HF 1323

as introduced - 82nd Legislature (2001 - 2002) Posted on 12/15/2009 12:00am

  1.1                          A bill for an act 
  1.2             relating to energy; enacting the Minnesota Energy 
  1.3             Security and Reliability Act; modifying provisions for 
  1.4             siting and routing large electric power facilities; 
  1.5             allowing for establishment of electric generation 
  1.6             parks; creating independent reliability administrator; 
  1.7             providing tax exemption for certain electric 
  1.8             generation facility property; regulating conservation 
  1.9             expenditures by public utilities; encouraging 
  1.10            regulatory flexibility in supplying and obtaining 
  1.11            energy; requiring a state energy plan; regulating 
  1.12            interconnection of distributed utility resources; 
  1.13            making technical, conforming, and clarifying changes; 
  1.14            appropriating money; amending Minnesota Statutes 2000, 
  1.15            sections 15A.0815, subdivisions 2 and 3; 116C.52, 
  1.16            subdivision 4, and by adding subdivisions; 116C.53, 
  1.17            subdivision 3; 116C.57, subdivisions 1, 2, 4, and by 
  1.18            adding subdivisions; 116C.58; 116C.60; 116C.61, 
  1.19            subdivision 1; 116C.62; 116C.64; 116C.645; 116C.65; 
  1.20            116C.66; 116C.69; 216A.03, subdivision 3a, and by 
  1.21            adding a subdivision; 216B.02, subdivisions 1, 7, 8, 
  1.22            and by adding subdivisions; 216B.03; 216B.16, 
  1.23            subdivisions 1, 6b, 6c, and 7; 216B.162, subdivision 
  1.24            8; 216B.1621, subdivision 2; 216B.164, subdivision 4; 
  1.25            216B.1645; 216B.24, subdivisions 1, 2, and 3; 
  1.26            216B.241, subdivisions 1, 1a, 1b, and by adding 
  1.27            subdivisions; 216B.2421, subdivisions 1, 2, and by 
  1.28            adding a subdivision; 216B.2423, subdivision 2; 
  1.29            216B.243, subdivisions 2, 3, and 5; 216C.17, 
  1.30            subdivision 3; and 272.027, subdivision 1, and by 
  1.31            adding a subdivision; proposing coding for new law in 
  1.32            Minnesota Statutes, chapters 116C; and 216B; proposing 
  1.33            coding for new law as Minnesota Statutes, chapter 
  1.34            216E; repealing Minnesota Statutes 2000, sections 
  1.35            116C.55; 116C.57, subdivisions 3, 5, and 5a; 116C.67; 
  1.36            216B.241, subdivisions 1c, 2, and 2a; 216B.2422, 
  1.37            subdivisions 1, 2, 2a, 4, 5, and 6; and 216C.18. 
  1.38  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.39                             ARTICLE 1
  1.40                  ESSENTIAL ENERGY INFRASTRUCTURE
  1.41     Section 1.  [TITLE.] 
  2.1      This act shall be known as the Minnesota Energy Security 
  2.2   and Reliability Act. 
  2.3      Sec. 2.  Minnesota Statutes 2000, section 116C.52, is 
  2.4   amended by adding a subdivision to read: 
  2.5      Subd. 2a.  [COMMISSIONER.] "Commissioner" means the 
  2.6   commissioner of the pollution control agency. 
  2.7      Sec. 3.  Minnesota Statutes 2000, section 116C.52, is 
  2.8   amended by adding a subdivision to read: 
  2.9      Subd. 3a.  [ELECTRIC GENERATION PARK.] "Electric generation 
  2.10  park" means a specially designated area for the siting and 
  2.11  construction of multiple generation facilities of various sizes. 
  2.12     Sec. 4.  Minnesota Statutes 2000, section 116C.52, 
  2.13  subdivision 4, is amended to read: 
  2.14     Subd. 4.  [HIGH VOLTAGE TRANSMISSION LINE.] "High voltage 
  2.15  transmission line" means a conductor of electric energy and 
  2.16  associated facilities designed for and capable of operation at a 
  2.17  nominal voltage of 200 100 kilovolts or more, except that the 
  2.18  board, by rule, may exempt lines pursuant to section 116C.57, 
  2.19  subdivision 5. 
  2.20     Sec. 5.  Minnesota Statutes 2000, section 116C.53, 
  2.21  subdivision 3, is amended to read: 
  2.22     Subd. 3.  [INTERSTATE ROUTES.] (a) If a route is proposed 
  2.23  in two or more states, the board shall attempt to reach 
  2.24  agreement with affected states on the entry and exit points 
  2.25  prior to authorizing the construction of the route. The board, 
  2.26  in discharge of its duties pursuant to sections 116C.51 to 
  2.27  116C.69 may make joint investigations, hold joint hearings 
  2.28  within or without the state, and issue joint or concurrent 
  2.29  orders in conjunction or concurrence with any official or agency 
  2.30  of any state or of the United States.  The board may negotiate 
  2.31  and enter into any agreements or compacts with agencies of other 
  2.32  states, pursuant to any consent of Congress, for cooperative 
  2.33  efforts in certifying the construction, operation, and 
  2.34  maintenance of large electric power facilities in accord with 
  2.35  the purposes of sections 116C.51 to 116C.69 and for the 
  2.36  enforcement of the respective state laws regarding such these 
  3.1   facilities. 
  3.2      (b) The board may not issue a route permit for the 
  3.3   Minnesota portion of an interstate high voltage transmission 
  3.4   line unless the applicant has received a certificate of need 
  3.5   from the public utilities commission or been placed on the 
  3.6   public project list established under section 216E.08. 
  3.7      Sec. 6.  Minnesota Statutes 2000, section 116C.57, 
  3.8   subdivision 1, is amended to read: 
  3.9      Subdivision 1.  [DESIGNATION OF SITES SUITABLE FOR SPECIFIC 
  3.10  FACILITIES; REPORTS SITE PERMIT.] A utility must apply to the 
  3.11  board in a form and manner prescribed by the board for 
  3.12  designation of a specific site for a specific size and type of 
  3.13  facility.  The application shall contain at least two proposed 
  3.14  sites.  In the event a utility proposes a site not included in 
  3.15  the board's inventory of study areas, the utility shall specify 
  3.16  the reasons for the proposal and shall make an evaluation of the 
  3.17  proposed site based upon the planning policies, criteria and 
  3.18  standards specified in the inventory.  Pursuant to sections 
  3.19  116C.57 to 116C.60, the board shall study and evaluate any site 
  3.20  proposed by a utility and any other site the board deems 
  3.21  necessary which was proposed in a manner consistent with rules 
  3.22  adopted by the board concerning the form, content, and 
  3.23  timeliness of proposals for alternate sites.  No site 
  3.24  designation shall be made in violation of the site selection 
  3.25  standards established in section 116C.55.  The board shall 
  3.26  indicate the reasons for any refusal and indicate changes in 
  3.27  size or type of facility necessary to allow site designation. 
  3.28  Within a year after the board's acceptance of a utility's 
  3.29  application, the board shall decide in accordance with the 
  3.30  criteria specified in section 116C.55, subdivision 2, the 
  3.31  responsibilities, procedures and considerations specified in 
  3.32  section 116C.57, subdivision 4, and the considerations in 
  3.33  chapter 116D which proposed site is to be designated.  The board 
  3.34  may extend for just cause the time limitation for its decision 
  3.35  for a period not to exceed six months.  When the board 
  3.36  designates a site, it shall issue a certificate of site 
  4.1   compatibility to the utility with any appropriate conditions.  
  4.2   The board shall publish a notice of its decision in the State 
  4.3   Register within 30 days of site designation.  (a) No person may 
  4.4   construct a large electric power generating plant shall be 
  4.5   constructed except on without a site designated by permit from 
  4.6   the board.  A large electric generating plant may be constructed 
  4.7   only on either (1) a site approved by the board or (2) a site 
  4.8   designated by a local siting authority using substantially 
  4.9   similar terms, conditions, procedures, and standards imposed and 
  4.10  used by the board. 
  4.11     (b) Notwithstanding paragraph (a), a site permit is not 
  4.12  needed to construct a facility in an approved electric 
  4.13  generation park. 
  4.14     Sec. 7.  Minnesota Statutes 2000, section 116C.57, is 
  4.15  amended by adding a subdivision to read: 
  4.16     Subd. 1a.  [DESIGNATION OF SITE FOR ELECTRIC GENERATION 
  4.17  PARK.] (a) A person may apply to the board for designation of a 
  4.18  site for an electric generation park.  The application must be 
  4.19  in a form and manner prescribed by the board.  The application 
  4.20  must specify the site boundaries and a general description of 
  4.21  the number, type, and size of facilities contemplated to be 
  4.22  constructed on site, and the proposed total nameplate capacity 
  4.23  of generation to be sited in the park. 
  4.24     (b) Pursuant to sections 116C.57 to 116C.60, the board 
  4.25  shall study and evaluate any site proposed under this 
  4.26  subdivision.  The proposed site may or may not contain one or 
  4.27  more existing large electric power generating plants.  The board 
  4.28  shall indicate the reasons for any refusal and indicate changes 
  4.29  necessary to allow site designation.  Within 270 days after the 
  4.30  board's acceptance of an application under this subdivision, the 
  4.31  board shall decide in accordance with the responsibilities, 
  4.32  procedures, and considerations specified in section 116C.57, 
  4.33  subdivision 4, and the considerations in chapter 116D which 
  4.34  proposed site is to be designated.  The board may extend for 
  4.35  just cause the time limitation for its decision for a period not 
  4.36  to exceed three months.  The board may seek an initial analysis 
  5.1   of the potential impact of the proposed park on ambient air 
  5.2   quality from the pollution control agency. 
  5.3      (c) When the board designates a site for an electric 
  5.4   generation park, it shall issue a certificate of site 
  5.5   compatibility to the person with any appropriate conditions, 
  5.6   including the maximum generation capacity allowed within the 
  5.7   park.  The board shall publish a notice of its decision in the 
  5.8   State Register within 30 days of site designation.  An electric 
  5.9   generation park may be constructed only on a site designated by 
  5.10  the board. 
  5.11     (d) If the board has not granted any application for 
  5.12  designation of a site for an electric generation park by January 
  5.13  1, 2003, the commissioner of commerce may develop and submit an 
  5.14  application under this subdivision.  On receiving approvals 
  5.15  under this section and section 216B.2431, the commissioner shall 
  5.16  solicit bids from owners, operators, and developers of electric 
  5.17  generation facilities for the construction of generation 
  5.18  facilities within the approved park. 
  5.19     (e) The board may only consider the environmental impact of 
  5.20  alternative sites for the proposed generation park, but may not 
  5.21  consider alternatives to the park, including the "no-build" 
  5.22  alternative, for any park proposal for which the commission has 
  5.23  issued a certificate of need under section 216B.2431 or for 
  5.24  which an application under that section is pending.  If the park 
  5.25  proposer's application is denied or withdrawn, the proposer must 
  5.26  withdraw its siting application as well. 
  5.27     Sec. 8.  Minnesota Statutes 2000, section 116C.57, 
  5.28  subdivision 2, is amended to read: 
  5.29     Subd. 2.  [DESIGNATION OF ROUTES; PROCEDURE ROUTE PERMIT.] 
  5.30  A utility shall apply to the board in a form and manner 
  5.31  prescribed by the board for a permit for the construction of a 
  5.32  high voltage transmission line.  The application shall contain 
  5.33  at least two proposed routes.  Pursuant to sections 116C.57 to 
  5.34  116C.60, the board shall study, and evaluate the type, design, 
  5.35  routing, right-of-way preparation and facility construction of 
  5.36  any route proposed in a utility's application and any other 
  6.1   route the board deems necessary which was proposed in a manner 
  6.2   consistent with rules adopted by the board concerning the form, 
  6.3   content, and timeliness of proposals for alternate routes 
  6.4   provided, however, that the board shall identify the alternative 
  6.5   routes prior to the commencement of public hearings thereon 
  6.6   pursuant to section 116C.58.  Within one year after the board's 
  6.7   acceptance of a utility's application, the board shall decide in 
  6.8   accordance with the criteria and standards specified in section 
  6.9   116C.55, subdivision 2, and the considerations specified in 
  6.10  section 116C.57, subdivision 4, which proposed route is to be 
  6.11  designated.  The board may extend for just cause the time 
  6.12  limitation for its decision for a period not to exceed 90 days.  
  6.13  When the board designates a route, it shall issue a permit for 
  6.14  the construction of a high voltage transmission line specifying 
  6.15  the type, design, routing, right-of-way preparation and facility 
  6.16  construction it deems necessary and with any other appropriate 
  6.17  conditions.  The board may order the construction of high 
  6.18  voltage transmission line facilities which are capable of 
  6.19  expansion in transmission capacity through multiple circuiting 
  6.20  or design modifications.  The board shall publish a notice of 
  6.21  its decision in the state register within 30 days of issuance of 
  6.22  the permit.  (a) No person may construct a high voltage 
  6.23  transmission line shall be constructed except on without a route 
  6.24  designated by permit from the board, unless it was exempted 
  6.25  pursuant to subdivision 5.  A high voltage transmission line may 
  6.26  be constructed only along a route approved by the board. 
  6.27     (b) Notwithstanding paragraph (a) and at the request of the 
  6.28  project developer, a high voltage transmission line of between 
  6.29  100 and 200 kilovolts may be permitted and routed by a local 
  6.30  routing authority. 
  6.31     Sec. 9.  Minnesota Statutes 2000, section 116C.57, is 
  6.32  amended by adding a subdivision to read: 
  6.33     Subd. 2a.  [APPLICATION.] (a) A person seeking to construct 
  6.34  a large electric power generating plant or a high voltage 
  6.35  transmission line shall apply to the board for a site permit or 
  6.36  route permit.  The application must contain any information 
  7.1   required by the board. 
  7.2      (b) The applicant shall propose at least two sites for a 
  7.3   large electric power generating plant and two routes for a high 
  7.4   voltage transmission line. 
  7.5      (c) The chair of the board shall determine whether an 
  7.6   application is complete and advise the applicant of any 
  7.7   deficiencies. 
  7.8      Sec. 10.  Minnesota Statutes 2000, section 116C.57, is 
  7.9   amended by adding a subdivision to read: 
  7.10     Subd. 2b.  [NOTICE OF APPLICATION.] Within 15 days after 
  7.11  submitting an application to the board, the applicant shall 
  7.12  publish notice of the application in a legal newspaper of 
  7.13  general circulation in each county in which the site or route is 
  7.14  proposed and send a copy of the application by certified mail to 
  7.15  any regional development commission, county, incorporated 
  7.16  municipality, and town in which the site or route is proposed.  
  7.17  Within the same 15 days, the applicant shall also send a notice 
  7.18  of the submission of the application and description of the 
  7.19  proposed project to each owner whose property is adjacent to any 
  7.20  of the proposed sites for the power plant or along any of the 
  7.21  proposed routes for the transmission line.  The notice must 
  7.22  identify a location where a copy of the application can be 
  7.23  reviewed.  For the purpose of giving mailed notice under this 
  7.24  subdivision, owners are those shown on the records of the county 
  7.25  auditor or, in any county where tax statements are mailed by the 
  7.26  county treasurer, on the records of the county treasurer, but 
  7.27  other appropriate records may be used for this purpose.  The 
  7.28  failure to give mailed notice to a property owner, or defects in 
  7.29  the notice, does not invalidate the proceedings, provided a bona 
  7.30  fide attempt to comply with this subdivision has been made.  
  7.31  Within the same 15 days, the applicant shall also send the same 
  7.32  notice of the submission of the application and description of 
  7.33  the proposed project to those persons who have requested to be 
  7.34  placed on a list maintained by the board for receiving notice of 
  7.35  proposed large electric generating power plants and high voltage 
  7.36  transmission lines. 
  8.1      Sec. 11.  Minnesota Statutes 2000, section 116C.57, is 
  8.2   amended by adding a subdivision to read: 
  8.3      Subd. 2c.  [ENVIRONMENTAL REVIEW.] (a) After a complete 
  8.4   application has been submitted, an environmental impact 
  8.5   statement must be prepared (1) by the commissioner of the 
  8.6   pollution control agency for each proposed large electric 
  8.7   generating plant or (2) by the board for each proposed high 
  8.8   voltage transmission line.  
  8.9      (b) Neither the commissioner nor the board shall consider 
  8.10  the no-build alternative for any project that is (1) required to 
  8.11  have a certificate of need from the public utilities commission 
  8.12  or (2) either on the list of public purpose projects or has been 
  8.13  requested to be added to the list by the project proposer under 
  8.14  section 216E.12. 
  8.15     (c) No other state environmental review documents are 
  8.16  required.  
  8.17     (d) The commissioner shall study and evaluate any site or 
  8.18  route proposed by an applicant and any other site or route the 
  8.19  commissioner deems necessary that was proposed in a manner 
  8.20  consistent with rules adopted by the board concerning the form, 
  8.21  content, and timeliness of proposals for alternate sites or 
  8.22  routes. 
  8.23     Sec. 12.  Minnesota Statutes 2000, section 116C.57, is 
  8.24  amended by adding a subdivision to read: 
  8.25     Subd. 2d.  [PUBLIC HEARING.] The board and the independent 
  8.26  reliability administrator shall hold a joint public hearing on 
  8.27  an application for a site permit for a large electric power 
  8.28  generating plant or a route permit for a high voltage 
  8.29  transmission line.  A hearing held for designating a site or 
  8.30  route must be conducted by an administrative law judge from the 
  8.31  office of administrative hearings under the contested case 
  8.32  procedures of chapter 14.  Notice of the hearing must be given 
  8.33  by the board at least ten days in advance but no earlier than 45 
  8.34  days prior to the commencement of the hearing.  Notice must be 
  8.35  by publication in a legal newspaper of general circulation in 
  8.36  the county in which the public hearing is to be held and by 
  9.1   certified mail to chief executives of the regional development 
  9.2   commissions, counties, organized towns, townships, and the 
  9.3   incorporated municipalities in which a site or route is 
  9.4   proposed.  A person may appear at the hearing and offer 
  9.5   testimony and exhibits without the necessity of intervening as a 
  9.6   formal party to the proceeding.  The administrative law judge 
  9.7   may allow a person to ask questions of other witnesses.  The 
  9.8   administrative law judge shall hold a portion of the hearing in 
  9.9   the area where the power plant or transmission line is proposed 
  9.10  to be located. 
  9.11     Sec. 13.  Minnesota Statutes 2000, section 116C.57, 
  9.12  subdivision 4, is amended to read: 
  9.13     Subd. 4.  [CONSIDERATIONS IN DESIGNATING SITES AND 
  9.14  ROUTES.] (a) To facilitate the study, research, evaluation, and 
  9.15  designation of sites and routes, the board and the commissioner 
  9.16  shall be guided by, but not limited to, the following 
  9.17  responsibilities, procedures, and considerations: 
  9.18     (1) evaluation of research and investigations relating to 
  9.19  the effects on land, water, and air resources of large electric 
  9.20  power generating plants and high voltage transmission line 
  9.21  routes and the effects of water and air discharges and electric 
  9.22  fields resulting from such facilities on public health and 
  9.23  welfare, vegetation, animals, materials, and aesthetic values, 
  9.24  including base line studies, predictive modeling, and monitoring 
  9.25  of the water and air mass at proposed and operating sites and 
  9.26  routes, evaluation of new or improved methods for minimizing 
  9.27  adverse impacts of water and air discharges and other matters 
  9.28  pertaining to the effects of power plants on the water and air 
  9.29  environment; 
  9.30     (2) environmental evaluation of sites and routes proposed 
  9.31  for future development and expansion and their relationship to 
  9.32  the land, water, air, and human resources of the state; 
  9.33     (3) evaluation of the effects of new electric power 
  9.34  generation and transmission technologies and systems related to 
  9.35  power plants designed to minimize adverse environmental effects; 
  9.36     (4) evaluation of the potential for beneficial uses of 
 10.1   waste energy from proposed large electric power generating 
 10.2   plants; 
 10.3      (5) analysis of the direct and indirect economic impact of 
 10.4   proposed sites and routes including, but not limited to, 
 10.5   productive agricultural land lost or impaired; 
 10.6      (6) evaluation of adverse direct and indirect environmental 
 10.7   effects which that cannot be avoided should the proposed site 
 10.8   and route be accepted; 
 10.9      (7) evaluation of alternatives to the applicant's proposed 
 10.10  site or route proposed pursuant to subdivisions 1 and 2; 
 10.11     (8) evaluation of potential routes which that would use or 
 10.12  parallel existing railroad and highway rights-of-way; 
 10.13     (9) evaluation of governmental survey lines and other 
 10.14  natural division lines of agricultural land so as to minimize 
 10.15  interference with agricultural operations; 
 10.16     (10) evaluation of the future needs for additional high 
 10.17  voltage transmission lines in the same general area as any 
 10.18  proposed route, and the advisability of ordering the 
 10.19  construction of structures capable of expansion in transmission 
 10.20  capacity through multiple circuiting or design modifications; 
 10.21     (11) evaluation of irreversible and irretrievable 
 10.22  commitments of resources should the proposed site or route be 
 10.23  approved; and 
 10.24     (12) where when appropriate, consideration of problems 
 10.25  raised by other state and federal agencies and local entities. 
 10.26     (13) (b) If the board's rules are substantially similar to 
 10.27  existing rules and regulations of a federal agency to which the 
 10.28  utility in the state is subject, the federal rules and 
 10.29  regulations shall must be applied by the board. 
 10.30     (14) (c) No site or route shall may be designated which 
 10.31  violates if to do so would violate state agency rules. 
 10.32     Sec. 14.  Minnesota Statutes 2000, section 116C.57, is 
 10.33  amended by adding a subdivision to read: 
 10.34     Subd. 7.  [TIMING.] The board shall make a final decision 
 10.35  on an application within 60 days after receipt of the report of 
 10.36  the administrative law judge.  A final decision on the request 
 11.1   for a site permit or route permit shall be made within one year 
 11.2   after the chair's determination that an application is complete. 
 11.3      Sec. 15.  Minnesota Statutes 2000, section 116C.57, is 
 11.4   amended by adding a subdivision to read: 
 11.5      Subd. 8.  [FINAL DECISION.] (a) A site permit may not be 
 11.6   issued in violation of the site selection standards and criteria 
 11.7   established in this section and in rules adopted by the board.  
 11.8   The board shall indicate the reasons for any refusal and 
 11.9   indicate changes in size or type of facility necessary to allow 
 11.10  site designation.  When the board designates a site, it shall 
 11.11  issue a site permit to the applicant with any appropriate 
 11.12  conditions.  The board shall publish a notice of its decision in 
 11.13  the State Register within 30 days of issuing the site permit. 
 11.14     (b) A route permit may not be issued in violation of the 
 11.15  route selection standards and criteria established in this 
 11.16  section and in rules adopted by the board.  When the board 
 11.17  designates a route, it shall issue a permit for the construction 
 11.18  of a high voltage transmission line specifying the type, design, 
 11.19  routing, right-of-way preparation, and facility construction it 
 11.20  deems necessary and with any other appropriate conditions.  The 
 11.21  board may order the construction of high voltage transmission 
 11.22  line facilities that are capable of expansion in transmission 
 11.23  capacity through multiple circuiting or design modifications.  
 11.24  The board shall publish a notice of its decision in the State 
 11.25  Register within 30 days of issuing the permit. 
 11.26     Sec. 16.  [116C.575] [ALTERNATIVE REVIEW OF APPLICATIONS.] 
 11.27     Subdivision 1.  [ALTERNATIVE REVIEW.] An applicant who 
 11.28  seeks a site permit or route permit for one of the projects 
 11.29  identified in this section shall have the option of following 
 11.30  the procedures in this section rather than the procedures in 
 11.31  section 116C.57.  The applicant shall notify the chair at the 
 11.32  time the application is submitted which procedures the applicant 
 11.33  chooses to follow. 
 11.34     Subd. 2.  [APPLICABLE PROJECTS.] The requirements and 
 11.35  procedures in this section may apply to the following projects: 
 11.36     (1) large electric power generating plants with a capacity 
 12.1   of between 50 and 80 megawatts regardless of fuel; 
 12.2      (2) large electric power generating plants powered by 
 12.3   natural gas as its primary fuel; 
 12.4      (3) projects to retrofit or repower an existing large 
 12.5   electric power generating plant to one burning primarily natural 
 12.6   gas or other similar clean fuel; 
 12.7      (4) large electric power generating plants regardless of 
 12.8   fuel to be located immediately adjacent to an existing large 
 12.9   electric power generating plant; 
 12.10     (5) high voltage transmission lines of between 100,000 and 
 12.11  200,000 kilovolts; 
 12.12     (6) high voltage transmission lines in excess of 200,000 
 12.13  kilovolts less than five miles in length in Minnesota; and 
 12.14     (7) high voltage transmission lines in excess of 200,000 
 12.15  kilovolts if at least 80 percent of the distance of the line in 
 12.16  Minnesota will be located parallel or along existing 
 12.17  right-of-way. 
 12.18     Subd. 3.  [APPLICATION.] The applicant for a site 
 12.19  certificate or route permit for any of the projects listed in 
 12.20  subdivision 2 who chooses to follow these procedures shall 
 12.21  submit information the board may require, but the applicant is 
 12.22  not required to propose a second site or route for the project.  
 12.23  The applicant shall identify in the application any other sites 
 12.24  or routes that were rejected by the applicant and the board may 
 12.25  identify additional sites or routes to consider during the 
 12.26  processing of the application.  The chair of the board shall 
 12.27  determine whether an application is complete and advise the 
 12.28  applicant of any deficiencies. 
 12.29     Subd. 4.  [NOTICE OF APPLICATION.] On submitting an 
 12.30  application under this section, the applicant shall provide the 
 12.31  same notice as required by section 116C.57, subdivision 4. 
 12.32     Subd. 5.  [ENVIRONMENTAL REVIEW.] For the projects 
 12.33  identified in subdivision 2 and following these procedures, the 
 12.34  commissioner shall prepare an environmental assessment 
 12.35  worksheet.  The commissioner shall include as part of the 
 12.36  environmental assessment worksheet other sites or routes 
 13.1   identified by the commissioner and shall address mitigating 
 13.2   measures for all of the sites or routes considered.  The 
 13.3   environmental assessment worksheet is the only state 
 13.4   environmental review document required to be prepared on the 
 13.5   project. 
 13.6      Subd. 6.  [PUBLIC MEETING.] The board and the independent 
 13.7   reliability administrator shall hold a joint public meeting in 
 13.8   the area where the facility is proposed to be located.  The 
 13.9   board shall give notice of the public meeting in the same manner 
 13.10  as notice for a public hearing.  The board shall provide 
 13.11  opportunity at the public meeting for any person to present 
 13.12  comments and to ask questions of the applicant and board staff.  
 13.13  The board shall also afford interested persons an opportunity to 
 13.14  submit written comments into the record. 
 13.15     Subd. 7.  [TIMING.] The board shall make a final decision 
 13.16  on an application within 60 days after completion of the public 
 13.17  meeting.  A final decision on the request for a site permit or 
 13.18  route permit under this section must be made within six months 
 13.19  after the chair's determination that an application is complete. 
 13.20     Subd. 8.  [CONSIDERATIONS.] The considerations in section 
 13.21  116C.57, subdivision 4, apply to any projects subject to this 
 13.22  section. 
 13.23     Subd. 9.  [FINAL DECISION.] (a) A site permit may not be 
 13.24  issued in violation of the site selection standards and criteria 
 13.25  established in this section and in rules adopted by the board.  
 13.26  The board shall indicate the reasons for any refusal and 
 13.27  indicate changes in size or type of facility necessary to allow 
 13.28  site designation.  When the board designates a site, it shall 
 13.29  issue a site permit to the applicant with any appropriate 
 13.30  conditions.  The board shall publish a notice of its decision in 
 13.31  the State Register within 30 days of issuance of the site permit.
 13.32     (b) A route designation may not be made in violation of the 
 13.33  route selection standards and criteria established in this 
 13.34  section and in rules adopted by the board.  When the board 
 13.35  designates a route, it shall issue a permit for the construction 
 13.36  of a high voltage transmission line specifying the type, design, 
 14.1   routing, right-of-way preparation, and facility construction it 
 14.2   deems necessary and with any other appropriate conditions.  The 
 14.3   board may order the construction of high voltage transmission 
 14.4   line facilities that are capable of expansion in transmission 
 14.5   capacity through multiple circuiting or design modifications.  
 14.6   The board shall publish a notice of its decision in the State 
 14.7   Register within 30 days of issuance of the permit. 
 14.8      Sec. 17.  [116C.576] [EMERGENCY PERMIT.] 
 14.9      (a) Any utility whose electric power system requires the 
 14.10  immediate construction of a large electric power generating 
 14.11  plant or high voltage transmission line may apply to the board 
 14.12  for an emergency permit.  The permit must be issued in a timely 
 14.13  manner, no later than 195 days after the board's acceptance of 
 14.14  the application and upon a finding by the board that (1) a 
 14.15  demonstrable emergency exists, (2) the emergency requires 
 14.16  immediate construction, and (3) adherence to the procedures and 
 14.17  time schedules specified in section 116C.57 would jeopardize the 
 14.18  utility's electric power system or would jeopardize the 
 14.19  utility's ability to meet the electric needs of its customers in 
 14.20  an orderly and timely manner. 
 14.21     (b) A public hearing to determine if an emergency exists 
 14.22  must be held within 90 days of the application.  The board, 
 14.23  after notice and hearing, shall adopt rules specifying the 
 14.24  criteria for emergency certification.  [116C.57, subd 5] 
 14.25     Sec. 18.  Minnesota Statutes 2000, section 116C.58, is 
 14.26  amended to read: 
 14.27     116C.58 [PUBLIC HEARINGS; NOTICE ANNUAL HEARING.] 
 14.28     The board shall hold an annual public hearing at a time and 
 14.29  place prescribed by rule in order to afford interested persons 
 14.30  an opportunity to be heard regarding its inventory of study 
 14.31  areas and any other aspects of the board's activities and duties 
 14.32  or policies specified in sections 116C.51 to 116C.69.  The board 
 14.33  shall hold at least one public hearing in each county where a 
 14.34  site or route is being considered for designation pursuant to 
 14.35  section 116C.57.  Notice and agenda of public hearings and 
 14.36  public meetings of the board held in each county shall be given 
 15.1   by the board at least ten days in advance but no earlier than 45 
 15.2   days prior to such hearings or meetings.  Notice shall be by 
 15.3   publication in a legal newspaper of general circulation in the 
 15.4   county in which the public hearing or public meeting is to be 
 15.5   held and by certified mailed notice to chief executives of the 
 15.6   regional development commissions, counties, organized towns and 
 15.7   the incorporated municipalities in which a site or route is 
 15.8   proposed.  All hearings held for designating a site or route or 
 15.9   for exempting a route shall be conducted by an administrative 
 15.10  law judge from the office of administrative hearings pursuant to 
 15.11  the contested case procedures of chapter 14.  Any person may 
 15.12  appear at the hearings and present testimony and exhibits and 
 15.13  may question witnesses without the necessity of intervening as a 
 15.14  formal party to the proceedings. any matters relating to the 
 15.15  siting of large electric generating power plants and routing of 
 15.16  high voltage transmission lines.  At the meeting the board shall 
 15.17  advise the public of the permits issued by the board in the past 
 15.18  year.  The board shall provide at least ten days' notice, but no 
 15.19  more than 45 days' notice, of the annual meeting by mailing 
 15.20  notice to those persons who have requested notice and by 
 15.21  publication in the board's "EQB Monitor." 
 15.22     Sec. 19.  Minnesota Statutes 2000, section 116C.60, is 
 15.23  amended to read: 
 15.24     116C.60 [PUBLIC MEETINGS; TRANSCRIPT OF PROCEEDINGS; 
 15.25  WRITTEN RECORDS.] 
 15.26     Meetings of the board, including hearings, shall must be 
 15.27  open to the public.  Minutes shall must be kept of board 
 15.28  meetings and a complete record of public hearings shall be 
 15.29  kept.  All books, records, files, and correspondence of the 
 15.30  board shall must be available for public inspection at any 
 15.31  reasonable time.  The council shall board is also be subject to 
 15.32  chapter 13D. 
 15.33     Sec. 20.  [216B.011] [ADMINISTRATOR; ASSESSMENTS; 
 15.34  APPROPRIATION; REPORT.] 
 15.35     Subdivision 1.  [CREATION.] (a) Recognizing the critical 
 15.36  importance of adequate, reliable, and environmentally sound 
 16.1   energy services to the state's economy and the well-being of its 
 16.2   citizens, and that responsibility for reliability is dispersed 
 16.3   among several state agencies, the commissioner of commerce shall 
 16.4   create an independent reliability administrator within the 
 16.5   department of commerce.  
 16.6      (b) The commissioner, the chair of the public utilities 
 16.7   commission, and the director of the office of strategic and 
 16.8   long-range planning shall jointly appoint the administrator for 
 16.9   a six-year term.  The administrator may be removed only for 
 16.10  cause.  In addition to jointly appointing the administrator, the 
 16.11  commissioner, the commission chair, and the director of the 
 16.12  office of strategic and long-range planning shall oversee and 
 16.13  direct the work of the administrator, annually audit the 
 16.14  expenses of the administrator, and biennially approve the budget 
 16.15  of the administrator. 
 16.16     (c) The administrator may utilize staff from the 
 16.17  department, commission, and the board, at the discretion of the 
 16.18  administrative heads of those agencies; may hire staff; and may 
 16.19  contract for technical expertise in performing duties when 
 16.20  existing state resources are required for other state 
 16.21  responsibilities or when special expertise is required. 
 16.22     (d) The salary of the administrator is governed by section 
 16.23  15A.0815, subdivision 2. 
 16.24     Subd. 2.  [DUTIES.] (a) The administrator shall increase 
 16.25  state agency technical expertise and understanding of 
 16.26  reliability needs and increase public confidence in proposed 
 16.27  infrastructure projects by: 
 16.28     (1) modeling and monitoring the use and operation of the 
 16.29  energy infrastructure in the state, including generation 
 16.30  facilities, transmission lines, and natural gas pipelines; 
 16.31     (2) identifying weaknesses, constraints, and conditions 
 16.32  that materially limit the adequacy of energy supply, efficiency 
 16.33  of energy service, or reliability of energy service to consumers 
 16.34  in Minnesota that may require construction of a generation, 
 16.35  transmission, or natural gas pipeline project; 
 16.36     (3) developing and consolidating technical analyses of 
 17.1   proposed infrastructure projects, to be utilized by the 
 17.2   commission, the department, the office of attorney general, the 
 17.3   environmental quality board, and the pollution control agency in 
 17.4   reviewing applications for infrastructure approvals under the 
 17.5   jurisdiction of those respective agencies; 
 17.6      (4) assessing, from a technical standpoint, assertions of 
 17.7   need for additional infrastructure; 
 17.8      (5) developing, issuing, and presenting the reliability 
 17.9   status report required under subdivision 4 and the state 
 17.10  reliability plan under section 216B.012; 
 17.11     (6) hosting public meetings around the state to present 
 17.12  independent, factual, expert, technical information on 
 17.13  infrastructure proposals; and 
 17.14     (7) coordinating with regulators and reliability officials 
 17.15  of other states, regional reliability entities, and the federal 
 17.16  government. 
 17.17     (b) The commission, department, pollution control agency, 
 17.18  and environmental quality board shall refer applications for 
 17.19  energy infrastructure approvals to the administrator for initial 
 17.20  technical analysis of the proposed infrastructure improvement on 
 17.21  reliability of energy services to Minnesota consumers.  The 
 17.22  administrator shall make an initial recommendation on the 
 17.23  application.  Following a negative recommendation, the applicant 
 17.24  may either amend and resubmit the application or appeal the 
 17.25  negative recommendation to the appropriate agency.  The time 
 17.26  used by the administrator to analyze the application counts 
 17.27  against the time period established by statute or rule for a 
 17.28  final agency decision on the application.  
 17.29     (c) The administrator may require an applicant to pay a fee 
 17.30  to cover the administrator's costs incurred in conducting 
 17.31  initial analysis of the application.  An estimated cost for 
 17.32  processing the application must be discussed with the 
 17.33  applicant.  The applicant may appeal the amount of the proposed 
 17.34  fee to the commission or the board as appropriate.  The 
 17.35  applicant must remit 50 percent of the approved cost within 14 
 17.36  days of acceptance of the application.  The balance is due 
 18.1   within 30 days after receipt of an invoice from the 
 18.2   administrator.  Costs in excess of the fee must be certified by 
 18.3   the commission or board as appropriate and charged to the 
 18.4   applicant.  Certification is prima facie evidence that the costs 
 18.5   are reasonable and necessary.  Money received under this 
 18.6   subdivision must be deposited in a special account.  Money in 
 18.7   the account is appropriated to the administrator to pay expenses 
 18.8   incurred in processing the application and, if the expenses are 
 18.9   less than the fee paid, to refund the excess to the applicant. 
 18.10     Subd. 3.  [TECHNICAL ASSISTANCE.] Upon request, the 
 18.11  administrator shall provide technical assistance regarding 
 18.12  matters unrelated to applications for infrastructure 
 18.13  improvements to the department, the commission, and the board, 
 18.14  with those agencies appropriately sharing the costs of the 
 18.15  assistance.  The administrator may also provide technical 
 18.16  assistance to a private entity and shall bill the private entity 
 18.17  for the cost of assistance.  The fee for this assistance is 
 18.18  governed under subdivision 1, paragraph (b).  
 18.19     Subd. 4.  [ADMINISTRATIVE EXPENSE ASSESSMENT; 
 18.20  APPROPRIATION.] (a) The department shall assess all energy 
 18.21  utilities in the manner provided in section 216B.62, up to 
 18.22  $2,500,000 annually for the administrative expenses incurred by 
 18.23  the administrator.  The department may make additional 
 18.24  assessments above this amount if the commissioner, chair, and 
 18.25  director deem the assessments to be necessary.  In any year in 
 18.26  which additional assessments are made, the administrator shall 
 18.27  notify the chairs of the house and senate policy and finance 
 18.28  committees with jurisdiction over energy issues of the amount 
 18.29  and reason for the additional assessment.  Assessments pursuant 
 18.30  to this section are in addition to other assessments allowed 
 18.31  under state law for the department. 
 18.32     (b) Assessments under this subdivision are appropriated to 
 18.33  the administrator for the purposes provided in this section. 
 18.34     Subd. 5.  [RELIABILITY STATUS REPORT.] (a) The commission 
 18.35  shall require distribution utilities to report to the 
 18.36  administrator on operating and planning reserves, available 
 19.1   transmission capacity, outages of major generation units and 
 19.2   feeders of distribution and transmissions facilities, the 
 19.3   adequacy of stock and equipment, and any other information 
 19.4   necessary to assess the current and future reliability of energy 
 19.5   service in this state.  Distribution utilities that are 
 19.6   currently required to file resource plans may submit updates, if 
 19.7   applicable. 
 19.8      (b) The administrator shall, by January 1 of each 
 19.9   even-numbered year beginning in 2004, assess and report to the 
 19.10  commission, the board, and the legislature the status of the 
 19.11  reliability of electric service in the state and make 
 19.12  recommendations, if applicable, for regulatory or legislative 
 19.13  action. 
 19.14     Sec. 21.  [216B.012] [STATE RELIABILITY PLAN.] 
 19.15     (a) By January 1 of every odd-numbered year, the 
 19.16  administrator shall develop and propose a state reliability 
 19.17  plan, consisting of critical transmission system upgrades and 
 19.18  new transmission projects of 100 kilovolts or greater.  Only 
 19.19  projects that address certified or certifiable deficiencies 
 19.20  under section 216E.08, subdivision 3, that have been noticed 
 19.21  under section 216E.07, subdivision 2, may be included in the 
 19.22  plan.  The plan may describe projects generally.  Specific 
 19.23  locations and routes must be determined by the environmental 
 19.24  quality board. 
 19.25     (b) In developing the reliability plan, the administrator 
 19.26  shall consider: 
 19.27     (1) the most recent state energy plan issued under section 
 19.28  216E.02; 
 19.29     (2) the most recent regional energy infrastructure reports 
 19.30  issued by the regional energy infrastructure planning regions; 
 19.31     (3) any transmission plan issued by a federally approved 
 19.32  regional reliability entity for the region that includes 
 19.33  Minnesota, or issued by the reliability entity for this region 
 19.34  that is a member of the North American Electric Reliability 
 19.35  Council, or any successor organization; 
 19.36     (4) any deficiencies noticed under section 216E.07, 
 20.1   subdivision 2; 
 20.2      (5) any transmission plan developed and proposed jointly by 
 20.3   the transmission-owning or transmission-operating entities in 
 20.4   the state; 
 20.5      (6) the needs of transmission-dependent utilities and 
 20.6   customers in Minnesota; and 
 20.7      (7) any other information the administrator deems necessary 
 20.8   or reasonable.  
 20.9      (c) Each energy utility, energy service supplier, or 
 20.10  transmission owner or operator shall comply with all requests 
 20.11  for information that the administrator deems necessary to 
 20.12  complete the proposed plan.  The commission shall ensure 
 20.13  compliance with this section, and shall by order take all steps 
 20.14  necessary to ensure the administrator has the information 
 20.15  necessary to complete the plan.  
 20.16     (d) The commission shall adopt the plan proposed by the 
 20.17  administrator within 120 days of issuance and shall publish the 
 20.18  plan in the State Register.  Projects in an approved plan are 
 20.19  public purpose projects under section 216E.08 and are exempt 
 20.20  from additional commission review under section 216B.243. 
 20.21     (e) The administrator shall hold public meetings in all 
 20.22  areas of the state affected by the reliability plan.  
 20.23     Sec. 22.  [216B.013] [EXISTING GENERATION FACILITIES.] 
 20.24     In order to continue the low-maintenance and low-cost 
 20.25  service that the existing base-load generation facilities in 
 20.26  Minnesota have provided to Minnesota consumers, and to provide 
 20.27  power to meet the growing demand for electricity by Minnesota 
 20.28  consumers and businesses, it is the policy of the state that 
 20.29  these facilities be maintained, preserved, and upgraded.  The 
 20.30  public utilities commission, department, and other state 
 20.31  agencies with regulatory jurisdiction over the operation of 
 20.32  these facilities shall take all steps necessary to incorporate 
 20.33  this state policy into the regulatory decisions made by each 
 20.34  respective agency. 
 20.35     Sec. 23.  [216B.014] [ENERGY SECURITY.] 
 20.36     It is a fundamental goal of Minnesota's energy and utility 
 21.1   policy that state policymakers maximize the state's energy 
 21.2   security.  Energy security means, among other things, ensuring 
 21.3   that the state's energy sources are (1) diverse, (2) to the 
 21.4   extent feasible, produced in the state, and (3) available to 
 21.5   consumers at affordable and stable rates or prices.  
 21.6      Sec. 24.  Minnesota Statutes 2000, section 216B.02, 
 21.7   subdivision 1, is amended to read: 
 21.8      Subdivision 1.  [SCOPE.] For the purposes of Laws 1974, 
 21.9   chapter 429 The terms defined in this section chapter have the 
 21.10  meanings given them in this section. 
 21.11     Sec. 25.  Minnesota Statutes 2000, section 216B.02, is 
 21.12  amended by adding a subdivision to read: 
 21.13     Subd. 1a.  [ADMINISTRATOR.] "Administrator" means the 
 21.14  independent reliability administrator appointed under section 
 21.15  216B.011. 
 21.16     Sec. 26.  Minnesota Statutes 2000, section 216B.02, is 
 21.17  amended by adding a subdivision to read: 
 21.18     Subd. 1b.  [COMMISSIONER.] "Commissioner" means the 
 21.19  commissioner of the Minnesota department of commerce. 
 21.20     Sec. 27.  Minnesota Statutes 2000, section 216B.02, 
 21.21  subdivision 7, is amended to read: 
 21.22     Subd. 7.  [COMMISSION.] "Commission" means the public 
 21.23  utilities commission of the department of public service. 
 21.24     Sec. 28.  Minnesota Statutes 2000, section 216B.02, 
 21.25  subdivision 8, is amended to read: 
 21.26     Subd. 8.  [DEPARTMENT.] "Department" means the department 
 21.27  of public service commerce of the state of Minnesota. 
 21.28     Sec. 29.  Minnesota Statutes 2000, section 216B.1645, is 
 21.29  amended to read: 
 21.30     216B.1645 [POWER PURCHASE CONTRACT OR INVESTMENT.] 
 21.31     (a) Upon the petition of a public utility, the public 
 21.32  utilities commission shall approve or disapprove power purchase 
 21.33  contracts, investments, or expenditures entered into or made by 
 21.34  the utility: 
 21.35     (1) to satisfy the wind and biomass mandates contained in 
 21.36  sections 216B.2423 and 216B.2424, or; 
 22.1      (2) to develop renewable energy sources from the account 
 22.2   required in section 116C.779; or 
 22.3      (3) for a generation facility within an electric generation 
 22.4   park certified by the commission under section 216B.2431.  
 22.5      (b) The expenses incurred by the utility over the duration 
 22.6   of the approved contract or useful life of the investment and 
 22.7   expenditures made pursuant to section 116C.779 shall be or for a 
 22.8   generation facility within an approved generation park are 
 22.9   recoverable from the ratepayers of the utility, to the extent 
 22.10  they are not offset by utility revenues attributable to the 
 22.11  contracts, investments, or expenditures; however, with regard to 
 22.12  expenses or costs for a generation facility within an electric 
 22.13  generation park, such costs are only recoverable to the extent 
 22.14  the utility can demonstrate that the power generated by the 
 22.15  facility was for the benefit of an end-use customer in Minnesota.
 22.16     (c) Upon petition by a public utility, the commission shall 
 22.17  approve or approve as modified a rate schedule providing for the 
 22.18  automatic adjustment of charges to recover the expenses or costs 
 22.19  approved by the commission.  
 22.20     (d) Nothing in This section shall may not be construed to 
 22.21  determine the manner or extent to which revenues derived from 
 22.22  other generation facilities of the utility may be considered in 
 22.23  determining the recovery of the approved cost or expenses 
 22.24  associated with the mandated contracts, investments, or 
 22.25  expenditures in the event when there is retail competition for 
 22.26  electric energy. 
 22.27     Sec. 30.  Minnesota Statutes 2000, section 216B.24, 
 22.28  subdivision 1, is amended to read: 
 22.29     Subdivision 1.  [MAJOR UTILITY FACILITY DEFINED.] The words 
 22.30  "major utility facility" means:  (1) electric generating plant 
 22.31  and associated facilities designed for, or capable of, operation 
 22.32  at a capacity of 50 megawatts or more; (2) an electric 
 22.33  transmission line and associated facilities of a design capacity 
 22.34  of 125 69 kilovolts or more; and (3) a gas transmission line and 
 22.35  associated facilities designed for, or capable of, transporting 
 22.36  gas at pressures in excess of 125 pounds per square inch; 
 23.1   provided, however, that the words "major utility facility" shall 
 23.2   not include electric or gas distribution lines and gas gathering 
 23.3   lines and associated facilities as defined by the commission.  
 23.4      Sec. 31.  Minnesota Statutes 2000, section 216B.24, 
 23.5   subdivision 2, is amended to read: 
 23.6      Subd. 2.  [CONSTRUCTION PLAN FILED; RULES.] Under rules As 
 23.7   the commission may prescribe by order, every public utility 
 23.8   shall file with the commission independent reliability 
 23.9   administrator, within the time and in the form as the commission 
 23.10  may designate, plans showing any contemplated construction of 
 23.11  major utility facilities.  
 23.12     Sec. 32.  Minnesota Statutes 2000, section 216B.24, 
 23.13  subdivision 3, is amended to read: 
 23.14     Subd. 3.  [APPLICABILITY TO MUNICIPALITIES AND 
 23.15  COOPERATIVES.] The provisions of this section shall apply to the 
 23.16  construction of major utility facilities by a cooperative 
 23.17  electric association or municipally owned gas or electric 
 23.18  utility.  
 23.19     Sec. 33.  Minnesota Statutes 2000, section 216B.2421, 
 23.20  subdivision 1, is amended to read: 
 23.21     Subdivision 1.  [APPLICABILITY.] The definition in this 
 23.22  section applies to this section and sections 216B.2422 and, 
 23.23  216B.243, and 216B.2431. 
 23.24     Sec. 34.  Minnesota Statutes 2000, section 216B.2421, 
 23.25  subdivision 2, is amended to read: 
 23.26     Subd. 2.  [LARGE ENERGY FACILITY.] "Large energy facility" 
 23.27  means: 
 23.28     (1) any electric power generating plant or combination of 
 23.29  plants at a single site with a combined capacity of 80,000 
 23.30  kilowatts or more, or any facility of 50,000 kilowatts or more 
 23.31  which requires oil, natural gas, or natural gas liquids as a 
 23.32  fuel and for which an installation permit has not been applied 
 23.33  for by May 19, 1977 pursuant to Minn. Reg. APC 3(a); 
 23.34     (2) any high voltage transmission line with a capacity of 
 23.35  200 100 kilovolts or more and with more than 50 ten miles of its 
 23.36  length in Minnesota; or, any high voltage transmission line with 
 24.1   a capacity of 300 kilovolts or more with more than 25 miles of 
 24.2   its length in Minnesota; 
 24.3      (3) any pipeline greater than six inches in diameter and 
 24.4   having more than 50 miles of its length in Minnesota used for 
 24.5   the transportation of coal, crude petroleum or petroleum fuels 
 24.6   or oil or their derivatives; 
 24.7      (4) any pipeline for transporting natural or synthetic gas 
 24.8   at pressures in excess of 200 pounds per square inch with more 
 24.9   than 50 miles of its length in Minnesota; 
 24.10     (5) any facility designed for or capable of storing on a 
 24.11  single site more than 100,000 gallons of liquefied natural gas 
 24.12  or synthetic gas; 
 24.13     (6) any underground gas storage facility requiring permit 
 24.14  pursuant to section 103I.681; 
 24.15     (7) any nuclear fuel processing or nuclear waste storage or 
 24.16  disposal facility; and 
 24.17     (8) any facility intended to convert any material into any 
 24.18  other combustible fuel and having the capacity to process in 
 24.19  excess of 75 tons of the material per hour. 
 24.20     Sec. 35.  Minnesota Statutes 2000, section 216B.2421, is 
 24.21  amended by adding a subdivision to read: 
 24.22     Subd. 4.  [MODIFYING EXISTING LARGE ENERGY FACILITY.] 
 24.23  Refurbishing or upgrading an existing large energy facility 
 24.24  through the replacement or addition of facility components does 
 24.25  not require a certificate of need under section 216B.243, unless 
 24.26  the changes lead to (1) a capacity increase of more than 100 
 24.27  megawatts, or ten percent of existing capacity, whichever is 
 24.28  greater, or (2) operation at more than 50 percent higher voltage.
 24.29     Sec. 36.  Minnesota Statutes 2000, section 216B.243, 
 24.30  subdivision 2, is amended to read: 
 24.31     Subd. 2.  [CERTIFICATE REQUIRED.] (a) Except as provided in 
 24.32  paragraph (b) or section 216E.08, no large energy facility shall 
 24.33  may be sited or constructed in Minnesota without the issuance of 
 24.34  a certificate of need by the commission pursuant to sections 
 24.35  216C.05 to 216C.30 and this section and consistent with the 
 24.36  criteria for assessment of need. 
 25.1      (b) Notwithstanding paragraph (a), a large energy facility 
 25.2   that is a generation plant not owned by a public or municipal 
 25.3   utility or cooperative electric association and that is not to 
 25.4   be included in the utility's or association's rate base does not 
 25.5   need a certificate of need under this section. 
 25.6      Sec. 37.  Minnesota Statutes 2000, section 216B.243, 
 25.7   subdivision 3, is amended to read: 
 25.8      Subd. 3.  [SHOWING REQUIRED FOR CONSTRUCTION.] No proposed 
 25.9   large energy facility shall be certified for construction unless 
 25.10  the applicant can show that demand for electricity cannot be met 
 25.11  more cost-effectively through energy conservation and 
 25.12  load-management measures and unless the applicant has otherwise 
 25.13  justified its need.  In assessing need, the commission shall 
 25.14  evaluate: 
 25.15     (1) the accuracy of the long-range energy demand forecasts 
 25.16  on which the necessity for the facility is based; 
 25.17     (2) the effect of existing or possible energy conservation 
 25.18  programs under sections 216C.05 to 216C.30 and this section or 
 25.19  other federal or state legislation on long-term energy demand; 
 25.20     (3) the relationship of the proposed facility to overall 
 25.21  state and regional energy needs, as described in the most recent 
 25.22  state energy policy and conservation report prepared under 
 25.23  section 216C.18 plan issued under section 216E.02; 
 25.24     (4) promotional activities that may have given rise to the 
 25.25  demand for this facility; 
 25.26     (5) socially beneficial uses of the output of this 
 25.27  facility, including its uses to protect or enhance environmental 
 25.28  quality; 
 25.29     (6) (3) the effects of the facility in inducing future 
 25.30  development; and 
 25.31     (7) (4) possible alternatives for satisfying the energy 
 25.32  demand including but not limited to potential for increased 
 25.33  efficiency of existing energy generation facilities;. 
 25.34     (8) the policies, rules, and regulations of other state and 
 25.35  federal agencies and local governments; and 
 25.36     (9) any feasible combination of energy conservation 
 26.1   improvements, required under section 216B.241, that can (i) 
 26.2   replace part or all of the energy to be provided by the proposed 
 26.3   facility, and (ii) compete with it economically. 
 26.4      Sec. 38.  Minnesota Statutes 2000, section 216B.243, 
 26.5   subdivision 5, is amended to read: 
 26.6      Subd. 5.  [APPROVAL, DENIAL, OR MODIFICATION.] Within six 
 26.7   months of the submission of an application, the commission shall 
 26.8   approve or deny a certificate of need for the facility.  
 26.9   Approval or denial of the certificate shall be accompanied by a 
 26.10  statement of the reasons for the decision.  Issuance of the 
 26.11  certificate may be made contingent upon modifications required 
 26.12  by the commission.  An application that the commission has not 
 26.13  acted on within nine months of accepting the application as 
 26.14  complete shall be deemed approved by the commission. 
 26.15     Sec. 39.  [216B.2431] [CERTIFICATE OF NEED FOR ELECTRIC 
 26.16  GENERATION PARK.] 
 26.17     Subdivision 1.  [DEFINITION; ELECTRIC GENERATION PARK.] 
 26.18  "Electric generation park" means a specially designated area for 
 26.19  the siting and construction of multiple generation facilities of 
 26.20  various sizes.  An electric generation park may contain existing 
 26.21  large energy facilities. 
 26.22     Subd. 2.  [ASSESSMENT OF NEED CRITERIA.] The commission 
 26.23  shall use the assessment of need criteria developed for use in 
 26.24  the determination of need for large energy facilities for the 
 26.25  determination of need for an electric generation park, but only 
 26.26  to the extent the commission finds the need criteria to be 
 26.27  relevant and consistent with this section. 
 26.28     Subd. 3.  [CERTIFICATE REQUIRED.] An electric generation 
 26.29  park may not be sited or constructed in Minnesota without the 
 26.30  issuance of a certificate of need by the commission pursuant to 
 26.31  this section.  A certificate of need under section 216B.243 is 
 26.32  not required for a proposed large energy generation facility to 
 26.33  be constructed within an approved electric generation park, 
 26.34  provided the proposed facility is consistent with any relevant 
 26.35  conditions imposed on approval of the park.  
 26.36     Subd. 4.  [SHOWING REQUIRED.] The commission shall issue a 
 27.1   certificate of need for a proposed electric generation park if 
 27.2   the commission finds that: 
 27.3      (1) the interconnected electric system for the state is in 
 27.4   need of additional power in excess of the proposed maximum 
 27.5   capacity of the electric generation park; 
 27.6      (2) the applicant agrees to make all locations in the park 
 27.7   available under terms and conditions that ensure comparable, 
 27.8   nondiscriminatory, and efficient access; and 
 27.9      (3) installation of the proposed maximum capacity of the 
 27.10  proposed electric generation park will not unduly stress the 
 27.11  transmission system. 
 27.12     Subd. 5.  [USE OF RENEWABLE AND HIGH-EFFICIENCY SOURCES.] 
 27.13  The commission may not issue a certificate of need under this 
 27.14  section unless the applicant for the certificate has 
 27.15  demonstrated to the commission's satisfaction that it has 
 27.16  explored the possibility of generating power by means of 
 27.17  renewable energy and high-efficiency sources and has 
 27.18  incorporated such sources into the design of the electric 
 27.19  generation park to the extent practical and feasible.  For 
 27.20  purposes of this subdivision, "renewable energy source" includes 
 27.21  (1) hydro, wind, solar, and geothermal energy, (2) the use of 
 27.22  wood or other vegetation as fuel, and (3) the use of 
 27.23  refuse-derived fuel or mixed municipal solid waste as fuel. 
 27.24     Subd. 6.  [APPLICATION FOR CERTIFICATE; HEARING.] Any 
 27.25  person proposing to construct an electric generation park shall 
 27.26  apply for a certificate of need before constructing the park.  
 27.27  The application must be on forms and in a manner established by 
 27.28  the commission.  In reviewing each application, the commission 
 27.29  shall hold at least one public hearing under chapter 14.  The 
 27.30  public hearing must be held at a location and hour reasonably 
 27.31  calculated to be convenient for the public.  An objective of the 
 27.32  public hearing must be to obtain public opinion on the necessity 
 27.33  of granting a certificate of need.  The commission shall 
 27.34  designate a commission employee to facilitate citizen 
 27.35  participation in the hearing process. 
 27.36     Subd. 7.  [APPROVAL, DENIAL, OR MODIFICATION.] Within 120 
 28.1   days of the submission of an application, the commission shall 
 28.2   approve or deny a certificate of need for the park.  Approval or 
 28.3   denial of the certificate must be accompanied by a statement of 
 28.4   the reasons for the decision.  Issuance of the certificate may 
 28.5   be made contingent upon modifications required by the commission.
 28.6      Subd. 8.  [APPLICATION FEES; APPROPRIATION.] (a) An 
 28.7   application for a certificate of need must be accompanied by the 
 28.8   fee required under this subdivision.  The maximum fee is 
 28.9   $........  
 28.10     (b) The commission may require an additional fee to recover 
 28.11  the costs of any rehearing.  The fee for a rehearing may not be 
 28.12  greater than the actual cost of the rehearing or the maximum fee 
 28.13  specified in paragraph (a), whichever is less.  
 28.14     (c) The commission shall establish by rule or order a 
 28.15  schedule of fees based on the output or capacity of the park and 
 28.16  the difficulty of assessment of need.  
 28.17     (d) Money collected in this manner must be credited to the 
 28.18  general fund of the state treasury. 
 28.19     Subd. 9.  [PARTICIPATION BY OTHER AGENCY OR POLITICAL 
 28.20  SUBDIVISION.] Other state agencies authorized to issue permits 
 28.21  for siting, construction, or operation of large energy 
 28.22  facilities, and those state agencies authorized to participate 
 28.23  in matters before the commission involving utility rates and 
 28.24  adequacy of utility services, shall present their position 
 28.25  regarding need and participate in the public hearing process 
 28.26  before a certificate of need is issued or denied.  The 
 28.27  commission has the sole and exclusive prerogative to issue or 
 28.28  deny a certificate of need and these determinations and 
 28.29  certificates are binding upon other state departments and 
 28.30  agencies, upon regional, county, and local governments, and upon 
 28.31  special purpose government districts, except as provided in 
 28.32  sections 116C.01 to 116C.08 and 116D.04, subdivision 9. 
 28.33     Sec. 40.  [216B.2432] [GENERATION CREDITS; INCENTIVES.] 
 28.34     Subdivision 1.  [MINNESOTA ENERGY RELIABILITY TRUST 
 28.35  FUND.] (a) The commissioner, chair of the commission, and 
 28.36  director of state planning, acting jointly, shall establish an 
 29.1   account with a financial institution, known as the "Minnesota 
 29.2   energy reliability trust fund."  The trust fund consists of 
 29.3   amounts deposited in the fund under subdivision 4.  The funds 
 29.4   collected and deposited in the trust fund constitute trust fund 
 29.5   revenues and are not state funds.  Amounts in the fund must be 
 29.6   held in trust by the fund manager. 
 29.7      (b) The fund manager is the independent reliability 
 29.8   administrator appointed under section 216B.011.  The fund 
 29.9   manager shall monitor the amounts in the fund and shall make 
 29.10  payments from the fund according to the budget developed by the 
 29.11  commissioner and approved by the commission under subdivision 
 29.12  2.  Amounts in the fund may only be used for the purposes 
 29.13  specified in this section and only in accordance with the 
 29.14  approved budget.  
 29.15     Subd. 2.  [MINNESOTA ENERGY RELIABILITY SURCHARGE.] (a) Not 
 29.16  later than August 1 of each year, the commissioner shall 
 29.17  recommend to the commission an adequate and appropriate budget 
 29.18  to implement this section.  The commission shall review the 
 29.19  budget for reasonableness and may modify the budget to the 
 29.20  extent it is unreasonable. 
 29.21     (b) Within 30 days of approving the budget, the commission 
 29.22  shall impose a nonbypassable, competitively neutral surcharge on 
 29.23  the consumption of electricity and natural gas in Minnesota.  
 29.24  The amount of the surcharge must be calculated to raise 
 29.25  sufficient revenue to implement the approved budget but may not 
 29.26  exceed $10,000,000 per year initially.  The initial surcharge is:
 29.27     (1) $0.00017 per kilowatt-hour for electricity sold to 
 29.28  end-use Minnesota customers; and 
 29.29     (2) $0.002 per thousand cubic feet for natural gas sold to 
 29.30  end-use Minnesota customers.  
 29.31  The commissioner, chair, and director may jointly act to 
 29.32  increase this surcharge proportionately, if needed to provide 
 29.33  incentive for the construction of generation to serve Minnesota 
 29.34  customers, as reflected in the commissioner's proposed budget 
 29.35  under paragraph (a).  The budget may not increase more than 
 29.36  $10,000,000 in any fiscal year and may never be more than 
 30.1   $50,000,000 annually.  
 30.2      (c) The reliability surcharge may not raise more than the 
 30.3   budgeted amount in the fiscal year.  If the surcharge raises 
 30.4   more than this amount within the fiscal year, the commission 
 30.5   shall discontinue imposing the fee until the unencumbered 
 30.6   balance of the fund falls below $4,000,000.  The commissioner 
 30.7   shall notify the commission if the unencumbered balance of the 
 30.8   reliability fund falls below $4,000,000.  The commission shall 
 30.9   reimpose the fee established in this section at the start of the 
 30.10  next fiscal year.  
 30.11     Subd. 4.  [COLLECTION.] Each electric and natural gas local 
 30.12  distribution utility shall collect the surcharge established by 
 30.13  the commission under subdivision 3 and remit amounts collected 
 30.14  to the fund manager.  The fund manager shall deposit the 
 30.15  receipts in the trust fund.  The local distribution utility 
 30.16  shall show the Minnesota energy reliability surcharge as a 
 30.17  separate line item on its customers' bills. 
 30.18     Subd. 5.  [GENERATION CONSTRUCTION CREDITS; INCENTIVES.] (a)
 30.19  The commission, by order, shall develop and issue a schedule of 
 30.20  generation construction credits to provide incentive for the 
 30.21  construction of generation facilities for service to Minnesota 
 30.22  consumers.  The schedule of generation construction credits must 
 30.23  provide one credit per megawatt of capacity of traditional 
 30.24  generation facilities; 1-1/2 credits per megawatt of capacity of 
 30.25  cogeneration or combined cycle generation or generation using 
 30.26  refuse-derived fuel, as defined in section 116.90; and two 
 30.27  credits per megawatt of renewable and emerging technology 
 30.28  generation facilities.  For the purposes of this section, 
 30.29  "emerging technology generation facilities" means facilities 
 30.30  intended to demonstrate new or developing technologies that 
 30.31  produce electricity efficiently, including but not limited to 
 30.32  natural gas-powered technologies such as fuel cells and small 
 30.33  scale turbines.  Generation construction credits may also be 
 30.34  used to develop adequate infrastructure in and adjacent to 
 30.35  electric generation parks.  
 30.36     (b) Generation construction credits may only be granted by 
 31.1   the commissioner and paid out by the fund manager as necessary 
 31.2   to provide incentive for construction, and only for electricity 
 31.3   generated for use by Minnesota retail customers.  In addition, 
 31.4   the commission shall establish a price ceiling for electricity 
 31.5   above which no generation construction credits may be granted.  
 31.6   If the wholesale market price for electricity increases above 
 31.7   that amount, the commissioner shall notify owners of generation 
 31.8   facilities currently receiving generation construction credits 
 31.9   that their facilities are no longer eligible for credits under 
 31.10  this section.  If an owner commits to selling electricity 
 31.11  produced at the owner's facility at a price lower than the 
 31.12  wholesale market price ceiling, that facility may continue to be 
 31.13  eligible for credits, at the commissioner's discretion.  
 31.14     (c) For ten years from the date a facility constructed 
 31.15  within an electric generation park begins to produce 
 31.16  electricity, the commissioner shall pay to the owner of a 
 31.17  generation facility in an electric generation park the amount of 
 31.18  credits agreed to by the commissioner according to the schedule 
 31.19  of generation construction credits provided under paragraph 
 31.20  (b).  The commissioner may not grant and the fund manager may 
 31.21  not pay generation construction credits for electricity that is 
 31.22  not consumed by an end-use customer in Minnesota and may require 
 31.23  any information the commissioner deems necessary from the owner 
 31.24  to ensure compliance with this section. 
 31.25     (d) Incentives for new renewable generation facilities 
 31.26  within a park may be funded from the renewable development fund 
 31.27  under section 116C.779.  Incentives for new refuse-derived fuel 
 31.28  generation facilities may be funded from the solid waste fund 
 31.29  under section 115B.42.  
 31.30     Subd. 6.  [RIGHT-OF-WAY BANK.] The commissioner may budget 
 31.31  up to five percent of the annual proceeds of the reliability 
 31.32  surcharge to assist local governments, the department of 
 31.33  transportation, and utilities in the purchase of right-of-way, 
 31.34  land, or easements for the placement of utility facilities, such 
 31.35  as new, upgraded, or existing transmission lines for 
 31.36  transmitting electricity, telecommunication and cable 
 32.1   facilities, and gas distribution or transport pipelines.  When 
 32.2   facilities are placed in a public utility corridor purchased 
 32.3   under this subdivision, the commissioner may require the owner 
 32.4   of the facility to repay an allocated portion of the cost of the 
 32.5   corridor.  Local government units shall remit one-half of the 
 32.6   local taxes on the facility to the fund manager for deposit in 
 32.7   the fund.  Amounts received in repayment must be deposited in 
 32.8   the fund.  
 32.9      Subd. 7.  [CONVERSION INCENTIVES.] The commissioner may use 
 32.10  up to five percent of the proceeds of the reliability surcharge 
 32.11  to provide monetary incentives to the owner of a coal-fired 
 32.12  generating facility in operation as of January 1, 2001, to: 
 32.13     (1) convert existing equipment at the facility to equipment 
 32.14  that reduces air emissions from the facility; or 
 32.15     (2) increase the fuel efficiency of the facility, as 
 32.16  calculated using the formula given in section 272.0211, 
 32.17  subdivision 1. 
 32.18     Subd. 8.  [BUSINESS ENERGY CONSERVATION GRANT AND LOAN 
 32.19  PROGRAM.] The commissioner may use up to five percent of the 
 32.20  proceeds of the reliability surcharge to implement an energy 
 32.21  conservation matching grant and loan program for commercial 
 32.22  energy consumers, to offset capital costs associated with 
 32.23  installation of energy efficiency and conservation 
 32.24  improvements.  The commission shall, by order, establish the 
 32.25  terms, conditions, and procedures governing the grant and loan 
 32.26  program. 
 32.27     Subd. 9.  [HOST FEE.] (a) A regional development commission 
 32.28  or the iron range resource and rehabilitation board in whose 
 32.29  jurisdiction an electric generation park is located may assess a 
 32.30  fee on the production of each kilowatt-hour of electricity 
 32.31  generated by a facility within the park, for ten years from the 
 32.32  date the facility begins to produce electricity.  The fee may 
 32.33  not generate revenues for the commission or board in excess of 
 32.34  an initial amount equal to 25 percent of the tax revenues the 
 32.35  local government units in the boundaries of the commission or 
 32.36  board would have received on the generation equipment and 
 33.1   attached machinery at the facility, but for the exemption in 
 33.2   section 272.027, subdivision 4, and must be reduced by 2.5 
 33.3   percent of that initial amount each year so that the amount 
 33.4   generated by the fee is 22.5 percent of the foregone tax 
 33.5   revenues in the second year, and 2.5 percent in the tenth year 
 33.6   after implementation.  
 33.7      (b) In lieu of a production fee as described in this 
 33.8   subdivision, a local government unit may negotiate a one-time 
 33.9   payment of funds with the owner of the generation facility. 
 33.10     Subd. 10.  [CENTER FOR ENERGY SECURITY.] (a) The center for 
 33.11  energy security is established within the Humphrey Institute for 
 33.12  Public Affairs of the University of Minnesota.  The center may 
 33.13  be established as a nonprofit corporation under section 501(c)(3)
 33.14  of the federal Internal Revenue Code.  The commissioner, 
 33.15  commission chair, and director shall establish an annual budget 
 33.16  for the center and the fund manager shall transfer that amount 
 33.17  of the reliability surcharge to the university for the 
 33.18  administration of the center. 
 33.19     (b) The center shall research and identify present and 
 33.20  emerging issues, including adequacy of energy supply to 
 33.21  consumers in the state; energy infrastructure issues; demand and 
 33.22  delivery concerns; environmental constraints; emerging 
 33.23  energy-related technologies, fuels, and applications; energy 
 33.24  restructuring policies; and matters that affect energy prices 
 33.25  paid by Minnesota consumers.  In addition, the center shall 
 33.26  serve as an information resource and clearinghouse and advise 
 33.27  state agencies and legislators on energy policy issues affecting 
 33.28  Minnesota consumers.  The center may seek, receive, and 
 33.29  distribute gifts, grants, bequests, and other sources of revenue 
 33.30  for the purposes of energy policy research and to fulfill its 
 33.31  mission. 
 33.32     (c) The university shall hire an executive director for the 
 33.33  center that has education or experience in law; business 
 33.34  administration; federal and state government; utility and 
 33.35  environmental regulation; energy and environmental policy; and 
 33.36  the demonstrated managerial, financial, promotional, and 
 34.1   representational capabilities to enable the center to fulfill 
 34.2   its duties. 
 34.3      Subd. 11.  [METROPOLITAN UNDERGROUND TRANSMISSION LINES; 
 34.4   DEMONSTRATION PROJECTS.] The commissioner may use a portion of 
 34.5   the proceeds of the reliability surcharge for up to two 
 34.6   demonstration projects for burying transmission lines within the 
 34.7   metropolitan area, as defined in section 473.121, subdivision 
 34.8   2.  To be an eligible project under this section, a utility must 
 34.9   be proposing to upgrade a transmission line designed for and 
 34.10  capable of operation at a nominal voltage of no less than 69 
 34.11  kilovolts.  The reliability surcharge proceeds may be used to 
 34.12  offset the costs of placing the transmission line underground.  
 34.13  The commissioner shall report to the legislature regarding the 
 34.14  costs of the demonstration projects as well as any effect on the 
 34.15  reliability of the buried line or cost of maintaining the buried 
 34.16  line. 
 34.17     Sec. 41.  Minnesota Statutes 2000, section 272.027, 
 34.18  subdivision 1, is amended to read: 
 34.19     Subdivision 1.  [ELECTRICITY GENERATED TO PRODUCE GOODS AND 
 34.20  SERVICES.] Personal property used to generate electric power is 
 34.21  exempt from property taxation if the electric power is used to 
 34.22  manufacture or produce goods, products, or services, other than 
 34.23  electric power, by the owner of the electric generation plant.  
 34.24  Except as provided in subdivisions 2 and, 3, and 4, the 
 34.25  exemption does not apply to property used to produce electric 
 34.26  power for sale to others and does not apply to real property.  
 34.27  In determining the value subject to tax, a proportionate share 
 34.28  of the value of the generating facilities, equal to the 
 34.29  proportion that the power sold to others bears to the total 
 34.30  generation of the plant, is subject to the general property tax 
 34.31  in the same manner as other property.  Power generated in such a 
 34.32  plant and exchanged for an equivalent amount of power that is 
 34.33  used for the manufacture or production of goods, products, or 
 34.34  services other than electric power by the owner of the 
 34.35  generating plant is considered to be used by the owner of the 
 34.36  plant. 
 35.1      Sec. 42.  Minnesota Statutes 2000, section 272.027, is 
 35.2   amended by adding a subdivision to read: 
 35.3      Subd. 4.  [EXEMPTION FOR PERSONAL PROPERTY USED TO GENERATE 
 35.4   ELECTRICITY.] (a) Personal property used to generate electric 
 35.5   power at a generation facility placed into service after January 
 35.6   1, 2001, is exempt from property taxation.  This exemption does 
 35.7   not apply to transformers, transmission lines, distribution 
 35.8   lines, or any other tools, implements, and machinery that is 
 35.9   part of an electric substation, wherever located. 
 35.10     (b) Personal property at a nuclear or primary coal-fired 
 35.11  power plant placed in service prior to January 1, 2001, is 
 35.12  exempt from all ad valorem taxation if it: 
 35.13     (1) has been retrofitted or repowered to meet new source 
 35.14  performance standards under the federal Clean Air Act; 
 35.15     (2) has increased the efficiency of the power plant above 
 35.16  40 percent, as calculated by the commissioner of commerce using 
 35.17  the efficiency calculation provided in section 272.0211, 
 35.18  subdivision 1; or 
 35.19     (3) has increased the capacity of the generation facility 
 35.20  by 100 megawatts or more. 
 35.21     (c) The commissioner of commerce shall notify the 
 35.22  commissioner of revenue of the exemption.  The exemption is 
 35.23  effective in the first assessment year following notification by 
 35.24  the commissioner of commerce.  
 35.25     Sec. 43.  [INSTRUCTION TO REVISOR.] 
 35.26     The revisor of statutes shall renumber Minnesota Statutes, 
 35.27  section 116C.57, subdivision 6, as section 116C.57, subdivision 
 35.28  9. 
 35.29     Sec. 44.  [REPEALER.] 
 35.30     Minnesota Statutes 2000, sections 116C.55; 116C.57, 
 35.31  subdivisions 3, 5, and 5a; and 116C.67, are repealed. 
 35.32     Sec. 45.  [EFFECTIVE DATES.] 
 35.33     (a) Sections 20 and 21 are effective July 1, 2002. 
 35.34     (b) Sections 1 to 19 and 22 to 44 are effective the day 
 35.35  following final enactment, except that those provisions 
 35.36  referring or relating to section 20 or 21, the independent 
 36.1   reliability administrator, or the state reliability plan are 
 36.2   effective July 1, 2002. 
 36.3                              ARTICLE 2 
 36.4                        REGULATORY FLEXIBILITY 
 36.5      Section 1.  Minnesota Statutes 2000, section 216B.16, 
 36.6   subdivision 7, is amended to read: 
 36.7      Subd. 7.  [ENERGY COST ADJUSTMENT.] (a) Notwithstanding any 
 36.8   other provision of this chapter, the commission may permit a 
 36.9   public utility to file rate schedules containing provisions for 
 36.10  the automatic adjustment of charges for public utility service 
 36.11  in direct relation to changes in:  (1) federally regulated 
 36.12  wholesale rates for energy delivered through interstate 
 36.13  facilities; (2) direct costs for natural gas delivered; or (3) 
 36.14  costs for fuel used in generation of electricity or the 
 36.15  manufacture of gas. 
 36.16     (b) In reviewing utility fuel purchases under this or any 
 36.17  other provision, the commission shall allow and encourage a 
 36.18  utility to have a combination of measures to manage price 
 36.19  volatility and risk, including having an appropriate share of 
 36.20  the utility's supply come from long-term and medium-term 
 36.21  contracts, in order to minimize consumer exposure to fuel price 
 36.22  volatility. 
 36.23     Sec. 2.  [216B.1622] [SUPPLY ELECTION; NO HARM TO OTHER 
 36.24  CUSTOMERS.] 
 36.25     A customer or group of customers with a connected load of 
 36.26  five megawatts or more that has been offered a competitive 
 36.27  transaction from a bona fide energy supplier to supply the 
 36.28  customer with electric energy may, after consultation with its 
 36.29  current utility, petition the commission, in the case of a 
 36.30  public utility, or the governing body of a municipal utility or 
 36.31  cooperative electric association to allow the customer to accept 
 36.32  the offer.  The commission or governing body, after a notice and 
 36.33  hearing, may not approve the petition unless it finds that: 
 36.34     (1) the competitive offer is structured so that authorizing 
 36.35  the customer to accept the offer does not increase costs for, or 
 36.36  otherwise harm, any other customer of the utility currently 
 37.1   serving the customer; and 
 37.2      (2) the transaction is otherwise consistent with the public 
 37.3   interest. 
 37.4      Sec. 3.  [216B.169] [RENEWABLE ENERGY RATE OPTIONS.] 
 37.5      (a) Each public utility, cooperative association, and 
 37.6   municipal utility shall offer its customers and shall advertise 
 37.7   the offer at least annually one or more options that allow a 
 37.8   customer to determine that a certain amount of the electricity 
 37.9   generated or purchased on behalf of the customer is (1) 
 37.10  renewable energy as defined in section 216B.2422, subdivision 1, 
 37.11  paragraph (c), or (2) high-efficiency, low-emissions, 
 37.12  distributed generation. 
 37.13     (b) Each public utility shall file a plan within 60 days of 
 37.14  the effective date of this section to implement paragraph (a), 
 37.15  and shall file tariff provisions under sections 216B.05 and 
 37.16  216B.16, incorporating the provisions of that plan.  Rates 
 37.17  charged to customers must reflect the utility's cost of 
 37.18  acquiring the energy for the customer.  Implementation of these 
 37.19  rate options may reflect a reasonable amount of lead time 
 37.20  necessary to arrange acquisition of the energy.  If a utility is 
 37.21  not able to arrange an adequate supply of renewable or 
 37.22  high-efficiency energy to meet its customers' demand under this 
 37.23  section, the utility must file a report with the commission 
 37.24  detailing its efforts and reasons for its failure.  The 
 37.25  commission, by order, may establish a program for tradeable 
 37.26  credits for renewable energy under this section. 
 37.27     Sec. 4.  Minnesota Statutes 2000, section 216B.241, 
 37.28  subdivision 1, is amended to read: 
 37.29     Subdivision 1.  [DEFINITIONS.] For purposes of this section 
 37.30  and section sections 216B.16, subdivision 6b, and 216B.2411, the 
 37.31  terms defined in this subdivision have the meanings given them.  
 37.32     (a) "Commission" means the public utilities commission. 
 37.33     (b) "Commissioner" means the commissioner of public service 
 37.34  commerce. 
 37.35     (c) "Customer facility" means all buildings, structures, 
 37.36  equipment, and installations at a single site. 
 38.1      (d) "Department" means the department of public 
 38.2   service commerce. 
 38.3      (e) "Energy conservation improvement" means the purchase or 
 38.4   installation of a device, method, material, or project that: 
 38.5      (1) reduces consumption of or increases efficiency in the 
 38.6   use of electricity or natural gas, including but not limited to 
 38.7   insulation and ventilation, storm or thermal doors or windows, 
 38.8   caulking and weatherstripping, furnace efficiency modifications, 
 38.9   thermostat or lighting controls, awnings, or systems to turn off 
 38.10  or vary the delivery of energy; 
 38.11     (2) creates, converts, or actively uses energy from 
 38.12  renewable sources such as solar, wind, and biomass, provided 
 38.13  that the device or method conforms with national or state 
 38.14  performance and quality standards whenever applicable; 
 38.15     (3) seeks to provide energy savings through reclamation or 
 38.16  recycling and that is used as part of the infrastructure of an 
 38.17  electric generation, transmission, or distribution system within 
 38.18  the state or a natural gas distribution system within the state; 
 38.19  or 
 38.20     (4) provides research or development of new means of 
 38.21  increasing energy efficiency or conserving energy or research or 
 38.22  development of improvement of existing means of increasing 
 38.23  energy efficiency or conserving energy; or 
 38.24     (5) increases a customer's ability to control the amount 
 38.25  and scheduling of energy purchased from a utility, through the 
 38.26  installation of high-efficiency on-site generation or other 
 38.27  technologies to allow customers to manage their own load. 
 38.28     (f) "Investments and expenses of a public utility" includes 
 38.29  the investments and expenses incurred by a public utility in 
 38.30  connection with an energy conservation improvement, including 
 38.31  but not limited to:  
 38.32     (1) the differential in interest cost between the market 
 38.33  rate and the rate charged on a no-interest or below-market 
 38.34  interest loan made by a public utility to a customer for the 
 38.35  purchase or installation of an energy conservation improvement; 
 38.36     (2) the difference between the utility's cost of purchase 
 39.1   or installation of energy conservation improvements and any 
 39.2   price charged by a public utility to a customer for such 
 39.3   improvements.  
 39.4      (g) "Large electric customer facility" means a customer 
 39.5   facility that imposes a peak electrical demand on an electric 
 39.6   utility's system of not less than 20,000 10,000 kilowatts, 
 39.7   measured in the same way as the utility that serves the customer 
 39.8   facility measures electrical demand for billing purposes, and 
 39.9   for which electric services are provided at retail on a single 
 39.10  bill by a utility operating in the state. 
 39.11     Sec. 5.  Minnesota Statutes 2000, section 216B.241, 
 39.12  subdivision 1a, is amended to read: 
 39.13     Subd. 1a.  [INVESTMENT, EXPENDITURE, AND CONTRIBUTION; 
 39.14  PUBLIC UTILITY.] (a) For purposes of this subdivision and 
 39.15  subdivision 2, "public utility" has the meaning given it in 
 39.16  section 216B.02, subdivision 4.  Each public utility shall spend 
 39.17  and invest for energy conservation improvements under this 
 39.18  subdivision and subdivision 2 the following amounts: 
 39.19     (1) for a utility that furnishes gas service, 0.5 percent 
 39.20  of its gross operating revenues from service provided in the 
 39.21  state; 
 39.22     (2) for a utility that furnishes electric service, 1.5 
 39.23  percent of its gross operating revenues from service provided in 
 39.24  the state; and 
 39.25     (3) for a utility that furnishes electric service and that 
 39.26  operates a nuclear-powered electric generating plant within the 
 39.27  state, two percent of its gross operating revenues from service 
 39.28  provided in the state. 
 39.29  For purposes of this paragraph (a), "gross operating revenues" 
 39.30  do not include revenues from large electric customer facilities 
 39.31  exempted by the commissioner of the department of public service 
 39.32  pursuant to paragraph (b). 
 39.33     (b) The owner of a large electric customer facility may 
 39.34  petition the commissioner of the department of public service to 
 39.35  exempt both electric and gas utilities serving the large energy 
 39.36  customer facility from the investment and expenditure 
 40.1   requirements of paragraph (a) with respect to retail revenues 
 40.2   attributable to the facility.  At a minimum, the petition must 
 40.3   be supported by evidence relating to international or domestic 
 40.4   competitive or economic pressures on the customer and a showing 
 40.5   by the customer of reasonable efforts to identify, evaluate, and 
 40.6   implement cost-effective conservation improvements at the 
 40.7   facility.  The commissioner may grant the petition, exempting 
 40.8   both electric and gas utilities serving the large energy 
 40.9   customer facility from the investment and expenditure 
 40.10  requirements of paragraph (a) with respect to (1) all of the 
 40.11  retail revenues attributable to the facility or (2) for a 
 40.12  customer facility that imposes a peak electrical demand on an 
 40.13  electric utility's system of at least 10,000 kilowatts, but not 
 40.14  more than 20,000 kilowatts, any percent of the retail revenues 
 40.15  attributable to the facility the commissioner deems reasonable.  
 40.16  If a petition is filed on or before October 1 of any year, the 
 40.17  order of the commissioner to exempt revenues attributable to the 
 40.18  facility can be effective no earlier than January 1 of the 
 40.19  following year.  The commissioner shall not grant an exemption 
 40.20  if the commissioner determines that granting the exemption is 
 40.21  contrary to the public interest.  The commissioner may, after 
 40.22  investigation, rescind any exemption granted under this 
 40.23  paragraph upon a determination that cost-effective energy 
 40.24  conservation improvements are available at the large electric 
 40.25  customer facility.  For the purposes of this paragraph, 
 40.26  "cost-effective" means that the projected total cost of the 
 40.27  energy conservation improvement at the large electric customer 
 40.28  facility is less than the projected present value of the energy 
 40.29  and demand savings resulting from the energy conservation 
 40.30  improvement.  For the purposes of investigations by the 
 40.31  commissioner under this paragraph, the owner of any large 
 40.32  electric customer facility shall, upon request, provide the 
 40.33  commissioner with updated information comparable to that 
 40.34  originally supplied in or with the owner's original petition 
 40.35  under this paragraph. 
 40.36     (c) The commissioner may require investments or spending 
 41.1   greater than the amounts required under this subdivision for a 
 41.2   public utility whose most recent advance forecast required under 
 41.3   section 216B.2422 or 216C.17 projects a peak demand deficit of 
 41.4   100 megawatts or greater within five years under mid-range 
 41.5   forecast assumptions.  
 41.6      (d) A public utility or owner of a large electric customer 
 41.7   facility may appeal a decision of the commissioner under 
 41.8   paragraph (b) or (c) to the commission under subdivision 2.  In 
 41.9   reviewing a decision of the commissioner under paragraph (b) or 
 41.10  (c), the commission shall rescind the decision if it finds that 
 41.11  the required investments or spending will: 
 41.12     (1) not result in cost-effective energy conservation 
 41.13  improvements; or 
 41.14     (2) otherwise decision is not be in the public interest. 
 41.15     (e) Each utility shall determine what portion of the amount 
 41.16  it sets aside for conservation improvement will be used for 
 41.17  conservation improvements under subdivision 2 and what portion 
 41.18  it will contribute to the energy and conservation account 
 41.19  established in subdivision 2a.  A public utility may propose to 
 41.20  the commissioner to designate that all or a portion of funds 
 41.21  contributed to the account established in subdivision 2a be used 
 41.22  for research and development projects.  Contributions must be 
 41.23  remitted to the commissioner of public service by February 1 of 
 41.24  each year.  Nothing in this subdivision prohibits a public 
 41.25  utility from spending or investing for energy conservation 
 41.26  improvement more than required in this subdivision. 
 41.27     Sec. 6.  Minnesota Statutes 2000, section 216B.241, 
 41.28  subdivision 1b, is amended to read: 
 41.29     Subd. 1b.  [CONSERVATION IMPROVEMENT BY COOPERATIVE 
 41.30  ASSOCIATION OR MUNICIPALITY.] (a) This subdivision applies to: 
 41.31     (1) a cooperative electric association that generates and 
 41.32  transmits electricity to associations that provide provides 
 41.33  electricity at retail including a cooperative electric 
 41.34  association not located in this state that serves associations 
 41.35  or others in the state; 
 41.36     (2) a municipality that provides electric service to retail 
 42.1   customers; and 
 42.2      (3) a municipality with gross operating revenues in excess 
 42.3   of $5,000,000 from sales of natural gas to retail customers.  
 42.4      (b) Each cooperative electric association and municipality 
 42.5   subject to this subdivision shall spend and invest for energy 
 42.6   conservation improvements under this subdivision the following 
 42.7   amounts: 
 42.8      (1) for a municipality, 0.5 percent of its gross operating 
 42.9   revenues from the sale of gas and one percent of its gross 
 42.10  operating revenues from the sale of electricity not purchased 
 42.11  from a public utility governed by subdivision 1a or a 
 42.12  cooperative electric association governed by this subdivision, 
 42.13  excluding gross operating revenues from electric and gas service 
 42.14  provided in the state to large electric customer facilities; and 
 42.15     (2) for a cooperative electric association, 1.5 percent of 
 42.16  its gross operating revenues from service provided in the state, 
 42.17  excluding gross operating revenues from service provided in the 
 42.18  state to large electric customer facilities indirectly through a 
 42.19  distribution cooperative electric association. 
 42.20     (c) Each municipality and cooperative association subject 
 42.21  to this subdivision shall identify and implement energy 
 42.22  conservation improvement spending and investments that are 
 42.23  appropriate for the municipality or association, except that a 
 42.24  municipality or association may not spend or invest for energy 
 42.25  conservation improvements that directly benefit a large electric 
 42.26  customer facility.  Each municipality and cooperative electric 
 42.27  association subject to this subdivision may spend and invest 
 42.28  annually up to 15 percent of the total amount required to be 
 42.29  spent and invested on energy conservation improvements under 
 42.30  this subdivision on research and development projects that meet 
 42.31  the definition of energy conservation improvement in subdivision 
 42.32  1 and that are funded directly by the municipality or 
 42.33  cooperative electric association.  Load management may be used 
 42.34  to meet the requirements of this subdivision if it reduces the 
 42.35  demand for or increases the efficiency of electric services.  A 
 42.36  generation and transmission cooperative electric association may 
 43.1   include as spending and investment required under this 
 43.2   subdivision conservation improvement spending and investment by 
 43.3   cooperative electric associations that provide electric service 
 43.4   at retail to consumers and that are served by the generation and 
 43.5   transmission association. 
 43.6      (d) By February 1 of each year, each municipality or 
 43.7   cooperative shall report to the commissioner its energy 
 43.8   conservation improvement spending and investments with a brief 
 43.9   analysis of effectiveness in reducing consumption of electricity 
 43.10  or gas.  The commissioner shall review each report and make 
 43.11  recommendations, where appropriate, to the municipality or 
 43.12  association to increase the effectiveness of conservation 
 43.13  improvement activities.  The commissioner shall also review each 
 43.14  report for whether a portion of the money spent on residential 
 43.15  conservation improvement programs is devoted to programs that 
 43.16  directly address the needs of renters and low-income persons 
 43.17  unless an insufficient number of appropriate programs are 
 43.18  available.  For the purposes of this subdivision and subdivision 
 43.19  2, "low-income" means an income of less than 185 percent of the 
 43.20  federal poverty level. 
 43.21     (e) As part of its spending for conservation improvement, a 
 43.22  municipality or association may contribute to the energy and 
 43.23  conservation account.  A municipality or association may propose 
 43.24  to the commissioner to designate that all or a portion of funds 
 43.25  contributed to the account be used for research and development 
 43.26  projects.  Any amount contributed must be remitted to the 
 43.27  commissioner of public service by February 1 of each 
 43.28  year.  However, each dollar spent on load management initiatives 
 43.29  shall only count for (1) $0.75 in 2002; (2) $0.50 in 2003; and 
 43.30  (3) $0.25 in 2004 and thereafter towards the utility's 
 43.31  conservation spending obligation. 
 43.32     Sec. 7.  Minnesota Statutes 2000, section 216B.241, is 
 43.33  amended by adding a subdivision to read: 
 43.34     Subd. 6.  [CONSERVATION-PRIVATE.] (a) The commission shall 
 43.35  certify one or more private entities, following a competitive 
 43.36  bid process, to design and implement energy conservation 
 44.1   initiatives in the state.  Certification may authorize the 
 44.2   private entity to provide energy conservation initiatives 
 44.3   statewide or may specify geographic areas for operation.  Such 
 44.4   certification may not be for a period of longer than five years, 
 44.5   but may be renewed.  The commission shall prescribe by order the 
 44.6   duties, standards, and procedures related to the operations of 
 44.7   the private entity, as well as the procedures and criteria for 
 44.8   selecting and certifying the private entity. 
 44.9      (b) Once certified, the private entity shall design and 
 44.10  implement energy conservation initiatives.  The initiatives must 
 44.11  be designed and implemented to efficiently and effectively 
 44.12  provide energy conservation services to energy consumers on a 
 44.13  nondiscriminatory and cost-effective basis.  The entity may 
 44.14  provide services directly or under contracts with others, and 
 44.15  may solicit and review bids to implement energy conservation 
 44.16  initiatives from any entity, including other private entities, 
 44.17  local government units, community organizations, public 
 44.18  utilities, municipal utilities, and cooperative electric 
 44.19  associations.  The private entity may seek and the commission 
 44.20  may grant approval to negotiate contracts for energy 
 44.21  conservation initiatives, without competitive bids, for 
 44.22  innovative initiatives, for initiatives provided by proven 
 44.23  companies who provide documentation of actual energy savings 
 44.24  resulting from their proposed programs, or in other instances 
 44.25  when the commission finds competitive bidding to be unnecessary. 
 44.26     (c) A private entity certified by the commission to provide 
 44.27  energy conservation initiatives shall bill each public utility, 
 44.28  municipal utility, or cooperative electric association subject 
 44.29  to this section for that utility's or association's share of its 
 44.30  programs and administrative costs of the private entity, 
 44.31  allocated in proportion to the utility's or association's 
 44.32  conservation spending requirement.  The total amount all 
 44.33  certified private entities may bill to public utilities, 
 44.34  municipal utilities, and cooperative electric associations that 
 44.35  are subject to this section may not exceed 50 percent of the 
 44.36  aggregated conservation spending requirements under this 
 45.1   section.  Amounts billed are payable within 30 days of receipt, 
 45.2   must be used to reduce the utility's or association's 
 45.3   conservation spending obligation under this section, and are 
 45.4   recoverable as provided in this section. 
 45.5      Sec. 8.  Minnesota Statutes 2000, section 216B.241, is 
 45.6   amended by adding a subdivision to read: 
 45.7      Subd. 7.  [REVIEW AND AUDIT.] Each utility and association 
 45.8   shall provide a report biennially to the commission summarizing 
 45.9   the utility's or association's conservation activities and 
 45.10  energy savings resulting from those activities under either this 
 45.11  section or section 216B.2411.  The utility or association shall 
 45.12  include in the report the results of an independent audit 
 45.13  performed by an auditor with experience in the provision of 
 45.14  energy conservation and energy efficiency services approved by 
 45.15  the commission.  The commission shall issue a report comparing 
 45.16  the overall effectiveness of the conservation programs in 
 45.17  overall cost, success in reducing overall energy use, and energy 
 45.18  saved per dollar spent. 
 45.19     Sec. 9.  Minnesota Statutes 2000, section 216B.241, is 
 45.20  amended by adding a subdivision to read: 
 45.21     Subd. 8.  [SMALL UTILITY OPT-OUT.] A utility with fewer 
 45.22  than ... customers may opt out of the provisions of subdivision 
 45.23  6 by notifying the commission of its decision. 
 45.24     Sec. 10.  [216B.2411] [CONSERVATION INVESTMENT PROGRAM.] 
 45.25     Subdivision 1.  [DEFINITIONS.] The definitions of section 
 45.26  216B.241 apply to this section. 
 45.27     Subd. 2.  [INVESTMENTS.] (a) A public utility, 
 45.28  municipality, or cooperative electric association may elect to 
 45.29  be governed by the provisions of this section rather than 
 45.30  section 216B.241, by notifying the commission of its election.  
 45.31  However, section 216B.241, subdivision 1a, paragraph (b), and 
 45.32  subdivision 2b apply to conservation investments made under this 
 45.33  section. 
 45.34     (b) Each entity that elects to be governed by this section 
 45.35  shall spend and invest for energy conservation improvements the 
 45.36  following amounts: 
 46.1      (1) for a public utility that furnishes gas service, one 
 46.2   percent of its gross operating revenues from service provided in 
 46.3   the state; 
 46.4      (2) for a cooperative electric association that provides 
 46.5   electricity at retail or a public utility that furnishes 
 46.6   electric service, 2.5 percent of its gross operating revenues 
 46.7   from service provided in the state; 
 46.8      (3) for a utility that furnishes electric service and that 
 46.9   operates a nuclear-powered electric generating plant within the 
 46.10  state, three percent of its gross operating revenues from 
 46.11  service provided in the state; and 
 46.12     (4) for a municipality, one percent of its gross operating 
 46.13  revenues from the sale of gas and two percent of its gross 
 46.14  operating revenues from the sale of electricity not purchased 
 46.15  from a public utility or a cooperative electric association 
 46.16  governed by this subdivision. 
 46.17  For purposes of this paragraph, "gross operating revenues" do 
 46.18  not include revenues from large electric customer facilities 
 46.19  exempted by the commissioner of the department of commerce 
 46.20  pursuant to section 216B.241, subdivision 1a, paragraph (b).  
 46.21  Entities electing to be governed by this section shall comply 
 46.22  with the provisions of section 216B.241, subdivision 7. 
 46.23     Sec. 11.  [216B.2412] [CONSERVATION PERFORMANCE CHALLENGE 
 46.24  PLAN.] 
 46.25     Subdivision 1.  [PLAN APPROVAL; COMMISSION FINDINGS.] A 
 46.26  utility subject to section 216B.241, subdivision 2, may petition 
 46.27  the commission for approval of a conservation performance 
 46.28  challenge plan under this section.  The commission may approve a 
 46.29  plan if it finds that: 
 46.30     (1) the plan provides incentives for the utility to achieve 
 46.31  greater, cost-effective energy savings than would have been 
 46.32  achieved in the absence of the plan; 
 46.33     (2) the potential benefits of the plan apply, at a minimum, 
 46.34  to each customer class of the utility; and 
 46.35     (3) the plan establishes one or more benchmarks against 
 46.36  which to measure actual energy savings. 
 47.1      Subd. 2.  [SHARING MECHANISM.] A plan must include a 
 47.2   risk-reward mechanism through which the utility shall (1) share 
 47.3   with its customers a reward for exceptional performance and (2) 
 47.4   bear a risk of penalty for failing to meet minimum energy 
 47.5   savings standards.  A plan must provide details of the reward, 
 47.6   the sharing mechanism, and the penalty.  The reward may include 
 47.7   a temporary or permanent reduction in the utility's overall 
 47.8   conservation spending obligation.  For public utilities, the 
 47.9   sharing mechanism must be implemented annually under section 
 47.10  216B.16, subdivision 7a.  Financial rewards or penalties under 
 47.11  the plan may not be considered in the determination of the 
 47.12  utility's revenue requirements in a general rate case pursuant 
 47.13  to section 216B.16. 
 47.14     Sec. 12.  [216B.401] [UTILITY JOINT VENTURES.] 
 47.15     Subdivision 1.  [AUTHORIZATION.] Public utilities, 
 47.16  cooperative electric associations, and municipal utilities may 
 47.17  enter into joint ventures with one another for providing utility 
 47.18  services within the boundaries of each member utility's 
 47.19  exclusive electric service territory, as shown on the map of 
 47.20  service territories maintained by the department of commerce.  
 47.21  The terms and conditions of each proposed joint venture are 
 47.22  subject to ratification by the governing body of each member 
 47.23  municipal utility and cooperative association and, if a public 
 47.24  utility is a member of the proposed joint venture, the 
 47.25  commission.  A joint venture may include the formation of a 
 47.26  corporate entity with an administrative and governance structure 
 47.27  independent of any of the member utilities.  A corporate entity 
 47.28  formed under this section is subject to all laws and rules 
 47.29  applicable to the respective members of the joint venture. 
 47.30     Subd. 2.  [POWERS.] (a) The joint venture formed under this 
 47.31  section, if any, has the powers, privileges, responsibilities, 
 47.32  and duties of the separate utilities entering into the joint 
 47.33  venture as the joint venture agreement may provide; except that, 
 47.34  upon formation of the joint venture, neither the joint venture 
 47.35  nor any member municipal utility has the power of eminent domain 
 47.36  or the authority under section 216B.44 to enlarge the service 
 48.1   territory served by the joint venture. 
 48.2      (b) These powers include, but are not limited to, the 
 48.3   authority to: 
 48.4      (1) finance, own, construct, and operate facilities 
 48.5   necessary for providing electric power to wholesale or retail 
 48.6   customers, including generation, transmission, and distribution 
 48.7   facilities; 
 48.8      (2) combine service territories, in whole or in part, upon 
 48.9   notice and hearing to do so with the public utilities 
 48.10  commission; 
 48.11     (3) serve customers in the two utilities' service 
 48.12  territories or in the combined service territory; 
 48.13     (4) combine, share, or employ administrative, managerial, 
 48.14  operational, or other staff if combining or sharing will not 
 48.15  degrade safety, reliability, or customer service standards; 
 48.16     (5) provide for joint administrative functions, such as 
 48.17  meter reading and billing; 
 48.18     (6) purchase or sell power at wholesale for resale to 
 48.19  customers; 
 48.20     (7) as required by law or rule, provide energy conservation 
 48.21  programs, other utility programs, public interest programs such 
 48.22  as cold weather shutoff protection, and energy conservation 
 48.23  spending programs; and 
 48.24     (8) participate as the parties deem necessary in providing 
 48.25  wholesale electric power with other municipal utilities, rural 
 48.26  electric cooperative utilities, investor-owned utilities, or 
 48.27  other entities, public or private. 
 48.28                             ARTICLE 3
 48.29                         STATE ENERGY PLAN
 48.30     Section 1.  [216E.01] [DEFINITIONS.] 
 48.31     Subdivision 1.  [SCOPE.] The terms used in this chapter 
 48.32  have the meanings given them in this section.  If not defined in 
 48.33  this section, those terms defined in chapters 216A, 216B, and 
 48.34  216C also apply to terms used in this chapter. 
 48.35     Subd. 2.  [COMMISSION.] "Commission" means the public 
 48.36  utilities commission. 
 49.1      Subd. 3.  [COMMISSIONER.] "Commissioner" means the 
 49.2   commissioner of commerce. 
 49.3      Subd. 4.  [DEPARTMENT.] "Department" means the department 
 49.4   of commerce. 
 49.5      Subd. 5.  [ELECTRIC UTILITY.] "Electric utility" means an 
 49.6   entity that provides 250,000 kilowatt hours annually to retail 
 49.7   customers in the state, or that owns or operates an electric 
 49.8   transmission facility in the state. 
 49.9      Subd. 6.  [ENERGY.] "Energy" means natural gas, 
 49.10  electricity, and petroleum products. 
 49.11     Subd. 7.  [ENERGY CONSERVATION.] "Energy conservation" 
 49.12  means demand-side management of energy supplies and includes 
 49.13  activities that demonstrably reduce present and future demand 
 49.14  for energy or that result in more efficient use of the same 
 49.15  amount of energy. 
 49.16     Subd. 8.  [ADMINISTRATOR.] "Administrator" means the 
 49.17  independent reliability administrator under section 216B.011.  
 49.18     Sec. 2.  [216E.02] [ENERGY PLAN.] 
 49.19     The commissioner shall develop a draft energy plan by March 
 49.20  1, 2002, and every four years thereafter.  The plan must: 
 49.21     (1) identify important trends and issues in energy supply, 
 49.22  consumption, conservation, and costs; 
 49.23     (2) set energy goals; and 
 49.24     (3) develop strategies to meet the goals. 
 49.25     Sec. 3.  [216E.03] [ENERGY PLAN CONTENTS.] 
 49.26     (a) The energy plan must include: 
 49.27     (1) the amount and type of projected statewide energy 
 49.28  consumption over the next ten years; 
 49.29     (2) a determination of whether and the extent to which 
 49.30  existing and anticipated energy production and transportation 
 49.31  facilities will or will not be able to supply needed energy; 
 49.32     (3) a determination of the potential for conservation to 
 49.33  meet some or all of the projected need for energy; and 
 49.34     (4) an assessment of the environmental impact of projected 
 49.35  energy consumption over the next ten years, prepared by the 
 49.36  commissioner of the pollution control agency in consultation 
 50.1   with other state agencies and other interested persons, with 
 50.2   strategies to mitigate those impacts. 
 50.3      (b) In addition, the plan must include an analysis of the 
 50.4   technical and economic feasibility of meeting future electric 
 50.5   energy needs in the state by use of environmentally and 
 50.6   economically sustainable electric generation.  This analysis 
 50.7   must discuss: 
 50.8      (1) capacity needs; 
 50.9      (2) maximum reasonably feasible energy conservation; 
 50.10     (3) achievable generation and distribution efficiencies; 
 50.11     (4) the potential role of renewable and sustainable forms 
 50.12  of energy and general cost projections; 
 50.13     (5) the costs associated with less environmentally damaging 
 50.14  sources of electric energy; 
 50.15     (6) whether and to what extent more distributed generation 
 50.16  can lessen the need for long distance transmission of power; 
 50.17     (7) the costs, benefits, and future economic impact of 
 50.18  importing energy into the state and of exporting energy 
 50.19  generated in the state; 
 50.20     (8) the costs and benefits of immediate investment in 
 50.21  renewable energy sources and modern energy technology; and 
 50.22     (9) the potential for additional streamlining of state and 
 50.23  local procedures for siting, permitting, and constructing energy 
 50.24  facilities. 
 50.25     Sec. 4.  [216E.04] [ENERGY GOALS.] 
 50.26     The plan must establish statewide goals and list strategies 
 50.27  to accomplish the following goals for: 
 50.28     (1) energy conservation; 
 50.29     (2) limiting adverse environmental emissions from the 
 50.30  generation of electric energy consumed in the state; 
 50.31     (3) production of electric energy consumed in the state 
 50.32  from renewable energy sources; 
 50.33     (4) deployment of distributed electric generation 
 50.34  technologies; and 
 50.35     (5) ensuring that energy service is affordable and 
 50.36  available to all consumers in the state. 
 51.1      The goals adopted in the plan may be one-time goals or a 
 51.2   series of goals to meet overall objectives.  The commissioner 
 51.3   and the administrator shall jointly present these goals, and any 
 51.4   associated strategies that require changes to state law, to the 
 51.5   legislature for approval.  
 51.6      Sec. 5.  [216E.05] [PLAN DEVELOPMENT.] 
 51.7      Subdivision 1.  [CONSULTATION.] In preparing the proposed 
 51.8   energy plan, the commissioner shall consult with: 
 51.9      (1) the commissioners of agriculture, economic security, 
 51.10  health, natural resources, and the pollution control agency; 
 51.11     (2) the independent reliability administrator and the 
 51.12  office of strategic and long-range planning; 
 51.13     (3) academic and other energy planning experts; 
 51.14     (4) regional energy infrastructure planning groups; 
 51.15     (5) energy utilities and other energy service providers; 
 51.16     (6) energy consumers and public interest advocacy groups; 
 51.17  and 
 51.18     (7) local government units and other interested persons. 
 51.19     Subd. 2.  [PUBLIC PARTICIPATION.] The commissioner shall: 
 51.20     (1) invite public comment and participation during plan 
 51.21  development; and 
 51.22     (2) hold at least one public meeting on the proposed plan 
 51.23  in each energy infrastructure planning region of the state after 
 51.24  at least 30 days public notice in the region. 
 51.25     Subd. 3.  [INFORMATION.] To develop the initial plan, the 
 51.26  commissioner shall rely on information in the most recent 
 51.27  integrated resource plan approved by the public utilities 
 51.28  commission for each energy utility or, in the case of a 
 51.29  municipal utility or a cooperative electric association, filed 
 51.30  with the commission.  For future proposed plans, the 
 51.31  commissioner shall rely on information contained in regional 
 51.32  energy infrastructure reports.  Each energy utility or energy 
 51.33  service provider in the state shall comply with additional 
 51.34  requests for information that the commissioner deems necessary 
 51.35  to complete the proposed plan.  At the request of the 
 51.36  commissioner, the commission may, by order, establish a uniform 
 52.1   reporting schedule and require uniform information reporting 
 52.2   requirements.  In addition, the commissioner shall gather 
 52.3   information from any other relevant sources, including, but not 
 52.4   limited to, regional and national reliability organizations, 
 52.5   regional and national transmission organizations, energy trade 
 52.6   associations, and energy research entities. 
 52.7      Subd. 4.  [NOTICE AND COMMENT; PLAN ISSUANCE.] The 
 52.8   commissioner shall provide notice of all public meetings to 
 52.9   discuss the proposed plan and allow opportunity for written 
 52.10  comment prior to issuing the final plan.  After review and 
 52.11  approval by the administrator, the commissioner shall publish 
 52.12  the final energy plan in the State Register within four months 
 52.13  of issuing the draft plan. 
 52.14     Sec. 6.  [216E.06] [REGIONAL ENERGY INFRASTRUCTURE 
 52.15  PLANNING.] 
 52.16     Subdivision 1.  [ESTABLISHING PLANNING REGIONS.] The 
 52.17  commission, after notice and opportunity for written comment, 
 52.18  shall establish geographic regional energy infrastructure 
 52.19  planning regions in the state by October 1, 2001.  Planning 
 52.20  regions shall coincide, if feasible, with existing subregional 
 52.21  planning areas used by the regional electric reliability or 
 52.22  regional transmission organization serving Minnesota. 
 52.23     Subd. 2.  [PLANNING GROUP.] Each energy utility that 
 52.24  operates in an identified region shall participate in the 
 52.25  regional energy infrastructure planning group.  Each regional 
 52.26  group must include as voting members, at a minimum, 
 52.27  representatives of energy utilities, and two members from each 
 52.28  county included in the identified region, appointed by the 
 52.29  county board. 
 52.30     Subd. 3.  [PUBLIC MEETINGS.] Each regional energy 
 52.31  infrastructure planning group shall hold public meetings within 
 52.32  the region on a regular basis and provide public notice at least 
 52.33  14 calendar days in advance of a meeting. 
 52.34     Subd. 4.  [REPORT.] By December 31, 2001, and every two 
 52.35  years thereafter, each regional energy infrastructure planning 
 52.36  group shall submit a report to the commissioner, the chair of 
 53.1   the commission, the director of state planning, and the 
 53.2   independent reliability administrator that: 
 53.3      (1) identifies inadequacies in electric generation and 
 53.4   transmission within the region including any deficiencies as 
 53.5   defined in section 216E.07, subdivision 1; 
 53.6      (2) lists alternative ways to address identified 
 53.7   inadequacies, taking into account the provisions of the state 
 53.8   energy plan; and 
 53.9      (3) identifies potential general and, to the extent known, 
 53.10  specific economic, environmental, and social issues associated 
 53.11  with each alternative. 
 53.12     Sec. 7.  [216E.07] [DEFINITION.] 
 53.13     Subdivision 1.  [DEFICIENCY.] "Deficiency" means a 
 53.14  condition, or set of conditions, that materially limit the 
 53.15  adequacy of electric supply, efficiency of electric service, or 
 53.16  reliability of electric service to an electric utility's 
 53.17  customers in the state that may require construction of a 
 53.18  generation or transmission project. 
 53.19     Subd. 2.  [NOTICE.] (a) Within 90 days of identifying a 
 53.20  deficiency in its system, an electric utility shall give notice 
 53.21  of the deficiency to at least: 
 53.22     (1) the members of affected regional energy infrastructure 
 53.23  planning groups; 
 53.24     (2) officials of potentially affected local governments; 
 53.25  and 
 53.26     (3) the commissioner and the independent reliability 
 53.27  administrator. 
 53.28     (b) Notice of deficiency must be made before submitting (1) 
 53.29  an application for a certificate of need under section 216B.243 
 53.30  or to be added to the list of public purpose projects under 
 53.31  section 216E.08 or (2) a request for environmental review of an 
 53.32  energy project to any governmental entity.  The energy utility 
 53.33  may identify a deficiency as part of a regional energy 
 53.34  infrastructure report or independently of such a report, as long 
 53.35  as the deficiency and its implications are clearly noted in a 
 53.36  summary preceding the body of the document. 
 54.1      Sec. 8.  [216E.08] [PUBLIC PURPOSE PROJECTS.] 
 54.2      Subdivision 1.  [LIST.] The commission shall maintain a 
 54.3   list of public purpose projects.  Projects qualify for the list 
 54.4   upon approval by the commission under subdivision 4. 
 54.5      Subd. 2.  [BENEFITS.] (a) Notwithstanding section 116C.63 
 54.6   or any other law to the contrary, eminent domain authority may 
 54.7   be used for an energy project only if it is on the public 
 54.8   purpose projects list. 
 54.9      (b) In siting and routing a public purpose project, the 
 54.10  environmental quality board and any permitting entity may not 
 54.11  consider the "no build" alternative in environmental review or 
 54.12  in evaluating and considering permits under section 116D.04, 
 54.13  subdivision 6. 
 54.14     (c) A public purpose project is exempt from the certificate 
 54.15  of need requirement in section 216B.243. 
 54.16     Subd. 3.  [DEFICIENCY CERTIFICATION; PUBLIC PURPOSE 
 54.17  PROJECT.] (a) Unless a transmission project is part of the 
 54.18  reliability plan proposed by the independent reliability 
 54.19  administrator and adopted by the commission under section 
 54.20  216B.012, a person who desires to place a proposed project on 
 54.21  the public purpose project list shall petition the commission, 
 54.22  with copies to the department, the independent reliability 
 54.23  administrator, and any relevant regional energy infrastructure 
 54.24  planning group, for certification of the deficiency the project 
 54.25  is designed to address and, at the same time or a later time, a 
 54.26  request to add the proposed project to the list.  If the request 
 54.27  is solely to certify a deficiency, the commission shall 
 54.28  determine whether or not a deficiency exists. 
 54.29     (b) The commission shall make a determination to accept, 
 54.30  modify, or reject certification of a deficiency within 60 days 
 54.31  of a filing, unless another party challenges the deficiency, in 
 54.32  which case the commission shall establish an expedited contested 
 54.33  issue procedure not to exceed 120 days. 
 54.34     (c) Projects on the state reliability plan proposed by the 
 54.35  independent reliability administrator and adopted by the 
 54.36  commission under section 216B.012 are public purpose projects 
 55.1   and are added to the list. 
 55.2      Subd. 4.  [PUBLIC PURPOSE PROJECT CRITERIA.] The project 
 55.3   proposer shall demonstrate that a project is a public purpose 
 55.4   project.  The commission may find that a project is a public 
 55.5   purpose project only if the project addresses a certifiable or 
 55.6   previously certified deficiency and is otherwise consistent with 
 55.7   the public interest. 
 55.8      Subd. 5.  [DESIGNATING PUBLIC PURPOSE PROJECTS.] (a) The 
 55.9   commission shall decide whether a project is a public purpose 
 55.10  project within 120 days of application.  The commission shall 
 55.11  provide notice and an opportunity for written comment.  Any 
 55.12  relevant regional energy infrastructure planning group shall 
 55.13  comment on alternatives available to address the deficiency and 
 55.14  recommend whether to place the project on the list within 90 
 55.15  days of the date the application was filed.  Failure of a 
 55.16  planning group to comment neither supports nor opposes the 
 55.17  listing of the project. 
 55.18                             ARTICLE 4
 55.19              INTERCONNECTION OF DISTRIBUTED RESOURCES
 55.20     Section 1.  [216B.68] [DEFINITIONS.] 
 55.21     Subdivision 1.  [SCOPE.] The words and terms used in 
 55.22  sections 216B.68 to 216B.75 have the meanings given them in this 
 55.23  section. 
 55.24     Subd. 2.  [APPLICATION FOR INTERCONNECTION AND PARALLEL 
 55.25  OPERATION.] "Application for interconnection and parallel 
 55.26  operation" with the utility system or application means a 
 55.27  standard form of application developed by the commissioner and 
 55.28  approved by the commission. 
 55.29     Subd. 3.  [COMPANY.] "Company" means an electric utility 
 55.30  operating a distribution system. 
 55.31     Subd. 4.  [ELECTRIC UTILITY.] "Electric utility" means all 
 55.32  electric utilities that own and operate equipment in the state 
 55.33  for furnishing electric service at retail. 
 55.34     Subd. 5.  [CUSTOMER.] "Customer" means any individual 
 55.35  person or entity interconnected to the company's utility system 
 55.36  for the purpose of receiving or exporting electric power from or 
 56.1   to the company's utility system. 
 56.2      Subd. 6.  [DISTRIBUTED GENERATION OR ON-SITE DISTRIBUTED 
 56.3   GENERATION.] "Distributed generation" or "on-site distributed 
 56.4   generation" means an electrical generating facility located at a 
 56.5   customer's point of delivery or point of common coupling of ten 
 56.6   megawatts or less and connected at a voltage less than or equal 
 56.7   to 60 kilovolts that may be connected in parallel operation to 
 56.8   the utility system. 
 56.9      Subd. 7.  [FACILITY.] "Facility" means an electrical 
 56.10  generating installation consisting of one or more on-site 
 56.11  distributed generation units.  The total capacity of a 
 56.12  facility's individual on-site distributed generation units may 
 56.13  exceed ten megawatts; however, no more than ten megawatts of a 
 56.14  facility's capacity will be interconnected at any point in time 
 56.15  at the point of common coupling under this section. 
 56.16     Subd. 8.  [INTERCONNECTION.] "Interconnection" means the 
 56.17  physical connection of distributed generation to the utility 
 56.18  system in accordance with the requirements of this section so 
 56.19  that parallel operation can occur. 
 56.20     Subd. 9.  [INTERCONNECTION AGREEMENT.] "Interconnection 
 56.21  agreement" means the standard form of agreement, developed and 
 56.22  approved by the commission.  The interconnection agreement sets 
 56.23  forth the contractual conditions under which a company and a 
 56.24  customer agree that one or more facilities may be interconnected 
 56.25  with the company's utility system. 
 56.26     Subd. 10.  [INVERTER-BASED PROTECTIVE 
 56.27  FUNCTION.] "Inverter-based protective function" means a function 
 56.28  of an inverter system, carried out using hardware and software, 
 56.29  that is designed to prevent unsafe operating conditions from 
 56.30  occurring before, during, and after the interconnection of an 
 56.31  inverter-based static power converter unit with a utility 
 56.32  system.  For purposes of this definition, unsafe operating 
 56.33  conditions are conditions that, if left uncorrected, would 
 56.34  result in harm to personnel, damage to equipment, unacceptable 
 56.35  system instability, or operation outside legally established 
 56.36  parameters affecting the quality of service to other customers 
 57.1   connected to the utility system. 
 57.2      Subd. 11.  [NETWORK SERVICE.] "Network service" means two 
 57.3   or more utility primary distribution feeder sources electrically 
 57.4   tied together on the secondary side, which is the low-voltage 
 57.5   side, to form one power source for one or more customers.  The 
 57.6   service is designed to maintain service to the customers even 
 57.7   after the loss of one of these primary distribution feeder 
 57.8   sources. 
 57.9      Subd. 12.  [PARALLEL OPERATION.] "Parallel operation" means 
 57.10  the operation of on-site distributed generation by a customer 
 57.11  while the customer is connected to the company's utility system. 
 57.12     Subd. 13.  [POINT OF COMMON COUPLING.] "Point of common 
 57.13  coupling" means the point where the electrical conductors of the 
 57.14  company utility system are connected to the customer's 
 57.15  conductors and where any transfer of electric power between the 
 57.16  customer and the utility system takes place, such as switchgear 
 57.17  near the meter. 
 57.18     Subd. 14.  [PRECERTIFIED EQUIPMENT.] "Precertified 
 57.19  equipment" means a specific generating and protective equipment 
 57.20  system or systems that have been certified as meeting the 
 57.21  applicable parts of this section relating to safety and 
 57.22  reliability by an entity approved by the commission. 
 57.23     Subd. 15.  [PRE-INTERCONNECTION STUDY.] 
 57.24  "Pre-interconnection study" means a study or studies that may be 
 57.25  undertaken by a company in response to its receipt of a 
 57.26  completed application for interconnection and parallel operation 
 57.27  with the utility system.  Pre-interconnection studies may 
 57.28  include, but are not limited to, service studies, coordination 
 57.29  studies, and utility system impact studies. 
 57.30     Subd. 16.  [STABILIZED.] "Stabilized" means that, following 
 57.31  a disturbance, a company utility system has returned to the 
 57.32  normal range of voltage and frequency for a duration of two 
 57.33  minutes or a shorter time as mutually agreed to by the company 
 57.34  and customer. 
 57.35     Subd. 17.  [TARIFF OR TARIFF FOR INTERCONNECTION AND 
 57.36  PARALLEL OPERATION OF DISTRIBUTED GENERATION.] "Tariff" or 
 58.1   "Tariff for interconnection and parallel operation of 
 58.2   distributed generation" means the commission-developed and 
 58.3   commission-approved tariff for interconnection and parallel 
 58.4   operation of distributed generation, including the application 
 58.5   for interconnection and parallel operation of distributed 
 58.6   generation and pre-interconnection study fee schedule. 
 58.7      Subd. 18.  [UNIT.] "Unit" means a power generator. 
 58.8      Subd. 19.  [UTILITY SYSTEM.] "Utility system" means a 
 58.9   company's distribution system below 60 kilovolts to which the 
 58.10  generation equipment is interconnected. 
 58.11     Sec. 2.  [216B.69] [INTERCONNECTION OF ON-SITE DISTRIBUTED 
 58.12  GENERATION.] 
 58.13     Subdivision 1.  [PURPOSE.] The purpose of sections 216B.68 
 58.14  to 216B.75 is to state the terms and conditions that govern the 
 58.15  interconnection and parallel operation of on-site distributed 
 58.16  generation to provide cost savings and reliability benefits to 
 58.17  customers, to establish technical requirements that will promote 
 58.18  the safe and reliable parallel operation of on-site distributed 
 58.19  generation resources, to enhance both the reliability of 
 58.20  electric service and economic efficiency in the production and 
 58.21  consumption of electricity, and to promote the use of 
 58.22  distributed resources in order to provide electric system 
 58.23  benefits during periods of capacity constraints. 
 58.24     Subd. 2.  [OBLIGATION TO SERVE; TARIFF AND OTHER 
 58.25  FILINGS.] (a) No later than 270 days after the effective date of 
 58.26  this section, each electric utility shall file tariffs for 
 58.27  interconnection and parallel operation of distributed generation 
 58.28  in conformance with sections 216B.68 to 216B.75.  The electric 
 58.29  utility may file a new tariff or a modification of an existing 
 58.30  tariff.  These tariffs must ensure that backup power, 
 58.31  supplemental power, and maintenance power are available to all 
 58.32  customers and customer classes that desire this service.  Any 
 58.33  modifications of existing tariffs or offerings of new tariffs 
 58.34  relating to this section must be consistent with the 
 58.35  commission-approved form.  
 58.36     (b) Concurrent with the tariff filing in this section, each 
 59.1   utility shall submit: 
 59.2      (1) a schedule detailing the charges of interconnection 
 59.3   studies and all supporting cost data for the charges; 
 59.4      (2) a standard application for interconnection and parallel 
 59.5   operation of distributed generation; and 
 59.6      (3) the interconnection agreement approved by the 
 59.7   commission. 
 59.8      Sec. 3.  [216B.70] [DISCONNECTION AND RECONNECTION.] 
 59.9      Subdivision 1.  [WHEN DISCONNECTION ALLOWED.] A utility may 
 59.10  disconnect a distributed generation unit from the utility system 
 59.11  if: 
 59.12     (1) the interconnection agreement with a customer expires 
 59.13  or terminates, in accordance with the terms of the agreement; 
 59.14     (2) the facility is not in compliance with the technical 
 59.15  requirements specified by the commissioner; 
 59.16     (3) continued interconnection will endanger persons or 
 59.17  property; or 
 59.18     (4) written notice is provided at least seven business days 
 59.19  prior to a service interruption for routine maintenance, 
 59.20  repairs, and utility system modifications. 
 59.21     Subd. 2.  [INCREMENTAL DEMAND CHARGES.] During the term of 
 59.22  an interconnection agreement, a utility may require that a 
 59.23  customer disconnect its distributed generation unit or take it 
 59.24  off-line as a result of utility system conditions.  The company 
 59.25  may not assess the customer incremental demand charges arising 
 59.26  from disconnecting the distributed generator as directed by the 
 59.27  company during these periods. 
 59.28     Sec. 4.  [216B.71] [PRE-INTERCONNECTION STUDIES FOR 
 59.29  NONNETWORK INTERCONNECTION OF DISTRIBUTED GENERATION.] 
 59.30     Subdivision 1.  [STUDIES.] A utility may conduct a service 
 59.31  study, coordination study, or utility system impact study prior 
 59.32  to interconnection of a distributed generation facility.  When a 
 59.33  study is deemed necessary, the scope of the study must be based 
 59.34  on the characteristics of the particular distributed generation 
 59.35  facility to be interconnected and the utility's system at the 
 59.36  specific proposed location.  By agreement between the utility 
 60.1   and its customer, a study related to interconnection of 
 60.2   distributed generation on the customer's premises may be 
 60.3   conducted by a qualified third party. 
 60.4      Subd. 2.  [CUSTOMER FEE.] (a) A utility may not charge a 
 60.5   customer a fee to conduct a pre-interconnection study for 
 60.6   precertified distributed generation units up to 500 kilowatts 
 60.7   that export not more than 15 percent of the total load on a 
 60.8   single radial feeder and contribute not more than 25 percent of 
 60.9   the maximum potential short circuit current on a single radial 
 60.10  feeder. 
 60.11     (b) Prior to the interconnection of a distributed 
 60.12  generation facility not described in paragraph (a), a utility 
 60.13  may charge a customer a fee to offset its costs incurred in the 
 60.14  conduct of a pre-interconnection study.  
 60.15     Subd. 3.  [WHEN UTILITY CONDUCTS STUDY.] When a utility 
 60.16  conducts an interconnection study, paragraphs (a) to (d) apply: 
 60.17     (a) The conduct of the pre-interconnection study may not 
 60.18  take more than four weeks. 
 60.19     (b) A utility shall prepare written reports of the study 
 60.20  findings and make them available to the customer. 
 60.21     (c) The study must consider both the costs incurred and the 
 60.22  benefits realized as a result of the interconnection of 
 60.23  distributed generation to the company's utility system. 
 60.24     (d) The utility shall provide the customer with an estimate 
 60.25  of the study cost before the utility initiates the study. 
 60.26     Sec. 5.  [216B.72] [PRE-INTERCONNECTION STUDIES FOR NETWORK 
 60.27  INTERCONNECTION OF DISTRIBUTED GENERATION.] 
 60.28     Subdivision 1.  [NOTICE AND FEES.] (a) Prior to charging a 
 60.29  pre-interconnection study fee for a network interconnection of 
 60.30  distributed generation, a utility shall first advise the 
 60.31  customer of the potential problems associated with 
 60.32  interconnection of distributed generation with its network 
 60.33  system.  
 60.34     (b) For potential interconnections to network systems, a 
 60.35  pre-interconnection study fee may not be assessed for a facility 
 60.36  with inverter systems under 20 kilowatts.  For all other 
 61.1   facilities, the utility may charge the customer a fee to offset 
 61.2   its costs incurred in the conduct of the pre-interconnection 
 61.3   study.  
 61.4      Subd. 2.  [REQUIREMENTS WHEN UTILITY CONDUCTS STUDY.] When 
 61.5   a utility conducts an interconnection study, paragraphs (a) to 
 61.6   (d) apply: 
 61.7      (a) The conduct of a pre-interconnection study may not take 
 61.8   more than four weeks. 
 61.9      (b) A utility shall prepare written reports of the study 
 61.10  findings and make them available to the customer. 
 61.11     (c) The study must consider both the costs incurred and the 
 61.12  benefits realized as a result of the interconnection of 
 61.13  distributed generation to the utility's system. 
 61.14     (d) The utility shall provide the customer with an estimate 
 61.15  of the study cost before the utility initiates the study. 
 61.16     Sec. 6.  [216B.73] [EQUIPMENT PRECERTIFICATION.] (a) The 
 61.17  commission may approve one or more entities that shall 
 61.18  precertify equipment as described under this section. 
 61.19     (b) Testing organizations or facilities capable of 
 61.20  analyzing the function, control, and protective systems of 
 61.21  distributed generation units may request to be certified as 
 61.22  testing organizations. 
 61.23     (c) Distributed generation units that are certified to be 
 61.24  in compliance by an approved testing facility or organization 
 61.25  must be installed on a company utility system in accordance with 
 61.26  an approved interconnection control and protection scheme 
 61.27  without further review of their design by the utility. 
 61.28     Sec. 7.  [216B.74] [TIME FOR PROCESSING APPLICATIONS FOR 
 61.29  INTERCONNECTION.] 
 61.30     (a) The interconnection of distributed generation to the 
 61.31  utility system must take place within the schedules described in 
 61.32  paragraphs (b) to (f): 
 61.33     (b) For a facility with precertified equipment, 
 61.34  interconnection must take place within four weeks of the 
 61.35  utility's receipt of a completed interconnection application. 
 61.36     (c) For facilities without precertified equipment, 
 62.1   connection must take place within six weeks of the utility's 
 62.2   receipt of a completed application. 
 62.3      (d) If interconnection of a particular facility will 
 62.4   require substantial capital upgrades to the utility system, the 
 62.5   company shall provide the customer an estimate of the schedule 
 62.6   and the customer's cost for the upgrade.  If the customer 
 62.7   desires to proceed with the upgrade, the customer and the 
 62.8   company shall enter into a contract for the completion of the 
 62.9   upgrade.  The interconnection must take place no later than two 
 62.10  weeks following the completion of the upgrade.  The utility 
 62.11  shall employ best reasonable efforts to complete the system 
 62.12  upgrade in the shortest time reasonably practical. 
 62.13     (e) A utility shall use best reasonable efforts to 
 62.14  interconnect facilities within the time frames described in this 
 62.15  section.  If in a particular instance, a utility determines that 
 62.16  it cannot interconnect a facility within the time frames stated 
 62.17  in this section, it must notify the applicant in writing of that 
 62.18  fact.  The notification must identify any reasons 
 62.19  interconnection could not be performed in accordance with the 
 62.20  schedule and provide an estimated date for interconnection. 
 62.21     (f) Applications for interconnection and parallel operation 
 62.22  of distributed generation must be processed by the utility in a 
 62.23  nondiscriminatory manner and in the order that they are 
 62.24  received.  It is recognized that certain applications may 
 62.25  require minor modifications while they are being reviewed by the 
 62.26  utility.  These minor modifications to a pending application do 
 62.27  not require that it be considered incomplete and treated as a 
 62.28  new or separate application. 
 62.29     Sec. 8.  [216B.75] [REPORTING REQUIREMENTS.] 
 62.30     (a) Each electric utility shall maintain records concerning 
 62.31  applications received for interconnection and parallel operation 
 62.32  of distributed generation.  The records must include the date 
 62.33  each application is received, documents generated in the course 
 62.34  of processing each application, correspondence regarding each 
 62.35  application, and the final disposition of each application.  
 62.36     (b) By March 30 of each year, every electric utility shall 
 63.1   file with the commission a distributed generation 
 63.2   interconnection report for the preceding calendar year that 
 63.3   identifies each distributed generation facility interconnected 
 63.4   with the utility's distribution system.  The report must list 
 63.5   the new distributed generation facilities interconnected with 
 63.6   the system since the previous year's report, any distributed 
 63.7   generation facilities no longer interconnected with the 
 63.8   utility's system since the previous report, the capacity of each 
 63.9   facility, and the feeder or other point on the company's utility 
 63.10  system where the facility is connected.  The annual report must 
 63.11  also identify all applications for interconnection received 
 63.12  during the previous one-year period, and the disposition of the 
 63.13  applications. 
 63.14                             ARTICLE 5 
 63.15                       CONFORMING AMENDMENTS 
 63.16     Section 1.  Minnesota Statutes 2000, section 116C.61, 
 63.17  subdivision 1, is amended to read: 
 63.18     Subdivision 1.  [REGIONAL, COUNTY AND LOCAL ORDINANCES, 
 63.19  RULES, REGULATIONS; PRIMARY RESPONSIBILITY AND REGULATION OF 
 63.20  SITE DESIGNATION, IMPROVEMENT, AND USE.] To assure the paramount 
 63.21  and controlling effect of the provisions herein this section 
 63.22  over other state agencies,; regional, county, and local 
 63.23  governments,; and special purpose government districts, the 
 63.24  issuance of a certificate of site compatibility permit or 
 63.25  transmission line construction route permit and subsequent 
 63.26  purchase and use of such site or route locations for large 
 63.27  electric power generating plant and high voltage transmission 
 63.28  line purposes shall be is the sole site approval required to be 
 63.29  obtained by the utility.  Such certificate or The permit shall 
 63.30  supersede supersedes and preempt all preempts any zoning, 
 63.31  building, or land use rules, regulations, or ordinances 
 63.32  promulgated by any regional, county, local, and special purpose 
 63.33  government. 
 63.34     Sec. 2.  Minnesota Statutes 2000, section 116C.62, is 
 63.35  amended to read: 
 63.36     116C.62 [IMPROVEMENT OF SITES AND ROUTES.] 
 64.1      Utilities which that have acquired a site or route in 
 64.2   accordance with sections 116C.51 to 116C.69 may proceed to 
 64.3   construct or improve the site or route for the intended purposes 
 64.4   at any time, subject to section 116C.61, subdivision 2,; 
 64.5   provided that, if the construction and improvement commences 
 64.6   more than has not commenced within four years after a 
 64.7   certificate or permit for the site or route has been issued, 
 64.8   then the utility must certify to the board that the site or 
 64.9   route continues to meet the conditions upon which the 
 64.10  certificate of site compatibility or transmission line 
 64.11  construction permit was issued. 
 64.12     Sec. 3.  Minnesota Statutes 2000, section 116C.64, is 
 64.13  amended to read: 
 64.14     116C.64 [FAILURE TO ACT.] 
 64.15     If the board fails to act within the times specified in 
 64.16  section 116C.57, the applicant or any affected utility person 
 64.17  may seek an order of the district court requiring the board to 
 64.18  designate or refuse to designate a site or route. 
 64.19     Sec. 4.  Minnesota Statutes 2000, section 116C.645, is 
 64.20  amended to read: 
 64.21     116C.645 [REVOCATION OR SUSPENSION.] 
 64.22     A site certificate permit or construction route permit may 
 64.23  be revoked or suspended by the board after adequate notice of 
 64.24  the alleged grounds for revocation or suspension and a full and 
 64.25  fair hearing in which the affected utility has an opportunity to 
 64.26  confront any witness and respond to any evidence against it and 
 64.27  to present rebuttal or mitigating evidence upon a finding by the 
 64.28  board of: 
 64.29     (1) any false statement knowingly made in the application 
 64.30  or in accompanying statements or studies required of the 
 64.31  applicant, if a true statement would have warranted a change in 
 64.32  the board's findings; 
 64.33     (2) failure to comply with material conditions of the site 
 64.34  certificate or construction permit, or failure to maintain 
 64.35  health and safety standards; or 
 64.36     (3) any material violation of the provisions of sections 
 65.1   116C.51 to 116C.69, any rule promulgated pursuant thereto 
 65.2   adopted under these sections, or any order of the board. 
 65.3      Sec. 5.  Minnesota Statutes 2000, section 116C.65, is 
 65.4   amended to read: 
 65.5      116C.65 [JUDICIAL REVIEW.] 
 65.6      Any utility applicant, party, or person aggrieved by the 
 65.7   issuance of a certificate site or route permit or emergency 
 65.8   certificate of site compatibility or transmission line 
 65.9   construction permit from the board or a certification of 
 65.10  continuing suitability filed by a utility with the board or by a 
 65.11  final order in accordance with any rules promulgated adopted by 
 65.12  the board, may appeal to the court of appeals in accordance with 
 65.13  chapter 14.  The appeal shall must be filed within 60 days after 
 65.14  the publication in the State Register of notice of the issuance 
 65.15  of the certificate or permit by the board or certification filed 
 65.16  with the board or the filing of any final order by the board.  
 65.17     Sec. 6.  Minnesota Statutes 2000, section 116C.66, is 
 65.18  amended to read: 
 65.19     116C.66 [RULES.] 
 65.20     (a) The board, in order to give effect to the purposes of 
 65.21  sections 116C.51 to 116C.69, shall prior to July 1, 1978, may 
 65.22  adopt rules consistent with sections 116C.51 to 116C.69, 
 65.23  including promulgation adoption of site and route designation 
 65.24  criteria,; the description of the information to be furnished by 
 65.25  the utilities,; establishment of minimum guidelines for public 
 65.26  participation in the development, revision, and enforcement of 
 65.27  any rule, plan, or program established by the board,; procedures 
 65.28  for the revocation or suspension of a construction permit or a 
 65.29  certificate of site compatibility,; the procedure and timeliness 
 65.30  for proposing alternative routes and sites,; and route exemption 
 65.31  criteria and procedures. 
 65.32     No (b) A rule adopted by the board shall may not grant 
 65.33  priority to state-owned wildlife management areas over 
 65.34  agricultural lands in the designation of route-avoidance areas. 
 65.35     (c) The provisions of chapter 14 shall apply to the appeal 
 65.36  of rules adopted by the board to the same extent as it applies 
 66.1   to the review of rules adopted by any other agency of state 
 66.2   government. 
 66.3      (d) The chief administrative law judge shall, prior to 
 66.4   January 1, 1978, adopt procedural rules for public hearings 
 66.5   relating to the site and route designation process and to the 
 66.6   route exemption process.  The rules shall must attempt to 
 66.7   maximize citizen participation in these processes. 
 66.8      Sec. 7.  Minnesota Statutes 2000, section 116C.69, is 
 66.9   amended to read: 
 66.10     116C.69 [BIENNIAL REPORT; APPLICATION FEES; APPROPRIATION; 
 66.11  FUNDING.] 
 66.12     Subdivision 1.  [BIENNIAL REPORT.] Before November 15 of 
 66.13  each even-numbered year the board shall prepare and submit to 
 66.14  the legislature a report of its operations, activities, 
 66.15  findings, and recommendations concerning sections 116C.51 to 
 66.16  116C.69.  The report shall also contain information on the 
 66.17  board's biennial expenditures, its proposed budget for the 
 66.18  following biennium, and the amounts paid in certificate and 
 66.19  permit application fees pursuant to subdivisions 2 and 2a and in 
 66.20  assessments pursuant to subdivision 3 section 116C.69.  The 
 66.21  proposed budget for the following biennium shall be is subject 
 66.22  to legislative review. 
 66.23     Subd. 2.  [SITE APPLICATION FEE.] Every applicant for a 
 66.24  site certificate permit shall pay to the board a fee in an 
 66.25  amount equal to $500 for each $1,000,000 of production plant 
 66.26  investment in the proposed installation as defined in the 
 66.27  Federal Power Commission Uniform System of Accounts.  The board 
 66.28  shall specify the time and manner of payment of the fee.  If any 
 66.29  single payment requested by the board is in excess of 25 percent 
 66.30  of the total estimated fee, the board shall show that the excess 
 66.31  is reasonably necessary.  The applicant shall pay within 30 days 
 66.32  of notification any additional fees reasonably necessary for 
 66.33  completion of the site evaluation and designation process by the 
 66.34  board.  In no event shall The total fees required of the 
 66.35  applicant under this subdivision must never exceed an amount 
 66.36  equal to 0.001 of said the production plant investment (, which 
 67.1   equals $1,000 for each $1,000,000).  All money received pursuant 
 67.2   to under this subdivision shall must be deposited in a special 
 67.3   account.  Money in the account is appropriated to the board to 
 67.4   pay expenses incurred in processing applications 
 67.5   for certificates site permits in accordance with sections 
 67.6   116C.51 to 116C.69 and in the event, if the expenses are less 
 67.7   than the fee paid, to refund the excess to the applicant.  
 67.8      Subd. 2a.  [ROUTE APPLICATION FEE.] Every applicant for a 
 67.9   transmission line construction route permit shall pay to the 
 67.10  board a base fee of $35,000 plus a fee in an amount equal to 
 67.11  $1,000 per mile length of the longest proposed route.  The board 
 67.12  shall specify the time and manner of payment of the fee.  If any 
 67.13  single payment requested by the board is in excess of 25 percent 
 67.14  of the total estimated fee, the board shall show that the excess 
 67.15  is reasonably necessary.  In the event If the actual cost of 
 67.16  processing an application up to the board's final decision to 
 67.17  designate a route exceeds the above this fee schedule, the board 
 67.18  may assess the applicant any additional fees necessary to cover 
 67.19  the actual costs, not to exceed an amount equal to $500 per mile 
 67.20  length of the longest proposed route.  All money received 
 67.21  pursuant to under this subdivision shall must be deposited in a 
 67.22  special account.  Money in the account is appropriated to the 
 67.23  board to pay expenses incurred in processing applications for 
 67.24  construction route permits in accordance with sections 116C.51 
 67.25  to 116C.69 and in the event, if the expenses are less than the 
 67.26  fee paid, to refund the excess to the applicant.  
 67.27     Subd. 3.  [FUNDING; ASSESSMENT.] (a) The board shall 
 67.28  finance its base line studies, general environmental studies, 
 67.29  development of criteria, inventory preparation, monitoring of 
 67.30  conditions placed on site certificates and construction route 
 67.31  permits, and all other work, other than specific site and route 
 67.32  designation, from an assessment made quarterly, at least 30 days 
 67.33  before the start of each quarter, by the board against all 
 67.34  utilities with annual retail kilowatt-hour sales greater than 
 67.35  4,000,000 kilowatt-hours in the previous calendar year.  
 67.36     (b) Each share shall must be determined as follows: 
 68.1      (1) the ratio that the annual retail kilowatt-hour sales in 
 68.2   the state of each utility bears to the annual total retail 
 68.3   kilowatt-hour sales in the state of all these utilities, 
 68.4   multiplied by 0.667,; plus 
 68.5      (2) the ratio that the annual gross revenue from retail 
 68.6   kilowatt-hour sales in the state of each utility bears to the 
 68.7   annual total gross revenues from retail kilowatt-hour sales in 
 68.8   the state of all these utilities, multiplied by 0.333, as 
 68.9   determined by the board. 
 68.10     (c) The assessment shall must be credited to the special 
 68.11  revenue fund and shall be paid to the state treasury within 30 
 68.12  days after receipt of the bill, which shall constitute notice of 
 68.13  said the assessment and its demand of payment thereof. 
 68.14     (d) The total amount which that may be assessed to the 
 68.15  several utilities under the authority of this subdivision shall 
 68.16  may not exceed the sum of the annual budget of the board for 
 68.17  carrying out the purposes of this subdivision. 
 68.18     (e) The assessment for the second quarter of each fiscal 
 68.19  year shall must be adjusted to compensate for the amount by 
 68.20  which actual expenditures by the board for the preceding fiscal 
 68.21  year were more or less than the estimated expenditures 
 68.22  previously assessed. 
 68.23     Sec. 8.  Minnesota Statutes 2000, section 216B.03, is 
 68.24  amended to read: 
 68.25     216B.03 [REASONABLE RATE.] 
 68.26     (a) Every rate made, demanded, or received by any public 
 68.27  utility, or by any two or more public utilities jointly, shall 
 68.28  must be just and reasonable.  Rates shall must not be 
 68.29  unreasonably preferential, or unreasonably prejudicial or 
 68.30  discriminatory, but shall must be sufficient, equitable, and 
 68.31  consistent in application to a class of consumers.  To the 
 68.32  maximum reasonable extent, the commission shall set rates to 
 68.33  encourage energy conservation and renewable energy use and to 
 68.34  further the goals of sections 216B.164, 216B.241, 216B.2411, and 
 68.35  216C.05.  Any doubt as to reasonableness should be resolved in 
 68.36  favor of the consumer. 
 69.1      (b) For rate-making purposes a public utility may treat two 
 69.2   or more municipalities served by it as a single class wherever 
 69.3   the populations are comparable in size or the conditions of 
 69.4   service are similar.  
 69.5      Sec. 9.  Minnesota Statutes 2000, section 216B.16, 
 69.6   subdivision 1, is amended to read: 
 69.7      Subdivision 1.  [NOTICE.] Unless the commission otherwise 
 69.8   orders, no public utility shall change a rate which that has 
 69.9   been duly established under this chapter, except upon 60 days' 
 69.10  notice to the commission.  The notice shall must include 
 69.11  statements of facts, expert opinions, substantiating documents, 
 69.12  and exhibits, supporting the change requested, and state the 
 69.13  change proposed to be made in the rates then in force and the 
 69.14  time when the modified rates will go into effect.  If the filing 
 69.15  utility does not have an approved conservation improvement plan 
 69.16  on file with the department of public service, it shall also 
 69.17  include in its notice an energy conservation plan pursuant to 
 69.18  section 216B.241.  The filing utility shall give written notice, 
 69.19  as approved by the commission, of the proposed change to the 
 69.20  governing body of each municipality and county in the area 
 69.21  affected.  All proposed changes shall must be shown by filing 
 69.22  new schedules or shall be plainly indicated upon schedules on 
 69.23  file and in force at the time. 
 69.24     Sec. 10.  Minnesota Statutes 2000, section 216B.16, 
 69.25  subdivision 6b, is amended to read: 
 69.26     Subd. 6b.  [ENERGY CONSERVATION IMPROVEMENT.] (a) Except as 
 69.27  otherwise provided in this subdivision, all investments and 
 69.28  expenses of a public utility as defined in section 216B.241, 
 69.29  subdivision 1, paragraph (e), incurred in connection with energy 
 69.30  conservation improvements shall under either section 216B.241 or 
 69.31  216B.2411 must be recognized and included by the commission in 
 69.32  the determination of just and reasonable rates as if the 
 69.33  investments and expenses were directly made or incurred by the 
 69.34  utility in furnishing utility service. 
 69.35     (b) After December 31, 1999, investments and expenses for 
 69.36  energy conservation improvements shall must not be included by 
 70.1   the commission in the determination of just and reasonable 
 70.2   electric and gas rates for retail electric and gas service 
 70.3   provided to large electric customer facilities that have been 
 70.4   exempted by the commissioner of the department of public service 
 70.5   pursuant to section 216B.241, subdivision 1a, paragraph (b).  
 70.6   However, no a public utility shall may not be prevented from 
 70.7   recovering its investment in energy conservation improvements 
 70.8   from all customers that were made on or before December 31, 
 70.9   1999, in compliance with the requirements of section 216B.241.  
 70.10     (c) The commission may permit a public utility to file rate 
 70.11  schedules providing for annual recovery of the costs of energy 
 70.12  conservation improvements under either section 216B.241 or 
 70.13  216B.2411.  These rate schedules may be applicable to less than 
 70.14  all the customers in a class of retail customers if necessary to 
 70.15  reflect the differing minimum spending requirements of section 
 70.16  216B.241, subdivision 1a.  After December 31, 1999, the 
 70.17  commission shall allow a public utility, without requiring a 
 70.18  general rate filing under this section, to reduce the electric 
 70.19  and gas rates applicable to large electric customer facilities 
 70.20  that have been exempted by the commissioner of the department of 
 70.21  public service pursuant to section 216B.241, subdivision 1a, 
 70.22  paragraph (b), by an amount that reflects the elimination of 
 70.23  energy conservation improvement investments or expenditures for 
 70.24  those facilities required on or before December 31, 1999.  In 
 70.25  the event that If the commission has set electric or gas rates 
 70.26  based on the use of an accounting methodology that results in 
 70.27  the cost of conservation improvements being recovered from 
 70.28  utility customers over a period of years, the rate reduction may 
 70.29  occur in a series of steps to coincide with the recovery of 
 70.30  balances due to the utility for conservation improvements made 
 70.31  by the utility on or before December 31, 1999.  
 70.32     Sec. 11.  Minnesota Statutes 2000, section 216B.16, 
 70.33  subdivision 6c, is amended to read: 
 70.34     Subd. 6c.  [INCENTIVE PLAN FOR ENERGY CONSERVATION 
 70.35  IMPROVEMENT.] (a) The commission may order public utilities to 
 70.36  develop and submit for commission approval incentive plans that 
 71.1   describe the method of recovery and accounting for utility 
 71.2   conservation expenditures and savings under either section 
 71.3   216B.241 or 216B.2411.  In developing the incentive plans the 
 71.4   commission shall ensure the effective involvement of interested 
 71.5   parties. 
 71.6      (b) In approving incentive plans, the commission shall 
 71.7   consider: 
 71.8      (1) whether the plan is likely to increase utility 
 71.9   investment in cost-effective energy conservation; 
 71.10     (2) whether the plan is compatible with the interest of 
 71.11  utility ratepayers and other interested parties; 
 71.12     (3) whether the plan links the incentive to the utility's 
 71.13  performance in achieving cost-effective conservation; and 
 71.14     (4) whether the plan is in conflict with other provisions 
 71.15  of this chapter. 
 71.16     (c) The commission may set rates to encourage the vigorous 
 71.17  and effective implementation of utility conservation programs.  
 71.18  The commission may: 
 71.19     (1) increase or decrease any otherwise allowed rate of 
 71.20  return on net investment based upon the utility's skill, 
 71.21  efforts, and success in conserving energy; 
 71.22     (2) share between ratepayers and utilities the net savings 
 71.23  resulting from energy conservation programs to the extent 
 71.24  justified by the utility's skill, efforts, and success in 
 71.25  conserving energy; and 
 71.26     (3) compensate the utility for earnings lost as a result of 
 71.27  its conservation programs. 
 71.28     Sec. 12.  Minnesota Statutes 2000, section 216B.162, 
 71.29  subdivision 8, is amended to read: 
 71.30     Subd. 8.  [ENERGY EFFICIENCY IMPROVEMENT; EXPENSE 
 71.31  RECOVERY.] If the commission approves a competitive rate or the 
 71.32  parties agree to a modified rate, the commission may require the 
 71.33  electric utility to provide the customer with an energy audit 
 71.34  and assist in implementing cost-effective energy efficiency 
 71.35  improvements to assure that the customer's use of electricity is 
 71.36  efficient.  An investment in cost-effective energy conservation 
 72.1   improvements required under this section must be treated as an 
 72.2   energy conservation improvement program and included in 
 72.3   the department's determination of significant investments under 
 72.4   section 216B.241 or 216B.2411.  The utility shall recover energy 
 72.5   conservation improvement expenses in a rate proceeding under 
 72.6   section 216B.16 or 216B.17 in the same manner as the commission 
 72.7   authorizes for the recovery of conservation expenditures made 
 72.8   under section 216B.241 or 216B.2411. 
 72.9      Sec. 13.  Minnesota Statutes 2000, section 216B.1621, 
 72.10  subdivision 2, is amended to read: 
 72.11     Subd. 2.  [COMMISSION APPROVAL.] (a) The commission shall 
 72.12  approve an agreement under this section upon finding that: 
 72.13     (1) the proposed electric service power generation facility 
 72.14  could reasonably be expected to qualify for a market value 
 72.15  exclusion under section 272.0211; 
 72.16     (2) the public utility has a contractual option to purchase 
 72.17  electric power from the proposed facility; and 
 72.18     (3) the public utility can use the output from the proposed 
 72.19  facility to meet its future need for power as demonstrated in 
 72.20  the most recent resource plan filed with and approved by the 
 72.21  commission under section 216B.2422. 
 72.22     (b) Sections 216B.03, 216B.05, 216B.06, 216B.07, 216B.16, 
 72.23  216B.162, and 216B.23 do not apply to an agreement under this 
 72.24  section. 
 72.25     Sec. 14.  Minnesota Statutes 2000, section 216B.164, 
 72.26  subdivision 4, is amended to read: 
 72.27     Subd. 4.  [PURCHASES; WHEELING; COSTS.] (a) Except as 
 72.28  otherwise provided in paragraph (c), this subdivision shall 
 72.29  apply to all qualifying facilities having 40-kilowatt capacity 
 72.30  or more as well as qualifying facilities as defined in 
 72.31  subdivision 3 which elect to be governed by its provisions.  
 72.32     (b) The utility to which the qualifying facility is 
 72.33  interconnected shall purchase all energy and capacity made 
 72.34  available by the qualifying facility.  The qualifying facility 
 72.35  shall be paid the utility's full avoided capacity and energy 
 72.36  costs as negotiated by the parties, as set by the commission, or 
 73.1   as determined through competitive bidding approved by the 
 73.2   commission.  The full avoided capacity and energy costs to be 
 73.3   paid a qualifying facility that generates electric power by 
 73.4   means of a renewable energy source are the utility's least cost 
 73.5   renewable energy facility or the bid of a competing supplier of 
 73.6   a least cost renewable energy facility, whichever is lower, 
 73.7   unless the commission's resource plan order, under section 
 73.8   216B.2422, subdivision 2, provides commission determines that 
 73.9   the use of a renewable resource to meet the identified capacity 
 73.10  need is not in the public interest.  
 73.11     (c) For all qualifying facilities having 30-kilowatt 
 73.12  capacity or more, the utility shall, at the qualifying 
 73.13  facility's or the utility's request, provide wheeling or 
 73.14  exchange agreements wherever practicable to sell the qualifying 
 73.15  facility's output to any other Minnesota utility having 
 73.16  generation expansion anticipated or planned for the ensuing ten 
 73.17  years.  The commission shall establish the methods and 
 73.18  procedures to insure that except for reasonable wheeling charges 
 73.19  and line losses, the qualifying facility receives the full 
 73.20  avoided energy and capacity costs of the utility ultimately 
 73.21  receiving the output.  
 73.22     (d) The commission shall set rates for electricity 
 73.23  generated by renewable energy. 
 73.24     Sec. 15.  Minnesota Statutes 2000, section 216B.2423, 
 73.25  subdivision 2, is amended to read: 
 73.26     Subd. 2.  [RESOURCE PLANNING MANDATE.] The public utilities 
 73.27  commission shall order a public utility subject to subdivision 
 73.28  1, to construct and operate, purchase, or contract to purchase 
 73.29  an additional 400 megawatts of electric energy installed 
 73.30  capacity generated by wind energy conversion systems by December 
 73.31  31, 2002, subject to any resource planning and least cost 
 73.32  planning requirements in section 216B.2422. 
 73.33     Sec. 16.  Minnesota Statutes 2000, section 216C.17, 
 73.34  subdivision 3, is amended to read: 
 73.35     Subd. 3.  [DUPLICATION.] The commissioner shall, to the 
 73.36  maximum extent feasible, provide that forecasts required under 
 74.1   this section be consistent with material required by other state 
 74.2   and federal agencies in order to prevent unnecessary 
 74.3   duplication.  Electric utilities submitting advance forecasts as 
 74.4   part of an integrated resource plan filed pursuant to section 
 74.5   216B.2422 and public utilities commission rules are excluded 
 74.6   from the annual reporting requirement in subdivision 2. 
 74.7      Sec. 17.  [INSTRUCTION TO REVISOR.] 
 74.8      The revisor of statutes shall renumber Minnesota Statutes, 
 74.9   section 116C.69, subdivision 1, as section 116C.681. 
 74.10                             ARTICLE 6
 74.11                      MISCELLANEOUS PROVISIONS
 74.12     Section 1.  Minnesota Statutes 2000, section 15A.0815, 
 74.13  subdivision 2, is amended to read: 
 74.14     Subd. 2.  [GROUP I SALARY LIMITS.] The salaries for 
 74.15  positions in this subdivision may not exceed 95 percent of the 
 74.16  salary of the governor:  
 74.17     Commissioner of administration; 
 74.18     Commissioner of agriculture; 
 74.19     Commissioner of children, families, and learning; 
 74.20     Commissioner of commerce; 
 74.21     Commissioner of corrections; 
 74.22     Commissioner of economic security; 
 74.23     Commissioner of employee relations; 
 74.24     Commissioner of finance; 
 74.25     Commissioner of health; 
 74.26     Executive director, higher education services office; 
 74.27     Commissioner, housing finance agency; 
 74.28     Commissioner of human rights; 
 74.29     Commissioner of human services; 
 74.30     Executive director, state board of investment; 
 74.31     Commissioner of labor and industry; 
 74.32     Commissioner of natural resources; 
 74.33     Director of office of strategic and long-range planning; 
 74.34     Commissioner, pollution control agency; 
 74.35     Commissioner of public safety; 
 74.36     Commissioner, department of public service; 
 75.1      Chair of the public utilities commission; 
 75.2      Commissioner of revenue; 
 75.3      Commissioner of trade and economic development; 
 75.4      Commissioner of transportation; and 
 75.5      Commissioner of veterans affairs. 
 75.6      Sec. 2.  Minnesota Statutes 2000, section 15A.0815, 
 75.7   subdivision 3, is amended to read: 
 75.8      Subd. 3.  [GROUP II SALARY LIMITS.] The salaries for 
 75.9   positions in this subdivision may not exceed 85 percent of the 
 75.10  salary of the governor: 
 75.11     Ombudsman for corrections; 
 75.12     Executive director of gambling control board; 
 75.13     Commissioner, iron range resources and rehabilitation 
 75.14  board; 
 75.15     Commissioner, bureau of mediation services; 
 75.16     Ombudsman for mental health and retardation; 
 75.17     Chair, metropolitan council; 
 75.18     Executive director of pari-mutuel racing; 
 75.19     Executive director, public employees retirement 
 75.20  association; 
 75.21     Commissioner other than the chair, public utilities 
 75.22  commission; 
 75.23     Executive director, state retirement system; and 
 75.24     Executive director, teachers retirement association. 
 75.25     Sec. 3.  Minnesota Statutes 2000, section 216A.03, 
 75.26  subdivision 3a, is amended to read: 
 75.27     Subd. 3a.  [POWERS AND DUTIES OF CHAIR.] The chair shall be 
 75.28  is the principal executive officer of the commission and shall 
 75.29  preside at meetings of the commission.  The responsibilities of 
 75.30  the chair shall organize include: 
 75.31     (1) organizing the work of the commission and may make; 
 75.32     (2) making assignments to commission members, appoint 
 75.33  committees and give as appropriate; 
 75.34     (3) appointing subcommittees; 
 75.35     (4) giving direction to the commission staff through the 
 75.36  executive secretary subject to the approval of the commission.; 
 76.1      (5) supervising the work of the executive secretary; and 
 76.2      (6) in coordination with the executive secretary, 
 76.3   participating in employment and termination decisions, including 
 76.4   representing the commission in grievance proceedings; addressing 
 76.5   employee complaints and grievances; developing and implementing 
 76.6   the agency budget; testifying before legislative committees and 
 76.7   working with legislators as requested; determining agency-wide 
 76.8   training needs and initiatives; implementing computer technology 
 76.9   updates; administering and implementing relations with the 
 76.10  department of commerce, the office of the attorney general, and 
 76.11  other agencies; and developing and implementing strategies for 
 76.12  the commission to adapt to rapid changes in the industries the 
 76.13  commission oversees. 
 76.14     Sec. 4.  Minnesota Statutes 2000, section 216A.03, is 
 76.15  amended by adding a subdivision to read: 
 76.16     Subd. 10.  [INFORMAL DISPUTE RESOLUTION.] (a) The chair of 
 76.17  the commission or the chair's designee may mediate and resolve 
 76.18  disputes between providers whose services are regulated by the 
 76.19  commission.  This informal dispute resolution option is intended 
 76.20  to furnish providers with a more efficient and informal option 
 76.21  for dispute resolution than can be provided by formal 
 76.22  proceedings before the full commission or before a court. 
 76.23     (b) A complaint by a provider regarding the services or 
 76.24  practices of another provider must be submitted in writing to 
 76.25  the chair, requesting informal mediation and resolution under 
 76.26  this subdivision.  Parties to the mediation may make a 
 76.27  recommendation as to their mediator.  If no recommendation is 
 76.28  made or if the chair disagrees with the recommendation, the 
 76.29  chair may hear the dispute, or may designate another person to 
 76.30  hear the dispute.  
 76.31     (c) Upon deciding to grant a request for mediation and 
 76.32  resolution, the chair or the chair's designee shall give actual 
 76.33  notice to the parties to the mediation prior to the mediation 
 76.34  session.  The chair shall specify in the notice any information 
 76.35  the chair determines to be important or necessary to rendering a 
 76.36  decision in the mediation.  The parties to the mediation shall 
 77.1   provide any information requested by the chair.  The chair may 
 77.2   also require concise written arguments before or after the 
 77.3   mediation session.  If both parties agree to the mediator, the 
 77.4   resolution is binding. 
 77.5      (d) Any information provided under paragraph (c), as well 
 77.6   as the discussion during the mediation itself, becomes part of 
 77.7   the mediation record.  The commission may use records of 
 77.8   mediations in establishing a pattern of behavior sufficient to 
 77.9   initiate a formal complaint against a provider regulated by the 
 77.10  commission.  A mediation record may not be used by any other 
 77.11  person or entity for any purpose. 
 77.12     (e) Within 15 days after the mediation session, the parties 
 77.13  shall inform the chair as to whether the parties have been able 
 77.14  to resolve the dispute themselves.  If the parties have not been 
 77.15  able to resolve the dispute to each party's satisfaction, the 
 77.16  chair or the chair's designee may render and issue a written 
 77.17  decision resolving the complaint within 15 days of notice.  The 
 77.18  decision by the chair can include any resolution the commission 
 77.19  as a whole could order.  The chair may also refer the issue to 
 77.20  the full commission for resolution.  Involvement in the 
 77.21  mediation or resolution of a complaint under this section does 
 77.22  not affect the chair's ability to participate fully in the 
 77.23  commission's proceedings on the complaint or an appeal under 
 77.24  paragraph (f).  The chair may discuss and present the mediation 
 77.25  record with the full commission, along with any findings made by 
 77.26  the chair.  
 77.27     (f) Decisions by the chair under paragraph (e) are 
 77.28  appealable to the full commission.  The executive secretary 
 77.29  shall set for a hearing an appeal made within ten days of the 
 77.30  issuance of the chair's decision.  Upon hearing the appeal, the 
 77.31  commission may reject, approve, or amend the decision of the 
 77.32  chair, or the chair's designee, or may set the issue aside for 
 77.33  further proceedings before the commission. 
 77.34     Sec. 5.  [216B.76] [TRANSMISSION SYSTEM.] 
 77.35     (a) A transmission operator shall provide for 
 77.36  nondiscriminatory access to and use of the transmission system 
 78.1   for buyers and sellers of electricity, as prescribed by the 
 78.2   Federal Energy Regulatory Commission.  An owner of transmission 
 78.3   facilities in Minnesota shall comply with federal requirements 
 78.4   regarding operation of its transmission assets and shall certify 
 78.5   its compliance to the commission.  
 78.6      (b) Transmission operators shall operate their transmission 
 78.7   facilities in compliance with the reliability standards set by 
 78.8   the Mid Continent Area Power Pool, or its successor 
 78.9   organization, regional transmission organization, or regional 
 78.10  transmission group approved by the Federal Energy Regulatory 
 78.11  Commission to operate in this region, or the North American 
 78.12  Electricity Reliability Council or its successors. 
 78.13     (c) Each entity that owns both generation and transmission 
 78.14  assets must demonstrate to the commission that its transmission 
 78.15  assets are operating independently of its generating assets.  
 78.16  The commission shall consider ownership or membership in an 
 78.17  independent transmission entity approved by the Federal Energy 
 78.18  Regulatory Commission as proof of independence.  
 78.19     (d) Nothing in paragraphs (a) to (c) affects the rights or 
 78.20  obligations of the transmission operator to comply with the 
 78.21  Federal Power Act and the regulations adopted under that act.  
 78.22     Sec. 6.  [216B.77] [REGIONAL OVERSIGHT.] 
 78.23     The commissioner, in consultation with the administrator, 
 78.24  shall develop and implement initiatives with regulators in other 
 78.25  states and regions to develop the mechanisms and organizations 
 78.26  necessary to ensure that the interests of Minnesota consumers 
 78.27  are advocated for and protected. 
 78.28     Sec. 7.  [216B.78] [UTILITY RELATIONSHIPS WITH REGIONAL 
 78.29  INSTITUTIONS.] 
 78.30     Subdivision 1.  [CONTRACT APPROVAL.] No contract or 
 78.31  arrangement, including any general or continuing arrangement 
 78.32  between an electric utility and any regional institution seeking 
 78.33  to have operational control or influence over utility facilities 
 78.34  in Minnesota, such as an independent system operator or regional 
 78.35  transmission operator approved by the Federal Energy Regulatory 
 78.36  Commission, for (1) furnishing management, supervisory, 
 79.1   construction, engineering, accounting, legal, financial, or 
 79.2   similar services, (2) purchasing, selling, leasing, or 
 79.3   exchanging any property, right, or service, or (3) furnishing 
 79.4   any property, right, or service, is valid or effective unless 
 79.5   and until the contract or arrangement has received the written 
 79.6   approval of the commission.  Regular recurring transactions 
 79.7   under a general or continuing arrangement that has been approved 
 79.8   by the commission are valid if they are conducted in accordance 
 79.9   with the approved terms and conditions.  Every electric utility 
 79.10  shall file with the commission a verified copy of the contract 
 79.11  or arrangement, or a verified summary of the unwritten contract 
 79.12  or arrangement, and also of all the contracts and arrangements, 
 79.13  whether written or unwritten.  The commission shall approve the 
 79.14  contract or arrangement made or entered into after that date 
 79.15  only if it clearly appears and is established upon investigation 
 79.16  that it is reasonable and consistent with the public interest.  
 79.17  The burden of proof to establish the reasonableness of the 
 79.18  contract or arrangement is on the electric utility. 
 79.19     Subd. 2.  [CONTINUING AUTHORITY OF COMMISSION.] The 
 79.20  commission has continuing supervisory control over the terms and 
 79.21  conditions of the contracts and arrangements described in 
 79.22  subdivision 1 necessary to protect and promote the public 
 79.23  interest.  The commission has the same jurisdiction over the 
 79.24  modifications or amendment of contracts or arrangements as it 
 79.25  has over original contracts or arrangements.  The fact that the 
 79.26  commission has approved entry into contracts or arrangements 
 79.27  does not preclude disallowance or disapproval of payments made 
 79.28  under the contracts or arrangements, if upon actual experience 
 79.29  the commission determines that the payments provided for or made 
 79.30  were or are unreasonable. 
 79.31     Sec. 8.  [216B.79] [AUTHORITY TO ORDER FACILITY 
 79.32  CONSTRUCTION.] 
 79.33     (a) The commission (1) has the authority to ensure that 
 79.34  jurisdictional entities are making adequate infrastructure 
 79.35  investments and undertaking sufficient preventative maintenance 
 79.36  with regard to such facilities and (2) upon request of the 
 80.1   commissioner or the administrator, may order a public utility, 
 80.2   municipal utility, or rural electric cooperative association to 
 80.3   construct generation, distribution, or transmission facilities 
 80.4   to ensure that electric consumers in the state are provided with 
 80.5   safe, adequate, reliable, efficient, and reasonable service. 
 80.6      (b) The commission may make appropriate adjustments in a 
 80.7   utility's rates, or make a recommendation to the Federal Energy 
 80.8   Regulatory Commission to make an appropriate adjustment in a 
 80.9   utility's allowed rate of return on those utilities' 
 80.10  transmission facilities, to offset the costs of such 
 80.11  construction. 
 80.12     Sec. 9.  [216B.80] [MARKET POWER ISSUES; GENERATION.] 
 80.13     (a) The commission, with the technical assistance of the 
 80.14  administrator and the department, shall monitor and periodically 
 80.15  investigate the structure of the Minnesota electric generation 
 80.16  market, and the activities of participants in this market, for 
 80.17  the existence and abuse of market power.  The commission shall 
 80.18  take all necessary steps to protect Minnesota consumers from the 
 80.19  abuse of market power and shall order actions necessary to 
 80.20  mitigate any adverse market power impacts arising from the 
 80.21  ownership or control of generation facilities. 
 80.22     (b) For purposes of assessing potential generation market 
 80.23  power, the relevant market is defined as all generation 
 80.24  operating in Minnesota that is connected to the transmission or 
 80.25  distribution system and capable of serving competitive retail 
 80.26  load in Minnesota, plus any out-of-state generation that is 
 80.27  proven to be available and capable of being imported into 
 80.28  Minnesota to serve competitive retail load. 
 80.29     (c) If, as a result of an investigation conducted under 
 80.30  paragraph (a), the commission finds that (1) a jurisdictional 
 80.31  utility has market power in the relevant market and (2) the 
 80.32  utility is using its market power to harm Minnesota consumers or 
 80.33  competitors, the commission may order the utility to file a 
 80.34  market power mitigation plan.  These plans may include 
 80.35  divestiture of generation facilities, capacity auctions, or any 
 80.36  other appropriate remedial action.  The commission shall issue 
 81.1   an order approving or modifying the plans within 45 days of 
 81.2   filing. 
 81.3      Sec. 10.  [EXPEDITED RULEMAKING.] 
 81.4      The department or the commission may adopt rules to 
 81.5   implement this act and may utilize expedited rulemaking where 
 81.6   necessary to ensure that rules, procedures, standards, or 
 81.7   criteria are in place in time to ensure reliable short-term and 
 81.8   long-term energy services. 
 81.9      Sec. 11.  [REPEALER.] 
 81.10     Minnesota Statutes 2000, sections 216B.241, subdivisions 
 81.11  1c, 2, and 2a; 216B.2422, subdivisions 1, 2, 2a, 4, 5, and 6; 
 81.12  and 216C.18, are repealed. 
 81.13     Sec. 12.  [EFFECTIVE DATE.] 
 81.14     Articles 2 to 6 are effective the day following final 
 81.15  enactment, except that those provisions referring or relating to 
 81.16  article 1, section 20 or 21, to the independent reliability 
 81.17  administrator, or to the state reliability plan are effective 
 81.18  July 1, 2002.