HF 436

as introduced - 85th Legislature (2007 - 2008) Posted on 12/15/2009 12:00am

A bill for an act
relating to energy; enacting the Next Generation Energy Act of 2007; establishing
state energy policy goals for fossil fuel-use reduction and renewable energy use;
providing for electric utility renewable energy obligations of 25 percent by 2025;
establishing provisions to promote community energy development; providing
for transition to an energy savings requirement for electric and natural gas
utilities; enacting provisions to address climate change; providing for delegation
to counties for permitting wind projects under 25 megawatts; amending
Minnesota Statutes 2006, sections 123B.65, subdivision 2; 216B.16, subdivisions
6b, 6c; 216B.1612, subdivision 2, by adding a subdivision; 216B.1691,
subdivisions 1, 2, 3, by adding subdivisions; 216B.2426; 216B.243, subdivisions
2, 3, 3a, 5; 216C.05; 216C.31; 471.345, subdivision 13; 504B.161, subdivision 1;
proposing coding for new law in Minnesota Statutes, chapters 216B; 216C; 216F;
repealing Minnesota Statutes 2006, sections 216B.165; 216B.241; 216B.2411;
216C.27; 216C.30, subdivision 5; Minnesota Rules, parts 4635.0110; 4635.0130;
7365.0210; 7635.0100; 7635.0120; 7635.0140; 7635.0150; 7635.0160;
7635.0170; 7635.0180; 7635.0200; 7635.0210; 7635.0220; 7635.0230;
7635.0240; 7635.0250; 7635.0260; 7635.0300; 7635.0310; 7635.0320;
7635.0330; 7635.0340; 7635.0400; 7635.0410; 7635.0420; 7635.0500;
7635.0510; 7635.0520; 7635.0530; 7635.0600; 7635.0610; 7635.0620;
7635.0630; 7635.0640; 7635.1000; 7635.1010; 7635.1020; 7635.1030;
7655.0100; 7655.0120; 7655.0200; 7655.0220; 7655.0230; 7655.0240;
7655.0250; 7655.0260; 7655.0270; 7655.0280; 7655.0290; 7655.0300;
7655.0310; 7655.0320; 7655.0330; 7655.0400; 7655.0410; 7655.0420.

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

ARTICLE 1

GENERAL PROVISIONS

Section 1. new text begin TITLE.
new text end

new text begin This act may be cited as the Next Generation Energy Act of 2007.
new text end

Sec. 2.

Minnesota Statutes 2006, section 216C.05, is amended to read:

216C.05 FINDINGS AND PURPOSE.

new text begin Subdivision 1. new text end

new text begin Energy planning. new text end

The legislature finds and declares that continued
growth in demand for energy will cause severe social and economic dislocations, and that
the state has a vital interest in providing for: increased efficiency in energy consumption,
the development and use of renewable energy resources wherever possible, and the
creation of an effective energy forecasting, planning, and education program.

The legislature further finds and declares that the protection of life, safety, and
financial security for citizens during an energy crisis is of paramount importance.

Therefore, the legislature finds that it is in the public interest to review, analyze, and
encourage those energy programs that will minimize the need for annual increases in
fossil fuel consumption by 1990 and the need for additional electrical generating plants,
and provide for an optimum combination of energy sources consistent with environmental
protection and the protection of citizens.

The legislature intends to monitor, through energy policy planning and
implementation, the transition from historic growth in energy demand to a period when
demand for traditional fuels becomes stable and the supply of renewable energy resources
is readily available and adequately utilized.

new text begin Subd. 2. new text end

new text begin Energy policy goals. new text end

new text begin It is the energy policy of the state of Minnesota that:
new text end

new text begin (1) the per capita use of fossil fuel as an energy input be reduced by 15 percent by
the year 2015, through increased reliance on energy efficiency and renewable energy
alternatives; and
new text end

new text begin (2) 25 percent of the total energy used in the state be derived from renewable energy
resources by the year 2025.
new text end

ARTICLE 2

RENEWABLE ENERGY

Section 1.

Minnesota Statutes 2006, section 216B.1691, subdivision 1, is amended to
read:

Subdivision 1.

Definitions.

(a) Unless otherwise specified in law, "eligible energy
technology" means an energy technology that:

(1) generates electricity from the following renewable energy sources: solar; wind;
hydroelectric with a capacity of less than deleted text begin 60 deleted text end new text begin 100 new text end megawatts; hydrogen, provided that
after January 1, 2010, the hydrogen must be generated from the resources listed in this
clause; or biomass, which includes an energy recovery facility used to capture the heat
value of mixed municipal solid waste or refuse-derived fuel from mixed municipal solid
waste as a primary fuel; and

(2) was not mandated by Laws 1994, chapter 641, or by commission order issued
pursuant to that chapter prior to August 1, 2001.

(b) "Electric utility" means a public utility providing electric service, a generation
and transmission cooperative electric association, or a municipal power agency.

(c) "Total retail electric sales" means the kilowatt-hours of electricity sold in a year
by an electric utility to retail customers of the electric utility or to a distribution utility for
distribution to the retail customers of the distribution utility.

Sec. 2.

Minnesota Statutes 2006, section 216B.1691, subdivision 2, is amended to read:

Subd. 2.

deleted text begin Eligible deleted text end new text begin Next generation renewable new text end energy objectives.

(a) Each electric
utility shall make a good faith effort to generate or procure sufficient electricity generated
by an eligible energy technology to provide its retail consumers, or the retail customers of a
distribution utility to which the electric utility provides wholesale electric service, so that:

(1) deleted text begin commencing in 2005 deleted text end new text begin by 2010 new text end , at least deleted text begin one deleted text end new text begin ten new text end percent of the electric utility's total
retail electric sales is generated by eligible energy technologies; new text begin and
new text end

(2) the amount provided under clause (1) is increased by one percent of the utility's
total retail electric sales each year until new text begin 2025, with interim goals of 15 percent by new text end 2015 deleted text begin ;
deleted text end and new text begin 20 percent by 2020.
new text end

deleted text begin (3) ten deleted text end new text begin These objectives apply to each individual electric utility and apply statewide,
so that by the end of 2025 and beyond, at least 25 new text end percent of the electric energy provided
to retail customers in Minnesota is generated by eligible energy technologies.

(b) deleted text begin Of the eligible energy technology generation required under paragraph (a),
clauses (1) and (2), not less than 0.5 percent of the energy must be generated by biomass
energy technologies, including an energy recovery facility used to capture the heat value
of mixed municipal solid waste or refuse-derived fuel from mixed municipal solid waste
as a primary fuel, by 2005. By 2010, one percent of the eligible technology generation
required under paragraph (a), clauses (1) and (2), shall be generated by biomass energy
technologies. deleted text end new text begin Notwithstanding subdivision 1, paragraph (a), clause (1):
new text end

new text begin (1) the commission may authorize an energy technology that generates electricity
from a hydroelectric resource with a capacity of 60 megawatts or greater as an eligible
energy technology for an individual electric utility if the commission finds that
authorization to be necessary to minimize an excessive rate impact on the utilitya??s
customers under this section; and
new text end

new text begin (2) new text end an energy recovery facility used to capture the heat value of mixed municipal
solid waste or refuse-derived fuel from mixed municipal solid waste, with a power sales
agreement in effect as of May 29, 2003, that terminates after December 31, 2010, does not
qualify as an eligible energy technology unless the agreement provides for rate adjustment
in the event the facility qualifies as a renewable energy source.

(c) deleted text begin By June 1, 2004, and deleted text end As needed deleted text begin thereafter deleted text end , the commission shall issue an order
detailing the criteria and standards by which it will measure an electric utility's efforts
to meet the renewable energy objectives of this section to determine whether the utility
is making the required good faith effort new text begin , taking into consideration the provisions of
subdivision 7 new text end . In this order, the commission shall include criteria and standards that
protect against undesirable impacts on the reliability of the utility's system and economic
impacts on the utility's ratepayers and that consider technical feasibility.

deleted text begin (d) In its order under paragraph (c), the commission shall provide for a weighted
scale of how energy produced by various eligible energy technologies shall count toward a
utility's objective. In establishing this scale, the commission shall consider the attributes
of various technologies and fuels, and shall establish a system that grants multiple credits
toward the objectives for those technologies and fuels the commission determines is in
the public interest to encourage.
deleted 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. 3.

Minnesota Statutes 2006, section 216B.1691, subdivision 3, is amended to read:

Subd. 3.

Utility plans filed with commission.

(a) Each electric utility shall report
on its plans, activities, and progress with regard to these objectives in its filings under
section 216B.2422 or in a separate report submitted to the commission every two years,
whichever is more frequent, demonstrating to the commission that the utility is making the
required good faith effort. In its resource plan or a separate report, each electric utility
shall provide a description of:

(1) the status of the utility's renewable energy mix relative to the good faith objective;

(2) efforts taken to meet the objective;

(3) any obstacles encountered or anticipated in meeting the objective; and

(4) potential solutions to the obstacles.

(b) new text begin The commission shall review the compliance filings of each electric utility under
paragraph (a), and make a determination as to whether the utility is in compliance with
the requirements of this section. A utility that the commission has determined to have
made the required good faith effort for the reporting period but that did not achieve the
objective specified for that reporting period shall file a plan with the commission to make
up the balance of the objective for that reporting period. A utility that the commission has
determined has not made the required good faith effort for the reporting period is subject
to the penalty established under subdivision 8.
new text end

new text begin (c) new text end The commissioner shall compile the information provided to the commission
under deleted text begin paragraph deleted text end new text begin paragraphs new text end (a) new text begin and (b) new text end , and report to the chairs of the house of
representatives and senate committees with jurisdiction over energy and environment
policy issues as to the progress of utilities in the state in increasing the amount of
renewable energy provided to retail customers, with any recommendations for regulatory
or legislative action, by January 15 of each odd-numbered year.

Sec. 4.

Minnesota Statutes 2006, section 216B.1691, is amended by adding a
subdivision to read:

new text begin Subd. 7. new text end

new text begin Good faith effort. new text end

new text begin For the purposes of this section, "good faith effort"
means that an electric utility subject to this section has taken all reasonable steps to meet
the renewable energy objective established in subdivision 2, while minimizing adverse
reliability and cost impacts to its Minnesota consumers. Evidence of that good faith
effort may include, but is not limited to:
new text end

new text begin (1) demonstrated commitment to a comprehensive and specific plan to meet the
renewable energy objective, detailing the steps to be taken to reach the renewable energy
objective, with an accompanying timetable. Each electric utility is responsible for
conducting sufficient advance planning to comply with this section;
new text end

new text begin (2) demonstrated financial commitments to build or to purchase energy or credits to
meet the renewable energy objective, including project financing, purchase and ordering
of equipment, and expenditures to hire construction firms if needed;
new text end

new text begin (3) demonstrated commitments to construction of physical infrastructure to meet the
renewable energy objective, including ordering equipment, hiring construction firms, and
contracting for construction sites;
new text end

new text begin (4) demonstrated legal and contractual commitments to purchase or build the
facilities to meet the renewable energy objective including, but not limited to, contracts for
sites on which to build; contracts for labor and equipment; arrangements for insurance and
liability; or, in the case of contracts for purchases to meet the renewable energy objective,
a negotiated power purchase agreement;
new text end

new text begin (5) demonstrated commitment to meet regulatory requirements in a timely fashion,
including all permitting and other regulatory obligations;
new text end

new text begin (6) demonstrated commitment to acquiring or building transmission access for
generation facilities to meet the renewable energy objective, including the initiation or
participation in transmission studies, construction of needed transmission infrastructure,
or otherwise providing for interconnection and transmission service for those facilities;
new text end

new text begin (7) demonstrated commitment to openness and transparency, including full public
access to all nonproprietary information related to meeting the renewable energy
objective; and
new text end

new text begin (8) demonstrated analysis of the technical feasibility and potential for negative
impacts on reliability and rates for each project proposed to meet the utilitya??s objective.
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.

Minnesota Statutes 2006, section 216B.1691, is amended by adding a
subdivision to read:

new text begin Subd. 8. new text end

new text begin Penalty for noncompliance. new text end

new text begin If the commission finds that an electric utility
has failed to make a good faith effort for the previous reporting period under subdivision
3, the commission shall impose an administrative penalty of $50 per megawatt-hour
for the amount of eligible renewable energy generation the utility is in deficit. The
commission may not impose a penalty on the electric utility if it finds that the utilitya??s
failure to meet the renewable energy objectives is due to circumstances outside of the
utilitya??s reasonable control, such as weather-related damage, mechanical failure, strikes,
lockouts, and actions of a governmental authority that adversely affect the generation,
transmission, or distribution of renewable energy from an eligible resource. Penalty
payments under this subdivision must be deposited to the next generation energy fund
established under section 216C.054.
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. 6.

Minnesota Statutes 2006, section 216B.1691, is amended by adding a
subdivision to read:

new text begin Subd. 9. new text end

new text begin Compliance payment option. new text end

new text begin In lieu of adding eligible energy resources
or purchasing renewable credits to meet an electric utilitya??s objectives under this section,
a utility may petition the commission to make a compliance payment equal to the value
of eligible energy resources necessary to meet that planning perioda??s objective. The
commission may approve the petition if it finds that a compliance payment would be in
the best interest of the utility and its ratepayers. The commission may, by order, establish
the amount of the payment based on the market price for renewable energy credits for the
Midwest region. Payments under this subdivision must be deposited to the next generation
energy fund established under section 216C.054.
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. 7.

Minnesota Statutes 2006, section 216B.1691, is amended by adding a
subdivision to read:

new text begin Subd. 10. new text end

new text begin Community energy projects. new text end

new text begin (a) Each electric utility subject to this
section shall make a good faith effort to manage the power purchase agreements it enters
into after July 1, 2007, to satisfy the renewable energy objective in such a way that at
least 25 percent of the amounts paid out under those power purchase agreements, in
the aggregate, are distributed to Minnesota community investors, defined as qualifying
owners under section 216B.1612, subdivision 2, paragraph (c).
new text end

new text begin (b) The commission shall allow an electric utility to count one kilowatt-hour of
electricity generated by a community energy project and purchased directly by the utility
as 1.2 kilowatt-hours of electricity towards the utilitya??s obligation under this section.
new text end

new text begin (c) For the purposes of this subdivision, community energy project has the meaning
given to it under section 216B.2426, subdivision 1, paragraph (b).
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. 8.

new text begin [216C.054] NEXT GENERATION ENERGY FUND.
new text end

new text begin Subdivision 1. new text end

new text begin Fund established. new text end

new text begin A next generation energy fund is established
as an account in the state treasury. Earnings, such as interest, dividends, and any other
earnings arising from fund assets, must be credited to the fund.
new text end

new text begin Subd. 2. new text end

new text begin Appropriation and expenditures. new text end

new text begin Money in the fund is appropriated to
the commissioner of commerce, and may only be used:
new text end

new text begin (1) for amounts deposited to the fund under section 216B.1691, to encourage the
development of new renewable energy projects in the state; and
new text end

new text begin (2) for amounts deposited to the fund under section 216B.2412, subdivision 12, for
the purposes specified in that subdivision.
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. 9. new text begin TRANSMISSION PLANNING AND DEVELOPMENT.
new text end

new text begin Subdivision 1. new text end

new text begin Transmission necessary to serve the next generation renewable
energy objective. new text end

new text begin Transmission-owning utilities subject to Minnesota Statutes, section
216B.2425, shall analyze and identify specific transmission solutions for serving the
renewable energy resources necessary to comply with the expanded and accelerated
renewable energy objective under this article, with particular focus on the transmission
infrastructure needed by the year 2010. The utilities shall take into account the analysis
being conducted under Minnesota Statutes, section 216B.2426, subdivision 3, and shall
issue the analysis required under this subdivision in the November 1, 2007, filing under
Minnesota Statutes, section 216B.2425.
new text end

new text begin Subd. 2. new text end

new text begin Extra-high-voltage transmission for the Midwest. new text end

new text begin In order to assist
attaining the national goal of having 20 percent of the electricity used nationally come
from wind energy resources, the transmission-owning utilities subject to Minnesota
Statutes, section 216B.2425, shall participate in a transmission analysis to identify
extra-high-voltage transmission solutions to transmit energy from 20,000 megawatts of
new wind energy facilities located in the Midwest, and shall report their findings to the
Public Utilities Commission by January 15, 2008.
new text end

ARTICLE 3

COMMUNITY ENERGY

Section 1.

Minnesota Statutes 2006, section 216B.1612, subdivision 2, is amended to
read:

Subd. 2.

Definitions.

(a) The terms used in this section have the meanings given
them in this subdivision.

(b) "C-BED tariff" or "tariff" means a community-based energy development tariff.

(c) "Qualifying owner" means:

(1) a Minnesota resident;

(2) a limited liability company that is organized under the laws of this state and that
is made up of members who are Minnesota residents;

(3) a Minnesota nonprofit organization organized under chapter 317A;

(4) a Minnesota cooperative association organized under chapter 308A or 308B,
other than a rural electric cooperative association or a generation and transmission
cooperative;

(5) a Minnesota political subdivision or local government other than a municipal
electric utility or municipal power agency, including, but not limited to, a county, statutory
or home rule charter city, town, school district, or public or private higher education
institution or any other local or regional governmental organization such as a board,
commission, or association; or

(6) a tribal council.

(d) "Net present value rate" means a rate equal to the net present value of the
nominal payments to a project divided by the total expected energy production of the
project over the life of its power purchase agreement.

(e) "Standard reliability criteria" means:

(1) can be safely integrated into and operated within the utility's grid without causing
any adverse or unsafe consequences; and

(2) is consistent with the utility's resource needs as identified in its most recent
resource plan submitted under section 216B.2422.

(f) "Community-based energy project" or "C-BED project" means a deleted text begin new deleted text end new text begin
community-based new text end wind energy project that deleted text begin : deleted text end new text begin became operational after July 1, 2005.
new text end

deleted text begin (1) has deleted text end No single qualifying owner deleted text begin owning deleted text end new text begin of a C-BED project with more than
two turbines may own new text end more than 15 percent of deleted text begin a deleted text end new text begin that new text end C-BED project deleted text begin that consists of
more than two turbines; or deleted text end new text begin .
new text end

deleted text begin (2) for C-BED projects of one or two turbines, is owned entirely by one or more
qualifying owners, with at least 51 percent of the total financial benefits over the life of the
project flowing to qualifying owners; and
deleted text end

deleted text begin (3) deleted text end new text begin (g) "Community-based" means a project:
new text end

new text begin (1) in which at least 35 percent of the amount paid to the project under a utility
power purchase agreement over the term of the agreement goes to the qualified owners
directly or to the surrounding community in the form of management fees, service
contracts, taxes paid by the project to local units of government, easement lease payments,
and other revenues paid directly to qualified owners; and
new text end

new text begin (2) that new text end has a resolution of support adopted by the county board of each county in
which the project is to be located, or in the case of a project located within the boundaries
of a reservation, the tribal council for that reservation.

new text begin EFFECTIVE DATE. new text end

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

Sec. 2.

Minnesota Statutes 2006, section 216B.1612, is amended by adding a
subdivision to read:

new text begin Subd. 8. new text end

new text begin Certification. new text end

new text begin For the purposes of this section, section 216B.1691,
subdivision 10, and section 216B.2426, a project developer of a proposed project may
apply to the commissioner of commerce for an initial certification that the project meets
the criteria for a community energy project. The commissioner shall issue a decision
within 30 business days from the date all information necessary to make the determination
is received by the department. An initial certification by the commissioner is appealable
to the commission if the appeal is made within 14 business days. If no appeal is made
within that period, the initial certification becomes final.
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. 3.

Minnesota Statutes 2006, section 216B.2426, is amended to read:

216B.2426 new text begin COMMUNITY ENERGY PROJECTS; new text end OPPORTUNITIES deleted text begin FOR
DISTRIBUTED GENERATION deleted text end new text begin , INTERCONNECTION new text end .

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin (a) The definitions in this subdivision and in section
216B.1612 apply to this section.
new text end

new text begin (b) "Community energy project" means a community-based energy project; or
a community-based distributed generation facility of no more than ten megawatts of
interconnected capacity that is an eligible energy technology other than wind.
new text end

new text begin (c) "Utility" or "utilities" includes entities defined in section 216B.1691, subdivision
1, paragraph (b), subject to state renewable energy objectives.
new text end

new text begin Subd. 2. new text end

new text begin Consideration in proceedings. new text end

The commission shall ensure that
opportunities for the installation of deleted text begin distributed generation, as that term is defined in section
216B.169, subdivision 1, paragraph (c), deleted text end new text begin community energy projects new text end are considered in
any proceeding under section 216B.2422, 216B.2425, or 216B.243 new text begin , and may, by order,
establish standards and procedures to comply with this subdivision new text end .

new text begin Subd. 3. new text end

new text begin Statewide study of potential for community energy; assessment. new text end

new text begin (a)
Each electric utility subject to section 216B.1691 shall participate in a statewide study
that identifies the potential for community energy projects that can be developed within
each Minnesota electric transmission planning zone to serve retail electric customers
within the state. This study must:
new text end

new text begin (1) identify the general location of each substation that has transformer secondary
voltage of 34.5 kV or higher;
new text end

new text begin (2) identify the potential amount of capacity that could reasonably be developed at
each substation identified in clause (1), considering wind resources, land use constraints,
and other site-specific characteristics;
new text end

new text begin (3) identify enhancements to existing transformer and infrastructure needed to
interconnect the projects of the capacity identified in clause (2) so as to optimize efficient
use of existing infrastructure to meet the needs of community energy projects;
new text end

new text begin (4) identify community energy enhancement zones in geographic areas where the
cumulative potential for community energy development is sufficiently great to justify the
construction of transformer and transmission infrastructure enhancements in anticipation
of future community energy projects;
new text end

new text begin (5) identify the transformer and infrastructure needs of community energy projects
under subdivision 4;
new text end

new text begin (6) be conducted at a level of detail sufficient for project proposal development
through certificate of need under section 216B.243, or the transmission planning priority
process under section 216B.2425.
new text end

new text begin (b) The utilities shall consult with a stakeholder group for each transmission
planning zone to provide input into the scope and nature of the analysis and review
results. The commission shall convene the stakeholder group for each planning zone and
shall select and engage an independent engineering firm to provide technical support to
the stakeholder groups.
new text end

new text begin (c) The utilities shall complete the initial study under this subdivision by November
1, 2007, and the commission shall issue the results by January 1, 2008. Any enhancements
identified must be submitted for certification in the biennial transmission plan filing, or
submitted for approval under 216B.243 within six months of completion of the study.
new text end

new text begin (d) Thereafter, the utilities, utilizing input from the stakeholder groups, shall provide
updates of this statewide study in the statea??s transmission planning processes under
216B.2425. The report must include a system map showing the location and thermal
megawatt loading rating of each of its facilities over 34.5 kV operating voltage, and also
include a report on community energy projects and related transmission infrastructure
constructed in the proceeding periods.
new text end

new text begin (e) Each utility subject to section 216B.1691 shall participate fully and in a timely
manner in conducting the analysis, study, and report required in this subdivision, and the
commission shall assess these utilities for the commissiona??s costs incurred under this
section. Amounts assessed under this paragraph are appropriated to the commission, and
its biennial appropriation is increased by a like amount.
new text end

new text begin Subd. 4 new text end

new text begin Interconnection of priority community energy projects. new text end

new text begin (a) The
commission shall initiate a proceeding and by an order issued by January 15, 2008, to
establish a process to identify priority community energy projects of 25 megawatts of
capacity or less, and establish standards to assure their prompt and orderly interconnection.
This process must:
new text end

new text begin (1) identify as priority projects those community energy projects with completed
power purchase agreements and demonstrations of financial feasibility;
new text end

new text begin (2) establish (i) a standard interconnection agreement that sets forth the contractual
conditions under which a company and a customer agree that one or more facilities may
be interconnected with the company's utility system, and (ii) a standard application form
and process for interconnection and parallel operation with the utility system;
new text end

new text begin (3) set reasonable terms and conditions to ensure the reliable, safe, and efficient
operation of interconnected equipment;
new text end

new text begin (4) assign interconnection costs of community energy projects to the distribution
system owner to the maximum extent permitted by federal law, such costs not to exceed
five percent of the total project costs;
new text end

new text begin (5) include provisions for expedited construction of interconnection facilities by
utilities, and provision for damage payments to interconnecting projects if schedules
are delayed; and
new text end

new text begin (6) provide for the expedited, low-cost, orderly, safe, and standardized
interconnection of community energy project facilities including establishing a statewide
two-tiered queue process that includes:
new text end

new text begin (i) a priority queue for projects with completed power purchase agreements and
demonstrated financial feasibility; and
new text end

new text begin (ii) a preliminary queue that includes a feasibility analysis of each proposed project
and allows projects in the preliminary queue with newly completed power purchase
agreements to move to the bottom of the priority queue.
new text end

new text begin (b) Each utility shall identify transmission system enhancements required by
priority community energy projects identified under this subdivision and submit those
enhancements for permitting approval under section 216B.2425. These enhancements
must be considered certified as priority projects under that section, or under section
216B.243.
new text end

new text begin Subd. 5. new text end

new text begin Costs recoverable. new text end

new text begin Expenditures by utilities required to comply with this
section, including any costs allocated under subdivision 4, paragraph (a), clause (5),
are recoverable pursuant to 216B.1645.
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

ARTICLE 4

DEMAND EFFICIENCY

Section 1.

Minnesota Statutes 2006, section 216B.16, subdivision 6b, is amended to
read:

Subd. 6b.

Energy new text begin efficiency and new text end conservation improvement.

(a) Except as
otherwise provided in this subdivision, all investments and expenses of a public utility
as defined in section deleted text begin 216B.241 deleted text end new text begin 216B.2412 new text end , subdivision 1, paragraph (e), incurred in
connection with energy new text begin efficiency and new text end conservation improvements shall be recognized
and included by the commission in the determination of just and reasonable rates as if
the investments and expenses were directly made or incurred by the utility in furnishing
utility service.

(b) deleted text begin After December 31, 1999, deleted text end Investments and expenses for energy new text begin efficiency and
new text end conservation improvements shall not be included by the commission in the determination
of just and reasonable electric and gas rates for retail electric and gas service provided
to large electric customer facilities that have been exempted by the commissioner of the
department pursuant to section deleted text begin 216B.241, subdivision 1a, paragraph (b) deleted text end new text begin 216B.2412,
subdivision 2, paragraph (b) new text end . deleted text begin However, no public utility shall be prevented from recovering
its investment in energy conservation improvements from all customers that were made on
or before December 31, 1999, in compliance with the requirements of section 216B.241.
deleted text end

(c) The commission may permit a public utility to file rate schedules providing
for annual recovery of the costs of energy new text begin efficiency and new text end conservation improvements.
These rate schedules may be applicable to less than all the customers in a class of retail
customers if necessary to reflect the differing deleted text begin minimum spending deleted text end requirements of section
deleted text begin 216B.241, subdivision 1a deleted text end new text begin 216B.2412, subdivision 3 new text end . deleted text begin After December 31, 1999, deleted text end The
commission shall allow a public utility, without requiring a general rate filing under this
section, to reduce the electric and gas rates applicable to large electric customer facilities
that have been exempted by the commissioner of the department pursuant to section
deleted text begin 216B.241, subdivision 1a deleted text end new text begin 216B.2412, subdivision 2 new text end , paragraph (b), by an amount that
reflects the elimination of energy new text begin efficiency and new text end conservation improvement investments
or expenditures for those facilities deleted text begin required on or before December 31, 1999 deleted text end . In the
event that the commission has set electric or gas rates based on the use of an accounting
methodology that results in the cost of conservation improvements being recovered from
utility customers over a period of years, the rate reduction may occur in a series of steps to
coincide with the recovery of balances due to the utility for conservation improvements
made by the utility on or before December 31, 1999.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2008.
new text end

Sec. 2.

Minnesota Statutes 2006, section 216B.16, subdivision 6c, is amended to read:

Subd. 6c.

Incentive plan for energy new text begin efficiency and new text end conservation improvement.

(a) The commission may order public utilities to develop and submit for commission
approval incentive plans that describe the method of recovery and accounting for utility
conservation expenditures and savings. In developing the incentive plans the commission
shall ensure the effective involvement of interested parties.

(b) In approving incentive plans, the commission shall consider:

(1) whether the plan is likely to increase utility investment in cost-effective energy
new text begin efficiency and new text end conservation;

(2) whether the plan is compatible with the interest of utility ratepayers and other
interested parties;

(3) whether the plan links the incentive to the utility's performance in achieving
cost-effective conservation; and

(4) whether the plan is in conflict with other provisions of this chapter.

(c) The commission may set rates to encourage the vigorous and effective
implementation of utility new text begin energy efficiency and new text end conservation programs. The commission
may:

(1) increase or decrease any otherwise allowed rate of return on net investment based
upon the utility's skill, efforts, and success in conserving energy;

(2) share between ratepayers and utilities the net savings resulting from energy
new text begin efficiency and new text end conservation programs to the extent justified by the utility's skill, efforts,
and success in conserving energy; and

(3) compensate the utility for earnings lost as a result of its conservation programs.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2008.
new text end

Sec. 3.

new text begin [216B.2412] DEMAND EFFICIENCY PROGRAM.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin For purposes of this section and section 216B.16,
subdivision 6b, the terms defined in this subdivision have the meanings given them.
new text end

new text begin (a) "Customer facility" means all buildings, structures, equipment, and installations
at a single site.
new text end

new text begin (b) "Energy conservation" means demand-side management of energy supplies
resulting in a net reduction in energy use. Load management that reduces overall energy
use is energy conservation.
new text end

new text begin (c) "Energy efficiency" means measures or programs, including energy conservation
measures or programs, that target consumer behavior, equipment, processes, or devices to
result in a decrease in consumption of electric energy or natural gas without a reduction in
the quality or level of service provided to the energy consumer.
new text end

new text begin (d) "Energy efficiency and conservation improvement" means a project that results
in energy efficiency or energy conservation.
new text end

new text begin (e) "Investments and expenses of a public utility" includes the investments and
expenses incurred by a public utility in connection with an energy efficiency and
conservation improvement, including but not limited to:
new text end

new text begin (1) the differential in interest cost between the market rate and the rate charged on a
no-interest or below-market interest loan made by a public utility to a customer for the
purchase or installation of an energy efficiency and conservation improvement;
new text end

new text begin (2) the difference between the utility's cost of purchase or installation of energy
efficiency and conservation improvements and any price charged by a public utility to a
customer for such improvements.
new text end

new text begin (f) "Large electric customer facility" means a customer facility that imposes a
peak electrical demand on an electric utility's system of not less than 20,000 kilowatts,
measured in the same way as the utility that serves the customer facility measures
electrical demand for billing purposes, and for which electric services are provided at
retail on a single bill by a utility operating in the state.
new text end

new text begin (g) "Load management" means an activity, service, or technology to change the
timing or the efficiency of a customer's use of energy that allows a utility or a customer to
respond to wholesale market fluctuations or to reduce the overall demand for energy or
capacity.
new text end

new text begin Subd. 2. new text end

new text begin Applicability. new text end

new text begin (a) This section applies to each:
new text end

new text begin (1) public utility;
new text end

new text begin (2) municipal utility that furnishes electric service in the state;
new text end

new text begin (3) municipal utility with more than 1,000,000,000 cubic feet in annual throughput
sales from natural gas service provided in the state; and
new text end

new text begin (4) generation and transmission cooperative electric association that provides
energy services to cooperative electric associations that provide electric service at retail
to consumers in the state.
new text end

new text begin (b) The owner of a large electric customer facility may petition the commissioner
to exempt both electric and gas utilities serving the large energy customer facility from
the energy savings requirements of subdivision 3 with respect to retail sales attributable
to the facility. At a minimum, the petition must be supported by evidence relating to
competitive or economic pressures on the customer and a showing by the customer
of reasonable efforts to identify, evaluate, and implement cost-effective conservation
improvements at the facility. If a petition is filed on or before October 1 of any year, the
order of the commissioner to exempt revenues attributable to the facility can be effective
no earlier than January 1 of the following year. The commissioner shall not grant an
exemption if the commissioner determines that granting the exemption is contrary to
the public interest. The commissioner may, after investigation, rescind any exemption
granted under this paragraph upon a determination that cost-effective energy efficiency
and conservation improvements are available at the large electric customer facility. For
the purposes of investigations by the commissioner under this paragraph, the owner of
any large electric customer facility shall, upon request, provide the commissioner with
updated information comparable to that originally supplied in or with the owner's original
petition under this paragraph.
new text end

new text begin (c) A generation and transmission cooperative electric association or public utility
serving utilities with fewer than 500 aggregate retail customers in the state may petition
the commissioner for an exemption from this section. The commissioner shall grant an
exemption if the affected retail consumers in Minnesota have access to energy efficiency
and conservation programs provided by a utility or other entity under requirements of
another state.
new text end

new text begin Subd. 3. new text end

new text begin Energy savings goals. new text end

new text begin (a) The commissioner shall establish annual
energy savings goals for each utility and association listed in subdivision 2. Unless the
commissioner determines the goal is not in the public interest, the energy savings goals
for programs established under subdivision 4 must equal:
new text end

new text begin (1) at least 0.75 percent of gross annual retail energy sales by 2009;
new text end

new text begin (2) at least 1.0 percent of gross annual retail energy sales by 2010; and
new text end

new text begin (3) at least 1.5 percent of gross annual retail energy sales by 2012 and each year
thereafter.
new text end

new text begin (b) For a generation and transmission electric cooperative association, the goals
listed in paragraph (a) apply to each associationa??s membersa?? aggregate gross annual
retail energy sales.
new text end

new text begin (c) Municipal utilities may meet the energy savings goals established in paragraph
(a) on an aggregate basis through a municipal power agency, generation and transmission
electric cooperative association, or other not-for-profit entity. A municipal power agency,
generation and transmission electric cooperative association, or other not-for-profit entity
administering aggregate energy efficiency and conservation programs may invest in
energy efficiency and conservation improvements on behalf of the municipal utilities it
serves and shall fulfill the reporting and energy savings goals on an aggregate basis.
new text end

new text begin (d) The commissioner may require a public utility to make an energy efficiency and
conservation improvement investment or expenditure whenever the commissioner finds
that the improvement will result in energy savings at a total cost to the utility less than the
cost to the utility to produce or purchase an equivalent amount of new supply of energy.
new text end

new text begin Subd. 4. new text end

new text begin Demand efficiency programs. new text end

new text begin (a) Utilities and associations subject
to subdivision 2 shall file energy efficiency and conservation improvement plans by
June 1, on a schedule determined by order of the commissioner, but at least every four
years. Plans received by June 1 must be approved or approved as modified by the
commissioner by December 1 of that same year. The commissioner shall evaluate the
program on the basis of cost-effectiveness and the reliability of technologies employed.
The commissioner's order must provide to the extent practicable for a free choice, by
consumers participating in the program, of the device, method, material, or project
constituting the energy efficiency and conservation improvement and for a free choice of
the seller, installer, or contractor of the energy efficiency and conservation improvement;
provided that the device, method, material, or project seller, installer, or contractor is duly
licensed, certified, approved, or qualified.
new text end

new text begin (b) A utility or association subject to this section under subdivision 2, paragraph
(a), may not spend for or invest in energy efficiency and conservation improvements that
directly benefit a large electric customer facility for which the commissioner has issued an
exemption pursuant to subdivision 2, paragraph (b).
new text end

new text begin (c) The commissioner shall consider and may require a utility, association, or
other entity providing energy efficiency and conservation services under this section to
undertake a program suggested by an outside source, including a political subdivision
or a nonprofit or community organization.
new text end

new text begin (d) The commissioner may, by order, establish a list of programs that may be
offered as energy efficiency and conservation improvements by a public utility, municipal
utility, cooperative electric association, or other entity providing energy efficiency and
conservation services pursuant to this section. The commissioner may, by order, change
this list to add or subtract programs as the commissioner determines is necessary to
promote efficient and effective conservation programs.
new text end

new text begin (e) The commissioner may, by order, establish energy savings assumptions for
energy efficiency and conservation improvements that must be used when filing programs
under this subdivision. The commissioner may contract with a third party to provide
technical assistance establishing these assumptions.
new text end

new text begin Subd. 5. new text end

new text begin Manner of filing and service. new text end

new text begin (a) If subject to section 216B.2412, as
of January 1, 2008, any public utility, generation and transmission cooperative electric
association, municipal power agency, cooperative electric association and municipal utility
shall submit filings to the department via the departmenta??s electronic filing system. The
commissioner may approve an exemption from this requirement in the event an affected
utility is unable to submit filings via the departmenta??s electronic filing system. All other
interested parties shall submit filings to the department via the departmenta??s electronic
filing system whenever practicable but may also file by personal delivery or by mail.
new text end

new text begin (b) Submission of a document to the departmenta??s electronic filing system constitutes
service on the department. When department rule requires service of a notice, order, or
other document by the department, utility, or interested party upon persons on a service
list maintained by the department, service may be made by personal delivery, mail, or
electronic service, except that electronic service may only be made upon persons on
the service list who have previously agreed in writing to accept electronic service at an
electronic address provided to the department for electronic service purposes.
new text end

new text begin Subd. 6. new text end

new text begin Appeals. new text end

new text begin (a) A utility, a political subdivision, a nonprofit or community
organization, the attorney general acting on behalf of consumers and small business
interests, the owner of a large electric customer facility, or a utility customer that is not
represented by the attorney general under section 8.33, may petition the commission to
modify or revoke a department decision under this section, and the commission may do so
if it determines that the commissionera??s decision:
new text end

new text begin (1) will not result in cost-effective energy efficiency and conservation improvements;
new text end

new text begin (2) has a long-range negative effect on one or more classes of customers; or
new text end

new text begin (3) is otherwise not in the public interest.
new text end

new text begin (b) The commission shall reject a petition that, on its face, fails to make a reasonable
argument that a decision is not in the public interest.
new text end

new text begin Subd. 7. new text end

new text begin Independent audit. new text end

new text begin The commissioner shall order a public utility to
file annually the results of an independent audit of the utility's energy efficiency and
conservation improvement programs and expenditures performed by the department or an
auditor with experience in the provision of energy efficiency and conservation services
approved by the commissioner and chosen by the utility. The audit must specify the energy
savings or increased efficiency in the use of energy within the service territory of the
utility that is the result of the investments. The audit must evaluate the cost-effectiveness
of the utility's energy efficiency and conservation programs.
new text end

new text begin Subd. 8. new text end

new text begin Ownership of energy efficiency and conservation improvement. new text end

new text begin An
energy efficiency and conservation improvement made to or installed in a building in
accordance with this section, except systems owned by the utility and designed to turn
off, limit, or vary the delivery of energy, are the exclusive property of the owner of the
building except to the extent that the improvement is subjected to a security interest in
favor of the utility in case of a loan to the building owner. The utility has no liability
for loss, damage, or injury caused directly or indirectly by an energy efficiency and
conservation improvement except for negligence by the utility in the purchase, installation,
or modification of the product.
new text end

new text begin Subd. 9. new text end

new text begin Low income programs. new text end

new text begin The commissioner shall establish and
implement low-income energy efficiency and conservation programs. In establishing
low-income energy efficiency and conservation programs, the commissioner shall consult
political subdivisions, utilities, and nonprofit and community organizations, especially
organizations engaged in providing energy and weatherization assistance to low-income
persons. To the extent practicable, money collected under subdivision 12 for this purpose
must serve low-income persons, including low-income renters, in the service territory of
the utility or association providing the funds. The commissioner shall record and report
expenditures and energy savings achieved as a result of low-income programs funded
through this account. The commissioner may contract with a political subdivision, a
nonprofit or community organization, a public utility, a municipality, or a cooperative
electric association to implement its programs.
new text end

new text begin Subd. 10. new text end

new text begin Demand efficiency research and development grants. new text end

new text begin The
commissioner may provide grants to any person to conduct research and development of
energy efficiency and conservation improvements. In awarding research and development
grants, the commissioner shall consult with an advisory group consisting of utilities,
consumer advocates, and other interested parties.
new text end

new text begin Subd. 11. new text end

new text begin Facilities demand efficiency. new text end

new text begin (a) The Department of Administration
and the Department of Commerce shall maintain and, as needed, revise the sustainable
building guidelines developed under section 16B.325.
new text end

new text begin (b) The Department of Administration and the Department of Commerce shall
maintain and update the benchmarking tool developed under Laws 2001, chapter 212,
article 1, section 3, so that all public buildings can use the benchmarking tool to maintain
energy usage information for the purposes of establishing energy efficiency benchmarks
and tracking building performance and the results of energy efficiency and conservation
improvements.
new text end

new text begin (c) The commissioner may provide grants to commercial building owners to
facilitate energy efficiency and conservation improvements and professional engineering
certification to reach the goal of 1,000 Energy Star-labeled commercial buildings in the
state by 2010.
new text end

new text begin Subd. 12. new text end

new text begin Demand efficiency account. new text end

new text begin (a) A demand efficiency account is
established within the next generation energy fund established under section 216C.054.
Interest on money in the account accrues to the account.
new text end

new text begin (b) Subject to the limitations established in paragraph (c), the commissioner shall
assess energy utilities for costs related to execution of subdivision 4, paragraph (e), and
9, 10, and 11. The commissioner shall apportion the costs among all energy utilities in
proportion to their respective gross operating revenues from sales of gas or electric service
within the state during the last calendar year and shall then render a bill to each utility on a
regular basis. For purposes of administrative efficiency, the commissioner shall assess
energy utilities and issue bills in accordance with the billing and assessment procedures
provided in section 216B.62, to the extent that these procedures do not conflict with this
subdivision. The amount of the bills rendered by the commissioner under this paragraph
must be paid by the energy utility into the demand efficiency account within the next
generation energy fund within 30 days from the date of billing and is appropriated to the
commissioner for the purposes of executing subdivisions 4, paragraph (e), 9, 10, and
11. All amounts assessed under this section are in addition to amounts appropriated to
the commissioner by other law.
new text end

new text begin (c) The commissioner may assess:
new text end

new text begin (1) an amount equal to 0.20 percent of the gross operating revenue from annual retail
sales of electricity and natural gas in the state for the purpose of providing low-income
energy efficiency programs under subdivision 9;
new text end

new text begin (2) up to $3,500,000 annually to establish energy savings assumptions under
subdivision 4, paragraph (e), to provide grants for research and development of energy
efficiency and conservation improvements under subdivision 10 and grants promoting
Energy Star-labeled commercial buildings under subdivision 11, paragraph (c); and
new text end

new text begin (3) up to an additional $500,000 annually to carry out subdivision 11, paragraphs
(a) and (b). The amount assessed under this clause is appropriated to the commissioner,
and some or all of the amount assessed may be transferred to the commissioner of
administration, for the purposes specified in subdivision 11, paragraphs (a) and (b), as
needed to implement those paragraphs.
new text end

new text begin Subd. 13. new text end

new text begin Recovery of expenses. new text end

new text begin The commission shall allow a utility to recover
expenses resulting from an energy efficiency and conservation improvement program
required by the department and contributions to the demand efficiency account, unless
the recovery would be inconsistent with a financial incentive proposal approved by the
commission. In addition, a utility may file annually or the Public Utilities Commission
may require the utility to file, and the commission may approve, rate schedules containing
provisions for the automatic adjustment of charges for utility service in direct relation
to changes in the expenses of the utility for real and personal property taxes, fees, and
permits, the amounts of which the utility cannot control. A public utility is eligible
to file for adjustment for real and personal property taxes, fees, and permits under this
subdivision only if, in the year previous to the year in which it files for adjustment, it has
saved an additional 0.15 percent over the amount specified in subdivision 3, excluding
large electric customer facilities for which the commissioner has issued an exemption
under subdivision 2, paragraph (b).
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2008, and applies to proposals
pending on that date.
new text end

Sec. 4.

new text begin [216B.2413] DECOUPLING OF ENERGY SALES FROM REVENUES.
new text end

new text begin The commission may, by order, establish criteria and standards for decoupling, in
whole or in part, energy sales by public utilities from the revenues of those utilities. The
commission shall design the criteria and standards to mitigate the impact on the public
utilities of the energy efficiency objectives under section 216B.2412 without adversely
affecting utility ratepayers. Upon adoption of criteria and standards under this section,
the commission may approve utility proposals for decoupling that are consistent with
those criteria and standards.
new text end

Sec. 5.

Minnesota Statutes 2006, section 216B.243, subdivision 3, is amended to read:

Subd. 3.

Showing required for construction.

No proposed large energy facility
shall be certified for construction unless the applicant can show that demand for electricity
cannot be met more cost effectively through energy conservation and load-management
measures and unless the applicant has otherwise justified its need. In assessing need,
the commission shall evaluate:

(1) the accuracy of the long-range energy demand forecasts on which the necessity
for the facility is based;

(2) the effect of existing or possible energy conservation programs under sections
216C.05 to 216C.30 and this section or other federal or state legislation on long-term
energy demand;

(3) the relationship of the proposed facility to overall state energy needs, as
described in the most recent state energy policy and conservation report prepared under
section 216C.18, or, in the case of a high-voltage transmission line, the relationship of the
proposed line to regional energy needs, as presented in the transmission plan submitted
under section 216B.2425;

(4) promotional activities that may have given rise to the demand for this facility;

(5) benefits of this facility, including its uses to protect or enhance environmental
quality, and to increase reliability of energy supply in Minnesota and the region;

(6) possible alternatives for satisfying the energy demand or transmission needs
including but not limited to potential for increased efficiency and upgrading of existing
energy generation and transmission facilities, load-management programs, and distributed
generation;

(7) the policies, rules, and regulations of other state and federal agencies and local
governments;

(8) new text begin whether the applicant or applicants are in compliance with section 216B.2412,
subdivision 3;
new text end

new text begin (9) new text end any feasible combination of energy conservation improvements, required under
section , that can (i) replace part or all of the energy to be provided
by the proposed facility, and (ii) compete with it economically;

deleted text begin (9) deleted text end new text begin (10) new text end with respect to a high-voltage transmission line, the benefits of enhanced
regional reliability, access, or deliverability to the extent these factors improve the
robustness of the transmission system or lower costs for electric consumers in Minnesota;

deleted text begin (10) deleted text end new text begin (11) new text end whether the applicant or applicants are in compliance with applicable
provisions of sections 216B.1691 and 216B.2425, subdivision 7, and have filed or will file
by a date certain an application for certificate of need under this section or for certification
as a priority electric transmission project under section 216B.2425 for any transmission
facilities or upgrades identified under section 216B.2425, subdivision 7;

deleted text begin (11) deleted text end new text begin (12) new text end whether the applicant has made the demonstrations required under
subdivision 3a; and

deleted text begin (12) deleted text end new text begin (13) new text end if the applicant is proposing a nonrenewable generating plant, the
applicant's assessment of the risk of environmental costs and regulation on that proposed
facility over the expected useful life of the plant, including a proposed means of allocating
costs associated with that risk.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2008.
new text end

Sec. 6. new text begin REVISOR'S INSTRUCTION.
new text end

new text begin The revisor of statutes shall change all statutory references to all or parts of
section 216B.241 wherever found in Minnesota Statutes and Minnesota Rules to section
216B.2412.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2008.
new text end

Sec. 7. new text begin REPEALER.
new text end

new text begin Minnesota Statutes 2006, sections 216B.241; and 216B.2411, new text end new text begin are repealed effective
June 30, 2008.
new text end

ARTICLE 5

CLIMATE CHANGE

Section 1.

Minnesota Statutes 2006, section 216B.243, subdivision 2, is amended to
read:

Subd. 2.

Certificate required.

new text begin (a) new text end No large energy facility deleted text begin shall deleted text end new text begin may new text end be sited or
constructed in Minnesota new text begin and no nonrenewable resource power purchase agreement may
be entered into by an electric utility, new text end without the issuance of a certificate of need by the
commission pursuant to sections 216C.05 to 216C.30 and this section and consistent
with the criteria for assessment of need.

new text begin (b) For the purposes of this section:
new text end

new text begin (1) "nonrenewable resource power purchase agreement" means power purchase
agreement for 50 megawatts of capacity or more with a term exceeding five years from
a generation facility powered by nonrenewable fuel; and
new text end

new text begin (2) "electric utility" has the meaning given to it in section 216B.38, subdivision 5.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment
and applies to proposals pending as of that date.
new text end

Sec. 2.

Minnesota Statutes 2006, section 216B.243, subdivision 3a, is amended to read:

Subd. 3a.

Use of renewable resource.

new text begin (a) new text end The commission may not issue a
certificate of need under this section for new text begin :
new text end

new text begin (1) new text end a large energy facility that new text begin :
new text end

new text begin (i) new text end generates electric power by means of a nonrenewable energy source deleted text begin , deleted text end new text begin ; new text end or deleted text begin that
deleted text end

new text begin (ii) new text end transmits electric power generated by means of a nonrenewable energy source new text begin ; or
new text end

new text begin (2) a nonrenewable resource power purchase agreement new text end , unless the applicant for the
certificate has demonstrated to the commission's satisfaction that new text begin :
new text end

new text begin (i) the applicant has arranged to offset the carbon dioxide and other greenhouse gas
emissions from the nonrenewable resource through:
new text end

new text begin (A) capture and geologic sequestration of those emissions;
new text end

new text begin (B) the purchase of greenhouse gas emission-reduction credits issued by a tracking
and crediting organization approved by the commission; or
new text end

new text begin (C) another method approved by the commission after notice and opportunity to
comment; and
new text end

new text begin (ii) new text end it has explored the possibility of generating power by means of renewable energy
sources and has demonstrated that the alternative selected is less expensive deleted text begin ( deleted text end new text begin , new text end including
environmental costs deleted text begin ) deleted text end new text begin and the costs of compliance with item (i) new text end new text begin , new text end than power generated by a
renewable energy source.

new text begin (b) new text end For purposes of this subdivision, "renewable energy source" includes hydro,
wind, solar, and geothermal energy and the use of trees or other vegetation as fuel.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment
and applies to proposals pending as of that date.
new text end

Sec. 3.

Minnesota Statutes 2006, section 216B.243, subdivision 5, is amended to read:

Subd. 5.

Approval, denial, or modification.

new text begin (a) new text end Within 12 months of the
submission of an application, the commission shall approve or deny a certificate of need
for the facility new text begin or power purchase agreement new text end . Approval or denial of the certificate shall be
accompanied by a statement of the reasons for the decision. Issuance of the certificate may
be made contingent upon modifications required by the commission. If the commission
has not issued an order on the application within the 12 months provided, the commission
may extend the time period upon receiving the consent of the parties or on its own motion,
for good cause, by issuing an order explaining the good cause justification for extension.

new text begin (b) The commission may modify proposals for nonrenewable projects or
nonrenewable resource power purchase agreements applied for under this section to
order the implementation of technically feasible, cost-effective energy conservation or
renewable energy projects, including community energy projects, as determined under
section 216B.2426, that are identified in the application review process.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment
and applies to proposals pending as of that date.
new text end

Sec. 4.

new text begin [216C.03] CLIMATE CHANGE; ENERGY PRODUCTION AND USE.
new text end

new text begin Subdivision 1. new text end

new text begin Climate change action plan. new text end

new text begin The commissioner of commerce, on
behalf of the executive branch and in coordination with the Pollution Control Agency and
Departments of Natural Resources, Agriculture, Employment and Economic Development,
and Transportation, shall identify and invite a nationally recognized independent expert
entity to conduct a structured, broadly inclusive stakeholder-based review of potential
policies and initiatives that can be implemented in Minnesota to reduce greenhouse gas
emissions from activities in this state. The purpose of this effort is to identify, develop, and
integrate a full range of state-level energy efficiency, renewable energy, and other climate
change actions, across all economic sectors, regions, and energy uses in the state and
develop a comprehensive climate action plan that also can provide substantial energy and
emissions savings and related benefits for Minnesotaa??s citizens. The end product of this
technical, cost-benefit analysis should be a final report that includes a thorough inventory
and forecast of Minnesotaa??s greenhouse gas emissions, a series of individual policy
recommendations across all sectors and types of activities, and recommended statewide
goals for implementation. The commissioner of commerce shall coordinate the activities
of the executive branch participation with this stakeholder process, and shall issue a
Minnesota climate change action plan to the Minnesota Legislature by February 1, 2008.
new text end

new text begin Subd. 2. new text end

new text begin Regional activities. new text end

new text begin It shall be an executive branch responsibility to work
with other states in the Midwest region to develop and implement a regional approach
to reducing greenhouse gas emissions from activities in the region. The commissioner
of commerce shall coordinate Minnesotaa??s regional activities under this subdivision
and report by February 1 of each year on the progress made and recommendations for
further action.
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

ARTICLE 6

WIND PROJECT PERMITTING

Section 1.

new text begin [216F.015] SIZE DETERMINATION.
new text end

new text begin (a) The total size of a combination of wind energy conversion systems for the
purpose of determining jurisdictional siting authority under sections 216F.01 to 216F.07
must be determined according to this section. The nameplate capacity of one wind energy
conversion system must be combined with the nameplate capacity of any other wind
energy conversion system that is:
new text end

new text begin (1) located within five miles of the wind energy conversion system;
new text end

new text begin (2) constructed within the same 12-month period as the wind energy conversion
system; and
new text end

new text begin (3) exhibits characteristics of being a single development, including but not limited
to ownership structure, an umbrella sales arrangement, shared interconnection, revenue
sharing arrangements, and common debt or equity financing.
new text end

new text begin (b) Upon written request of a project developer, the commissioner of commerce shall
provide an initial written determination under this section within 30 days of receipt of the
request and information necessary to develop a determination. The commissioner shall
prepare and make available the necessary forms and guidance for project developers to
make a request for determination. In the case of a dispute, the chair of the Public Utilities
Commission shall determine the total size of the system and shall draw all reasonable
inferences in favor of combining the systems.
new text end

new text begin (c) An application for a permit for a wind energy conversion system from a county is
not complete without a jurisdictional determination made pursuant to this section.
new text end

Sec. 2.

new text begin [216F.08] DELEGATION TO COUNTIES.
new text end

new text begin Subdivision 1. new text end

new text begin Counties; processing of applications for LWECS site permits.
new text end

new text begin (a) Any Minnesota county board may, by resolution and upon written notice to the Public
Utilities Commission, assume responsibility for processing applications for permits
required under this chapter for LWECS with a combined nameplate capacity of less
than 25,000 kilowatts. The responsibility for permit application processing, if assumed
by a county, may be delegated by the county board to any appropriate county officer
or employee. Processing by a county must be done in accordance with procedures and
processes established under chapter 394.
new text end

new text begin (b) For the purposes of this subdivision, the term "processing" includes:
new text end

new text begin (1) the distribution to applicants of application and determination forms provided
by the commission;
new text end

new text begin (2) the receipt and examination of completed application forms, and the certification,
in writing, to the commission either (i) that the LWECS for which a permit was issued by
the county will comply with applicable rules and standards, or (ii) if the facility will not
comply, the respects in which a variance was required for the issuance of a permit; and
new text end

new text begin (3) rendering to applicants, upon request, assistance for the proper completion of
an application.
new text end

new text begin (c) A county board that exercises its option under paragraph (a) and assumes
responsibility for processing applications for permits for LWECS within its borders
is responsible for issuing, denying, modifying, imposing conditions upon, or revoking
permits pursuant to the provisions of this section or rules adopted pursuant to this section.
The action of the county board with regard to that permit application is final, subject
to appeal as provided in section 394.27.
new text end

new text begin (d) In adopting and enforcing rules or standards under this subdivision, the
commission and the commissioner shall cooperate closely with the delegated county
and other governmental agencies.
new text end

new text begin (e) The commission shall work with counties and wind developers to notify and
educate stakeholders with regard to rules or standards under this section at the time such
rules or standards are being developed and adopted and at least every two years thereafter.
new text end

new text begin (f) The commission shall, by order, develop general permit standards to cover
requirements of site permits for LWECS pursuant to this section. These general permit
standards shall apply both to permits issued by counties and to permits issued by the
commission directly for LWECS with a combined nameplate capacity of less than 25,000
kilowatts. The order shall outline minimum standards necessary to ensure the protection
of human health and safety and wind resources on adjacent land. The initial order shall
contain standards that are consistent with the general provisions of wind permits issued by
the commission in the five years prior to enactment of this provision.
new text end

new text begin (g) The commission and the commissioner of commerce shall provide technical
assistance to a delegated county with respect to the processing of LWECS site permit
applications by that county.
new text end

new text begin (h) A county may adopt by ordinance standards for LWECS that are more stringent
than standards in commission rules or in the general permit standards. The commission, in
considering a permit for LWECS in a county that has adopted more stringent standards,
shall incorporate and apply those more stringent standards, unless the commission finds
there is good cause not to do so.
new text end

new text begin Subd. 2. new text end

new text begin Notice of application for LWECS site permits; public participation.
new text end

new text begin (a) A person who applies to a county board for a permit to construct or expand an LWECS
under this section shall follow the same notification requirements as applicants seeking
a permit from the commission.
new text end

new text begin (b) The county board shall provide for public participation commensurate with that
afforded the public through the commission permitting process.
new text end

new text begin Subd. 3. new text end

new text begin Wind turbine database. new text end

new text begin Any county assuming responsibility for
processing applications under this section shall provide the commission with an inventory
of all permitted LWECS in a format suitable for incorporation into a statewide wind
turbine database.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 15, 2008.
new text end

ARTICLE 7

MISCELLANEOUS PROVISIONS

Section 1.

Minnesota Statutes 2006, section 123B.65, subdivision 2, is amended to read:

Subd. 2.

Energy efficiency contract.

(a) Notwithstanding any law to the contrary,
a school district may enter into a guaranteed energy savings contract with a qualified
provider to significantly reduce energy or operating costs.

(b) Before entering into a contract under this subdivision, the board shall comply
with clauses (1) to (5).

(1) The board must seek proposals from multiple qualified providers by publishing
notice of the proposed guaranteed energy savings contract in the board's official newspaper
and in other publications if the board determines that additional publication is necessary to
notify multiple qualified providers.

(2) The school board must select the qualified provider that best meets the needs of
the board. The board must provide public notice of the meeting at which it will select the
qualified provider.

(3) The contract between the board and the qualified provider must describe the
methods that will be used to calculate the costs of the contract and the operational and
energy savings attributable to the contract.

(4) The qualified provider shall issue a report to the board giving a description of all
costs of installations, modifications, or remodeling, including costs of design, engineering,
installation, maintenance, repairs, or debt service, and giving detailed calculations of the
amounts by which energy or operating costs will be reduced and the projected payback
schedule in years.

(5) The board must provide published notice of the meeting in which it proposes to
award the contract, the names of the parties to the proposed contract, and the contract's
purpose.

new text begin (c) The board must provide a copy of any contract entered into under paragraph (a)
to the commissioner within 30 days of the effective date of the contract.
new text end

Sec. 2.

Minnesota Statutes 2006, section 216C.31, is amended to read:

216C.31 ENERGY AUDIT PROGRAMS.

The commissioner shall develop deleted text begin and administer deleted text end state programs of energy audits of
residential and commercial buildings including deleted text begin those required by United States Code, title
42, sections 8211 to 8222 and sections 8281 to 8284. The commissioner shall continue
to administer the residential energy audit program as originally established under the
provisions of United States Code, title 42, sections 8211 to 8222; through July 1, 1986
irrespective of any prior expiration date provided in United States Code, title 42, section
8216. The commissioner may approve temporary programs if they are likely to result
in the installation of as many conservation measures as would have been installed had
the utility met the requirements of United States Code, title 42, sections 8211 to 8222.
The Consumer Services Division and the attorney general may release information on
consumer comments about the operation of the program to the commissioner deleted text end new text begin the training
and qualifications necessary for the auditing of residential and commercial buildings under
the auspices of a program created under section 216B.2412 new text end .

Sec. 3.

Minnesota Statutes 2006, section 471.345, subdivision 13, is amended to read:

Subd. 13.

Energy efficiency projects.

The following definitions apply to this
subdivision.

(a) "Energy conservation measure" means a training program or facility alteration
designed to reduce energy consumption or operating costs and includes:

(1) insulation of the building structure and systems within the building;

(2) storm windows and doors, caulking or weatherstripping, multiglazed windows
and doors, heat absorbing or heat reflective glazed and coated window and door
systems, additional glazing, reductions in glass area, and other window and door system
modifications that reduce energy consumption;

(3) automatic energy control systems;

(4) heating, ventilating, or air conditioning system modifications or replacements;

(5) replacement or modifications of lighting fixtures to increase the energy efficiency
of the lighting system without increasing the overall illumination of a facility, unless an
increase in illumination is necessary to conform to the applicable state or local building
code for the lighting system after the proposed modifications are made;

(6) energy recovery systems;

(7) cogeneration systems that produce steam or forms of energy such as heat, as well
as electricity, for use primarily within a building or complex of buildings;

(8) energy conservation measures that provide long-term operating cost reductions.

(b) "Guaranteed energy savings contract" means a contract for the evaluation
and recommendations of energy conservation measures, and for one or more energy
conservation measures. The contract must provide that all payments, except obligations
on termination of the contract before its expiration, are to be made over time, but not to
exceed 15 years from the date of final installation, and the savings are guaranteed to the
extent necessary to make payments for the systems.

(c) "Qualified provider" means a person or business experienced in the design,
implementation, and installation of energy conservation measures. A qualified provider
to whom the contract is awarded shall give a sufficient bond to the municipality for its
faithful performance.

Notwithstanding any law to the contrary, a municipality may enter into a guaranteed
energy savings contract with a qualified provider to significantly reduce energy or
operating costs.

Before entering into a contract under this subdivision, the municipality shall provide
published notice of the meeting in which it proposes to award the contract, the names of
the parties to the proposed contract, and the contract's purpose.

Before installation of equipment, modification, or remodeling, the qualified provider
shall first issue a report, summarizing estimates of all costs of installations, modifications,
or remodeling, including costs of design, engineering, installation, maintenance, repairs,
or debt service, and estimates of the amounts by which energy or operating costs will be
reduced.

A guaranteed energy savings contract that includes a written guarantee that savings
will meet or exceed the cost of energy conservation measures is not subject to competitive
bidding requirements of section 471.345 or other law or city charter. The contract is
not subject to section 123B.52.

A municipality may enter into a guaranteed energy savings contract with a qualified
provider if, after review of the report, it finds that the amount it would spend on the energy
conservation measures recommended in the report is not likely to exceed the amount
to be saved in energy and operation costs over 15 years from the date of installation if
the recommendations in the report were followed, and the qualified provider provides a
written guarantee that the energy or operating cost savings will meet or exceed the costs
of the system. The guaranteed energy savings contract may provide for payments over
a period of time, not to exceed 15 years.

A municipality may enter into an installment payment contract for the purchase and
installation of energy conservation measures. The contract must provide for payments
of not less than 1/15 of the price to be paid within two years from the date of the first
operation, and the remaining costs to be paid monthly, not to exceed a 15-year term from
the date of the first operation.

new text begin A municipality entering into a guaranteed energy savings contract shall provide a
copy of the contract to the commissioner of the Department of Commerce within 30
days of the effective date of the contract.
new text end

Guaranteed energy savings contracts may extend beyond the fiscal year in which
they become effective. The municipality shall include in its annual appropriations measure
for each later fiscal year any amounts payable under guaranteed energy savings contracts
during the year. Failure of a municipality to make such an appropriation does not affect
the validity of the guaranteed energy savings contract or the municipality's obligations
under the contracts.

Sec. 4.

Minnesota Statutes 2006, section 504B.161, subdivision 1, is amended to read:

Subdivision 1.

Requirements.

In every lease or license of residential premises, the
landlord or licensor covenants:

(1) that the premises and all common areas are fit for the use intended by the parties;

(2) to keep the premises in reasonable repair during the term of the lease or license,
except when the disrepair has been caused by the willful, malicious, or irresponsible
conduct of the tenant or licensee or a person under the direction or control of the tenant or
licensee; and

(3) to new text begin make the premises reasonably energy efficient by installing such measures
as weatherstripping, caulking, storm windows, and storm doors, and to new text end maintain the
premises in compliance with the applicable health and safety laws of the state deleted text begin , including
the weatherstripping, caulking, storm window, and storm door energy efficiency standards
for renter-occupied residences prescribed by section 216C.27, subdivisions 1 and 3, deleted text end and of
the local units of government where the premises are located during the term of the lease
or license, except when violation of the health and safety laws has been caused by the
willful, malicious, or irresponsible conduct of the tenant or licensee or a person under the
direction or control of the tenant or licensee.

The parties to a lease or license of residential premises may not waive or modify the
covenants imposed by this section.

Sec. 5. new text begin REPEALER.
new text end

new text begin Minnesota Statutes 2006, sections 216B.165; 216C.27; and 216C.30, subdivision 5, new text end new text begin
and new text end new text begin Minnesota Rules, parts 4635.0110; 4635.0130; 7365.0210; 7635.0100; 7635.0120;
7635.0140; 7635.0150; 7635.0160; 7635.0170; 7635.0180; 7635.0200; 7635.0210;
7635.0220; 7635.0230; 7635.0240; 7635.0250; 7635.0260; 7635.0300; 7635.0310;
7635.0320; 7635.0330; 7635.0340; 7635.0400; 7635.0410; 7635.0420; 7635.0500;
7635.0510; 7635.0520; 7635.0530; 7635.0600; 7635.0610; 7635.0620; 7635.0630;
7635.0640; 7635.1000; 7635.1010; 7635.1020; 7635.1030; 7655.0100; 7655.0120;
7655.0200; 7655.0220; 7655.0230; 7655.0240; 7655.0250; 7655.0260; 7655.0270;
7655.0280; 7655.0290; 7655.0300; 7655.0310; 7655.0320; 7655.0330; 7655.0400;
7655.0410; and 7655.0420, new text end new text begin are repealed effective July 1, 2007.
new text end