HF 956

1st Engrossment - 88th Legislature (2013 - 2014) Posted on 03/18/2013 04:46pm

A bill for an act
relating to energy; amending various provisions related to utilities; modifying
provisions governing cogeneration and small power production; establishing
a value of solar rate and related regulations; permitting community solar
generating facilities; creating various renewable energy incentives; requiring
studies; extending sunsets; making technical corrections; amending Minnesota
Statutes 2012, sections 16C.144, subdivision 2; 116C.779, subdivision 3;
216B.02, subdivision 4; 216B.03; 216B.16, subdivision 7b, by adding a
subdivision; 216B.1611; 216B.1635; 216B.164, subdivisions 3, 4, 5, 6, by
adding subdivisions; 216B.1691, subdivisions 1, 2a, 2e, by adding a subdivision;
216B.1692, subdivisions 1, 8, by adding a subdivision; 216B.1695, subdivision
5, by adding a subdivision; 216B.23, subdivision 1a; 216B.241, subdivisions 1e,
5c; 216B.2411, subdivision 3; 216B.40; 216B.62, subdivision 7; 216C.436,
subdivisions 7, 8; Laws 2005, chapter 97, article 10, section 3; proposing coding
for new law in Minnesota Statutes, chapters 216B; 216C; repealing Minnesota
Statutes 2012, section 216B.37.

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

Section 1.

Minnesota Statutes 2012, section 16C.144, subdivision 2, is amended to read:

Subd. 2.

Guaranteed energy-savings agreement.

The commissioner may enter
into a guaranteed energy-savings agreement with a qualified provider if:

(1) the qualified provider is selected through a competitive process in accordance
with the guaranteed energy-savings program guidelines within the Department of
Administration;

(2) the qualified provider agrees to submit an engineering report prior to the
execution of the guaranteed energy-savings agreement. The cost of the engineering report
may be considered as part of the implementation costs if the commissioner enters into a
guaranteed energy-savings agreement with the provider;

(3) the term of the guaranteed energy-savings agreement shall not exceed deleted text begin 15 deleted text end new text begin 25
new text end years from the date of final installation;

(4) the commissioner finds that the amount it would spend on the utility cost-savings
measures recommended in the engineering report will not exceed the amount to be
saved in utility operation and maintenance costs over deleted text begin 15 deleted text end new text begin 25 new text end years from the date of
implementation of utility cost-savings measures;

(5) the qualified provider provides a written guarantee that the annual utility,
operation, and maintenance cost savings during the term of the guaranteed energy-savings
agreement will meet or exceed the annual payments due under a lease purchase agreement.
The qualified provider shall reimburse the state for any shortfall of guaranteed utility,
operation, and maintenance cost savings; and

(6) the qualified provider gives a sufficient bond in accordance with section
574.26 to the commissioner for the faithful implementation and installation of the utility
cost-savings measures.

Sec. 2.

Minnesota Statutes 2012, section 116C.779, subdivision 3, is amended to read:

Subd. 3.

Initiative for Renewable Energy and the Environment.

(a)
new text begin Notwithstanding subdivision 1, paragraph (g), new text end beginning July 1, 2009, and each July
1 through deleted text begin 2011 deleted text end new text begin 2014 new text end , $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.

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

(1) environmentally sound production of energy from a renewable energy source,
including biomass and agricultural crops;

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

(3) development of energy conservation and efficient energy utilization technologies;

(4) energy storage technologies; and

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

(c) For the purposes of this subdivision:

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

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

(d) Beginning January 15 of 2010, and each year thereafter, the director of the
Initiative for Renewable Energy and the Environment at the University of Minnesota shall
submit a report to the chair and ranking minority members of the senate and house of
representatives committees with primary jurisdiction over energy finance describing the
activities conducted during the previous year funded under 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. 3.

Minnesota Statutes 2012, section 216B.02, subdivision 4, is amended to read:

Subd. 4.

Public utility.

"Public utility" means persons, corporations, or other legal
entities, their lessees, trustees, and receivers, now or hereafter operating, maintaining,
or controlling in this state equipment or facilities for furnishing at retail natural,
manufactured, or mixed gas or electric service to or for the public or engaged in the
production and retail sale thereof but does not include (1) a municipality or a cooperative
electric association, organized under the provisions of chapter 308A, producing or
furnishing natural, manufactured, or mixed gas or electric service; (2) a retail seller of
compressed natural gas used as a vehicular fuel which purchases the gas from a public
utility; or (3) a retail seller of electricity used to recharge a battery that powers an electric
vehicle, as defined in section 169.011, subdivision 26a, and that is not otherwise a public
utility under this chapter. Except as otherwise provided, the provisions of this chapter shall
not be applicable to any sale of natural, manufactured, or mixed gas or electricity by a
public utility to another public utility for resale. In addition, the provisions of this chapter
shall not apply to a public utility whose total natural gas business consists of supplying
natural, manufactured, or mixed gas to not more than 650 customers within a city pursuant
to a franchise granted by the city, provided a resolution of the city council requesting
exemption from regulation is filed with the commission. The city council may rescind
the resolution requesting exemption at any time, and, upon the filing of the rescinding
resolution with the commission, the provisions of this chapter shall apply to the public
utility. No person shall be deemed to be a public utility if it furnishes its services only to
tenants or cooperative or condominium owners in buildings owned, leased, or operated
by such person. No person shall be deemed to be a public utility if it furnishes service
to occupants of a manufactured home or trailer park owned, leased, or operated by such
person. No person shall be deemed to be a public utility if it produces or furnishes service
to less than 25 persons. new text begin No person shall be deemed to be a public utility solely as a result
of the person furnishing consumers with electricity or heat generated from wind or solar
generating equipment located on the consumer's property, provided the equipment is
owned or operated by an entity other than the consumer.
new text end

Sec. 4.

Minnesota Statutes 2012, section 216B.03, is amended to read:

216B.03 REASONABLE RATE.

Every rate made, demanded, or received by any public utility, or by any two or
more public utilities jointly, shall be just and reasonable. Rates shall not be unreasonably
preferential, unreasonably prejudicial, or discriminatory, but shall be sufficient, equitable,
and consistent in application to a class of consumers. To the maximum reasonable extent,
the commission shall set rates to encourage energy conservation and renewable energy use
and to further the goals of sections 216B.164, 216B.241, deleted text begin and deleted text end 216C.05 new text begin , and 216C.412 new text end . Any
doubt as to reasonableness should be resolved in favor of the consumer. For rate-making
purposes a public utility may treat two or more municipalities served by it as a single class
wherever the populations are comparable in size or the conditions of service are similar.

Sec. 5.

Minnesota Statutes 2012, section 216B.16, is amended by adding a subdivision
to read:

new text begin Subd. 6e. new text end

new text begin Solar energy production incentive. new text end

new text begin (a) Except as otherwise provided in
this subdivision, all assessments authorized by section 216C.412 incurred in connection
with the solar energy production incentive shall be recognized and included by the
commission in the determination of just and reasonable rates as if the expenses were
directly made or incurred by the utility in furnishing utility service.
new text end

new text begin (b) The commission shall not include expenses for the solar energy production
incentive in determining just and reasonable electric rates for retail electric service provided
to customers receiving the low-income electric rate discount authorized by subdivision 14.
new text end

Sec. 6.

Minnesota Statutes 2012, section 216B.16, subdivision 7b, is amended to read:

Subd. 7b.

Transmission cost adjustment.

(a) Notwithstanding any other provision
of this chapter, the commission may approve a tariff mechanism for the automatic annual
adjustment of charges for the Minnesota jurisdictional costs of (i) new transmission
facilities that have been separately filed and reviewed and approved by the commission
under section 216B.243 or are certified as a priority project or deemed to be a priority
transmission project under section 216B.2425; deleted text begin and deleted text end (ii) new text begin new transmission facilities
proposed to be constructed by a utility, or an affiliate operating an integrated system
with the utility, approved by the regulatory commission of the state in which the new
transmission facilities are to be constructed to the extent approval is required by the laws
of that state, and determined by the Midwest Independent Transmission System Operator
to benefit the utility or integrated utility transmission system; (iii) new text end charges incurred by a
utility that accrue from other transmission owners' regionally planned transmission projects
that have been determined by the Midwest Independent new text begin Transmission new text end System Operator to
benefit the utility new text begin or integrated system new text end , as provided for under a federally approved tariff.

(b) Upon filing by a public utility or utilities providing transmission service, the
commission may approve, reject, or modify, after notice and comment, a tariff that:

(1) allows the utility to recover on a timely basis the costs net of revenues of
facilities approved under section 216B.243 or certified or deemed to be certified under
section 216B.2425 or exempt from the requirements of section 216B.243;

(2) allows the charges incurred by a utility that accrue from other transmission
owners' regionally planned transmission projects that have been determined by the
Midwest Independent new text begin Transmission new text end System Operator to benefit the utility new text begin or integrated
system new text end , as provided for under a federally approved tariff. These charges must be reduced
or offset by revenues received by the utility and by amounts the utility charges to other
regional transmission owners, to the extent those revenues and charges have not been
otherwise offset;

(3) new text begin allows the utility to recover on a timely basis the costs net of revenues of facilities
approved by the regulatory commission of the state in which the new transmission
facilities are to be constructed and determined by the Midwest Independent Transmission
System Operator to benefit the utility or integrated transmission system;
new text end

new text begin (4) new text end allows a return on investment at the level approved in the utility's last general
rate case, unless a different return is found to be consistent with the public interest;

deleted text begin (4) deleted text end new text begin (5) new text end provides a current return on construction work in progress, provided that
recovery from Minnesota retail customers for the allowance for funds used during
construction is not sought through any other mechanism;

deleted text begin (5) deleted text end new text begin (6) new text end allows for recovery of other expenses if shown to promote a least-cost project
option or is otherwise in the public interest;

deleted text begin (6) deleted text end new text begin (7) new text end allocates project costs appropriately between wholesale and retail customers;

deleted text begin (7) deleted text end new text begin (8) new text end provides a mechanism for recovery above cost, if necessary to improve the
overall economics of the project or projects or is otherwise in the public interest; and

deleted text begin (8) deleted text end new text begin (9) new text end terminates recovery once costs have been fully recovered or have otherwise
been reflected in the utility's general rates.

(c) A public utility may file annual rate adjustments to be applied to customer bills
paid under the tariff approved in paragraph (b). In its filing, the public utility shall provide:

(1) a description of and context for the facilities included for recovery;

(2) a schedule for implementation of applicable projects;

(3) the utility's costs for these projects;

(4) a description of the utility's efforts to ensure the lowest costs to ratepayers for
the project; and

(5) calculations to establish that the rate adjustment is consistent with the terms
of the tariff established in paragraph (b).

(d) Upon receiving a filing for a rate adjustment pursuant to the tariff established in
paragraph (b), the commission shall approve the annual rate adjustments provided that,
after notice and comment, the costs included for recovery through the tariff were or are
expected to be prudently incurred and achieve transmission system improvements at the
lowest feasible and prudent cost to ratepayers.

Sec. 7.

Minnesota Statutes 2012, section 216B.1611, is amended to read:

216B.1611 INTERCONNECTION OF ON-SITE DISTRIBUTED
GENERATION.

Subdivision 1.

Purpose.

The purpose of this section is to:

(1) establish the terms and conditions that govern the interconnection and parallel
operation of on-site distributed generation new text begin resources interconnected with a public utility's
distribution system new text end ;

(2) provide cost savings and reliability benefits to customers;

(3) establish technical requirements that will promote the safe and reliable parallel
operation of on-site distributed generation resources new text begin interconnected with a public utility's
distribution system new text end ;

(4) enhance both the reliability of electric service and economic efficiency in the
production and consumption of electricity; and

(5) promote the use of distributed resources in order to provide electric system
benefits during periods of capacity constraints.

Subd. 2.

Distributed generation; generic proceeding.

(a) The commission shall
initiate a proceeding within 30 days of July 1, deleted text begin 2001 deleted text end new text begin 2013 new text end , to establish, by order, generic
standards for utility tariffs for the interconnection and parallel operation of distributed
generation new text begin projects, including a qualified cogeneration project under section 216B.164,
that are:
new text end

new text begin (1) new text end fueled by natural gas or a renewable fuel, or another similarly clean fuel or
combination of fuels deleted text begin of deleted text end new text begin ;
new text end

new text begin (2) new text end no more than ten megawatts of interconnected capacity new text begin ; and
new text end

new text begin (3) interconnected with a public utility's distribution system where system voltages
are less than 100 kilovolts new text end .

new text begin (b) new text end At a minimum, deleted text begin these deleted text end new text begin the new text end tariff standards new text begin established in paragraph (a) new text end must:

(1) to the extent possible, be consistent with industry and other federal and state
operational and safety standards;

(2) provide for the low-cost, safe, and standardized interconnection of facilities;

(3) take into account differing system requirements and hardware, as well as
new text begin encourage maximum penetration of distributed generation while considering new text end the overall
demand load requirements of individual utilities;

(4) allow for new text begin just and new text end reasonable terms and conditions, consistent with the cost and
operating characteristics of the various technologies, so that a utility can reasonably be
assured of the reliable, safe, and efficient operation of the interconnected equipment new text begin while
expediting the evaluation of interconnection applications new text end ; deleted text begin and
deleted text end

(5) 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 for
interconnection and parallel operation with the utility system new text begin ;
new text end

new text begin (6) establish a procedure whereby, when the size of a distributed generation resource
causes power to flow intermittently into transmission facilities operated by the Midwest
Independent Systems Operator, a local load-serving utility may coordinate with the
Midwest Independent Systems Operator to conduct the interconnection transmission
system analysis and transmission system usage reservations, as needed;
new text end

new text begin (7) include payments for ancillary services and other system benefits provided by a
distributed generation resource;
new text end

new text begin (8) reflect the savings that accrue to a public utility's distribution system resulting
from avoided demand charges and avoided transmission and transmission infrastructure
costs; and
new text end

new text begin (9) recognize the role played by the regional wholesale electricity market and demand
side and storage resources as a source of standby power for a distributed energy resource new text end .

deleted text begin (b) deleted text end new text begin (c) new text end The commission deleted text begin may deleted text end new text begin shall new text end develop financial incentives based on a public
utility's performance in encouraging residential and small business customers to participate
in on-site generation new text begin interconnected with a public utility's distribution system. A public
utility's performance shall be evaluated on:
new text end

new text begin (1) steps taken by the public utility to reduce barriers to the development of
distributed generation resources, including but not limited to financial, technical, and
interconnection barriers; and
new text end

new text begin (2) the extent to which a public utility has effectively and thoroughly analyzed
available locations on its distribution system for siting future distributed generation
resources and provided that information to developers new text end .

Subd. 3.

Distributed generation tariff.

Within 90 days of the issuance of an order
under subdivision 2:

(1) each public utility providing electric service at retail shall file a distributed
generation tariff consistent with that order, for commission approval or approval with
modification; and

(2) each municipal utility and cooperative electric association shall adopt a
distributed generation tariff that addresses the issues included in the commission's order.

Subd. 4.

Reporting requirements.

(a) Each electric utility shall maintain records
concerning applications received for interconnection and parallel operation of distributed
generation. The records must include the date each application is received, documents
generated in the course of processing each application, correspondence regarding each
application, and the final disposition of each application.

(b) Every electric utility shall file with the commissioner a distributed generation
interconnection report for the preceding calendar year that identifies new text begin :
new text end

new text begin (1) new text end each distributed generation facility interconnected with the utility's distribution
system deleted text begin . The report must list the deleted text end new text begin ;
new text end

new text begin (2) new text end new distributed generation facilities interconnected with the system since the
previous year's report, any distributed generation facilities no longer interconnected with
the utility's system since the previous report, the capacity of each facility, and the feeder or
other point on the company's utility system where the facility is connected deleted text begin . The annual
report must also identify deleted text end new text begin ;
new text end

new text begin (3) new text end all applications for interconnection received during the previous one-year period,
and the disposition of the applications new text begin ; and
new text end

new text begin (4) the most optimal locations on its distribution system for the interconnection
of future distributed generation resources, considering the technical feasibility of
accommodating a project of up to ten megawatts capacity, the system benefits that accrue
for power quality improvements from distributed generation resources and from reducing
local system demand, and the avoidance of future expenditures to expand generation
or transmission or distribution capacity 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.

Minnesota Statutes 2012, section 216B.1635, is amended to read:

216B.1635 RECOVERY OF GAS UTILITY INFRASTRUCTURE COSTS.

Subdivision 1.

Definitions.

(a) "Gas utility" means a public utility as defined in
section 216B.02, subdivision 4, that furnishes natural gas service to retail customers.

(b) "Gas utility infrastructure costs" or "GUIC" means new text begin costs incurred in new text end gas utility
projects that:

(1) do not serve to increase revenues by directly connecting the infrastructure
replacement to new customers;

(2) are in service deleted text begin but were not included in the gas utility's rate base in its most
recent general rate case deleted text end new text begin or planned to be in service during the period covered by the report
submitted in accordance with subdivision 2 new text end ; and

(3) deleted text begin replace or modify existing infrastructure if the replacement or modification does
not constitute a betterment, unless the betterment is required by a political subdivision,
as evidenced by specific documentation from the government entity requiring the
replacement or modification of infrastructure deleted text end new text begin do not constitute a betterment, unless
the betterment is based on requirements by a political subdivision or federal or state
regulation, as evidenced by specific documentation or regulation from the government
entity requiring the replacement or modification of infrastructure new text end .

(c) "Gas utility projects" means deleted text begin relocation and deleted text end new text begin :
new text end

new text begin (1) new text end replacement of natural gas facilities located in the public right-of-way required
by the construction or improvement of a highway, road, street, public building, or other
public work by or on behalf of the United States, the state of Minnesota, or a political
subdivision deleted text begin . deleted text end new text begin ; and
new text end

new text begin (2) replacement or modification of existing natural gas facilities, including surveys,
assessments, reassessment, and other work necessary to determine the need for replacement
or modification of existing infrastructure that is required by federal or state regulation.
new text end

Subd. 2.

new text begin Gas infrastructure new text end filing.

deleted text begin (a) The commission may approve a gas utility's
petition for a rate schedule deleted text end new text begin A public utility submitting a petition new text end to recover deleted text begin GUIC deleted text end new text begin gas
infrastructure costs new text end under this section deleted text begin . A gas utility may deleted text end new text begin must submit to the commission, the
department, the Office of Pipeline Safety, and interested parties a gas infrastructure project
plan report and a new text end petition deleted text begin the commission to recover a rate of return, income taxes on the
rate of return, incremental property taxes, plus incremental depreciation expense associated
with GUIC deleted text end new text begin for rate recovery. new text end new text begin The report and petition must be made at least 150 days in
advance of implementation of the rate schedule, provided that the rate schedule will not be
implemented until the petition is approved by the commission pursuant to subdivision 7 new text end .

deleted text begin (b) The filing is subject to the following:
deleted text end

deleted text begin (1) A gas utility may submit a filing under this section no more than once per year.
deleted text end

deleted text begin (2) A gas utility must file sufficient information to satisfy the commission regarding
the proposed GUIC or be subject to denial by the commission. The information includes,
but is not limited to:
deleted text end

deleted text begin (i) the government entity ordering the gas utility project and the purpose for which
the project is undertaken;
deleted text end

deleted text begin (ii) the location, description, and costs associated with the project;
deleted text end

deleted text begin (iii) a description of the costs, and salvage value, if any, associated with the existing
infrastructure replaced or modified as a result of the project;
deleted text end

deleted text begin (iv) the proposed rate design and an explanation of why the proposed rate design
is in the public interest;
deleted text end

deleted text begin (v) the magnitude and timing of any known future gas utility projects that the utility
may seek to recover under this section;
deleted text end

deleted text begin (vi) the magnitude of GUIC in relation to the gas utility's base revenue as approved
by the commission in the gas utility's most recent general rate case, exclusive of gas
purchase costs and transportation charges;
deleted text end

deleted text begin (vii) the magnitude of GUIC in relation to the gas utility's capital expenditures since
its most recent general rate case;
deleted text end

deleted text begin (viii) the amount of time since the utility last filed a general rate case and the utility's
reasons for seeking recovery outside of a general rate case; and
deleted text end

deleted text begin (ix) documentation supporting the calculation of the GUIC.
deleted text end

Subd. 3.

Commission authority; rules.

The commission may issue orders and
adopt rules necessary to implement and administer this section.

new text begin Subd. 4. new text end

new text begin Gas infrastructure project plan report. new text end

new text begin The gas infrastructure project
plan report required to be filed under subdivision 2 shall include all pertinent information
and supporting data on each proposed project, including but not limited to project
description and scope, estimated project costs, and project in-service date.
new text end

new text begin Subd. 5. new text end

new text begin Gas infrastructure project plan report review. new text end

new text begin The Office of Pipeline
Safety shall evaluate the gas utility's report filed under subdivision 4 and, within 60 days
of the filing, provide the commission with:
new text end

new text begin (1) verification that a gas utility project associated with federal or state regulations
complies with subdivision 1, paragraph (c), clause (2); and
new text end

new text begin (2) an assessment of the appropriateness of the gas utility's proposed plans.
new text end

new text begin Subd. 6. new text end

new text begin Cost recovery petition for utility's facilities. new text end

new text begin Notwithstanding any other
provision of this chapter, the commission may approve a rate schedule for the automatic
annual adjustment of charges for gas utility infrastructure costs under this section,
including a rate of return, income taxes on the rate of return, incremental property taxes,
incremental depreciation expense, and incremental operation and maintenance costs. A
gas utility's petition for approval of a rate schedule to recover gas utility infrastructure
costs outside of a general rate case under section 216B.16 is subject to the following:
new text end

new text begin (1) a gas utility may submit a filing under this section no more than once per year; and
new text end

new text begin (2) a gas utility must file sufficient information to satisfy the commission regarding
the proposed GUIC. The information includes, but is not limited to:
new text end

new text begin (i) the information required to be included in the gas infrastructure project plan
report under subdivision 4;
new text end

new text begin (ii) the government entity ordering the gas utility project and the purpose for which
the project is undertaken, or the federal or state regulations causing the project;
new text end

new text begin (iii) a description of the estimated costs and salvage value, if any, associated with the
existing infrastructure replaced or modified as a result of the project;
new text end

new text begin (iv) a comparison of the utility's estimated costs included in the gas infrastructure
project plan and the actual costs incurred, including a description of the utility's efforts to
ensure the costs of the facilities are reasonable and were or will be prudently incurred;
new text end

new text begin (v) calculations to establish that the rate adjustment is consistent with the terms
of the rate schedule, including the proposed rate design and an explanation of why the
proposed rate design is in the public interest;
new text end

new text begin (vi) the magnitude and timing of any known future gas utility projects that the
utility may seek to recover under this section;
new text end

new text begin (vii) the magnitude of GUIC in relation to the gas utility's base revenue as approved
by the commission in the gas utility's most recent general rate case, exclusive of gas
purchase costs and transportation charges;
new text end

new text begin (viii) the magnitude of GUIC in relation to the gas utility's capital expenditures
since its most recent general rate case; and
new text end

new text begin (ix) the amount of time since the utility last filed a general rate case and the utility's
reasons for seeking recovery outside of a general rate case.
new text end

new text begin Subd. 7. new text end

new text begin Commission action. new text end

new text begin Upon receiving a gas utility report and petition for
cost recovery under subdivision 2 and assessment and verification under subdivision
5, the commission may approve the annual GUIC rate adjustments provided that, after
notice and comment, the costs included for recovery through the rate schedule were or are
expected to be prudently incurred and achieve gas facility improvements at the lowest
reasonable and prudent cost to ratepayers.
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.

Minnesota Statutes 2012, section 216B.164, is amended by adding a
subdivision to read:

new text begin Subd. 2a. new text end

new text begin Definitions. new text end

new text begin (a) For the purposes of this section, the following terms
have the meanings given them:
new text end

new text begin (b) "Aggregated meter" means a meter located on the premises of a customer's
owned or leased property that is contiguous with property containing the customer's
designated meter.
new text end

new text begin (c) "Capacity" means the number of megawatts alternating current (AC) at the point
of interconnection between a solar photovoltaic device and a utility's electric system.
new text end

new text begin (d) "Cogeneration" means a combined process whereby electrical and useful thermal
energy are produced simultaneously.
new text end

new text begin (e) "Contiguous property" means property owned or leased by the customer sharing
a common border, without regard to interruptions in contiguity caused by easements,
public thoroughfares, transportation rights-of-way, or utility rights-of-way.
new text end

new text begin (f) "Customer" means the person who is named on the utility electric bill for the
premises.
new text end

new text begin (g) "Designated meter" means a meter that is physically attached to the customer's
facility that the customer-generator designates as the first meter to which net metered
credits are to be applied as the primary meter for billing purposes when the customer is
serviced by more than one meter.
new text end

new text begin (h) "Distributed generation" means a facility that:
new text end

new text begin (1) has a capacity of ten megawatts or less;
new text end

new text begin (2) is interconnected with a utility's distribution system, over which the commission
has jurisdiction; and
new text end

new text begin (3) generates electricity from natural gas, renewable fuel, or a similarly clean fuel,
and may include waste heat, cogeneration, or fuel cell technology.
new text end

new text begin (i) "High-efficiency distributed generation" means a distributed energy facility
that has a minimum efficiency of 40 percent, as calculated under section 272.0211,
subdivision 1.
new text end

new text begin (j) "Net metered facility" means an electric generation facility with the purpose of
offsetting energy use through the use of renewable energy or high-efficiency distributed
generation sources.
new text end

new text begin (k) "Renewable energy" has the meaning given in section 216B.2411, subdivision 2.
new text end

new text begin (l) "Standby charge" means a charge imposed by an electric utility upon a distributed
generation facility for the recovery of fixed costs necessary to make electricity service
available to the distributed generation facility.
new text end

Sec. 10.

Minnesota Statutes 2012, section 216B.164, subdivision 3, is amended to read:

Subd. 3.

Purchases; small facilities.

(a) For a qualifying facility having less
than deleted text begin 40-kilowatt deleted text end new text begin 105-kilowatt new text end capacity, the customer shall be billed for the net energy
supplied by the utility according to the applicable rate schedule for sales to that class of
customer. In the case of net input into the utility system by a qualifying facility having
less than deleted text begin 40-kilowatt deleted text end new text begin 105-kilowatt new text end capacity, compensation to the customer shall be at a per
kilowatt-hour rate determined under paragraph (b) or (c).

(b) In setting rates, the commission shall consider the fixed distribution costs to the
utility not otherwise accounted for in the basic monthly charge and shall ensure that the
costs charged to the qualifying facility are not discriminatory in relation to the costs
charged to other customers of the utility. The commission shall set the rates for net
input into the utility system based on avoided costs as defined in the Code of Federal
Regulations, title 18, section 292.101, paragraph (b)(6), the factors listed in Code of
Federal Regulations, title 18, section 292.304, and all other relevant factors.

(c) Notwithstanding any provision in this chapter to the contrary, a qualifying facility
having less than deleted text begin 40-kilowatt deleted text end new text begin 105-kilowatt new text end capacity may elect that the compensation for net
input by the qualifying facility into the utility system shall be at the average retail utility
energy rate new text begin plus the premium charged by the utility to customers of that customer class
who elect to purchase renewable electricity under section 216B.169. If the utility does not
offer a renewable rate under section 216B.169, the rate that a qualifying facility may elect
to receive under this paragraph is the average rate charged under section 216B.169 to the
applicable customer class by the three utilities that offer such a rate whose service areas
are located closest to that of the utility that does not offer a rate under section 216B.169 new text end .
"Average retail utility energy rate" is defined as the average of the retail energy rates,
exclusive of special rates based on income, age, or energy conservation, according to the
applicable rate schedule of the utility for sales to that class of customer.

(d) If the qualifying facility is interconnected with a nongenerating utility which has
a deleted text begin sole source deleted text end contract with a municipal power agency or a generation and transmission
utility, the nongenerating utility may elect to treat its purchase of any net input under this
subdivision as being made on behalf of its supplier and shall be reimbursed by its supplier
for any additional costs incurred in making the purchase. Qualifying facilities having less
than deleted text begin 40-kilowatt deleted text end new text begin 105-kilowatt new text end capacity may, at the customer's option, elect to be governed
by the provisions of subdivision 4.

new text begin (e) A utility may elect to take possession of any renewable energy credits attached to
electricity purchased under this section.
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. 11.

Minnesota Statutes 2012, section 216B.164, subdivision 4, is amended to read:

Subd. 4.

Purchases; wheeling; costs.

(a) Except as otherwise provided in
paragraph (c), this subdivision shall apply to all qualifying facilities having deleted text begin 40-kilowatt
deleted text end new text begin 1,000-kilowatt new text end capacity or more as well as qualifying facilities as defined in subdivision 3
new text begin and net metered facilities under subdivision 4a new text end which elect to be governed by its provisions.

(b) The utility to which the qualifying facility is interconnected shall purchase all
energy and capacity made available by the qualifying facility. The qualifying facility shall
be paid the utility's full avoided capacity and energy costs as negotiated by the parties, as
set by the commission, or as determined through competitive bidding approved by the
commission. The full avoided capacity and energy costs to be paid a qualifying facility
that generates electric power by means of a renewable energy source are the utility's least
cost renewable energy facility or the bid of a competing supplier of a least cost renewable
energy facility, whichever is lower, unless the commission's resource plan order, under
section 216B.2422, subdivision 2, provides that the use of a renewable resource to meet
the identified capacity need is not in the public interest.

(c) For all qualifying facilities having 30-kilowatt capacity or more, the utility
shall, at the qualifying facility's or the utility's request, provide wheeling or exchange
agreements wherever practicable to sell the qualifying facility's output to any other
Minnesota utility having generation expansion anticipated or planned for the ensuing ten
years. The commission shall establish the methods and procedures to insure that except
for reasonable wheeling charges and line losses, the qualifying facility receives the full
avoided energy and capacity costs of the utility ultimately receiving the output.

(d) The commission shall set rates for electricity generated by renewable energy.

Sec. 12.

Minnesota Statutes 2012, section 216B.164, is amended by adding a
subdivision to read:

new text begin Subd. 4a. new text end

new text begin Net metered facility. new text end

new text begin Notwithstanding any provision of this chapter to
the contrary, a customer with a net metered facility having less than 105-kilowatt capacity
may elect to be compensated for the customer's net input into the utility system in the form
of a kilowatt-hour credit on the customer's energy bill carried forward and applied to
subsequent energy bills. Any net input supplied by the customer into the utility system
that exceeds energy supplied to the customer by the utility during a 12-month period must
be compensated at the utility's avoided cost rate under subdivision 3, paragraph (b), or
subdivision 4, paragraph (b), as applicable. The customer may choose the month in which
the annual billing period begins.
new text end

Sec. 13.

Minnesota Statutes 2012, section 216B.164, is amended by adding a
subdivision to read:

new text begin Subd. 4b. new text end

new text begin Aggregation of meters. new text end

new text begin (a) For the purpose of measuring electricity
under subdivisions 3 and 4a, a utility must aggregate for billing purposes a customer's
designated meter with one or more aggregated meters if a customer requests that it do so.
Any aggregation of meters must be governed under this section.
new text end

new text begin (b) A customer must give at least 60 days' notice to the utility prior to a request that
additional meters be included in meter aggregation. The specific meters must be identified
at the time of the request. In the event that more than one meter is identified, the customer
must designate the rank order for the aggregated meters to which the net metered credits
are to be applied. At least 60 days prior to the beginning of the next annual billing period,
a customer may amend the rank order of the aggregated meters, subject to the provisions
of this subdivision.
new text end

new text begin (c) The aggregation of meters applies only to charges that use kilowatt-hours as the
billing determinant. All other charges applicable to each meter account must be billed to
the customer.
new text end

new text begin (d) The utility must first apply the kilowatt-hour credit to the charges for the
designated meter and then to the charges for the aggregated meters in the rank order
specified by the customer. If the net metered facility supplies more electricity to the utility
than the energy usage recorded by the customer's designated and aggregated meters during
a monthly billing period, the utility must apply credits to the customer's next monthly
bill for the excess kilowatt-hours.
new text end

new text begin (e) With the commission's prior approval, a utility may charge the customer
requesting to aggregate meters a reasonable fee to cover the administrative costs incurred
as a result of implementing the provisions of this subdivision, pursuant to a tariff approved
by the commission for a public utility or by a governing body for a municipal electric
utility or electric cooperative.
new text end

Sec. 14.

Minnesota Statutes 2012, section 216B.164, is amended by adding a
subdivision to read:

new text begin Subd. 4c. new text end

new text begin Limiting cumulative generation prohibited. new text end

new text begin The commission and any
other governing body regulating public utilities, municipal electric utilities, or electric
cooperatives are prohibited from limiting the cumulative generation of net metered facilities
under subdivision 4a and qualifying facilities under subdivision 3 to less than five percent
of a utility's or cooperative's average annual retail electricity sales as measured over the
previous three calendar years. After the cumulative limit of five percent has been reached,
a public utility, municipal electric utility, or electric cooperative's obligation to offer net
metering to additional customers may be limited by the commission or governing body if
it determines doing so is in the public interest. The commission may limit additional net
metering obligations under this subdivision only after providing notice and opportunity for
public comment. The governing body of a municipal electric utility or electric cooperative
may limit additional net metering obligations under this subdivision only after providing
the affected municipal electric utility or electric cooperative's customers with notice
and opportunity to comment. In determining whether to limit additional net metering
obligations under this subdivision, the commission or governing body shall consider:
new text end

new text begin (1) the environmental and other public policy benefits of net metered facilities;
new text end

new text begin (2) the impact of net metered facilities on electricity rates for customers without
net metered systems;
new text end

new text begin (3) the effects of net metering on the reliability of the electric system;
new text end

new text begin (4) technical advances or technical concerns; and
new text end

new text begin (5) other statutory obligations imposed on the commission or on a utility.
new text end

new text begin The commission or governing body may limit additional net metering obligations under
clauses (2) to (4) only if it determines that additional net metering obligations would
cause significant rate impact, require significant measures to address reliability, or raise
significant technical issues.
new text end

Sec. 15.

Minnesota Statutes 2012, section 216B.164, subdivision 5, is amended to read:

Subd. 5.

new text begin Nondiscrimination; new text end dispute deleted text begin ; deleted text end resolution.

new text begin (a) A utility may not impose
unduly burdensome conditions or stipulations on, and may not discriminate against, a
qualifying facility seeking to interconnect with and sell electric power to the utility.
new text end

new text begin (b) new text end In the event of disputes between an electric utility and a qualifying facility,
either party may request a determination of the issue by the commission. In any such
determination, the burden of proof shall be on the utility. The commission in its order
resolving each such dispute shall require payments to the prevailing party of the prevailing
party's costs, disbursements, and reasonable attorneys' fees, except that the qualifying
facility will be required to pay the costs, disbursements, and attorneys' fees of the utility
only if the commission finds that the claims of the qualifying facility in the dispute have
been made in bad faith, or are a sham, or are frivolous.

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 2012, section 216B.164, subdivision 6, is amended to read:

Subd. 6.

Rules and uniform contract.

(a) The commission shall promulgate rules
to implement the provisions of this section. The commission shall also establish a uniform
statewide form of contract for use between utilities and a qualifying facility having less
than deleted text begin 40-kilowatt deleted text end new text begin 105-kilowatt new text end capacity.

(b) The commission shall require the qualifying facility to provide the utility with
reasonable access to the premises and equipment of the qualifying facility if the particular
configuration of the qualifying facility precludes disconnection or testing of the qualifying
facility from the utility side of the interconnection with the utility remaining responsible
for its personnel.

(c) The uniform statewide form of contract shall be applied to all new and existing
interconnections established between a utility and a qualifying facility having less than
deleted text begin 40-kilowatt deleted text end new text begin 105-kilowatt new text end capacity, except that existing contracts may remain in force
until written notice of election that the uniform statewide contract form applies is given
by either party to the other, with the notice being of the shortest time period permitted
under the existing contract for termination of the existing contract by either party, but
not less than ten nor longer than 30 days.

new text begin EFFECTIVE DATE. new text end

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

Sec. 17.

Minnesota Statutes 2012, section 216B.164, is amended by adding a
subdivision to read:

new text begin Subd. 6a. new text end

new text begin Generation exceeding capacity. new text end

new text begin Electrical generation that exceeds a
qualifying facility's nameplate capacity:
new text end

new text begin (1) does not nullify the contract between a qualifying facility and a utility purchasing
electricity under this section; and
new text end

new text begin (2) must be purchased at the utility's avoided cost rate, as defined by the commission
under subdivision 3 or 4, as applicable.
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. 18.

Minnesota Statutes 2012, section 216B.164, is amended by adding a
subdivision to read:

new text begin Subd. 10. new text end

new text begin Energy for public buildings. new text end

new text begin (a) All the provisions of this section that
apply to a qualifying facility with a capacity of less than one megawatt shall apply to a
wind energy conversion system with a capacity of up to 3.5 megawatts or an energy
storage device storing energy generated by a wind energy conversion system that provides
energy to a public building.
new text end

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

new text begin (1) "energy storage device" means a device capable of storing up to 3.5 megawatts
of previously generated energy and releasing that energy for use at a later time; and
new text end

new text begin (2) "public building" means a building or facility financed wholly or in part with
public funds, including facilities financed by the Public Facilities Authority.
new text end

Sec. 19.

new text begin [216B.1641] VALUE OF SOLAR RATE.
new text end

new text begin Subdivision 1. new text end

new text begin Definition. new text end

new text begin For the purposes of this section, "solar photovoltaic
device" has the meaning given in section 216C.06, subdivision 16, and must meet the
requirements of section 216C.25.
new text end

new text begin Subd. 2. new text end

new text begin Applicability. new text end

new text begin (a) This section shall apply:
new text end

new text begin (1) beginning January 1, 2014, to the two public utilities with the highest Minnesota
retail electricity sales and the generation and transmission cooperative with the highest
Minnesota wholesale electricity sales; and
new text end

new text begin (2) beginning July 1, 2015, to all Minnesota electric utilities, including cooperative
electric associations and municipal electric utilities.
new text end

new text begin (b) Notwithstanding section 216B.164, an owner of a solar photovoltaic device may,
with respect to the purchase price credited by a utility to an owner of a solar photovoltaic
device, elect to be governed under this section or section 216B.164. All other provisions
of section 216B.164, except those in subdivision 3, subdivision 4, paragraphs (a) to (c),
and subdivision 4a, shall apply to an owner of a solar photovoltaic device electing to
be governed under this section.
new text end

new text begin (c) This section does not apply to a utility that owns a solar photovoltaic device.
new text end

new text begin (d) An owner of a solar photovoltaic device governed under the net metering
provisions of section 216B.164 prior to the effective date of the commission order issued
under subdivision 10 and who elects to be governed under section 216B.1641 with respect
to the purchase price credited by a utility must provide written notice of that election to
the utility. The utility shall begin crediting the value of solar rate most recently approved
by the commission to the owner of the solar photovoltaic device on the first day of the first
month that begins at least 30 days after receipt of the notice.
new text end

new text begin (e) This section does not apply to a solar photovoltaic device whose capacity
exceeds two megawatts.
new text end

new text begin Subd. 3. new text end

new text begin Standby charge prohibited. new text end

new text begin An electric utility may not apply a standby
charge to a solar photovoltaic device governed under this section.
new text end

new text begin Subd. 4. new text end

new text begin Standard contract. new text end

new text begin The commission shall establish a statewide uniform
form of contract that must be used by a purchasing utility and an owner of a solar
photovoltaic device who elects to be governed under this section. The term of a contract
entered into under this section must be no less than 20 years. The agreement must provide
for credit of the value of solar rate as approved by the commission under this section,
and must require the transfer of all renewable energy credits associated with the energy
generated by the solar photovoltaic device to the purchasing utility.
new text end

new text begin Subd. 5. new text end

new text begin Credits. new text end

new text begin The utility interconnected to a solar photovoltaic device whose
owner elects to be governed under this section shall purchase, throughout the term of the
contract, all energy and capacity made available by the owner of the solar photovoltaic
device. All credits must be made at the value of solar rate approved by the commission
under this section.
new text end

new text begin Subd. 6. new text end

new text begin Value of solar rate; calculation. new text end

new text begin (a) By February 1, 2014, the Department
of Commerce shall calculate the value of solar rate for each utility subject to the provisions
of this section. The value of solar rate is expressed on a per kilowatt-hour basis and is
composed of the following components:
new text end

new text begin (1) line loss savings equal to the value of the average amount of electricity lost
through transmission and distribution when electricity is generated by the utility's nonsolar
photovoltaic generators;
new text end

new text begin (2) transmission and distribution capacity savings equal to the value of delaying
the need for capital investment in a utility's transmission and distribution system by
contracting to purchase energy from solar photovoltaic devices;
new text end

new text begin (3) energy savings equal to the reduction in a utility's wholesale energy purchases
and costs, based on the time of day the energy would have been generated, realized as a
result of energy purchases from solar photovoltaic devices;
new text end

new text begin (4) generation capacity savings equal to the value of the benefit of the capacity
added to the utility's system by solar photovoltaic devices;
new text end

new text begin (5) fuel price hedge value equal to the value of eliminating price uncertainty
associated with the utility's purchases of fuel for electricity generation; and
new text end

new text begin (6) environmental benefits equal to the premium retail customers are willing to pay
to consume energy produced from renewable resources.
new text end

new text begin (b) The department may, based on known and measurable evidence of the economic
development benefits of solar electricity generation, including the net increase in local
employment and taxes generated from the manufacture, assembly, installation, operation,
and maintenance of solar photovoltaic devices, or other factors, incorporate additional
amounts into the value of solar rate.
new text end

new text begin (c) The value of solar rate is equal to the present value of the future revenue streams
of the values components calculated in paragraphs (a) and (b) over the useful life of a
solar photovoltaic device.
new text end

new text begin Subd. 7. new text end

new text begin Value of solar rate; information. new text end

new text begin The Department of Commerce shall
solicit information from each utility subject to the provisions of this section to assist it in
calculating the value of solar rate. A utility shall provide the information requested by the
department in a timely fashion.
new text end

new text begin Subd. 8. new text end

new text begin Value of solar rate; process. new text end

new text begin The Department of Commerce shall solicit
comments and recommendations from utilities, ratepayers, and other interested parties
regarding the calculation of the value of solar rate.
new text end

new text begin Subd. 9. new text end

new text begin Value of solar rate; adjustments. new text end

new text begin By January 1, 2015, and every January
1 thereafter through 2049, the commissioner shall make a determination as to whether
the value of solar rate needs to be adjusted in order to reflect current conditions in energy
markets or changes in the value of the components calculated in subdivision 6. In making
that determination, the commissioner shall solicit comments and recommendations from
interested parties in the same manner as required under subdivision 8. After considering
the comments and recommendations, the commissioner may adjust the value of solar rate.
new text end

new text begin Subd. 10. new text end

new text begin Value of solar rate; billing. new text end

new text begin Notwithstanding section 216B.164, an
owner of a solar photovoltaic device who elects to receive the value of solar rate for
electricity generated by the solar photovoltaic device that is sold to a utility must be:
new text end

new text begin (1) charged by the utility the applicable rate schedule for sales to that class of
customer for all electricity consumed by the customer;
new text end

new text begin (2) credited the value of solar rate by the utility for all electricity generated by the
solar photovoltaic device;
new text end

new text begin (3) provided by the utility with a monthly bill that contains, in addition to the
amounts in clauses (1) and (2), the net amount owed to the utility or net credit realized
by the owner for that month and on a year-to-date basis. In the event that the customer
has a positive balance after the 12-month cycle ending on the last day of February, that
balance will be eliminated and the credit cycle will restart the following billing period
beginning March 1; and
new text end

new text begin (4) provided by the utility a meter that allows for the separate calculation of the
amount of electricity consumed and generated at the property.
new text end

new text begin Subd. 11. new text end

new text begin Commission review; approval. new text end

new text begin (a) The commissioner shall submit the
value of solar rate calculated under subdivision 6 and the information, comments, and
recommendations received under subdivisions 7 and 8 to the commission for its review
and approval. The commission shall review the rate and the information, comments,
and recommendations and may, at its discretion, solicit additional comments and
recommendations from utilities, ratepayers, and other interested parties regarding the
calculation of the value of solar rate.
new text end

new text begin (b) By January 1, 2014, and each January 1 thereafter through 2049, the commission
shall approve or modify the value of solar rate submitted to it by the commissioner. The
commission shall, by order, direct all electric utilities subject to this section to begin
crediting the value of solar rate most recently approved by the commission to: (1) owners
of solar photovoltaic devices who sign a standard contract under this section on or after the
first day of the first month following the effective date of the order; and (2) owners of solar
photovoltaic devices who were governed under the net metering provisions of section
216B.164 prior to the effective date of the order and who elect to be governed under
section 216B.1641 with respect to the purchase price credited by a utility by complying
with the provisions of section 216B.1641, subdivision 2, paragraph (d).
new text end

new text begin (c) In no case shall the commission approve a value of solar rate under this section
that is lower than the applicable retail rate of the subject utility.
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. 20.

new text begin [216B.1651] DEFINITIONS.
new text end

new text begin Subdivision 1. new text end

new text begin Scope. new text end

new text begin For the purposes of sections 216B.1651 to 216B.1654, the
following definitions have the meanings given.
new text end

new text begin Subd. 2. new text end

new text begin Community solar generating facility. new text end

new text begin "Community solar generating
facility" means a facility:
new text end

new text begin (1) that generates electricity by means of a solar photovoltaic device that has a
capacity of less than two megawatts direct current nameplate;
new text end

new text begin (2) that is interconnected with a utility's distribution system under the jurisdiction
of the commission;
new text end

new text begin (3) that is located in the electric service area of the utility with which it is
interconnected;
new text end

new text begin (4) whose subscribers purchase, under long-term contract with the community solar
generating facility, the right to consume the electricity generated from a specified portion
of the facility's generating capacity;
new text end

new text begin (5) that is not owned by a utility; and
new text end

new text begin (6) that has at least two subscribers.
new text end

new text begin Subd. 3. new text end

new text begin Facility manager. new text end

new text begin "Facility manager" means an entity that manages a
community solar generating facility for the benefit of subscribers and may, in addition,
develop, construct, own, or operate the community solar generating facility. A facility
manager may not be a utility, but may be:
new text end

new text begin (1) a person whose sole purpose is to beneficially own and operate a community
solar generating facility;
new text end

new text begin (2) a Minnesota nonprofit corporation organized under chapter 317A;
new text end

new text begin (3) a Minnesota cooperative association organized under chapter 308A or 308B;
new text end

new text begin (4) a Minnesota political subdivision or local government including, but not limited
to, a county, statutory or home rule charter city, town, school district, public or private
higher education institution, or any other local or regional governmental organization such
as a board, commission, or association; or
new text end

new text begin (5) a tribal council.
new text end

new text begin Subd. 4. new text end

new text begin Renewable energy credit. new text end

new text begin "Renewable energy credit" has the meaning
given in section 216B.1691, subdivision 1, paragraph (d).
new text end

new text begin Subd. 5. new text end

new text begin Solar photovoltaic device. new text end

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

new text begin Subd. 6. new text end

new text begin Subscriber. new text end

new text begin "Subscriber" means a retail customer of a utility who owns
one or more subscriptions of a community solar generating facility interconnected with
that utility. A facility manager may be a subscriber.
new text end

new text begin Subd. 7. new text end

new text begin Subscription. new text end

new text begin "Subscription" means a contract between a subscriber and a
community solar generating facility that has a term of no less than 20 years and that
provides to the subscriber a portion of the generation of the community solar generating
facility and a corresponding proportion of the electricity generated by the community
solar generating facility.
new text end

new text begin Subd. 8. new text end

new text begin Utility. new text end

new text begin "Utility" means a utility subject to section 216B.164.
new text end

Sec. 21.

new text begin [216B.1652] SUBSCRIPTIONS.
new text end

new text begin Subdivision 1. new text end

new text begin Presale of subscriptions. new text end

new text begin A community solar generating facility
may not commence construction of the facility until contracts have been executed for
subscriptions, excluding the subscription of the facility manager, that represent 80 percent
of the proposed nameplate capacity of the community solar generating facility.
new text end

new text begin Subd. 2. new text end

new text begin Size. new text end

new text begin (a) A subscription must be a portion of the community solar generating
facility's nameplate capacity sized so as to produce no more than 120 percent of the annual
average amount of electricity consumed over the previous three years at the site where the
subscriber's meter is located. If the site is newly constructed, the subscription must be sized
based on 120 percent of the average annual amount of electricity consumed by a facility of
similar size and type in the utility's service area, as determined by the facility manager.
new text end

new text begin (b) A subscriber may not own one or more subscriptions whose total capacity
exceeds the maximum capacity allowed for a qualifying facility subject to section
216B.164, subdivision 3.
new text end

new text begin (c) A facility manager may not own subscriptions whose total capacity exceeds the
maximum subscription size allowed under paragraph (a) plus ten percent of the remaining
available nameplate capacity in the community solar generating facility, subject to the
limit in paragraph (b).
new text end

new text begin (d) The maximum subscription size for a subscriber consuming electricity generated
from an eligible energy technology, as defined in section 216B.1691, subdivision 1, at any
time during the term of the subscriber's subscription, is the maximum subscription size
allowed under paragraph (a) minus the nameplate capacity of the eligible energy technology
device providing electricity to the subscriber, subject to the limit in paragraph (b).
new text end

new text begin Subd. 3. new text end

new text begin Certification. new text end

new text begin Prior to the sale of a subscription, a facility manager
must provide certification to the subscriber signed by the facility manager under penalty
of perjury:
new text end

new text begin (1) identifying the rate of insolation at the community solar generating facility;
new text end

new text begin (2) certifying that the solar photovoltaic devices employed by the community solar
generating facility to generate electricity have an electrical energy degradation rate of no
more than 0.5 percent annually; and
new text end

new text begin (3) certifying that the community solar generating facility is in full compliance with
all applicable federal and state utility, securities, and tax laws.
new text end

new text begin Subd. 4. new text end

new text begin On-site subscriber. new text end

new text begin A subscriber who owns the property on which
a community solar generating facility is located has no more rights with respect to
subscription size or price than any other subscriber.
new text end

new text begin Subd. 5. new text end

new text begin Subscription prices. new text end

new text begin The price for a subscription to a community solar
generating facility is not subject to regulation by the commission and is negotiated
between the prospective subscriber and the facility manager.
new text end

new text begin Subd. 6. new text end

new text begin Subscription transfer. new text end

new text begin A subscriber that terminates the contract between
the subscriber and the community solar generating facility must transfer the subscription
to a person eligible to be a subscriber or to the facility manager at a price negotiated
by both parties.
new text end

new text begin Subd. 7. new text end

new text begin New subscribers. new text end

new text begin Within 30 days of the execution of a contract between the
community solar generating facility and a new subscriber, the facility manager shall submit
the following information to the utility serving the community solar generating facility:
new text end

new text begin (1) the new subscriber's name, address, number of meters, and utility customer
account; and
new text end

new text begin (2) the share of the community solar generating facility's nameplate capacity owned
by the new subscriber.
new text end

new text begin Subd. 8. new text end

new text begin Meter change. new text end

new text begin A subscriber that moves to a different property served by
the community solar generating facility from the property at which the subscriber resided
at the time the contract between the subscriber and the community solar generating facility
was executed, or that changes the number of meters attached to the subscriber's account,
must notify the facility manager within 30 days of the change.
new text end

new text begin Subd. 9. new text end

new text begin Renewable energy credits. new text end

new text begin (a) Notwithstanding any other law, a
subscriber owns the renewable energy credits associated with the electricity allocated to
the subscriber's subscription. A utility or facility manager may purchase renewable energy
credits under a contract with a subscriber.
new text end

new text begin (b) Renewable energy credits may not be assigned to a utility as a condition of entering
into a contract or an interconnection agreement with a community solar generating facility.
new text end

new text begin Subd. 10. new text end

new text begin Disputes. new text end

new text begin The dispute resolution provisions available under section
216B.164 shall be used to resolve disputes between a facility manager and the utility
serving the community solar generating facility.
new text end

Sec. 22.

new text begin [216B.1653] DISPOSITION OF ELECTRICITY GENERATED.
new text end

new text begin Subdivision 1. new text end

new text begin Allocation. new text end

new text begin (a) The total amount of electricity available for allocation
to all subscribers of a community solar generating facility shall be determined by a
production meter installed by the utility.
new text end

new text begin (b) The total amount of electricity available to a subscriber shall be the total amount
of electricity available for allocation to all subscribers of a community solar generating
facility prorated by a subscriber's subscription size in relation to the nameplate capacity of
the community solar generating facility.
new text end

new text begin (c) A subscriber may not resell electricity governed by the subscriber's contract
with a community solar generating facility.
new text end

new text begin (d) All electricity generated by a community solar generating facility that is not
allocated to or consumed by subscribers must be sold to the utility interconnected with
the community solar generating facility.
new text end

new text begin Subd. 2. new text end

new text begin Utility purchases. new text end

new text begin The utility to which the community solar generating
facility is interconnected shall purchase all electricity generated by the community solar
generating facility that is not consumed by subscribers. The price paid to the community
solar generating facility by the utility is governed by section 216B.164 or any law that
governs the price a utility must pay to purchase electricity from a solar photovoltaic device.
new text end

new text begin Subd. 3. new text end

new text begin Interconnection. new text end

new text begin The commission shall establish uniform fees for the
interconnection of a community solar generating facility with a utility.
new text end

new text begin Subd. 4. new text end

new text begin Nonutility status. new text end

new text begin Notwithstanding section 216B.02, a community solar
generating facility is not a public utility.
new text end

Sec. 23.

new text begin [216B.1654] BILLING.
new text end

new text begin Subdivision 1. new text end

new text begin Billing procedure. new text end

new text begin A subscriber to a community solar generating
facility must be:
new text end

new text begin (1) charged by the utility interconnected with the community solar generating
facility the utility's applicable rate schedule for sales to that class of customer for all
electricity consumed by the subscriber;
new text end

new text begin (2) paid by the utility the maximum rate allowable under section 216B.164, or
any other law that may govern the price a utility must pay to purchase electricity from
a solar photovoltaic device, for a portion of all electricity the utility purchases from
the community solar generating facility that is equal to the ratio of the subscriber's
subscription to the nameplate capacity of the community solar generating facility;
new text end

new text begin (3) provided by the utility with a monthly bill that contains, in addition to the
amounts in clauses (1) and (2), the net amount owed to the utility or net credit realized by
the owner for that month and on a year-to-date basis; and
new text end

new text begin (4) provided by the utility with a meter that allows for the separate calculation of the
amount of electricity consumed and generated at the property.
new text end

new text begin Subd. 2. new text end

new text begin Billing system. new text end

new text begin The Department of Commerce shall, by January 1, 2014,
establish a uniform administrative system to credit the utility accounts of subscribers to a
community solar generating facility. In determining the uniform administrative system, the
commission shall solicit comments and recommendations from utilities, ratepayers, and
other interested parties, and shall review commercially available administrative systems
and administrative systems used in jurisdictions where entities similar to community
solar generating facilities are operating.
new text end

new text begin Subd. 3. new text end

new text begin Commission proceeding; rate adjustment. new text end

new text begin By September 1, 2014, the
commission shall initiate a proceeding to examine whether the rate paid by a utility to
purchase energy from a community solar generating facility under section 216B.1653,
subdivision 2, should be adjusted to reflect the actual fixed costs incurred by a utility to
provide service to a community solar generating facility.
new text end

Sec. 24.

Minnesota Statutes 2012, 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 generates electricity from the following
renewable energy sources:

(1) solar;

(2) wind;

(3) hydroelectric with a capacity of less than 100 megawatts;

(4) hydrogen, provided that after January 1, 2010, the hydrogen must be generated
from the resources listed in this paragraph; or

(5) biomass, which includes, without limitation, landfill gas; an anaerobic digester
system; the predominantly organic components of wastewater effluent, sludge, or related
by-products from publicly owned treatment works, but not including incineration of
wastewater sludge to produce electricity; and 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.

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

(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. "Total retail electric
sales" does not include the sale of hydroelectricity supplied by a federal power marketing
administration or other federal agency, regardless of whether the sales are directly to a
distribution utility or are made to a generation and transmission utility and pooled for
further allocation to a distribution utility.

new text begin (d) "Renewable energy credit" means a certificate of proof, issued through the
accounting system approved by the commission under subdivision 4, attesting that one
unit of electricity was generated and delivered by an eligible energy technology, and
including all renewable and environmental attributes associated with the production of
electricity from the eligible energy technology.
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. 25.

Minnesota Statutes 2012, 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 solar energy
or wind energy conversion systems and the remaining five percent by other eligible
energy technology. Of the 25 percent that must be generated by wind or solar, no more
than one percent may be solar generated and the remaining 24 percent or greater must
be wind generated.

new text begin (c) By 2030, each public utility shall generate or procure sufficient electricity
generated by an eligible energy technology to provide at least 40 percent of its total retail
electric sales to retail customers in Minnesota.
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. 26.

Minnesota Statutes 2012, section 216B.1691, subdivision 2e, is amended to
read:

Subd. 2e.

Rate impact of standard compliance; report.

Each electric utility must
submit to the commission and the legislative committees with primary jurisdiction over
energy policy a report containing an estimation of the rate impact of activities of the
electric utility necessary to comply with this section. new text begin In consultation with the Department
of Commerce, the commission shall determine a uniform reporting system to ensure that
individual utility reports are consistent and comparable, and shall, by order, require each
electric utility subject to this section to use that reporting system. new text end The rate impact estimate
must be for wholesale rates and, if the electric utility makes retail sales, the estimate
shall also be for the impact on the electric utility's retail rates. Those activities include,
without limitation, energy purchases, generation facility acquisition and construction, and
transmission improvements. An initial report must be submitted within 150 days of May
28, 2011. After the initial report, a report must be updated and submitted as part of each
integrated resource plan or plan modification filed by the electric utility under section
216B.2422. The reporting obligation of an electric utility under this subdivision expires
December 31, 2025, for an electric utility subject to subdivision 2a, paragraph (a), and
December 31, 2020, for an electric utility subject to subdivision 2a, paragraph (b).

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 2012, section 216B.1691, is amended by adding a
subdivision to read:

new text begin Subd. 2f. new text end

new text begin Solar energy standard. new text end

new text begin (a) In addition to the requirements of subdivision
2a, each electric utility shall generate or procure sufficient electricity generated by solar
energy to serve 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 solar energy by the end of the year indicated:
new text end

new text begin (1) new text end	new text begin 2016 new text end	new text begin 0.5 percent new text end
new text begin (2) new text end	new text begin 2020 new text end	new text begin 2.0 percent new text end
new text begin (3) new text end	new text begin 2025 new text end	new text begin 4.0 percent new text end

new text begin (b) The solar energy standard established in this subdivision is subject to all the
provisions of this section governing a utility's standard obligation under subdivision 2a.
new text end

new text begin (c) It is an energy goal of the state of Minnesota that by 2030, ten percent of the
retail electric sales in Minnesota be generated by solar energy.
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. 28.

Minnesota Statutes 2012, section 216B.1692, subdivision 1, is amended to read:

Subdivision 1.

Qualifying projects.

new text begin (a) new text end Projects that may be approved for the
emissions reduction-rate rider allowed in this section must:

(1) be installed on existing large electric generating power plants, as defined in
section 216B.2421, subdivision 2, clause (1), that are located in the state and that are
currently not subject to emissions limitations for new power plants under the federal Clean
Air Act, United States Code, title 42, section 7401 et seq.;

(2) not increase the capacity of the existing electric generating power plant more
than ten percent or more than 100 megawatts, whichever is greater; and

(3) result in the existing plant either:

(i) complying with applicable new source review standards under the federal Clean
Air Act; or

(ii) emitting air contaminants at levels substantially lower than allowed for new
facilities by the applicable new source performance standards under the federal Clean
Air Act; or

(iii) reducing emissions from current levels at a unit to the lowest cost-effective level
when, due to the age or condition of the generating unit, the public utility demonstrates
that it would not be cost-effective to reduce emissions to the levels in item (i) or (ii).

new text begin (b) Notwithstanding paragraph (a), a project may be approved for the emission
reduction rate rider allowed in this section if the project is to be installed on existing
large electric generating power plants, as defined in section 216B.2421, subdivision 2,
clause (1), that are located outside the state and are needed to comply with state or federal
air quality standards, but only if the project has received an advance determination of
prudence from the commission under section 216B.1695.
new text end

Sec. 29.

Minnesota Statutes 2012, section 216B.1692, is amended by adding a
subdivision to read:

new text begin Subd. 1a. new text end

new text begin Exemption. new text end

new text begin Subdivisions 2, 4, and 5, paragraph (c), clause (1), do not
apply to projects qualifying under subdivision 1, paragraph (b).
new text end

Sec. 30.

Minnesota Statutes 2012, section 216B.1692, subdivision 8, is amended to read:

Subd. 8.

Sunset.

This section is effective until December 31, deleted text begin 2015 deleted text end new text begin 2020 new text end , and
applies to plans, projects, and riders approved before that date and modifications made to
them after that date.

Sec. 31.

Minnesota Statutes 2012, section 216B.1695, subdivision 5, is amended to read:

Subd. 5.

Cost recovery.

The utility may begin recovery of costs that have been
incurred by the utility in connection with implementation of the project in the next rate
case following an advance determination of prudence new text begin or in a rider approved under section
216B.1692 new text end . The commission shall review the costs incurred by the utility for the project.
The utility must show that the project costs are reasonable and necessary, and demonstrate
its efforts to ensure the lowest reasonable project costs. Notwithstanding the commission's
prior determination of prudence, it may accept, modify, or reject any of the project costs.
The commission may determine whether to require an allowance for funds used during
construction offset.

Sec. 32.

Minnesota Statutes 2012, section 216B.1695, is amended by adding a
subdivision to read:

new text begin Subd. 5a. new text end

new text begin Rate of return. new text end

new text begin The return on investment in the rider shall be at the
level approved by the commission in the public utility's last general rate case, unless the
commission determines that a different rate of return is in the public interest.
new text end

Sec. 33.

Minnesota Statutes 2012, section 216B.23, subdivision 1a, is amended to read:

Subd. 1a.

Authority to issue refund.

(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.

(b) This section must not be construed as allowing:

(1) retroactive ratemaking;

(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

(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, deleted text begin or deleted text end 216C.05 new text begin , or 216C.412 new text end .

(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.

Sec. 34.

Minnesota Statutes 2012, section 216B.241, subdivision 1e, is amended to read:

Subd. 1e.

Applied research and development grants.

(a) The commissioner
may, by order, approve and make grants for applied research and development projects
of general applicability that identify new technologies or strategies to maximize energy
savings, improve the effectiveness of energy conservation programs, or document
the carbon dioxide reductions from energy conservation programs. When approving
projects, the commissioner shall consider proposals and comments from utilities and
other interested parties. The commissioner may assess up to $3,600,000 annually for the
purposes of this subdivision. The assessments must be deposited in the state treasury
and credited to the energy and conservation account created under subdivision 2a. An
assessment made under this subdivision is not subject to the cap on assessments provided
by section 216B.62, or any other law.

(b) The commissioner, as part of the assessment authorized under paragraph (a),
shall annually assess and grant up to $500,000 for the purpose of subdivision 9.

new text begin (c) The commissioner, as part of the assessment authorized under paragraph (a),
shall annually assess $500,000 for a grant to the partnership created by section 216C.385,
subdivision 2. The grant must be used to exercise the powers and perform the duties
specified in section 216C.385, subdivision 3.
new text end

new text begin (d) By February 15 annually, the commissioner shall report to the chairs and ranking
minority members of the committees of the legislature with primary jurisdiction over
energy policy and energy finance on the assessments made under this subdivision for the
previous calendar year and the use of the assessment. The report must briefly describe the
activities supported by the assessment and the parties that engaged in those activities.
new text end

Sec. 35.

Minnesota Statutes 2012, section 216B.241, subdivision 5c, is amended to read:

Subd. 5c.

Large solar electric generating plant.

(a) For the purpose of this
subdivision:

(1) "project" means a solar electric generation project consisting of arrays of solar
photovoltaic cells with a capacity of up to two megawatts located on the site of a closed
landfill in Olmsted County owned by the Minnesota Pollution Control Agency; and

(2) "cooperative electric association" means a generation and transmission
cooperative electric association that has a member distribution cooperative association to
which it provides wholesale electric service in whose service territory a project is located.

(b) A cooperative electric association may elect to count all of its purchases of
electric energy from a project toward only one of the following:

(1) its energy-savings goal under subdivision 1c; or

(2) its deleted text begin energy objective or deleted text end new text begin solar energy new text end standard under section 216B.1691.

(c) A cooperative electric association may include in its conservation plan purchases
of electric energy from a project. The cost-effectiveness of project 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 solar energy. The kilowatt hours of solar energy purchased by a
cooperative electric association from a project may count for up to 33 percent of its one
percent savings goal under subdivision 1c or up to 22 percent of its 1.5 percent savings
goal under that subdivision. Expenditures made by a cooperative association for the
purchase of energy from a project may not be used to meet the revenue expenditure
requirements of subdivisions 1a and 1b.

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 2012, section 216B.2411, subdivision 3, is amended to read:

Subd. 3.

Other provisions.

(a) Electricity generated by a facility constructed with
funds provided under this section and using an eligible renewable energy source may be
counted toward the renewable energy objectives in section 216B.1691, subject to the
provisions of that section new text begin , except as provided in paragraph (c) new text end .

(b) Two or more entities may pool resources under this section to provide assistance
jointly to proposed eligible renewable energy projects. The entities shall negotiate and
agree among themselves for allocation of benefits associated with a project, such as the
ability to count energy generated by a project toward a utility's renewable energy objectives
under section 216B.1691 new text begin , except as provided in paragraph (c) new text end . The entities shall provide a
summary of the allocation of benefits to the commissioner. A utility may spend funds under
this section for projects in Minnesota that are outside the service territory of the utility.

new text begin (c) Electricity generated by a solar photovoltaic device constructed with funds
provided under this section may be counted toward a utility's solar energy standard under
section 216B.1691.
new text end

Sec. 37.

Minnesota Statutes 2012, section 216B.40, is amended to read:

216B.40 EXCLUSIVE SERVICE RIGHT; SERVICE EXTENSION.

Except as provided in sections 216B.42 and 216B.421, each electric utility shall
have the exclusive right to provide electric service new text begin by electric line new text end at retail to each and
every present and future customer in its assigned service area and no electric utility shall
render or extend electric service at retail within the assigned service area of another
electric utility unless the electric utility consents thereto in writing; provided that any
electric utility may extend its facilities through the assigned service area of another
electric utility if the extension is necessary to facilitate the electric utility connecting its
facilities or customers within its own assigned service area.

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 2012, section 216B.62, subdivision 7, is amended to read:

Subd. 7.

Assessing all utilities.

The department shall assess public utilities,
cooperative electric associations, and municipal utilities for the costs of activities under
chapter 216C. The department shall not assess for costs of grants, loans, or other aids or
for costs that can be recovered through other assessment authority new text begin , except as specifically
authorized in statute or law new text end . Each public utility, cooperative, and municipal utility shall be
assessed in the proportion that its gross operating revenue for the sale of gas and electric
service within the state for the last calendar year bears to the total of those revenues for all
public utilities, cooperatives, and municipalities.

Sec. 39.

new text begin [216C.411] SOLAR ENERGY PRODUCTION INCENTIVE ACCOUNT.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin For the purposes of this section, the terms defined in this
subdivision have the meanings given them.
new text end

new text begin (a) "Commission" means the Public Utilities Commission.
new text end

new text begin (b) "Gross annual retail electricity sales" means annual electric sales to all retail
customers in a public utility's Minnesota service territory.
new text end

new text begin (c) "Public utility" has the same meaning as provided in section 216B.02,
subdivision 4.
new text end

new text begin Subd. 2. new text end

new text begin Account established; account management. new text end

new text begin A solar energy production
incentive account is established as a separate account in the special revenue fund in the
state treasury. The commissioner shall credit to the account the amounts assessed and
collected under this section and appropriations and transfers to the account. Earnings, such
as interest, dividends, and any other earnings arising from account assets, must be credited
to the account. Funds remaining in the account at the end of a fiscal year are not canceled
to the general fund but remain in the account. The commissioner shall manage the account.
new text end

new text begin Subd. 3. new text end

new text begin Purpose. new text end

new text begin The purpose of the account is to pay the solar energy
production incentive to owners of qualified solar photovoltaic devices, including related
administrative costs, under section 216C.412.
new text end

new text begin Subd. 4. new text end

new text begin Assessment. new text end

new text begin Beginning September 1, 2014, and each September 1
thereafter through September 1, 2049, the department shall assess, under section 216B.62,
subdivision 7, each utility an amount, not to exceed 1.33 percent of the utility's gross
annual retail electricity sales within the state during the preceding calendar year, as
required to carry out the purpose of section 216C.412. Such assessments are not subject to
the cap on assessments provided by section 216B.62, or any other law. The assessment
shall be deposited in the account established in subdivision 2.
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. 40.

new text begin [216C.412] SOLAR ENERGY PRODUCTION INCENTIVE.
new text end

new text begin Subdivision 1. new text end

new text begin Incentive payment; appropriation. new text end

new text begin (a) Incentive payments may be
made under this section only to an owner of a solar photovoltaic device who has:
new text end

new text begin (1) submitted to the commissioner, on a form prescribed by the commissioner, an
application to receive the incentive; and
new text end

new text begin (2) received from the commissioner in writing a determination that the solar
photovoltaic device qualifies for the incentive.
new text end

new text begin (b) There is annually appropriated from the solar energy production incentive
account established under section 216C.411 to the commissioner of commerce sums
sufficient to make the payments required under this section.
new text end

new text begin (c) A utility that owns a solar photovoltaic device is not eligible to receive incentive
payments under this section.
new text end

new text begin (d) A solar photovoltaic device whose capacity exceeds two megawatts is ineligible
to receive incentive payments under this section.
new text end

new text begin Subd. 2. new text end

new text begin Eligibility window; payment duration. new text end

new text begin (a) Payments may be made under
this section only for electricity generated from a solar photovoltaic device that first begins
generating electricity after January 1, 2014, through December 31, 2049.
new text end

new text begin (b) Payment of the incentive begins and runs consecutively from the date the solar
photovoltaic device begins generating electricity.
new text end

new text begin (c) The owner of a solar photovoltaic device may receive payments under this
section for a period of 20 years. No payment may be made under this section for electricity
generated after December 31, 2049.
new text end

new text begin Subd. 3. new text end

new text begin Amount of payment. new text end

new text begin (a) An incentive payment is based on the number of
kilowatt hours of electricity generated. The per-kilowatt-hour amount of the payment for
each category of qualified solar photovoltaic device listed below is equal to the applicable
reference price specified in this subdivision minus:
new text end

new text begin (1) the value of solar rate approved by the commissioner under section 216B.1641,
for owners of solar photovoltaic devices that have elected to have the utility's purchase
price for electricity governed by that section; or
new text end

new text begin (2) the rate a utility pays an owner of a solar photovoltaic device for excess electricity
generation under section 216B.164, for owners of solar photovoltaic devices that have
elected to have the utility's purchase price for electricity governed by that section.
new text end

	new text begin Nameplate Capacity new text end	new text begin Reference Price new text end
	new text begin Residential new text end	new text begin 20.4 cents per kilowatt-hour new text end
	new text begin Nonresidential: new text end
	new text begin Under 25 kilowatts new text end	new text begin 18.1 cents per kilowatt-hour new text end
	new text begin Rooftop, 25 kilowatts to 2 megawatts new text end	new text begin 15.9 cents per kilowatt-hour new text end
	new text begin Ground-mounted, 25 kilowatts to 2 megawatts new text end	new text begin 13.6 cents per kilowatt-hour new text end

new text begin (b) By January 1, 2015, and every January 1 thereafter through 2049, the
commissioner shall make a determination as to whether the reference price needs to be
adjusted in order to achieve the solar energy standard established in section 216B.1691,
subdivision 2f, at the lowest level of incentive payments. In making the determination, the
commissioner shall solicit comments and recommendations from utilities, ratepayers, and
other interested parties regarding the calculation of the reference price. After considering
the comments and recommendations, the commissioner may adjust the reference price.
new text end

new text begin (c) For the purposes of this subdivision, "reference price" means the lowest
per-kilowatt price for electricity generated by a qualified solar photovoltaic system the
commissioner determines is sufficient to provide an economic incentive that will result
in the development of aggregate capacity in this state to meet the solar energy standard
established in section 216B.1691, subdivision 2f.
new text end

new text begin Subd. 4. new text end

new text begin Additional payment; Made in Minnesota. new text end

new text begin (a) The commissioner of
commerce shall determine an additional incentive amount to be paid to owners of solar
photovoltaic devices that are "Made in Minnesota."
new text end

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

new text begin (1) "Made in Minnesota" means the manufacture in this state of solar photovoltaic
modules:
new text end

new text begin (i) at a manufacturing facility located in Minnesota that is registered and authorized
to manufacture and apply the UL 1703 certification mark to solar photovoltaic modules by
Underwriters Laboratory (UL), CSA International, Intertek, or an equivalent UL-approved
independent certification agency;
new text end

new text begin (ii) that bear UL 1703 certification marks from UL, CSA International, Intertek,
or an equivalent UL-approved independent certification agency, which marks must be
physically applied to the modules at a manufacturing facility described in item (i), and that
meet either of the following conditions:
new text end

new text begin (A) that are manufactured in Minnesota via manufacturing processes that must
include tabbing, stringing, and lamination; or
new text end

new text begin (B) that are manufactured in Minnesota by interconnecting low-voltage direct current
photovoltaic elements that produce the final useful photovoltaic output of the modules.
new text end

new text begin A solar photovoltaic module that is manufactured by attaching microinverters, direct
current optimizers, or other power electronics to a laminate or solar photovoltaic
module that has received UL 1703 certification marks outside Minnesota from UL, CSA
International, Intertek, or an equivalent UL-approved independent certification agency
is not "Made in Minnesota" under this subdivision; and
new text end

new text begin (2) "solar photovoltaic module" has the meaning given in section 116C.7791,
subdivision 1.
new text end

new text begin Subd. 5. new text end

new text begin Appropriation. new text end

new text begin An amount sufficient to pay the solar energy production
incentive under this section is annually appropriated from the account established under
section 216C.411 to the commissioner of commerce for the purposes of this section.
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. 41.

Minnesota Statutes 2012, section 216C.436, subdivision 7, is amended to read:

Subd. 7.

Repayment.

An implementing entity that finances an energy improvement
under this section must:

(1) secure payment with a lien against the deleted text begin benefited deleted text end qualifying real property; and

(2) collect repayments as a special assessment as provided for in section 429.101
or by charter new text begin , provided that special assessments may be made payable in up to 20 equal
annual installments new text end .

If the implementing entity is an authority, the local government that authorized
the authority to act as implementing entity shall impose and collect special assessments
necessary to pay debt service on bonds issued by the implementing entity under subdivision
8, and shall transfer all collections of the assessments upon receipt to the authority.

Sec. 42.

Minnesota Statutes 2012, section 216C.436, subdivision 8, is amended to read:

Subd. 8.

Bond issuance; repayment.

(a) An implementing entity may issue
revenue bonds as provided in chapter 475 for the purposes of this section new text begin , provided the
revenue bond must not be payable more than 20 years from the date of issuance new text end .

(b) The bonds must be payable as to both principal and interest solely from the
revenues from the assessments established in subdivision 7.

(c) No holder of bonds issued under this subdivision may compel any exercise of the
taxing power of the implementing entity that issued the bonds to pay principal or interest
on the bonds, and if the implementing entity is an authority, no holder of the bonds may
compel any exercise of the taxing power of the local government. Bonds issued under
this subdivision are not a debt or obligation of the issuer or any local government that
issued them, nor is the payment of the bonds enforceable out of any money other than the
revenue pledged to the payment of the bonds.

Sec. 43.

Laws 2005, chapter 97, article 10, section 3, is amended to read:

Sec. 3. SUNSET.

Sections 1 and 2 shall expire on June 30, deleted text begin 2015 deleted text end new text begin 2023 new text end .

Sec. 44. new text begin STUDY OF POTENTIAL FOR SOLAR ENERGY INSTALLATIONS
ON PUBLIC BUILDINGS.
new text end

new text begin (a) The commissioner of commerce shall contract with an independent consultant
selected through a request for proposal process to produce a report analyzing the potential
for electricity generation resulting from the installation of solar photovoltaic devices on
and adjacent to public buildings in this state. The study must:
new text end

new text begin (1) determine, for buildings identified under the process initiated in Laws 2001,
chapter 212, article 1, section 3, commonly referred to as the B3 program, the amount
of space available for the installation of solar photovoltaic devices and the maximum
solar electricity generation potential; and
new text end

new text begin (2) utilize existing data on energy efficiency potential developed under the B3
program and determine how investments in energy efficiency for these buildings could
be combined with solar photovoltaic systems to enhance a building's overall energy
efficiency. The analysis must include a schedule for installing solar photovoltaic systems
on public buildings at a rate of four percent of available space per year and must prioritize
installations that result in the largest benefits with the shortest payback periods.
new text end

new text begin (b) By January 1, 2014, the commissioner of commerce shall submit a copy of the
report to the chairs and ranking minority members of the legislative committees with
primary jurisdiction over energy policy and state government finance.
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. 45. new text begin TRANSMISSION FOR FUTURE RENEWABLE ENERGY STANDARD.
new text end

new text begin The commission shall order all Minnesota electric utilities, as defined in Minnesota
Statutes, section 216B.1691, subdivision 1, paragraph (b), to study and develop plans for
the transmission network enhancements necessary to support increasing the renewable
energy standard established in Minnesota Statutes, section 216B.1691, subdivision 2a, to
40 percent by 2030, while maintaining system reliability.
new text end

new text begin The Minnesota electric utilities must complete the study work under the direction of
the commissioner of commerce. Prior to the start of the study, the commissioner shall
appoint a technical review committee consisting of up to 15 individuals with experience
and expertise in electric transmission system engineering, electric power systems
operations, and renewable energy generation technology to review the study's proposed
methods and assumptions, ongoing work, and preliminary results.
new text end

new text begin As part of the planning process, the Minnesota electric utilities must incorporate
and build upon the analyses that have previously been done or that are in progress
including but not limited to the 2006 Minnesota Wind Integration Study and ongoing
work to address geographically dispersed development plans, the 2007 Minnesota
Transmission for Renewable Energy Standard Study, the 2008 and 2009 Statewide Studies
of Dispersed Renewable Generation, the 2009 Minnesota RES Update, Corridor, and
Capacity Validation Studies, the 2010 Regional Generation Outlet Study, the 2011 Multi
Value Project Portfolio Study, and recent and ongoing Midwest Independent System
Operator transmission expansion planning work. The utilities shall collaborate with the
Midwest Independent System Operator to optimize and integrate, to the extent possible,
Minnesota's transmission plans with other regional considerations and to encourage the
Midwest Independent System Operator to incorporate Minnesota's planning work into its
transmission expansion future planning.
new text end

new text begin The study must be completed and submitted to the Minnesota Public Utilities
Commission by December 1, 2013. The report shall include a description of the analyses
that have been conducted and the results, including:
new text end

new text begin (1) a conceptual plan for transmission necessary for generation interconnection and
delivery and for access to regional geographic diversity and regional supply and demand
side flexibility; and
new text end

new text begin (2) identification and development of potential solutions to any critical issues
encountered to support increasing the renewable energy standard to 40 percent by 2030
while maintaining system reliability, as well as potential impacts and barriers of increasing
the renewable energy standard to 45 percent and 50 percent.
new text end

Sec. 46. new text begin SOLAR INTERCONNECTION STUDY.
new text end

new text begin Each public utility, cooperative association, and municipal utility selling electricity
shall, by November 1, 2013, provide to the commissioner of commerce an assessment of the
capacity available on its electric distribution system for interconnecting solar photovoltaic
devices installed on or adjacent to nonresidential buildings in the utility's service area. For
each such potential interconnection point, the utility must calculate the maximum capacity
of solar photovoltaic devices that could be installed on or adjacent to nearby nonresidential
buildings, the amount of available capacity that could be installed without upgrading the
utility's distribution system, and the cost of the upgrade necessary to accommodate the
installation of the maximum capacity and lesser amounts. The assessment must be in map
format, must be updated annually, and must be made available to the public.
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. 47. new text begin VALUE OF ON-SITE ENERGY STORAGE STUDY.
new text end

new text begin (a) The commissioner of commerce shall contract with an independent consultant
selected through a request for proposal process to produce a report analyzing the potential
costs and benefits of installing utility-managed, grid-connected energy storage devices in
residential and commercial buildings in this state. The study must:
new text end

new text begin (1) estimate the potential value of on-site energy storage devices as a
load-management tool to reduce costs for individual customers and for the utility, including
but not limited to reductions in energy, particularly peaking, costs, and capacity costs;
new text end

new text begin (2) examine the interaction of energy storage devices with on-site solar photovoltaic
devices; and
new text end

new text begin (3) analyze existing barriers to the installation of on-site energy storage devices by
utilities, and examine strategies and design potential economic incentives to overcome
those barriers.
new text end

new text begin (b) The commissioner of commerce shall assess an amount necessary under
Minnesota Statutes, section 216B.241, subdivision 1e, for the purpose of completing the
study described in this section.
new text end

new text begin By January 1, 2014, the commissioner of commerce shall submit the study to the chairs
and ranking minority members of the legislative committees with jurisdiction over energy
policy and finance.
new text end

Sec. 48. new text begin VALUE OF SOLAR THERMAL STUDY.
new text end

new text begin (a) The commissioner of commerce shall contract with an independent consultant
selected through a request for proposal process to produce a report analyzing the potential
costs and benefits of expanding the installation of solar thermal projects, as defined in
Minnesota Statutes, section 216B.2411, subdivision 2, in residential and commercial
buildings in this state. The study must examine the potential for solar thermal projects
to reduce heating and cooling costs for individual customers and to reduce costs at the
utility level as well. The study must also analyze existing barriers to the installation of
on-site energy storage devices by utilities and examine strategies and design potential
economic incentives to overcome those barriers. By January 1, 2014, the commissioner
of commerce shall submit the study to the chairs and ranking minority members of the
legislative committees with jurisdiction over energy policy and finance.
new text end

new text begin (b) The commissioner of commerce shall assess an amount necessary under
Minnesota Statutes, section 216B.241, subdivision 1e, for the purpose of completing the
study described in this section.
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. 49. new text begin SEVERABILITY.
new text end

new text begin If any provision of this act is found to be unconstitutional and void, the remaining
provisions of this act are valid.
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. 50. new text begin REPEALER.
new text end

new text begin Minnesota Statutes 2012, section 216B.37, new text end new text begin is repealed.
new text end