HF 1036

as introduced - 90th Legislature (2017 - 2018) Posted on 02/09/2017 01:48pm

A bill for an act
relating to energy; exempting energy consumed by pipelines from the
energy-savings goals base calculation for utilities; amending Minnesota Statutes
2016, section 216B.241, subdivisions 1, 1a.

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

Section 1.

Minnesota Statutes 2016, section 216B.241, subdivision 1, is amended to read:

Subdivision 1.

Definitions.

For purposes of this section and section 216B.16, subdivision
6b, the terms defined in this subdivision have the meanings given them.

(a) "Commission" means the Public Utilities Commission.

(b) "Commissioner" means the commissioner of commerce.

(c) "Department" means the Department of Commerce.

(d) "Energy conservation" means demand-side management of energy supplies resulting
in a net reduction in energy use. Load management that reduces overall energy use is energy
conservation.

(e) "Energy conservation improvement" means a project that results in energy efficiency
or energy conservation. Energy conservation improvement may include waste heat that is
recovered and converted into electricity, but does not include electric utility infrastructure
projects approved by the commission under section 216B.1636. Energy conservation
improvement also includes waste heat recovered and used as thermal energy.

(f) "Energy efficiency" means measures or programs, including energy conservation
measures or programs, that target consumer behavior, equipment, processes, or devices
designed to produce either an absolute decrease in consumption of electric energy or natural
gas or a decrease in consumption of electric energy or natural gas on a per unit of production
basis without a reduction in the quality or level of service provided to the energy consumer.

(g) "Gross annual retail energy sales" means annual electric sales to all retail customers
in a utility's or association's Minnesota service territory or natural gas throughput to all retail
customers, including natural gas transportation customers, on a utility's distribution system
in Minnesota. For purposes of this section, gross annual retail energy sales exclude:

(1) gas sales to:

(i) a large energy facility;

(ii) a large customer facility whose natural gas utility has been exempted by the
commissioner under subdivision 1a, paragraph (b), with respect to natural gas sales made
to the large customer facility; deleted text begin and
deleted text end

(iii) a commercial gas customer facility whose natural gas utility has been exempted by
the commissioner under subdivision 1a, paragraph (c), with respect to natural gas sales
made to the commercial gas customer facility; new text begin and
new text end

new text begin (iv) a pipeline facility; new text end and

(2) electric sales to new text begin :
new text end

new text begin (i) new text end a large customer facility whose electric utility has been exempted by the commissioner
under subdivision 1a, paragraph (b), with respect to electric sales made to the large customer
facility new text begin ; and
new text end

new text begin (ii) a pipeline facility new text end .

(h) "Investments and expenses of a public utility" includes the investments and expenses
incurred by a public utility in connection with an energy conservation improvement, including
but not limited to:

(1) the differential in interest cost between the market rate and the rate charged on a
no-interest or below-market interest loan made by a public utility to a customer for the
purchase or installation of an energy conservation improvement;

(2) the difference between the utility's cost of purchase or installation of energy
conservation improvements and any price charged by a public utility to a customer for such
improvements.

(i) "Large customer facility" means all buildings, structures, equipment, and installations
at a single site that collectively (1) impose a peak electrical demand on an electric utility's
system of not less than 20,000 kilowatts, measured in the same way as the utility that serves
the customer facility measures electrical demand for billing purposes or (2) consume not
less than 500 million cubic feet of natural gas annually. In calculating peak electrical demand,
a large customer facility may include demand offset by on-site cogeneration facilities and,
if engaged in mineral extraction, may aggregate peak energy demand from the large customer
facility's mining and processing operations.

(j) "Large energy facility" has the meaning given it in section 216B.2421, subdivision
2, clause (1).

(k) "Load management" means an activity, service, or technology to change the timing
or the efficiency of a customer's use of energy that allows a utility or a customer to respond
to wholesale market fluctuations or to reduce peak demand for energy or capacity.

(l) "Low-income programs" means energy conservation improvement programs that
directly serve the needs of low-income persons, including low-income renters.

(m) new text begin "Petroleum products" has the meaning given in section 296A.01, subdivision 42,
and includes propane, as defined in section 216B.02, subdivision 3a.
new text end

new text begin (n) "Pipeline facility" means a pipeline located in Minnesota with a diameter of six
inches or greater and through which natural gas, petroleum, or petroleum products are
transported under pressure to a utility, petroleum refinery, or other wholesale customer.
Pipeline facility includes natural gas compressor stations, petroleum pumping stations, and
other facilities necessary to physically transport fuel through a pipeline to a wholesale
customer, but does not include facilities used to transport natural gas, petroleum, or petroleum
products within a petroleum refinery, storage, or manufacturing facility.
new text end

new text begin (o) new text end "Qualifying utility" means a utility that supplies the energy to a customer that enables
the customer to qualify as a large customer facility.

deleted text begin (n) deleted text end new text begin (p) new text end "Waste heat recovered and used as thermal energy" means capturing heat energy
that would otherwise be exhausted or dissipated to the environment from machinery,
buildings, or industrial processes and productively using such recovered thermal energy
where it was captured or distributing it as thermal energy to other locations where it is used
to reduce demand-side consumption of natural gas, electric energy, or both.

deleted text begin (o) deleted text end new text begin (q) new text end "Waste heat recovery converted into electricity" means an energy recovery process
that converts otherwise lost energy from the heat of exhaust stacks or pipes used for engines
or manufacturing or industrial processes, or the reduction of high pressure in water or gas
pipelines.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 2.

Minnesota Statutes 2016, section 216B.241, subdivision 1a, is amended to read:

Subd. 1a.

Investment, expenditure, and contribution; public utility.

(a) For purposes
of this subdivision and subdivision 2, "public utility" has the meaning given it in section
216B.02, subdivision 4. Each public utility shall spend and invest for energy conservation
improvements under this subdivision and subdivision 2 the following amounts:

(1) for a utility that furnishes gas service, 0.5 percent of its gross operating revenues
from service provided in the state;

(2) for a utility that furnishes electric service, 1.5 percent of its gross operating revenues
from service provided in the state; and

(3) for a utility that furnishes electric service and that operates a nuclear-powered electric
generating plant within the state, two percent of its gross operating revenues from service
provided in the state.

For purposes of this paragraph (a), "gross operating revenues" do not include revenues
from large customer facilities exempted under paragraph (b), deleted text begin or deleted text end from commercial gas
customers that are exempted under paragraph (c) or (e) new text begin , or from a customer that is a pipeline
facility new text end .

(b) The owner of a large customer facility may petition the commissioner to exempt
both electric and gas utilities serving the large customer facility from the investment and
expenditure requirements of paragraph (a) with respect to retail revenues attributable to the
large customer facility. The filing must include a discussion of the competitive or economic
pressures facing the owner of the facility and the efforts taken by the owner to identify,
evaluate, and implement energy conservation and efficiency improvements. A filing
submitted on or before October 1 of any year must be approved within 90 days and become
effective January 1 of the year following the filing, unless the commissioner finds that the
owner of the large customer facility has failed to take reasonable measures to identify,
evaluate, and implement energy conservation and efficiency improvements. If a facility
qualifies as a large customer facility solely due to its peak electrical demand or annual
natural gas usage, the exemption may be limited to the qualifying utility if the commissioner
finds that the owner of the large customer facility has failed to take reasonable measures to
identify, evaluate, and implement energy conservation and efficiency improvements with
respect to the nonqualifying utility. Once an exemption is approved, the commissioner may
request the owner of a large customer facility to submit, not more often than once every
five years, a report demonstrating the large customer facility's ongoing commitment to
energy conservation and efficiency improvement after the exemption filing. The
commissioner may request such reports for up to ten years after the effective date of the
exemption, unless the majority ownership of the large customer facility changes, in which
case the commissioner may request additional reports for up to ten years after the change
in ownership occurs. The commissioner may, within 180 days of receiving a report submitted
under this paragraph, rescind any exemption granted under this paragraph upon a
determination that the large customer facility is not continuing to make reasonable efforts
to identify, evaluate, and implement energy conservation improvements. A large customer
facility that is, under an order from the commissioner, exempt from the investment and
expenditure requirements of paragraph (a) as of December 31, 2010, is not required to
submit a report to retain its exempt status, except as otherwise provided in this paragraph
with respect to ownership changes. No exempt large customer facility may participate in a
utility conservation improvement program unless the owner of the facility submits a filing
with the commissioner to withdraw its exemption.

(c) A commercial gas customer that is not a large customer facility and that purchases
or acquires natural gas from a public utility having fewer than 600,000 natural gas customers
in Minnesota may petition the commissioner to exempt gas utilities serving the commercial
gas customer from the investment and expenditure requirements of paragraph (a) with
respect to retail revenues attributable to the commercial gas customer. The petition must be
supported by evidence demonstrating that the commercial gas customer has acquired or can
reasonably acquire the capability to bypass use of the utility's gas distribution system by
obtaining natural gas directly from a supplier not regulated by the commission. The
commissioner shall grant the exemption if the commissioner finds that the petitioner has
made the demonstration required by this paragraph.

(d) The commissioner may require investments or spending greater than the amounts
required under this subdivision for a public utility whose most recent advance forecast
required under section 216B.2422 or 216C.17 projects a peak demand deficit of 100
megawatts or greater within five years under midrange forecast assumptions.

(e) A public utility or owner of a large customer facility may appeal a decision of the
commissioner under paragraph (b), (c), or (d) to the commission under subdivision 2. In
reviewing a decision of the commissioner under paragraph (b), (c), or (d), the commission
shall rescind the decision if it finds that the required investments or spending will:

(1) not result in cost-effective energy conservation improvements; or

(2) otherwise not be in the public interest.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end