HF 1330

as introduced - 90th Legislature (2017 - 2018) Posted on 02/16/2017 02:21pm

A bill for an act
relating to energy; establishing rate schedules for certain renewable energy projects;
establishing a surcharge on electricity consumption; creating an account; requiring
reports; appropriating money; proposing coding for new law in Minnesota Statutes,
chapter 216B.

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

Section 1.

new text begin [216B.152] CITATION.
new text end

new text begin Sections 216B.152 to 216B.1565 may be referred to as the "Energy Security and
Economic Development Act of 2017."
new text end

Sec. 2.

new text begin [216B.1525] DEFINITIONS.
new text end

new text begin Subdivision 1. new text end

new text begin Scope. new text end

new text begin For purposes of sections 216B.152 to 216B.1565, the following
terms have the meanings given them.
new text end

new text begin Subd. 2. new text end

new text begin Capacity. new text end

new text begin "Capacity" means the nameplate capacity of a renewable electricity
generator.
new text end

new text begin Subd. 3. new text end

new text begin Electric utility. new text end

new text begin "Electric utility" means (1) a public utility providing electric
service, or (2) a generation or cooperative electric association that elects to be subject to
rate regulation by the commission under section 216B.026.
new text end

new text begin Subd. 4. new text end

new text begin Electrical distribution system. new text end

new text begin "Electrical distribution system" means the
portion of the electric power system over which the Federal Energy Regulatory Commission
does not have authority to interconnect electric generators that sell electricity in intrastate
commerce only.
new text end

new text begin Subd. 5. new text end

new text begin Open field project. new text end

new text begin "Open field project" means a photovoltaic device that has
no physical connection to a building other than electric lines to transport electricity.
new text end

new text begin Subd. 6. new text end

new text begin Photovoltaic device. new text end

new text begin "Photovoltaic device" has the meaning given in section
216C.06, subdivision 16.
new text end

new text begin Subd. 7. new text end

new text begin Qualifying owner. new text end

new text begin (a) "Qualifying owner" means a:
new text end

new text begin (1) Minnesota resident individually or as a member of a Minnesota limited liability
company organized under chapter 322B and formed for the purpose of developing a C-BED
project;
new text end

new text begin (2) Minnesota nonprofit organization organized under chapter 317A;
new text end

new text begin (3) Minnesota cooperative association organized under chapter 308A or 308B, including
a rural electric cooperative association or a generation and transmission cooperative on
behalf of and at the request of a member distribution utility;
new text end

new text begin (4) Minnesota political subdivision or local government including, but not limited to, a
municipal electric utility, or a municipal power agency on behalf of and at the request of a
member distribution utility; the office of the commissioner of Iron Range resources and
rehabilitation; a county, statutory or home rule charter city, town, school district, or public
or private higher education institution; or any other local or regional governmental
organization such as a board, commission, or association;
new text end

new text begin (5) tribal council; or
new text end

new text begin (6) legal entity (i) formed for a purpose other than to participate in C-BED projects; (ii)
whose principal place of business or principal executive office is located in Minnesota; and
(iii) that provides labor, services, equipment, components, or debt financing to a C-BED
project.
new text end

new text begin (b) A public utility, as defined in section 216B.02, subdivision 4, is not a qualifying
owner.
new text end

new text begin Subd. 8. new text end

new text begin Reasonable profit. new text end

new text begin "Reasonable profit" means a rate of profit equal to the
average rate of return on equity approved by the commission in general rate cases for electric
utilities during the previous 12 months.
new text end

new text begin Subd. 9. new text end

new text begin Renewable electricity generator. new text end

new text begin "Renewable electricity generator" means a
project:
new text end

new text begin (1) that generates electrical energy by means of a wind energy conversion system,
photovoltaic device, or anaerobic digester; and
new text end

new text begin (2) having one or more qualifying owners with at least a 51 percent ownership interest.
new text end

new text begin Subd. 10. new text end

new text begin Rooftop project. new text end

new text begin "Rooftop project" means a project where a photovoltaic
device is physically attached to the roof of a building.
new text end

new text begin Subd. 11. new text end

new text begin Wind energy conversion system or WECS. new text end

new text begin "Wind energy conversion system"
or "WECS" has the meaning given in section 216C.06, subdivision 19.
new text end

Sec. 3.

new text begin [216B.153] STANDARD RENEWABLE RATE ESTABLISHED.
new text end

new text begin A standard renewable rate is established to provide opportunities for Minnesotans to
own and invest in renewable electricity generation by requiring utilities to purchase electrical
energy at a just and reasonable price from Minnesota-owned renewable electricity generation
projects connected to the electrical distribution system consistent with the standard terms
and rates provided in sections 216B.152 to 216B.1565.
new text end

Sec. 4.

new text begin [216B.1535] STANDARD RENEWABLE RATE.
new text end

new text begin Subdivision 1. new text end

new text begin Utilities to offer standard renewable rate. new text end

new text begin By December 1, 2017, each
electric utility providing electric service at retail must file for commission approval a standard
renewable rate consistent with this section. Within 90 days of the first commission approval
order under this section, each cooperative electric association, generation and transmission
cooperative electric association, and municipal power agency must adopt a standard
renewable rate that is as consistent with this section as possible.
new text end

new text begin Subd. 2. new text end

new text begin Standard renewable rate objective. new text end

new text begin The objective of the standard renewable
rate is to promote a renewable electricity generator rate of development that contributes
significantly to accomplishing the renewable energy objectives and standards in section
216B.1691, subdivisions 2a and 2f.
new text end

new text begin Subd. 3. new text end

new text begin Application. new text end

new text begin The standard renewable rate applies to:
new text end

new text begin (1) a wind energy conversion system with a capacity no greater than seven megawatts;
and
new text end

new text begin (2) a photovoltaic system with a capacity no greater than 500 kilowatts.
new text end

new text begin Subd. 4. new text end

new text begin Standard renewable rate components. new text end

new text begin The standard renewable rate has two
components:
new text end

new text begin (1) the utility purchasing the energy must pay the highest price determined under section
216B.164, based on project size; and
new text end

new text begin (2) an incentive payment paid from the public benefits surcharge account established in
section 216B.155 must equal the difference between the standard renewable rate for the
relevant project type and size determined under this section and the amount in clause (1).
new text end

new text begin Subd. 5. new text end

new text begin Standard renewable rate terms. new text end

new text begin An electric utility must enter into a power
purchase agreement with the qualifying owners of a renewable electricity generator connected
to the electrical distribution system to purchase all of the electricity produced by the
renewable electricity generator. The term of the power purchase agreement must not be less
than 20 years from the date the renewable electricity generator is commissioned. The rates
paid under the power purchase agreement must be the rates established by the commission
under subdivision 6, 7, or 8, as applicable. The standard renewable rates established under
this section must remain constant over the entire term of a power purchase agreement, except
as provided in subdivision 6.
new text end

new text begin Subd. 6. new text end

new text begin Standard renewable rate; interim values. new text end

new text begin Until the commission determines
the final standard renewable rates under subdivision 7, the interim standard renewable rates
are:
new text end

new text begin (1) for wind energy conversion systems during the first five years following
commissioning of a project, $....... per kilowatt-hour;
new text end

new text begin (2) for wind energy conversion systems during years six through 20 following
commissioning of a project:
new text end

new text begin (i) if the capacity is 40 kilowatts or less, $....... per kilowatt-hour;
new text end

new text begin (ii) if the capacity exceeds 40 kilowatts but is no greater than 100 kilowatts, $....... per
kilowatt-hour;
new text end

new text begin (iii) if the capacity exceeds 100 kilowatts but is no greater than 1,000 kilowatts, $.......
per kilowatt-hour; and
new text end

new text begin (iv) if the capacity exceeds 1,000 kilowatts but is no greater than seven megawatts, $.......
per kilowatt-hour;
new text end

new text begin (3) for open field or rooftop solar photovoltaic devices:
new text end

new text begin (i) if the capacity is five kilowatts or less, $....... per kilowatt-hour;
new text end

new text begin (ii) if the capacity exceeds five kilowatts but is no greater than ten kilowatts, $....... per
kilowatt-hour;
new text end

new text begin (iii) if the capacity exceeds ten kilowatts but is no greater than 100 kilowatts, $....... per
kilowatt-hour; and
new text end

new text begin (iv) if the capacity exceeds 100 kilowatts but is less than 500 kilowatts, $....... per
kilowatt-hour.
new text end

new text begin Subd. 7. new text end

new text begin Standard renewable rate; final values. new text end

new text begin (a) By October 1, 2017, the commission
must determine a final standard rate for each project type and size listed under subdivision
6. The commission must review each interim standard renewable rate established under
subdivision 6 to determine whether the interim rate is a reasonable approximation of a rate
established by applying the criteria in this subdivision. If the commission determines the
interim rate is a reasonable approximation of a rate established under this subdivision, it
must approve the interim standard renewable rate as a final standard renewable rate. If the
commission determines the interim rate is not a reasonable approximation of a rate established
under this subdivision, it must calculate the final standard renewable rate by applying the
criteria in paragraph (b).
new text end

new text begin (b) The commission must calculate a final standard renewable rate by first determining,
for each project type and size listed in subdivision 6:
new text end

new text begin (1) the cost of generation, based on an economic analysis;
new text end

new text begin (2) the amount of federal, state, and utility subsidies, including grants, tax credits, and
rebates, but excluding tradeable renewable energy credits, a tax under chapter 272, or
financial incentives available to businesses that generate electricity but are not a renewable
electricity generator, that a renewable electricity generator is likely to obtain for projects;
new text end

new text begin (3) a reasonable profit; and
new text end

new text begin (4) any adjustment the commission determines is the minimum necessary to ensure the
objective in subdivision 2 is met.
new text end

new text begin (c) The commission must calculate the standard renewable rate by adding the amounts
in paragraph (b), clauses (1), (3), and (4), and subtracting the amount in paragraph (b),
clause (2), from the total.
new text end

new text begin (d) The commission shall not approve a standard rate exceeding $....... per kilowatt-hour.
new text end

new text begin Subd. 8. new text end

new text begin Standard renewable rate review and adjustment. new text end

new text begin (a) Beginning February
1, 2019, and annually thereafter, the commission must review the standard renewable rate.
The commission may adjust the standard renewable rate if it determines the standard
renewable rate (1) is not a reasonable approximation of the rate that would be calculated
under subdivision 7, paragraph (b), using the most recent available data, or (2) does not
achieve the objectives described in subdivision 2. In determining whether the standard
renewable rate should be adjusted, the commission must consider:
new text end

new text begin (1) the rate of penetration for wind, photovoltaic devices, and anaerobic digester facilities
in Minnesota's electricity generation sector, compared to the state's renewable energy goals
enumerated under section 216B.1691, subdivisions 2a and 2f;
new text end

new text begin (2) whether the implementation of a standard obligation has been modified by the
commission under section 216B.1691, subdivision 2b; and
new text end

new text begin (3) the account balance in the public benefits surcharge account established under section
216B.155.
new text end

new text begin (b) The commission must not approve a standard renewable rate that is less than the cost
of generating electricity from a renewable electricity generator plus a reasonable profit.
new text end

new text begin (c) After notice and hearing and upon finding that the objectives in section 216B.1691
are not likely to be met without extending this standard renewable rate to renewable electricity
projects connected to the electrical transmission system, the commission may require electric
utilities to enter into power purchase agreements with qualifying owners at rates calculated
under subdivisions 6 to 8 as necessary to achieve the objectives.
new text end

new text begin Subd. 9. new text end

new text begin Sale to nonqualifying owners limited. new text end

new text begin During the term of a power purchase
agreement entered into under the standard renewable rate established by this section, no
qualifying owner may voluntarily sell its ownership interest in the renewable energy generator
unless the sale is to another qualifying owner and is approved by the commission. This
subdivision does not restrict transfers of interest by means other than voluntary sales.
new text end

new text begin Subd. 10. new text end

new text begin Ownership limit. new text end

new text begin A single qualifying or nonqualifying owner receiving
payments under a standard renewable rate established in this section may own:
new text end

new text begin (1) up to 100 percent of a single project for each of the three technologies eligible to
receive payments, but may own no more than 15 percent of any other project receiving a
standard renewable rate under this section; and
new text end

new text begin (2) in aggregate, projects or portions of projects with a combined capacity of no more
than 12 megawatts.
new text end

new text begin Subd. 11. new text end

new text begin WECS capacity calculation. new text end

new text begin For the purposes of this section and section
216B.1555, the total size of a wind energy conversion system must be determined in the
same manner as under section 216C.41, subdivision 5, paragraphs (b) and (c).
new text end

new text begin Subd. 12. new text end

new text begin Interconnection. new text end

new text begin (a) The standard renewable rate in this section must ensure
that electric utilities interconnect renewable energy generators to the electrical distribution
system under the commission's jurisdiction to the maximum extent allowed under federal
law.
new text end

new text begin (b) The commission must consult with the Federal Energy Regulatory Commission, the
Midcontinent Independent System Operator, and other appropriate entities to establish an
interconnection request review procedure that promptly and efficiently determines whether
the commission may interconnect a renewable energy generator that requests interconnection
under state authority.
new text end

new text begin (c) The commission must issue orders necessary to establish interconnection standard
renewable rates for the standardized, cost-effective, timely, reliable, and safe interconnection
of renewable electricity generators under state authority.
new text end

new text begin (d) The commission must establish standard interconnection contracts and interconnection
schedules.
new text end

new text begin (e) An electric utility's costs associated with the interconnection of renewable electricity
generators, including direct interconnection costs, distribution system enhancements, and
electric utility compliance costs, are recoverable under section 216B.154.
new text end

new text begin Subd. 13. new text end

new text begin Standard contract. new text end

new text begin The commission must approve a standard contract for
use in all power purchase agreements under the standard renewable rate established under
this section. The contract must include the price paid for each kilowatt-hour generated, a
method to adjust the price for inflation, and the duration of the contract.
new text end

Sec. 5.

new text begin [216B.154] COST RECOVERY.
new text end

new text begin The commission must require an electric utility to file rate schedules containing provisions
for the automatic adjustment of charges for electric utility service in direct relation to the
cost of electricity purchased from renewable electricity generators under the standard
renewable rate established under sections 216B.152 to 216B.1565, and all other costs
required to comply with the standard renewable rate established under section 216B.1535.
new text end

Sec. 6.

new text begin [216B.1545] INFORMATION REQUIRED.
new text end

new text begin (a) By March 1, 2019, and each year thereafter, a utility that has filed with the commission
a standard renewable rate established in this section must report to the commission the
following quantities for the previous calendar year:
new text end

new text begin (1) the total number of kilowatt-hours purchased under contracts using the standard
renewable rate established under section 216B.1535;
new text end

new text begin (2) the total revenues paid by the utility for electricity purchased under contracts using
the standard renewable rate established under section 216B.1535; and
new text end

new text begin (3) the total number of kilowatt-hours sold to Minnesota retail customers.
new text end

new text begin (b) Upon request, renewable energy generators, qualifying owners that own all or part
of a renewable energy generator, and electric utilities must provide the commission any
information that may be relevant to the commission performing its duties under sections
216B.152 to 216B.1565, including but not limited to project development costs, equipment
costs, electricity production costs, interconnection costs, automatic rate adjustments, and
compliance costs.
new text end

Sec. 7.

new text begin [216B.155] PUBLIC BENEFITS SURCHARGE.
new text end

new text begin Subdivision 1. new text end

new text begin Surcharge. new text end

new text begin A public benefits surcharge on each kilowatt-hour of electricity
sold at retail to Minnesota customers by an electric utility is established. The surcharge
must be collected by each electric utility and remitted to the commissioner of commerce
each month.
new text end

new text begin Subd. 2. new text end

new text begin Amount. new text end

new text begin Beginning July 1, 2017, the public benefits surcharge is $0.00025
per kilowatt-hour. The public benefits surcharge increases to $0.0005 per kilowatt-hour on
July 1, 2018, $0.00075 per kilowatt-hour on July 1, 2019, and $0.001 per kilowatt-hour on
July 1, 2020, and thereafter.
new text end

new text begin Subd. 3. new text end

new text begin Account. new text end

new text begin The public benefits surcharge account is established in the special
revenue fund in the state treasury. Each month the commissioner of commerce must deposit
all proceeds from the surcharge established under subdivision 1 into the account. Other
funds may be deposited into the account, including those voluntarily contributed by ratepayers
under subdivision 6. Interest accrued on the account balance remains in the account. The
account balance at the end of a fiscal year does not cancel to the general fund, but remains
in the account for disbursement under subdivision 4.
new text end

new text begin Subd. 4. new text end

new text begin Expenditures. new text end

new text begin The commissioner of commerce may make expenditures from
the account for the following purposes:
new text end

new text begin (1) to make incentive payments to owners of renewable electricity generators, as specified
in section 216B.1555; and
new text end

new text begin (2) to reimburse the commission for reasonable costs incurred to annually review the
standard renewable rate under section 216B.1535, subdivision 8.
new text end

new text begin Subd. 5. new text end

new text begin Exceptions. new text end

new text begin The public benefits surcharge must not be charged to:
new text end

new text begin (1) the electricity consumption of a retail industrial electric customer that exceeds .......
kilowatt-hours in a month; or
new text end

new text begin (2) a residential customer who receives the low-income electric rate discount under
section 216B.16, subdivision 14.
new text end

new text begin Subd. 6. new text end

new text begin Ratepayer contributions. new text end

new text begin An electric utility must offer its customers the option
to make voluntary contributions to the account created under this section through the
customer's utility bill.
new text end

Sec. 8.

new text begin [216B.1555] STANDARD RENEWABLE RATE INCENTIVE PAYMENTS.
new text end

new text begin Subdivision 1. new text end

new text begin Incentive payment; appropriation. new text end

new text begin (a) Incentive payments to a project
that receives a rate under section 216B.1535 must be made under this section.
new text end

new text begin (b) Payment may only be made after the commissioner of commerce receives a standard
renewable rate incentive payment application that (1) establishes the applicant's eligibility
to receive a standard renewable rate incentive payment, and (2) satisfies other requirements
the commissioner deems necessary. The application must be in a form and submitted at a
time established by the commissioner.
new text end

new text begin (c) There is annually appropriated from the public benefits surcharge account under
section 216B.155 to the commissioner of commerce funds sufficient to make the payments
required under this section.
new text end

new text begin Subd. 2. new text end

new text begin Payment period. new text end

new text begin (a) A facility may receive payments under this section
throughout the term of a power purchase agreement.
new text end

new text begin (b) The payment period begins and runs consecutively from the date the facility begins
generating electricity.
new text end

new text begin Subd. 3. new text end

new text begin Amount of payment. new text end

new text begin An incentive payment is based on the number of
kilowatt-hours of electricity generated. The payment amount per kilowatt-hour generated
is the difference between (1) the average price per kilowatt-hour contained in power purchase
agreements signed during calendar year 2016 and approved by the commission for each
project type and size, and (2) the standard renewable rate established under section
216B.1535, subdivisions 6 to 8.
new text end

new text begin Subd. 4. new text end

new text begin Ownership; financing; cure. new text end

new text begin (a) A subsequent owner of a renewable electricity
generator receiving payments under this section may continue to receive the incentive
payment for the duration of the original payment period if the subsequent owner qualifies
for the incentive under section 216B.1535.
new text end

new text begin (b) Nothing in this section may be construed to deny an incentive payment to an otherwise
qualified renewable electricity generator that has obtained debt or equity financing for
construction or operation, provided the ownership requirements of section 216B.1535 are
met. If the owner of the renewable electricity generator is in default of a lending agreement
during the incentive payment period for a qualified renewable electricity generator and the
lender takes possession of, operates, and makes reasonable efforts to transfer ownership of
the renewable electricity generator to an entity other than the lender, the lender may continue
to receive the incentive payment for electricity generated and sold by the renewable electricity
generator for a period not to exceed 18 months. A lender who takes possession of a renewable
electricity generator must notify the commissioner immediately upon taking possession and
must document efforts to transfer ownership of the renewable electricity generator at least
quarterly.
new text end

new text begin (c) If a renewable electricity generator loses the right to receive the incentive because
of changes in ownership during the incentive payment period, the renewable electricity
generator may regain the right to receive the incentive upon cure of the ownership structure
that resulted in the loss of eligibility and may reapply for the incentive. In no case may the
payment period be extended beyond the original limit established in the power purchase
agreement.
new text end

new text begin (d) A subsequent or requalifying owner under paragraph (b) or (c) retains the renewable
electricity generator's original priority order for incentive payments provided the ownership
structure requalifies within two years of the date (1) the renewable electricity generator
became unqualified, or (2) a lender takes possession.
new text end

new text begin Subd. 5. new text end

new text begin Eligibility process. new text end

new text begin (a) A renewable electricity generator is eligible for the
incentive on the date the commissioner receives:
new text end

new text begin (1) an application for the incentive payment;
new text end

new text begin (2) one of the following:
new text end

new text begin (i) a copy of a signed power purchase agreement;
new text end

new text begin (ii) a copy of a binding agreement other than a power purchase agreement to sell
electricity generated by the project to a third person; or
new text end

new text begin (iii) if the renewable electricity generator's developer or owner will sell electricity to its
own members or customers, a copy of the purchase order for equipment to construct the
renewable electricity generator with a delivery date and a copy of a signed receipt for a
nonrefundable deposit; and
new text end

new text begin (3) any other information the commissioner deems necessary to determine whether the
proposed renewable electricity generator qualifies for the incentive under this section.
new text end

new text begin (b) The commissioner must determine whether a renewable electricity generator qualifies
for the incentive and respond in writing to the applicant approving or denying the application
within 15 working days of the date the information required under paragraph (a) is received.
A renewable electricity generator that is not operational within 18 months of receiving a
letter of approval is no longer approved for the incentive. The commissioner must notify
an applicant of potential loss of approval no less than 60 days before the end of the 18-month
period. A renewable electricity generator that loses approval may reestablish eligibility on
the date the commissioner receives a new completed application.
new text end

Sec. 9.

new text begin [216B.1565] REPORT.
new text end

new text begin By January 1, 2019, and January 1, 2020, and every four years thereafter, the commission
must submit a report to the governor and legislature that includes:
new text end

new text begin (1) the number of new renewable electricity generators in Minnesota and the
environmental effects of the addition of those generators, including but not limited to the
effects on progress toward achieving the renewable energy objectives and standards under
section 216B.1691;
new text end

new text begin (2) recommendations for legislative changes to the rates in section 216B.1535, if any;
and
new text end

new text begin (3) actions taken by the commission to implement sections 216B.152 to 216B.1565 and
to use the standard renewable rate to achieve the renewable energy objectives and standards
under section 216B.1691.
new text end

Sec. 10. new text begin EFFECTIVE DATE.
new text end

new text begin Sections 1 to 9 are effective the day following final enactment.
new text end