdivisions 1e, 5c; 216B.2411, 
1.13 	subdivision 3; 216B.40; 216C.436, subdivisions 7, 8; Laws 2005, chapter 97, 
1.14 	article 10, section 3; proposing coding for new law in Minnesota Statutes, 
1.15 	chapters 216B; 216C; repealing Minnesota Statutes 2012, section 216B.1637.
1.16 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.17 	Section 1. Minnesota Statutes 2012, section 16C.144, subdivision 2, is amended to read:
1.18 		Subd. 2.Guaranteed energy-savings agreement. The commissioner may enter 
1.19 	into a guaranteed energy-savings agreement with a qualified provider if:
1.20 	(1) the qualified provider is selected through a competitive process in accordance 
1.21 	with the guaranteed energy-savings program guidelines within the Department of 
1.22 	Administration;
1.23 	(2) the qualified provider agrees to submit an engineering report prior to the 
1.24 	execution of the guaranteed energy-savings agreement. The cost of the engineering report 
1.25 	may be considered as part of the implementation costs if the commissioner enters into a 
1.26 	guaranteed energy-savings agreement with the provider;
1.27 	(3) the term of the guaranteed energy-savings agreement shall not exceed 15 25
1.28 	 years from the date of final installation;
2.1 	(4) the commissioner finds that the amount it would spend on the utility cost-savings 
2.2 	measures recommended in the engineering report will not exceed the amount to be 
2.3 	saved in utility operation and maintenance costs over 15 25 years from the date of 
2.4 	implementation of utility cost-savings measures;
2.5 	(5) the qualified provider provides a written guarantee that the annual utility, 
2.6 	operation, and maintenance cost savings during the term of the guaranteed energy-savings 
2.7 	agreement will meet or exceed the annual payments due under a lease purchase agreement. 
2.8 	The qualified provider shall reimburse the state for any shortfall of guaranteed utility, 
2.9 	operation, and maintenance cost savings; and
2.10 	(6) the qualified provider gives a sufficient bond in accordance with section 
2.11 	574.26 to the commissioner for the faithful implementation and installation of the utility 
2.12 	cost-savings measures.

2.13 	Sec. 2. Minnesota Statutes 2012, section 116C.779, subdivision 3, is amended to read:
2.14 		Subd. 3.Initiative for Renewable Energy and the Environment. (a) 
2.15 	Notwithstanding subdivision 1, paragraph (g), beginning July 1, 2009, and each July 
2.16 	1 through 2011 2014, $5,000,000 must be allocated from the renewable development 
2.17 	account to fund a grant to the Board of Regents of the University of Minnesota for the 
2.18 	Initiative for Renewable Energy and the Environment for the purposes described in 
2.19 	paragraph (b). The Initiative for Renewable Energy and the Environment must set aside 
2.20 	at least 15 percent of the funds received annually under the grant for qualified projects 
2.21 	conducted at a rural campus or experiment station. Any set-aside funds not awarded to a 
2.22 	rural campus or experiment station at the end of the fiscal year revert back to the Initiative 
2.23 	for Renewable Energy and the Environment for its exclusive use. This subdivision does 
2.24 	not create an obligation to contribute funds to the account.
2.25 	(b) Activities funded under this grant may include, but are not limited to:
2.26 	(1) environmentally sound production of energy from a renewable energy source, 
2.27 	including biomass and agricultural crops;
2.28 	(2) environmentally sound production of hydrogen from biomass and any other 
2.29 	renewable energy source for energy storage and energy utilization;
2.30 	(3) development of energy conservation and efficient energy utilization technologies;
2.31 	(4) energy storage technologies; and
2.32 	(5) analysis of policy options to facilitate adoption of technologies that use or 
2.33 	produce low-carbon renewable energy.
2.34 	(c) For the purposes of this subdivision:
3.1 	(1) "biomass" means plant and animal material, agricultural and forest residues, 
3.2 	mixed municipal solid waste, and sludge from wastewater treatment; and
3.3 	(2) "renewable energy source" means hydro, wind, solar, biomass, and geothermal 
3.4 	energy, and microorganisms used as an energy source.
3.5 	(d) Beginning January 15 of 2010, and each year thereafter, the director of the 
3.6 	Initiative for Renewable Energy and the Environment at the University of Minnesota shall 
3.7 	submit a report to the chair and ranking minority members of the senate and house of 
3.8 	representatives committees with primary jurisdiction over energy finance describing the 
3.9 	activities conducted during the previous year funded under this subdivision.

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

3.11 	Sec. 3. Minnesota Statutes 2012, section 216B.02, subdivision 4, is amended to read:
3.12 		Subd. 4.Public utility. "Public utility" means persons, corporations, or other legal 
3.13 	entities, their lessees, trustees, and receivers, now or hereafter operating, maintaining, 
3.14 	or controlling in this state equipment or facilities for furnishing at retail natural, 
3.15 	manufactured, or mixed gas or electric service to or for the public or engaged in the 
3.16 	production and retail sale thereof but does not include (1) a municipality or a cooperative 
3.17 	electric association, organized under the provisions of chapter 308A, producing or 
3.18 	furnishing natural, manufactured, or mixed gas or electric service; (2) a retail seller of 
3.19 	compressed natural gas used as a vehicular fuel which purchases the gas from a public 
3.20 	utility; or (3) a retail seller of electricity used to recharge a battery that powers an electric 
3.21 	vehicle, as defined in section 169.011, subdivision 26a, and that is not otherwise a public 
3.22 	utility under this chapter. Except as otherwise provided, the provisions of this chapter shall 
3.23 	not be applicable to any sale of natural, manufactured, or mixed gas or electricity by a 
3.24 	public utility to another public utility for resale. In addition, the provisions of this chapter 
3.25 	shall not apply to a public utility whose total natural gas business consists of supplying 
3.26 	natural, manufactured, or mixed gas to not more than 650 customers within a city pursuant 
3.27 	to a franchise granted by the city, provided a resolution of the city council requesting 
3.28 	exemption from regulation is filed with the commission. The city council may rescind 
3.29 	the resolution requesting exemption at any time, and, upon the filing of the rescinding 
3.30 	resolution with the commission, the provisions of this chapter shall apply to the public 
3.31 	utility. No person shall be deemed to be a public utility if it furnishes its services only to 
3.32 	tenants or cooperative or condominium owners in buildings owned, leased, or operated 
3.33 	by such person. No person shall be deemed to be a public utility if it furnishes service 
3.34 	to occupants of a manufactured home or trailer park owned, leased, or operated by such 
3.35 	person. No person shall be deemed to be a public utility if it produces or furnishes service 
4.1 	to less than 25 persons. No person shall be deemed to be a public utility solely as a result 
4.2 	of the person furnishing consumers with electricity or heat generated from wind or solar 
4.3 	generating equipment located on the consumer's property, provided the equipment is 
4.4 	owned or operated by an entity other than the consumer.

4.5 	Sec. 4. Minnesota Statutes 2012, section 216B.03, is amended to read:
4.6 	216B.03 REASONABLE RATE.
4.7 	Every rate made, demanded, or received by any public utility, or by any two or 
4.8 	more public utilities jointly, shall be just and reasonable. Rates shall not be unreasonably 
4.9 	preferential, unreasonably prejudicial, or discriminatory, but shall be sufficient, equitable, 
4.10 	and consistent in application to a class of consumers. To the maximum reasonable extent, 
4.11 	the commission shall set rates to encourage energy conservation and renewable energy use 
4.12 	and to further the goals of sections 216B.164, 216B.241, and216C.05, and 216C.412. Any 
4.13 	doubt as to reasonableness should be resolved in favor of the consumer. For rate-making 
4.14 	purposes a public utility may treat two or more municipalities served by it as a single class 
4.15 	wherever the populations are comparable in size or the conditions of service are similar.

4.16 	Sec. 5. Minnesota Statutes 2012, section 216B.16, is amended by adding a subdivision 
4.17 	to read:
4.18 		Subd. 6e.Solar energy production incentive. (a) Except as otherwise provided in 
4.19 	this subdivision, all assessments authorized by section 216C.412 incurred in connection 
4.20 	with the solar energy production incentive shall be recognized and included by the 
4.21 	commission in the determination of just and reasonable rates as if the expenses were 
4.22 	directly made or incurred by the utility in furnishing utility service.
4.23 	(b) The commission shall not include expenses for the solar energy production 
4.24 	incentive in determining just and reasonable electric rates for retail electric service provided 
4.25 	to customers receiving the low-income electric rate discount authorized by subdivision 14.

4.26 	Sec. 6. Minnesota Statutes 2012, section 216B.16, subdivision 7b, is amended to read:
4.27 		Subd. 7b.Transmission cost adjustment. (a) Notwithstanding any other provision 
4.28 	of this chapter, the commission may approve a tariff mechanism for the automatic annual 
4.29 	adjustment of charges for the Minnesota jurisdictional costs net of associated revenues of:
4.30 	(i) new transmission facilities that have been separately filed and reviewed and 
4.31 	approved by the commission under section 216B.243 or are certified as a priority project 
4.32 	or deemed to be a priority transmission project under section 216B.2425; and
5.1 	(ii) new transmission facilities approved by the regulatory commission of the state 
5.2 	in which the new transmission facilities are to be constructed, to the extent approval 
5.3 	is required by the laws of that state, and determined by the Midwest Independent 
5.4 	Transmission System Operator to benefit the utility or integrated transmission system; and
5.5 	(iii) charges incurred by a utility under a federally approved tariff that accrue 
5.6 	from other transmission owners' regionally planned transmission projects that have been 
5.7 	determined by the Midwest Independent Transmission System Operator to benefit the 
5.8 	utility, as provided for under a federally approved tariff or integrated transmission system.
5.9 	(b) Upon filing by a public utility or utilities providing transmission service, the 
5.10 	commission may approve, reject, or modify, after notice and comment, a tariff that:
5.11 	(1) allows the utility to recover on a timely basis the costs net of revenues of 
5.12 	facilities approved under section 216B.243 or certified or deemed to be certified under 
5.13 	section 216B.2425 or exempt from the requirements of section 216B.243;
5.14 	(2) allows the utility to recover charges incurred by a utility under a federally 
5.15 	approved tariff that accrue from other transmission owners' regionally planned 
5.16 	transmission projects that have been determined by the Midwest Independent Transmission 
5.17 	System Operator to benefit the utility, as provided for under a federally approved tariff
5.18 	 or integrated transmission system. These charges must be reduced or offset by revenues 
5.19 	received by the utility and by amounts the utility charges to other regional transmission 
5.20 	owners, to the extent those revenues and charges have not been otherwise offset;
5.21 	(3) allows the utility to recover on a timely basis the costs net of revenues of facilities 
5.22 	approved by the regulatory commission of the state in which the new transmission 
5.23 	facilities are to be constructed and determined by the Midwest Independent Transmission 
5.24 	System Operator to benefit the utility or integrated transmission system;
5.25 	(4) allows a return on investment at the level approved in the utility's last general 
5.26 	rate case, unless a different return is found to be consistent with the public interest;
5.27 	(4)(5) provides a current return on construction work in progress, provided that 
5.28 	recovery from Minnesota retail customers for the allowance for funds used during 
5.29 	construction is not sought through any other mechanism;
5.30 	(5)(6) allows for recovery of other expenses if shown to promote a least-cost project 
5.31 	option or is otherwise in the public interest;
5.32 	(6)(7) allocates project costs appropriately between wholesale and retail customers;
5.33 	(7)(8) provides a mechanism for recovery above cost, if necessary to improve the 
5.34 	overall economics of the project or projects or is otherwise in the public interest; and
5.35 	(8)(9) terminates recovery once costs have been fully recovered or have otherwise 
5.36 	been reflected in the utility's general rates.
6.1 	(c) A public utility may file annual rate adjustments to be applied to customer bills 
6.2 	paid under the tariff approved in paragraph (b). In its filing, the public utility shall provide:
6.3 	(1) a description of and context for the facilities included for recovery;
6.4 	(2) a schedule for implementation of applicable projects;
6.5 	(3) the utility's costs for these projects;
6.6 	(4) a description of the utility's efforts to ensure the lowest costs to ratepayers for 
6.7 	the project; and
6.8 	(5) calculations to establish that the rate adjustment is consistent with the terms 
6.9 	of the tariff established in paragraph (b).
6.10 	(d) Upon receiving a filing for a rate adjustment pursuant to the tariff established in 
6.11 	paragraph (b), the commission shall approve the annual rate adjustments provided that, 
6.12 	after notice and comment, the costs included for recovery through the tariff were or are 
6.13 	expected to be prudently incurred and achieve transmission system improvements at the 
6.14 	lowest feasible and prudent cost to ratepayers.

6.15 	Sec. 7. Minnesota Statutes 2012, section 216B.1611, is amended to read:
6.16 	216B.1611 INTERCONNECTION OF ON-SITE DISTRIBUTED 
6.17 	GENERATION.
6.18 		Subdivision 1.Purpose. The purpose of this section is to:
6.19 	(1) establish the terms and conditions that govern the interconnection and parallel 
6.20 	operation of on-site distributed generation resources interconnected with a public utility's 
6.21 	distribution system;
6.22 	(2) provide cost savings and reliability benefits to customers;
6.23 	(3) establish technical requirements that will promote the safe and reliable parallel 
6.24 	operation of on-site distributed generation resources interconnected with a public utility's 
6.25 	distribution system;
6.26 	(4) enhance both the reliability of electric service and economic efficiency in the 
6.27 	production and consumption of electricity; and
6.28 	(5) promote the use of distributed resources in order to provide electric system 
6.29 	benefits during periods of capacity constraints.
6.30 		Subd. 2.Distributed generation; generic proceeding. (a) The commission shall 
6.31 	initiate a proceeding within 30 days of July 1, 2001 2013, to establish, by order, generic 
6.32 	standards for utility tariffs for the interconnection and parallel operation of distributed 
6.33 	generation projects, including a qualified cogeneration project under section 216B.164, 
6.34 	that are:
7.1 	(1) fueled by natural gas or a renewable fuel, or another similarly clean fuel or 
7.2 	combination of fuels of;
7.3 	(2) no more than ten megawatts of interconnected capacity; and
7.4 	(3) interconnected with a public utility's distribution system where system voltages 
7.5 	are less than 100 kilovolts.
7.6 	(b) At a minimum, these the tariff standards established in paragraph (a) must:
7.7 	(1) to the extent possible, be consistent with industry and other federal and state 
7.8 	operational and safety standards;
7.9 	(2) provide for the low-cost, safe, and standardized interconnection of facilities;
7.10 	(3) take into account differing system requirements and hardware, as well as 
7.11 	encourage maximum penetration of distributed generation while considering the overall 
7.12 	demand load requirements of individual utilities;
7.13 	(4) allow for just and reasonable terms and conditions, consistent with the cost and 
7.14 	operating characteristics of the various technologies, so that a utility can reasonably be 
7.15 	assured of the reliable, safe, and efficient operation of the interconnected equipment while 
7.16 	expediting the evaluation of interconnection applications; and
7.17 	(5) establish (i) a standard interconnection agreement that sets forth the contractual 
7.18 	conditions under which a company and a customer agree that one or more facilities may 
7.19 	be interconnected with the company's utility system, and (ii) a standard application for 
7.20 	interconnection and parallel operation with the utility system;
7.21 	(6) establish a procedure whereby, when the size of a distributed generation resource 
7.22 	causes power to flow intermittently into transmission facilities operated by the Midwest 
7.23 	Independent Systems Operator, a local load-serving utility may coordinate with the 
7.24 	Midwest Independent Systems Operator to conduct the interconnection transmission 
7.25 	system analysis and transmission system usage reservations, as needed;
7.26 	(7) include payments for ancillary services and other system benefits provided by a 
7.27 	distributed generation resource;
7.28 	(8) reflect the savings that accrue to a public utility's distribution system resulting 
7.29 	from avoided demand charges and avoided transmission and transmission infrastructure 
7.30 	costs; and
7.31 	(9) recognize the role played by the regional wholesale electricity market and demand 
7.32 	side and storage resources as a source of standby power for a distributed energy resource.
7.33 	(b) (c) The commission may shall develop financial incentives based on a public 
7.34 	utility's performance in encouraging residential and small business customers to participate 
7.35 	in on-site generation interconnected with a public utility's distribution system. A public 
7.36 	utility's performance shall be evaluated on:
8.1 	(1) steps taken by the public utility to reduce barriers to the development of 
8.2 	distributed generation resources, including but not limited to financial, technical, and 
8.3 	interconnection barriers; and
8.4 	(2) the extent to which a public utility has effectively and thoroughly analyzed 
8.5 	available locations on its distribution system for siting future distributed generation 
8.6 	resources and provided that information to developers.
8.7 		Subd. 3.Distributed generation tariff. Within 90 days of the issuance of an order 
8.8 	under subdivision 2:
8.9 	(1) each public utility providing electric service at retail shall file a distributed 
8.10 	generation tariff consistent with that order, for commission approval or approval with 
8.11 	modification; and
8.12 	(2) each municipal utility and cooperative electric association shall adopt a 
8.13 	distributed generation tariff that addresses the issues included in the commission's order.
8.14 		Subd. 4.Reporting requirements. (a) Each electric utility shall maintain records 
8.15 	concerning applications received for interconnection and parallel operation of distributed 
8.16 	generation. The records must include the date each application is received, documents 
8.17 	generated in the course of processing each application, correspondence regarding each 
8.18 	application, and the final disposition of each application.
8.19 	(b) Every electric utility shall file with the commissioner a distributed generation 
8.20 	interconnection report for the preceding calendar year that identifies:
8.21 	(1) each distributed generation facility interconnected with the utility's distribution 
8.22 	system. The report must list the;
8.23 	(2) new distributed generation facilities interconnected with the system since the 
8.24 	previous year's report, any distributed generation facilities no longer interconnected with 
8.25 	the utility's system since the previous report, the capacity of each facility, and the feeder or 
8.26 	other point on the company's utility system where the facility is connected. The annual 
8.27 	report must also identify;
8.28 	(3) all applications for interconnection received during the previous one-year period, 
8.29 	and the disposition of the applications; and
8.30 	(4) the most optimal locations on its distribution system for the interconnection 
8.31 	of future distributed generation resources, considering the technical feasibility of 
8.32 	accommodating a project of up to ten megawatts capacity, the system benefits that accrue 
8.33 	for power quality improvements from distributed generation resources and from reducing 
8.34 	local system demand, and the avoidance of future expenditures to expand generation 
8.35 	or transmission or distribution capacity.

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

9.1 	Sec. 8. Minnesota Statutes 2012, section 216B.1635, is amended to read:
9.2 	216B.1635 RECOVERY OF GAS UTILITY INFRASTRUCTURE COSTS.
9.3 		Subdivision 1.Definitions. (a) "Gas utility" means a public utility as defined in 
9.4 	section 216B.02, subdivision 4, that furnishes natural gas service to retail customers.
9.5 	(b) "Gas utility infrastructure costs" or "GUIC" means costs incurred in gas utility 
9.6 	projects that:
9.7 	(1) do not serve to increase revenues by directly connecting the infrastructure 
9.8 	replacement to new customers;
9.9 	(2) are in service but were not included in the gas utility's rate base in its most 
9.10 	recent general rate case; and, or are planned to be in service during the period covered 
9.11 	by the report submitted under subdivision 2, but in no case longer than the one-year 
9.12 	forecast period in the report; and
9.13 	(3) replace or modify existing infrastructure if the replacement or modification does 
9.14 	not constitute a betterment, unless the betterment is required by a political subdivision, 
9.15 	as evidenced by specific documentation from the government entity requiring the 
9.16 	replacement or modification of infrastructure do not constitute a betterment, unless the 
9.17 	betterment is based on requirements by a political subdivision or a federal or state agency, 
9.18 	as evidenced by specific documentation, an order, or other similar requirement from the 
9.19 	government entity requiring the replacement or modification of infrastructure.
9.20 	(c) "Gas utility projects" means relocation and:
9.21 	(1) replacement of natural gas facilities located in the public right-of-way required 
9.22 	by the construction or improvement of a highway, road, street, public building, or other 
9.23 	public work by or on behalf of the United States, the state of Minnesota, or a political 
9.24 	subdivision.; and
9.25 	(2) replacement or modification of existing natural gas facilities, including surveys, 
9.26 	assessments, reassessment, and other work necessary to determine the need for replacement 
9.27 	or modification of existing infrastructure that is required by a federal or state agency.
9.28 		Subd. 2.Gas infrastructure filing. (a) The commission may approve a gas utility's 
9.29 	petition for a rate scheduleA public utility submitting a petition to recover GUICgas 
9.30 	infrastructure costs under this section. A gas utility maymust submit to the commission, 
9.31 	the department, and interested parties a gas infrastructure project plan report and a 
9.32 	petition the commission to recover a rate of return, income taxes on the rate of return, 
9.33 	incremental property taxes, plus incremental depreciation expense associated with GUIC
9.34 	 for rate recovery of only incremental costs associated with projects under subdivision 
9.35 	1, paragraph (c), clause (2). The report and petition must be made at least 150 days in 
9.36 	advance of implementation of the rate schedule, provided that the rate schedule will not be 
10.1 	implemented until the petition is approved by the commission pursuant to subdivision 
10.2 	7. The report must be for a forecast period of one year.
10.3 	(b) The filing is subject to the following:
10.4 	(1) A gas utility may submit a filing under this section no more than once per year.
10.5 	(2) A gas utility must file sufficient information to satisfy the commission regarding 
10.6 	the proposed GUIC or be subject to denial by the commission. The information includes, 
10.7 	but is not limited to:
10.8 	(i) the government entity ordering the gas utility project and the purpose for which 
10.9 	the project is undertaken;
10.10 	(ii) the location, description, and costs associated with the project;
10.11 	(iii) a description of the costs, and salvage value, if any, associated with the existing 
10.12 	infrastructure replaced or modified as a result of the project;
10.13 	(iv) the proposed rate design and an explanation of why the proposed rate design 
10.14 	is in the public interest;
10.15 	(v) the magnitude and timing of any known future gas utility projects that the utility 
10.16 	may seek to recover under this section;
10.17 	(vi) the magnitude of GUIC in relation to the gas utility's base revenue as approved 
10.18 	by the commission in the gas utility's most recent general rate case, exclusive of gas 
10.19 	purchase costs and transportation charges;
10.20 	(vii) the magnitude of GUIC in relation to the gas utility's capital expenditures since 
10.21 	its most recent general rate case;
10.22 	(viii) the amount of time since the utility last filed a general rate case and the utility's 
10.23 	reasons for seeking recovery outside of a general rate case; and
10.24 	(ix) documentation supporting the calculation of the GUIC.
10.25 		Subd. 3.Gas infrastructure project plan report.  The gas infrastructure project 
10.26 	plan report required to be filed under subdivision 2 shall include all pertinent information 
10.27 	and supporting data on each proposed project including, but not limited to, project 
10.28 	description and scope, estimated project costs, and project in-service date.
10.29 		Subd. 4.Cost recovery petition for utility's facilities. Notwithstanding any other 
10.30 	provision of this chapter, the commission may approve a rate schedule for the automatic 
10.31 	annual adjustment of charges for gas utility infrastructure costs net of revenues under 
10.32 	this section, including a rate of return, income taxes on the rate of return, incremental 
10.33 	property taxes, incremental depreciation expense, and any incremental operation and 
10.34 	maintenance costs. A gas utility's petition for approval of a rate schedule to recover 
10.35 	gas utility infrastructure costs outside of a general rate case under section 216B.16 is 
10.36 	subject to the following:
11.1 	(1) a gas utility may submit a filing under this section no more than once per year; and
11.2 	(2) a gas utility must file sufficient information to satisfy the commission regarding 
11.3 	the proposed GUIC. The information includes, but is not limited to:
11.4 	(i) the information required to be included in the gas infrastructure project plan 
11.5 	report under subdivision 3;
11.6 	(ii) the government entity ordering or requiring the gas utility project and the 
11.7 	purpose for which the project is undertaken;
11.8 	(iii) a description of the estimated costs and salvage value, if any, associated with the 
11.9 	existing infrastructure replaced or modified as a result of the project;
11.10 	(iv) a comparison of the utility's estimated costs included in the gas infrastructure 
11.11 	project plan and the actual costs incurred, including a description of the utility's efforts to 
11.12 	ensure the costs of the facilities are reasonable and prudently incurred;
11.13 	(v) calculations to establish that the rate adjustment is consistent with the terms 
11.14 	of the rate schedule, including the proposed rate design and an explanation of why the 
11.15 	proposed rate design is in the public interest;
11.16 	(vi) the magnitude and timing of any known future gas utility projects that the 
11.17 	utility may seek to recover under this section;
11.18 	(vii) the magnitude of GUIC in relation to the gas utility's base revenue as approved 
11.19 	by the commission in the gas utility's most recent general rate case, exclusive of gas 
11.20 	purchase costs and transportation charges;
11.21 	(viii) the magnitude of GUIC in relation to the gas utility's capital expenditures 
11.22 	since its most recent general rate case; and
11.23 	(ix) the amount of time since the utility last filed a general rate case and the utility's 
11.24 	reasons for seeking recovery outside of a general rate case.
11.25 		Subd. 5.Commission action. Upon receiving a gas utility report and petition for 
11.26 	cost recovery under subdivision 2 and assessment and verification under subdivision 4, the 
11.27 	commission may approve the annual GUIC rate adjustments provided that, after notice 
11.28 	and comment, the costs included for recovery through the rate schedule are prudently 
11.29 	incurred and achieve gas facility improvements at the lowest reasonable and prudent 
11.30 	cost to ratepayers.
11.31 		Subd. 6.Rate of return. The return on investment for the rate adjustment shall be 
11.32 	at the level approved by the commission in the public utility's last general rate case, unless 
11.33 	the commission determines that a different rate of return is in the public interest.
11.34 		Subd. 3 7.Commission authority; rules. The commission may issue orders and 
11.35 	adopt rules necessary to implement and administer this section.

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

12.1 	Sec. 9. Minnesota Statutes 2012, section 216B.164, is amended by adding a 
12.2 	subdivision to read:
12.3 		Subd. 2a.Definitions. (a) For the purposes of this section, the following terms 
12.4 	have the meanings given them:
12.5 	(b) "Aggregated meter" means a meter located on the premises of a customer's 
12.6 	owned or leased property that is contiguous with property containing the customer's 
12.7 	designated meter.
12.8 	(c) "Capacity" means the number of megawatts alternating current (AC) at the point 
12.9 	of interconnection between a solar photovoltaic device and a utility's electric system.
12.10 	(d) "Cogeneration" means a combined process whereby electrical and useful thermal 
12.11 	energy are produced simultaneously.
12.12 	(e) "Contiguous property" means property owned or leased by the customer sharing 
12.13 	a common border, without regard to interruptions in contiguity caused by easements, 
12.14 	public thoroughfares, transportation rights-of-way, or utility rights-of-way.
12.15 	(f) "Customer" means the person who is named on the utility electric bill for the 
12.16 	premises.
12.17 	(g) "Designated meter" means a meter that is physically attached to the customer's 
12.18 	facility that the customer-generator designates as the first meter to which net metered 
12.19 	credits are to be applied as the primary meter for billing purposes when the customer is 
12.20 	serviced by more than one meter. 
12.21 	(h) "Distributed generation" means a facility that:
12.22 	(1) has a capacity of ten megawatts or less;
12.23 	(2) is interconnected with a utility's distribution system, over which the commission 
12.24 	has jurisdiction; and
12.25 	(3) generates electricity from natural gas, renewable fuel, or a similarly clean fuel, 
12.26 	and may include waste heat, cogeneration, or fuel cell technology.
12.27 	(i) "High-efficiency distributed generation" means a distributed energy facility 
12.28 	that has a minimum efficiency of 40 percent, as calculated under section 272.0211, 
12.29 	subdivision 1.
12.30 	(j) "Net metered facility" means an electric generation facility with the purpose of 
12.31 	offsetting energy use through the use of renewable energy or high-efficiency distributed 
12.32 	generation sources.
12.33 	(k) "Renewable energy" has the meaning given in section 216B.2411, subdivision 2.
12.34 	(l) "Standby charge" means a charge imposed by an electric utility upon a distributed 
12.35 	generation facility for the recovery of fixed costs necessary to make electricity service 
12.36 	available to the distributed generation facility.

13.1 	Sec. 10. Minnesota Statutes 2012, section 216B.164, subdivision 3, is amended to read:
13.2 		Subd. 3.Purchases; small facilities. (a) For a qualifying facility having less 
13.3 	than 40-kilowatt 105-kilowatt capacity, the customer shall be billed for the net energy 
13.4 	supplied by the utility according to the applicable rate schedule for sales to that class of 
13.5 	customer. In the case of net input into the utility system by a qualifying facility having 
13.6 	less than 40-kilowatt 105-kilowatt capacity, compensation to the customer shall be at a per 
13.7 	kilowatt-hour rate determined under paragraph (b) or (c).
13.8 	(b) In setting rates, the commission shall consider the fixed distribution costs to the 
13.9 	utility not otherwise accounted for in the basic monthly charge and shall ensure that the 
13.10 	costs charged to the qualifying facility are not discriminatory in relation to the costs 
13.11 	charged to other customers of the utility. The commission shall set the rates for net 
13.12 	input into the utility system based on avoided costs as defined in the Code of Federal 
13.13 	Regulations, title 18, section 292.101, paragraph (b)(6), the factors listed in Code of 
13.14 	Federal Regulations, title 18, section 292.304, and all other relevant factors.
13.15 	(c) Notwithstanding any provision in this chapter to the contrary, a qualifying facility 
13.16 	having less than 40-kilowatt 105-kilowatt capacity may elect that the compensation for net 
13.17 	input by the qualifying facility into the utility system shall be at the average retail utility 
13.18 	energy rate plus the premium charged by the utility to customers of that customer class 
13.19 	who elect to purchase renewable electricity under section 216B.169. If the utility does not 
13.20 	offer a renewable rate under section 216B.169, the rate that a qualifying facility may elect 
13.21 	to receive under this paragraph is the average rate charged under section 216B.169 to the 
13.22 	applicable customer class by the three utilities that offer such a rate whose service areas 
13.23 	are located closest to that of the utility that does not offer a rate under section 216B.169. 
13.24 	"Average retail utility energy rate" is defined as the average of the retail energy rates, 
13.25 	exclusive of special rates based on income, age, or energy conservation, according to the 
13.26 	applicable rate schedule of the utility for sales to that class of customer.
13.27 	(d) If the qualifying facility is interconnected with a nongenerating utility which has 
13.28 	a sole source contract with a municipal power agency or a generation and transmission 
13.29 	utility, the nongenerating utility may elect to treat its purchase of any net input under this 
13.30 	subdivision as being made on behalf of its supplier and shall be reimbursed by its supplier 
13.31 	for any additional costs incurred in making the purchase. Qualifying facilities having less 
13.32 	than 40-kilowatt 105-kilowatt capacity may, at the customer's option, elect to be governed 
13.33 	by the provisions of subdivision 4.
13.34 	(e) A utility may elect to take possession of any renewable energy credits attached to 
13.35 	electricity purchased under this section.

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

14.1 	Sec. 11. Minnesota Statutes 2012, section 216B.164, subdivision 4, is amended to read:
14.2 		Subd. 4.Purchases; wheeling; costs. (a) Except as otherwise provided in 
14.3 	paragraph (c), this subdivision shall apply to all qualifying facilities having 40-kilowatt
14.4 	 1,000-kilowatt capacity or more as well as qualifying facilities as defined in subdivision 3 
14.5 	and net metered facilities under subdivision 4a which elect to be governed by its provisions.
14.6 	(b) The utility to which the qualifying facility is interconnected shall purchase all 
14.7 	energy and capacity made available by the qualifying facility. The qualifying facility shall 
14.8 	be paid the utility's full avoided capacity and energy costs as negotiated by the parties, as 
14.9 	set by the commission, or as determined through competitive bidding approved by the 
14.10 	commission. The full avoided capacity and energy costs to be paid a qualifying facility 
14.11 	that generates electric power by means of a renewable energy source are the utility's least 
14.12 	cost renewable energy facility or the bid of a competing supplier of a least cost renewable 
14.13 	energy facility, whichever is lower, unless the commission's resource plan order, under 
14.14 	section 216B.2422, subdivision 2, provides that the use of a renewable resource to meet 
14.15 	the identified capacity need is not in the public interest.
14.16 	(c) For all qualifying facilities having 30-kilowatt capacity or more, the utility 
14.17 	shall, at the qualifying facility's or the utility's request, provide wheeling or exchange 
14.18 	agreements wherever practicable to sell the qualifying facility's output to any other 
14.19 	Minnesota utility having generation expansion anticipated or planned for the ensuing ten 
14.20 	years. The commission shall establish the methods and procedures to insure that except 
14.21 	for reasonable wheeling charges and line losses, the qualifying facility receives the full 
14.22 	avoided energy and capacity costs of the utility ultimately receiving the output.
14.23 	(d) The commission shall set rates for electricity generated by renewable energy.

14.24 	Sec. 12. Minnesota Statutes 2012, section 216B.164, is amended by adding a 
14.25 	subdivision to read:
14.26 		Subd. 4a.Net metered facility. Notwithstanding any provision of this chapter to 
14.27 	the contrary, a customer with a net metered facility having less than 105-kilowatt capacity 
14.28 	may elect to be compensated for the customer's net input into the utility system in the form 
14.29 	of a kilowatt-hour credit on the customer's energy bill carried forward and applied to 
14.30 	subsequent energy bills. Any net input supplied by the customer into the utility system 
14.31 	that exceeds energy supplied to the customer by the utility during a 12-month period must 
14.32 	be compensated at the utility's avoided cost rate under subdivision 3, paragraph (b), or 
14.33 	subdivision 4, paragraph (b), as applicable. The customer may choose the month in which 
14.34 	the annual billing period begins.

15.1 	Sec. 13. Minnesota Statutes 2012, section 216B.164, is amended by adding a 
15.2 	subdivision to read:
15.3 		Subd. 4b.Aggregation of meters. (a) For the purpose of measuring electricity 
15.4 	under subdivisions 3 and 4a, a utility must aggregate for billing purposes a customer's 
15.5 	designated meter with one or more aggregated meters if a customer requests that it do so. 
15.6 	Any aggregation of meters must be governed under this section.
15.7 	(b) A customer must give at least 60 days' notice to the utility prior to a request that 
15.8 	additional meters be included in meter aggregation. The specific meters must be identified 
15.9 	at the time of the request. In the event that more than one meter is identified, the customer 
15.10 	must designate the rank order for the aggregated meters to which the net metered credits 
15.11 	are to be applied. At least 60 days prior to the beginning of the next annual billing period, 
15.12 	a customer may amend the rank order of the aggregated meters, subject to the provisions 
15.13 	of this subdivision.
15.14 	(c) The aggregation of meters applies only to charges that use kilowatt-hours as the 
15.15 	billing determinant. All other charges applicable to each meter account must be billed to 
15.16 	the customer.
15.17 	(d) The utility must first apply the kilowatt-hour credit to the charges for the 
15.18 	designated meter and then to the charges for the aggregated meters in the rank order 
15.19 	specified by the customer. If the net metered facility supplies more electricity to the utility 
15.20 	than the energy usage recorded by the customer's designated and aggregated meters during 
15.21 	a monthly billing period, the utility must apply credits to the customer's next monthly 
15.22 	bill for the excess kilowatt-hours.
15.23 	(e) With the commission's prior approval, a utility may charge the customer 
15.24 	requesting to aggregate meters a reasonable fee to cover the administrative costs incurred 
15.25 	as a result of implementing the provisions of this subdivision, pursuant to a tariff approved 
15.26 	by the commission for a public utility or by a governing body for a municipal electric 
15.27 	utility or electric cooperative.

15.28 	Sec. 14. Minnesota Statutes 2012, section 216B.164, is amended by adding a 
15.29 	subdivision to read:
15.30 		Subd. 4c.Limiting cumulative generation prohibited. The commission and any 
15.31 	other governing body regulating public utilities, municipal electric utilities, or electric 
15.32 	cooperatives are prohibited from limiting the cumulative generation of net metered facilities 
15.33 	under subdivision 4a and qualifying facilities under subdivision 3 to less than five percent 
15.34 	of a utility's or cooperative's average annual retail electricity sales as measured over the 
15.35 	previous three calendar years. After the cumulative limit of five percent has been reached, 
16.1 	a public utility, municipal electric utility, or electric cooperative's obligation to offer net 
16.2 	metering to additional customers may be limited by the commission or governing body if 
16.3 	it determines doing so is in the public interest. The commission may limit additional net 
16.4 	metering obligations under this subdivision only after providing notice and opportunity for 
16.5 	public comment. The governing body of a municipal electric utility or electric cooperative 
16.6 	may limit additional net metering obligations under this subdivision only after providing 
16.7 	the affected municipal electric utility or electric cooperative's customers with notice 
16.8 	and opportunity to comment. In determining whether to limit additional net metering 
16.9 	obligations under this subdivision, the commission or governing body shall consider:
16.10 	(1) the environmental and other public policy benefits of net metered facilities;
16.11 	(2) the impact of net metered facilities on electricity rates for customers without 
16.12 	net metered systems;
16.13 	(3) the effects of net metering on the reliability of the electric system;
16.14 	(4) technical advances or technical concerns; and
16.15 	(5) other statutory obligations imposed on the commission or on a utility.
16.16 	The commission or governing body may limit additional net metering obligations under 
16.17 	clauses (2) to (4) only if it determines that additional net metering obligations would 
16.18 	cause significant rate impact, require significant measures to address reliability, or raise 
16.19 	significant technical issues.

16.20 	Sec. 15. Minnesota Statutes 2012, section 216B.164, subdivision 5, is amended to read:
16.21 		Subd. 5.Nondiscrimination; dispute; resolution. (a) A utility may not impose 
16.22 	unduly burdensome conditions or stipulations on, and may not discriminate against, a 
16.23 	qualifying facility seeking to interconnect with and sell electric power to the utility.
16.24 	(b) In the event of disputes between an electric utility and a qualifying facility, 
16.25 	either party may request a determination of the issue by the commission. In any such 
16.26 	determination, the burden of proof shall be on the utility. The commission in its order 
16.27 	resolving each such dispute shall require payments to the prevailing party of the prevailing 
16.28 	party's costs, disbursements, and reasonable attorneys' fees, except that the qualifying 
16.29 	facility will be required to pay the costs, disbursements, and attorneys' fees of the utility 
16.30 	only if the commission finds that the claims of the qualifying facility in the dispute have 
16.31 	been made in bad faith, or are a sham, or are frivolous.

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

16.33 	Sec. 16. Minnesota Statutes 2012, section 216B.164, subdivision 6, is amended to read:
17.1 		Subd. 6.Rules and uniform contract. (a) The commission shall promulgate rules 
17.2 	to implement the provisions of this section. The commission shall also establish a uniform 
17.3 	statewide form of contract for use between utilities and a qualifying facility having less 
17.4 	than 40-kilowatt 105-kilowatt capacity.
17.5 	(b) The commission shall require the qualifying facility to provide the utility with 
17.6 	reasonable access to the premises and equipment of the qualifying facility if the particular 
17.7 	configuration of the qualifying facility precludes disconnection or testing of the qualifying 
17.8 	facility from the utility side of the interconnection with the utility remaining responsible 
17.9 	for its personnel.
17.10 	(c) The uniform statewide form of contract shall be applied to all new and existing 
17.11 	interconnections established between a utility and a qualifying facility having less than 
17.12 	40-kilowatt 105-kilowatt capacity, except that existing contracts may remain in force 
17.13 	until written notice of election that the uniform statewide contract form applies is given 
17.14 	by either party to the other, with the notice being of the shortest time period permitted 
17.15 	under the existing contract for termination of the existing contract by either party, but 
17.16 	not less than ten nor longer than 30 days.

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

17.18 	Sec. 17. Minnesota Statutes 2012, section 216B.164, is amended by adding a 
17.19 	subdivision to read:
17.20 		Subd. 6a.Generation exceeding capacity. Electrical generation that exceeds a 
17.21 	qualifying facility's nameplate capacity:
17.22 	(1) does not nullify the contract between a qualifying facility and a utility purchasing 
17.23 	electricity under this section; and
17.24 	(2) must be purchased at the utility's avoided cost rate, as defined by the commission 
17.25 	under subdivision 3 or 4, as applicable.

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

17.27 	Sec. 18. Minnesota Statutes 2012, section 216B.164, is amended by adding a 
17.28 	subdivision to read:
17.29 		Subd. 10.Energy for public buildings. (a) All the provisions of this section that 
17.30 	apply to a qualifying facility with a capacity of less than one megawatt shall apply to a 
17.31 	wind energy conversion system with a capacity of up to 3.5 megawatts or an energy 
17.32 	storage device storing energy generated by a wind energy conversion system that provides 
17.33 	energy to a public building.
18.1 	(b) For the purposes of this subdivision:
18.2 	(1) "energy storage device" means a device capable of storing up to 3.5 megawatts 
18.3 	of previously generated energy and releasing that energy for use at a later time; and
18.4 	(2) "public building" means a building or facility financed wholly or in part with 
18.5 	public funds, including facilities financed by the Public Facilities Authority.

18.6 	Sec. 19. [216B.1641] VALUE OF SOLAR RATE.
18.7 		Subdivision 1.Definition. For the purposes of this section, "solar photovoltaic 
18.8 	device" has the meaning given in section 216C.06, subdivision 16, and must meet the 
18.9 	requirements of section 216C.25.
18.10 		Subd. 2.Applicability. (a) Beginning January 1, 2014, this section shall apply to 
18.11 	public utilities selling electricity at retail in Minnesota, and to electric cooperatives and 
18.12 	municipalities selling electricity at retail in Minnesota that have elected to be governed 
18.13 	under section 216C.412.
18.14 	(b) Notwithstanding section 216B.164, an owner of a solar photovoltaic device may, 
18.15 	with respect to the purchase price credited by a utility to an owner of a solar photovoltaic 
18.16 	device, elect to be governed under this section or section 216B.164. All other provisions 
18.17 	of section 216B.164, except those in subdivision 3, subdivision 4, paragraphs (a) to (c), 
18.18 	and subdivision 4a, shall apply to an owner of a solar photovoltaic device electing to 
18.19 	be governed under this section.
18.20 	(c) This section does not apply to a utility that owns a solar photovoltaic device.
18.21 	(d) An owner of a solar photovoltaic device governed under the net metering 
18.22 	provisions of section 216B.164 prior to the effective date of the commission order issued 
18.23 	under subdivision 10 and who elects to be governed under section 216B.1641 with respect 
18.24 	to the purchase price credited by a utility must provide written notice of that election to 
18.25 	the utility. The utility shall begin crediting the value of solar rate most recently approved 
18.26 	by the commission to the owner of the solar photovoltaic device on the first day of the first 
18.27 	month that begins at least 30 days after receipt of the notice.
18.28 	(e) This section does not apply to a solar photovoltaic device whose capacity 
18.29 	exceeds two megawatts.
18.30 		Subd. 3.Standby charge prohibited. A utility may not apply a standby charge to 
18.31 	a solar photovoltaic device governed under this section.
18.32 		Subd. 4.Standard contract. The commission shall establish a statewide uniform 
18.33 	form of contract that must be used by a purchasing utility and an owner of a solar 
18.34 	photovoltaic device who elects to be governed under this section. The term of a contract 
18.35 	entered into under this section must be no less than 20 years. The agreement must provide 
19.1 	for credit of the value of solar rate as approved by the commission under this section, 
19.2 	and must require the transfer of all renewable energy credits associated with the energy 
19.3 	generated by the solar photovoltaic device to the purchasing utility.
19.4 		Subd. 5.Credits. The utility interconnected to a solar photovoltaic device whose 
19.5 	owner elects to be governed under this section shall purchase, throughout the term of the 
19.6 	contract, all energy and capacity made available by the owner of the solar photovoltaic 
19.7 	device. All credits must be made at the value of solar rate approved by the commission 
19.8 	under this section.
19.9 		Subd. 6.Value of solar rate; calculation. (a) By February 1, 2014, the Department 
19.10 	of Commerce shall calculate the value of solar rate for each utility subject to the provisions 
19.11 	of this section. The value of solar rate is expressed on a per kilowatt-hour basis and is 
19.12 	composed of the following components:
19.13 	(1) line loss savings equal to the value of the average amount of electricity lost 
19.14 	through transmission and distribution when electricity is generated by the utility's nonsolar 
19.15 	photovoltaic generators;
19.16 	(2) transmission and distribution capacity savings equal to the value of delaying 
19.17 	the need for capital investment in a utility's transmission and distribution system by 
19.18 	contracting to purchase energy from solar photovoltaic devices;
19.19 	(3) energy savings equal to the reduction in a utility's wholesale energy purchases 
19.20 	and costs, based on the time of day the energy would have been generated, realized as a 
19.21 	result of energy purchases from solar photovoltaic devices;
19.22 	(4) generation capacity savings equal to the value of the benefit of the capacity 
19.23 	added to the utility's system by solar photovoltaic devices;
19.24 	(5) fuel price hedge value equal to the value of eliminating price uncertainty 
19.25 	associated with the utility's purchases of fuel for electricity generation; and
19.26 	(6) environmental benefits equal to the premium retail customers are willing to pay 
19.27 	to consume energy produced from renewable resources.
19.28 	(b) The department may, based on known and measurable evidence of the economic 
19.29 	development benefits of solar electricity generation, including the net increase in local 
19.30 	employment and taxes generated from the manufacture, assembly, installation, operation, 
19.31 	and maintenance of solar photovoltaic devices, or other factors, incorporate additional 
19.32 	amounts into the value of solar rate.
19.33 	(c) The value of solar rate is equal to the present value of the future revenue streams 
19.34 	of the values components calculated in paragraphs (a) and (b) over the useful life of a 
19.35 	solar photovoltaic device.
20.1 		Subd. 7.Value of solar rate; information. The Department of Commerce shall 
20.2 	solicit information from each utility subject to the provisions of this section to assist it in 
20.3 	calculating the value of solar rate. A utility shall provide the information requested by the 
20.4 	department in a timely fashion.
20.5 		Subd. 8.Value of solar rate; process. The Department of Commerce shall solicit 
20.6 	comments and recommendations from utilities, ratepayers, and other interested parties 
20.7 	regarding the calculation of the value of solar rate.
20.8 		Subd. 9.Value of solar rate; adjustments. By January 1, 2015, and every January 
20.9 	1 thereafter through 2049, the commissioner shall make a determination as to whether 
20.10 	the value of solar rate needs to be adjusted in order to reflect current conditions in energy 
20.11 	markets or changes in the value of the components calculated in subdivision 6. In making 
20.12 	that determination, the commissioner shall solicit comments and recommendations from 
20.13 	interested parties in the same manner as required under subdivision 8. After considering 
20.14 	the comments and recommendations, the commissioner may adjust the value of solar rate.
20.15 		Subd. 10.Value of solar rate; billing. Notwithstanding section 216B.164, an 
20.16 	owner of a solar photovoltaic device who elects to receive the value of solar rate for 
20.17 	electricity generated by the solar photovoltaic device that is sold to a utility must be:
20.18 	(1) charged by the utility the applicable rate schedule for sales to that class of 
20.19 	customer for all electricity consumed by the customer;
20.20 	(2) credited the value of solar rate by the utility for all electricity generated by the 
20.21 	solar photovoltaic device;
20.22 	(3) provided by the utility with a monthly bill that contains, in addition to the 
20.23 	amounts in clauses (1) and (2), the net amount owed to the utility or net credit realized 
20.24 	by the owner for that month and on a year-to-date basis. In the event that the customer 
20.25 	has a positive balance after the 12-month cycle ending on the last day of February, that 
20.26 	balance will be eliminated and the credit cycle will restart the following billing period 
20.27 	beginning March 1; and
20.28 	(4) provided by the utility a meter that allows for the separate calculation of the 
20.29 	amount of electricity consumed and generated at the property.
20.30 		Subd. 11.Commission review; approval. (a) The commissioner shall submit the 
20.31 	value of solar rate calculated under subdivision 6 and the information, comments, and 
20.32 	recommendations received under subdivisions 7 and 8 to the commission for its review 
20.33 	and approval. The commission shall review the rate and the information, comments, 
20.34 	and recommendations and may, at its discretion, solicit additional comments and 
20.35 	recommendations from utilities, ratepayers, and other interested parties regarding the 
20.36 	calculation of the value of solar rate.
21.1 	(b) By January 1, 2014, and each January 1 thereafter through 2049, the commission 
21.2 	shall approve or modify the value of solar rate submitted to it by the commissioner. The 
21.3 	commission shall, by order, direct all electric utilities subject to this section to begin 
21.4 	crediting the value of solar rate most recently approved by the commission to: (1) owners 
21.5 	of solar photovoltaic devices who sign a standard contract under this section on or after the 
21.6 	first day of the first month following the effective date of the order; and (2) owners of solar 
21.7 	photovoltaic devices who were governed under the net metering provisions of section 
21.8 	216B.164 prior to the effective date of the order and who elect to be governed under 
21.9 	section 216B.1641 with respect to the purchase price credited by a utility by complying 
21.10 	with the provisions of section 216B.1641, subdivision 2, paragraph (d).
21.11 	(c) In no case shall the commission approve a value of solar rate under this section 
21.12 	that is lower than the applicable retail rate of the subject utility.

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

21.14 	Sec. 20. [216B.1651] DEFINITIONS.
21.15 		Subdivision 1.Scope. For the purposes of sections 216B.1651 to 216B.1654, the 
21.16 	following definitions have the meanings given.
21.17 		Subd. 2.Community solar generating facility. "Community solar generating 
21.18 	facility" means a facility:
21.19 	(1) that generates electricity by means of a solar photovoltaic device that has a 
21.20 	capacity of less than two megawatts direct current nameplate;
21.21 	(2) that is interconnected with a utility's distribution system under the jurisdiction 
21.22 	of the commission;
21.23 	(3) that is located in the electric service area of the utility with which it is 
21.24 	interconnected;
21.25 	(4) whose subscribers purchase, under long-term contract with the community solar 
21.26 	generating facility, the right to consume the electricity generated from a specified portion 
21.27 	of the facility's generating capacity;
21.28 	(5) that is not owned by a utility; and
21.29 	(6) that has at least two subscribers.
21.30 		Subd. 3.Facility manager. "Facility manager" means an entity that manages a 
21.31 	community solar generating facility for the benefit of subscribers and may, in addition, 
21.32 	develop, construct, own, or operate the community solar generating facility. A facility 
21.33 	manager may not be a utility, but may be:
21.34 	(1) a person whose sole purpose is to beneficially own and operate a community 
21.35 	solar generating facility;
22.1 	(2) a Minnesota nonprofit corporation organized under chapter 317A;
22.2 	(3) a Minnesota cooperative association organized under chapter 308A or 308B;
22.3 	(4) a Minnesota political subdivision or local government including, but not limited 
22.4 	to, a county, statutory or home rule charter city, town, school district, public or private 
22.5 	higher education institution, or any other local or regional governmental organization such 
22.6 	as a board, commission, or association; or
22.7 	(5) a tribal council.
22.8 		Subd. 4.Renewable energy credit. "Renewable energy credit" has the meaning 
22.9 	given in section 216B.1691, subdivision 1, paragraph (d).
22.10 		Subd. 5.Solar photovoltaic device. "Solar photovoltaic device" has the meaning 
22.11 	given in section 216C.06, subdivision 16.
22.12 		Subd. 6.Subscriber. "Subscriber" means a retail customer of a utility who owns 
22.13 	one or more subscriptions of a community solar generating facility interconnected with 
22.14 	that utility. A facility manager may be a subscriber.
22.15 		Subd. 7.Subscription. "Subscription" means a contract between a subscriber and a 
22.16 	community solar generating facility that has a term of no less than 20 years and that 
22.17 	provides to the subscriber a portion of the generation of the community solar generating 
22.18 	facility and a corresponding proportion of the electricity generated by the community 
22.19 	solar generating facility.
22.20 		Subd. 8.Utility. "Utility" means a public utility or a cooperative association or 
22.21 	municipality that has elected to be governed under section 216C.412.

22.22 	Sec. 21. [216B.1652] SUBSCRIPTIONS.
22.23 		Subdivision 1.Presale of subscriptions. A community solar generating facility 
22.24 	may not commence construction of the facility until contracts have been executed for 
22.25 	subscriptions, excluding the subscription of the facility manager, that represent at least 80 
22.26 	percent of the proposed nameplate capacity of the community solar generating facility.
22.27 		Subd. 2.Size. (a) A subscription must be a portion of the community solar generating 
22.28 	facility's nameplate capacity sized so as to produce no more than 120 percent of the annual 
22.29 	average amount of electricity consumed over the previous three years at the site where the 
22.30 	subscriber's meter is located. If the site is newly constructed, the subscription must be sized 
22.31 	based on 120 percent of the average annual amount of electricity consumed by a facility of 
22.32 	similar size and type in the utility's service area, as determined by the facility manager.
22.33 	(b) A subscriber may not own one or more subscriptions whose total capacity 
22.34 	exceeds the maximum capacity allowed for a qualifying facility subject to section 
22.35 	216B.164, subdivision 3.
23.1 	(c) A facility manager may not own subscriptions whose total capacity exceeds the 
23.2 	maximum subscription size allowed under paragraph (a) plus ten percent of the remaining 
23.3 	available nameplate capacity in the community solar generating facility, subject to the 
23.4 	limit in paragraph (b).
23.5 	(d) The maximum subscription size for a subscriber consuming electricity generated 
23.6 	from an eligible energy technology, as defined in section 216B.1691, subdivision 1, at any 
23.7 	time during the term of the subscriber's subscription, is the maximum subscription size 
23.8 	allowed under paragraph (a) minus the nameplate capacity of the eligible energy technology 
23.9 	device providing electricity to the subscriber, subject to the limit in paragraph (b).
23.10 		Subd. 3.Certification. Prior to the sale of a subscription, a facility manager 
23.11 	must provide certification to the subscriber signed by the facility manager under penalty 
23.12 	of perjury:
23.13 	(1) identifying the rate of insolation at the community solar generating facility;
23.14 	(2) certifying that the solar photovoltaic devices employed by the community solar 
23.15 	generating facility to generate electricity have an electrical energy degradation rate of no 
23.16 	more than 0.5 percent annually; and
23.17 	(3) certifying that the community solar generating facility is in full compliance with 
23.18 	all applicable federal and state utility, securities, and tax laws.
23.19 		Subd. 4.On-site subscriber. A subscriber who owns the property on which 
23.20 	a community solar generating facility is located has no more rights with respect to 
23.21 	subscription size or price than any other subscriber.
23.22 		Subd. 5.Subscription prices. The price for a subscription to a community solar 
23.23 	generating facility is not subject to regulation by the commission and is negotiated 
23.24 	between the prospective subscriber and the facility manager.
23.25 		Subd. 6.Subscription transfer. A subscriber that terminates the contract between 
23.26 	the subscriber and the community solar generating facility must transfer the subscription 
23.27 	to a person eligible to be a subscriber or to the facility manager at a price negotiated 
23.28 	by both parties.
23.29 		Subd. 7.New subscribers. Within 30 days of the execution of a contract between the 
23.30 	community solar generating facility and a new subscriber, the facility manager shall submit 
23.31 	the following information to the utility serving the community solar generating facility:
23.32 	(1) the new subscriber's name, address, number of meters, and utility customer 
23.33 	account; and
23.34 	(2) the share of the community solar generating facility's nameplate capacity owned 
23.35 	by the new subscriber.
24.1 		Subd. 8.Meter change. A subscriber that moves to a different property served by 
24.2 	the community solar generating facility from the property at which the subscriber resided 
24.3 	at the time the contract between the subscriber and the community solar generating facility 
24.4 	was executed, or that changes the number of meters attached to the subscriber's account, 
24.5 	must notify the facility manager within 30 days of the change.
24.6 		Subd. 9.Renewable energy credits. (a) Notwithstanding any other law, a 
24.7 	subscriber owns the renewable energy credits associated with the electricity allocated to 
24.8 	the subscriber's subscription. A utility or facility manager may purchase renewable energy 
24.9 	credits under a contract with a subscriber.
24.10 	(b) Renewable energy credits may not be assigned to a utility as a condition of entering 
24.11 	into a contract or an interconnection agreement with a community solar generating facility.
24.12 		Subd. 10.Disputes. The dispute resolution provisions available under section 
24.13 	216B.164 shall be used to resolve disputes between a facility manager and the utility 
24.14 	serving the community solar generating facility.

24.15 	Sec. 22. [216B.1653] DISPOSITION OF ELECTRICITY GENERATED.
24.16 		Subdivision 1.Allocation. (a) The total amount of electricity available for allocation 
24.17 	to all subscribers of a community solar generating facility shall be determined by a 
24.18 	production meter installed by the utility.
24.19 	(b) The total amount of electricity available to a subscriber shall be the total amount 
24.20 	of electricity available for allocation to all subscribers of a community solar generating 
24.21 	facility prorated by a subscriber's subscription size in relation to the nameplate capacity of 
24.22 	the community solar generating facility.
24.23 	(c) A subscriber may not resell electricity governed by the subscriber's contract 
24.24 	with a community solar generating facility.
24.25 	(d) All electricity generated by a community solar generating facility that is not 
24.26 	allocated to or consumed by subscribers must be sold to the utility interconnected with 
24.27 	the community solar generating facility.
24.28 		Subd. 2.Utility purchases. The utility to which the community solar generating 
24.29 	facility is interconnected shall purchase all electricity generated by the community solar 
24.30 	generating facility that is not consumed by subscribers. The price paid to the community 
24.31 	solar generating facility by the utility is governed by section 216B.164 or any law that 
24.32 	governs the price a utility must pay to purchase electricity from a solar photovoltaic device.
24.33 		Subd. 3.Interconnection. The commission shall establish uniform fees for the 
24.34 	interconnection of a community solar generating facility with a utility.
25.1 		Subd. 4.Nonutility status. Notwithstanding section 216B.02, a community solar 
25.2 	generating facility is not a public utility.

25.3 	Sec. 23. [216B.1654] BILLING.
25.4 		Subdivision 1.Billing procedure. A subscriber to a community solar generating 
25.5 	facility must be:
25.6 	(1) charged by the utility interconnected with the community solar generating 
25.7 	facility the utility's applicable rate schedule for sales to that class of customer for all 
25.8 	electricity consumed by the subscriber;
25.9 	(2) paid by the utility the maximum rate allowable under section 216B.164, or 
25.10 	any other law that may govern the price a utility must pay to purchase electricity from 
25.11 	a solar photovoltaic device, for a portion of all electricity the utility purchases from 
25.12 	the community solar generating facility that is equal to the ratio of the subscriber's 
25.13 	subscription to the nameplate capacity of the community solar generating facility;
25.14 	(3) provided by the utility with a monthly bill that contains, in addition to the 
25.15 	amounts in clauses (1) and (2), the net amount owed to the utility or net credit realized by 
25.16 	the owner for that month and on a year-to-date basis; and
25.17 	(4) provided by the utility with a meter that allows for the separate calculation of the 
25.18 	amount of electricity consumed and generated at the property.
25.19 		Subd. 2.Billing system. The Department of Commerce shall, by January 1, 2014, 
25.20 	establish a uniform administrative system to credit the utility accounts of subscribers to a 
25.21 	community solar generating facility. In determining the uniform administrative system, the 
25.22 	commission shall solicit comments and recommendations from utilities, ratepayers, and 
25.23 	other interested parties, and shall review commercially available administrative systems 
25.24 	and administrative systems used in jurisdictions where entities similar to community 
25.25 	solar generating facilities are operating.
25.26 		Subd. 3.Commission proceeding; rate adjustment. By September 1, 2014, the 
25.27 	commission shall initiate a proceeding to examine whether the rate paid by a utility to 
25.28 	purchase energy from a community solar generating facility under section 216B.1653, 
25.29 	subdivision 2, should be adjusted to reflect the actual fixed costs incurred by a utility to 
25.30 	provide service to a community solar generating facility.

25.31 	Sec. 24. Minnesota Statutes 2012, section 216B.1691, subdivision 1, is amended to read:
25.32 		Subdivision 1.Definitions. (a) Unless otherwise specified in law, "eligible energy 
25.33 	technology" means an energy technology that generates electricity from the following 
25.34 	renewable energy sources:
26.1 	(1) solar;
26.2 	(2) wind;
26.3 	(3) hydroelectric with a capacity of less than 100 megawatts;
26.4 	(4) hydrogen, provided that after January 1, 2010, the hydrogen must be generated 
26.5 	from the resources listed in this paragraph; or
26.6 	(5) biomass, which includes, without limitation, landfill gas; an anaerobic digester 
26.7 	system; the predominantly organic components of wastewater effluent, sludge, or related 
26.8 	by-products from publicly owned treatment works, but not including incineration of 
26.9 	wastewater sludge to produce electricity; and an energy recovery facility used to capture 
26.10 	the heat value of mixed municipal solid waste or refuse-derived fuel from mixed municipal 
26.11 	solid waste as a primary fuel.
26.12 	(b) "Electric utility" means a public utility providing electric service, a generation 
26.13 	and transmission cooperative electric association, a municipal power agency, or a power 
26.14 	district.
26.15 	(c) "Total retail electric sales" means the kilowatt-hours of electricity sold in a year 
26.16 	by an electric utility to retail customers of the electric utility or to a distribution utility 
26.17 	for distribution to the retail customers of the distribution utility. "Total retail electric 
26.18 	sales" does not include the sale of hydroelectricity supplied by a federal power marketing 
26.19 	administration or other federal agency, regardless of whether the sales are directly to a 
26.20 	distribution utility or are made to a generation and transmission utility and pooled for 
26.21 	further allocation to a distribution utility.
26.22 	(d) "Renewable energy credit" means a certificate of proof, issued through the 
26.23 	accounting system approved by the commission under subdivision 4, attesting that one 
26.24 	unit of electricity was generated and delivered by an eligible energy technology, and 
26.25 	including all renewable and environmental attributes associated with the production of 
26.26 	electricity from the eligible energy technology.

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

26.28 	Sec. 25. Minnesota Statutes 2012, section 216B.1691, subdivision 2a, is amended to 
26.29 	read:
26.30 		Subd. 2a.Eligible energy technology standard. (a) Except as provided in 
26.31 	paragraph (b), each electric utility shall generate or procure sufficient electricity generated 
26.32 	by an eligible energy technology to provide its retail customers in Minnesota, or the 
26.33 	retail customers of a distribution utility to which the electric utility provides wholesale 
26.34 	electric service, so that at least the following standard percentages of the electric utility's 
27.1 	total retail electric sales to retail customers in Minnesota are generated by eligible energy 
27.2 	technologies by the end of the year indicated:

27.3	(1)
	2012
	12 percent
	
27.4	(2)
	2016
	17 percent
	
27.5	(3)
	2020
	20 percent
	
27.6	(4)
	2025
	25 percent.
	
27.7 	(b) An electric utility that owned a nuclear generating facility as of January 1, 2007, 
27.8 	must meet the requirements of this paragraph rather than paragraph (a). An electric utility 
27.9 	subject to this paragraph must generate or procure sufficient electricity generated by 
27.10 	an eligible energy technology to provide its retail customers in Minnesota or the retail 
27.11 	customer of a distribution utility to which the electric utility provides wholesale electric 
27.12 	service so that at least the following percentages of the electric utility's total retail electric 
27.13 	sales to retail customers in Minnesota are generated by eligible energy technologies by the 
27.14 	end of the year indicated:

27.15	(1)
	2010
	15 percent
	
27.16	(2)
	2012
	18 percent
	
27.17	(3)
	2016
	25 percent
	
27.18	(4)
	2020
	30 percent.
	
27.19 	Of the 30 percent in 2020, at least 25 percent must be generated by solar energy 
27.20 	or wind energy conversion systems and the remaining five percent by other eligible 
27.21 	energy technology. Of the 25 percent that must be generated by wind or solar, no more 
27.22 	than one percent may be solar generated and the remaining 24 percent or greater must 
27.23 	be wind generated.
27.24 	(c) By 2030, each public utility shall generate or procure sufficient electricity 
27.25 	generated by an eligible energy technology to provide at least 40 percent of its total retail 
27.26 	electric sales to retail customers in Minnesota.

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

27.28 	Sec. 26. Minnesota Statutes 2012, section 216B.1691, subdivision 2e, is amended to 
27.29 	read:
27.30 		Subd. 2e.Rate impact of standard compliance; report. Each electric utility must 
27.31 	submit to the commission and the legislative committees with primary jurisdiction over 
27.32 	energy policy a report containing an estimation of the rate impact of activities of the 
27.33 	electric utility necessary to comply with this section. In consultation with the Department 
27.34 	of Commerce, the commission shall determine a uniform reporting system to ensure that 
27.35 	individual utility reports are consistent and comparable, and shall, by order, require each 
28.1 	electric utility subject to this section to use that reporting system. The rate impact estimate 
28.2 	must be for wholesale rates and, if the electric utility makes retail sales, the estimate 
28.3 	shall also be for the impact on the electric utility's retail rates. Those activities include, 
28.4 	without limitation, energy purchases, generation facility acquisition and construction, and 
28.5 	transmission improvements. An initial report must be submitted within 150 days of May 
28.6 	28, 2011. After the initial report, a report must be updated and submitted as part of each 
28.7 	integrated resource plan or plan modification filed by the electric utility under section 
28.8 	216B.2422. The reporting obligation of an electric utility under this subdivision expires 
28.9 	December 31, 2025, for an electric utility subject to subdivision 2a, paragraph (a), and 
28.10 	December 31, 2020, for an electric utility subject to subdivision 2a, paragraph (b).

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

28.12 	Sec. 27. Minnesota Statutes 2012, section 216B.1691, is amended by adding a 
28.13 	subdivision to read:
28.14 		Subd. 2f.Solar energy standard. (a) In addition to the requirements of subdivision 
28.15 	2a, each public utility shall generate or procure sufficient electricity generated by solar 
28.16 	energy to serve its retail electricity customers in Minnesota so that at least the following 
28.17 	standard percentages of the utility's total retail electric sales to retail customers in 
28.18 	Minnesota are generated by solar energy by the end of the year indicated:

28.19	(1)
	2016
	0.5 percent
	
28.20	(2)
	2020
	2.0 percent
	
28.21	(3)
	2025
	4.0 percent
	
28.22 	(b) The solar energy standard established in this subdivision is subject to all the 
28.23 	provisions of this section governing a utility's standard obligation under subdivision 2a.
28.24 	(c) It is an energy goal of the state of Minnesota that by 2030, ten percent of the 
28.25 	retail electric sales in Minnesota be generated by solar energy.

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

28.27 	Sec. 28. Minnesota Statutes 2012, section 216B.1692, subdivision 1, is amended to read:
28.28 		Subdivision 1.Qualifying projects. (a) Projects that may be approved for the 
28.29 	emissions reduction-rate rider allowed in this section must:
28.30 	(1) be installed on existing large electric generating power plants, as defined in 
28.31 	section 216B.2421, subdivision 2, clause (1), that are located in the state and that are 
28.32 	currently not subject to emissions limitations for new power plants under the federal Clean 
28.33 	Air Act, United States Code, title 42, section 7401 et seq.;
29.1 	(2) not increase the capacity of the existing electric generating power plant more 
29.2 	than ten percent or more than 100 megawatts, whichever is greater; and
29.3 	(3) result in the existing plant either:
29.4 	(i) complying with applicable new source review standards under the federal Clean 
29.5 	Air Act; or
29.6 	(ii) emitting air contaminants at levels substantially lower than allowed for new 
29.7 	facilities by the applicable new source performance standards under the federal Clean 
29.8 	Air Act; or
29.9 	(iii) reducing emissions from current levels at a unit to the lowest cost-effective level 
29.10 	when, due to the age or condition of the generating unit, the public utility demonstrates 
29.11 	that it would not be cost-effective to reduce emissions to the levels in item (i) or (ii).
29.12 	(b) Notwithstanding paragraph (a), a project may be approved for the emission 
29.13 	reduction rate rider allowed in this section if the project is to be installed on existing 
29.14 	large electric generating power plants, as defined in section 216B.2421, subdivision 2, 
29.15 	clause (1), that are located outside the state and are needed to comply with state or federal 
29.16 	air quality standards, but only if the project has received an advance determination of 
29.17 	prudence from the commission under section 216B.1695.

29.18 	Sec. 29. Minnesota Statutes 2012, section 216B.1692, is amended by adding a 
29.19 	subdivision to read:
29.20 		Subd. 1a.Exemption. Subdivisions 2, 4, and 5, paragraph (c), clause (1), do not 
29.21 	apply to projects qualifying under subdivision 1, paragraph (b).

29.22 	Sec. 30. Minnesota Statutes 2012, section 216B.1692, subdivision 8, is amended to read:
29.23 		Subd. 8.Sunset. This section is effective until December 31, 2015 2020, and 
29.24 	applies to plans, projects, and riders approved before that date and modifications made to 
29.25 	them after that date.

29.26 	Sec. 31. Minnesota Statutes 2012, section 216B.1695, subdivision 5, is amended to read:
29.27 		Subd. 5.Cost recovery. The utility may begin recovery of costs that have been 
29.28 	incurred by the utility in connection with implementation of the project in the next rate 
29.29 	case following an advance determination of prudence or in a rider approved under section 
29.30 	216B.1692. The commission shall review the costs incurred by the utility for the project. 
29.31 	The utility must show that the project costs are reasonable and necessary, and demonstrate 
29.32 	its efforts to ensure the lowest reasonable project costs. Notwithstanding the commission's 
29.33 	prior determination of prudence, it may accept, modify, or reject any of the project costs. 
30.1 	The commission may determine whether to require an allowance for funds used during 
30.2 	construction offset.

30.3 	Sec. 32. Minnesota Statutes 2012, section 216B.1695, is amended by adding a 
30.4 	subdivision to read:
30.5 		Subd. 5a.Rate of return. The return on investment in the rider shall be at the 
30.6 	level approved by the commission in the public utility's last general rate case, unless the 
30.7 	commission determines that a different rate of return is in the public interest.

30.8 	Sec. 33. Minnesota Statutes 2012, section 216B.23, subdivision 1a, is amended to read:
30.9 		Subd. 1a.Authority to issue refund. (a) On determining that a public utility has 
30.10 	charged a rate in violation of this chapter, a commission rule, or a commission order, the 
30.11 	commission, after conducting a proceeding, may require the public utility to refund to its 
30.12 	customers, in a manner approved by the commission, any revenues the commission finds 
30.13 	were collected as a result of the unlawful conduct. Any refund authorized by this section 
30.14 	is permitted in addition to any remedies authorized by section 216B.16 or any other law 
30.15 	governing rates. Exercising authority under this section does not preclude the commission 
30.16 	from pursuing penalties under sections 216B.57 to 216B.61 for the same conduct.
30.17 	(b) This section must not be construed as allowing:
30.18 	(1) retroactive ratemaking;
30.19 	(2) refunds based on claims that prior or current approved rates have been unjust, 
30.20 	unreasonable, unreasonably preferential, discriminatory, insufficient, inequitable, or 
30.21 	inconsistent in application to a class of customers; or
30.22 	(3) refunds based on claims that approved rates have not encouraged energy 
30.23 	conservation or renewable energy use, or have not furthered the goals of section 216B.164, 
30.24 	216B.241, or216C.05, or 216C.412.
30.25 	(c) A refund under this subdivision does not apply to revenues collected more than 
30.26 	six years before the date of the notice of the commission proceeding required under this 
30.27 	subdivision.

30.28 	Sec. 34. Minnesota Statutes 2012, section 216B.241, subdivision 1e, is amended to read:
30.29 		Subd. 1e.Applied research and development grants. (a) The commissioner 
30.30 	may, by order, approve and make grants for applied research and development projects 
30.31 	of general applicability that identify new technologies or strategies to maximize energy 
30.32 	savings, improve the effectiveness of energy conservation programs, or document 
30.33 	the carbon dioxide reductions from energy conservation programs. When approving 
31.1 	projects, the commissioner shall consider proposals and comments from utilities and 
31.2 	other interested parties. The commissioner may assess up to $3,600,000 annually for the 
31.3 	purposes of this subdivision. The assessments must be deposited in the state treasury 
31.4 	and credited to the energy and conservation account created under subdivision 2a. An 
31.5 	assessment made under this subdivision is not subject to the cap on assessments provided 
31.6 	by section 216B.62, or any other law.
31.7 	(b) The commissioner, as part of the assessment authorized under paragraph (a), 
31.8 	shall annually assess and grant up to $500,000 for the purpose of subdivision 9.
31.9 	(c) The commissioner, as part of the assessment authorized under paragraph (a), 
31.10 	shall annually assess $500,000 per fiscal year for a grant to the partnership created by 
31.11 	section 216C.385, subdivision 2. The grant must be used to exercise the powers and 
31.12 	perform the duties specified in section 216C.385, subdivision 3.
31.13 	(d) By February 15 annually, the commissioner shall report to the chairs and ranking 
31.14 	minority members of the committees of the legislature with primary jurisdiction over 
31.15 	energy policy and energy finance on the assessments made under this subdivision for the 
31.16 	previous calendar year and the use of the assessment. The report must clearly describe the 
31.17 	activities supported by the assessment and the parties that engaged in those activities. 

31.18 	Sec. 35. Minnesota Statutes 2012, section 216B.241, subdivision 5c, is amended to read:
31.19 		Subd. 5c.Large solar electric generating plant. (a) For the purpose of this 
31.20 	subdivision:
31.21 	(1) "project" means a solar electric generation project consisting of arrays of solar 
31.22 	photovoltaic cells with a capacity of up to two megawatts located on the site of a closed 
31.23 	landfill in Olmsted County owned by the Minnesota Pollution Control Agency; and
31.24 	(2) "cooperative electric association" means a generation and transmission 
31.25 	cooperative electric association that has a member distribution cooperative association to 
31.26 	which it provides wholesale electric service in whose service territory a project is located.
31.27 	(b) A cooperative electric association may elect to count all of its purchases of 
31.28 	electric energy from a project toward only one of the following:
31.29 	(1) its energy-savings goal under subdivision 1c; or
31.30 	(2) its energy objective or solar energy standard under section 216B.1691.
31.31 	(c) A cooperative electric association may include in its conservation plan purchases 
31.32 	of electric energy from a project. The cost-effectiveness of project purchases may be 
31.33 	determined by a different standard than for other energy conservation improvements 
31.34 	under this section if the commissioner determines that doing so is in the public interest 
31.35 	in order to encourage solar energy. The kilowatt hours of solar energy purchased by a 
32.1 	cooperative electric association from a project may count for up to 33 percent of its one 
32.2 	percent savings goal under subdivision 1c or up to 22 percent of its 1.5 percent savings 
32.3 	goal under that subdivision. Expenditures made by a cooperative association for the 
32.4 	purchase of energy from a project may not be used to meet the revenue expenditure 
32.5 	requirements of subdivisions 1a and 1b.

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

32.7 	Sec. 36. Minnesota Statutes 2012, section 216B.2411, subdivision 3, is amended to read:
32.8 		Subd. 3.Other provisions. (a) Electricity generated by a facility constructed with 
32.9 	funds provided under this section and using an eligible renewable energy source may be 
32.10 	counted toward the renewable energy objectives in section 216B.1691, subject to the 
32.11 	provisions of that section, except as provided in paragraph (c).
32.12 	(b) Two or more entities may pool resources under this section to provide assistance 
32.13 	jointly to proposed eligible renewable energy projects. The entities shall negotiate and 
32.14 	agree among themselves for allocation of benefits associated with a project, such as the 
32.15 	ability to count energy generated by a project toward a utility's renewable energy objectives 
32.16 	under section 216B.1691, except as provided in paragraph (c). The entities shall provide a 
32.17 	summary of the allocation of benefits to the commissioner. A utility may spend funds under 
32.18 	this section for projects in Minnesota that are outside the service territory of the utility.
32.19 	(c) Electricity generated by a solar photovoltaic device constructed with funds 
32.20 	provided under this section may be counted toward a public utility's solar energy standard 
32.21 	under section 216B.1691.

32.22 	Sec. 37. Minnesota Statutes 2012, section 216B.40, is amended to read:
32.23 	216B.40 EXCLUSIVE SERVICE RIGHT; SERVICE EXTENSION.
32.24 	Except as provided in sections 216B.42 and 216B.421, each electric utility shall 
32.25 	have the exclusive right to provide electric service by electric line at retail to each and 
32.26 	every present and future customer in its assigned service area and no electric utility shall 
32.27 	render or extend electric service at retail within the assigned service area of another 
32.28 	electric utility unless the electric utility consents thereto in writing; provided that any 
32.29 	electric utility may extend its facilities through the assigned service area of another 
32.30 	electric utility if the extension is necessary to facilitate the electric utility connecting its 
32.31 	facilities or customers within its own assigned service area.

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

33.1 	Sec. 38. [216C.411] SOLAR ENERGY PRODUCTION INCENTIVE ACCOUNT.
33.2 		 Subdivision 1.Account established; account management. A solar energy 
33.3 	production incentive account is established as a separate account in the special revenue 
33.4 	fund in the state treasury. The commissioner of commerce shall credit to the account the 
33.5 	amounts assessed and collected under this section and appropriations and transfers to 
33.6 	the account. Earnings, such as interest, dividends, and any other earnings arising from 
33.7 	account assets, must be credited to the account. Funds remaining in the account at the 
33.8 	end of a fiscal year are not canceled to the general fund but remain in the account. The 
33.9 	commissioner of commerce shall manage the account.
33.10 		Subd. 2.Purpose. The purpose of the account is to pay the solar energy production 
33.11 	incentive to owners of qualified solar photovoltaic devices located in the electric service 
33.12 	territory of a cooperative association or municipality that has elected to be governed under 
33.13 	section 216C.412, and the Department of Commerce's actual and reasonable costs to 
33.14 	administer this section and section 216C.412.
33.15 		Subd. 3.Administrative procedure. By April 1, 2014, the commissioner of 
33.16 	commerce shall develop an administrative procedure that transfers funds from the account 
33.17 	to pay the solar energy production incentive to owners of solar photovoltaic devices 
33.18 	located in the electric service territory of a cooperative association or municipality that has 
33.19 	elected to be governed under section 216C.412.
33.20 		Subd. 4.Transfer. The public utility that contributes to the account established 
33.21 	under section 116C.779 shall transfer from that account up to $5,000,000 annually to the 
33.22 	commissioner of commerce for deposit in the account established in subdivision 1 to pay 
33.23 	the solar energy production incentive to owners of solar photovoltaic devices located in 
33.24 	the electric service territory of a cooperative association or municipality that has elected 
33.25 	to be governed under section 216C.412.  The commissioner of commerce shall request 
33.26 	funds to be transferred by the public utility only to the extent necessary to fully fund the 
33.27 	annual aggregate solar production incentives paid to owners of solar photovoltaic devices 
33.28 	that are interconnected with cooperative associations or municipalities that have elected 
33.29 	to be governed under section 216C.412.

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

33.31 	Sec. 39. [216C.412] SOLAR ENERGY PRODUCTION INCENTIVE.
33.32 		Subdivision 1.Applicability. (a) A public utility providing retail electric service to 
33.33 	Minnesota customers is subject to the provisions of this section. 
33.34 	(b) A cooperative association or a municipality providing retail electric service 
33.35 	to Minnesota customers may elect to be subject to the provisions of this section.  The 
34.1 	election shall be approved by resolution of the board of directors of the association 
34.2 	or the governing body of the municipality, a copy of which must be provided to the 
34.3 	commissioner of commerce.  The election is effective 30 days after the election by the 
34.4 	board of directors or governing body.
34.5 		Subd. 2.Incentive payment. (a) Incentive payments may be made under this 
34.6 	section only to an owner of a solar photovoltaic device who has:
34.7 	(1) submitted to the utility to which the solar photovoltaic device is interconnected, 
34.8 	on a form prescribed by the utility, an application to receive the incentive; and
34.9 	(2) received from the utility in writing a determination that the solar photovoltaic 
34.10 	device qualifies for the incentive.
34.11 	(b) A utility shall make incentive payments under this section on a first-come, 
34.12 	first-served basis. A utility is not required to make aggregate incentive payments under 
34.13 	this section in any one calendar year that exceed 1.33 percent of the utility's gross 
34.14 	operating revenues from retail sales of electric service provided to Minnesota customers 
34.15 	during the previous calendar year.
34.16 	(c) A cooperative association or a municipality that elects to be subject to the 
34.17 	provisions of this section may elect to have the Department of Commerce pay the incentive 
34.18 	to owners of solar photovoltaic devices from the account established in section 216C.411.
34.19 	(d) A utility that owns a solar photovoltaic device is not eligible to receive incentive 
34.20 	payments under this section.
34.21 	(e) A solar photovoltaic device whose capacity exceeds two megawatts is ineligible 
34.22 	to receive incentive payments under this section.
34.23 		Subd. 3.Eligibility window; payment duration. (a) Payments may be made under 
34.24 	this section only for electricity generated from a solar photovoltaic device that first begins 
34.25 	generating electricity after January 1, 2014, through December 31, 2049.
34.26 	(b) Payment of the incentive begins and runs consecutively from the date the solar 
34.27 	photovoltaic device begins generating electricity.
34.28 	(c) A utility paying an incentive under this section must enter into a contract with 
34.29 	an owner of a solar photovoltaic system under which the utility agrees to make incentive 
34.30 	payments for a period of 20 years.
34.31 	(d) No payment may be made under this section for electricity generated after 
34.32 	December 31, 2049.
34.33 		Subd. 4.Amount of payment. (a) An incentive payment is based on the number of 
34.34 	kilowatt hours of electricity generated. The per-kilowatt-hour amount of the payment for 
34.35 	each category of qualified solar photovoltaic device listed below is equal to the applicable 
34.36 	reference price specified in this subdivision minus:
35.1 	(1) the value of solar rate approved by the commissioner under section 216B.1641, 
35.2 	for owners of solar photovoltaic devices that have elected to have the utility's purchase 
35.3 	price for electricity governed by that section; or
35.4 	(2) the rate a utility pays an owner of a solar photovoltaic device for excess electricity 
35.5 	generation under section 216B.164, for owners of solar photovoltaic devices that have 
35.6 	elected to have the utility's purchase price for electricity governed by that section.

35.7		Nameplate Capacity
	Reference Price
	
35.8		Residential
	20.4 cents per kilowatt-hour

35.9		Nonresidential:
		
35.10		Under 25 kilowatts
	18.1 cents per kilowatt-hour
	
35.11
35.12		Rooftop, 25 kilowatts to 2 
megawatts
	15.9 cents per kilowatt-hour
	
35.13
35.14		Ground-mounted, 25 kilowatts to 
2 megawatts
	13.6 cents per kilowatt-hour
	
35.15 	(b) By January 1, 2015, and every January 1 thereafter through 2049, the 
35.16 	commissioner shall make a determination as to whether the reference price needs to be 
35.17 	adjusted in order to achieve the solar energy standard established in section 216B.1691, 
35.18 	subdivision 2f, at the lowest level of incentive payments. In making the determination, the 
35.19 	commissioner shall solicit comments and recommendations from utilities, ratepayers, and 
35.20 	other interested parties regarding the calculation of the reference price. After considering 
35.21 	the comments and recommendations, the commissioner may adjust the reference price.
35.22 	(c) For the purposes of this subdivision, "reference price" means the lowest 
35.23 	per-kilowatt price for electricity generated by a qualified solar photovoltaic system the 
35.24 	commissioner determines is sufficient to provide an economic incentive that will result 
35.25 	in the development of aggregate capacity in this state to meet the solar energy standard 
35.26 	established in section 216B.1691, subdivision 2f.
35.27 		Subd. 5.Additional payment; Made in Minnesota. (a) The commissioner of 
35.28 	commerce shall determine an additional incentive amount to be paid by utilities under this 
35.29 	section to owners of solar photovoltaic devices that are "Made in Minnesota."
35.30 	(b) For the purposes of this subdivision:
35.31 	(1) "Made in Minnesota"  means the manufacture in this state of solar photovoltaic 
35.32 	modules:
35.33 	(i) at a manufacturing facility located in Minnesota that is registered and authorized 
35.34 	to manufacture and apply the UL 1703 certification mark to solar photovoltaic modules by 
35.35 	Underwriters Laboratory (UL), CSA International, Intertek, or an equivalent UL-approved 
35.36 	independent certification agency;
36.1 	(ii) that bear UL 1703 certification marks from UL, CSA International, Intertek, 
36.2 	or an equivalent UL-approved independent certification agency, which marks must be 
36.3 	physically applied to the modules at a manufacturing facility described in item (i), and that 
36.4 	meet either of the following conditions:
36.5 	(A) that are manufactured in Minnesota via manufacturing processes that must 
36.6 	include tabbing, stringing, and lamination; or
36.7 	(B) that are manufactured in Minnesota by interconnecting low-voltage direct current 
36.8 	photovoltaic elements that produce the final useful photovoltaic output of the modules.
36.9 	A solar photovoltaic module that is manufactured by attaching microinverters, direct 
36.10 	current optimizers, or other power electronics to a laminate or solar photovoltaic 
36.11 	module that has received UL 1703 certification marks outside Minnesota from UL, CSA 
36.12 	International, Intertek, or an equivalent UL-approved independent certification agency 
36.13 	is not "Made in Minnesota" under this subdivision; and
36.14 	(2) "solar photovoltaic module" has the meaning given in section 116C.7791, 
36.15 	subdivision 1.
36.16 		Subd. 6.Appropriation. An amount sufficient to pay the solar energy production 
36.17 	incentive under this section is annually appropriated from the account established under 
36.18 	section 216C.411 to the commissioner of commerce for the purposes of this section.

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

36.20 	Sec. 40. Minnesota Statutes 2012, section 216C.436, subdivision 7, is amended to read:
36.21 		Subd. 7.Repayment. An implementing entity that finances an energy improvement 
36.22 	under this section must:
36.23 	(1) secure payment with a lien against the benefited qualifying real property; and
36.24 	(2) collect repayments as a special assessment as provided for in section 429.101 
36.25 	or by charter, provided that special assessments may be made payable in up to 20 equal 
36.26 	annual installments.
36.27 	If the implementing entity is an authority, the local government that authorized 
36.28 	the authority to act as implementing entity shall impose and collect special assessments 
36.29 	necessary to pay debt service on bonds issued by the implementing entity under subdivision 
36.30 	8, and shall transfer all collections of the assessments upon receipt to the authority.

36.31 	Sec. 41. Minnesota Statutes 2012, section 216C.436, subdivision 8, is amended to read:
37.1 		Subd. 8.Bond issuance; repayment. (a) An implementing entity may issue 
37.2 	revenue bonds as provided in chapter 475 for the purposes of this section, provided the 
37.3 	revenue bond must not be payable more than 20 years from the date of issuance.
37.4 	(b) The bonds must be payable as to both principal and interest solely from the 
37.5 	revenues from the assessments established in subdivision 7.
37.6 	(c) No holder of bonds issued under this subdivision may compel any exercise of the 
37.7 	taxing power of the implementing entity that issued the bonds to pay principal or interest 
37.8 	on the bonds, and if the implementing entity is an authority, no holder of the bonds may 
37.9 	compel any exercise of the taxing power of the local government. Bonds issued under 
37.10 	this subdivision are not a debt or obligation of the issuer or any local government that 
37.11 	issued them, nor is the payment of the bonds enforceable out of any money other than the 
37.12 	revenue pledged to the payment of the bonds.

37.13 	Sec. 42. Laws 2005, chapter 97, article 10, section 3, is amended to read:
37.14 	Sec. 3. SUNSET.
 37.15 	Sections 1 and 2 shall expire on June 30, 2015 2023.

37.16 	Sec. 43. STUDY OF POTENTIAL FOR SOLAR ENERGY INSTALLATIONS 
37.17 	ON PUBLIC BUILDINGS.
 37.18 	(a) The commissioner of commerce shall contract with an independent consultant 
37.19 	selected through a request for proposal process to produce a report analyzing the potential 
37.20 	for electricity generation resulting from the installation of solar photovoltaic devices on 
37.21 	and adjacent to public buildings in this state. The study must:
37.22 	(1) determine, for buildings identified under the process initiated in Laws 2001, 
37.23 	chapter 212, article 1, section 3, commonly referred to as the B3 program, the amount 
37.24 	of space available for the installation of solar photovoltaic devices and the maximum 
37.25 	solar electricity generation potential; and
37.26 	(2) utilize existing data on energy efficiency potential developed under the B3 
37.27 	program and determine how investments in energy efficiency for these buildings could 
37.28 	be combined with solar photovoltaic systems to enhance a building's overall energy 
37.29 	efficiency. The analysis must include a schedule for installing solar photovoltaic systems 
37.30 	on public buildings at a rate of four percent of available space per year and must prioritize 
37.31 	installations that result in the largest benefits with the shortest payback periods.
37.32 	(b) By January 1, 2014, the commissioner of commerce shall submit a copy of the 
37.33 	report to the chairs and ranking minority members of the legislative committees with 
37.34 	primary jurisdiction over energy policy and state government finance.

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

38.2 	Sec. 44. TRANSMISSION FOR FUTURE RENEWABLE ENERGY STANDARD.
 38.3 	The commission shall order all Minnesota electric utilities, as defined in Minnesota 
38.4 	Statutes, section 216B.1691, subdivision 1, paragraph (b), to study and develop plans for 
38.5 	the transmission network enhancements necessary to support increasing the renewable 
38.6 	energy standard established in Minnesota Statutes, section 216B.1691, subdivision 2a, to 
38.7 	40 percent by 2030, while maintaining system reliability.
38.8 	The Minnesota electric utilities must complete the study work under the direction of 
38.9 	the commissioner of commerce. Prior to the start of the study, the commissioner shall 
38.10 	appoint a technical review committee consisting of up to 15 individuals with experience 
38.11 	and expertise in electric transmission system engineering, electric power systems 
38.12 	operations, and renewable energy generation technology to review the study's proposed 
38.13 	methods and assumptions, ongoing work, and preliminary results.
38.14 	As part of the planning process, the Minnesota electric utilities must incorporate 
38.15 	and build upon the analyses that have previously been done or that are in progress 
38.16 	including but not limited to the 2006 Minnesota Wind Integration Study and ongoing 
38.17 	work to address geographically dispersed development plans, the 2007 Minnesota 
38.18 	Transmission for Renewable Energy Standard Study, the 2008 and 2009 Statewide Studies 
38.19 	of Dispersed Renewable Generation, the 2009 Minnesota RES Update, Corridor, and 
38.20 	Capacity Validation Studies, the 2010 Regional Generation Outlet Study, the 2011 Multi 
38.21 	Value Project Portfolio Study, and recent and ongoing Midwest Independent System 
38.22 	Operator transmission expansion planning work. The utilities shall collaborate with the 
38.23 	Midwest Independent System Operator to optimize and integrate, to the extent possible, 
38.24 	Minnesota's transmission plans with other regional considerations and to encourage the 
38.25 	Midwest Independent System Operator to incorporate Minnesota's planning work into its 
38.26 	transmission expansion future planning.
38.27 	The study must be completed and submitted to the Minnesota Public Utilities 
38.28 	Commission by December 1, 2013. The report shall include a description of the analyses 
38.29 	that have been conducted and the results, including:
38.30 	(1) a conceptual plan for transmission necessary for generation interconnection and 
38.31 	delivery and for access to regional geographic diversity and regional supply and demand 
38.32 	side flexibility; and
38.33 	(2) identification and development of potential solutions to any critical issues 
38.34 	encountered to support increasing the renewable energy standard to 40 percent by 2030 
39.1 	while maintaining system reliability, as well as potential impacts and barriers of increasing 
39.2 	the renewable energy standard to 45 percent and 50 percent.

39.3 	Sec. 45. SOLAR INTERCONNECTION STUDY.
 39.4 	Each public utility, cooperative association, and municipal utility selling electricity 
39.5 	shall, by November 1, 2013, provide to the commissioner of commerce an assessment of the 
39.6 	capacity available on its electric distribution system for interconnecting solar photovoltaic 
39.7 	devices installed on or adjacent to nonresidential buildings in the utility's service area. For 
39.8 	each such potential interconnection point, the utility must calculate the maximum capacity 
39.9 	of solar photovoltaic devices that could be installed on or adjacent to nearby nonresidential 
39.10 	buildings, the amount of available capacity that could be installed without upgrading the 
39.11 	utility's distribution system, and the cost of the upgrade necessary to accommodate the 
39.12 	installation of the maximum capacity and lesser amounts. The assessment must be in map 
39.13 	format, must be updated annually, and must be made available to the public.

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

39.15 	Sec. 46. VALUE OF ON-SITE ENERGY STORAGE STUDY.
 39.16 	(a) The commissioner of commerce shall contract with an independent consultant 
39.17 	selected through a request for proposal process to produce a report analyzing the potential 
39.18 	costs and benefits of installing utility-managed, grid-connected energy storage devices in 
39.19 	residential and commercial buildings in this state. The study must:
39.20 	(1) estimate the potential value of on-site energy storage devices as a 
39.21 	load-management tool to reduce costs for individual customers and for the utility, including 
39.22 	but not limited to reductions in energy, particularly peaking, costs, and capacity costs;
39.23 	(2) examine the interaction of energy storage devices with on-site solar photovoltaic 
39.24 	devices; and
39.25 	(3) analyze existing barriers to the installation of on-site energy storage devices by 
39.26 	utilities, and examine strategies and design potential economic incentives to overcome 
39.27 	those barriers.
39.28 	(b) The commissioner of commerce shall assess an amount necessary under 
39.29 	Minnesota Statutes, section 216B.241, subdivision 1e, for the purpose of completing the 
39.30 	study described in this section.
39.31 	By January 1, 2014, the commissioner of commerce shall submit the study to the chairs 
39.32 	and ranking minority members of the legislative committees with jurisdiction over energy 
39.33 	policy and finance.

40.1 	Sec. 47. VALUE OF SOLAR THERMAL STUDY.
 40.2 	(a) The commissioner of commerce shall contract with an independent consultant 
40.3 	selected through a request for proposal process to produce a report analyzing the potential 
40.4 	costs and benefits of expanding the installation of solar thermal projects, as defined in 
40.5 	Minnesota Statutes, section 216B.2411, subdivision 2, in residential and commercial 
40.6 	buildings in this state. The study must examine the potential for solar thermal projects 
40.7 	to reduce heating and cooling costs for individual customers and to reduce costs at the 
40.8 	utility level as well. The study must also analyze existing barriers to the installation of 
40.9 	on-site energy storage devices by utilities and examine strategies and design potential 
40.10 	economic incentives to overcome those barriers. By January 1, 2014, the commissioner 
40.11 	of commerce shall submit the study to the chairs and ranking minority members of the 
40.12 	legislative committees with jurisdiction over energy policy and finance.
40.13 	(b) The commissioner of commerce shall assess an amount necessary under 
40.14 	Minnesota Statutes, section 216B.241, subdivision 1e, for the purpose of completing the 
40.15 	study described in this section.

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

40.17 	Sec. 48. SEVERABILITY.
 40.18 	If any provision of this act is found to be unconstitutional and void, the remaining 
40.19 	provisions of this act are valid.

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

40.21 	Sec. 49.  REPEALER.
 40.22 	Minnesota Statutes 2012, section 216B.1637, is repealed.