HF 863

1st Engrossment - 86th Legislature (2009 - 2010) Posted on 02/09/2010 01:42am

A bill for an act
relating to energy; modifying or adding provisions relating to renewable energy
production incentives and initiatives, C-BED contracts, renewable energy
purchases, certain appraisal fees, energy conservation, utility costs and refunds,
renewable and high-efficiency energy rate options, solar energy, utility energy
savings, renewable residential heating, biomethane purchases, Sustainable
Building 2030, power purchase agreements, power transmission, certificate
of need exemptions, energy facilities, renewable development account, the
reliability administrator, wind energy conversion systems, municipal power
agencies, and Mountain Iron Economic Development Authority; requiring
legislative reports and proposals; appropriating money; amending Minnesota
Statutes 2008, sections 116C.779, subdivision 2, by adding a subdivision;
117.189; 216B.16, subdivision 6c, by adding a subdivision; 216B.1645,
subdivision 2a; 216B.169, subdivision 2; 216B.1691, subdivision 2a; 216B.23,
by adding a subdivision; 216B.241, subdivisions 1c, 9, by adding subdivisions;
216B.2411, subdivisions 1, 2; 216B.2424, subdivision 5a; 216B.2425,
subdivision 3; 216B.243, subdivisions 8, 9; 216C.052, subdivision 2; 216C.41,
subdivision 5a; 216F.01, subdivisions 2, 3; 216F.012; 216F.02; 216F.08; 453.52,
subdivisions 2, 7, 8; 453.53, subdivisions 1, 2, 3, 4, 8, 9; 453.55, subdivision 13;
proposing coding for new law in Minnesota Statutes, chapters 216B; 216C;
repealing Laws 2007, chapter 3, section 3.

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

Section 1.

Minnesota Statutes 2008, section 116C.779, subdivision 2, is amended to
read:

Subd. 2.

Renewable energy production incentive.

(a) Until January 1, deleted text begin 2018 deleted text end new text begin 2021 new text end ,
deleted text begin up to deleted text end $10,900,000 annually must be allocated from available funds in the account to
fund renewable energy production incentives. $9,400,000 of this annual amount is for
incentives for deleted text begin up to 200 megawatts of deleted text end electricity generated by wind energy conversion
systems that are eligible for the incentives under section 216C.41 new text begin or Laws 2005, chapter
40 new text end .

new text begin (b) new text end The balance of this amount, up to $1,500,000 annually, may be used for
production incentives for on-farm biogas recovery facilities new text begin and hydroelectric facilities
new text end that are eligible for the incentive under section 216C.41 deleted text begin or for production incentives for
other renewables, to be provided in the same manner as under section 216C.41 deleted text end .

new text begin (c) Any funds allocated to incentive payments for wind energy conversion systems
under paragraph (a) that are not expended for that purpose must be allocated to incentive
payments under paragraph (b) if necessary to fully pay eligible claims for incentive
payments to qualified on-farm biogas recovery facilities and hydroelectric facilities.
new text end

new text begin (d) If funds allocated in calendar year 2010 under paragraphs (b) and (c) are
insufficient to fully pay eligible claims for incentive payments to qualified on-farm biogas
recovery facilities and hydroelectric facilities, up to $500,000 of additional funds in the
renewable development account must be allocated to make up the insufficiency.
new text end

new text begin (e) new text end Any portion of the $10,900,000 not expended in any calendar year for the
incentive is available for other spending purposes under this section. This subdivision
does not create an obligation to contribute funds to the account.

deleted text begin (b) deleted text end new text begin (f) new text end The Department of Commerce shall determine eligibility of projects under
section 216C.41 for the purposes of this subdivision. At least quarterly, the Department of
Commerce shall notify the public utility of the name and address of each eligible project
owner and the amount due to each project under section 216C.41. The public utility shall
make payments within 15 working days after receipt of notification of payments due.

Sec. 2.

Minnesota Statutes 2008, section 116C.779, is amended by adding a subdivision
to read:

new text begin Subd. 3. new text end

new text begin Initiative for Renewable Energy and the Environment new text end

new text begin (a) Beginning
July 1, 2011, and each July 1 thereafter, $5,000,000 must be allocated from the renewable
development account to fund a grant to the Board of Regents of the University of
Minnesota for the Initiative for Renewable Energy and the Environment for the purposes
described in paragraph (b). The Initiative for Renewable Energy and the Environment
must set aside at least 15 percent of the funds received annually under the grant for
qualified projects conducted at a rural campus or experiment station. Any set-aside funds
not awarded to a rural campus or experiment station at the end of the fiscal year revert
back to the Initiative for Renewable Energy and the Environment for its exclusive use.
This subdivision does not create an obligation to contribute funds to the account.
new text end

new text begin (b) Activities funded under this grant may include, but are not limited to:
new text end

new text begin (1) environmentally sound production of energy from a renewable energy source,
including biomass;
new text end

new text begin (2) environmentally sound production of hydrogen from biomass and any other
renewable energy source for energy storage and energy utilization;
new text end

new text begin (3) development of energy conservation and efficient energy utilization technologies;
new text end

new text begin (4) energy storage technologies; and
new text end

new text begin (5) analysis of policy options to facilitate adoption of technologies that use or
produce low-carbon renewable energy.
new text end

new text begin (c) For the purposes of this subdivision:
new text end

new text begin (1) "biomass" means plant and animal material, agricultural and forest residues,
mixed municipal solid waste, and sludge from wastewater treatment; and
new text end

new text begin (2) "renewable energy source" means hydro, wind, solar, biomass, and geothermal
energy, and microorganisms used as an energy source.
new text end

Sec. 3.

Minnesota Statutes 2008, section 117.189, is amended to read:

117.189 PUBLIC SERVICE CORPORATION EXCEPTIONS.

Sections 117.031; 117.036; 117.055, subdivision 2, paragraph (b); 117.186; 117.187;
117.188; and 117.52, subdivisions 1a and 4, do not apply to public service corporations.
For purposes of an award of appraisal fees under section 117.085, the fees awarded may
not exceed deleted text begin $500 deleted text end new text begin $1,500 new text end for all types of property.

Sec. 4.

Minnesota Statutes 2008, section 216B.16, subdivision 6c, is amended to read:

Subd. 6c.

Incentive plan for energy 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
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 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
conservation programs to the extent justified by the utility's skill, efforts, and success in
conserving energy; and

(3) deleted text begin compensate the utility for earnings lost as a result of its conservation programs deleted text end new text begin
adopt any mechanism that satisfies the criteria of this subdivision new text end .

new text begin (d) In its review under section 216B.241, subdivision 2c, the commission shall
provide an incentive that makes effective implementation of cost-effective conservation
the most profitable resource choice for public utilities.
new text end

Sec. 5.

Minnesota Statutes 2008, section 216B.16, is amended by adding a subdivision
to read:

new text begin Subd. 7d. new text end

new text begin University Avenue light rail transit utility zone cost adjustment. new text end

new text begin (a)
"University Avenue light rail transit utility zone" or "utility zone" means an area extending
no more than one-half mile on either side of the route for the planned light rail transit
system connecting the cities of Minneapolis and St. Paul along University Avenue.
new text end

new text begin (b) A public utility that provides retail electric service within the utility zone,
and which is required to replace, relocate, construct, or install facilities because of the
mass transit system, may apply to the commission for approval of new facilities in the
utility zone. Facilities proposed under this subdivision are not limited to those facilities
that actually replace dislocated facilities and may include any transmission facilities,
distribution facilities, generation facilities, advanced technology-assisted efficiency
devices, and energy storage facilities within the utility zone. Upon approval under
paragraph (c), the utility may construct and install the facilities.
new text end

new text begin (c) The commission may approve the construction and installation of facilities in a
mass transit utility zone proposed by a utility under paragraph (b) upon a finding:
new text end

new text begin (1) that the facilities:
new text end

new text begin (i) are necessary to provide electric service;
new text end

new text begin (ii) assist future development of renewable energy, conservation, electric vehicles, or
advanced technology-assisted efficiency programs and devices; or
new text end

new text begin (iii) are exploratory, experimental, or research facilities to advance the use of
renewable energy, conservation, electric vehicles, or advanced technology-assisted
efficiency programs and devices;
new text end

new text begin (2) that the utility has engaged in a cooperative process with affected local and state
government agencies in the design, planning, or construction of the utility zone project
and changes to utility facilities;
new text end

new text begin (3) that the utility and local units of government have made reasonable efforts to seek
federal, state, or private funds that may be available to mass transit and energy projects;
new text end

new text begin (4) that the utility has made reasonable efforts to minimize the costs and maximize
the value to customers of the facilities;
new text end

new text begin (5) that the utility has a plan to offer a comprehensive array of programs for
residential, commercial, and industrial customers located within the mass transit zone;
new text end

new text begin (6) that the utility direct existing and planned solar energy programs to develop solar
energy along the mass transit utility zone; and
new text end

new text begin (7) that the utility has made reasonable efforts to apply for federal funds to develop
technology-assisted efficiency programs and devices within the mass transit utility zone.
new text end

new text begin (d) Notwithstanding any other provision of this chapter, the commission may approve
a tariff mechanism for automatic adjustment of charges for new, replaced, or relocated
facilities installed under this subdivision in a manner consistent with this subdivision and
the standards and procedures contained in subdivision 7b, except that no approval under
section 216B.243 or certification under section 216B.2425 is required unless otherwise
required by law. This section does not authorize a city-requested facilities surcharge.
new text end

new text begin (e) For the purpose of this subdivision, "technology-assisted efficiency programs and
devices" includes, but is not limited to, infrastructure that integrates digital information and
controls technology to improve the reliability, security, and efficiency of the electric grid.
new text end

Sec. 6.

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

new text begin (a) Within 60 days of the effective date of this section, the commission shall initiate
a proceeding to standardize all contract provisions, except those establishing the power
purchase price, for two classes of C-BED projects:
new text end

new text begin (1) projects with a nameplate capacity of five megawatts or less; and
new text end

new text begin (2) projects with a nameplate capacity of greater than five megawatts.
new text end

new text begin (b) The proceeding shall provide for participation by the public and stakeholders.
The commission shall issue an order containing standardized contract language for each
class of C-BED project identified in this section no later than 90 days after the opening of
the proceeding. The standardized contract form must be similar in all material respects to
the standard contract form previously filed with the commission under section 216B.2423,
subdivision 3, including any revisions to that contract on file with the commission as of
the effective date of this section. Any applicable C-BED contract signed after the date of
the commission's order whose provisions are not identical to the standardized contract
contained in the commission's order is invalid.
new text end

new text begin EFFECTIVE DATE. new text end

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

Sec. 7.

new text begin [216B.1614] SMALL RENEWABLE PROJECTS PURCHASE.
new text end

new text begin Between the effective date of this section and December 31, 2010, electric utilities,
as defined in section 216B.1691, subdivision 1, paragraph (b), must purchase or contract to
purchase energy from a sufficient number of renewable energy projects with a nameplate
capacity of five megawatts or less so as to total at least 200 megawatts in the aggregate.
Such projects must be constructed or under construction by December 31, 2010, and must
meet the eligibility requirements for a renewable energy incentive under the American
Recovery and Reinvestment Act of 2009, the federal Rural Energy for America Program,
or other renewable energy incentive program. Before December 31, 2010, an electric
utility must undertake such projects in approximate proportion to its share of the total
amount of electrical energy sold within this state. This requirement does not prevent an
electric utility from developing or acquiring electrical energy from other sources either
within or outside the state regardless of whether such sources use renewable energy.
new text end

Sec. 8.

Minnesota Statutes 2008, section 216B.1645, subdivision 2a, is amended to
read:

Subd. 2a.

Cost recovery for utility's renewable facilities.

(a) A utility may petition
the commission to approve a rate schedule that provides for the automatic adjustment of
charges to recover prudently incurred investments, expenses, or costs associated with
facilities constructed, owned, or operated by a utility to satisfy the requirements of section
216B.1691, provided those facilities were previously approved by the commission under
section 216B.2422 or 216B.243, or were determined by the commission to be reasonable
and prudent under section 216B.243, subdivision 9. new text begin For a facility not subject to review
by the commission under section 216B.2422 or 216B.243, a utility shall first petition
the commission to determine the utility's eligibility to apply for cost recovery for the
facility under this section. new text end The commission may approve, or approve as modified, a
rate schedule that:

(1) allows a utility to recover directly from customers on a timely basis the costs of
qualifying renewable energy projects, including:

(i) return on investment;

(ii) depreciation;

(iii) ongoing operation and maintenance costs;

(iv) taxes; and

(v) costs of transmission and other ancillary expenses directly allocable to
transmitting electricity generated from a project meeting the specifications of this
paragraph;

(2) provides a current return on construction work in progress, provided that recovery
of these costs from Minnesota ratepayers is not sought through any other mechanism;

(3) allows recovery of other expenses incurred that are directly related to a
renewable energy project, including expenses for energy storage, provided that the
utility demonstrates to the commission's satisfaction that the expenses improve project
economics, ensure project implementation, new text begin advance research and understanding of how
storage devices may improve renewable energy projects, new text end or facilitate coordination with
the development of transmission necessary to transport energy produced by the project
to market;

(4) allocates recoverable costs appropriately between wholesale and retail customers;

(5) terminates recovery when costs have been fully recovered or have otherwise
been reflected in a utility's rates.

(b) A petition filed under this subdivision must include:

(1) a description of the facilities for which costs are to be recovered;

(2) an implementation schedule for the facilities;

(3) the utility's costs for the facilities;

(4) a description of the utility's efforts to ensure that costs of the facilities are
reasonable and were prudently incurred; and

(5) a description of the benefits of the project in promoting the development of
renewable energy in a manner consistent with this chapter.

Sec. 9.

Minnesota Statutes 2008, section 216B.169, subdivision 2, is amended to read:

Subd. 2.

Renewable and high-efficiency energy rate options.

(a) deleted text begin Each deleted text end new text begin A new text end
utility deleted text begin shall deleted text end new text begin may new text end offer its customers deleted text begin , and shall advertise the offer at least annually, deleted text end
one or more options that allow a customer to determine that a certain amount of the
electricity generated or purchased on behalf of the customer is renewable energy or energy
generated by high-efficiency, low-emissions, distributed generation such as fuel cells and
microturbines fueled by a renewable fuel.

deleted text begin (b) Each public utility shall file an implementation plan within 90 days of July 1,
2001, to implement paragraph (a).
deleted text end

deleted text begin (c) deleted text end new text begin (b) new text end Rates charged to customers must be calculated using the utility's cost of
acquiring the energy for the customer and must:

(1) reflect the difference between the cost of generating or purchasing the
new text begin additional new text end renewable deleted text begin energy and the cost of generating or purchasing the same amount
of nonrenewable deleted text end energy new text begin and the cost that would otherwise be attributed to the customer
for the same amount of energy based on the utility's mix of renewable and nonrenewable
energy sources new text end ; and

(2) be distributed on a per kilowatt-hour basis among all customers who choose to
participate in the program.

(d) deleted text begin Implementation of these rate options may reflect a reasonable amount of
lead time necessary to arrange acquisition of the energy. deleted text end The utility may acquire the
energy demanded by customers, in whole or in part, through procuring or generating the
renewable energy directly, or through the purchase of credits from a provider that has
received certification of eligible power supply pursuant to subdivision 3. deleted text begin If a utility is not
able to arrange an adequate supply of renewable or high-efficiency energy to meet its
customers' demand under this section, the utility must file a report with the commission
detailing its efforts and reasons for its failure.
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. 10.

Minnesota Statutes 2008, section 216B.1691, subdivision 2a, is amended to
read:

Subd. 2a.

Eligible energy technology standard.

(a) Except as provided in
paragraph (b), each electric utility shall generate or procure sufficient electricity generated
by an eligible energy technology to provide its retail customers in Minnesota, or the
retail customers of a distribution utility to which the electric utility provides wholesale
electric service, so that at least the following standard percentages of the electric utility's
total retail electric sales to retail customers in Minnesota are generated by eligible energy
technologies by the end of the year indicated:

(1)	2012	12 percent
(2)	2016	17 percent
(3)	2020	20 percent
(4)	2025	25 percent.

(b) An electric utility that owned a nuclear generating facility as of January 1, 2007,
must meet the requirements of this paragraph rather than paragraph (a). An electric utility
subject to this paragraph must generate or procure sufficient electricity generated by
an eligible energy technology to provide its retail customers in Minnesota or the retail
customer of a distribution utility to which the electric utility provides wholesale electric
service so that at least the following percentages of the electric utility's total retail electric
sales to retail customers in Minnesota are generated by eligible energy technologies by the
end of the year indicated:

(1)	2010	15 percent
(2)	2012	18 percent
(3)	2016	25 percent
(4)	2020	30 percent.

Of the 30 percent in 2020, at least 25 percent must be generated by wind new text begin or solar
new text end energy conversion systems and the remaining five percent by other eligible energy
technology.

Sec. 11.

Minnesota Statutes 2008, section 216B.23, is amended by adding a subdivision
to read:

new text begin Subd. 1a. new text end

new text begin Authority to issue refund. new text end

new text begin (a) On determining that a public utility has
charged a rate in violation of this chapter, a commission rule, or a commission order, the
commission, after conducting a proceeding, may require the public utility to refund to its
customers, in a manner approved by the commission, any revenues the commission finds
were collected as a result of the unlawful conduct. Any refund authorized by this section
is permitted in addition to any remedies authorized by section 216B.16 or any other law
governing rates. Exercising authority under this section does not preclude the commission
from pursuing penalties under sections 216B.57 to 216B.61 for the same conduct.
new text end

new text begin (b) This section must not be construed as allowing:
new text end

new text begin (1) retroactive ratemaking;
new text end

new text begin (2) refunds based on claims that prior or current approved rates have been unjust,
unreasonable, unreasonably preferential, discriminatory, insufficient, inequitable, or
inconsistent in application to a class of customers; or
new text end

new text begin (3) refunds based on claims that approved rates have not encouraged energy
conservation or renewable energy use, or have not furthered the goals of section 216B.164,
216B.241, or 216C.05.
new text end

new text begin (c) A refund under this subdivision does not apply to revenues collected more than
six years before the date of the notice of the commission proceeding required under this
subdivision.
new text end

Sec. 12.

Minnesota Statutes 2008, section 216B.241, subdivision 1c, is amended to
read:

Subd. 1c.

Energy-saving goals.

(a) The commissioner shall establish energy-saving
goals for energy conservation improvement expenditures and shall evaluate an energy
conservation improvement program on how well it meets the goals set.

(b) Each individual utility and association shall have an annual energy-savings
goal equivalent to 1.5 percent of gross annual retail energy sales unless modified by the
commissioner under paragraph (d). The savings goals must be calculated based on the
most recent three-year weather normalized average. new text begin A utility or association may elect to
carry forward energy savings in excess of 1.5 percent for a year to the succeeding three
calendar years, provided that a particular energy savings can apply only to one year's goal.
new text end

(c) The commissioner must adopt a filing schedule that is designed to have all
utilities and associations operating under an energy-savings plan by calendar year 2010.

(d) In its energy conservation improvement plan filing, a utility or association may
request the commissioner to adjust its annual energy-savings percentage goal based on
its historical conservation investment experience, customer class makeup, load growth,
a conservation potential study, or other factors the commissioner determines warrants
an adjustment. The commissioner may not approve a plan that provides for an annual
energy-savings goal of less than one percent of gross annual retail energy sales from
energy conservation improvements.

A utility or association may include in its energy conservation plan energy savings
from electric utility infrastructure projects approved by the commission under section
216B.1636 or waste heat recovery converted into electricity projects that may count as
energy savings in addition to the minimum energy-savings goal of at least one percent for
energy conservation improvements. Electric utility infrastructure projects must result in
increased energy efficiency greater than that which would have occurred through normal
maintenance activity.

(e) An energy-savings goal is not satisfied by attaining the revenue expenditure
requirements of subdivisions 1a and 1b, but can only be satisfied by meeting the
energy-savings goal established in this subdivision.

(f) An association or utility is not required to make energy conservation investments
to attain the energy-savings goals of this subdivision that are not cost-effective even
if the investment is necessary to attain the energy-savings goals. For the purpose of
this paragraph, in determining cost-effectiveness, the commissioner shall consider the
costs and benefits to ratepayers, the utility, participants, and society. In addition, the
commissioner shall consider the rate at which an association or municipal utility is
increasing its energy savings and its expenditures on energy conservation.

(g) On an annual basis, the commissioner shall produce and make publicly available
a report on the annual energy savings and estimated carbon dioxide reductions achieved
by the energy conservation improvement programs for the two most recent years for
which data is available. The commissioner shall report on program performance both in
the aggregate and for each entity filing an energy conservation improvement plan for
approval or review by the commissioner.

(h) By January 15, 2010, the commissioner shall report to the legislature whether
the spending requirements under subdivisions 1a and 1b are necessary to achieve the
energy-savings goals established in this subdivision.

new text begin EFFECTIVE DATE. new text end

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

Sec. 13.

Minnesota Statutes 2008, section 216B.241, is amended by adding a
subdivision to read:

new text begin Subd. 2d. new text end

new text begin Renewable residential heating. new text end

new text begin (a) Up to five percent of a utility's
conservation spending obligation under subdivision 1a or any amount expended in order
to satisfy a utility's energy-savings goal under subdivision 1c may be used for a project
located in this state that provides rebates to homeowners who install the following types of
projects to heat the homeowner's primary residence:
new text end

new text begin (1) a solar thermal project, as defined in section 216B.2411, subdivision 2, paragraph
(e);
new text end

new text begin (2) a geothermal project;
new text end

new text begin (3) a heating unit that burns exclusively either biodiesel, shelled corn, or wood chips
or wood pellets, provided that the heating unit is listed by Underwriters Laboratories.
new text end

new text begin (b) A rebate awarded under this subdivision must not exceed the lesser of 25 percent
of the purchase and installation costs of the project or $500.
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. 14.

Minnesota Statutes 2008, section 216B.241, is amended by adding a
subdivision to read:

new text begin Subd. 5b. new text end

new text begin Biomethane purchases. new text end

new text begin (a) A natural gas utility may include in its
conservation plan purchases of biomethane, and may use up to five percent of the total
amount to be spent on energy conservation improvements under this section for that
purpose. The cost-effectiveness of biomethane purchases may be determined by a
different standard than for other energy conservation improvements under this section if
the commissioner determines that doing so is in the public interest in order to encourage
biomethane purchases. Energy savings from purchasing biomethane may not be counted
toward the minimum energy-savings goal of at least one percent for energy conservation
improvements required under subdivision 1c, but may, if the conservation plan is approved:
new text end

new text begin (1) be counted toward energy savings above that minimum percentage; and
new text end

new text begin (2) be considered when establishing performance incentives under subdivision 2c.
new text end

new text begin (b) For the purposes of this subdivision, "biomethane" means biogas produced
through anaerobic digestion of biomass, gasification of biomass, or other effective
conversion processes, that is cleaned and purified into biomethane that meets natural gas
utility quality specifications for use in a natural gas utility distribution system.
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. 15.

Minnesota Statutes 2008, section 216B.241, subdivision 9, is amended to read:

Subd. 9.

Building performance standards; Sustainable Building 2030.

(a) The
purpose of this subdivision is to establish cost-effective energy-efficiency performance
standards for new and substantially reconstructed commercial, industrial, and institutional
buildings that can significantly reduce carbon dioxide emissions by lowering energy use in
new and substantially reconstructed buildings. For the purposes of this subdivision, the
establishment of these standards may be referred to as Sustainable Building 2030.

(b) The commissioner shall contract with the Center for Sustainable Building
Research at the University of Minnesota to coordinate development and implementation
of energy-efficiency performance standards, strategic planning, research, data analysis,
technology transfer, training, and other activities related to the purpose of Sustainable
Building 2030. The commissioner and the Center for Sustainable Building Research
shall, in consultation with utilities, builders, developers, building operators, and experts
in building design and technology, develop a Sustainable Building 2030 implementation
plan that must address, at a minimum, the following issues:

(1) training architects to incorporate the performance standards in building design;

(2) incorporating the performance standards in utility conservation improvement
programs; and

(3) developing procedures for ongoing monitoring of energy use in buildings that
have adopted the performance standards.

The plan must be submitted to the chairs and ranking minority members of the senate and
house of representatives committees with primary jurisdiction over energy policy by
July 1, 2009.

(c) Sustainable Building 2030 energy-efficiency performance standards must be firm,
quantitative measures of total building energy use and associated carbon dioxide emissions
per square foot for different building types and uses, that allow for accurate determinations
of a building's conformance with a performance standard. The energy-efficiency
performance standards must be updated every three or five years to incorporate all
cost-effective measures. The performance standards must reflect the reductions in carbon
dioxide emissions per square foot resulting from actions taken by utilities to comply
with the renewable energy standards in section 216B.1691. The performance standards
should be designed to achieve reductions equivalent to the following reduction schedule,
measured against energy consumption by an average building in each applicable building
sector in 2003: (1) 60 percent in 2010; (2) 70 percent in 2015; (3) 80 percent in 2020;
and (4) 90 percent in 2025. A performance standard must not be established or increased
absent a conclusive engineering analysis that it is cost-effective based upon established
practices used in evaluating utility conservation improvement programs.

(d) The annual amount of the contract with the Center for Sustainable Building
Research is up to $500,000. The Center for Sustainable Building Research shall expend
no more than $150,000 of this amount each year on administration, coordination, and
oversight activities related to Sustainable Building 2030. The balance of contract funds
must be spent new text begin on substantive programmatic activities allowed under this subdivision
that may be conducted by the Center for Sustainable Building Research and new text end for
subcontracts with not-for-profit energy organizations, architecture and engineering firms,
and other qualified entities to undertake technical projects and activities in support of
Sustainable Building 2030. The primary work to be accomplished each year by qualified
technical experts under subcontracts is the development and thorough justification of
recommendations for specific energy-efficiency performance standards. Additional work
may include:

(1) research, development, and demonstration of new energy-efficiency technologies
and techniques suitable for commercial, industrial, and institutional buildings;

(2) analysis and evaluation of practices in building design, construction,
commissioning and operations, and analysis and evaluation of energy use in the
commercial, industrial, and institutional sectors;

(3) analysis and evaluation of the effectiveness and cost-effectiveness of Sustainable
Building 2030 performance standards, conservation improvement programs, and building
energy codes;

(4) development and delivery of training programs for architects, engineers,
commissioning agents, technicians, contractors, equipment suppliers, developers, and
others in the building industries; and

(5) analyze and evaluate the effect of building operations on energy use.

(e) The commissioner shall require utilities to develop and implement conservation
improvement programs that are expressly designed to achieve energy efficiency goals
consistent with the Sustainable Building 2030 performance standards. These programs
must include offerings of design assistance and modeling, financial incentives, and the
verification of the proper installation of energy-efficient design components in new and
substantially reconstructed buildings. new text begin A utility's design assistance program must consider
the strategic planting of trees and shrubs around buildings as an energy conservation
strategy for the designed project. new text end A utility making an expenditure under its conservation
improvement program that results in a building meeting the Sustainable Building 2030
performance standards may claim the energy savings toward its energy-savings goal
established in subdivision 1c.

(f) The commissioner shall report to the legislature every three years, beginning
January 15, 2010, on the cost-effectiveness and progress of implementing the Sustainable
Building 2030 performance standards and shall make recommendations on the need to
continue the program as described in this section.

new text begin EFFECTIVE DATE. new text end

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

Sec. 16.

Minnesota Statutes 2008, section 216B.2411, subdivision 1, is amended to
read:

Subdivision 1.

Generation projects.

(a) Any municipality or rural electric
association providing electric service and subject to section 216B.241 may, and each
public utility may, use five percent of the total amount to be spent on energy conservation
improvements under section 216B.241, on:

(1) projects in Minnesota to construct an electric generating facility that utilizes
eligible renewable energy sources as defined in subdivision 2, such as methane or other
combustible gases derived from the processing of plant or animal wastes, biomass fuels
such as short-rotation woody or fibrous agricultural crops, or other renewable fuel, as
its primary fuel source;

(2) projects in Minnesota to install a distributed generation facility of ten megawatts
or less of interconnected capacity that is fueled by natural gas, renewable fuels, or another
similarly clean fuel; or

(3) projects in Minnesota to install a qualifying solar energy project as defined in
subdivision 2.

(b) new text begin A utility that offers a program to customers to promote installing qualifying solar
energy projects may request authority from the commissioner to exceed the five percent
limit in paragraph (a) to meet customer demand for installation of qualifying solar energy
projects. In considering this request, the commissioner shall consider customer interest in
qualifying solar energy and the impact on other customers.
new text end

deleted text begin For public utilities, as defined under section 216B.02, subdivision 4, deleted text end new text begin (c) For a utility
subject to this section, new text end projects under this section must be considered energy conservation
improvements as defined in section 216B.241. deleted text begin For cooperative electric associations and
municipal utilities, projects under this section must be considered load-management
activities described in section 216B.241, subdivision 1.
deleted text end

Sec. 17.

Minnesota Statutes 2008, section 216B.2411, subdivision 2, is amended to
read:

Subd. 2.

Definitions.

(a) For the purposes of this section, the terms defined in this
subdivision and section 216B.241, subdivision 1, have the meanings given them.

(b) "Eligible renewable energy sources" means fuels and technologies to generate
electricity through the use of any of the resources listed in section 216B.1691, subdivision
1, paragraph (a), except that the incineration of wastewater sludge is not an eligible
renewable energy source, "biomass" has the meaning provided under paragraph (c), and
"solar" must be from a qualified solar energy project as defined in paragraph (d).

(c) "Biomass" includes:

(1) methane or other combustible gases derived from the processing of plant or
animal material;

(2) alternative fuels derived from soybean and other agricultural plant oils or animal
fats;

(3) combustion of barley hulls, corn, soy-based products, or other agricultural
products;

(4) wood residue from the wood products industry in Minnesota or other wood
products such as short-rotation woody or fibrous agricultural crops;

(5) landfill gas;

(6) the predominantly organic components of wastewater effluent, sludge, or related
byproducts from publicly owned treatment works; and

(7) mixed municipal solid waste, and refuse-derived fuel from mixed municipal
solid waste.

(d) "Qualifying solar energy project" means a qualifying solar thermal project or
qualifying solar electric project.

(e) "Qualifying solar thermal project" means a flat plate or evacuated tube that meets
the requirements of section 216C.25 with a fixed orientation that collects the sun's radiant
energy and transfers it to a storage medium for distribution as energy to heat or cool air or
water, but does not include equipment used to heat water at a residential property (1) for
domestic use if less than one-half of the energy used for that purpose is derived from the
sun or (2) for use in a hot tub or swimming pool.

(f) "Qualifying solar electric project" means new text begin :
new text end

new text begin (1) new text end solar electric equipment that new text begin : (i) new text end meets the requirements of section 216C.25
deleted text begin with a total deleted text end new text begin ; (ii) has a new text end peak generating capacity of 100 kilowatts or less new text begin ; and (iii) is new text end
used deleted text begin for generating deleted text end new text begin to generate new text end electricity deleted text begin primarily deleted text end for use in a residential deleted text begin property or
small business to reduce the effective electric load for that residence or small business deleted text end new text begin ,
commercial, or publicly owned building or facility; and
new text end

new text begin (2) if applicable, equipment that is used to store the electricity generated by a
qualified solar electric project under clause (1) and that is located proximate to the
building or facility using the electricity new text end .

(g) "Residential deleted text begin property deleted text end new text begin building new text end " means the principal residence of a homeowner at
the time the solar equipment is placed in service.

deleted text begin (h) "Small business" has the meaning given to it in section 645.445.
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. 18.

Minnesota Statutes 2008, section 216B.2424, subdivision 5a, is amended to
read:

Subd. 5a.

Reduction of biomass mandate.

(a) Notwithstanding subdivision 5, the
biomass electric energy mandate must be reduced from 125 megawatts to 110 megawatts.

(b) The Public Utilities Commission shall approve a request pending before the
commission as of May 15, 2003, for amendments to and assignment of a power purchase
agreement with the owner of a facility that uses short-rotation, woody crops as its primary
fuel previously approved to satisfy a portion of the biomass mandate if the owner of
the project agrees to reduce the size of its project from 50 megawatts to 35 megawatts,
while maintaining an average price for energy in nominal dollars measured over the term
of the power purchase agreement at or below $104 per megawatt-hour, exclusive of any
price adjustments that may take effect subsequent to commission approval of the power
purchase agreement, as amended. The commission shall also approve, as necessary, any
subsequent assignment or sale of the power purchase agreement or ownership of the
project to an entity owned or controlled, directly or indirectly, by two municipal utilities
located north of Constitutional Route No. 8, as described in section 161.114, which
currently own electric and steam generation facilities using coal as a fuel and which
propose to retrofit their existing municipal electrical generating facilities to utilize biomass
fuels in order to perform the power purchase agreement.

(c) If the power purchase agreement described in paragraph (b) is assigned to an
entity that is, or becomes, owned or controlled, directly or indirectly, by two municipal
entities as described in paragraph (b), and the power purchase agreement meets the
price requirements of paragraph (b), the commission shall approve any amendments to
the power purchase agreement necessary to reflect the changes in project location and
ownership and any other amendments made necessary by those changes. The commission
shall also specifically find that:

(1) the power purchase agreement complies with and fully satisfies the provisions of
this section to the full extent of its 35-megawatt capacity;

(2) all costs incurred by the public utility and all amounts to be paid by the public
utility to the project owner under the terms of the power purchase agreement are fully
recoverable pursuant to section 216B.1645;

(3) subject to prudency review by the commission, the public utility may recover
from its Minnesota retail customers the Minnesota jurisdictional portion of the amounts
that may be incurred and paid by the public utility during the full term of the power
purchase agreement; and

(4) if the purchase power agreement meets the requirements of this subdivision,
it is reasonable and in the public interest.

(d) The commission shall specifically approve recovery by the public utility of
any and all Minnesota jurisdictional costs incurred by the public utility to improve,
construct, install, or upgrade transmission, distribution, or other electrical facilities owned
by the public utility or other persons in order to permit interconnection of the retrofitted
biomass-fueled generating facilities or to obtain transmission service for the energy
provided by the facilities to the public utility pursuant to section 216B.1645, and shall
disapprove any provision in the power purchase agreement that requires the developer
or owner of the project to pay the jurisdictional costs or that permit the public utility to
terminate the power purchase agreement as a result of the existence of those costs or the
public utility's obligation to pay any or all of those costs.

new text begin (e) Upon request by the project owner, the public utility shall agree to amend the
power purchase agreement described in paragraph (b) and approved by the commission
as required by paragraph (c). The amendment must be negotiated and executed within
45 days of the effective date of this section and must apply to prices paid after January
1, 2009. The average price for energy in nominal dollars measured over the term of the
power purchase agreement must not exceed $104 per megawatt hour by more than five
percent. The public utility shall request approval of the amendment by the commission
within 30 days of execution of the amended power purchase agreement. The amendment
is not effective until approval by the commission. The commission shall act on the
amendment within 90 days of submission of the request by the public utility. Upon
approval of the amended power purchase agreement, the commission shall allow the
public utility to recover the costs of the amended power purchase agreement, as provided
in section 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

Sec. 19.

Minnesota Statutes 2008, section 216B.2425, subdivision 3, is amended to
read:

Subd. 3.

Commission approval new text begin ; order new text end .

new text begin (a) new text end By June 1 of each even-numbered
year, the commission shall adopt a state transmission project list and shall certify, certify
as modified, or deny certification of the projects proposed under subdivision 2. The
commission may only certify a project that is a high-voltage transmission line as defined
in section 216B.2421, subdivision 2, that the commission finds is:

(1) necessary to maintain or enhance the reliability of electric service to Minnesota
consumers;

(2) needed, applying the criteria in section 216B.243, subdivision 3; and

(3) in the public interest, taking into account electric energy system needs and
economic, environmental, and social interests affected by the project.

new text begin (b) In its order adopting a statewide transmission project list, the commission shall
summarize the present and future inadequacies of the transmission system identified in
the utilities' transmission project reports, plans to address those inadequacies, and any
barriers that may prevent those inadequacies from being addressed. Within ten days of
issuing the order, the commission shall send a copy of the order to the chairs and ranking
minority members of the senate and house of representatives committees with primary
jurisdiction over energy policy.
new text end

Sec. 20.

Minnesota Statutes 2008, section 216B.243, subdivision 8, is amended to read:

Subd. 8.

Exemptions.

This section does not apply to:

(1) cogeneration or small power production facilities as defined in the Federal Power
Act, United States Code, title 16, section 796, paragraph (17), subparagraph (A), and
paragraph (18), subparagraph (A), and having a combined capacity at a single site of less
than 80,000 kilowatts; plants or facilities for the production of ethanol or fuel alcohol; or
any case where the commission has determined after being advised by the attorney general
that its application has been preempted by federal law;

(2) a high-voltage transmission line proposed primarily to distribute electricity to
serve the demand of a single customer at a single location, unless the applicant opts to
request that the commission determine need under this section or section 216B.2425;

(3) the upgrade to a higher voltage of an existing transmission line that serves
the demand of a single customer that primarily uses existing rights-of-way, unless the
applicant opts to request that the commission determine need under this section or section
216B.2425;

(4) a high-voltage transmission line of one mile or less required to connect a new or
upgraded substation to an existing, new, or upgraded high-voltage transmission line;

(5) conversion of the fuel source of an existing electric generating plant to using
natural gas;

(6) the modification of an existing electric generating plant to increase efficiency,
as long as the capacity of the plant is not increased more than ten percent or more than
100 megawatts, whichever is greater; or

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

(i) generates electricity from wind energy conversion systems deleted text begin , deleted text end new text begin ; new text end

(ii) will serve retail customers in Minnesota deleted text begin , deleted text end new text begin ; and new text end

(iii) new text begin meets any of the following conditions:
new text end

new text begin (A) new text end is specifically intended to be used to meet the renewable energy objective under
section 216B.1691 deleted text begin or deleted text end new text begin ; new text end

new text begin (B) new text end addresses a resource need identified in a current commission-approved or
commission-reviewed resource plan under section 216B.2422 deleted text begin , and (iv) deleted text end new text begin ; or
new text end

new text begin (C) new text end derives at least ten percent of the total nameplate capacity of the proposed project
from one or more C-BED projects, as defined under section 216B.1612, subdivision 2,
paragraph (f).

Sec. 21.

Minnesota Statutes 2008, section 216B.243, subdivision 9, is amended to read:

Subd. 9.

Renewable energy standard facilities.

The requirements of this section
do not apply to a wind energy conversion system or a solar electric generation facility that
is intended to be used to meet or exceed the obligations of section 216B.1691; provided
that, after notice and comment, the commission determines that the facility is a reasonable
and prudent approach to meeting a utility's obligations under that section. When making
this determination, the commission may consider new text begin :
new text end

new text begin (1) new text end the size of the facility relative to a utility's total need for renewable resources deleted text begin and deleted text end new text begin ;
new text end

new text begin (2) new text end alternative approaches for supplying the renewable energy to be supplied by
the proposed facility deleted text begin , and must consider deleted text end new text begin ;
new text end

new text begin (3) new text end the facility's ability to promote economic development, as required under section
216B.1691, subdivision 9 deleted text begin , maintain deleted text end new text begin ;
new text end

new text begin (4) maintenance of new text end electric system reliability deleted text begin and consider deleted text end new text begin ;
new text end

new text begin (5) new text end impacts on ratepayers deleted text begin , deleted text end new text begin ; new text end and

new text begin (6) new text end other criteria deleted text begin as deleted text end new text begin that new text end the commission deleted text begin may determine deleted text end new text begin determines new text end are relevant.

Sec. 22.

Minnesota Statutes 2008, section 216C.052, subdivision 2, is amended to read:

Subd. 2.

Administrative issues.

(a) The commissioner may select the administrator.
The administrator must have deleted text begin at least five years of deleted text end experience working as a power systems
deleted text begin engineer deleted text end new text begin planner new text end or transmission planner, or in a position dealing with power system
reliability issues, and may not have been a party or a participant in a commission energy
proceeding for at least one year prior to selection by the commissioner. The commissioner
shall oversee and direct the work of the administrator, annually review the expenses of the
administrator, and annually approve the budget of the administrator. The administrator
may hire staff and may contract for technical expertise in performing duties when existing
state resources are required for other state responsibilities or when special expertise is
required. The salary of the administrator is governed by section 15A.0815, subdivision 2.

(b) Costs relating to a specific proceeding, analysis, or project are not general
administrative costs. For purposes of this section, "energy utility" means public utilities,
generation and transmission cooperative electric associations, and municipal power
agencies providing natural gas or electric service in the state.

(c) The Department of Commerce shall pay:

(1) the general administrative costs of the administrator, not to exceed $1,000,000
in a fiscal year, and shall assess energy utilities for those administrative costs. These
costs must be consistent with the budget approved by the commissioner under paragraph
(a). The department 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; and

(2) costs relating to a specific proceeding analysis or project and shall render a bill to
the specific energy utility or utilities participating in the proceeding, analysis, or project
directly, either at the conclusion of a particular proceeding, analysis, or project, or from
time to time during the course of the proceeding, analysis, or project.

(d) For purposes of administrative efficiency, the department 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 department under paragraph (c) must be paid by
the energy utility into an account in the special revenue fund in the state treasury within
30 days from the date of billing and is appropriated to the department for the purposes
provided in this section. The commission shall approve or approve as modified a rate
schedule providing for the automatic adjustment of charges to recover amounts paid by
utilities under this section. All amounts assessed under this section are in addition to
amounts appropriated to the commission and the department by other law.

Sec. 23.

new text begin [216C.055] KEY ROLE OF SOLAR AND BIOMASS RESOURCES IN
PRODUCING THERMAL ENERGY.
new text end

new text begin The legislature recognizes that the use of solar energy and the combustion of grasses,
agricultural wastes, trees, and other vegetation to produce thermal energy for heating
commercial, industrial, and residential buildings and for industrial process can play a
significant role in helping Minnesota meet its future energy needs and its greenhouse gas
emissions reduction goals. The annual legislative proposals required to be submitted by
the commissioners of commerce and the Pollution Control Agency under section 216H.07,
subdivision 4, must include proposals regarding the use of the renewable energy sources
described in this section if the commissioners determine that such policies are appropriate
to achieve the state's greenhouse gas emissions reduction goals. No legal claim against
any person is allowed under this section. The combustion of municipal solid waste or
refuse-derived fuel to produce thermal energy is not addressed under this section. For
purposes of this section, removal of woody biomass from publicly owned forests shall be
consistent with the principles of sustainable forest management.
new text end

Sec. 24.

Minnesota Statutes 2008, section 216C.41, subdivision 5a, is amended to read:

Subd. 5a.

Renewable development account.

The Department of Commerce
shall authorize payment of the renewable energy production incentive to wind energy
conversion systems deleted text begin for 200 megawatts of nameplate capacity and deleted text end new text begin that are eligible under
this section or Laws 2005, chapter 40, new text end to on-farm biogas recovery facilities new text begin , and to
hydroelectric facilities new text end . Payment of the incentive shall be made from the renewable energy
development account as provided under section 116C.779, subdivision 2.

Sec. 25.

Minnesota Statutes 2008, section 216F.01, subdivision 2, is amended to read:

Subd. 2.

Large wind energy conversion system or LWECS.

"Large wind energy
conversion system" or "LWECS" means any combination of WECS with a combined
nameplate capacity deleted text begin of 5,000 deleted text end new text begin greater than 25,000 new text end kilowatts deleted text begin or more 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. 26.

Minnesota Statutes 2008, section 216F.01, subdivision 3, is amended to read:

Subd. 3.

Small wind energy conversion system or SWECS.

"Small wind energy
conversion system" or "SWECS" means any combination of WECS with a combined
nameplate capacity deleted text begin of deleted text end less than deleted text begin 5,000 deleted text end new text begin or equal to 25,000 new text end kilowatts.

new text begin EFFECTIVE DATE. new text end

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

Sec. 27.

Minnesota Statutes 2008, section 216F.012, is amended to read:

216F.012 SIZE ELECTION.

(a) deleted text begin A wind energy conversion system of less than 25 megawatts of nameplate
capacity as determined under section 216F.011 is a small wind energy conversion system
if, by July 1, 2009, the owner so elects in writing and submits a completed application for
zoning approval and the written election to the county or counties in which the project is
proposed to be located. The owner must notify the Public Utilities Commission of the
election at the time the owner submits the election to the county. deleted text end

deleted text begin (b) Notwithstanding paragraph (a), deleted text end A wind energy conversion system with a
nameplate capacity exceeding five megawatts that is proposed to be located wholly or
partially within a wind access buffer adjacent to state lands that are part of the outdoor
recreation system, as enumerated in section 86A.05, is a large wind energy conversion
system. The Department of Natural Resources shall negotiate in good faith with a system
owner regarding siting and may support the system owner in seeking a variance from the
system setback requirements if it determines that a variance is in the public interest.

deleted text begin (c) deleted text end new text begin (b) new text end The Public Utilities Commission shall issue an annual report to the chairs
and ranking minority members of the house of representatives and senate committees
with primary jurisdiction over energy policy and natural resource policy regarding any
variances applied for and not granted for systems subject to paragraph (b).

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2009.
new text end

Sec. 28.

Minnesota Statutes 2008, section 216F.02, is amended to read:

216F.02 EXEMPTIONS.

(a) The requirements of chapter 216E do not apply to the siting of deleted text begin LWECS deleted text end new text begin a WECS
with a combined nameplate greater than 5,000 kilowatts that applies to the commission for
a site permit new text end , except for sections 216E.01; 216E.03, subdivision 7; 216E.08; 216E.11;
216E.12; 216E.14; 216E.15; 216E.17; and 216E.18, subdivision 3, which do apply.

(b) Any person may construct an SWECS new text begin with a combined nameplate capacity less
than or equal to 5,000 kilowatts new text end without complying with chapter 216E or this chapter.

(c) Nothing in this chapter deleted text begin shall preclude deleted text end new text begin precludes new text end a local governmental unit from
establishing requirements for the siting and construction of SWECS.

new text begin EFFECTIVE DATE. new text end

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

Sec. 29.

Minnesota Statutes 2008, section 216F.08, is amended to read:

216F.08 PERMIT AUTHORITY; ASSUMPTION BY COUNTIES.

(a) A 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 deleted text begin LWECS with a combined nameplate capacity of less than 25,000 kilowatts deleted text end new text begin
SWECS new text end . The responsibility for permit application processing, if assumed by a county,
may be delegated by the county board to an appropriate county officer or employee.
deleted text begin Processing by deleted text end A county shall deleted text begin be done deleted text end new text begin process applications new text end in accordance with procedures
and processes established under chapter 394.

(b) A county board that exercises its option under paragraph (a) may issue, deny,
modify, impose conditions upon, or revoke permits pursuant to this section. The action of
deleted text begin the deleted text end new text begin a new text end county board deleted text begin about deleted text end new text begin with respect to new text end a permit application is final, subject to appeal as
provided in section 394.27.

(c) The commission shall, by order, establish general permit standards deleted text begin , including
appropriate property line set-backs, deleted text end governing site permits for LWECS deleted text begin under this section deleted text end new text begin
and SWECS new text end . deleted text begin The order must consider existing and historic commission standards for
wind permits issued by the commission. deleted text end The general permit standards deleted text begin shall deleted text end new text begin may new text end apply
to permits issued by counties and new text begin must apply new text end to permits issued by the commission for
LWECS deleted text begin with a combined nameplate capacity of less than 25,000 kilowatts deleted text end new text begin and SWECS new text end . new text begin
The general permit standards must establish a setback for a SWECS from a road or
property line equal to 1.1 times the maximum tip height of a rotor blade measured from
ground level when the blade is in a vertical position. Counties are encouraged to consider
an identical setback standard in permits they issue. new text end The commission or a county may grant
a variance from a general permit standard if the variance is found to be in the public
interest. new text begin Permit standards established by a county under this section supersede general
permit standards established by the commission.
new text end

(d) new text begin Upon request by a county, new text end the commission and the commissioner of commerce
shall provide technical assistance to a county with respect to deleted text begin the processing of LWECS deleted text end new text begin
SWECS new text end site permit applications.

new text begin EFFECTIVE DATE. new text end

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

Sec. 30.

Minnesota Statutes 2008, section 453.52, subdivision 2, is amended to read:

Subd. 2.

Agency agreement.

"Agency agreement" means the written agreement
between or among two or more cities new text begin or existing municipal power agencies new text end establishing a
municipal power agency.

new text begin EFFECTIVE DATE. new text end

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

Sec. 31.

Minnesota Statutes 2008, section 453.52, subdivision 7, is amended to read:

Subd. 7.

Governing body.

new text begin (a) new text end "Governing body," with respect to a city, means the
city council or, if another board, commission, or body is empowered by law or its charter
or by resolution of the city council to establish and regulate rates and charges for the
distribution of electric energy within the city, such board, commission, or body shall
be deemed to be the "governing body"; provided, however, that when the levy of a tax
or the incurring of an obligation payable from taxes or any other action of such board,
commission, or body requires the concurrence, approval, or independent action of the
city council or another body under the city's charter or any other law, such action shall
not be exercised under sections 453.51 to 453.62 until such concurrence or approval is
received or such independent action is taken; and provided further, that the concurrence
of the city council or other elected body charged with the general management of a city
shall be required, prior to the adoption by the city of any resolution approving an agency
agreement or any amendment thereto.

new text begin (b) With respect to an existing municipal power agency, "governing body" means
the agency's board of directors.
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. 32.

Minnesota Statutes 2008, section 453.52, subdivision 8, is amended to read:

Subd. 8.

Municipal power agency.

"Municipal power agency" means a separate
political subdivision and municipal corporation created by agreement between or among
two or more cities new text begin or existing municipal power agencies new text end pursuant to section 453.53
to exercise any of the powers of acquisition, construction, reconstruction, operation,
repair, extension, or improvement of electric generation or transmission facilities or the
acquisition of any interest therein or any right to part or all of the capacity thereof.

new text begin EFFECTIVE DATE. new text end

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

Sec. 33.

Minnesota Statutes 2008, section 453.53, subdivision 1, is amended to read:

Subdivision 1.

Two or more cities deleted text begin , deleted text end new text begin or existing municipal power agencies; new text end
resolution.

(a) Any two or more cities new text begin or existing municipal power agencies new text end may form
a municipal power agency by the execution of an agency agreement authorized by a
resolution of the governing body of each city new text begin or municipal power agency new text end .

(b) The agency agreement shall state:

(1) that the municipal power agency is created and incorporated under the provisions
of sections 453.51 to 453.62 as a municipal corporation and a political subdivision of the
state, to exercise thereunder a part of the sovereign powers of the state;

(2) the name of the agency, which shall include the words "municipal power agency";

(3) the names of the cities new text begin or municipal power agencies new text end which have approved the
agency agreement and are the initial members of the municipal power agency;

(4) the names and addresses of the persons initially appointed by the resolutions
approving the agreement to act as the representatives of the deleted text begin cities deleted text end new text begin members new text end , respectively,
in the exercise of their powers as members;

(5) limitations, if any, upon the terms of representatives of the respective deleted text begin member
cities deleted text end new text begin members new text end , provided that such representatives shall always be selected and vacancies
in their offices declared and filled by resolutions of the governing bodies of the respective
deleted text begin cities deleted text end new text begin members new text end ;

(6) the names of the initial board of directors of the municipal power agency, who
shall be not less than five persons who are representatives of the respective deleted text begin member cities deleted text end new text begin
members new text end , selected by the vote of a majority of such representatives; or the agreement may
provide that the representatives of the deleted text begin member cities deleted text end new text begin members new text end from time to time shall
be and constitute the board of directors;

(7) the location by city, town, or other community in the state, of the registered office
of the municipal power agency;

(8) that the cities new text begin or municipal power agencies new text end which are members of the municipal
power agency are not liable for its obligations; and

(9) any other provision for regulating the business of the municipal power agency or
the conduct of its affairs which may be agreed by the deleted text begin member cities deleted text end new text begin members new text end , consistent
with sections 453.51 to 453.62.

new text begin EFFECTIVE DATE. new text end

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

Sec. 34.

Minnesota Statutes 2008, section 453.53, subdivision 2, is amended to read:

Subd. 2.

Filing agreement, resolution; incorporation certificate.

The agency
agreement and a certified copy of the resolution of the governing body of each deleted text begin city deleted text end new text begin
member new text end shall be filed for record with the secretary of state. If the agency agreement
conforms to the requirements of this section, the secretary of state shall record it and
issue and record a certificate of incorporation. The certificate shall state the name of
the municipal power agency and the fact and date of incorporation. Upon the issuance
of the certificate of incorporation, the existence of the municipal power agency as a
political subdivision of the state and a municipal corporation shall begin. The certificate of
incorporation shall be conclusive evidence of the fact of incorporation.

new text begin EFFECTIVE DATE. new text end

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

Sec. 35.

Minnesota Statutes 2008, section 453.53, subdivision 3, is amended to read:

Subd. 3.

First board.

The initial board of directors of the municipal power agency,
unless otherwise provided by the agency agreement, shall be elected prior to the filing of
the agreement by a majority vote of the persons acting as representatives of the deleted text begin member
cities deleted text end new text begin members new text end , from among their members. After commencement of existence, the first
meeting of the board of directors shall be held at the call of the directors, after notice, for
the purpose of adopting the initial bylaws, electing officers, and for any other business
that comes before the meeting.

new text begin EFFECTIVE DATE. new text end

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

Sec. 36.

Minnesota Statutes 2008, section 453.53, subdivision 4, is amended to read:

Subd. 4.

Bylaws.

(a) The bylaws of the municipal power agency, and any
amendments thereto, shall be proposed by the board of directors and shall be adopted by
a majority vote of the representatives of the deleted text begin member cities deleted text end new text begin members new text end , unless the agency
agreement requires a greater vote, at a meeting held after notice.

(b) Subject to the provisions of the agency agreement, the bylaws shall state:

(1) the qualifications of deleted text begin member cities deleted text end new text begin members new text end , and limitations, if any, upon their
number;

(2) conditions of membership, if any;

(3) manner and time of calling regular meetings of representatives of deleted text begin member cities deleted text end new text begin
members new text end ;

(4) manner and conditions of termination of membership; and

(5) such other provisions for regulating the affairs of the municipal power agency as
the representatives of the deleted text begin member cities deleted text end new text begin members new text end shall determine to be necessary.

new text begin EFFECTIVE DATE. new text end

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

Sec. 37.

Minnesota Statutes 2008, section 453.53, subdivision 8, is amended to read:

Subd. 8.

deleted text begin City deleted text end new text begin Member new text end representatives.

Except as otherwise provided in the
agency agreement or the bylaws, the duly authorized representatives of each member deleted text begin city deleted text end
shall act as, and vote on behalf of, such deleted text begin city deleted text end new text begin member new text end . Except where the agency agreement
or bylaws provide otherwise, representatives of the deleted text begin member cities deleted text end new text begin members new text end shall hold
at least one meeting each year for the election of directors and for the transaction of any
other business. Except where the agency agreement or bylaws prescribe otherwise, special
meetings of the representatives may be called for any purpose upon written request to the
president or secretary to call the meeting. Such officer shall give notice of the meeting to
be held between 10 and 60 days after receipt of such request. Unless the agency agreement
or bylaws provide for a different percentage, a quorum for a meeting of the representatives
of the deleted text begin member cities deleted text end new text begin members new text end is a majority of the total members and a quorum for
meetings of the board of directors is a majority of the membership of such board.

new text begin EFFECTIVE DATE. new text end

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

Sec. 38.

Minnesota Statutes 2008, section 453.53, subdivision 9, is amended to read:

Subd. 9.

Amendments to agency agreement.

The agency agreement may be
amended as proposed at any meeting of the representatives of the members for which
notice, stating the purpose, shall be given to each representative and, unless the agency
agreement or bylaws require otherwise, shall become effective when ratified by resolutions
of a majority of the governing bodies of the deleted text begin member cities deleted text end new text begin members new text end . Each amendment
and the resolutions approving it shall be filed for record with the secretary of state.

new text begin EFFECTIVE DATE. new text end

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

Sec. 39.

Minnesota Statutes 2008, section 453.55, subdivision 13, is amended to read:

Subd. 13.

Payable solely from pledged or available revenue.

The principal of and
interest upon any bonds or notes issued by a municipal power agency shall be payable
solely from the revenues or funds pledged or available for their payment as authorized in
sections 453.51 to 453.62. Each bond and note shall contain a statement that the principal
thereof or interest thereon is payable solely from revenues or funds of the municipal
power agency and that neither the state nor any political subdivision thereof, other than
the municipal power agency, nor any deleted text begin city which is a deleted text end member of the municipal power
agency is obligated to pay the principal or interest and that neither the faith and credit nor
the taxing power of the state or any political subdivision thereof or of any deleted text begin such deleted text end new text begin member new text end
city is pledged to the payment of the principal of or the interest on the bonds or notes.
Nothing herein, however, precludes the use of tax or other revenue by a city for payment
of amounts due and performance of covenants under any contract of the city as provided
in section 453.58, subdivision 3.

new text begin EFFECTIVE DATE. new text end

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

Sec. 40. new text begin MOUNTAIN IRON ECONOMIC DEVELOPMENT AUTHORITY;
WIND ENERGY PROJECT.
new text end

new text begin (a) The Mountain Iron Economic Development Authority may form or become a
member of a limited liability company organized under Minnesota Statutes, chapter 322B,
for the purpose of developing a community-based energy development project pursuant
to Minnesota Statutes, section 216B.1612. A limited liability company formed or joined
under this section is subject to the open meeting requirements established in Minnesota
Statutes, chapter 13D. A project authorized by this section may not sell, transmit, or
distribute the electrical energy at retail or provide for end use of the electricity to an
off-site facility of the economic development corporation or the limited liability company.
Nothing in this section modifies the exclusive service territories or exclusive right to serve
as provided in Minnesota Statutes, sections 216B.37 to 216B.43.
new text end

new text begin (b) The authority may acquire a leasehold interest in property outside its corporate
boundaries for the purpose of developing a community-based energy development project
as provided in Minnesota Statutes, section 216B.1612.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day after the city of Mountain
Iron and its chief clerical officer comply with Minnesota Statutes, section 645.021,
subdivisions 2 and 3.
new text end

Sec. 41. new text begin SOLAR CITIES REPORT.
new text end

new text begin The cities of Minneapolis and St. Paul, designated as solar cities under the federal
Department of Energy's Solar America Initiative, shall, by October 1, 2009, and October
1, 2010, submit a report to the cochairs of the Legislative Energy Committee containing
strategies to accelerate the rate of solar thermal and solar electric energy installations
in all building types throughout the state. The report must, at a minimum, address the
following issues:
new text end

new text begin (1) identify legal, administrative, financial, and operational barriers to increasing the
installation of solar energy, and measures to overcome them;
new text end

new text begin (2) identify financial and regulatory mechanisms that stimulate the development of
solar energy;
new text end

new text begin (3) identify ways to link solar energy development with energy conservation and
energy efficiency strategies and programs;
new text end

new text begin (4) how efforts and initiatives undertaken by St. Paul and Minneapolis can be
integrated with activities undertaken in other parts of the state; and
new text end

new text begin (5) how projected trends in solar technologies and the costs of solar generation can
be integrated into the state's strategy to advance adoption of solar energy.
new text end

new text begin In preparing these reports, the cities may confer with any person whose experience
and expertise will assist in preparing the reports, including utilities, businesses providing
solar energy installation services, nonprofit organizations promoting solar energy, and
others.
new text end

Sec. 42. new text begin NATURAL GAS UTILITIES; INTERIM ENERGY SAVINGS PLAN.
new text end

new text begin (a) The commissioner of commerce may approve an energy conservation
improvement plan under Minnesota Statutes, section 216B.241, subdivision 1c, paragraph
(d), that:
new text end

new text begin (1) is submitted to the commissioner in calendar year 2009 by a utility that provides
natural gas service at retail;
new text end

new text begin (2) governs the conservation improvements to be undertaken by the utility over the
next three-year time period; and
new text end

new text begin (3) is accompanied by a study that specifies how the utility may:
new text end

new text begin (i) average savings of at least 0.75 percent over the three years following submission
of the plan;
new text end

new text begin (ii) meet and exceed the minimum energy savings goal of one percent of gross
annual retail sales within five years of submission of the plan; and
new text end

new text begin (iii) achieve average annual savings of at least one percent over the nine years
following submission of the plan.
new text end

new text begin (b) The plan must include projections of the total amount spent by the utility to
achieve energy savings each year and the cost per unit of energy saved.
new text end

new text begin (c) Nothing in this section precludes the commissioner from requiring additional
energy conservation improvement activities and programs beyond those proposed by a
utility in its proposed plan so long as those additional activities and programs meet the
requirements of Minnesota Statutes, section 216B.241. The commissioner shall require
all reasonable actions by a utility that will increase the likelihood of the utility's meeting
and exceeding the minimum one percent energy savings goal and the 1.5 percent goal
as soon as reasonably feasible.
new text end

Sec. 43. new text begin CLEAN ENERGY RESOURCE TEAMS; APPROPRIATION.
new text end

new text begin The utility subject to Minnesota Statutes, section 116C.779, shall transfer $563,000
in fiscal year 2010 and $563,000 in fiscal year 2011 from the renewable development
account established in Minnesota Statutes, section 116C.779, to the Department of
Commerce on a schedule to be determined by the commissioner of commerce. The funds
must be deposited in the special revenue fund and are appropriated to the commissioner
for the purposes of this section.
new text end

new text begin $563,000 in fiscal year 2010 and $563,000 in fiscal year 2011 are for continued
funding of community energy technical assistance and outreach on renewable energy and
energy efficiency, as described in Minnesota Statutes, section 216C.385. Of this amount,
$113,000 each year is for technical assistance in the metropolitan area.
new text end

Sec. 44. new text begin REPEALER.
new text end

new text begin Laws 2007, chapter 3, section 3, new text end new text begin is repealed.
new text end