HF 357

1st Engrossment - 86th Legislature (2009 - 2010) Posted on 02/09/2010 01:36am

A bill for an act
relating to energy; modifying provisions relating to tariffs and contracts for
community-based energy development projects; amending Minnesota Statutes
2008, section 216B.1612, subdivisions 1, 3, 5, 7; proposing coding for new law
in Minnesota Statutes, chapter 216B.

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

Section 1.

Minnesota Statutes 2008, section 216B.1612, subdivision 1, is amended to
read:

Subdivision 1.

Tariff establishment.

A tariff shall be established new text begin :
new text end

new text begin (1) new text end to optimize local, regional, and state benefits from renewable energy
development deleted text begin and deleted text end new text begin ;
new text end

new text begin (2) new text end to facilitate widespread development of community-based renewable energy
projects throughout Minnesota new text begin , especially in rural communities; and
new text end

new text begin (3) to enable Minnesotans to develop, own, and invest in renewable electric
generation despite their inability to benefit from existing federal tax credit and other
financial incentives new text end .

Sec. 2.

Minnesota Statutes 2008, section 216B.1612, subdivision 3, is amended to read:

Subd. 3.

Tariff rate.

(a) The tariff described in subdivision 4 must have a rate
schedule that allows for a net present value rate over the 20-year life of the power
purchase agreement. The tariff must provide for a rate that is higher in the first ten years
of the power purchase agreement than in the last ten years. The discount rate required
to calculate the net present value must be the utility's normal discount rate used for its
other business purposes.

(b) deleted text begin The commission shall consider mechanisms to encourage the aggregation of
C-BED projects. deleted text end new text begin The tariff for a C-BED project of five megawatts or less must be the
net present value equal to the annual average of the previous year's Midwest Independent
System Operator (MISO) Average Day Ahead Market Price calculated over the term of
the contract, which must extend at least 20 years.
new text end

(c) The commission shall require that qualifying and nonqualifying owners provide
sufficient security to secure performance under the power purchase agreement, and shall
prohibit the transfer of the C-BED project to a nonqualifying owner during the initial
20 years of the contract.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 3.

Minnesota Statutes 2008, section 216B.1612, subdivision 5, is amended to read:

Subd. 5.

Priority for C-BED projects.

(a) A utility subject to section
216B.1691that needs to construct new generation, or purchase the output from new
generation, as part of its plan to satisfy its good faith objective and standard under that
section must deleted text begin take reasonable steps to determine if one or more C-BED projects are
available that meet the utility's cost and reliability requirements, applying standard
reliability criteria, to fulfill some or all of the identified need at minimal impact to
customer rates deleted text end new text begin contract with C-BED projects until the commission determines that the
aggregate capacity of such projects installed or for which contracts have been signed in
this state reaches 800 megawatts. Only if C-BED projects of any capacity are unavailable
or are insufficient to meet the utility's need for additional electricity may the utility
purchase electricity from a non-C-BED source new text end .

deleted text begin Nothing in this section shall be construed to obligate a utility to enter into a power
purchase agreement under a C-BED tariff developed under this section.
deleted text end

new text begin (b) A utility subject to section 216B.1691, as part of its plan to satisfy its good faith
objective and standard under that section, must, by December 31, 2011, contract with
C-BED projects with a nameplate capacity of five megawatts or less until the commission
determines that the aggregate capacity of such projects installed or for which contracts
have been signed in this state reaches 200 megawatts.
new text end

deleted text begin (b) deleted text end new text begin (c) new text end Each utility shall include in its resource plan submitted under section
216B.2422 a description of its efforts to purchase energy from C-BED projects, including
a list of the projects under contract and the amount of C-BED energy purchased.

deleted text begin (c) deleted text end new text begin (d) new text end The commission shall consider the efforts and activities of a utility to
purchase energy from C-BED projects when evaluating its good faith effort towards
meeting the renewable energy objective under section 216B.1691.

deleted text begin (d) deleted text end new text begin (e) new text end A municipal power agency or generation and transmission cooperative shall,
when issuing a request for proposals for C-BED projects to satisfy its standard obligation
under section 216B.1691, provide notice to its member distribution utilities that they
may propose, in partnership with other qualifying owners, a C-BED project for the
consideration of the municipal power agency or generation and transmission cooperative.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 4.

Minnesota Statutes 2008, section 216B.1612, subdivision 7, is amended to read:

Subd. 7.

Other C-BED tariff issues.

(a) A community-based project developer
and a utility shall negotiate the rate and power purchase agreement terms consistent with
the tariff established under subdivision 4.

(b) At the discretion of the developer, a community-based project developer and
a utility may negotiate a power purchase agreement with terms different from the tariff
established under subdivision 4.

(c) deleted text begin A qualifying owner, or any combination of qualifying owners, may develop a
joint venture project with a nonqualifying renewable energy project developer. However,
the terms of the C-BED tariff may only apply to the portion of the energy production of
the total project that is directly proportional to the equity share of the project owned
by the qualifying owners.
deleted text end

deleted text begin (d) deleted text end A project that is operating under a power purchase agreement under a C-BED
tariff is not eligible for net energy billing under section 216B.164, subdivision 3, or for
production incentives under section 216C.41.

deleted text begin (e) deleted text end new text begin (d) new text end A public utility must receive commission approval of a power purchase
agreement for a C-BED tariffed project. The commission shall provide the utility's
ratepayers an opportunity to address the reasonableness of the proposed power purchase
agreement. Unless a party objects to a contract within 30 days of submission of the
contract to the commission the contract is deemed approved.

new text begin (e) Each contract for a C-BED project with a nameplate capacity of five megawatts
or less must contain a provision requiring the qualified owners to make a deposit each
year throughout the term of the contract into a maintenance reserve account. The annual
payment must be of a magnitude to reasonably insure that revenues in the account are
sufficient to pay projected maintenance costs over the term of the contract, including
provision for contingencies.
new text end

new text begin (f) A qualifying owner of a C-BED project with a nameplate capacity of five
megawatts or less that is aggregated into a larger project may not sign a contract to receive
the price established in subdivision 3, paragraph (b).
new text end

new text begin (g) A qualifying owner receiving the rate established in subdivision 3, paragraph
(b), may not participate in the ownership of another C-BED project receiving the rate
established in subdivision 3, paragraph (b), if the second project is located within a
five-mile radius of the project receiving that rate.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 5.

new text begin [216B.1613] STANDARDIZED C-BED CONTRACT.
new text end

new text begin Subdivision 1. new text end

new text begin Commission proceeding. new text end

new text begin Within 60 days of the effective date
of this section, the commission shall initiate a proceeding to standardize all contract
provisions, except those establishing the power purchase price, for two classes of C-BED
projects: (1) projects with a nameplate capacity of five megawatts or less; and (2) projects
with a nameplate capacity of greater than five megawatts. The proceeding shall provide
for participation by the public and stakeholders. The commission shall issue an order
containing standardized contract language for each class of C-BED project identified in
this subdivision no later than 90 days after the opening of the proceeding. Any applicable
C-BED contract signed after the date of the commission's order whose provisions are not
identical to the standardized contract contained in the commission's order is invalid.
new text end

new text begin Subd. 2. new text end

new text begin Expiration. new text end

new text begin This section expires the day following issuance of the order
required under subdivision 1.
new text end