HF 1405

as introduced - 91st Legislature (2019 - 2020) Posted on 02/26/2020 09:25pm

A bill for an act
relating to energy; establishing the Clean Energy First Act; requiring electric
utilities to meet resource needs using clean energy resources; amending Minnesota
Statutes 2018, sections 216B.16, subdivisions 6, 13; 216B.1645, subdivisions 1,
2; 216B.1691, subdivision 9; 216B.2422, subdivisions 1, 2, 4, 5, by adding
subdivisions; proposing coding for new law in Minnesota Statutes, chapter 216C.

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

Section 1. new text begin TITLE.
new text end

new text begin Sections 2 to 15 shall be referred to as the "Clean Energy First Act".
new text end

Sec. 2.

Minnesota Statutes 2018, section 216B.16, subdivision 6, is amended to read:

Subd. 6.

Factors considered, generally.

The commission, in the exercise of its powers
under this chapter to determine just and reasonable rates for public utilities, shall give due
consideration to the public need for adequate, efficient, and reasonable service and to the
need of the public utility for revenue sufficient to enable it to meet the cost of furnishing
the service, including adequate provision for depreciation of its utility property used and
useful in rendering service to the public, and to earn a fair and reasonable return upon the
investment in such property. In determining the rate base upon which the utility is to be
allowed to earn a fair rate of return, the commission shall give due consideration to evidence
of the cost of the property when first devoted to public use, to prudent acquisition cost to
the public utility less appropriate depreciation on each, to construction work in progress, to
offsets in the nature of capital provided by sources other than the investors, and to other
expenses of a capital nature. For purposes of determining rate base, the commission shall
consider the original cost of utility property included in the base and shall make no allowance
for its estimated current replacement value. If the commission orders a generating facility
to terminate its operations before the end of the facility's physical life deleted text begin in order to comply
with a specific state or federal energy statute or policy deleted text end new text begin as part of a resource planning order
under section 216B.2422 new text end , the commission deleted text begin may deleted text end new text begin must new text end allow the public utility to recover any
positive net book value of the facility as determined by the commission.

Sec. 3.

Minnesota Statutes 2018, section 216B.16, subdivision 13, is amended to read:

Subd. 13.

Economic and community development.

The commission may allow a
public utility to recover from ratepayers the expenses incurred for new text begin (1) new text end economic and
community development new text begin , and (2) efforts to maximize employment of local workers to
construct and maintain generation facilities that supply power to the utility's customers new text end .

Sec. 4.

Minnesota Statutes 2018, section 216B.1645, subdivision 1, is amended to read:

Subdivision 1.

Commission authority.

Upon the petition of a public utility, the Public
Utilities Commission shall approve or disapprove power purchase contracts, investments,
or expenditures entered into or made by the utility to satisfy the wind and biomass mandates
contained in sections 216B.169, 216B.2423, and 216B.2424, and to satisfy the renewable
energy objectives and standards set forth in section 216B.1691, including reasonable
investments and expenditures made to:

(1) transmit the electricity generated from sources developed under those sections that
is ultimately used to provide service to the utility's retail customers, including studies
necessary to identify new transmission facilities needed to transmit electricity to Minnesota
retail customers from generating facilities constructed to satisfy the renewable energy
objectives and standards, provided that the costs of the studies have not been recovered
previously under existing tariffs and the utility has filed an application for a certificate of
need or for certification as a priority project under section 216B.2425 for the new
transmission facilities identified in the studies;

(2) provide storage facilities for renewable energy generation facilities that contribute
to the reliability, efficiency, or cost-effectiveness of the renewable facilities; deleted text begin or
deleted text end

(3) develop renewable energy sources from the account required in section 116C.779 deleted text begin . deleted text end new text begin ;
or
new text end

new text begin (4) upgrade or modify existing transmission facilities primarily used to transmit electricity
generated by a clean energy resource, as defined in section 216B.2422, subdivision 1,
paragraph (f), regardless of whether the public utility has satisfied the standards set forth
in section 216B.1691.
new text end

Sec. 5.

Minnesota Statutes 2018, section 216B.1645, subdivision 2, is amended to read:

Subd. 2.

Cost recovery.

The expenses incurred by the utility over the duration of the
approved contract or useful life of the investment deleted text begin and deleted text end new text begin , new text end expenditures made pursuant to section
116C.779 deleted text begin shall be deleted text end new text begin , and efforts to maximize employment of local workers to construct and
maintain generation facilities that supply power to the utility's customers, are new text end recoverable
from the ratepayers of the utility, to the extent they are not offset by utility revenues
attributable to the contracts, investments, or expenditures. Upon petition by a public utility,
the commission shall approve or approve as modified a rate schedule providing for the
automatic adjustment of charges to recover the expenses or costs approved by the commission
under subdivision 1, which, in the case of transmission expenditures, are limited to the
portion of actual transmission costs that are directly allocable to the need to transmit power
from the renewable sources of energy. The commission may not approve recovery of the
costs for that portion of the power generated from sources governed by this section that the
utility sells into the wholesale market.

Sec. 6.

Minnesota Statutes 2018, section 216B.1691, subdivision 9, is amended to read:

Subd. 9.

Local benefits.

The commission shall take all reasonable actions within its
statutory authority to ensure this section is implemented to maximize benefits to Minnesota
citizens new text begin and local workers as defined in section 216B.2422, subdivision 1 new text end , balancing factors
such as local ownership of or participation in energy production, new text begin local job impacts as defined
in section 216B.2422, subdivision 1, new text end development and ownership of eligible energy
technology facilities by independent power producers, Minnesota utility ownership of
eligible energy technology facilities, the costs of energy generation to satisfy the renewable
standard, and the reliability of electric service to Minnesotans.

Sec. 7.

Minnesota Statutes 2018, section 216B.2422, subdivision 1, is amended to read:

Subdivision 1.

Definitions.

(a) For purposes of this section, the terms defined in this
subdivision have the meanings given them.

(b) "Utility" means an entity with the capability of generating 100,000 kilowatts or more
of electric power and serving, either directly or indirectly, the needs of 10,000 retail
customers in Minnesota. Utility does not include federal power agencies.

(c) "Renewable energy" means electricity generated through use of any of the following
resources:

(1) wind;

(2) solar;

(3) geothermal;

(4) hydro;

(5) trees or other vegetation;

(6) landfill gas; or

(7) predominantly organic components of wastewater effluent, sludge, or related
by-products from publicly owned treatment works, but not including incineration of
wastewater sludge.

(d) "Resource plan" means a set of resource options that a utility could use to meet the
service needs of its customers over a forecast period, including an explanation of the supply
and demand circumstances under which, and the extent to which, each resource option
would be used to meet those service needs. These resource options include using,
refurbishing, and constructing utility plant and equipment, buying power generated by other
entities, controlling customer loads, and implementing customer energy conservation.

(e) "Refurbish" means to rebuild or substantially modify an existing electricity generating
resource of 30 megawatts or greater.

new text begin (f) "Clean energy resource" means renewable energy, an energy storage system, and
energy efficiency and load management, as defined in section 216B.241, subdivision 1, or
a carbon-free resource, as defined under paragraph (g) and determined by the commission
under subdivision 4, paragraph (h).
new text end

new text begin (g) "Carbon-free resource" means a generation technology that, when operating, does
not contribute to statewide greenhouse gas emissions, as defined in section 216H.01,
subdivision 2.
new text end

new text begin (h) "Energy storage system" means a commercially available technology that:
new text end

new text begin (1) uses mechanical, chemical, or thermal processes to:
new text end

new text begin (i) store energy and deliver the stored energy for use at a later time; or
new text end

new text begin (ii) store thermal energy for direct use for heating or cooling at a later time in a manner
that reduces the demand for electricity at the later time;
new text end

new text begin (2) if being used for electric grid benefits, is operationally visible and capable of being
controlled by the distribution or transmission entity managing it to enable and optimize the
safe and reliable operation of the electric system; and
new text end

new text begin (3) achieves any of the following:
new text end

new text begin (i) reduces peak electrical demand;
new text end

new text begin (ii) defers the need or substitutes for an investment in electric generation, transmission,
or distribution assets;
new text end

new text begin (iii) improves the reliable operation of the electrical transmission or distribution systems;
or
new text end

new text begin (iv) lowers customer costs by storing energy when the cost of generating or purchasing
energy is low and delivering energy to customers when costs are high.
new text end

new text begin (i) "Nonrenewable energy facility" means a generation facility, other than a nuclear
facility, that does not use a renewable energy or other clean energy resource.
new text end

new text begin (j) "Local job impacts" means the impacts of an integrated resource plan, a certificate
of need, a power purchase agreement, or commission approval of a new or refurbished
energy facility on the availability of construction employment opportunities to local workers.
new text end

new text begin (k) "Local workers" means workers employed to construct and maintain energy
infrastructure that are Minnesota residents, residents of the utility's service territory, or who
permanently reside within 150 miles of a proposed new or refurbished energy facility.
new text end

Sec. 8.

Minnesota Statutes 2018, section 216B.2422, subdivision 2, is amended to read:

Subd. 2.

Resource plan filing and approval.

(a) A utility shall file a resource plan with
the commission periodically in accordance with rules adopted by the commission. The
commission shall approve, reject, or modify the plan of a public utility, as defined in section
216B.02, subdivision 4, consistent with the public interest.

(b) In the resource plan proceedings of all other utilities, the commission's order shall
be advisory and the order's findings and conclusions shall constitute prima facie evidence
which may be rebutted by substantial evidence in all other proceedings. With respect to
utilities other than those defined in section 216B.02, subdivision 4, the commission shall
consider the filing requirements and decisions in any comparable proceedings in another
jurisdiction.

(c) As a part of its resource plan filing, a utility shall include the least cost plan for
meeting 50 and 75 percent of all energy needs from both new and refurbished generating
facilities through a combination of deleted text begin conservation deleted text end new text begin clean energy new text end and deleted text begin renewable energy deleted text end
new text begin carbon-free new text end resources.

Sec. 9.

Minnesota Statutes 2018, section 216B.2422, subdivision 4, is amended to read:

Subd. 4.

Preference for deleted text begin renewable energy facility deleted text end new text begin clean energy resources new text end .

new text begin (a) new text end The
commission shall not approve a new or refurbished nonrenewable energy facility in an
integrated resource plan or a certificate of need, pursuant to section 216B.243, nor shall the
commission new text begin approve a power purchase agreement for a new or refurbished asset subject to
its jurisdiction or new text end allow rate recovery pursuant to section 216B.16 for such a nonrenewable
energy facility, unless the utility has demonstrated that a renewable energy facility new text begin , alone
or in combination with other clean energy resources, new text end is not in the public interest.

new text begin (b) new text end When making the public interest determination new text begin under paragraph (a) new text end , the commission
must consider:

new text begin (1) whether the record in the resource plan, proposed certificate of need, or proposed
power purchase agreement for the new or refurbished nonrenewable energy facility
demonstrates the utility is unable affordably and reliably to meet the resource need the
facility is proposed for solely through the addition of clean energy resources, after evaluation
by the utility, the department, and other parties to the docket;
new text end

deleted text begin (1) deleted text end new text begin (2) new text end whether the resource plan new text begin , proposed certificate of need, or proposed power
purchase agreement new text end helps the utility achieve the greenhouse gas reduction goals under
section 216H.02, the renewable energy standard under section 216B.1691, or the solar
energy standard under section 216B.1691, subdivision 2f;

deleted text begin (2) deleted text end new text begin (3) new text end impacts on local and regional grid reliability;

deleted text begin (3) deleted text end new text begin (4) new text end utility and ratepayer impacts resulting from the intermittent nature of renewable
energy facilities, including but not limited to the costs of purchasing wholesale electricity
in the market and the costs of providing ancillary services; and

deleted text begin (4) deleted text end new text begin (5) new text end utility and ratepayer impacts resulting from reduced exposure to fuel price
volatility, changes in transmission costs, portfolio diversification, and environmental
compliance costs new text begin , as well as utility and ratepayer impacts that might result from additional
investment in nonrenewable energy facilities new text end .

new text begin (c) If the commission finds the utility has demonstrated a renewable energy facility is
not in the public interest under paragraph (a), the commission may approve a utility's proposal
for a new or refurbished nonrenewable energy facility at the size necessary to ensure reliable
and affordable service to the utility's customers.
new text end

new text begin (d) This subdivision does not apply to an energy facility approved by the legislature
under Laws 2017, chapter 5, or to commission approval of an affiliated interest agreement
for an energy facility in docket number E015/AI-17-568.
new text end

new text begin (e) When evaluating the reliability of proposed resources, the commission must consider
the ability of proposed resources to provide (1) essential reliability services needed by utility
customers or the electric system, including frequency response, balancing services, and
voltage control, and (2) energy and capacity.
new text end

new text begin (f) If the commission approves a resource plan that includes the retirement of a
nonrenewable energy facility owned by a public utility, the public utility owns the generation,
transmission, and other facilities necessary to replace the accredited capacity of the retiring
facility, provided:
new text end

new text begin (1) the resource plan results in the utility having at least 85 percent of its electric supply
by the year 2030 and thereafter from resources that do not contribute to statewide greenhouse
gas emissions, as defined in section 216H.01, subdivision 2; and
new text end

new text begin (2) the utility demonstrates its ownership of replacement resources is in the public
interest, considering customer impacts and benefits. The commission must give special
consideration to a utility's proposal under this paragraph if the proposal replaces the capacity
of a retiring nonrenewable energy facility entirely with clean energy resources.
new text end

new text begin (g) Nothing in this section impacts a decision to continue operating a nuclear facility
that is generating energy in Minnesota as of June 1, 2019. If a decision is made to retire an
existing nuclear unit, the process in paragraphs (a) to (c) applies to the identification of
replacement resources.
new text end

new text begin (h) The commission may, by order, add to the list of resources it determines to be clean
energy resources for the purposes of this section upon a determination that the resource is
carbon free and cost competitive when compared with other carbon-free alternatives.
new text end

Sec. 10.

Minnesota Statutes 2018, section 216B.2422, is amended by adding a subdivision
to read:

new text begin Subd. 4a. new text end

new text begin Preference for local job creation. new text end

new text begin As a part of its resource plan filing, a utility
must report on associated local job impacts and the steps the utility and its energy suppliers
and contractors are taking to maximize the availability of construction employment
opportunities for local workers. The commission must consider local job impacts and give
preference to proposals that maximize the creation of construction employment opportunities
for local workers, consistent with the public interest, when evaluating any utility proposal
that involves the selection or construction of facilities used to generate or deliver energy to
serve the utility's customers, including but not limited to an integrated resource plan, a
certificate of need, a power purchase agreement, or commission approval of a new or
refurbished electric generation facility.
new text end

Sec. 11.

Minnesota Statutes 2018, section 216B.2422, subdivision 5, is amended to read:

Subd. 5.

Bidding; exemption from certificate of need proceeding.

(a) A utility may
select resources to meet its projected energy demand through a bidding process approved
or established by the commission. A utility shall use the environmental cost estimates
determined under subdivision 3 new text begin and consider local job impacts new text end in evaluating bids submitted
in a process established under this subdivision.

(b) Notwithstanding any other provision of this section, if an electric power generating
plant, as described in section 216B.2421, subdivision 2, clause (1), is selected in a bidding
process approved or established by the commission, a certificate of need proceeding under
section 216B.243 is not required.

(c) A certificate of need proceeding is also not required for an electric power generating
plant that has been selected in a bidding process approved or established by the commission,
or such other selection process approved by the commission, to satisfy, in whole or in part,
the wind power mandate of section 216B.2423 or the biomass mandate of section 216B.2424.

Sec. 12.

Minnesota Statutes 2018, section 216B.2422, is amended by adding a subdivision
to read:

new text begin Subd. 7. new text end

new text begin Transmission planning in advance of generation retirement. new text end

new text begin A utility must
identify in its resource plan each nonrenewable resource on its system that has a depreciation
term, probable service life, or operating license term that will end within 15 years of the
resource plan filing date. For each resource identified, the utility must include in its resource
plan an initial plan to (1) replace the resource if retired, and (2) upgrade any transmission
or other grid capabilities needed to support the retirement of that resource.
new text end

Sec. 13.

Minnesota Statutes 2018, section 216B.2422, is amended by adding a subdivision
to read:

new text begin Subd. 8. new text end

new text begin Biennial resource planning conference. new text end

new text begin Every even-numbered year, the
commissioner of commerce must convene utilities subject to this section and stakeholders
interested in resource planning to (1) facilitate the sharing of best practices and planning
innovations from one utility resource plan to the next, (2) help resolve issues that impact
all utilities during the resource plan development process, (3) and promote coordination
across resource plans. The commissioner must seek input from likely attendees regarding
topics the resource planning conference should cover. In addition, the agenda for the
conference should review key decisions by the Federal Energy Regulatory Commission and
the North American Electric Reliability Corporation that could impact resource planning,
as well as recent and ongoing transmission studies and market innovations from the
Midcontinent Independent System Operator.
new text end

Sec. 14.

new text begin [216C.45] POWER PLANT HOST COMMUNITY TRANSITION
PLANNING.
new text end

new text begin The commissioner of commerce must coordinate with the commissioner of labor and
industry and the commissioner of employment and economic development to develop plans,
programs, and other recommendations to mitigate the impacts on host communities and
workers resulting from the eventual retirement of large generation facilities. The
commissioners must coordinate this work with representatives of the local government units
that host large generation facilities; the workers at large generation facilities, including
full-time employees and contractors; and the utilities that own large generation facilities.
new text end

Sec. 15. new text begin COORDINATED ELECTRIC TRANSMISSION STUDY.
new text end

new text begin (a) Each entity subject to Minnesota Statutes, section 216B.2425, must participate in a
coordinated engineering study to identify transmission network enhancements necessary to
maintain system reliability in the event of the retirement of large generation resources.
Specifically, the study must evaluate what enhancements are necessary in the event of the
retirement of large generation resources that reach the end of the large generation resource's
depreciation term or operating license term within 20 years of the effective date of this
section. The study must also evaluate what transmission enhancements are necessary to
interconnect replacement generation and renewable resource additions, including generation
tie lines, anticipated by 2035 in any utility's integrated resource plan filed with or approved
by the Public Utilities Commission.
new text end

new text begin (b) When setting the scope for the study, and as needed while the study is being
conducted, utilities must consult with the commissioner of commerce, technical
representatives of renewable energy resource developers, and other interested entities to
discuss and identify needed generation tie lines to support the continued orderly development
of renewable resources in Minnesota. The study must include any analysis performed by
the Midcontinent Independent System Operator.
new text end

new text begin (c) A report on the study must be completed and submitted to the Public Utilities
Commission by November 1, 2020, and include a preliminary plan to build the needed
transmission network enhancements. Reasonable and prudent costs for the study are
recoverable through the mechanism provided under Minnesota Statutes, section 216B.1645,
subdivision 2.
new text end

Sec. 16. new text begin EFFECTIVE DATE.
new text end

new text begin Sections 1 to 15 are effective August 1, 2019, and apply only to dockets initiated at the
Public Utilities Commission on or after that date.
new text end