2nd Engrossment - 84th Legislature (2005 - 2006) Posted on 12/15/2009 12:00am
1.1 A bill for an act 1.2 relating to utilities; modifying and adding provisions 1.3 relating to alternative, clean, or renewable energy 1.4 resource development; regulating public utilities, 1.5 power transmission companies and facilities, and 1.6 energy facilities; authorizing local power quality 1.7 zones; authorizing community-based energy development 1.8 tariff; transferring various siting authorities from 1.9 Environmental Quality Board to Public Utilities 1.10 Commission; providing for commission oversight of 1.11 reliability administrator; modifying provisions 1.12 relating to energy conservation; requiring commission 1.13 to establish e-filing system; requiring creation of 1.14 stakeholder and working groups; regulating gas 1.15 infrastructure cost recovery; requiring studies and 1.16 reports; making clarifying and technical changes; 1.17 appropriating money; amending Minnesota Statutes 2004, 1.18 sections 116C.52, subdivisions 2, 4; 116C.53, 1.19 subdivision 2; 116C.57, subdivisions 1, 2c, by adding 1.20 a subdivision; 116C.575, subdivision 5; 116C.577; 1.21 116C.58; 116C.61, subdivision 3; 116C.69, subdivisions 1.22 2, 2a; 216B.02, by adding a subdivision; 216B.16, 1.23 subdivision 6d, by adding subdivisions; 216B.1645, 1.24 subdivision 1; 216B.241, subdivisions 1b, 2; 1.25 216B.2421, subdivision 2; 216B.2425, subdivision 2, by 1.26 adding a subdivision; 216B.243, subdivisions 3, 4, 5, 1.27 6, 7, 8; 216B.50, subdivision 1; 216B.62, subdivision 1.28 5, by adding a subdivision; 216B.79; 216C.052; 1.29 216C.41, subdivision 1; proposing coding for new law 1.30 in Minnesota Statutes, chapters 216B; 216C; repealing 1.31 Laws 1999, chapter 125, section 4, as amended. 1.32 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 1.33 ARTICLE 1 1.34 TRANSMISSION COMPANIES 1.35 Section 1. Minnesota Statutes 2004, section 216B.02, is 1.36 amended by adding a subdivision to read: 1.37 Subd. 10. [TRANSMISSION COMPANY.] "Transmission company" 1.38 means persons, corporations, or other legal entities and their 2.1 lessees, trustees, and receivers, now or hereafter engaged in 2.2 the business of owning, operating, maintaining, or controlling 2.3 in this state equipment or facilities for furnishing electric 2.4 transmission service in Minnesota, but does not include public 2.5 utilities, municipal electric utilities, municipal power 2.6 agencies, cooperative electric associations, or generation and 2.7 transmission cooperative power associations. 2.8 Sec. 2. Minnesota Statutes 2004, section 216B.16, is 2.9 amended by adding a subdivision to read: 2.10 Subd. 7b. [TRANSMISSION COST ADJUSTMENT.] (a) 2.11 Notwithstanding any other provision of this chapter, the 2.12 commission may approve a tariff mechanism for the automatic 2.13 annual adjustment of charges for the Minnesota jurisdictional 2.14 costs of new transmission facilities that have been separately 2.15 filed and reviewed and approved by the commission under sections 2.16 216B.2425 and 216B.243 or are deemed to be a priority 2.17 transmission project under section 216B.2425. 2.18 (b) Upon filing by a public utility or utilities providing 2.19 transmission service, the commission may approve, reject, or 2.20 modify, after notice and comment, a tariff that: 2.21 (1) allows the utility to recover on a timely basis the 2.22 costs net of revenues of facilities approved under sections 2.23 216B.2425 and 216B.243; 2.24 (2) allows a return on investment at the level approved in 2.25 the utility's last general rate case, unless a different return 2.26 is found to be consistent with the public interest; 2.27 (3) provides a current return on construction work in 2.28 progress, provided that recovery from Minnesota retail customers 2.29 for the allowance for funds used during construction is not 2.30 sought through any other mechanism; 2.31 (4) allows for recovery of other expenses if shown to 2.32 promote a least-cost project option or is otherwise in the 2.33 public interest; 2.34 (5) allocates project costs appropriately between wholesale 2.35 and retail customers; 2.36 (6) provides a mechanism for recovery above cost, if 3.1 necessary to improve the overall economics of the project or 3.2 projects or is otherwise in the public interest; and 3.3 (7) terminates recovery once costs have been fully 3.4 recovered or have otherwise been reflected in the utility's 3.5 general rates. 3.6 (c) A public utility may file annual rate adjustments to be 3.7 applied to customer bills paid under the tariff approved in 3.8 paragraph (b). In its filing, the public utility shall provide: 3.9 (1) a description of and context for the facilities 3.10 included for recovery; 3.11 (2) a schedule for implementation of applicable projects; 3.12 (3) the utility's costs for these projects; 3.13 (4) a description of the utility's efforts to ensure the 3.14 lowest costs to ratepayers for the project; and 3.15 (5) calculations to establish that the rate adjustment is 3.16 consistent with the terms of the tariff established in paragraph 3.17 (b). 3.18 (d) Upon receiving a filing for a rate adjustment pursuant 3.19 to the tariff established in paragraph (b), the commission shall 3.20 approve the annual rate adjustments provided that, after notice 3.21 and comment, the costs included for recovery through the tariff 3.22 were or are expected to be prudently incurred and achieve 3.23 transmission system improvements at the lowest feasible and 3.24 prudent cost to ratepayers. 3.25 Sec. 3. Minnesota Statutes 2004, section 216B.16, is 3.26 amended by adding a subdivision to read: 3.27 Subd. 7c. [TRANSMISSION ASSETS TRANSFER.] (a) Subject to 3.28 prior approval of the commission under this subdivision, a 3.29 public utility that owns transmission facilities may transfer 3.30 operational control or ownership of those assets to a 3.31 transmission company subject to Federal Energy Regulatory 3.32 Commission jurisdiction. For asset transfers by a public 3.33 utility, the Public Utilities Commission may review the request 3.34 to transfer in the context of a general rate case under this 3.35 section or may initiate other proceedings it determines provide 3.36 adequate review of the effect on retail rates of an asset 4.1 transfer approved under this section sufficient to protect 4.2 ratepayers. The commission may only approve a transfer sought 4.3 after the effective date of this section if it finds that the 4.4 transfer: 4.5 (1) is consistent with the public interest; 4.6 (2) facilitates the development of transmission 4.7 infrastructure necessary to ensure reliability, encourages the 4.8 development of renewable resources, and accommodates energy 4.9 transfers within and between states; 4.10 (3) protects Minnesota ratepayers against the subsidization 4.11 of wholesale transactions through retail rates; and 4.12 (4) ensures, in the case of operational control of 4.13 transmission assets, that the state retains jurisdiction over 4.14 the transferring utility for all aspects of service under this 4.15 chapter. 4.16 (b) A transfer of operational control or ownership of 4.17 assets by a public utility under this subdivision is subject to 4.18 section 216B.50. The relationship between a public utility 4.19 transferring operational control of assets to another entity 4.20 under this subdivision is subject to the provisions of section 4.21 216B.48. If a public utility transfers ownership of its 4.22 transmission assets to a transmission provider subject to the 4.23 jurisdiction of the Federal Energy Regulatory Commission, the 4.24 Public Utilities Commission may permit the utility to file a 4.25 rate schedule providing for the automatic adjustment of charges 4.26 to recover the cost of transmission services purchased under 4.27 tariff rates approved by the Federal Energy Regulatory 4.28 Commission. 4.29 Sec. 4. Minnesota Statutes 2004, section 216B.2421, 4.30 subdivision 2, is amended to read: 4.31 Subd. 2. [LARGE ENERGY FACILITY.] "Large energy facility" 4.32 means: 4.33 (1) any electric power generating plant or combination of 4.34 plants at a single site with a combined capacity of 50,000 4.35 kilowatts or more and transmission lines directly associated 4.36 with the plant that are necessary to interconnect the plant to 5.1 the transmission system; 5.2 (2) any high-voltage transmission line with a capacity of 5.3 200 kilovolts or more and greater than 1,500 feet in length; 5.4 (3) any high-voltage transmission line with a capacity of 5.5 100 kilovolts or more with more than ten miles of its length in 5.6 Minnesota or that crosses a state line; 5.7 (4) any pipeline greater than six inches in diameter and 5.8 having more than 50 miles of its length in Minnesota used for 5.9 the transportation of coal, crude petroleum or petroleum fuels 5.10 or oil, or their derivatives; 5.11 (5) any pipeline for transporting natural or synthetic gas 5.12 at pressures in excess of 200 pounds per square inch with more 5.13 than 50 miles of its length in Minnesota; 5.14 (6) any facility designed for or capable of storing on a 5.15 single site more than 100,000 gallons of liquefied natural gas 5.16 or synthetic gas; 5.17 (7) any underground gas storage facility requiring a permit 5.18 pursuant to section 103I.681; 5.19 (8) any nuclear fuel processing or nuclear waste storage or 5.20 disposal facility; and 5.21 (9) any facility intended to convert any material into any 5.22 other combustible fuel and having the capacity to process in 5.23 excess of 75 tons of the material per hour. 5.24 Sec. 5. Minnesota Statutes 2004, section 216B.2425, 5.25 subdivision 2, is amended to read: 5.26 Subd. 2. [LIST DEVELOPMENT; TRANSMISSION PROJECTS REPORT.] 5.27 (a) By November 1 of each odd-numbered year,eacha transmission 5.28 projects report must be submitted to the commission by each 5.29 utility, organization, or company that: 5.30 (1) is a public utility, a municipal utility,anda 5.31 cooperative electric association,orthe generation and 5.32 transmission organization that serves each utility or 5.33 association,thator a transmission company; and 5.34 (2) owns or operates electric transmission lines in 5.35 Minnesotashall. 5.36 (b) The report may be submitted jointly or individually 6.1submit a transmission projects reportto the commission. 6.2 (c) The report must: 6.3 (1) list specific present and reasonably foreseeable future 6.4 inadequacies in the transmission system in Minnesota; 6.5 (2) identify alternative means of addressing each 6.6 inadequacy listed; 6.7 (3) identify general economic, environmental, and social 6.8 issues associated with each alternative; and 6.9 (4) provide a summary of public inputthe utilities and6.10associations have gatheredrelated to the list of inadequacies 6.11 and the role of local government officials and other interested 6.12 persons in assisting to develop the list and analyze 6.13 alternatives. 6.14(b)(d) To meet the requirements of this subdivision, 6.15entitiesreporting parties may rely on available information and 6.16 analysis developed by a regional transmission organization or 6.17 any subgroup of a regional transmission organization and may 6.18 develop and include additional information as necessary. 6.19 Sec. 6. [216B.2426] [OPPORTUNITIES FOR DISTRIBUTED 6.20 GENERATION.] 6.21 The commission shall ensure that opportunities for the 6.22 installation of distributed generation, as that term is defined 6.23 in section 216B.169, subdivision 1, paragraph (c), are 6.24 considered in any proceeding under section 216B.2422, 216B.2425, 6.25 or 216B.243. 6.26 Sec. 7. Minnesota Statutes 2004, section 216B.243, 6.27 subdivision 3, is amended to read: 6.28 Subd. 3. [SHOWING REQUIRED FOR CONSTRUCTION.] No proposed 6.29 large energy facility shall be certified for construction unless 6.30 the applicant can show that demand for electricity cannot be met 6.31 more cost effectively through energy conservation and 6.32 load-management measures and unless the applicant has otherwise 6.33 justified its need. In assessing need, the commission shall 6.34 evaluate: 6.35 (1) the accuracy of the long-range energy demand forecasts 6.36 on which the necessity for the facility is based; 7.1 (2) the effect of existing or possible energy conservation 7.2 programs under sections 216C.05 to 216C.30 and this section or 7.3 other federal or state legislation on long-term energy demand; 7.4 (3) the relationship of the proposed facility to overall 7.5 state energy needs, as described in the most recent state energy 7.6 policy and conservation report prepared under section 216C.18, 7.7 or, in the case of a high-voltage transmission line, the 7.8 relationship of the proposed line to regional energy needs, as 7.9 presented in the transmission plan submitted under section 7.10 216B.2425; 7.11 (4) promotional activities that may have given rise to the 7.12 demand for this facility; 7.13 (5) benefits of this facility, including its uses to 7.14 protect or enhance environmental quality, and to increase 7.15 reliability of energy supply in Minnesota and the region; 7.16 (6) possible alternatives for satisfying the energy demand 7.17 or transmission needs including but not limited to potential for 7.18 increased efficiency and upgrading of existing energy generation 7.19 and transmission facilities, load-management programs, and 7.20 distributed generation; 7.21 (7) the policies, rules, and regulations of other state and 7.22 federal agencies and local governments;and7.23 (8) any feasible combination of energy conservation 7.24 improvements, required under section 216B.241, that can (i) 7.25 replace part or all of the energy to be provided by the proposed 7.26 facility, and (ii) compete with it economically.; 7.27 (9) with respect to a high-voltage transmission line, the 7.28 benefits of enhanced regional reliability, access, or 7.29 deliverability to improve the robustness of the transmission 7.30 system or to lower costs to electric consumers; 7.31 (10) whether the applicant or applicants are in compliance 7.32 with applicable provisions of sections 216B.1691 and 216B.2425, 7.33 subdivision 8, and have filed or will file by a date certain an 7.34 application for certificate of need under this section or for 7.35 certification as a priority electric transmission project under 7.36 section 216B.2425 for any transmission facilities or upgrades 8.1 identified under section 216B.2425, subdivision 8; 8.2 (11) whether the applicant has made the demonstrations 8.3 required under subdivision 3a; and 8.4 (12) if the applicant is proposing a nonrenewable 8.5 generating plan, the applicant's assessment of the risk of 8.6 environmental costs and regulation on that proposed facility 8.7 over the expected useful life of the plant, including a proposed 8.8 means of allocating costs associated with that risk. 8.9 Sec. 8. Minnesota Statutes 2004, section 216B.50, 8.10 subdivision 1, is amended to read: 8.11 Subdivision 1. [COMMISSION APPROVAL REQUIRED.] No public 8.12 utility shall sell, acquire, lease, or rent any plant as an 8.13 operating unit or system in this state for a total consideration 8.14 in excess of $100,000, or merge or consolidate with another 8.15 public utility or transmission company operating in this state, 8.16 without first being authorized so to do by the commission. Upon 8.17 the filing of an application for the approval and consent of the 8.18 commissionthereto, the commission shall investigate,with or 8.19 without public hearing, and in case of. The commission shall 8.20 hold a public hearing, upon such notice as the commission may 8.21 require, and if it shall find. If the commission finds that the 8.22 proposed action is consistent with the public interest, it shall 8.23 give its consent and approval by order in writing. In reaching 8.24 its determination, the commission shall take into consideration 8.25 the reasonable value of the property, plant, or securities to be 8.26 acquired or disposed of, or merged and consolidated.The8.27provisions of8.28 This sectionshalldoes notbe construed as8.29applicableapply to the purchase ofunits ofpropertyfor8.30replacement or to the additionto replace or add to the plant of 8.31 the public utility by construction. 8.32 Sec. 9. Minnesota Statutes 2004, section 216B.62, is 8.33 amended by adding a subdivision to read: 8.34 Subd. 5a. [ASSESSING TRANSMISSION COMPANIES.] The 8.35 commission and department may charge transmission companies 8.36 their proportionate share of the expenses incurred in the review 9.1 and disposition of proceedings under sections 216B.2425, 9.2 216B.243, 216B.48, 216B.50, and 216B.79. A transmission company 9.3 is not liable for costs and expenses in a calendar year in 9.4 excess of the limitation on costs that may be assessed against 9.5 public utilities under subdivision 2. A transmission company 9.6 may object to and appeal bills of the commission and department 9.7 as provided in subdivision 4. 9.8 Sec. 10. Minnesota Statutes 2004, section 216B.79, is 9.9 amended to read: 9.10 216B.79 [PREVENTATIVE MAINTENANCE.] 9.11 The commission may order public utilities to make adequate 9.12 infrastructure investments and undertake sufficient preventative 9.13 maintenance with regard to generation, transmission, and 9.14 distribution facilities. The commission's authority under this 9.15 section also applies to any transmission company that owns or 9.16 operates electric transmission lines in Minnesota. 9.17 Sec. 11. [216B.82] [LOCAL POWER QUALITY ZONES.] 9.18 (a) Upon joint petition of a public utility as defined in 9.19 section 216B.02, subdivision 4, and any customer located within 9.20 the utility's service territory, the commission may establish a 9.21 zone within that utility's service territory where the utility 9.22 will install additional, redundant, or upgraded components of 9.23 the electric distribution infrastructure that are designed to 9.24 decrease the risk of power outages; provided, the utility and 9.25 all of its customers located within the proposed zone have 9.26 approved the installation of the components and the financial 9.27 recovery plan prior to the creation of the zone. 9.28 (b) The commission shall authorize the utility to collect 9.29 all costs of the installation of any components under this 9.30 section, including initial investment, operation, and 9.31 maintenance costs and taxes from all customers within the zone, 9.32 through tariffs and surcharges for service in a zone that 9.33 appropriately reflect the cost of service to those customers, 9.34 provided the customers agree to pay all costs for a 9.35 predetermined period, including costs of component removal, if 9.36 appropriate. 10.1 (c) Nothing in this section limits the ability of the 10.2 utility and any customer to enter into customer-specific 10.3 agreements pursuant to applicable statutory, rule, or tariff 10.4 provisions. 10.5 Sec. 12. [STAKEHOLDER PROCESS AND REPORT.] 10.6 Subdivision 1. [MEMBERSHIP.] By June 15, 2005, the 10.7 Legislative Electric Energy Task Force shall convene a 10.8 stakeholder group consisting of one representative from each of 10.9 the following groups: transmission-owning investor-owned 10.10 utilities, electric cooperatives, municipal power agencies, 10.11 energy consumer advocates, business energy consumer advocates, 10.12 residential energy consumer advocates, environmental 10.13 organizations, the Minnesota Department of Commerce, the 10.14 Minnesota Environmental Quality Board, and the Minnesota Public 10.15 Utilities Commission. 10.16 Subd. 2. [CHARGE.] (a) The stakeholder group shall explore 10.17 whether increased efficiencies and effectiveness can be obtained 10.18 through modifying current state statutes and administrative 10.19 processes to certify and route high-voltage transmission lines, 10.20 including modifications to Minnesota Statutes, section 216B.243. 10.21 (b) In developing its recommendations, the stakeholder 10.22 group shall consider: 10.23 (1) whether the certification process established under 10.24 Minnesota Statutes, section 216B.2425, subdivision 3, can be 10.25 modified to encourage utilities to apply for certification under 10.26 that section; 10.27 (2) whether alternative certification processes are 10.28 feasible for different types of transmission facilities; and 10.29 (3) whether additional cooperation between state agencies 10.30 is needed to enhance the efficiency of the certification and 10.31 routing processes, and whether modifications to those processes 10.32 are appropriate. 10.33 (c) The stakeholder group shall also consider and make 10.34 recommendations regarding whether and how to provide 10.35 compensation above traditional eminent domain payments to 10.36 landowners over whose property a new transmission facility is 11.1 constructed. 11.2 Subd. 3. [REPORT.] By January 15, 2006, the task force 11.3 shall submit a report to the legislature summarizing the 11.4 stakeholder group findings and any recommended changes to the 11.5 certification and routing processes for high-voltage 11.6 transmission lines. 11.7 ARTICLE 2 11.8 COMMUNITY-BASED ENERGY TARIFF 11.9 Section 1. [216B.1612] [COMMUNITY-BASED ENERGY 11.10 DEVELOPMENT; TARIFF.] 11.11 Subdivision 1. [TARIFF ESTABLISHMENT.] A tariff shall be 11.12 established to optimize local, regional, and state benefits from 11.13 wind energy development, and to facilitate development of 11.14 community-based wind energy projects throughout Minnesota. 11.15 Subd. 2. [DEFINITIONS.] (a) The terms used in this section 11.16 have the meanings given them in this subdivision. 11.17 (b) "C-BED tariff" or "tariff" means a community-based 11.18 energy development tariff. 11.19 (c) "Qualifying owner" means: 11.20 (1) a Minnesota resident; 11.21 (2) a limited liability corporation that is organized under 11.22 the laws of this state and that is made up of members who are 11.23 Minnesota residents; 11.24 (3) a Minnesota nonprofit organization organized under 11.25 chapter 317A; 11.26 (4) a Minnesota cooperative association organized under 11.27 chapter 308A or 308B, other than a rural electric cooperative 11.28 association or a generation and transmission cooperative; 11.29 (5) a Minnesota political subdivision or local government 11.30 other than a municipal electric utility or municipal power 11.31 agency, including, but not limited to, a county, statutory or 11.32 home rule charter city, town, school district, or public or 11.33 private higher education institution or any other local or 11.34 regional governmental organization such as a board, commission, 11.35 or association; or 11.36 (6) a tribal council. 12.1 (d) "Net present value rate" means a rate equal to the net 12.2 present value of the nominal payments to a project divided by 12.3 the total expected energy production of the project over the 12.4 life of its power purchase agreement. 12.5 (e) "Standard reliability criteria" means: 12.6 (1) can be safely integrated into and operated within the 12.7 utility's grid without causing any adverse or unsafe 12.8 consequences; and 12.9 (2) is consistent with the utility's resource needs as 12.10 identified in its most recent resource plan submitted under 12.11 section 216B.2422. 12.12 (f) "Community-based energy project" or "C-BED project" 12.13 means a new wind energy project that: 12.14 (1) has no single qualifying owner owning more than 15 12.15 percent of a C-BED project that consists of more than two 12.16 turbines; or 12.17 (2) for C-BED projects of one or two turbines, is owned 12.18 entirely by one or more qualifying owners, with at least 51 12.19 percent of the total financial benefits over the life of the 12.20 project flowing to qualifying owners; and 12.21 (3) has a resolution of support adopted by the county board 12.22 of each county in which the project is to be located, or in the 12.23 case of a project located within the boundaries of a 12.24 reservation, the tribal council for that reservation. 12.25 Subd. 3. [TARIFF RATE.] (a) The tariff described in 12.26 subdivision 4 must have a rate schedule that allows for a rate 12.27 up to a 2.7 cents per kilowatt hour net present value rate over 12.28 the 20-year life of the power purchase agreement. The tariff 12.29 must provide for a rate that is higher in the first ten years of 12.30 the power purchase agreement than in the last ten years. The 12.31 discount rate required to calculate the net present value must 12.32 be the utility's normal discount rate used for its other 12.33 business purposes. 12.34 (b) The commission shall consider mechanisms to encourage 12.35 the aggregation of C-BED projects. 12.36 (c) The commission shall require that qualifying owners 13.1 provide sufficient security to secure performance under the 13.2 power purchase agreement, and shall prohibit the transfer of the 13.3 C-BED project to a nonqualifying owner during the initial 20 13.4 years of the contract. 13.5 Subd. 4. [UTILITIES TO OFFER TARIFF.] By December 1, 2005, 13.6 each public utility providing electric service at retail shall 13.7 file for commission approval a community-based energy 13.8 development tariff consistent with subdivision 3. Within 90 13.9 days of the first commission approval order under this 13.10 subdivision, each municipal power agency and generation and 13.11 transmission cooperative electric association shall adopt a 13.12 community-based energy development tariff as consistent as 13.13 possible under subdivision 3. 13.14 Subd. 5. [PRIORITY FOR C-BED PROJECTS.] (a) A utility 13.15 subject to section 216B.1691 that needs to construct new 13.16 generation, or purchase the output from new generation, as part 13.17 of its plan to satisfy its good faith objective under that 13.18 section shall take reasonable steps to determine if one or more 13.19 C-BED projects are available that meet the utility's cost and 13.20 reliability requirements, applying standard reliability 13.21 criteria, to fulfill some or all of the identified need at 13.22 minimal impact to customer rates. 13.23 Nothing in this section shall be construed to obligate a 13.24 utility to enter into a power purchase agreement under a C-BED 13.25 tariff developed under this section. 13.26 (b) Each utility shall include in its resource plan 13.27 submitted under section 216B.2422 a description of its efforts 13.28 to purchase energy from C-BED projects, including a list of the 13.29 projects under contract and the amount of C-BED energy purchased. 13.30 (c) The commission shall consider the efforts and 13.31 activities of a utility to purchase energy from C-BED projects 13.32 when evaluating its good faith effort towards meeting the 13.33 renewable energy objective under section 216B.1691. 13.34 Subd. 6. [PROPERTY OWNER PARTICIPATION.] To the extent 13.35 feasible, a developer of a C-BED project must provide, in 13.36 writing, an opportunity to invest in the C-BED project to each 14.1 property owner on whose property a high voltage transmission 14.2 line transmitting the energy generated by the C-BED project to 14.3 market currently exists or is to be constructed and who resides 14.4 in the county where the C-BED project is located or in an 14.5 adjacent Minnesota county. 14.6 Subd. 7. [OTHER C-BED TARIFF ISSUES.] (a) A 14.7 community-based project developer and a utility shall negotiate 14.8 the rate and power purchase agreement terms consistent with the 14.9 tariff established under subdivision 4. 14.10 (b) At the discretion of the developer, a community-based 14.11 project developer and a utility may negotiate a power purchase 14.12 agreement with terms different from the tariff established under 14.13 subdivision 4. 14.14 (c) A qualifying owner, or any combination of qualifying 14.15 owners, may develop a joint venture project with a nonqualifying 14.16 wind energy project developer. However, the terms of the C-BED 14.17 tariff may only apply to the portion of the energy production of 14.18 the total project that is directly proportional to the equity 14.19 share of the project owned by the qualifying owners. 14.20 (d) A project that is operating under a power purchase 14.21 agreement under a C-BED tariff is not eligible for net energy 14.22 billing under section 216B.164, subdivision 3, or for production 14.23 incentives under section 216C.41. 14.24 (e) A public utility must receive commission approval of a 14.25 power purchase agreement for a C-BED project that is operating 14.26 under a rate that is higher in the first ten years of the 14.27 agreement than in the last ten years. The commission shall 14.28 provide the utility's ratepayers an opportunity to address the 14.29 reasonableness of the proposed power purchase agreement. 14.30 Unless a party objects to the contract within 30 days, the 14.31 contract will be deemed approved. 14.32 Sec. 2. Minnesota Statutes 2004, section 216B.1645, 14.33 subdivision 1, is amended to read: 14.34 Subdivision 1. [COMMISSION AUTHORITY.] Upon the petition 14.35 of a public utility, the Public Utilities Commission shall 14.36 approve or disapprove power purchase contracts, investments, or 15.1 expenditures entered into or made by the utility to satisfy the 15.2 wind and biomass mandates contained in sections 216B.169, 15.3 216B.2423, and 216B.2424, and to satisfy the renewable energy 15.4 objectives set forth in section 216B.1691, including reasonable 15.5 investments and expenditures made to: 15.6 (1) transmit the electricity generated from sources 15.7 developed under those sections that is ultimately used to 15.8 provide service to the utility's retail customers,or to15.9 including studies necessary to identify new transmission 15.10 facilities needed to transmit electricity to Minnesota retail 15.11 customers from generating facilities constructed to satisfy the 15.12 renewable energy objectives, provided that the costs of the 15.13 studies have not been recovered previously under existing 15.14 tariffs and the utility has filed an application for a 15.15 certificate of need for the new transmission facilities 15.16 identified in the studies; or 15.17 (2) develop renewable energy sources from the account 15.18 required in section 116C.779. 15.19 Sec. 3. Minnesota Statutes 2004, section 216B.2425, is 15.20 amended by adding a subdivision to read: 15.21 Subd. 8. [PRIORITY TRANSMISSION PROJECTS.] (a) Until 15.22 January 1, 2010, transmission projects determined by the 15.23 commission to be necessary to support a utility's plan under 15.24 section 216B.1691 to meet its obligations under that section 15.25 must be certified as a priority electric transmission project, 15.26 satisfying the requirements of section 216B.243. In determining 15.27 that a proposed transmission project is necessary to support a 15.28 utility's plan under section 216B.1691, the commission must find 15.29 that the applicant has met the following factors: 15.30 (1) that the transmission facility is necessary to allow 15.31 the delivery of power from renewable sources of energy to retail 15.32 customers in Minnesota; 15.33 (2) that the applicant has signed or will sign power 15.34 purchase agreements, subject to commission approval, for 15.35 resources to meet the renewable energy objective that are 15.36 dependent upon or will use the capacity of the transmission 16.1 facility to serve retail customers in Minnesota; 16.2 (3) that the installation and commercial operation date of 16.3 the renewable resources to satisfy the renewable energy 16.4 objective will match the planned in-service date of the 16.5 transmission facility; and 16.6 (4) that the proposed transmission facility is consistent 16.7 with a least-cost solution to the utility's need for additional 16.8 electricity. 16.9 (b) This subdivision expires January 1, 2010. 16.10 Sec. 4. Minnesota Statutes 2004, section 216B.243, 16.11 subdivision 8, is amended to read: 16.12 Subd. 8. [EXEMPTIONS.] This section does not apply to: 16.13 (1) cogeneration or small power production facilities as 16.14 defined in the Federal Power Act, United States Code, title 16, 16.15 section 796, paragraph (17), subparagraph (A), and paragraph 16.16 (18), subparagraph (A), and having a combined capacity at a 16.17 single site of less than 80,000 kilowattsor to; plants or 16.18 facilities for the production of ethanol or fuel alcoholnor in; 16.19 or any case where the commissionshall determinehas determined 16.20 after being advised by the attorney general that its application 16.21 has been preempted by federal law; 16.22 (2) a high-voltage transmission line proposed primarily to 16.23 distribute electricity to serve the demand of a single customer 16.24 at a single location, unless the applicant opts to request that 16.25 the commission determine need under this section or section 16.26 216B.2425; 16.27 (3) the upgrade to a higher voltage of an existing 16.28 transmission line that serves the demand of a single customer 16.29 that primarily uses existing rights-of-way, unless the applicant 16.30 opts to request that the commission determine need under this 16.31 section or section 216B.2425; 16.32 (4) a high-voltage transmission line of one mile or less 16.33 required to connect a new or upgraded substation to an existing, 16.34 new, or upgraded high-voltage transmission line; 16.35 (5) conversion of the fuel source of an existing electric 16.36 generating plant to using natural gas;or17.1 (6) the modification of an existing electric generating 17.2 plant to increase efficiency, as long as the capacity of the 17.3 plant is not increased more than ten percent or more than 100 17.4 megawatts, whichever is greater.; or 17.5 (7) a large energy facility that (i) generates electricity 17.6 from wind energy conversion systems, (ii) will serve retail 17.7 customers in Minnesota, (iii) is specifically intended to be 17.8 used to meet the renewable energy objective under section 17.9 216B.1691 or addresses a resource need identified in a current 17.10 commission-approved or commission-reviewed resource plan under 17.11 section 216B.2422, and (iv) derives at least ten percent of the 17.12 total nameplate capacity of the proposed project from one or 17.13 more C-BED projects, as defined under section 216B.1612, 17.14 subdivision 2, paragraph (f). 17.15 Sec. 5. [216C.053] [RENEWABLE ENERGY DEVELOPMENT.] 17.16 The Department of Commerce shall assist utilities, 17.17 renewable energy developers, regulators, regional transmission 17.18 grid managers, and the public on issues related to renewable 17.19 energy development. The department shall work to ensure 17.20 cost-effective renewable energy development throughout the state. 17.21 Sec. 6. [WIND INTEGRATION STUDY.] 17.22 The Public Utilities Commission shall order all electric 17.23 utilities, as defined in Minnesota Statutes, section 216B.1691, 17.24 subdivision 1, paragraph (b), to participate in a statewide wind 17.25 integration study. Utilities subject to Minnesota Statutes, 17.26 section 216B.1691, shall jointly contract with an independent 17.27 firm selected by the reliability administrator to conduct an 17.28 engineering study of the impacts on reliability and costs 17.29 associated with increasing wind capacity to 20 percent of 17.30 Minnesota retail electric energy sales by the year 2020, and to 17.31 identify and develop options for utilities to use to manage the 17.32 intermittent nature of wind resources. The contracting 17.33 utilities shall cooperate with the firm conducting the study by 17.34 providing data requested. The reliability administrator shall 17.35 manage the study process and shall appoint a group of 17.36 stakeholders with experience in engineering and expertise in 18.1 power systems or wind energy to review the study's proposed 18.2 methods and assumptions and preliminary data. The study must be 18.3 completed by November 30, 2006. Using the study results, the 18.4 contracting utilities shall provide the commissioner of commerce 18.5 with estimates of the impact on their electric rates of 18.6 increasing wind capacity to 20 percent, assuming no reduction in 18.7 reliability. Electric utilities shall incorporate the study's 18.8 findings into their utility integrated resource plans prepared 18.9 under Minnesota Statutes, section 216B.2422. The costs of the 18.10 study are recoverable under Minnesota Statutes, section 18.11 216C.052, subdivision 2, paragraph (c), clause (2). 18.12 Sec. 7. [LANDOWNER PAYMENTS WORKING GROUP.] 18.13 Subdivision 1. [MEMBERSHIP.] By June 15, 2005, the 18.14 Legislative Electric Energy Task Force shall convene a Landowner 18.15 Payments Working Group consisting of up to 12 members, including 18.16 representatives from each of the following groups: 18.17 transmission-owning investor-owned utilities, electric 18.18 cooperatives, municipal power agencies, Farm Bureau, Farmers 18.19 Union, county commissioners, real estate appraisers, and others 18.20 with an interest and expertise in landowner rights and the 18.21 market value of rural property. 18.22 Subd. 2. [APPOINTMENT.] The chairs of the Legislative 18.23 Electric Energy Task Force and the chairs of the senate and 18.24 house committees with primary jurisdiction over energy policy 18.25 shall jointly appoint the working group members. 18.26 Subd. 3. [CHARGE.] (a) The Landowner Payments Working 18.27 Group shall research alternative methods of remunerating 18.28 landowners on whose land high-voltage transmission lines have 18.29 been constructed. 18.30 (b) In developing its recommendations, the working group 18.31 shall: 18.32 (1) examine different methods of landowner payments that 18.33 operate in other states and countries; 18.34 (2) consider innovative alternatives to lump-sum payments 18.35 that extend payments over the life of the transmission line and 18.36 that run with the land if the land is conveyed to another owner; 19.1 and 19.2 (3) consider alternative ways of structuring payments that 19.3 are equitable to landowners and utilities. 19.4 Subd. 4. [EXPENSES.] Members of the working group must be 19.5 reimbursed for expenses as provided in Minnesota Statutes, 19.6 section 15.059, subdivision 6. Expenses of the Landowner 19.7 Payments Working Group must not exceed $10,000 without the 19.8 approval of the chairs of the Legislative Electric Energy Task 19.9 Force. 19.10 Subd. 5. [REPORT.] The Landowner Payments Working Group 19.11 shall present its findings and recommendations, including 19.12 legislative recommendations and model legislation, if any, in a 19.13 report to the Legislative Electric Energy Task Force by January 19.14 15, 2006. 19.15 ARTICLE 3 19.16 TRANSFER OF SITING AND ROUTING AUTHORITY 19.17 FOR LARGE ENERGY FACILITIES 19.18 Section 1. Minnesota Statutes 2004, section 116C.52, 19.19 subdivision 2, is amended to read: 19.20 Subd. 2. [BOARDCOMMISSION.]"Board" shall mean the19.21Minnesota Environmental Quality Board"Commission" means the 19.22 Public Utilities Commission. 19.23 Sec. 2. Minnesota Statutes 2004, section 116C.52, 19.24 subdivision 4, is amended to read: 19.25 Subd. 4. [HIGH VOLTAGE TRANSMISSION LINE.] "High voltage 19.26 transmission line" means a conductor of electric energy and 19.27 associated facilities designed for and capable of operation at a 19.28 nominal voltage of 100 kilovolts or more and is greater than 19.29 1,500 feet in length. 19.30 Sec. 3. Minnesota Statutes 2004, section 116C.53, 19.31 subdivision 2, is amended to read: 19.32 Subd. 2. [JURISDICTION.] Theboardcommission ishereby19.33 given the authority to provide for site and route selection for 19.34 large electric power facilities. Theboardcommission shall 19.35 issue permits for large electric power facilities in a timely 19.36 fashion. When the Public Utilities Commission has determined20.1theand in a manner consistent with the overall determination of 20.2 need for the project under section 216B.243 or 216B.2425,. 20.3 Questions of need, including size, type, and timing; alternative 20.4 system configurations; and voltageare not within the board's20.5siting and routing authority andmust not be included in the 20.6 scope of environmental review conducted under sections 116C.51 20.7 to 116C.69. 20.8 Sec. 4. Minnesota Statutes 2004, section 116C.57, 20.9 subdivision 1, is amended to read: 20.10 Subdivision 1. [SITE PERMIT.] No person may construct a 20.11 large electric generating plant without a site permit from the 20.12boardcommission. A large electric generating plant may be 20.13 constructed only on a site approved by theboardcommission. 20.14 Theboardcommission must incorporate into one proceeding the 20.15 route selection for a high voltage transmission line that is 20.16 directly associated with and necessary to interconnect the large 20.17 electric generating plant to the transmission system and whose 20.18 need is certifiedas part of the generating plant project by the20.19Public Utilities Commissionunder section 216B.243. 20.20 Sec. 5. Minnesota Statutes 2004, section 116C.57, 20.21 subdivision 2c, is amended to read: 20.22 Subd. 2c. [ENVIRONMENTAL REVIEW.] Theboardcommissioner 20.23 of the Department of Commerce shall prepare for the commission 20.24 an environmental impact statement on each proposed large 20.25 electric generating plant or high voltage transmission line for 20.26 which a complete application has been submitted.For any20.27project that has obtained a certificate of need from the Public20.28Utilities Commission, the boardThe commissioner shall not 20.29 consider whether or not the project is needed. No other state 20.30 environmental review documentsshall beare required. Theboard20.31 commissioner shall study and evaluate any site or route proposed 20.32 by an applicant and any other site or route theboardcommission 20.33 deems necessary that was proposed in a manner consistent with 20.34 rulesadopted by the boardconcerning the form, content, and 20.35 timeliness of proposals for alternate sites or routes. 20.36 Sec. 6. Minnesota Statutes 2004, section 116C.57, is 21.1 amended by adding a subdivision to read: 21.2 Subd. 9. [DEPARTMENT OF COMMERCE TO PROVIDE TECHNICAL 21.3 EXPERTISE AND OTHER ASSISTANCE.] The commissioner of the 21.4 Department of Commerce shall provide technical expertise and 21.5 other assistance to the commission for activities and 21.6 proceedings under this section, sections 116C.51 to 116C.697, 21.7 and chapter 116I. This assistance shall include the sharing of 21.8 staff resources as necessary. The commissioner shall 21.9 periodically report to the commission concerning the Department 21.10 of Commerce's costs of providing assistance. The report must 21.11 conform to the schedule and include the required contents 21.12 specified by the commission. The commission shall include the 21.13 costs of the assistance in assessments for activities and 21.14 proceedings under those sections and reimburse the special 21.15 revenue fund for those costs. If either the commissioner or the 21.16 commission deems it necessary, the Department of Commerce and 21.17 the commission shall enter into an interagency agreement 21.18 establishing terms and conditions for the provision of 21.19 assistance and resources under this subdivision. 21.20 Sec. 7. Minnesota Statutes 2004, section 116C.575, 21.21 subdivision 5, is amended to read: 21.22 Subd. 5. [ENVIRONMENTAL REVIEW.] For the projects 21.23 identified in subdivision 2 and following these procedures, the 21.24boardcommissioner of the Department of Commerce shall prepare 21.25 for the commission an environmental assessment. The 21.26 environmental assessment shall contain information on the human 21.27 and environmental impacts of the proposed project and other 21.28 sites or routes identified by theboardcommission and shall 21.29 address mitigating measures for all of the sites or routes 21.30 considered. The environmental assessment shall be the only 21.31 state environmental review document required to be prepared on 21.32 the project. 21.33 Sec. 8. Minnesota Statutes 2004, section 116C.577, is 21.34 amended to read: 21.35 116C.577 [EMERGENCY PERMIT.] 21.36 (a) Any utility whose electric power system requires the 22.1 immediate construction of a large electric power generating 22.2 plant or high voltage transmission line due to a major 22.3 unforeseen event may apply to theboardcommission for an 22.4 emergency permitafter providing. The application must provide 22.5 notice in writingto the Public Utilities Commissionof the 22.6 major unforeseen event and the need for immediate construction. 22.7 The permit must be issued in a timely manner, no later than 195 22.8 days after theboard'scommission's acceptance of the 22.9 application and upon a finding by theboardcommission that (1) 22.10 a demonstrable emergency exists, (2) the emergency requires 22.11 immediate construction, and (3) adherence to the procedures and 22.12 time schedules specified in section 116C.57 would jeopardize the 22.13 utility's electric power system or would jeopardize the 22.14 utility's ability to meet the electric needs of its customers in 22.15 an orderly and timely manner. 22.16 (b) A public hearing to determine if an emergency exists 22.17 must be held within 90 days of the application. The 22.18boardcommission, after notice and hearing, shall adopt rules 22.19 specifying the criteria for emergency certification. 22.20 Sec. 9. Minnesota Statutes 2004, section 116C.58, is 22.21 amended to read: 22.22 116C.58 [ANNUAL HEARING.] 22.23 Theboardcommission shall hold an annual public hearing at 22.24 a time and place prescribed by rule in order to afford 22.25 interested persons an opportunity to be heard regarding any 22.26 matters relating to the siting of large electric generating 22.27 power plants and routing of high voltage transmission lines. At 22.28 the meeting, theboardcommission shall advise the public of the 22.29 permits issued by theboardcommission in the past year. 22.30 Theboardcommission shall provide at least ten days but no more 22.31 than 45 days' notice of the annual meeting by mailing notice to 22.32 those persons who have requested notice and by publication in 22.33 the EQB Monitor and the commission's weekly calendar. 22.34 Sec. 10. Minnesota Statutes 2004, section 116C.61, 22.35 subdivision 3, is amended to read: 22.36 Subd. 3. [STATE AGENCY PARTICIPATION.] (a) State agencies 23.1 authorized to issue permits required for construction or 23.2 operation of large electric power generating plants or high 23.3 voltage transmission lines shall participate during routing and 23.4 siting at public hearings and all other activities of the board 23.5 on specific site or route designations and design considerations 23.6 of the board, and shall clearly state whether the site or route 23.7 being considered for designation or permit and other design 23.8 matters under consideration for approval will be in compliance 23.9 with state agency standards, rules, or policies. 23.10 (b) An applicant for a permit under this section or under 23.11 chapter 116I shall notify the commissioner of agriculture if the 23.12 proposed project will impact cultivated agricultural land, as 23.13 defined in section 1116I.01, subdivision 4. The commissioner 23.14 may participate in any proceeding on the application, may advise 23.15 the commission as to whether to grant a permit for the project, 23.16 and may make recommendations regarding mitigating adverse 23.17 impacts to agricultural lands if the permit is granted. The 23.18 Department of Agriculture shall be the lead agency in developing 23.19 an agricultural mitigation plan required for the project. 23.20 Sec. 11. Minnesota Statutes 2004, section 116C.69, 23.21 subdivision 2, is amended to read: 23.22 Subd. 2. [SITE APPLICATION FEE.] Every applicant for a 23.23 site permit shall pay to theboardcommission a feein an amount23.24equal to $500 for each $1,000,000 of production plant investment23.25in the proposed installation as defined in the Federal Power23.26Commission Uniform System of Accounts. The board shall specify23.27the time and manner of payment of the fee. If any single23.28payment requested by the board is in excess of 25 percent of the23.29total estimated fee, the board shall show that the excess is23.30reasonably necessary. The applicant shall pay within 30 days of23.31notification any additional fees reasonably necessary for23.32completion of the site evaluation and designation process by the23.33board. In no event shall the total fees required of the23.34applicant under this subdivision exceed an amount equal to 0.00123.35of said production plant investment ($1,000 for each $1,000,000)23.36 to cover the necessary and reasonable costs incurred by the 24.1 commission in acting on the permit application and carrying out 24.2 the requirements of sections 116C.51 to 116C.69. The commission 24.3 may adopt rules providing for the payment of the fee. Section 24.4 16A.1283 does not apply to establishment of this fee. All money 24.5 received pursuant to this subdivision shall be deposited in a 24.6 special account. Money in the account is appropriated to 24.7 theboardcommission to pay expenses incurred in processing 24.8 applications for site permits in accordance with sections 24.9 116C.51 to 116C.69 and in the event the expenses are less than 24.10 the fee paid, to refund the excess to the applicant. 24.11 Sec. 12. Minnesota Statutes 2004, section 116C.69, 24.12 subdivision 2a, is amended to read: 24.13 Subd. 2a. [ROUTE APPLICATION FEE.] Every applicant for a 24.14 transmission line route permit shall pay to theboardcommission 24.15 abase fee of $35,000 plus a fee in an amount equal to $1,00024.16per mile length of the longest proposed route. The board shall24.17specify the time and manner of payment of the fee. If any24.18single payment requested by the board is in excess of 25 percent24.19of the total estimated fee, the board shall show that the excess24.20is reasonably necessary. In the event the actual cost of24.21processing an application up to the board's final decision to24.22designate a route exceeds the above fee schedule, the board may24.23assess the applicant any additional fees necessary to cover the24.24actual costs, not to exceed an amount equal to $500 per mile24.25length of the longest proposed routefee to cover the necessary 24.26 and reasonable costs incurred by the commission in acting on the 24.27 permit application and carrying out the requirements of sections 24.28 116C.51 to 116C.69. The commission may adopt rules providing 24.29 for the payment of the fee. Section 16A.1283 does not apply to 24.30 the establishment of this fee. All money received pursuant to 24.31 this subdivision shall be deposited in a special account. Money 24.32 in the account is appropriated to theboardcommission to pay 24.33 expenses incurred in processing applications for route permits 24.34 in accordance with sections 116C.51 to 116C.69 and in the event 24.35 the expenses are less than the fee paid, to refund the excess to 24.36 the applicant. 25.1 Sec. 13. Minnesota Statutes 2004, section 216B.243, 25.2 subdivision 4, is amended to read: 25.3 Subd. 4. [APPLICATION FOR CERTIFICATE; HEARING.] Any 25.4 person proposing to construct a large energy facility shall 25.5 apply for a certificate of needprior to applyingand for a site 25.6 or route permit under sections 116C.51 to 116C.69 or 25.7 construction of the facility. The application shall be on forms 25.8 and in a manner established by the commission. In reviewing 25.9 each application the commission shall hold at least one public 25.10 hearing pursuant to chapter 14. The public hearing shall be 25.11 held at a location and hour reasonably calculated to be 25.12 convenient for the public. An objective of the public hearing 25.13 shall be to obtain public opinion on the necessity of granting a 25.14 certificate of need and, if a joint hearing is held, a site or 25.15 route permit. The commission shall designate a commission 25.16 employee whose duty shall be to facilitate citizen participation 25.17 in the hearing process.IfUnless the commissionand the25.18Environmental Quality Board determinedetermines that a joint 25.19 hearing on siting and need under this subdivision and section 25.20 116C.57, subdivision 2d, is not feasible,or more efficient,and25.21may furtheror otherwise not in the public interest, a joint 25.22 hearing under those subdivisionsmayshall be held. 25.23 Sec. 14. Minnesota Statutes 2004, section 216B.243, 25.24 subdivision 5, is amended to read: 25.25 Subd. 5. [APPROVAL, DENIAL, OR MODIFICATION.] Within 25.26six12 months of the submission of an application, the 25.27 commission shall approve or deny a certificate of need for the 25.28 facility. Approval or denial of the certificate shall be 25.29 accompanied by a statement of the reasons for the decision. 25.30 Issuance of the certificate may be made contingent upon 25.31 modifications required by the commission. If the commissioner 25.32 has not issued an order on the application within the 12 months 25.33 provided, the commission may extent the time period upon 25.34 receiving the consent of the parties or on its own motion, for 25.35 good cause, by issuing an order explaining the good cause 25.36 justification for extension. 26.1 Sec. 15. Minnesota Statutes 2004, section 216B.243, 26.2 subdivision 7, is amended to read: 26.3 Subd. 7. [PARTICIPATION BY OTHER AGENCY OR POLITICAL 26.4 SUBDIVISION.] (a) Other state agencies authorized to issue 26.5 permits for siting, construction or operation of large energy 26.6 facilities, and those state agencies authorized to participate 26.7 in matters before the commission involving utility rates and 26.8 adequacy of utility services, shall present their position 26.9 regarding need and participate in the public hearing process 26.10 prior to the issuance or denial of a certificate of need. 26.11 Issuance or denial of certificates of need shall be the sole and 26.12 exclusive prerogative of the commission and these determinations 26.13 and certificates shall be binding upon other state departments 26.14 and agencies, regional, county, and local governments and 26.15 special purpose government districts except as provided in 26.16 sections 116C.01 to 116C.08 and 116D.04, subdivision 9. 26.17 (b) An applicant for a permit under this section or under 26.18 chapter 116I shall notify the commissioner of agriculture if the 26.19 proposed project will impact cultivated agricultural land, as 26.20 defined in section 1116I.01, subdivision 4. The commissioner 26.21 may participate in any proceeding on the application, may advise 26.22 the commission as to whether to grant a permit for the project, 26.23 and may make recommendations regarding mitigating adverse 26.24 impacts to agricultural lands if the permit is granted. The 26.25 Department of Agriculture shall be the lead agency in developing 26.26 an agricultural mitigation plan required for the project. 26.27 Sec. 16. Minnesota Statutes 2004, section 216C.052, is 26.28 amended to read: 26.29 216C.052 [RELIABILITY ADMINISTRATOR.] 26.30 Subdivision 1. [RESPONSIBILITIES.] (a) There is 26.31 established the position of reliability administrator in the 26.32Department of CommercePublic Utilities Commission. The 26.33 administrator shall act as a source of independent expertise and 26.34 a technical advisor tothe commissioner,the commission,and the 26.35 public, and the Legislative Electric Energy Task Forceon issues 26.36 related to the reliability of the electric system. In 27.1 conducting its work, the administrator shall provide assistance 27.2 to the commission in administering and implementing the 27.3 commission's duties under sections 116C.51 to 116C.69; sections 27.4 116C.691 to 116C.697; chapter 116I; and rules associated with 27.5 those sections. Subject to resource constraints, the 27.6 reliability administrator may also: 27.7 (1) model and monitor the use and operation of the energy 27.8 infrastructure in the state, including generation facilities, 27.9 transmission lines, natural gas pipelines, and other energy 27.10 infrastructure; 27.11 (2) develop and present to the commission and parties 27.12 technical analyses of proposed infrastructure projects, and 27.13 provide technical advice to the commission; 27.14 (3) present independent, factual, expert, and technical 27.15 information on infrastructure proposals and reliability issues 27.16 at public meetings hosted by the task force, the Environmental 27.17 Quality Board, the department, or the commission. 27.18 (b) Upon request and subject to resource constraints, the 27.19 administrator shall provide technical assistance regarding 27.20 matters unrelated to applications for infrastructure 27.21 improvements to the task force, the department, or the 27.22 commission. 27.23 (c) The administrator may not advocate for any particular 27.24 outcome in a commission proceeding, but may give technical 27.25 advice to the commission as to the impact on the reliability of 27.26 the energy system of a particular project or projects.The27.27administrator must not be considered a party or a participant in27.28any proceeding before the commission.27.29 Subd. 2. [ADMINISTRATIVE ISSUES.] (a) Thecommissioner27.30 commission may select the administrator who shall serve for a 27.31 four-year term. The administrator may not have been a party or 27.32 a participant in a commission energy proceeding for at least one 27.33 year prior to selection by thecommissionercommission. 27.34 Thecommissionercommission shall oversee and direct the work of 27.35 the administrator, annually review the expenses of the 27.36 administrator, and annually approve the budget of the 28.1 administrator. The administrator may hire staff and may 28.2 contract for technical expertise in performing duties when 28.3 existing state resources are required for other state 28.4 responsibilities or when special expertise is required. The 28.5 salary of the administrator is governed by section 15A.0815, 28.6 subdivision 2. 28.7 (b) Costs relating to a specific proceeding, analysis, or 28.8 project are not general administrative costs. For purposes of 28.9 this section, "energy utility" means public utilities, 28.10 generation and transmission cooperative electric associations, 28.11 and municipal power agencies providing natural gas or electric 28.12 service in the state. 28.13 (c) TheDepartment of Commercecommission shall pay: 28.14 (1) the general administrative costs of the administrator, 28.15 not to exceed $1,000,000 in a fiscal year, and shall assess 28.16 energy utilities for those administrative costs. These costs 28.17 must be consistent with the budget approved by thecommissioner28.18 commission under paragraph (a). The department shall apportion 28.19 the costs among all energy utilities in proportion to their 28.20 respective gross operating revenues from sales of gas or 28.21 electric service within the state during the last calendar year, 28.22 and shall then render a bill to each utility on a regular basis; 28.23 and 28.24 (2) costs relating to a specific proceeding analysis or 28.25 project and shall render a bill to the specific energy utility 28.26 or utilities participating in the proceeding, analysis, or 28.27 project directly, either at the conclusion of a particular 28.28 proceeding, analysis, or project, or from time to time during 28.29 the course of the proceeding, analysis, or project. 28.30 (d) For purposes of administrative efficiency, the 28.31 department shall assess energy utilities and issue bills in 28.32 accordance with the billing and assessment procedures provided 28.33 in section 216B.62, to the extent that these procedures do not 28.34 conflict with this subdivision. The amount of the bills 28.35 rendered by the department under paragraph (c) must be paid by 28.36 the energy utility into an account in the special revenue fund 29.1 in the state treasury within 30 days from the date of billing 29.2 and is appropriated to thecommissionercommission for the 29.3 purposes provided in this section. The commission shall approve 29.4 or approve as modified a rate schedule providing for the 29.5 automatic adjustment of charges to recover amounts paid by 29.6 utilities under this section. All amounts assessed under this 29.7 section are in addition to amounts appropriated to the 29.8 commissionand the departmentby other law. 29.9 Subd. 3. [ASSESSMENT AND APPROPRIATION.] In addition to 29.10 the amount noted in subdivision 2, thecommissionercommission 29.11 may assess utilities, using the mechanism specified in that 29.12 subdivision, up to an additional $500,000 annually through June 29.13 30, 2006. The amounts assessed under this subdivision are 29.14 appropriated to thecommissionercommission, and some or all of 29.15 the amounts assessed may be transferred to the commissioner of 29.16 administration, for the purposes specified in section 16B.325 29.17 and Laws 2001, chapter 212, article 1, section 3, as needed to 29.18 implement those sections. 29.19 Subd. 4. [EXPIRATION.] This section expires June 30, 29.2020062007. 29.21 Sec. 17. [TRANSFERRING POWER PLANT SITING 29.22 RESPONSIBILITIES.] 29.23 To ensure greater public participation in energy 29.24 infrastructure approval proceedings and to better integrate and 29.25 align state energy and environmental policy goals with economic 29.26 decisions involving large energy infrastructure, all 29.27 responsibilities, as defined in Minnesota Statutes, section 29.28 15.039, subdivision 1, held by the Environmental Quality Board 29.29 relating to power plant siting and routing under Minnesota 29.30 Statutes, sections 116C.51 to 116C.69; wind energy conversion 29.31 systems under Minnesota Statutes, sections 116C.691 to 116C.697; 29.32 pipelines under Minnesota Statutes, chapter 116I; and rules 29.33 associated with those sections are transferred to the Public 29.34 Utilities Commission under Minnesota Statutes, section 15.039, 29.35 except that the responsibilities of the Environmental Quality 29.36 Board under Minnesota Statutes, section 116C.83, subdivision 6, 30.1 and Minnesota Rules, parts 4400.1700, 4400.2750, and 4410.7010 30.2 to 4410.7070, are transferred to the commissioner of the 30.3 Department of Commerce. The power plan siting staff of the 30.4 Environmental Quality Board are transferred to the Department of 30.5 Commerce. The department's budget shall be adjusted to reflect 30.6 the transfer. The Department of Commerce and the Public 30.7 Utilities Commission shall perform these duties in accord with 30.8 the provisions set forth in section 116D.03. 30.9 Sec. 18. [TRANSFERRING RELIABILITY ADMINISTRATOR 30.10 RESPONSIBILITIES.] 30.11 All responsibilities, as defined in Minnesota Statutes 30.12 2004, section 15.039, subdivision 1, held by the Minnesota 30.13 Department of Commerce relating to the reliability administrator 30.14 under Minnesota Statutes, section 216C.052, and the staff 30.15 currently performing those duties, are transferred to the 30.16 Minnesota Public Utilities Commission under Minnesota Statutes, 30.17 section 15.039. 30.18 Sec. 19. [REVISOR'S INSTRUCTION.] 30.19 (a) The revisor of statutes shall change the words 30.20 "Environmental Quality Board," "board," "chair of the board," 30.21 "chair," "board's," and similar terms, when they refer to the 30.22 Environmental Quality Board or chair of the Environmental 30.23 Quality Board, to the term "Public Utilities Commission," 30.24 "commission," or "commission's," as appropriate, where they 30.25 appear in Minnesota Statutes, sections 13.741, subdivision 3, 30.26 116C.51 to 116C.697, and chapter 116I. The revisor shall also 30.27 make those changes in Minnesota Rules, chapters 4400, 4401, and 30.28 4415, except as specified in paragraph (b). 30.29 (b) The revisor of statutes shall change the words 30.30 "Environmental Quality Board," "board," "chair of the board," 30.31 "chair," "board's," and similar terms, when they refer to the 30.32 Environmental Quality Board or chair of the Environmental 30.33 Quality Board, to the term "commissioner of the Department of 30.34 Commerce," "commissioner," or "commissioner's," as appropriate, 30.35 where they appear in Minnesota Statutes, section 116C.83, 30.36 subdivision 6; and Minnesota Rules, parts 4400.1700, subparts 1 31.1 to 9, 11, and 12; 4400.2750; and 4410.7010 to 4410.7070. 31.2 Sec. 20. [EFFECTIVE DATE.] 31.3 Sections 1 to 18 are effective July 1, 2005. 31.4 ARTICLE 4 31.5 GAS INFRASTRUCTURE COST RECOVERY 31.6 Section 1. [216B.1635] [RECOVERY OF ELIGIBLE 31.7 INFRASTRUCTURE REPLACEMENT COSTS BY GAS UTILITIES.] 31.8 Subdivision 1. [DEFINITIONS.] (a) "Gas utility" means a 31.9 public utility as defined in section 216B.02, subdivision 4, 31.10 that furnishes natural gas service to retail customers. 31.11 (b) "Gas utility infrastructure costs" or "GUIC" means gas 31.12 utility projects that: 31.13 (1) do not serve to increase revenues by directly 31.14 connecting the infrastructure replacement to new customers; 31.15 (2) are in service but were not included in the gas 31.16 utility's rate base in its most recent general rate case; and 31.17 (3) replace or modify existing infrastructure if the 31.18 replacement or modification does not constitute a betterment, 31.19 unless the betterment is required by a political subdivision, as 31.20 evidenced by specific documentation from the government entity 31.21 requiring the replacement or modification of infrastructure. 31.22 (c) "Gas utility projects" means relocation and replacement 31.23 of natural gas facilities located in the public right-of-way 31.24 required by the construction or improvement of a highway, road, 31.25 street, public building, or other public work by or on behalf of 31.26 the United States, the state of Minnesota, or a political 31.27 subdivision. 31.28 Subd. 2. [FILING.] (a) The commission may approve a gas 31.29 utility's petition for a rate schedule to recover GUIC under 31.30 this section. A gas utility may petition the commission to 31.31 recover a rate of return, income taxes on the rate of return, 31.32 incremental property taxes, plus incremental depreciation 31.33 expense associated with GUIC. 31.34 (b) The filing is subject to the following: 31.35 (1) a gas utility may submit a filing under this section no 31.36 more than once per year; 32.1 (2) a gas utility must file sufficient information to 32.2 satisfy the commission regarding the proposed GUIC or be subject 32.3 to denial by the commission. The information includes, but is 32.4 not limited to: 32.5 (i) the government entity ordering the gas utility project 32.6 and the purpose for which the project is undertaken; 32.7 (ii) the location, description, and costs associated with 32.8 the project; 32.9 (iii) a description of the costs and salvage value, if any, 32.10 associated with the existing infrastructure replaced or modified 32.11 as a result of the project; 32.12 (iv) the proposed rate design and an explanation of why the 32.13 proposed rate design is in the public interest; 32.14 (v) the magnitude and timing of any known future gas 32.15 utility projects that the utility may seek to recover under this 32.16 section; 32.17 (vi) the magnitude of GUIC in relation to the gas utility's 32.18 base revenue as approved by the commission in the gas utility's 32.19 most recent general rate case, exclusive of gas purchase costs 32.20 and transportation charges; 32.21 (vii) the magnitude of GUIC in relation to the gas 32.22 utility's capital expenditures since its most recent general 32.23 rate case; 32.24 (viii) the amount of time since the utility last filed a 32.25 general rate case and the utility's reasons for seeking recovery 32.26 outside of a general rate case; and 32.27 (ix) documentation supporting the calculation of the GUIC. 32.28 Subd. 3. [COMMISSION AUTHORITY.] The commission may issue 32.29 orders and adopt rules necessary to implement and administer 32.30 this section. 32.31 [EFFECTIVE DATE.] This section is effective the day 32.32 following final enactment. 32.33 Sec. 2. [REPORT TO LEGISLATURE.] 32.34 The Department of Commerce shall review the operation and 32.35 impact of the GUIC recovery mechanism established under 32.36 Minnesota Statutes, section 216B.1635, on ratepayers and the 33.1 utility and submit a report of its findings and recommendations 33.2 to the legislature four years after the effective date of this 33.3 section. 33.4 Sec. 3. [SUNSET.] 33.5 Sections 1 and 2 expire on June 30, 2015. 33.6 ARTICLE 5 33.7 MISCELLANEOUS 33.8 Section 1. Minnesota Statutes 2004, section 216B.16, 33.9 subdivision 6d, is amended to read: 33.10 Subd. 6d. [WIND ENERGY; PROPERTY TAX.] An owner of a wind 33.11 energy conversion facility which is required to pay property 33.12 taxes under section 272.02, subdivision 22, or production taxes 33.13 under section 272.029, and any related or successor provisions, 33.14 or a public utility regulated by the Public Utilities Commission 33.15 which purchases the wind-generated electricity may petition the 33.16 commission to include in any power purchase agreement between 33.17 the owner of the facility and the public utility the amount of 33.18 property taxes and production taxes paid by the owner of the 33.19 facility. The Public Utilities Commission shall require the 33.20 public utility to amend the power purchase agreement to include 33.21 the property taxes and production taxes paid by the owner of the 33.22 facility in the price paid by the utility for wind-generated 33.23 electricity if the commission finds: 33.24 (1) the owner of the facility has paid the property taxes 33.25 or production taxes required by this subdivision; 33.26 (2) the power purchase agreement between the public utility 33.27 and the owner does not already require the utility to pay the 33.28 amount of property taxes or production taxes the owner has paid 33.29 under this subdivision, or, in the case of a power purchase 33.30 agreement entered into prior to 1997, the amount of property or 33.31 production taxes paid by the owner in any year of the power 33.32 purchase agreement exceeds the amount of such property or 33.33 production taxes included in the price paid by the utility to 33.34 the owner, as reflected in the owner's bid documents; and 33.35 (3) the commission has approved a rate schedule containing 33.36 provisions for the automatic adjustment of charges for utility 34.1 service in direct relation to the charges ordered by the 34.2 commission under section 272.02, subdivision 22, or 272.029. 34.3 Sec. 2. Minnesota Statutes 2004, section 216B.241, 34.4 subdivision 1b, is amended to read: 34.5 Subd. 1b. [CONSERVATION IMPROVEMENT BY COOPERATIVE 34.6 ASSOCIATION OR MUNICIPALITY.] (a) This subdivision applies to: 34.7 (1) a cooperative electric association that provides retail 34.8 service to its members; 34.9 (2) a municipality that provides electric service to retail 34.10 customers; and 34.11 (3) a municipality with gross operating revenues in excess 34.12 of $5,000,000 from sales of natural gas to retail customers. 34.13 (b) Each cooperative electric association and municipality 34.14 subject to this subdivision shall spend and invest for energy 34.15 conservation improvements under this subdivision the following 34.16 amounts: 34.17 (1) for a municipality, 0.5 percent of its gross operating 34.18 revenues from the sale of gas and 1.5 percent of its gross 34.19 operating revenues from the sale of electricity, excluding gross 34.20 operating revenues from electric and gas service provided in the 34.21 state to large electric customer facilities; and 34.22 (2) for a cooperative electric association, 1.5 percent of 34.23 its gross operating revenues from service provided in the state, 34.24 excluding gross operating revenues from service provided in the 34.25 state to large electric customer facilities indirectly through a 34.26 distribution cooperative electric association. 34.27 (c) Each municipality and cooperative electric association 34.28 subject to this subdivision shall identify and implement energy 34.29 conservation improvement spending and investments that are 34.30 appropriate for the municipality or association, except that a 34.31 municipality or association may not spend or invest for energy 34.32 conservation improvements that directly benefit a large electric 34.33 customer facility for which the commissioner has issued an 34.34 exemption under subdivision 1a, paragraph (b). 34.35 (d) Each municipality and cooperative electric association 34.36 subject to this subdivision may spend and invest annually up to 35.1 ten percent of the total amount required to be spent and 35.2 invested on energy conservation improvements under this 35.3 subdivision on research and development projects that meet the 35.4 definition of energy conservation improvement in subdivision 1 35.5 and that are funded directly by the municipality or cooperative 35.6 electric association. 35.7 (e) Load-management activities that do not reduce energy 35.8 use but that increase the efficiency of the electric system may 35.9 be used to meetthe following percentage50 percent of the 35.10 conservation investment and spending requirements of this 35.11 subdivision:35.12(1) 2002 - 90 percent;35.13(2) 2003 - 80 percent;35.14(3) 2004 - 65 percent; and35.15(4) 2005 and thereafter - 50 percent. 35.16 (f) A generation and transmission cooperative electric 35.17 association that provides energy services to cooperative 35.18 electric associations that provide electric service at retail to 35.19 consumers may invest in energy conservation improvements on 35.20 behalf of the associations it serves and may fulfill the 35.21 conservation, spending, reporting, and energy savings goals on 35.22 an aggregate basis. A municipal power agency or other 35.23 not-for-profit entity that provides energy service to municipal 35.24 utilities that provide electric service at retail may invest in 35.25 energy conservation improvements on behalf of the municipal 35.26 utilities it serves and may fulfill the conservation, spending, 35.27 reporting, and energy savings goals on an aggregate basis, under 35.28 an agreement between the municipal power agency or 35.29 not-for-profit entity and each municipal utility for funding the 35.30 investments. 35.31 (g) At least everytwofour years, on a schedule determined 35.32 by the commissioner, each municipality or cooperative shall file 35.33 an overview of its conservation improvement plan with the 35.34 commissioner. With this overview, the municipality or 35.35 cooperative shall also provide an evaluation to the commissioner 35.36 detailing its energy conservation improvement spending and 36.1 investments for the previous period. The evaluation must 36.2 briefly describe each conservation program and must specify the 36.3 energy savings or increased efficiency in the use of energy 36.4 within the service territory of the utility or association that 36.5 is the result of the spending and investments. The evaluation 36.6 must analyze the cost-effectiveness of the utility's or 36.7 association's conservation programs, using a list of baseline 36.8 energy and capacity savings assumptions developed in 36.9 consultation with the department. The commissioner shall review 36.10 each evaluation and make recommendations, where appropriate, to 36.11 the municipality or association to increase the effectiveness of 36.12 conservation improvement activities. Up to three percent of a 36.13 utility's conservation spending obligation under this section 36.14 may be used for program pre-evaluation, testing, and monitoring 36.15 and program evaluation. The overview and evaluation filed by a 36.16 municipality with less than 60,000,000 kilowatt hours in annual 36.17 retail sales of electric service may consist of a letter from 36.18 the governing board of the municipal utility to the department 36.19 providing the amount of annual conservation spending required of 36.20 that municipality and certifying that the required amount has 36.21 been spent on conservation programs pursuant to this subdivision. 36.22 (h) The commissioner shall also review each evaluation for 36.23 whether a portion of the money spent on residential conservation 36.24 improvement programs is devoted to programs that directly 36.25 address the needs of renters and low-income persons unless an 36.26 insufficient number of appropriate programs are available. For 36.27 the purposes of this subdivision and subdivision 2, "low-income" 36.28 means an income at or below 50 percent of the state median 36.29 income. 36.30 (i) As part of its spending for conservation improvement, a 36.31 municipality or association may contribute to the energy and 36.32 conservation account. A municipality or association may propose 36.33 to the commissioner to designate that all or a portion of funds 36.34 contributed to the account be used for research and development 36.35 projects that can best be implemented on a statewide basis. Any 36.36 amount contributed must be remitted to the commissioner by 37.1 February 1 of each year. 37.2 (j) A municipality may spend up to 50 percent of its 37.3 required spending under this section to refurbish an existing 37.4 district heating or cooling system. This paragraph expires July 37.5 1, 2007. 37.6 Sec. 3. Minnesota Statutes 2004, section 216B.241, 37.7 subdivision 2, is amended to read: 37.8 Subd. 2. [PROGRAMS.] (a) The commissioner may require 37.9 public utilities to make investments and expenditures in energy 37.10 conservation improvements, explicitly setting forth the interest 37.11 rates, prices, and terms under which the improvements must be 37.12 offered to the customers. The required programs must cover no 37.13 more than atwo-yearfour-year period. Public utilities shall 37.14 file conservation improvement plans by June 1, on a schedule 37.15 determined by order of the commissioner, but at least every four 37.16 years. Plans received by a public utility by June 1 must be 37.17 approved or approved as modified by the commissioner by December 37.18 1 of that same year. The commissioner shall give special 37.19 consideration and encouragement to programs that bring about 37.20 significant net savings through the use of energy-efficient 37.21 lighting. The commissioner shall evaluate the program on the 37.22 basis of cost-effectiveness and the reliability of technologies 37.23 employed. The commissioner's order must provide to the extent 37.24 practicable for a free choice, by consumers participating in the 37.25 program, of the device, method, material, or project 37.26 constituting the energy conservation improvement and for a free 37.27 choice of the seller, installer, or contractor of the energy 37.28 conservation improvement, provided that the device, method, 37.29 material, or project seller, installer, or contractor is duly 37.30 licensed, certified, approved, or qualified, including under the 37.31 residential conservation services program, where applicable. 37.32 (b) The commissioner may require a utility to make an 37.33 energy conservation improvement investment or expenditure 37.34 whenever the commissioner finds that the improvement will result 37.35 in energy savings at a total cost to the utility less than the 37.36 cost to the utility to produce or purchase an equivalent amount 38.1 of new supply of energy. The commissioner shall nevertheless 38.2 ensure that every public utility operate one or more programs 38.3 under periodic review by the department. 38.4 (c) Each public utility subject to subdivision 1a may spend 38.5 and invest annually up to ten percent of the total amount 38.6 required to be spent and invested on energy conservation 38.7 improvements under this section by the utility on research and 38.8 development projects that meet the definition of energy 38.9 conservation improvement in subdivision 1 and that are funded 38.10 directly by the public utility. 38.11 (d) A public utility may not spend for or invest in energy 38.12 conservation improvements that directly benefit a large electric 38.13 customer facility for which the commissioner has issued an 38.14 exemption pursuant to subdivision 1a, paragraph (b). The 38.15 commissioner shall consider and may require a utility to 38.16 undertake a program suggested by an outside source, including a 38.17 political subdivision or a nonprofit or community organization. 38.18 (e) The commissioner may, by order, establish a list of 38.19 programs that may be offered as energy conservation improvements 38.20 by a public utility, municipal utility, cooperative electric 38.21 association, or other entity providing conservation services 38.22 pursuant to this section. The list of programs may include 38.23 rebates for high-efficiency appliances, rebates or subsidies for 38.24 high-efficiency lamps, small business energy audits, and 38.25 building recommissioning. The commissioner may, by order, 38.26 change this list to add or subtract programs as the commissioner 38.27 determines is necessary to promote efficient and effective 38.28 conservation programs. 38.29 (f) The commissioner shall ensure that a portion of the 38.30 money spent on residential conservation improvement programs is 38.31 devoted to programs that directly address the needs of renters 38.32 and low-income persons, in proportion to the amount the utility 38.33 has historically spent on such programs based on the most recent 38.34 three-year average relative to the utility's total conservation 38.35 spending under this section, unless an insufficient number of 38.36 appropriate programs are available. 39.1 (g) A utility, a political subdivision, or a nonprofit or 39.2 community organization that has suggested a program, the 39.3 attorney general acting on behalf of consumers and small 39.4 business interests, or a utility customer that has suggested a 39.5 program and is not represented by the attorney general under 39.6 section 8.33 may petition the commission to modify or revoke a 39.7 department decision under this section, and the commission may 39.8 do so if it determines that the program is not cost-effective, 39.9 does not adequately address the residential conservation 39.10 improvement needs of low-income persons, has a long-range 39.11 negative effect on one or more classes of customers, or is 39.12 otherwise not in the public interest. The commission shall 39.13 reject a petition that, on its face, fails to make a reasonable 39.14 argument that a program is not in the public interest. 39.15 (h) The commissioner may order a public utility to include, 39.16 with the filing of the utility's proposed conservation 39.17 improvement plan under paragraph (a), the results of an 39.18 independent audit of the utility's conservation improvement 39.19 programs and expenditures performed by the department or an 39.20 auditor with experience in the provision of energy conservation 39.21 and energy efficiency services approved by the commissioner and 39.22 chosen by the utility. The audit must specify the energy 39.23 savings or increased efficiency in the use of energy within the 39.24 service territory of the utility that is the result of the 39.25 spending and investments. The audit must evaluate the 39.26 cost-effectiveness of the utility's conservation programs. 39.27 (i) Up to three percent of a utility's conservation 39.28 spending obligation under this section may be used for program 39.29 pre-evaluation, testing, and monitoring and program audit and 39.30 evaluation. 39.31 Sec. 4. Minnesota Statutes 2004, section 216B.243, 39.32 subdivision 6, is amended to read: 39.33 Subd. 6. [APPLICATION FEES; RULES.] Any application for a 39.34 certificate of need shall be accompanied by the application fee 39.35 required pursuant to this subdivision. The application fee is 39.36 to be applied toward the total costs reasonably necessary to 40.1 complete the evaluation of need for the proposed facility. The 40.2 maximum application fee shall be $50,000, except for an 40.3 application for an electric power generating plant as defined in 40.4 section 216B.2421, subdivision 2, clause (1), or a high-voltage 40.5 transmission line as defined in section 216B.2421, subdivision 40.6 2, clause (2), for which the maximum application fee shall be 40.7 $100,000.The commission may require an additional fee to40.8recover the costs of any rehearing. The fee for a rehearing40.9shall not be greater than the actual cost of the rehearing or40.10the maximum fee specified above, whichever is less.Costs 40.11 exceeding the application fee and reasonably necessary to 40.12 complete the evaluation of need for the proposed facility shall 40.13 be recovered from the applicant. If the applicant is a public 40.14 utility, a cooperative electric association, a generation and 40.15 transmission cooperative electric association, a municipal power 40.16 agency, a municipal electric utility, or a transmission company, 40.17 the recovery shall be made as provided under section 216B.62. 40.18 The commission shall establish by rule pursuant to chapter 14 40.19 and sections 216C.05 to 216C.30 and this section, a schedule of 40.20 fees based on the output or capacity of the facility and the 40.21 difficulty of assessment of need. Money collected in this 40.22 manner shall be credited to the general fund of the state 40.23 treasury. 40.24 Sec. 5. Minnesota Statutes 2004, section 216B.62, 40.25 subdivision 5, is amended to read: 40.26 Subd. 5. [ASSESSING COOPERATIVES AND MUNICIPALS.] The 40.27 commission and department may charge cooperative electric 40.28 associations, generation and transmission cooperative electric 40.29 associations, municipal power agencies, and municipal electric 40.30 utilities their proportionate share of the expenses incurred in 40.31 the review and disposition of resource plans, adjudication of 40.32 service area disputes, proceedings under section 216B.1691, 40.33 216B.2425, or 216B.243, and the costs incurred in the 40.34 adjudication of complaints over service standards, practices, 40.35 and rates. Cooperative electric associations electing to become 40.36 subject to rate regulation by the commission pursuant to section 41.1 216B.026, subdivision 4, are also subject to this section. 41.2 Neither a cooperative electric association nor a municipal 41.3 electric utility is liable for costs and expenses in a calendar 41.4 year in excess of the limitation on costs that may be assessed 41.5 against public utilities under subdivision 2. A cooperative 41.6 electric association, generation and transmission cooperative 41.7 electric association, municipal power agency, or municipal 41.8 electric utility may object to and appeal bills of the 41.9 commission and department as provided in subdivision 4. 41.10 The department shall assess cooperatives and municipalities 41.11 for the costs of alternative energy engineering activities under 41.12 section 216C.261. Each cooperative and municipality shall be 41.13 assessed in proportion that its gross operating revenues for the 41.14 sale of gas and electric service within the state for the last 41.15 calendar year bears to the total of those revenues for all 41.16 public utilities, cooperatives, and municipalities. 41.17 Sec. 6. Minnesota Statutes 2004, section 216C.41, 41.18 subdivision 1, is amended to read: 41.19 Subdivision 1. [DEFINITIONS.] (a) The definitions in this 41.20 subdivision apply to this section. 41.21 (b) "Qualified hydroelectric facility" means a 41.22 hydroelectric generating facility in this state that: 41.23 (1) is located at the site of a dam, if the dam was in 41.24 existence as of March 31, 1994; and 41.25 (2) begins generating electricity after July 1, 1994, or 41.26 generates electricity after substantial refurbishing of a 41.27 facility that begins after July 1, 2001. 41.28 (c) "Qualified wind energy conversion facility" means a 41.29 wind energy conversion system in this state that: 41.30 (1) produces two megawatts or less of electricity as 41.31 measured by nameplate rating and begins generating electricity 41.32 after December 31, 1996, and before July 1, 1999; 41.33 (2) begins generating electricity after June 30, 1999, 41.34 produces two megawatts or less of electricity as measured by 41.35 nameplate rating, and is: 41.36 (i) owned by a resident of Minnesota or an entity that is 42.1 organized under the laws of this state, is not prohibited from 42.2 owning agricultural land under section 500.24, and owns the land 42.3 where the facility is sited; 42.4 (ii) owned by a Minnesota small business as defined in 42.5 section 645.445; 42.6 (iii) owned by a Minnesota nonprofit organization; 42.7 (iv) owned by a tribal council if the facility is located 42.8 within the boundaries of the reservation; 42.9 (v) owned by a Minnesota municipal utility or a Minnesota 42.10 cooperative electric association; or 42.11 (vi) owned by a Minnesota political subdivision or local 42.12 government, including, but not limited to, a county, statutory 42.13 or home rule charter city, town, school district, or any other 42.14 local or regional governmental organization such as a board, 42.15 commission, or association; or 42.16 (3) begins generating electricity after June 30, 1999, 42.17 produces seven megawatts or less of electricity as measured by 42.18 nameplate rating, and: 42.19 (i) is owned by a cooperative organized under chapter 308A 42.20 other than a Minnesota cooperative electric association; and 42.21 (ii) all shares and membership in the cooperative are held 42.22 by an entity that is not prohibited from owning agricultural 42.23 land under section 500.24. 42.24 (d) "Qualified on-farm biogas recovery facility" means an 42.25 anaerobic digester system that: 42.26 (1) is located at the site of an agricultural 42.27 operation; and 42.28 (2) is owned by an entity that is not prohibited from 42.29 owning agricultural land under section 500.24 and that owns or 42.30 rents the land where the facility is located; and42.31(3) begins generating electricity after July 1, 2001. 42.32 (e) "Anaerobic digester system" means a system of 42.33 components that processes animal waste based on the absence of 42.34 oxygen and produces gas used to generate electricity. 42.35 Sec. 7. [LEGISLATIVE FINDINGS.] 42.36 The legislature finds that broad participation by the 43.1 public and other interested and affected parties in proceedings 43.2 of the Minnesota Public Utilities Commission serves the public 43.3 interest. The utilization of the Internet by the commission and 43.4 the Minnesota Department of Commerce, which maintains the 43.5 commission's records, to allow electronic access to commission 43.6 documents has expanded access to the commission's proceedings. 43.7 E-filing, which will enable individuals to electronically file 43.8 documents in ongoing proceedings via the Internet and permit the 43.9 electronic retrieval of all documents filed, is an effective way 43.10 to lower the costs and increase the ease and efficiency of 43.11 participation. 43.12 Sec. 8. [ESTABLISHMENT OF E-FILING SYSTEM; ACCOUNT; 43.13 APPROPRIATION.] 43.14 (a) The Public Utilities Commission's e-filing account is 43.15 established. The commission shall make a onetime assessment to 43.16 regulated utilities of $315,000, which must be deposited in the 43.17 account. Each public utility, municipal utility, electric 43.18 cooperative association, and telecommunications carrier must be 43.19 assessed in proportion to its respective gross operating 43.20 revenues for retail sales of gas, electric, or 43.21 telecommunications service in the state in the last calendar 43.22 year. 43.23 (b) Revenue in the account is appropriated to the 43.24 commission for the costs associated with establishing an 43.25 e-filing system that allows documents to be filed and retrieved 43.26 via the Internet. Revenue in the account remains available 43.27 until expended. 43.28 (c) The e-filing system must be operational by September 43.29 30, 2005. 43.30 Sec. 9. [STUDY; BIODIESEL FUEL FOR HOME HEATING.] 43.31 (a) From the money available to the commissioner of 43.32 commerce for purposes of studies and technical assistance by the 43.33 reliability administrator under Minnesota Statutes, section 43.34 216C.052, and in conformity with the goals and directives of 43.35 Minnesota Statutes, section 16B.325, the reliability 43.36 administrator shall perform a comprehensive technical and 44.1 economic analysis of the benefits to be derived from using 44.2 biodiesel fuel as defined in Minnesota Statutes, section 239.77, 44.3 subdivision 1, or biodiesel fuel blends, as a home heating 44.4 fuel. The analysis must consider blends ranging from B2 to 44.5 B100. No more than $25,000 may be expended for the analysis. 44.6 (b) Not later than March 15, 2007, the reliability 44.7 administrator shall report the results of the study and analysis 44.8 to the appropriate standing committees of the Minnesota senate 44.9 and house of representatives. 44.10 Sec. 10. [JOINT VENTURE AUTHORITY.] 44.11 (a) The city of Alexandria may enter into a joint venture 44.12 or joint ventures with one, two, or three of the entities known 44.13 as Runestone Telephone Association, Runestone Electric 44.14 Association, and Gardonville Telephone Cooperative for the 44.15 purpose of providing local niche service, including Internet 44.16 services, and point-to-point transmission of digital information. 44.17 (b) For purposes of this section, with respect to the 44.18 services described in paragraph (a), the city of Alexandria and 44.19 a joint venture to which it is a party shall have the rights and 44.20 authority granted by, and be subject to, Minnesota Statutes 2001 44.21 Supplement, section 452.25, except for the provisions of that 44.22 section which relate specifically and only to electric utilities. 44.23 (c) For the purposes of this section, "local niche service" 44.24 refers to point-to-point connections between end-user locations 44.25 within a service area and any telecommunications services under 44.26 the Public Utilities Commission's jurisdiction under Minnesota 44.27 Statutes, chapter 237, that do not fall within the definition of 44.28 local service or the definition of interexchange service. 44.29 (d) If the city of Alexandria obtains authority to provide 44.30 local service or interexchange service under Minnesota Statutes, 44.31 chapter 237, it may enter into a joint venture with the entities 44.32 identified in paragraph (a) for those purposes. 44.33 [EFFECTIVE DATE; LOCAL APPROVAL.] This section is effective 44.34 as to the city of Alexandria the day after the city of 44.35 Alexandria's governing body and its chief clerical officer 44.36 timely complete compliance with Minnesota Statutes, section 45.1 645.021, subdivisions 2 and 3. 45.2 Sec. 11. [REPEALER.] 45.3 Laws 1999, chapter 125, section 4, as amended by Laws 2002, 45.4 chapter 398, section 7, is repealed. 45.5 [EFFECTIVE DATE.] This section is effective the day 45.6 following final enactment.