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HF 3618

as introduced - 86th Legislature (2009 - 2010) Posted on 03/10/2010 03:45pm

KEY: stricken = removed, old language.
underscored = added, new language.

Bill Text Versions

Engrossments
Introduction Posted on 03/10/2010

Current Version - as introduced

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

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

Section 1.

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

new text begin Sections 216B.152 to 216B.1565 may be referred to as the Energy Security and
Economic Development Act of 2010.
new text end

Sec. 2.

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

new text begin Subdivision 1. new text end

new text begin Scope. new text end

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

new text begin Subd. 2. new text end

new text begin Capacity. new text end

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

new text begin Subd. 3. new text end

new text begin Community-based energy development project or C-BED project.
new text end

new text begin "Community-based energy development project" or "C-BED project" has the meaning
given in section 216B.1612, subdivision 2, paragraph (g).
new text end

new text begin Subd. 4. new text end

new text begin Electric utility. new text end

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

new text begin Subd. 5. new text end

new text begin Electrical distribution system. new text end

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

new text begin Subd. 6. new text end

new text begin Open field project. new text end

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

new text begin Subd. 7. new text end

new text begin Photovoltaic device. new text end

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

new text begin Subd. 8. new text end

new text begin Qualifying owner. new text end

new text begin "Qualifying owner" has the meaning given in section
216B.1612, subdivision 2, paragraph (c).
new text end

new text begin Subd. 9. new text end

new text begin Reasonable profit. new text end

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

new text begin Subd. 10. new text end

new text begin Renewable electricity generator. new text end

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

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

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

new text begin Subd. 11. new text end

new text begin Rooftop project. new text end

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

new text begin Subd. 12. new text end

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

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

Sec. 3.

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

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

Sec. 4.

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

new text begin Subdivision 1. new text end

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

new text begin By December 1,
2010, each public utility providing electric service at retail shall file for commission
approval a standard renewable rate consistent with this section. Within 90 days of the first
commission approval order under this section, each cooperative electric association,
generation and transmission cooperative electric association, and municipal power agency
shall adopt a standard renewable rate as consistent as possible with this section.
new text end

new text begin Subd. 2. new text end

new text begin Standard renewable rate objective. new text end

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

new text begin Subd. 3. new text end

new text begin Application. new text end

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

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

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

new text begin Subd. 4. new text end

new text begin Standard renewable rate components. new text end

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

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

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

new text begin Subd. 5. new text end

new text begin Standard renewable rate terms. new text end

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

new text begin Subd. 6. new text end

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

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

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

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

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

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

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

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

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

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

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

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

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

new text begin Subd. 7. new text end

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

new text begin (a) By October 1, 2010, the
commission shall determine a final standard rate for each project type and size listed
in subdivision 6. The commission shall review each interim standard renewable rate
established in subdivision 6 to determine if it is a reasonable approximation of the rate
that would be established by applying the criteria in this subdivision. If the commission
so determines, it shall approve the interim standard renewable rate as a final standard
renewable rate. Otherwise, the commission shall calculate the final standard renewable
rate by applying the criteria in paragraph (b).
new text end

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

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

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

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

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

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

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

new text begin Subd. 8. new text end

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

new text begin (a) Beginning
February 1, 2013, and annually thereafter, the commission shall review the standard
renewable rate and, if it determines that the standard renewable rate is not a reasonable
approximation of the rate that would be calculated under subdivision 7, paragraph (b),
using the most recent available data, or is not efficacious in achieving the objectives
described in subdivision 2, may adjust the standard renewable rate. In determining
whether the standard renewable rate should be adjusted, the commission shall consider:
new text end

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

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

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

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

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

new text begin Subd. 9. new text end

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

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

new text begin Subd. 10. new text end

new text begin Ownership limit. new text end

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

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

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

new text begin Subd. 11. new text end

new text begin WECS capacity calculation. new text end

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

new text begin Subd. 12. new text end

new text begin Interconnection. new text end

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

new text begin (b) The commission shall consult with the Federal Energy Regulatory Commission,
the Midwest Independent Transmission System Operator Incorporated, and other
appropriate entities to establish an interconnection request review procedure to promptly
and efficiently determine whether or not the commission may interconnect a renewable
energy generator that requests interconnection under state authority.
new text end

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

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

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

new text begin Subd. 13. new text end

new text begin Standard contract. new text end

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

Sec. 5.

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

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

Sec. 6.

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

new text begin (a) By March 1, 2012, and each year thereafter, a utility that has filed a standard
renewable rate established in this section with the commission shall report to the
commission, for the previous calendar year, the following quantities:
new text end

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

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

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

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

Sec. 7.

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

new text begin Subdivision 1. new text end

new text begin Surcharge. new text end

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

new text begin Subd. 2. new text end

new text begin Amount. new text end

new text begin Beginning July 1, 2010, the public benefits surcharge is
$0.00025 per kilowatt-hour, and increases to $0.0005 per kilowatt-hour on July 1, 2011,
to $0.00075 per kilowatt-hour on July 1, 2012, and to $0.001 per kilowatt-hour on July
1, 2013, and thereafter.
new text end

new text begin Subd. 3. new text end

new text begin Account. new text end

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

new text begin Subd. 4. new text end

new text begin Expenditures. new text end

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

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

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

new text begin Subd. 5. new text end

new text begin Exceptions. new text end

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

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

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

new text begin Subd. 6. new text end

new text begin Ratepayer contributions. new text end

new text begin An electric utility must offer its customers the
option of making voluntary contributions to the account created in this section through
the utility bill.
new text end

Sec. 8.

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

new text begin Subdivision 1. new text end

new text begin Incentive payment; appropriation. new text end

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

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

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

new text begin Subd. 2. new text end

new text begin Payment period. new text end

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

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

new text begin Subd. 3. new text end

new text begin Amount of payment. new text end

new text begin An incentive payment is based on the number of
kilowatt-hours of electricity generated. The amount of the payment per kilowatt-hour
generated is the difference between the average price per kilowatt-hour contained in power
purchase agreements signed during calendar year 2009 and approved by the commission
for C-BED projects under section 216B.1612, and the standard renewable rate established
in section 216B.1535, subdivisions 6 to 8.
new text end

new text begin Subd. 4. new text end

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

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

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

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

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

new text begin Subd. 5. new text end

new text begin Eligibility process. new text end

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

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

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

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

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

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

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

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

Sec. 9.

new text begin [216B.156] LOAN ELIGIBILITY.
new text end

new text begin A renewable electricity generator is eligible for a loan under section 216C.39,
subdivision 5.
new text end

Sec. 10.

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

new text begin By January 1 of 2012 and 2013 and every four years thereafter, the commission shall
submit a report to the governor and legislature that must include all of the following:
new text end

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

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

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

Sec. 11. new text beginEFFECTIVE DATE.
new text end

new text begin Sections 1 to 10 are effective the day following final enactment.
new text end