1.1                          A bill for an act 
  1.2             relating to energy; promoting and providing incentives 
  1.3             for the use of innovative generation technology by 
  1.4             utilities; amending Minnesota Statutes 2002, sections 
  1.5             216B.2422, by adding subdivisions; 216B.2424, 
  1.6             subdivision 5. 
  1.7   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.8      Section 1.  Minnesota Statutes 2002, section 216B.2422, is 
  1.9   amended by adding a subdivision to read: 
  1.10     Subd. 7.  [CONSIDERATION OF POWER SUPPLY OPTION.] (a) Prior 
  1.11  to the approval of any arrangement to build or expand a 
  1.12  fossil-fuel-fired generation facility, or enter into an 
  1.13  agreement to purchase capacity or energy from such a facility 
  1.14  for a term exceeding five years, the commission shall ensure 
  1.15  that a supply proposal from an eligible project is considered, 
  1.16  and shall take any action with respect to such supply proposal 
  1.17  that it deems to be in the best interests of ratepayers.  This 
  1.18  provision applies to any entity subject to the resource planning 
  1.19  requirements of this section, and whose most recent resource 
  1.20  plan demonstrates a need for new generation capacity or energy 
  1.21  resources. 
  1.22     (b) For the purposes of this section, the term "eligible 
  1.23  project" means an energy generation facility: 
  1.24     (1) that makes use of an innovative generation technology 
  1.25  utilizing coal as a primary fuel in a highly efficient 
  1.26  combined-cycle configuration with significantly reduced sulfur 
  2.1   dioxide, nitrogen oxide, particulate, and mercury emissions from 
  2.2   those of traditional technologies; 
  2.3      (2) that the project developer or owner certifies is a 
  2.4   project capable of offering a long-term supply contract at a 
  2.5   hedged, predictable cost; and 
  2.6      (3) that is designated by the commissioner of the iron 
  2.7   range resources and rehabilitation agency as a project that is 
  2.8   located in the tax relief area on a site that has substantial 
  2.9   real property with adequate infrastructure to support new or 
  2.10  expanded development. 
  2.11     (c) The technology utilized by an eligible project 
  2.12  constitutes an "eligible energy technology" for the purposes of 
  2.13  section 216B.1691. 
  2.14     Sec. 2.  Minnesota Statutes 2002, section 216B.2422, is 
  2.15  amended by adding a subdivision to read: 
  2.16     Subd. 8.  [REGULATORY INCENTIVES.] An eligible project: 
  2.17     (1) is granted a certificate of need under section 216B.243 
  2.18  for the generation facilities and transmission infrastructure 
  2.19  associated with the generation facilities, but are subject to 
  2.20  all applicable environmental review and permitting procedures of 
  2.21  sections 116C.51 to 116C.69; 
  2.22     (2) once permitted and constructed, is eligible to increase 
  2.23  the capacity of the associated transmission facilities without 
  2.24  additional state review upon filing notice with the public 
  2.25  utilities commission; and 
  2.26     (3) has the power of eminent domain, limited to the sites 
  2.27  and routes approved by the environmental quality board for the 
  2.28  project facilities. 
  2.29     Sec. 3.  Minnesota Statutes 2002, section 216B.2424, 
  2.30  subdivision 5, is amended to read: 
  2.31     Subd. 5.  [MANDATE.] (a) A public utility, as defined in 
  2.32  section 216B.02, subdivision 4, that operates a nuclear-powered 
  2.33  electric generating plant within this state must construct and 
  2.34  operate, purchase, or contract to construct and operate (1) by 
  2.35  December 31, 1998, 50 megawatts of electric energy installed 
  2.36  capacity generated by farm-grown closed-loop biomass scheduled 
  3.1   to be operational by December 31, 2001; and (2) by December 31, 
  3.2   1998, an additional 75 megawatts of installed capacity so 
  3.3   generated scheduled to be operational by December 31, 2002.  
  3.4      (b) Of the 125 megawatts of biomass electricity installed 
  3.5   capacity required under this subdivision, no more than 50 
  3.6   megawatts of this capacity may be provided by a facility that 
  3.7   uses poultry litter as its primary fuel source and any such 
  3.8   facility:  
  3.9      (1) need not use biomass that complies with the definition 
  3.10  in subdivision 1; 
  3.11     (2) must enter into a contract with the public utility for 
  3.12  such capacity, that has an average purchase price per megawatt 
  3.13  hour over the life of the contract that is equal to or less than 
  3.14  the average purchase price per megawatt hour over the life of 
  3.15  the contract in contracts approved by the public utilities 
  3.16  commission before April 1, 2000, to satisfy the mandate of this 
  3.17  section, and file that contract with the public utilities 
  3.18  commission prior to September 1, 2000; and 
  3.19     (3) must schedule such capacity to be operational by 
  3.20  December 31, 2002.  
  3.21     (c) Of the total 125 megawatts of biomass electric energy 
  3.22  installed capacity required under this section, no more than 75 
  3.23  megawatts may be provided by a single project.  
  3.24     (d) Of the 75 megawatts of biomass electric energy 
  3.25  installed capacity required under paragraph (a), clause (2), no 
  3.26  more than 25 megawatts of this capacity may be provided by a St. 
  3.27  Paul district heating and cooling system cogeneration facility 
  3.28  utilizing waste wood as a primary fuel source.  The St. Paul 
  3.29  district heating and cooling system cogeneration facility need 
  3.30  not use biomass that complies with the definition in subdivision 
  3.31  1.  
  3.32     (e) The public utility must accept and consider on an equal 
  3.33  basis with other biomass proposals: 
  3.34     (1) a proposal to satisfy the requirements of this section 
  3.35  that includes a project that exceeds the megawatt capacity 
  3.36  requirements of either paragraph (a), clause (1) or (2), and 
  4.1   that proposes to sell the excess capacity to the public utility 
  4.2   or to other purchasers; and 
  4.3      (2) a proposal for a new facility to satisfy more than ten 
  4.4   but not more than 20 megawatts of the electrical generation 
  4.5   requirements by a small business-sponsored independent power 
  4.6   producer facility to be located within the northern quarter of 
  4.7   the state, which means the area located north of Constitutional 
  4.8   Route No. 8 as described in section 161.114, subdivision 2, and 
  4.9   that utilizes biomass residue wood, sawdust, bark, chipped wood, 
  4.10  or brush to generate electricity.  A facility described in this 
  4.11  clause is not required to utilize biomass complying with the 
  4.12  definition in subdivision 1, but must have the capacity required 
  4.13  by this clause operational in construction by December 31, 2002 
  4.14  June 30, 2004. 
  4.15     (f) If a public utility files a contract with the 
  4.16  commission for electric energy installed capacity that uses 
  4.17  poultry litter as its primary fuel source, the commission must 
  4.18  do a preliminary review of the contract to determine if it meets 
  4.19  the purchase price criteria provided in paragraph (b), clause 
  4.20  (2), of this subdivision.  The commission shall perform its 
  4.21  review and advise the parties of its determination within 30 
  4.22  days of filing of such a contract by a public utility.  A public 
  4.23  utility may submit by September 1, 2000, a revised contract to 
  4.24  address the commission's preliminary determination.  
  4.25     (g) The commission shall finally approve, modify, or 
  4.26  disapprove no later than July 1, 2001, all contracts submitted 
  4.27  by a public utility as of September 1, 2000, to meet the mandate 
  4.28  set forth in this subdivision.  
  4.29     (h) If a public utility subject to this section exercises 
  4.30  an option to increase the generating capacity of a project in a 
  4.31  contract approved by the commission prior to April 25, 2000, to 
  4.32  satisfy the mandate in this subdivision, the public utility must 
  4.33  notify the commission by September 1, 2000, that it has 
  4.34  exercised the option and include in the notice the amount of 
  4.35  additional megawatts to be generated under the option 
  4.36  exercised.  Any review by the commission of the project after 
  5.1   exercise of such an option shall be based on the same criteria 
  5.2   used to review the existing contract. 
  5.3      (i) A facility specified in this subdivision qualifies for 
  5.4   exemption from property taxation under section 272.02, 
  5.5   subdivision 43.