HF 3669

1st Engrossment - 85th Legislature (2007 - 2008) Posted on 12/15/2009 12:00am

A bill for an act
relating to energy; creating program for government energy improvement
investments; requiring a report; appropriating money; amending Minnesota
Statutes 2006, section 216C.09; Minnesota Statutes 2007 Supplement, section
216B.241, by adding a subdivision; proposing coding for new law in Minnesota
Statutes, chapters 16B; 216C; repealing Laws 2007, chapter 57, article 2, section
30.

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

Section 1.

new text begin [16B.321] DEFINITIONS.
new text end

new text begin Subdivision 1. new text end

new text begin Scope. new text end

new text begin For the purpose of this section and section 16B.322, the terms
defined in this section have the meanings given them.
new text end

new text begin Subd. 2. new text end

new text begin Energy improvement project. new text end

new text begin "Energy improvement project" means:
new text end

new text begin (1) a project to improve energy efficiency in a building or facility, including the
design, acquisition, installation, construction, and commissioning of equipment or
improvements to a building or facility owned or operated by a state agency, and training
of building or facility staff necessary to properly operate and maintain the equipment or
improvements; or
new text end

new text begin (2) a project to design, acquire, install, construct, and commission equipment or
products to utilize solar, wind, geothermal, biomass, or other alternative energy sources in
heating, cooling, or providing electricity for a building or facility owned or operated by a
state agency and training of building or facility staff necessary to properly operate and
maintain the equipment or improvements.
new text end

new text begin Subd. 3. new text end

new text begin Energy project study. new text end

new text begin "Energy project study" means a technical and
financial study of one or more energy improvement projects, including:
new text end

new text begin (1) an analysis of historical energy consumption and cost data;
new text end

new text begin (2) a description of existing equipment, structural elements, operating characteristics,
and other conditions affecting energy use;
new text end

new text begin (3) a description of the proposed energy improvement projects;
new text end

new text begin (4) a detailed budget for the proposed project; and
new text end

new text begin (5) calculations sufficient to demonstrate the expected energy and operational cost
savings and reduction in fossil-fuel use.
new text end

new text begin Subd. 4. new text end

new text begin Financing agreement. new text end

new text begin "Financing agreement" means a tax-exempt
lease-purchase agreement entered into by the commissioner of administration and a
financial institution under a standard project financing agreement offered under section
16B.322, subdivision 4.
new text end

new text begin Subd. 5. new text end

new text begin State agency. new text end

new text begin "State agency" means any state officer, employee, board,
commission, authority, department, or other agency of the executive branch of state
government.
new text end

Sec. 2.

new text begin [16B.322] ENERGY IMPROVEMENT FINANCING PROGRAM FOR
STATE GOVERNMENT.
new text end

new text begin Subdivision 1. new text end

new text begin Commissioner's authority and duties; state agency authority. new text end

new text begin The
commissioner shall administer this section. A state agency may enter into contracts for the
purposes of this section with the commissioner and participating financial institutions. All
technical services and construction contracts must be executed through the appropriate
procurement procedure in chapters 16B, 16C, and other applicable law.
new text end

new text begin Subd. 2. new text end

new text begin Program eligibility; voluntary program participation; targeted
technical services. new text end

new text begin A state agency may elect to participate in the program. The
commissioner may prioritize and target technical services offered under subdivision 3 to
state agencies with state buildings or facilities that the commissioner determines offer the
greatest potential to improve energy efficiency or reduce use of fossil-fuel energy.
new text end

new text begin Subd. 3. new text end

new text begin Target technical services. new text end

new text begin The commissioner may require full or
partial reimbursement of costs for technical services provided to a state agency, subject
to terms and conditions specified and agreed to by contract prior to the delivery of
technical services. The commissioner of commerce may transfer up to $1,000,000 of the
appropriation in Laws 1988, chapter 686, article 1, section 38, to the commissioner of
administration for the purposes of this section.
new text end

new text begin Subd. 4. new text end

new text begin Financing agreement. new text end

new text begin The commissioner shall solicit proposals from
private financial institutions and may enter into a financing agreement with one or more
financial institutions. The term of the financing agreement must not exceed 15 years
from the date of final completion of the energy improvement project. The financing
agreement is assignable to the state agency operating or managing the state building or
facility improved by the energy improvement project. The proceeds from the financing
agreement are appropriated to the commissioner and may be used for the purposes of
this section and are available until spent.
new text end

new text begin Subd. 5. new text end

new text begin Qualifying energy improvement projects. new text end

new text begin The commissioner may
approve an energy improvement project and enter into a financing agreement if the
commissioner determines that:
new text end

new text begin (1) the project and financing agreement have been approved by the governing body
or head of the state agency that operates or manages the state building or facility to be
improved;
new text end

new text begin (2) the project is technically and economically feasible;
new text end

new text begin (3) the state agency that operates or manages the state building or facility has made
adequate provision for the operation and maintenance of the project;
new text end

new text begin (4) if an energy efficiency improvement, the project has a substantial likelihood to
result in a positive cash flow in each year the financing agreement is in effect; and
new text end

new text begin (5) if a renewable energy improvement, the project has a substantial likelihood to
reduce use of fossil-fuel energy.
new text end

new text begin Subd. 6. new text end

new text begin Program costs. new text end

new text begin Program costs incurred by the commissioner or a state
agency that are not reimbursed or paid directly under a financing agreement may be paid
with funds made available to the commissioner under section 216C.43, subdivision 10.
new text end

Sec. 3.

Minnesota Statutes 2007 Supplement, section 216B.241, is amended by adding
a subdivision to read:

new text begin Subd. 9. new text end

new text begin Coordination with utility conservation improvement programs. new text end

new text begin The
contractor selected by the commissioner in subdivision 2 shall ensure that the local
government makes use of all applicable conservation improvement programs provided
by utilities providing electric or natural gas service. Consistent with direction from the
commissioner, a utility may count the savings resulting from its energy improvement
projects under sections 16B.322 and 216C.43 towards the utility's energy-saving goal
under section 216B.241, subdivision 1c.
new text end

Sec. 4.

Minnesota Statutes 2006, section 216C.09, is amended to read:

216C.09 COMMISSIONER DUTIES.

(a) The commissioner shall:

(1) manage the department as the central repository within the state government for
the collection of data on energy;

(2) prepare and adopt an emergency allocation plan specifying actions to be taken
in the event of an impending serious shortage of energy, or a threat to public health,
safety, or welfare;

(3) undertake a continuing assessment of trends in the consumption of all forms of
energy and analyze the social, economic, and environmental consequences of these trends;

(4) carry out energy conservation measures as specified by the legislature and
recommend to the governor and the legislature additional energy policies and conservation
measures as required to meet the objectives of sections 216C.05 to 216C.30;

(5) collect and analyze data relating to present and future demands and resources
for all sources of energy;

(6) evaluate policies governing the establishment of rates and prices for energy
as related to energy conservation, and other goals and policies of sections 216C.05 to
216C.30, and make recommendations for changes in energy pricing policies and rate
schedules;

(7) study the impact and relationship of the state energy policies to international,
national, and regional energy policies;

(8) design and implement a state program for the conservation of energy; this
program shall include but not be limited to, general commercial, industrial, and residential,
and transportation areas; such program shall also provide for the evaluation of energy
systems as they relate to lighting, heating, refrigeration, air conditioning, building design
and operation, and appliance manufacturing and operation;

(9) inform and educate the public about the sources and uses of energy and the
ways in which persons can conserve energy;

(10) dispense funds made available for the purpose of research studies and projects
of professional and civic orientation, which are related to either energy conservation,
resource recovery, or the development of alternative energy technologies which conserve
nonrenewable energy resources while creating minimum environmental impact;

(11) charge other governmental departments and agencies involved in energy-related
activities with specific information gathering goals and require that those goals be met;

(12) design a comprehensive program for the development of indigenous energy
resources. The program shall include, but not be limited to, providing technical,
informational, educational, and financial services and materials to persons, businesses,
municipalities, and organizations involved in the development of solar, wind, hydropower,
peat, fiber fuels, biomass, and other alternative energy resources. The program shall be
evaluated by the alternative energy technical activity; and

(13) dispense loans, grants, or other financial aid from money received from
litigation or settlement of alleged violations of federal petroleum-pricing regulations
made available to the department for that purpose. deleted text begin The commissioner shall adopt rules
under chapter 14 for this purpose.
deleted text end

(b) Further, the commissioner may participate fully in hearings before the
Public Utilities Commission on matters pertaining to rate design, cost allocation,
efficient resource utilization, utility conservation investments, small power production,
cogeneration, and other rate issues. The commissioner shall support the policies stated in
section 216C.05 and shall prepare and defend testimony proposed to encourage energy
conservation improvements as defined in section 216B.241.

Sec. 5.

new text begin [216C.42] DEFINITIONS.
new text end

new text begin Subdivision 1. new text end

new text begin Scope. new text end

new text begin For the purpose of this section and section 216C.43, the terms
defined in this section have the meanings given them.
new text end

new text begin Subd. 2. new text end

new text begin Energy improvement project. new text end

new text begin "Energy improvement project" means
a project to improve energy efficiency in a building or facility, including the design,
acquisition, installation, and commissioning of equipment or improvements to a building
or facility, and training of building or facility staff necessary to properly operate and
maintain the equipment or improvements.
new text end

new text begin Subd. 3. new text end

new text begin Energy project study. new text end

new text begin "Energy project study" means a technical and
financial study of one or more energy improvement projects, including:
new text end

new text begin (1) an analysis of historical energy consumption and cost data;
new text end

new text begin (2) a description of existing equipment, structural elements, operating characteristics,
and other conditions affecting energy use;
new text end

new text begin (3) a description of the proposed energy improvement projects;
new text end

new text begin (4) a detailed budget for the proposed project; and
new text end

new text begin (5) calculations sufficient to demonstrate the expected energy savings.
new text end

new text begin Subd. 4. new text end

new text begin Financing agreement. new text end

new text begin "Financing agreement" means a tax-exempt
lease-purchase agreement entered into by a local government and a financial institution
under a standard project financing agreement offered under section 216C.43, subdivision 6.
new text end

new text begin Subd. 5. new text end

new text begin Local government. new text end

new text begin "Local government" means a Minnesota county,
statutory or home rule charter city, town, school district, or any combination of those units
operating under an agreement to exercise powers jointly.
new text end

new text begin Subd. 6. new text end

new text begin Program. new text end

new text begin "Program" means the energy improvement financing program
for local governments authorized by section 216C.43.
new text end

new text begin Subd. 7. new text end

new text begin Supplemental cash flow agreement. new text end

new text begin "Supplemental cash flow agreement"
means an agreement by the commissioner to lend funds to a local government up to an
amount necessary to ensure that the cumulative payments made by the local government
under a financing agreement minus the amount loaned by the commissioner do not exceed
the actual energy and operating cost savings attributable to the energy improvement
project for the term of the supplemental cash flow agreement.
new text end

Sec. 6.

new text begin [216C.43] ENERGY IMPROVEMENT FINANCING PROGRAM FOR
LOCAL GOVERNMENT.
new text end

new text begin Subdivision 1. new text end

new text begin Commissioner's authority and duties; local government
authority. new text end

new text begin The commissioner shall administer this section. A local government may
enter into contracts for the purposes of this section with the commissioner, the primary
contractor, other contracted technical service providers, and participating financial
institutions.
new text end

new text begin Subd. 2. new text end

new text begin Program eligibility; voluntary program participation; targeted
technical services. new text end

new text begin A local government may elect to participate in the program. The
commissioner may prioritize and target technical services offered under subdivision
5 to public entities that the commissioner determines offer the greatest potential for
cost-effective energy improvement projects.
new text end

new text begin Subd. 3. new text end

new text begin Primary contractor for technical, financial, and program management
services. new text end

new text begin The commissioner may enter into a contract for the delivery of technical
services, financial management, marketing, and administrative services necessary for
implementation of the program.
new text end

new text begin Subd. 4. new text end

new text begin Targeted technical services. new text end

new text begin The commissioner shall offer technical
services to targeted public entities to conduct energy project studies. The commissioner
may contract with one or more qualified technical service providers to conduct energy
project studies for targeted public entities. The commissioner may require full or partial
reimbursement of costs for technical services provided to a local government, subject to
terms and conditions specified and agreed to by contract prior to the delivery of technical
services. A local government may independently procure technical services to conduct an
energy project study, but the energy project study must be reviewed and approved by the
commissioner to qualify an energy improvement project for a financing agreement under
subdivision 6 or a supplemental cash flow agreement under subdivision 7.
new text end

new text begin Subd. 5. new text end

new text begin Participation of technical service providers statewide. new text end

new text begin Program
activities must be implemented to encourage statewide participation of engineers,
architects, energy auditors, contractors, and other technical service providers. The
commissioner may provide training on energy project study requirements and procedures
to technical service providers.
new text end

new text begin Subd. 6. new text end

new text begin Standard project financing agreement. new text end

new text begin The commissioner shall solicit
proposals from private financial institutions and may enter into a standard project
financing agreement with one or more financial institutions. A standard project financing
agreement must specify terms and conditions uniformly available to all participating
public entities for financing to implement energy improvement projects under this section.
A local government may choose to finance an energy improvement project by means other
than a standard project financing agreement, but a supplemental cash flow agreement
under subdivision 7 must not be offered unless the commissioner determines that the other
financing means creates no greater potential obligation under a supplemental cash flow
agreement than would be created through a standard project financing agreement.
new text end

new text begin Subd. 7. new text end

new text begin Supplemental cash flow agreement. new text end

new text begin (a) The commissioner shall offer
a supplemental cash flow agreement to a participating local government for qualifying
energy improvement projects. The term of a supplemental cash flow agreement may not
exceed 15 years. Terms and conditions of a supplemental cash flow agreement must be
agreed to by contract prior to a local government entering into a financing agreement.
new text end

new text begin (b) A supplemental cash flow agreement contract must include, but is not limited to:
new text end

new text begin (1) specification of methods and procedures to measure and verify energy cost
savings;
new text end

new text begin (2) obligations of the local government to operate and maintain the energy
improvements;
new text end

new text begin (3) procedures to modify the supplemental cash flow agreement if the local
government modifies operating characteristics of its building or facility in a manner that
adversely affects energy cost savings;
new text end

new text begin (4) interest charged on the loan, which may not exceed the interest on the related
financial agreement; and
new text end

new text begin (5) procedures for resolution of disputes.
new text end

new text begin Subd. 8. new text end

new text begin Qualifying energy improvement projects. new text end

new text begin A local government may
submit to the commissioner, on a form prescribed by the commissioner, an application for
a financing agreement authorization and supplemental cash flow agreement for energy
improvement projects. The commissioner shall approve an energy improvement project
for a supplemental cash flow agreement and authorize eligibility for a financing agreement
if the commissioner determines that:
new text end

new text begin (1) the application has been approved by the governing body or agency head of the
local government;
new text end

new text begin (2) the project is technically and economically feasible;
new text end

new text begin (3) the local government has made adequate provision for the operation and
maintenance of the project;
new text end

new text begin (4) the project has a substantial likelihood to result in a positive cash flow in each
year the financing agreement is in effect; and
new text end

new text begin (5) adequate funds will be available to the commissioner to fulfill the supplemental
cash flow agreement.
new text end

new text begin Subd. 9. new text end

new text begin Program costs. new text end

new text begin Program costs incurred by the commissioner or a public
entity that are not direct costs to implement energy improvement projects may be paid
with program funds appropriated under subdivision 10.
new text end

new text begin Subd. 10. new text end

new text begin Funding; appropriation; receipts. new text end

new text begin Petroleum violation escrow funds
appropriated to the commissioner by Laws 1988, chapter 686, article 1, section 38, for
state energy loan programs for schools, hospitals, and public buildings, and reappropriated
by Laws 2007, chapter 57, article 2, section 30, are appropriated to the commissioner
for the purposes of this section and are available until spent. The commissioner may
transfer up to $1,000,000 of this appropriation to the commissioner of administration for
the purposes of section 16B.322.
new text end

Sec. 7. new text begin REPORT; GREEN STAR AWARD EXPANSION.
new text end

new text begin The Pollution Control Agency and the Office of Energy Security in the Department
of Commerce shall, in collaboration with the clean energy resource teams (CERT's),
submit a report by February 2, 2009, to the chairs and ranking minority members of the
senate and house of representatives committees with primary jurisdiction over energy
policy that makes recommendations regarding how to expand eligibility to receive the
Green Star award, described in Minnesota Statutes, section 114C.25, to include cities and
communities that take action to help meet the state's greenhouse gas emissions reduction
goals established in Minnesota Statutes, section 216H.02, subdivision 1. The report must
address, at a minimum, the following issues:
new text end

new text begin (1) the criteria for actions cities and communities must take in order to receive a
Green Star award;
new text end

new text begin (2) what entity or entities would issue the award;
new text end

new text begin (3) the length of time during which the award may be displayed;
new text end

new text begin (4) existing state financial and technical assistance available to communities and
cities to assist them to reduce greenhouse gas emissions;
new text end

new text begin (5) sources of additional funding needed to implement the program; and
new text end

new text begin (6) any other issues that need to be resolved in order to implement the program.
new text end

Sec. 8. new text begin REPEALER.
new text end

new text begin Laws 2007, chapter 57, article 2, section 30, new text end new text begin is repealed.
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