HF 10

as introduced - 92nd Legislature (2021 - 2022) Posted on 03/01/2021 04:23pm

A bill for an act
relating to energy; establishing a Clean Energy First Act; amending Minnesota
Statutes 2020, sections 216B.16, subdivisions 6, 13; 216B.1645, subdivisions 1,
2; 216B.1691, subdivision 9; 216B.2422, subdivisions 1, 2, 3, 4, 5, by adding
subdivisions; 216E.03, subdivision 10; 216F.04.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1. new text begin TITLE.
new text end

new text begin This act may be referred to as the "Clean Energy First Act."
new text end

Sec. 2.

Minnesota Statutes 2020, section 216B.16, subdivision 6, is amended to read:

Subd. 6.

Factors considered, generally.

The commission, in the exercise of its powers
under this chapter to determine just and reasonable rates for public utilities, shall give due
consideration to the public need for adequate, efficient, and reasonable service and to the
need of the public utility for revenue sufficient to enable it to meet the cost of furnishing
the service, including adequate provision for depreciation of its utility property used and
useful in rendering service to the public, and to earn a fair and reasonable return upon the
investment in such property. In determining the rate base upon which the utility is to be
allowed to earn a fair rate of return, the commission shall give due consideration to evidence
of the cost of the property when first devoted to public use, to prudent acquisition cost to
the public utility less appropriate depreciation on each, to construction work in progress, to
offsets in the nature of capital provided by sources other than the investors, and to other
expenses of a capital nature. For purposes of determining rate base, the commission shall
consider the original cost of utility property included in the base and shall make no allowance
for its estimated current replacement value. If the commission orders a generating facility
to terminate its operations before the end of the facility's physical life in order to comply
with a specific state or federal energy deleted text begin statute or deleted text end policy, the commission may allow the public
utility to recover any positive net book value of the facility as determined by the commission.

Sec. 3.

Minnesota Statutes 2020, section 216B.16, subdivision 13, is amended to read:

Subd. 13.

Economic and community development.

The commission may allow a
public utility to recover from ratepayers the new text begin reasonable new text end expenses incurred new text begin (1) new text end for economic
and community development new text begin , and (2) to employ local workers to construct and maintain
generation facilities that supply power to the utility's customers new text end .

Sec. 4.

Minnesota Statutes 2020, section 216B.1645, subdivision 1, is amended to read:

Subdivision 1.

Commission authority.

Upon the petition of a public utility, the Public
Utilities Commission shall approve or disapprove power purchase contracts, investments,
or expenditures entered into or made by the utility to satisfy the wind and biomass mandates
contained in sections 216B.169, 216B.2423, and 216B.2424, and to satisfy the renewable
energy objectives and standards set forth in section 216B.1691, including reasonable
investments and expenditures new text begin , net of revenues, new text end made to:

(1) transmit the electricity generated from sources developed under those sections that
is ultimately used to provide service to the utility's retail customers, including studies
necessary to identify new transmission facilities needed to transmit electricity to Minnesota
retail customers from generating facilities constructed to satisfy the renewable energy
objectives and standards, provided that the costs of the studies have not been recovered
previously under existing tariffs and the utility has filed an application for a certificate of
need or for certification as a priority project under section 216B.2425 for the new
transmission facilities identified in the studies;

(2) provide storage facilities for renewable energy generation facilities that contribute
to the reliability, efficiency, or cost-effectiveness of the renewable facilities; or

(3) develop renewable energy sources from the account required in section 116C.779.

Sec. 5.

Minnesota Statutes 2020, section 216B.1645, subdivision 2, is amended to read:

Subd. 2.

Cost recovery.

The expenses incurred by the utility over the duration of the
approved contract or useful life of the investment deleted text begin and deleted text end new text begin , new text end expenditures made pursuant to section
116C.779 deleted text begin shall be deleted text end new text begin , and the expenses incurred to employ local workers to construct and
maintain generation facilities that supply power to the utility's customers are new text end recoverable
from the ratepayers of the utility deleted text begin , deleted text end to the extent deleted text begin they deleted text end new text begin the expenses or expenditures new text end are not
offset by utility revenues attributable to the contracts, investments, or expenditures new text begin , and if
the expenses or expenditures are deemed reasonable new text end . Upon petition by a public utility, the
commission shall approve or approve as modified a rate schedule providing for the automatic
adjustment of charges to recover the expenses or costs approved by the commission under
subdivision 1, which, in the case of transmission expenditures, are limited to the portion of
actual transmission costs that are directly allocable to the need to transmit power from the
renewable sources of energy. The commission may not approve recovery of the costs for
that portion of the power generated from sources governed by this section that the utility
sells into the wholesale market.

Sec. 6.

Minnesota Statutes 2020, section 216B.1691, subdivision 9, is amended to read:

Subd. 9.

Local benefits.

The commission shall take all reasonable actions within its
statutory authority to ensure this section is implemented to maximize benefits to Minnesota
citizens new text begin and local workers, as defined in section 216B.2422, subdivision 1 new text end , balancing factors
such as local ownership of or participation in energy production deleted text begin , deleted text end new text begin ; local job impacts, as
defined in section 216B.2422, subdivision 1; new text end development and ownership of eligible energy
technology facilities by independent power producers deleted text begin , deleted text end new text begin ; new text end Minnesota utility ownership of
eligible energy technology facilities deleted text begin , deleted text end new text begin ; new text end the costs of energy generation to satisfy the renewable
standard deleted text begin , deleted text end new text begin ; new text end and the reliability of electric service to Minnesotans.

Sec. 7.

Minnesota Statutes 2020, section 216B.2422, subdivision 1, is amended to read:

Subdivision 1.

Definitions.

(a) For purposes of this section, the terms defined in this
subdivision have the meanings given them.

(b) "Utility" means an entity with the capability of generating 100,000 kilowatts or more
of electric power and serving, either directly or indirectly, the needs of 10,000 retail
customers in Minnesota. Utility does not include federal power agencies.

(c) "Renewable energy" deleted text begin means electricity generated through use of any of the following
resources: deleted text end new text begin has the meaning given in section 216B.1691, subdivision 1.
new text end

deleted text begin (1) wind;
deleted text end

deleted text begin (2) solar;
deleted text end

deleted text begin (3) geothermal;
deleted text end

deleted text begin (4) hydro;
deleted text end

deleted text begin (5) trees or other vegetation;
deleted text end

deleted text begin (6) landfill gas; or
deleted text end

deleted text begin (7) predominantly organic components of wastewater effluent, sludge, or related
by-products from publicly owned treatment works, but not including incineration of
wastewater sludge.
deleted text end

(d) "Resource plan" means a set of resource options that a utility could use to meet the
service needs of its customers over a forecast period, including an explanation of the supply
and demand circumstances under which, and the extent to which, each resource option
would be used to meet those service needs. These resource options include using,
refurbishing, and constructing utility plant and equipment, buying power generated by other
entities, controlling customer loads, and implementing customer energy conservation.

(e) "Refurbish" means to rebuild or substantially modify an existing electricity generating
resource of 30 megawatts or greater.

(f) "Energy storage system" means a commercially available technology that:

(1) uses mechanical, chemical, or thermal processes to:

(i) store new text begin carbon-free or renewable new text end energy, deleted text begin including energy generated from renewable
resources and energy that would otherwise be wasted, deleted text end and deliver the stored energy for use
at a later time; or

(ii) store thermal energy for direct use for heating or cooling at a later time in a manner
that reduces the demand for electricity at the later time;

deleted text begin (2) is composed of stationary equipment;
deleted text end

deleted text begin (3) deleted text end new text begin (2) new text end if being used for electric grid benefits, is new text begin (i) new text end operationally visible new text begin to the distribution
or transmission entity managing it, new text end and new text begin (ii) new text end capable of being controlled by the distribution
or transmission entity deleted text begin managing it, deleted text end to enable and optimize the safe and reliable operation
of the electric system; and

deleted text begin (4) deleted text end new text begin (3) new text end achieves deleted text begin any of deleted text end the following:

(i) reduces peak or electrical demand;

(ii) defers the need or substitutes for an investment in electric generation, transmission,
or distribution assets;

(iii) improves the reliable operation of the electrical transmission or distribution systems deleted text begin ,
while ensuring transmission or distribution needs are not created deleted text end ; deleted text begin or deleted text end new text begin and
new text end

(iv) lowers customer costs by storing energy when the cost of generating or purchasing
deleted text begin it deleted text end new text begin energy new text end is low and delivering deleted text begin it deleted text end new text begin energy new text end to customers when the costs are high.

new text begin (g) "Clean energy resource" means: (1) renewable energy, an energy storage system
using renewable energy resources and energy efficiency, and load management, as defined
in section 216B.241, subdivision 1; or (2) a carbon-free resource, as defined under paragraph
(h) and as determined by the commission under subdivision 4, paragraph (g).
new text end

new text begin (h) "Carbon-free resource" means a generation technology that, when operating, does
not contribute to statewide greenhouse gas emissions, as defined in section 216H.01,
subdivision 2.
new text end

new text begin (i) "Nonrenewable energy facility" means a generation facility that does not use a
renewable energy or other clean energy resource. Nonrenewable facility does not include
a nuclear facility.
new text end

new text begin (j) "Local job impacts" means the impacts of a certificate of need, a power purchase
agreement, or commission approval of a new or refurbished energy facility on the availability
of construction employment opportunities to local workers.
new text end

new text begin (k) "Local workers" means workers employed to construct and maintain energy
infrastructure that are Minnesota residents, residents of the utility's service territory, or who
permanently reside within 150 miles of a proposed new or refurbished energy facility.
new text end

Sec. 8.

Minnesota Statutes 2020, section 216B.2422, subdivision 2, is amended to read:

Subd. 2.

Resource plan filing and approval.

(a) A utility shall file a resource plan with
the commission periodically in accordance with rules adopted by the commission. The
commission shall approve, reject, or modify the plan of a public utility, as defined in section
216B.02, subdivision 4, consistent with the public interest.

(b) In the resource plan proceedings of all other utilities, the commission's order shall
be advisory and the order's findings and conclusions shall constitute prima facie evidence
which may be rebutted by substantial evidence in all other proceedings. With respect to
utilities other than those defined in section 216B.02, subdivision 4, the commission shall
consider the filing requirements and decisions in any comparable proceedings in another
jurisdiction.

(c) As a part of its resource plan filing, a utility shall include the least cost plan for
meeting 50 deleted text begin and deleted text end new text begin , new text end 75 new text begin , and 100 new text end percent of all energy needs from both new and refurbished
generating facilities through a combination of deleted text begin conservation and renewable deleted text end new text begin clean new text end energy new text begin and
carbon-free new text end resources.

Sec. 9.

Minnesota Statutes 2020, section 216B.2422, subdivision 3, is amended to read:

Subd. 3.

Environmental costs.

deleted text begin (a) deleted text end The commission shall, to the extent practicable,
quantify and establish a range of environmental costs associated with each method of
electricity generation. A utility shall use the values established by the commission in
conjunction with other external factors, including socioeconomic costs, when evaluating
and selecting resource options in all proceedings before the commission, including new text begin for power
purchase agreement, new text end resource plan new text begin , new text end and certificate of need proceedings. new text begin When evaluating
resource options, the commission must include and consider the environmental cost values
adopted under this subdivision. When considering the costs of a nonrenewable energy
facility under this section, the commission must consider only nonzero values for the
environmental costs that must be analyzed under this subdivision, including both the low
and high values of any cost range adopted by the commission.
new text end

deleted text begin (b) The commission shall establish interim environmental cost values associated with
each method of electricity generation by March 1, 1994. These values expire on the date
the commission establishes environmental cost values under paragraph (a).
deleted text end

Sec. 10.

Minnesota Statutes 2020, section 216B.2422, is amended by adding a subdivision
to read:

new text begin Subd. 3a. new text end

new text begin Favored electric resources; state policy. new text end

new text begin It is the policy of the state that: (1)
in order to hasten the achievement of the greenhouse gas reduction goals under section
216H.02, the renewable energy standard under section 216B.1691, subdivision 2a, and the
solar energy standard under section 216B.1691, subdivision 2f; and (2) given the significant
and continuing reductions in the cost of wind technologies, solar technologies, energy
storage systems, and demand-response technologies, the favored method to meet electricity
demand in Minnesota is a combination of clean energy resources.
new text end

Sec. 11.

Minnesota Statutes 2020, section 216B.2422, subdivision 4, is amended to read:

Subd. 4.

Preference for deleted text begin renewable deleted text end new text begin clean new text end energy deleted text begin facility deleted text end new text begin resources new text end .

new text begin (a) new text end The commission
shall not approve a new or refurbished nonrenewable energy facility in deleted text begin an integrated resource
plan or deleted text end a certificate of need deleted text begin , deleted text end pursuant to section 216B.243, nor shall the commission new text begin approve
a power purchase agreement or new text end allow rate recovery pursuant to section 216B.16 for deleted text begin such deleted text end a
nonrenewable energy facility, unless the utility has demonstrated new text begin by clear and convincing
evidence new text end that a renewable energy facility new text begin , alone or in combination with other clean energy
resources, new text end is not in the public interest. deleted text begin When making the public interest determination, the
commission must consider:
deleted text end

deleted text begin (1) whether the resource plan helps the utility achieve the greenhouse gas reduction
goals under section 216H.02, the renewable energy standard under section 216B.1691, or
the solar energy standard under section 216B.1691, subdivision 2f;
deleted text end

deleted text begin (2) impacts on local and regional grid reliability;
deleted text end

deleted text begin (3) utility and ratepayer impacts resulting from the intermittent nature of renewable
energy facilities, including but not limited to the costs of purchasing wholesale electricity
in the market and the costs of providing ancillary services; and
deleted text end

deleted text begin (4) utility and ratepayer impacts resulting from reduced exposure to fuel price volatility,
changes in transmission costs, portfolio diversification, and environmental compliance
costs.
deleted text end

new text begin (b) In order to find that a renewable energy facility, alone or in combination with other
clean energy resources, is not in the public interest, the commission must find by clear and
convincing evidence that using renewable or clean energy resources to meet the need for
resources is not affordable or reliable.
new text end

new text begin (c) In order to determine whether a renewable or clean energy resource is affordable,
the commission must consider utility and ratepayer effects resulting from:
new text end

new text begin (1) the intermittent nature of renewable energy facilities, including but not limited to
the cost to purchase wholesale electricity in the market and the cost to provide ancillary
services;
new text end

new text begin (2) reduced exposure to fuel price volatility, changes in transmission and distribution
costs, portfolio diversification, and environmental compliance costs; and
new text end

new text begin (3) other environmental costs resulting from a nonrenewable energy facility, as determined
by the commission under subdivision 3.
new text end

new text begin (d) In order to determine whether a renewable or clean energy resource is reliable, the
commission must consider, to the extent reasonable, the ability of the proposed energy
resources or facilities to provide essential reliability services, including frequency response,
balancing services, and voltage control.
new text end

new text begin (e) When considering the costs of a nonrenewable energy facility under this section, the
commission must consider only nonzero values for the environmental costs that must be
analyzed under subdivision 3, including both the low and high values of any cost range
adopted by the commission.
new text end

new text begin (f) The commission must make a written determination describing its findings and
conclusions regarding whether a renewable or clean energy resource is affordable and
reliable under this subdivision. The commission must also make a written determination as
to whether the energy resources approved by the commission:
new text end

new text begin (1) help the state achieve the greenhouse gas reduction goals under section 216H.02;
and
new text end

new text begin (2) help the utility achieve the renewable energy standard under section 216B.1691 or
the solar energy standard under section 216B.1691, subdivision 2f.
new text end

new text begin (g) Nothing in this section impacts a decision to continue operating a nuclear facility
that is generating energy in Minnesota as of June 1, 2019. If a decision is made to retire an
existing nuclear unit, the process in paragraphs (a) to (c) applies to the process to identify
replacement resources.
new text end

new text begin (h) The commission may, by order, add to the list of resources it determines are clean
energy resources for the purposes of this section upon a determination that the resource is
carbon free and cost competitive when compared with other carbon-free alternatives.
new text end

new text begin (i) If the commission approves a resource plan that includes the retirement of a
carbon-emitting resource owned by a public utility, the public utility is entitled to own at
least a portion of the generation, transmission, and other facilities necessary to replace the
accredited capacity and energy of the retiring facility, provided:
new text end

new text begin (1) the resource plan of the public utility with more than 200,000 retail electric customers
in Minnesota results in an 80 percent or greater reduction in carbon emissions from 2005
levels by the year 2030 and thereafter;
new text end

new text begin (2) the resource plan of the public utility with between 50,000 and 200,000 retail electric
customers in Minnesota results in a 65 percent reduction in carbon emissions from 2005
levels by the year 2030 and thereafter;
new text end

new text begin (3) each public utility demonstrates that the public utility's ownership of replacement
resources is reasonably in the public interest, considering customer impacts and benefits;
and
new text end

new text begin (4) the commission determines that the public utility's ownership of needed replacement
resources is reasonable and in the public interest, considering customer impacts and benefits
compared to alternatives.
new text end

Sec. 12.

Minnesota Statutes 2020, section 216B.2422, is amended by adding a subdivision
to read:

new text begin Subd. 4a. new text end

new text begin Preference for local job creation. new text end

new text begin As a part of a resource plan filing, a utility
must report on associated local job impacts and the steps the utility and the utility's energy
suppliers and contractors are taking to maximize the availability of construction employment
opportunities for local workers. The commission must consider local job impacts and give
preference to proposals that maximize the creation of construction employment opportunities
for local workers, consistent with the public interest, when evaluating any utility proposal
that involves the selection or construction of facilities used to generate or deliver energy to
serve the utility's customers, including but not limited to an integrated resource plan, a
certificate of need, a power purchase agreement, or commission approval of a new or
refurbished electric generation facility. The commission must, to the maximum extent
possible, prioritize the hiring of workers from communities hosting retiring power plants.
new text end

Sec. 13.

Minnesota Statutes 2020, section 216B.2422, subdivision 5, is amended to read:

Subd. 5.

Bidding; exemption from certificate of need proceeding.

(a) A utility may
select resources to meet its projected energy demand through a bidding process approved
or established by the commission. A utility shall use the environmental cost estimates
determined under subdivision 3 deleted text begin in deleted text end new text begin and consider local job impacts when new text end evaluating bids
submitted in a process established under this subdivision.

(b) Notwithstanding any other provision of this section, if an electric power generating
plant, as described in section 216B.2421, subdivision 2, clause (1), is selected in a bidding
process approved or established by the commission, a certificate of need proceeding under
section 216B.243 is not required.

(c) A certificate of need proceeding is also not required for an electric power generating
plant that has been selected in a bidding process approved or established by the commission,
or such other selection process approved by the commission, to satisfy, in whole or in part,
the wind power mandate of section 216B.2423 or the biomass mandate of section 216B.2424.

Sec. 14.

Minnesota Statutes 2020, section 216B.2422, is amended by adding a subdivision
to read:

new text begin Subd. 8. new text end

new text begin Transmission planning in advance of generation retirement. new text end

new text begin A utility must
identify in a resource plan each nonrenewable resource on the utility's system that has a
depreciation term, probable service life, or operating license term that ends within 15 years
of the resource plan filing date. For each resource identified, the utility must include in the
resource plan an initial plan to (1) replace the resource if retired, and (2) upgrade any
transmission or other grid capabilities needed to support the retirement of that resource.
new text end

Sec. 15.

Minnesota Statutes 2020, section 216E.03, subdivision 10, is amended to read:

Subd. 10.

Final decision.

(a) No site permit shall be issued in violation of the site
selection standards and criteria established in this section and in rules adopted by the
commission. When the commission designates a site, it shall issue a site permit to the
applicant with any appropriate conditions. The commission shall publish a notice of its
decision in the State Register within 30 days of issuance of the site permit.

(b) No route permit shall be issued in violation of the route selection standards and
criteria established in this section and in rules adopted by the commission. When the
commission designates a route, it shall issue a permit for the construction of a high-voltage
transmission line specifying the design, routing, right-of-way preparation, and facility
construction it deems necessary, and with any other appropriate conditions. The commission
may order the construction of high-voltage transmission line facilities that are capable of
expansion in transmission capacity through multiple circuiting or design modifications. The
commission shall publish a notice of its decision in the State Register within 30 days of
issuance of the permit.

new text begin (c) The commission may require, as a condition of permit issuance, that the recipient of
a site permit to construct a large electric power generating plant and all of the permit
recipient's construction contractors and subcontractors on the project pay no less than the
prevailing wage rate, as defined in section 177.42. The commission may also require, as a
condition of modifying a site permit for a large electric power generating plant repowering
project as defined in section 216B.243, subdivision 8, paragraph (b), that the recipient of
the site permit and all of the permit recipient's construction contractors and subcontractors
on the repowering project pay no less than the prevailing wage rate, as defined in section
177.42. When deciding whether to require payment of no less than the prevailing wage rate
under this paragraph, the commission must consider relevant factors, including the direct
and indirect economic impact as well as the quality, efficiency, and safety of construction.
new text end

Sec. 16.

Minnesota Statutes 2020, section 216F.04, is amended to read:

216F.04 SITE PERMIT.

(a) No person may construct an LWECS without a site permit issued by the Public
Utilities Commission.

(b) Any person seeking to construct an LWECS shall submit an application to the
commission for a site permit in accordance with this chapter and any rules adopted by the
commission. The permitted site need not be contiguous land.

(c) The commission shall make a final decision on an application for a site permit for
an LWECS within 180 days after acceptance of a complete application by the commission.
The commission may extend this deadline for cause.

(d) The commission may place conditions in a permit and may deny, modify, suspend,
or revoke a permit.

new text begin (e) The commission may require, as a condition of permit issuance, that the recipient of
a site permit to construct an LWECS with a nameplate capacity above 25,000 kilowatts and
all of the permit recipient's construction contractors and subcontractors on the project pay
no less than the prevailing wage rate, as defined in section 177.42. The commission may
also require, as a condition of modifying a site permit for an LWECS repowering project
as defined in section 216B.243, subdivision 8, paragraph (b), that the recipient of the site
permit and all of the permit recipient's construction contractors and subcontractors on the
repowering project pay no less than the prevailing wage rate as defined in section 177.42.
When deciding whether to require payment of no less than the prevailing wage rate under
this paragraph, the commission must consider relevant factors, including the direct and
indirect economic impact as well as the quality, efficiency, and safety of construction.
new text end

Sec. 17. new text begin EFFECTIVE DATE.
new text end

new text begin This act is effective August 1, 2021, and applies to dockets initiated at the Public Utilities
Commission on or after that date.
new text end