SF 521

2nd Engrossment - 88th Legislature (2013 - 2014) Posted on 05/17/2013 02:13pm

A bill for an act
relating to energy; regulating a biomass mandate project and a proposed
high-voltage transmission line; amending Minnesota Statutes 2012, section
216B.2424, subdivision 5a.

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

Section 1.

Minnesota Statutes 2012, section 216B.2424, subdivision 5a, is amended to
read:

Subd. 5a.

Reduction of biomass mandate.

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

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

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

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

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

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

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

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

(e) Upon request by the project owner, the public utility shall agree to amend the
power purchase agreement described in paragraph (b) and approved by the commission as
required by paragraph (c). The amendment must be negotiated and executed within 45
days of deleted text begin May 20, 2009 deleted text end new text begin the effective date of this act new text end , and must apply to prices paid after
January 1, deleted text begin 2009 deleted text end new text begin 2014 new text end . The average price for energy in nominal dollars measured over the
term of the power purchase agreement must not exceed deleted text begin $104 deleted text end new text begin $109.20 new text end per megawatt hour
deleted text begin by more than five percent deleted text end . The public utility shall request approval of the amendment by
the commission within 30 days of execution of the amended power purchase agreement.
The amendment is not effective until approval by the commission. The commission
shall act on the amendment within 90 days of submission of the request by the public
utility. Upon approval of the amended power purchase agreement, the commission shall
allow the public utility to recover the costs of the amended power purchase agreement, as
provided in section 216B.1645.

new text begin (f) With respect to the power purchase agreement described in paragraph (b), and
amended and approved by the commission pursuant to paragraphs (c) and (e), upon request
by the project owner, the public utility shall agree to amend the power purchase agreement
to include a fuel cost adjustment clause which requires the public utility to reimburse the
project owner monthly for all costs incurred by the project owner during the applicable
month to procure and transport all fuel used to produce energy for delivery to the public
utility pursuant to the power purchase agreement to the extent such costs exceeded $3.40
per million metric British thermal unit (MMBTU), in addition to the price to be paid for
the energy produced and delivered by the project owner. Beginning with 2014, at the end
of each calendar year of the term of the power purchase agreement, the project owner shall
calculate the amount by which actual fuel costs for the year exceeded $3.40 per MMBTU,
and prior monthly payment for such fuel costs shall be reconciled against actual fuel costs
for the applicable calendar year. If such prior monthly fuel payments for the year in the
aggregate exceed the amount due based on the annual calculation, the project owner shall
credit the public utility for the excess paid. If the annual calculation of fuel costs due
exceeds the prior monthly fuel payments for the year in the aggregate, the project owner
shall be entitled to be paid for the deficiency with the next invoice to the public utility. The
amendment shall be negotiated and executed within 45 days of the enactment of this act
and shall be effective for fuel costs incurred and prices after January 1, 2014. The public
utility shall request approval of the amendment by the commission, and the commission
shall approve the amendment as reasonable and in the public interest and allow the public
utility to recover from its Minnesota retail customers the amounts paid by the public utility
to the project owner pursuant to the power purchase agreement during the full term of
the power purchase agreement, including the reimbursement of fuel costs pursuant to the
power purchase agreement amendment, pursuant to section 216B.1645, or otherwise.
new text end

new text begin (g) With respect to the power purchase agreement described in paragraph (b) and
approved by the commission pursuant to paragraphs (c) and (e), the public utility is
prohibited from recovering from the project owner any costs which were not actually and
reasonably incurred by the utility, notwithstanding any provision in the power purchase
agreement to the contrary. In addition, beginning with 2012, the public utility shall pay for
all energy delivered by the project owner pursuant to the power purchase agreement at
the full price for such energy in the power purchase agreement approved and amended
pursuant to paragraph (e), provided that the project owner does not deliver more than
110 percent of the amount scheduled for delivery in any year of the power purchase
agreement, and does not deliver, on average over any five consecutive years of the power
purchase agreement, an amount greater than 105 percent of the amount scheduled for
delivery over the five-year period.
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. 2. new text begin TRANSMISSION LINE; CERTIFICATE OF NEED REQUIRED AND
EVIDENCE REQUIRED.
new text end

new text begin (a) A high-voltage transmission line with a capacity of 100 kilovolts or more proposed
to be located within a city in the metropolitan area as defined in Minnesota Statutes,
section 473.121, subdivision 2, for which a route permit application was filed between
June 2011 and August 2011, and a certificate of need application was filed between June
2012 and August 2012, to rebuild approximately eight miles of 69 kilovolt transmission
with a high-voltage transmission line to meet local area distribution needs, must be
approved in a certificate of need proceeding conducted under Minnesota Statutes, section
216B.243. The certificate of need may be approved only if the commission finds by clear
and convincing evidence that there is no feasible and available distribution level alternative
to the transmission line. In making its findings the commission shall consider the factors
provided in applicable law and rules including, without limitation, cost-effectiveness,
energy conservation, and the protection or enhancement of environmental quality.
new text end

new text begin (b) Further proceedings regarding the routing of a high-voltage transmission line
described in this section shall be suspended until the Public Utilities Commission has
made a determination that the transmission line is needed.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment and
applies to route permits and certificate of need applications pending on or after that date.
new text end