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Minnesota Legislature

Office of the Revisor of Statutes

HF 1323

3rd Engrossment - 82nd Legislature (2001 - 2002) Posted on 12/15/2009 12:00am

KEY: stricken = removed, old language.
underscored = added, new language.

Bill Text Versions

Introduction Posted on 03/01/2001
1st Engrossment Posted on 03/22/2001
2nd Engrossment Posted on 03/29/2001
3rd Engrossment Posted on 04/23/2001

Current Version - 3rd Engrossment

  1.1                          A bill for an act 
  1.2             relating to energy; authorizing creation of electric 
  1.3             generation parks emphasizing use of clean, efficient 
  1.4             energy sources; establishing Minnesota energy 
  1.5             reliability trust fund to be managed by independent 
  1.6             reliability administrator and funded by 
  1.7             electricity-consumption surcharge; providing credits 
  1.8             and incentives for generation facility construction; 
  1.9             establishing center for energy security in the 
  1.10            Humphrey Institute for Public Affairs; providing for 
  1.11            demonstration projects for burying transmission lines; 
  1.12            providing tax incentives and sales tax exemption; 
  1.13            appropriating money; amending Minnesota Statutes 2000, 
  1.14            sections 116C.52, by adding a subdivision; 116C.57, by 
  1.15            adding a subdivision; 272.027, subdivision 1, by 
  1.16            adding a subdivision; proposing coding for new law in 
  1.17            Minnesota Statutes, chapter 216B. 
  1.19     Section 1.  Minnesota Statutes 2000, section 116C.52, is 
  1.20  amended by adding a subdivision to read: 
  1.21     Subd. 3a.  [ELECTRIC GENERATION PARK.] "Electric generation 
  1.22  park" means a specially designated area for the siting and 
  1.23  construction of multiple generation facilities of various sizes. 
  1.24     Sec. 2.  Minnesota Statutes 2000, section 116C.57, is 
  1.25  amended by adding a subdivision to read: 
  1.27  PARK.] (a) A person may apply to the board for designation of a 
  1.28  site for an electric generation park.  The application must be 
  1.29  in a form and manner prescribed by the board.  The application 
  1.30  must specify the site boundaries and a general description of 
  1.31  the number, type (including fuel type), and size of facilities 
  2.1   contemplated to be constructed on site, the proposed total 
  2.2   nameplate capacity of generation to be sited in the park, and 
  2.3   transmission outlet facilities sufficient to carry that capacity.
  2.4      (b) Pursuant to sections 116C.57 to 116C.60, the board 
  2.5   shall study and evaluate any site proposed under this 
  2.6   subdivision.  The proposed site may or may not contain one or 
  2.7   more existing large electric power generating plants.  The board 
  2.8   shall indicate the reasons for any refusal and indicate changes 
  2.9   necessary to allow site designation.  Within 270 days after the 
  2.10  board's acceptance of an application under this subdivision, the 
  2.11  board shall decide in accordance with the responsibilities, 
  2.12  procedures, and considerations specified in section 116C.57, 
  2.13  subdivision 4, and the considerations in chapter 116D, which 
  2.14  proposed site is to be designated.  The board may extend for 
  2.15  just cause the time limitation for its decision for a period not 
  2.16  to exceed three months.  The board may seek an initial analysis 
  2.17  of the potential impact of the proposed park on ambient air 
  2.18  quality from the pollution control agency. 
  2.19     (c) When the board designates a site for an electric 
  2.20  generation park, it shall issue a certificate of site 
  2.21  compatibility to the person with any appropriate conditions, 
  2.22  including the maximum generation capacity allowed within the 
  2.23  park and the specific fuels and technologies that may be used in 
  2.24  the park to generate that capacity.  The board shall publish a 
  2.25  notice of its decision in the State Register within 30 days of 
  2.26  site designation.  An electric generation park may be 
  2.27  constructed only on a site designated by the board and only for 
  2.28  a park proposal for which the commission has issued a 
  2.29  certificate of need in accordance with section 216B.2431, or for 
  2.30  which an application under that section is pending. 
  2.31     (d) The board shall consider the environmental impact of 
  2.32  alternative sites for the proposed generation park and 
  2.33  alternative generation technologies to be used within the park, 
  2.34  but may not consider alternatives to the park, including the 
  2.35  "no-build" alternative, for any park proposal for which the 
  2.36  commission has issued a certificate of need under section 
  3.1   216B.2431 or for which an application under that section is 
  3.2   pending.  If the park proposer's application is denied or 
  3.3   withdrawn, the proposer must withdraw its siting application as 
  3.4   well. 
  3.5      Sec. 3.  [216B.2431] [CERTIFICATE OF NEED FOR ELECTRIC 
  3.7      Subdivision 1.  [DEFINITION; ELECTRIC GENERATION PARK.] 
  3.8   "Electric generation park" means a specially designated area for 
  3.9   the siting and construction of multiple generation facilities of 
  3.10  various sizes.  An electric generation park may contain existing 
  3.11  large energy facilities. 
  3.12     Subd. 2.  [ASSESSMENT OF NEED CRITERIA.] The commission 
  3.13  shall use the assessment of need criteria developed for use in 
  3.14  the determination of need for large energy facilities for the 
  3.15  determination of need for an electric generation park, but only 
  3.16  to the extent the commission finds the need criteria to be 
  3.17  relevant and consistent with this section. 
  3.18     Subd. 3.  [CERTIFICATE REQUIRED.] An electric generation 
  3.19  park may not be sited or constructed in Minnesota without the 
  3.20  issuance of a certificate of need by the commission pursuant to 
  3.21  this section.  A certificate of need under section 216B.243 is 
  3.22  not required for a proposed large energy generation facility to 
  3.23  be constructed within an approved electric generation park, 
  3.24  provided the proposed facility is consistent with any relevant 
  3.25  conditions imposed on approval of the park.  
  3.26     Subd. 4.  [SHOWING REQUIRED.] The commission shall issue a 
  3.27  certificate of need for a proposed electric generation park if 
  3.28  the commission finds that the applicant has met the burden 
  3.29  established under section 216B.243, as modified by subdivision 
  3.30  2, and that: 
  3.31     (1) the interconnected electric system for the state is in 
  3.32  need of additional power in excess of the proposed maximum 
  3.33  capacity of the electric generation park; 
  3.34     (2) the applicant agrees to make all locations in the park 
  3.35  available under terms and conditions that ensure comparable, 
  3.36  nondiscriminatory, and efficient access; and 
  4.1      (3) installation of the proposed maximum capacity of the 
  4.2   proposed electric generation park will not unduly stress the 
  4.3   transmission system. 
  4.5   The commission may not issue a certificate of need under this 
  4.6   section unless the applicant for the certificate has 
  4.7   demonstrated to the commission's satisfaction that it has 
  4.8   explored the possibility of generating power, to the greatest 
  4.9   extent practical and feasible, by means of fuel sources and 
  4.10  technologies in the following order of preference:  renewable 
  4.11  energy as defined in section 216B.2422, subdivision 1, including 
  4.12  the use of agricultural waste for energy generation; 
  4.13  high-efficiency, low emission sources such as combined cycle or 
  4.14  cogeneration facilities powered by natural gas or other 
  4.15  similarly clean fuel; and traditional energy sources such as 
  4.16  waste-to-energy, natural gas, coal, and nuclear facilities. 
  4.18  person proposing to construct an electric generation park shall 
  4.19  apply for a certificate of need before constructing the park.  
  4.20  The application must be on forms and in a manner established by 
  4.21  the commission.  In reviewing each application, the commission 
  4.22  shall hold at least one public hearing under chapter 14.  The 
  4.23  public hearing must be held at a location and hour reasonably 
  4.24  calculated to be convenient for the public.  An objective of the 
  4.25  public hearing must be to obtain public opinion on the necessity 
  4.26  of granting a certificate of need.  The commission shall 
  4.27  designate a commission employee to facilitate citizen 
  4.28  participation in the hearing process. 
  4.29     Subd. 7.  [APPROVAL, DENIAL, OR MODIFICATION.] Within 180 
  4.30  days of the submission of an application, the commission shall 
  4.31  approve, approve as modified, or deny a certificate of need for 
  4.32  the park.  Approval or denial of the certificate must be 
  4.33  accompanied by a statement of the reasons for the decision.  
  4.34  Issuance of the certificate may be made contingent upon 
  4.35  modifications required by the commission. 
  4.36     Subd. 8.  [APPLICATION FEES; APPROPRIATION.] (a) An 
  5.1   application for a certificate of need must be accompanied by the 
  5.2   fee required under this subdivision.  The maximum fee is 
  5.3   $........  
  5.4      (b) The commission may require an additional fee to recover 
  5.5   the costs of any rehearing.  The fee for a rehearing may not be 
  5.6   greater than the actual cost of the rehearing or the maximum fee 
  5.7   specified in paragraph (a), whichever is less.  
  5.8      (c) The commission shall establish by rule or order a 
  5.9   schedule of fees based on the output or capacity of the park and 
  5.10  the difficulty of assessment of need.  
  5.11     (d) Money collected in this manner must be credited to the 
  5.12  general fund of the state treasury. 
  5.14  SUBDIVISION.] Other state agencies authorized to issue permits 
  5.15  for siting, construction, or operation of large energy 
  5.16  facilities, and those state agencies authorized to participate 
  5.17  in matters before the commission involving utility rates and 
  5.18  adequacy of utility services, shall present their position 
  5.19  regarding need and participate in the public hearing process 
  5.20  before a certificate of need is issued or denied.  The 
  5.21  commission has the sole and exclusive prerogative to issue or 
  5.22  deny a certificate of need and these determinations and 
  5.23  certificates are binding upon other state departments and 
  5.24  agencies, upon regional, county, and local governments, and upon 
  5.25  special purpose government districts, except as provided in 
  5.26  sections 116C.01 to 116C.08 and 116D.04, subdivision 9. 
  5.27     Sec. 4.  [216B.2432] [GENERATION CREDITS; INCENTIVES.] 
  5.29  FUND.] (a) The commissioner, chair of the commission, and 
  5.30  director of state planning, acting jointly, shall establish an 
  5.31  account with a financial institution, known as the "Minnesota 
  5.32  energy reliability trust fund."  The trust fund consists of 
  5.33  amounts deposited in the fund under subdivision 4.  The funds 
  5.34  collected and deposited in the trust fund constitute trust fund 
  5.35  revenues and are not state funds.  Amounts in the fund must be 
  5.36  held in trust by the fund manager. 
  6.1      (b) The fund manager is the independent reliability 
  6.2   administrator appointed under section 216B.011.  The fund 
  6.3   manager shall monitor the amounts in the fund and shall make 
  6.4   payments from the fund according to the budget developed by the 
  6.5   commissioner and approved by the commission under subdivision 
  6.6   2.  Amounts in the fund may only be used for the purposes 
  6.7   specified in this section and only in accordance with the 
  6.8   approved budget.  
  6.10  later than August 1 of each year, the commissioner shall 
  6.11  recommend to the commission an adequate and appropriate budget 
  6.12  to implement this section.  The commission shall review the 
  6.13  budget for reasonableness and may modify the budget to the 
  6.14  extent it is unreasonable. 
  6.15     (b) Within 30 days of approving the budget, the commission 
  6.16  shall impose a nonbypassable, competitively neutral surcharge on 
  6.17  the consumption of electricity and natural gas in Minnesota.  
  6.18  The amount of the surcharge must be calculated to raise 
  6.19  sufficient revenue to implement the approved budget but may not 
  6.20  exceed $10,000,000 per year initially.  The initial surcharge is:
  6.21     (1) $0.00017 per kilowatt-hour for electricity sold to 
  6.22  end-use Minnesota customers; and 
  6.23     (2) $0.003 per thousand cubic feet for natural gas sold to 
  6.24  end-use Minnesota customers.  
  6.25  The commissioner, chair, and director may jointly act to 
  6.26  increase this surcharge proportionately, if needed to provide 
  6.27  incentive for the construction of generation to serve Minnesota 
  6.28  customers, as reflected in the commissioner's proposed budget 
  6.29  under paragraph (a).  The budget may not increase more than 
  6.30  $10,000,000 in any fiscal year and may never be more than 
  6.31  $50,000,000 annually.  
  6.32     (c) The reliability surcharge may not raise more than the 
  6.33  budgeted amount in the fiscal year.  If the surcharge raises 
  6.34  more than this amount within the fiscal year, the commission 
  6.35  shall discontinue imposing the fee until the unencumbered 
  6.36  balance of the fund falls below $4,000,000.  The commissioner 
  7.1   shall notify the commission if the unencumbered balance of the 
  7.2   reliability fund falls below $4,000,000.  The commission shall 
  7.3   reimpose the fee established in this section at the start of the 
  7.4   next fiscal year.  
  7.5      (d) The surcharge must not be considered to be part of the 
  7.6   sale price for purposes of chapter 297A and the surcharge 
  7.7   amounts collected are exempt from state and local sales and use 
  7.8   taxes. 
  7.9      Subd. 3.  [COLLECTION.] Each electric and natural gas local 
  7.10  distribution utility shall collect the surcharge established by 
  7.11  the commission under subdivision 3 and remit amounts collected 
  7.12  to the fund manager.  The fund manager shall deposit the 
  7.13  receipts in the trust fund.  The local distribution utility 
  7.14  shall show the Minnesota energy reliability surcharge as a 
  7.15  separate line item on its customers' bills. 
  7.17  The commission, by order, shall develop and issue a schedule of 
  7.18  generation construction credits to provide incentive for the 
  7.19  construction of generation facilities for service to Minnesota 
  7.20  consumers.  The schedule of generation construction credits must 
  7.21  provide one credit per megawatt of capacity of cogeneration or 
  7.22  combined cycle generation and two credits per megawatt of 
  7.23  renewable and emerging technology generation facilities.  For 
  7.24  the purposes of this section, "emerging technology generation 
  7.25  facilities" means facilities intended to demonstrate new or 
  7.26  developing technologies that produce electricity efficiently, 
  7.27  including but not limited to natural gas-powered technologies 
  7.28  such as fuel cells and small scale turbines.  Generation 
  7.29  construction credits may also be used to develop adequate 
  7.30  infrastructure in and adjacent to electric generation parks.  
  7.31     (b) Generation construction credits may only:  (1) be 
  7.32  granted by the commissioner and paid out by the fund manager as 
  7.33  necessary to provide incentive for construction; (2) for 
  7.34  construction of projects that comply with the requirements of 
  7.35  section 177.43; and (3) for electricity generated for use by 
  7.36  Minnesota retail customers. 
  8.1      (c) For ten years from the date a facility constructed 
  8.2   within an electric generation park begins to produce 
  8.3   electricity, the commissioner shall pay to the owner of a 
  8.4   generation facility in an electric generation park the amount of 
  8.5   credits agreed to by the commissioner according to the schedule 
  8.6   of generation construction credits provided under paragraph 
  8.7   (b).  The commissioner may not grant and the fund manager may 
  8.8   not pay generation construction credits for electricity that is 
  8.9   not consumed by an end-use customer in Minnesota and may require 
  8.10  any information the commissioner deems necessary from the owner 
  8.11  to ensure compliance with this section. 
  8.12     (d) Incentives for new renewable generation facilities 
  8.13  within a park may be funded from the renewable development fund 
  8.14  under section 116C.779. 
  8.15     Subd. 5.  [MERCURY EMISSIONS RESEARCH.] The commissioner 
  8.16  may transfer a portion of the annual proceeds of the reliability 
  8.17  surcharge to the commissioner of the pollution control agency 
  8.18  for one or more grants to institutions conducting research into 
  8.19  the capture or control of mercury emissions from electric 
  8.20  generation stations. 
  8.21     Subd. 6.  [CONVERSION INCENTIVES.] The commissioner may use 
  8.22  a portion of the proceeds of the reliability surcharge to 
  8.23  provide monetary incentives to the owner of a coal-fired 
  8.24  generating facility in operation as of January 1, 2001, to: 
  8.25     (1) convert existing equipment at the facility to equipment 
  8.26  that reduces air emissions from the facility beyond emissions 
  8.27  standards applicable to the facility; or 
  8.28     (2) increase the fuel efficiency of the facility, as 
  8.29  calculated using the formula given in section 272.0211, 
  8.30  subdivision 1.  Grants under this subdivision must be matched at 
  8.31  least on a dollar for dollar basis by utility funds or other 
  8.32  nonstate funds. 
  8.33     Subd. 7.  [CENTER FOR ENERGY SECURITY.] (a) The center for 
  8.34  energy security is established within the Humphrey Institute for 
  8.35  Public Affairs of the University of Minnesota.  The center may 
  8.36  be established as a nonprofit corporation under section 501(c)(3)
  9.1   of the federal Internal Revenue Code.  The commissioner, 
  9.2   commission chair, and director shall establish an annual budget 
  9.3   for the center and the fund manager shall transfer that amount 
  9.4   of the reliability surcharge to the university for the 
  9.5   administration of the center. 
  9.6      (b) The center shall research and identify present and 
  9.7   emerging issues, including adequacy of energy supply to 
  9.8   consumers in the state; energy infrastructure issues; demand and 
  9.9   delivery concerns; environmental constraints; emerging 
  9.10  energy-related technologies, fuels, and applications; energy 
  9.11  restructuring policies; and matters that affect energy prices 
  9.12  paid by Minnesota consumers.  In addition, the center shall 
  9.13  serve as an information resource and clearinghouse and advise 
  9.14  state agencies and legislators on energy policy issues affecting 
  9.15  Minnesota consumers.  The center may seek, receive, and 
  9.16  distribute gifts, grants, bequests, and other sources of revenue 
  9.17  for the purposes of energy policy research and to fulfill its 
  9.18  mission. 
  9.19     (c) The university shall hire an executive director for the 
  9.20  center that has education or experience in law; business 
  9.21  administration; federal and state government; utility and 
  9.22  environmental regulation; energy and environmental policy; and 
  9.23  the demonstrated managerial, financial, promotional, and 
  9.24  representational capabilities to enable the center to fulfill 
  9.25  its duties. 
  9.27  PROJECTS.] The commissioner may use a portion of the proceeds of 
  9.28  the reliability surcharge for up to two demonstration projects 
  9.29  for burying transmission lines.  The reliability surcharge 
  9.30  proceeds may be used to offset the costs of placing the 
  9.31  transmission line underground.  The commissioner shall report to 
  9.32  the legislature regarding the costs of the demonstration 
  9.33  projects as well as any effect on the reliability of the buried 
  9.34  line or cost of maintaining the buried line. 
  9.35     Sec. 5.  [216B.2433] [NEW ELECTRIC GENERATION PLANTS.] 
  9.36     Subdivision 1.  [QUALIFYING PROJECTS.] This section applies 
 10.1   to a project that meets the following requirements: 
 10.2      (1) the improvements consist of: 
 10.3      (i) construction of a new electric generation facility with 
 10.4   the capacity to produce 250 megawatts or more of power; or 
 10.5      (ii) substantial improvement or rehabilitation of an 
 10.6   existing electric generation facility that increases its 
 10.7   capacity by 100 megawatts or more; and 
 10.8      (2) the commissioner of commerce determines that it is 
 10.9   necessary to provide the incentives under this section to make 
 10.10  the project feasible. 
 10.11     Subd. 2.  [DURATION OF APPLICATION.] (a) The section 
 10.12  applies beginning for the first assessment year that occurs 
 10.13  after the commissioner of revenue determines that a sufficient 
 10.14  amount of the project has been completed to increase the tax 
 10.15  capacity of the site of the project by $300,000 or more. 
 10.16     (b) In approving the project, the commissioner of commerce 
 10.17  shall specify the number of assessment years for which a project 
 10.18  qualifies under this section.  In no case may this duration 
 10.19  exceed ten assessment years. 
 10.20     Subd. 3.  [INCREMENTAL TAX CAPACITY.] The commissioner of 
 10.21  revenue shall separately determine the increase in the net tax 
 10.22  capacity of a project that is attributable to construction of a 
 10.23  project qualifying under this section.  The resulting amount is 
 10.24  the "incremental tax capacity for the project" for purposes of 
 10.25  this section.  The commissioner of revenue shall certify this 
 10.26  incremental tax capacity to the county auditor for the county in 
 10.27  which the project is located and to the commissioner of commerce.
 10.28     Subd. 4.  [TAX CALCULATION.] The county auditor shall 
 10.29  exclude the incremental tax capacity of the project from the net 
 10.30  tax capacity of the local taxing districts in determining local 
 10.31  taxing district tax extension rates.  The local tax extension 
 10.32  rates determined in this manner are to be extended against the 
 10.33  incremental tax capacity of the project as well as the net tax 
 10.34  capacity of the local taxing districts. 
 10.35     Subd. 5.  [FISCAL DISPARITIES.] For projects located in 
 10.36  areas subject to the fiscal disparities provisions of chapter 
 11.1   276A or 473F, the incremental tax capacity of the project is 
 11.2   excluded from the definition of "commercial-industrial property" 
 11.3   under those chapters. 
 11.4      Subd. 6.  [PAYMENT TO COMMISSIONER OF COMMERCE.] The county 
 11.5   treasurer shall pay the tax generated by the extension of the 
 11.6   local taxing district tax rates to the incremental tax capacity 
 11.7   of the project to the commissioner of commerce for distribution 
 11.8   under this section. 
 11.9      Subd. 7.  [DEPOSIT OF REVENUES.] Tax revenues received 
 11.10  under this section are deposited in the general fund. 
 11.11     Subd. 8.  [USE OF TAX REVENUES.] The commissioner of 
 11.12  commerce shall use taxes received for a project for the 
 11.13  following purposes and in the following proportions: 
 11.14     (a) Up to 75 percent of the revenues may be used to pay the 
 11.15  developer or operator of the project as an incentive to 
 11.16  construct the project.  If, in approving the project, the 
 11.17  commissioner of commerce determines that less than 80 percent is 
 11.18  necessary for this purpose, the commissioner shall notify the 
 11.19  county of the proportion of the tax paid by the incremental tax 
 11.20  capacity to retain.  This retained amount must be distributed in 
 11.21  the manner provided under section 469.176, subdivision 2, clause 
 11.22  (4), for excess tax increments. 
 11.23     (b) Ten percent of the revenues must be deposited into an 
 11.24  account to be used by the commissioner to provide incentives for 
 11.25  development and installation of renewable generation resources. 
 11.26     (c) Ten percent of the revenues must be deposited into an 
 11.27  account and appropriated to the commissioner of economic 
 11.28  security to be used to provide assistance for conservation, 
 11.29  weatherization, and similar assistance. 
 11.30     (d) Five percent of the revenues must be paid to the 
 11.31  statutory or home rule charter city and county in which the 
 11.32  facility is constructed. 
 11.33     Subd. 9.  [APPROPRIATION.] An amount sufficient to make 
 11.34  payments under subdivision 8 is appropriated to the commissioner 
 11.35  of commerce from the general fund. 
 11.36     [EFFECTIVE DATE.] This section is effective beginning for 
 12.1   taxes payable in 2003. 
 12.2      Sec. 6.  Minnesota Statutes 2000, section 272.027, 
 12.3   subdivision 1, is amended to read: 
 12.5   SERVICES.] Personal property used to generate electric power is 
 12.6   exempt from property taxation if the electric power is used to 
 12.7   manufacture or produce goods, products, or services, other than 
 12.8   electric power, by the owner of the electric generation plant.  
 12.9   Except as provided in subdivisions 2 and, 3, and 4, the 
 12.10  exemption does not apply to property used to produce electric 
 12.11  power for sale to others and does not apply to real property.  
 12.12  In determining the value subject to tax, a proportionate share 
 12.13  of the value of the generating facilities, equal to the 
 12.14  proportion that the power sold to others bears to the total 
 12.15  generation of the plant, is subject to the general property tax 
 12.16  in the same manner as other property.  Power generated in such a 
 12.17  plant and exchanged for an equivalent amount of power that is 
 12.18  used for the manufacture or production of goods, products, or 
 12.19  services other than electric power by the owner of the 
 12.20  generating plant is considered to be used by the owner of the 
 12.21  plant. 
 12.22     Sec. 7.  Minnesota Statutes 2000, section 272.027, is 
 12.23  amended by adding a subdivision to read: 
 12.25  ELECTRICITY.] For a generation facility or natural gas peaking 
 12.26  facility constructed and placed into service after January 1, 
 12.27  2001 and that complies with the requirements of section 177.43, 
 12.28  personal property is exempt from property taxation.  This 
 12.29  exemption does not apply to transformers, transmission lines, 
 12.30  distribution lines, or any other tools, implements, and 
 12.31  machinery that is part of an electric substation, wherever 
 12.32  located.