SF 129

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

A bill for an act
relating to energy; requiring utilities to meet certain renewable energy standards;
regulating certificates of need for large energy facilities; modifying integrated
resource planning requirements; modifying transmission planning process;
providing for taxation of certain transmission lines; making technical changes;
amending Minnesota Statutes 2006, sections 216B.1612, subdivision 5;
216B.1645, subdivision 1; 216B.1691; 216B.2411, subdivisions 1, 3; 216B.2421;
216B.2422; 216B.2425, subdivision 7; 216B.2426; 216B.243; 216C.053;
216C.315; 272.02, by adding a subdivision; repealing Minnesota Statutes 2006,
section 216B.169.

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

Section 1.

Minnesota Statutes 2006, section 216B.1612, subdivision 5, is amended to
read:

Subd. 5.

Priority for C-BED projects.

(a) A utility subject to section 216B.1691
that needs to construct new generation, or purchase the output from new generation, as
part of its plan to satisfy deleted text begin its good faith objective deleted text end new text begin the standard new text end under that section should
take reasonable steps to determine if one or more C-BED projects are available that meet
the utility's cost and reliability requirements, applying standard reliability criteria, to fulfill
some or all of the identified need at minimal impact to customer rates.

Nothing in this section shall be construed to obligate a utility to enter into a power
purchase agreement under a C-BED tariff developed under this section.

(b) Each utility shall include in its resource plan submitted under section 216B.2422
a description of its efforts to purchase energy from C-BED projects, including a list of the
projects under contract and the amount of C-BED energy purchased.

(c) The commission shall consider the efforts and activities of a utility to purchase
energy from C-BED projects when evaluating its good faith effort towards meeting the
renewable energy deleted text begin objective deleted text end new text begin standard new text end under section 216B.1691.

Sec. 2.

Minnesota Statutes 2006, section 216B.1645, subdivision 1, is amended to read:

Subdivision 1.

Commission authority.

Upon the petition of a public utility, the
Public Utilities Commission shall approve or disapprove power purchase contracts,
investments, or expenditures entered into or made by the utility to satisfy the wind and
biomass mandates contained in sections deleted text begin 216B.169, deleted text end 216B.2423 deleted text begin , deleted text end and 216B.2424, and to
satisfy the renewable energy deleted text begin objectives deleted text end new text begin standards new text end set forth in section 216B.1691, including
reasonable investments and expenditures made to:

(1) transmit the electricity generated from sources developed under those sections
that is ultimately used to provide service to the utility's retail customers, including
studies necessary to identify new transmission facilities needed to transmit electricity to
Minnesota retail customers from generating facilities constructed to satisfy the renewable
energy deleted text begin objectives deleted text end new text begin standards new text end , provided that the costs of the studies have not been recovered
previously under existing tariffs and the utility has filed an application for a certificate
of need or for certification as a priority project under section 216B.2425 for the new
transmission facilities identified in the studies; or

(2) develop renewable energy sources from the account required in section 116C.779.

Sec. 3.

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

216B.1691 RENEWABLE ENERGY deleted text begin OBJECTIVES deleted text end new text begin STANDARDS new text end .

Subdivision 1.

Definitions.

(a) deleted text begin Unless otherwise specified in law deleted text end new text begin For purposes of
this section new text end , " deleted text begin eligible deleted text end new text begin renewable new text end energy technology" means an energy technology that deleted text begin :
deleted text end

deleted text begin (1) deleted text end generates electricity from deleted text begin the following deleted text end new text begin a new text end renewable energy deleted text begin sources deleted text end new text begin source of
any kind, including, but not limited to new text end : solar; wind; hydroelectric with a capacity of less
than deleted text begin 60 deleted text end new text begin 100 new text end megawatts; hydrogen, provided that after January 1, 2010, the hydrogen
must be generated from the resources listed in this clause; deleted text begin or deleted text end biomass, which includes an
energy recovery facility used to capture the heat value of mixed municipal solid waste or
refuse-derived fuel from mixed municipal solid waste as a primary fuel; new text begin or landfill gas. new text end deleted text begin and
deleted text end

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

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

(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.

Subd. 2.

deleted text begin Eligible deleted text end new text begin Renewable new text end energy deleted text begin objectives deleted text end new text begin standards new text end .

(a) Each electric utility
shall deleted text begin make a good faith effort to deleted text end generate or procure sufficient electricity generated by
deleted text begin an eligible deleted text end new text begin a renewable new text end energy technology to provide its retail consumers, or the retail
customers of a distribution utility to which the electric utility provides wholesale electric
service, so that new text begin at least the following percentages of the electric utility's total retail electric
sales are generated by renewable energy technologies by the end of the year indicated new text end :

new text begin (1) 2015 - 10 percent
new text end

new text begin (2) 2020 - 20 percent
new text end

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

deleted text begin (2) the amount provided under clause (1) is increased by one percent of the utility's
total retail electric sales each year until 2015; and
deleted text end

deleted text begin (3) ten percent of the electric energy provided to retail customers in Minnesota is
generated by eligible energy technologies deleted text end .

(b) deleted text begin Of the eligible energy technology generation required under paragraph (a),
clauses (1) and (2), not less than 0.5 percent of the energy must be generated by biomass
energy technologies, including an energy recovery facility used to capture the heat value
of mixed municipal solid waste or refuse-derived fuel from mixed municipal solid waste
as a primary fuel, by 2005. By 2010, one percent of the eligible technology generation
required under paragraph (a), clauses (1) and (2), shall be generated by biomass energy
technologies. An energy recovery facility used to capture the heat value of mixed
municipal solid waste or refuse-derived fuel from mixed municipal solid waste, with a
power sales agreement in effect as of May 29, 2003, that terminates after December 31,
2010, does not qualify as an eligible energy technology unless the agreement provides for
rate adjustment in the event the facility qualifies as a renewable energy source.
deleted text end

deleted text begin (c) By June 1, 2004, and as needed thereafter, the commission shall issue an order
detailing the criteria and standards by which it will measure an electric utility's efforts to
meet the renewable energy objectives of this section to determine whether the utility is
making the required good faith effort. In this order, deleted text end The commission shall deleted text begin include criteria
and standards that protect against deleted text end new text begin delay or modify the standard for an electric utility if it
finds that compliance with a standard is not in the public interest because compliance:
new text end

new text begin (1) will produce new text end undesirable impacts on the reliability of the utility's system deleted text begin and deleted text end new text begin ;
new text end

new text begin (2) will produce undesirable new text end economic impacts on the utility's ratepayers deleted text begin and that
consider technical feasibility deleted text end new text begin ;
new text end

new text begin (3) is not feasible due to delays in acquiring, or due to rejection of, necessary siting
or other permitting approvals;
new text end

new text begin (4) is not feasible due to delays, cancellations, or nondelivery of necessary
equipment for the construction or commercial operation of a renewable energy facility;
new text end

new text begin (5) is not feasible due to transmission constraints preventing delivery of service; or
new text end

new text begin (6) is otherwise not technically feasible new text end .

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

new text begin (c) The commission must accept findings of fact related to this subdivision, as
determined and presented by the governing body of a generation and transmission
cooperative association or municipal power agency or power district.
new text end

Subd. 3.

Utility plans filed with commission.

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

(1) the status of the utility's renewable energy mix relative to deleted text begin the good faith objective deleted text end new text begin
these standards new text end ;

(2) efforts taken to meet the deleted text begin objective deleted text end new text begin standards new text end ;

(3) any obstacles encountered or anticipated in meeting the deleted text begin objective deleted text end new text begin standards new text end ; and

(4) potential solutions to the obstacles.

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

Subd. 4.

Renewable energy credits.

(a) To facilitate compliance with this section,
the commission, by rule or order, deleted text begin may deleted text end new text begin shall new text end establish a program for tradable new text begin renewable
energy new text end credits for electricity generated by deleted text begin an eligible deleted text end new text begin a renewable new text end energy technology new text begin that
treats all renewable energy equally, and shall do so no later than January 1, 2008 new text end . In doing
so, the commission shall implement a system that constrains or limits the cost of credits,
taking care to ensure that such a system does not undermine the market for those credits. new text begin
The program shall treat all renewable energy technology equally and shall not give more or
less credit to energy based on the state where the energy was generated or the technology
with which the energy was generated. The program shall provide for the banking of
unused credits to allow renewable energy generated in one year but not used to satisfy the
standard in that same year to be carried forward to satisfy the mandate in future years.
new text end

(b) In lieu of generating or procuring energy directly to satisfy the renewable energy
deleted text begin objective deleted text end new text begin standard new text end of this section, an electric utility may deleted text begin purchase sufficient renewable
energy credits, issued pursuant to this subdivision, to meet its objective deleted text end new text begin utilize renewable
energy credits issued pursuant to this subdivision. Each kilowatt-hour of renewable
energy credits shall be treated the same as a kilowatt-hour of renewable energy generated
or procured by an electric utility new text end .

(c) deleted text begin Upon the passage of a renewable energy standard, portfolio, or objective in
a bordering state that includes a similar definition of eligible energy technology or
renewable energy, deleted text end The commission deleted text begin may deleted text end new text begin shall new text end facilitate the trading of renewable energy
credits between states.

new text begin (d) An electric supplier may only utilize renewable energy credits generated by an
eligible energy technology if the credits were acquired after January 1, 2001, and the
credits can be demonstrated to have been sold only once.
new text end

Subd. 5.

deleted text begin Technology based on fuel combustion deleted text end new text begin Renewable technology
restrictions new text end .

(a) new text begin Energy production that was mandated by Laws 1994, chapter 641, or
by commission order issued under that chapter prior to August 1, 2001, does not apply
toward an electric utility's requirement under this section.
new text end

new text begin (b) To apply toward an electric utility's requirement under this section, energy must
be generated by a facility located in the United States that was originally placed in service
after January 1, 1975, unless the facility is a municipally owned hydroelectric plant in
Minnesota that provides electricity only to a municipal system.
new text end

new text begin (c) new text end Electricity produced by fuel combustion may only count toward a utility's
deleted text begin objectives deleted text end new text begin standard new text end if the generation facility:

(1) was constructed in compliance with new source performance standards
promulgated under the federal Clean Air Act for a generation facility of that type; or

(2) employs the maximum achievable or best available control technology available
for a generation facility of that type.

deleted text begin (b) An eligible deleted text end new text begin (d) A renewable new text end energy technology may blend or co-fire a fuel listed
in subdivision 1, paragraph (a), deleted text begin clause (1), deleted text end with other fuels in the generation facility, but
only the percentage of electricity that is attributable to a fuel listed in that clause can be
counted toward an electric utility's renewable energy deleted text begin objectives deleted text end new text begin standard new text end .

Subd. 6.

Electric utility that owns nuclear generation facility.

(a) An electric
utility that owns a nuclear generation facility, as part of its deleted text begin good faith effort deleted text end new text begin requirement
new text end under this subdivision and subdivision 2, shall deploy an additional 300 megawatts of
nameplate capacity of wind energy conversion systems by 2010, beyond the amount of
wind energy capacity to which the utility is required by law or commission order as of
May 1, 2003. At least 100 megawatts of this capacity are to be wind energy conversion
systems of two megawatts or less, which shall not be eligible for the production incentive
under section 216C.41. To the greatest extent technically feasible and economic, these
300 megawatts of wind energy capacity are to be distributed geographically throughout
the state. The utility may opt to own, construct, and operate up to 100 megawatts of this
wind energy capacity, except that the utility may not own, construct, or operate any of
the facilities that are under two megawatts of nameplate capacity. The deployment of the
wind energy capacity under this subdivision must be consistent with the outcome of the
engineering study required under Laws 2003, First Special Session chapter 11, article
2, section 21.

(b) deleted text begin The renewable energy objective set forth in subdivision 2 shall be a requirement
for the public utility that owns the Prairie Island nuclear generation plant. The objective is
a requirement subject to resource planning and least-cost planning requirements in section
216B.2422, unless implementation of the objective can reasonably be shown to jeopardize
the reliability of the electric system. The least-cost planning analysis must include the
costs of ancillary services and other necessary generation and transmission upgrades. deleted text end

deleted text begin (c) deleted text end Also as part of its deleted text begin good faith effort deleted text end new text begin requirements new text end under this section, the utility that
owns a nuclear generation facility is to enter into a power purchase agreement by January
1, 2004, for ten to 20 megawatts of biomass energy and capacity at an all-inclusive price
not to exceed $55 per megawatt-hour, for a project described in section 216B.2424,
subdivision 5, paragraph (e), clause (2). The project must be operational and producing
energy by June 30, 2005.

new text begin Subd. 7. new text end

new text begin Compliance. new text end

new text begin The commission, on its own motion or upon petition,
may investigate whether an electric supplier is in compliance with the standard under
subdivisions 2 and 6. If the commission finds noncompliance it may order the electric
supplier to construct facilities or purchase credits to achieve compliance. If an electric
supplier fails to comply with an order under this subdivision, the commission may impose
a financial penalty on the electric supplier in an amount up to the electric supplier's
estimated cost of compliance, not to exceed the lesser of the cost to construct facilities
or purchase credits.
new text end

Sec. 4.

Minnesota Statutes 2006, section 216B.2411, subdivision 1, is amended to read:

Subdivision 1.

Generation projects.

(a) Any municipality or rural electric
association providing electric service and subject to section 216B.241 that is meeting
the deleted text begin objectives deleted text end new text begin standards new text end under section 216B.1691 may, and each public utility may, use
five percent of the total amount to be spent on energy conservation improvements under
section 216B.241, on:

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

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

(b) For public utilities, as defined under section 216B.02, subdivision 4, projects
under this section must be considered energy conservation improvements as defined in
section 216B.241. For cooperative electric associations and municipal utilities, projects
under this section must be considered load-management activities described in section
216B.241, subdivision 1, paragraph (i).

Sec. 5.

Minnesota Statutes 2006, 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 deleted text begin objectives deleted text end new text begin standards new text end in section 216B.1691, subject
to the provisions of that section.

(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. 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.

Sec. 6.

Minnesota Statutes 2006, section 216B.2421, is amended to read:

216B.2421 DEFINITION OF LARGE ENERGY FACILITY.

Subdivision 1.

Applicability.

The deleted text begin definition deleted text end new text begin definitions new text end in this section deleted text begin applies deleted text end
new text begin apply new text end to this section and sections 216B.2422 and 216B.243.

Subd. 2.

Large energy facility.

"Large energy facility" deleted text begin means deleted text end new text begin includes the
following facilities described in clauses (1) to (6) new text end :

(1) new text begin "power plant" means new text end any electric power generating plant or combination
of plants at a single site with a combined capacity of 50,000 kilowatts or more and
transmission lines directly associated with the plant that are necessary to interconnect the
plant to the transmission system;

(2) new text begin "high-voltage transmission line" means:
new text end

new text begin (i) new text end any high-voltage transmission line with a capacity of 200 kilovolts or more and
greater than 1,500 feet in length new text begin , and associated transmission substations new text end ; new text begin or
new text end

deleted text begin (3) deleted text end new text begin (ii) new text end any high-voltage transmission line with a capacity of 100 kilovolts or more
with more than ten miles of its length in Minnesota or that crosses a state line new text begin , and
associated transmission substations new text end ;

deleted text begin (4) deleted text end new text begin (3) "pipeline" means:
new text end

new text begin (i) new text end any pipeline greater than six inches in diameter and having more than 50 miles of
its length in Minnesota used for the transportation of coal, crude petroleum or petroleum
fuels or oil, or their derivatives; new text begin or
new text end

deleted text begin (5) deleted text end new text begin (ii) new text end any pipeline for transporting natural or synthetic gas at pressures in excess of
200 pounds per square inch with more than 50 miles of its length in Minnesota;

deleted text begin (6) deleted text end new text begin (4) "storage facility" means:
new text end

new text begin (i) new text end any facility designed for or capable of storing on a single site more than 100,000
gallons of liquefied natural gas or synthetic gas; new text begin or
new text end

deleted text begin (7) deleted text end new text begin (ii) new text end any underground gas storage facility requiring a permit pursuant to section
103I.681;

deleted text begin (8) deleted text end new text begin (5) new text end any nuclear fuel processing or nuclear waste storage or disposal facility; and

deleted text begin (9) deleted text end new text begin (6) new text end any facility intended to convert any material into any other combustible fuel
and having the capacity to process in excess of 75 tons of the material per hour.

Sec. 7.

Minnesota Statutes 2006, section 216B.2422, is amended to read:

216B.2422 RESOURCE PLANNING deleted text begin ; RENEWABLE ENERGY deleted text end .

Subdivision 1.

Definitions.

(a) For purposes of this section, the terms defined in this
subdivision have the meanings given them.

(b) "Utility" means an entity with the capability of generating 100,000 kilowatts or
more of electric power and serving, either directly or indirectly, the needs of 10,000 retail
customers in Minnesota. Utility does not include federal power agencies.

(c) deleted text begin "Renewable energy" means electricity generated through use of any of the
following resources:
deleted text end

deleted text begin (1) wind;
deleted text end

deleted text begin (2) solar;
deleted text end

deleted text begin (3) geothermal;
deleted text end

deleted text begin (4) hydro;
deleted text end

deleted text begin (5) trees or other vegetation; or
deleted text end

deleted text begin (6) landfill gas.
deleted text end

deleted text begin (d) deleted text end "Resource plan" means a set of resource options that a utility could use to
meet the service needs of its customers over a forecast period, including an explanation
of the supply and demand circumstances under which, and the extent to which, each
resource option would be used to meet those service needs. These resource options
include using, refurbishing, and constructing utility plant and equipment, buying power
generated by other entities, controlling customer loads, and implementing customer
energy conservation.

deleted text begin (e) deleted text end new text begin (d) new text end "Refurbish" means to rebuild or substantially modify an existing electricity
generating resource of 30 megawatts or greater.

Subd. 2.

Resource plan filing and approval.

A utility shall file a resource plan
with the commission periodically in accordance with rules adopted by the commission.
The commission shall approve, reject, or modify the plan of a public utility, as defined
in section 216B.02, subdivision 4, consistent with the public interest. In the resource
plan proceedings of all other utilities, the commission's order shall be advisory and the
order's findings and conclusions shall constitute prima facie evidence which may be
rebutted by substantial evidence in all other proceedings. With respect to utilities other
than those defined in section 216B.02, subdivision 4, the commission shall consider the
filing requirements and decisions in any comparable proceedings in another jurisdiction. deleted text begin
As a part of its resource plan filing, a utility shall include the least cost plan for meeting
50 and 75 percent of all new and refurbished capacity needs through a combination of
conservation and renewable energy resources. deleted text end

Subd. 2a.

Historical data and advance forecast.

Each utility required to file a
resource plan under this section shall include in the filing all applicable annual information
required by section 216C.17, subdivision 2, and the rules adopted under that section. To
the extent that a utility complies with this subdivision, it is not required to file annual
advance forecasts with the department under section 216C.17, subdivision 2.

Subd. 3.

Environmental costs.

(a) The commission shall, to the extent practicable,
quantify and establish a range of environmental costs associated with each method of
electricity generation. A utility shall use the values established by the commission in
conjunction with other external factors, including socioeconomic costs, when evaluating
and selecting resource options in all proceedings before the commission, including
resource plan and certificate of need proceedings.

(b) The commission shall establish interim environmental cost values associated
with each method of electricity generation by March 1, 1994. These values expire on the
date the commission establishes environmental cost values under paragraph (a).

deleted text begin Subd. 4. deleted text end

deleted text begin Preference for renewable energy facility. deleted text end

deleted text begin The commission shall not
approve a new or refurbished nonrenewable energy facility in an integrated resource plan
or a certificate of need, pursuant to section , nor shall the commission allow rate
recovery pursuant to section for such a nonrenewable energy facility, unless the
utility has demonstrated that a renewable energy facility is not in the public interest.
deleted text end

Subd. 5.

Bidding; exemption from certificate of need proceeding.

(a) A utility
may select resources to meet its projected energy demand through a bidding process
approved or established by the commission. A utility shall use the environmental cost
estimates determined under subdivision 3 in evaluating bids submitted in a process
established under this subdivision.

(b) Notwithstanding any other provision of this section, if deleted text begin an electric deleted text end new text begin a new text end power
deleted text begin generating deleted text end plant, as described in section 216B.2421, subdivision 2, clause (1), is selected
in a bidding process approved or established by the commission, a certificate of need
proceeding under section 216B.243 is not required.

(c) A certificate of need proceeding is also not required for deleted text begin an electric deleted text end new text begin a new text end power
deleted text begin generating deleted text end plant that has been selected in a bidding process approved or established by the
commission, or such other selection process approved by the commission, to satisfy, in
whole or in part, the wind power mandate of section 216B.2423 or the biomass mandate
of section 216B.2424.

Subd. 6.

Consolidation of resource planning and certificate of need.

A utility
shall indicate in its resource plan whether it intends to site or construct a deleted text begin large energy
facility deleted text end new text begin power plant new text end . If the utility's resource plan includes a proposed deleted text begin large energy facility deleted text end
new text begin power plant new text end and construction of that facility is likely to begin before the utility files its
next resource plan, the commission shall conduct the resource plan proceeding consistent
with the requirements of section 216B.243 with respect to the proposed facility. If the
commission approves the proposed facility in the resource plan, a separate certificate of
need proceeding is not required.

Sec. 8.

Minnesota Statutes 2006, section 216B.2425, subdivision 7, is amended to read:

Subd. 7.

Transmission needed to support renewable resources.

(a) Each entity
subject to this section shall determine necessary transmission upgrades to support
development of renewable energy resources required to meet deleted text begin objectives deleted text end new text begin standards new text end under
section 216B.1691 and shall include those upgrades in its report under subdivision 2.

(b) Transmission projects determined by the commission to be necessary to deleted text begin support deleted text end
new text begin facilitate new text end a utility's deleted text begin plan under deleted text end new text begin compliance with new text end section 216B.1691 deleted text begin to meet its obligations
under that section deleted text end must be certified as a priority electric transmission project, satisfying
the requirements of section 216B.243. In determining that a proposed transmission project
is necessary to deleted text begin support deleted text end new text begin facilitate new text end a utility's deleted text begin plan under deleted text end new text begin compliance with new text end section 216B.1691,
the commission must find that the applicant has met the following factors:

(1) that the transmission facility is necessary to allow the delivery of power from
renewable sources of energy to retail customers in Minnesota;

(2) deleted text begin that the applicant has signed or will sign power purchase agreements, subject
to commission approval, for resources to meet the renewable energy objective that
are dependent upon or will use the capacity of the transmission facility to serve retail
customers in Minnesota;
deleted text end

deleted text begin (3) deleted text end that the installation and commercial operation date of the renewable resources to
satisfy the renewable energy deleted text begin objective deleted text end new text begin standard new text end will match the planned in-service date
of the transmission facility; and

deleted text begin (4) deleted text end new text begin (3) new text end that the proposed transmission facility is consistent with a least-cost solution
to the utility's need for additional electricity.

Sec. 9.

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

216B.2426 OPPORTUNITIES FOR DISTRIBUTED GENERATION.

The commission shall ensure that opportunities for the installation of distributed
generation deleted text begin , as that term is defined in section 216B.169, subdivision 1, paragraph (c), deleted text end are
considered in any proceeding under section 216B.2422, 216B.2425, or 216B.243.

Sec. 10.

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

216B.243 CERTIFICATE OF NEED FOR LARGE ENERGY FACILITY.

Subdivision 1.

Assessment of need criteria.

The commission shall, pursuant to
chapter 14 and sections 216C.05 to 216C.30 and this section, adopt assessment of need
criteria to be used in the determination of need for large energy facilities pursuant to
this section.

Subd. 2.

Certificate required.

No large energy facility shall be sited or constructed
in Minnesota without the issuance of a certificate of need by the commission pursuant
to sections 216C.05 to 216C.30 and this section and consistent with the criteria for
assessment of need.

Subd. 3.

Showing required for construction new text begin of large energy facility new text end .

No proposed
large energy facility new text begin , as defined in section 216B.2421, subdivision 2, clauses (3) to (6), new text end
shall be certified for construction deleted text begin unless the applicant can show that demand for electricity
cannot be met more cost effectively through energy conservation and load-management
measures and deleted text end unless the applicant has deleted text begin otherwise deleted text end justified its need. In assessing need,
the commission shall evaluate:

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

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

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

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

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

deleted text begin (6) deleted text end new text begin (5) new text end possible alternatives for satisfying the energy demand deleted text begin or transmission needs deleted text end
including new text begin , new text end but not limited to new text begin , new text end potential for increased efficiency and upgrading of existing
energy generation and transmission facilities, load-management programs, and distributed
generation;

deleted text begin (7) deleted text end new text begin (6) new text end the policies, rules, and regulations of other state and federal agencies and
local governments; new text begin and
new text end

deleted text begin (8) deleted text end new text begin (7) new text end any feasible combination of energy conservation improvements, required
under section 216B.241, that can (i) replace part or all of the energy to be provided by the
proposed facility, and (ii) compete with it economically deleted text begin ; deleted text end new text begin .
new text end

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

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

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

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

deleted text begin Subd. 3a. deleted text end

deleted text begin Use of renewable resource. deleted text end

deleted text begin The commission may not issue a certificate
of need under this section for a large energy facility that generates electric power by means
of a nonrenewable energy source, or that transmits electric power generated by means of
a nonrenewable energy source, unless the applicant for the certificate has demonstrated
to the commission's satisfaction that it has explored the possibility of generating power
by means of renewable energy sources and has demonstrated that the alternative selected
is less expensive (including environmental costs) than power generated by a renewable
energy source. For purposes of this subdivision, "renewable energy source" includes
hydro, wind, solar, and geothermal energy and the use of trees or other vegetation as fuel.
deleted text end

Subd. 3b.

Nuclear power plant; new construction prohibited; relicensing.

(a) The commission may not issue a certificate of need for the construction of a new
nuclear-powered electric generating plant.

(b) Any certificate of need for additional storage of spent nuclear fuel for a facility
seeking a license extension shall address the impacts of continued operations over the
period for which approval is sought.

new text begin Subd. 3c. new text end

new text begin Showing required for construction of power plant. new text end

new text begin No proposed power
plant, as defined in section 216B.2421, subdivision 2, clause (1), shall be certified for
construction unless the applicant can show that demand for electricity cannot be met
more cost effectively through energy conservation and load-management measures and
unless the applicant has otherwise justified its need. In assessing need, the commission
shall evaluate:
new text end

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

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

new text begin (3) the relationship of the proposed facility to overall state energy needs, as
described in the most recent state energy policy and conservation report prepared under
section 216C.18;
new text end

new text begin (4) benefits of the facility, including its uses to protect or enhance environmental
quality, and to increase reliability of energy supply in Minnesota and the region; and
new text end

new text begin (5) possible alternatives for satisfying the energy demand including, but not limited
to, potential for increased efficiency and upgrading of existing energy generation and
transmission facilities, load-management programs, and distributed generation.
new text end

new text begin Subd. 3d. new text end

new text begin Showing required for construction of high-voltage transmission line.
new text end

new text begin No proposed high-voltage transmission line, as defined in section 216B.2421, subdivision
2, clause (2), shall be certified for construction unless the applicant has otherwise justified
its need. In assessing need, the commission shall evaluate:
new text end

new text begin (1) the relationship of the proposed line to regional energy needs, as presented in
the transmission plan submitted under section 216B.2425;
new text end

new text begin (2) possible alternatives for satisfying the transmission needs, including, but not
limited to, potential for upgrading existing transmission facilities;
new text end

new text begin (3) the benefits of the facility, including its uses to protect or enhance environmental
quality and to increase reliability of energy supply in Minnesota and the region;
new text end

new text begin (4) the benefits of enhanced regional reliability, access, or deliverability to the extent
these factors improve the robustness of the transmission system or lower costs for electric
consumers in Minnesota;
new text end

new text begin (5) whether the applicant or applicants have filed, or will file by a date certain,
an application for certification as a priority electric transmission project under section
216B.2425 for any transmission facilities or upgrades identified under section 216B.2425,
subdivision 7; and
new text end

new text begin (6) the commission may not make its determination of need for a new, or need for
upgrade of an existing, high-voltage transmission line based on the nature or character of
the source of the electric power that will be transmitted over the proposed line or lines.
new text end

Subd. 4.

Application for certificate; hearing.

Any person proposing to construct a
large energy facility shall apply for a certificate of need and for a site or route permit under
chapter 216E prior to construction of the facility. The application shall be on forms and in
a manner established by the commission. In reviewing each application the commission
shall hold at least one public hearing pursuant to chapter 14. The public hearing shall
be held at a location and hour reasonably calculated to be convenient for the public.
An objective of the public hearing shall be to obtain public opinion on the necessity of
granting a certificate of need and, if a joint hearing is held, a site or route permit. The
commission shall designate a commission employee whose duty shall be to facilitate
citizen participation in the hearing process. Unless the commission determines that a joint
hearing on siting and need under this subdivision and section 216E.03, subdivision 6, is
not feasible or more efficient, or otherwise not in the public interest, a joint hearing under
those subdivisions shall be held.

Subd. 5.

Approval, denial, or modification.

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

new text begin (b) The commission shall compile an annual report on their workload in relationship
to applications for certificates of need during the previous calendar year, including the
number of applications filed, the number pending at the beginning and at the end of the
calendar year, the nature of the applications, whether each application has been approved,
denied, or modified, and the status of each application that remains pending at the end of
the calendar year. The report shall identify whether the commission has acted on each
application within the 12 months provided. For each application that has not been acted
upon within the required 12-month period, the commission shall provide a description of
the reason for the delay. The commission shall provide the report annually to the chairs
of the committees of the house of representatives and the senate with jurisdiction over
energy matters by January 31 of each year.
new text end

Subd. 6.

Application fees; rules.

Any application for a certificate of need shall be
accompanied by the application fee required pursuant to this subdivision. The application
fee is to be applied toward the total costs reasonably necessary to complete the evaluation
of need for the proposed facility. The maximum application fee deleted text begin shall be deleted text end new text begin is new text end $50,000,
except for an application for deleted text begin an electric deleted text end new text begin a new text end power deleted text begin generating deleted text end plant new text begin , new text end as defined in section
216B.2421, subdivision 2, clause (1), or a high-voltage transmission line new text begin , new text end as defined in
section 216B.2421, subdivision 2, clause (2), for which the maximum application fee deleted text begin shall
be deleted text end new text begin is new text end $100,000. Costs exceeding the application fee and reasonably necessary to complete
the evaluation of need for the proposed facility shall be recovered from the applicant.
If the applicant is a public utility, a cooperative electric association, a generation and
transmission cooperative electric association, a municipal power agency, a municipal
electric utility, or a transmission company, the recovery shall be done pursuant to section
216B.62. The commission shall establish by rule pursuant to chapter 14 and sections
216C.05 to 216C.30 and this section, a schedule of fees based on the output or capacity
of the facility and the difficulty of assessment of need. Money collected in this manner
shall be credited to the general fund of the state treasury.

Subd. 7.

Participation by other agency or political subdivision.

(a) Other
state agencies authorized to issue permits for siting, construction new text begin , new text end or operation of large
energy facilities, and those state agencies authorized to participate in matters before the
commission involving utility rates and adequacy of utility services, shall present their
position regarding need and participate in the public hearing process prior to the issuance
or denial of a certificate of need. Issuance or denial of certificates of need shall be the sole
and exclusive prerogative of the commission and these determinations and certificates
shall be binding upon other state departments and agencies, regional, county, and local
governments and special purpose government districts except as provided in sections
116C.01 to 116C.08 and 116D.04, subdivision 9.

(b) An applicant for a certificate of need shall notify the commissioner of agriculture
if the proposed project will impact cultivated agricultural land, as that term is defined in
section 216G.01, subdivision 4. The commissioner may participate in any proceeding on
the application and advise the commission as to whether to grant the certificate of need,
and the best options for mitigating adverse impacts to agricultural lands if the certificate is
granted. The Department of Agriculture shall be the lead agency on the development of
any agricultural mitigation plan required for the project.

Subd. 8.

Exemptions.

This section does not apply to:

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

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

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

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

(5) conversion of the fuel source of an existing deleted text begin electric generating deleted text end new text begin power new text end plant to
using natural gas;

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

(7) a large energy facility that (i) generates electricity from wind energy
conversion systems, (ii) will serve new text begin , directly or indirectly, new text end retail customers in Minnesota,
new text begin and new text end (iii) is specifically intended to deleted text begin be used to meet the renewable energy objective
under section 216B.1691 or addresses deleted text end new text begin address new text end a resource need identified in a current
commission-approved or commission-reviewed resource plan under section 216B.2422 deleted text begin ,
and (iv) derives at least ten percent of the total nameplate capacity of the proposed project
from one or more C-BED projects, as defined under section 216B.1612, subdivision 2,
paragraph (f) deleted text end .

Sec. 11.

Minnesota Statutes 2006, section 216C.053, is amended to read:

216C.053 RENEWABLE ENERGY DEVELOPMENT.

The commissioner of commerce must engage in activities to encourage deployment
of cost-effective renewable energy developments within the state. The commissioner shall
compile and maintain information concerning existing and potential renewable energy
developments and resources in the state. deleted text begin The commissioner shall provide, as appropriate,
this information in proceedings for the determination of need for large energy facilities
and for the review of a utility's integrated resource plan. deleted text end To the extent practicable, and in
addition to any other obligation of an electric utility to furnish information, an electric
utility seeking to add generation to its supply portfolio to serve Minnesota consumers shall
provide the commissioner with notice of its intention.

Sec. 12.

Minnesota Statutes 2006, section 216C.315, is amended to read:

216C.315 ALTERNATIVE ENERGY ECONOMIC ANALYSIS.

The commissioner shall carry out the following energy economic analysis duties:

(1) provide continued analysis of alternative energy issues for the biennial report deleted text begin ,
certificates of need, deleted text end and legislative requests;

(2) provide alternative energy information to consumers and business;

(3) assist in the maintenance and improvement of alternative energy input-output
multipliers and market penetration models;

(4) provide analysis of alternative energy data.

Sec. 13.

Minnesota Statutes 2006, section 272.02, is amended by adding a subdivision
to read:

new text begin Subd. 85. new text end

new text begin New high-voltage transmission lines; exemption phase-out.
new text end

new text begin Notwithstanding subdivision 9, clause (a), each high-voltage transmission line, as
defined in section 216B.2421, subdivision 2, clause (2), and its associated transmission
substations, the construction of which is commenced on or after January 1, 2007, is
exempt for the first taxable year after the line or substation is initially placed in service,
and property taxes as otherwise determined by law on the transmission line and its
associated transmission substations must be reduced by:
new text end

new text begin (1) 75 percent for the second taxable year of operation of the transmission line;
new text end

new text begin (2) 50 percent for the third taxable year of operation of the transmission line; and
new text end

new text begin (3) 25 percent for the fourth taxable year of operation of the transmission line.
new text end

new text begin After the fourth taxable year of operation of the transmission line and associated
transmission substations, the transmission line and its associated transmission substations
are taxed in compliance with chapter 272.
new text end

new text begin For purposes of this subdivision, "initially placed in service" includes both new
construction and substantial expansion of the carrying capacity of a preexisting line.
"Substantial expansion" means an increase in carrying capacity of 50 percent or more.
new text end

Sec. 14. new text begin REPEALER.
new text end

new text begin Minnesota Statutes 2006, section 216B.169, new text end new text begin is repealed.
new text end