SF 550

3rd Engrossment - 86th Legislature (2009 - 2010) Posted on 02/09/2010 02:13am

A bill for an act
relating to energy; providing for energy conservation; regulating utilities and
utility rates; modifying or adding provisions relating to renewable energy
production incentives and initiatives, high-voltage transmission lines, central
corridor utility zone cost adjustments, contracts, renewable energy purchases,
decoupling criteria, certain appraisal fees, energy conservation, utility costs
and refunds, renewable and high-efficiency energy rate options, solar energy,
utility energy savings, biomethane purchases, Sustainable Building 2030,
certificate of need exemptions, energy facilities, renewable development account,
and Mountain Iron Economic Development Authority; providing for audit
investigation costs and appropriating money; requiring studies, legislative reports
and proposals; cancelling appropriations; appropriating money; amending
Minnesota Statutes 2008, sections 116C.779, subdivision 2, by adding a
subdivision; 117.189; 216A.03, subdivision 6, by adding a subdivision; 216B.16,
subdivisions 2, 6c, 7b, by adding a subdivision; 216B.1645, subdivision 2a;
216B.169, subdivision 2; 216B.1691, subdivision 2a; 216B.23, by adding
a subdivision; 216B.241, subdivisions 1c, 5a, 9, by adding a subdivision;
216B.2411, subdivisions 1, 2; 216B.2412, subdivision 2; 216B.2424, subdivision
5a; 216B.243, subdivisions 8, 9; 216B.62, subdivisions 3, 4, by adding a
subdivision; 216C.11; 216C.41, subdivision 5a; proposing coding for new law
in Minnesota Statutes, chapters 216B; 216C; repealing Laws 2007, chapter 3,
section 3.

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

Section 1.

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

Subd. 2.

Renewable energy production incentive.

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

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

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

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

Sec. 2.

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

new text begin Subd. 3. new text end

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

new text begin (a) Beginning
July 1, 2009, and each July 1 through 2012, $5,000,000 must be allocated from the
renewable development account to fund a grant to the Board of Regents of the University
of Minnesota for the Initiative for Renewable Energy and the Environment for the purposes
described in paragraph (b). The Initiative for Renewable Energy and the Environment
must set aside at least 15 percent of the funds received annually under the grant for
qualified projects conducted at a rural campus or experiment station. Any set-aside funds
not awarded to a rural campus or experiment station at the end of the fiscal year revert
back to the Initiative for Renewable Energy and the Environment for its exclusive use.
This subdivision does not create an obligation to contribute funds to the account.
new text end

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

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

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

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

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

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

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

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

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

new text begin (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 end

new text begin EFFECTIVE DATE. new text end

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

Sec. 3.

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

117.189 PUBLIC SERVICE CORPORATION EXCEPTIONS.

Sections 117.031; 117.036; 117.055, subdivision 2, paragraph (b); 117.186; 117.187;
117.188; and 117.52, subdivisions 1a and 4, do not apply to public service corporations.
For purposes of an award of appraisal fees under section 117.085, the fees awarded may
not exceed deleted text begin $500 deleted text end new text begin $1,500 new text end for all types of property new text begin except for a public service corporation's
use of eminent domain for a high-voltage transmission line, where the award may not
exceed $3,000 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. 4.

Minnesota Statutes 2008, section 216A.03, subdivision 6, is amended to read:

Subd. 6.

Record of proceedings.

An audio magnetic new text begin or audio electronic new text end recording
device shall be used to keep a record of all proceedings before the commission deleted text begin unless the deleted text end
deleted text begin commission provides a hearing reporter to record the proceeding deleted text end .

new text begin EFFECTIVE DATE. new text end

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

Sec. 5.

Minnesota Statutes 2008, section 216A.03, is amended by adding a subdivision
to read:

new text begin Subd. 6a. new text end

new text begin Hearing reporter. new text end

new text begin The commission may delegate to the executive
secretary authority to require hearing reporter services. The cost of hearing reporter
services must be borne by the utility, telephone company, or telecommunications carrier
that is the subject of the proceeding. If more than one company is the subject of a
proceeding, the commission or, if the commission so delegates, the executive secretary,
shall determine how the hearing reporter costs are to be allocated for the proceeding.
new text end

new text begin EFFECTIVE DATE. new text end

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

Sec. 6.

Minnesota Statutes 2008, section 216B.16, subdivision 2, is amended to read:

Subd. 2.

Suspension of proposed rate; hearing; final determination defined.

(a)
Whenever there is filed with the commission a schedule modifying or resulting in a change
in any rates then in force as provided in subdivision 1, the commission may suspend the
operation of the schedule by filing with the schedule of rates and delivering to the affected
utility a statement in writing of its reasons for the suspension at any time before the rates
become effective. The suspension shall not be for a longer period than ten months beyond
the initial filing date except as provided in this subdivision or subdivision 1a.

(b) During the suspension the commission shall determine whether all questions of
the reasonableness of the rates requested raised by persons deemed interested or by the
department can be resolved to the satisfaction of the commission. If the commission
finds that all significant issues raised have not been resolved to its satisfaction, or upon
petition by ten percent of the affected customers or 250 affected customers, whichever is
less, it shall refer the matter to the Office of Administrative Hearings with instructions
for a public hearing as a contested case pursuant to chapter 14, except as otherwise
provided in this section.

(c) The commission may order that the issues presented by the proposed rate
changes be bifurcated into two separate hearings as follows: (1) determination of the
utility's revenue requirements and (2) determination of the rate design. Upon issuance of
both administrative law judge reports, the issues shall again be joined for consideration
and final determination by the commission.

(d) All prehearing discovery activities of state agency intervenors shall be
consolidated and conducted by the Department of Commerce.

(e) If the commission does not make a final determination concerning a schedule of
rates within ten months after the initial filing date, the schedule shall be deemed to have
been approved by the commission; except if:

(1) an extension of the procedural schedule has been granted under new text begin paragraph (f) or
new text end subdivision 1a, in which case the schedule of rates is deemed to have been approved by
the commission on the last day of the extended period of suspension; or

(2) a settlement has been submitted to and rejected by the commission and the
commission does not make a final determination concerning the schedule of rates, the
schedule of rates is deemed to have been approved 60 days after the initial or, if applicable,
the extended period of suspension.

(f) If the commission finds that it has insufficient time during the suspension period
to make a final determination of a case involving changes in general rates because of the
need to make a final determination of deleted text begin another previously filed deleted text end new text begin any pending new text end case involving
changes in general rates under this section or section 237.075, the commission may extend
the suspension period to deleted text begin the extent necessary to allow itself 20 working days to deleted text end new text begin allow up
to a total of 90 additional calendar days to new text end make the final determination deleted text begin after it has made a
final determination in the previously filed case deleted text end . An extension of the suspension period
under this paragraph does not alter the setting of interim rates under subdivision 3.

(g) For the purposes of this section, "final determination" means the initial decision
of the commission and not any order which may be entered by the commission in response
to a petition for rehearing or other further relief. The commission may further suspend
rates until it determines all those petitions.

new text begin EFFECTIVE DATE. new text end

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

Sec. 7.

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

Subd. 6c.

Incentive plan for energy conservation improvement.

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

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

(1) whether the plan is likely to increase utility investment in cost-effective energy
conservation;

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

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

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

(c) The commission may set rates to encourage the vigorous and effective
implementation of utility conservation programs. The commission may:

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

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

(3) deleted text begin compensate the utility for earnings lost as a result of its conservation
programs deleted text end new text begin adopt any mechanism that satisfies the criteria of this subdivision, such that
implementation of cost-effective conservation is a preferred resource choice for the public
utility considering the impact of conservation on earnings of the public 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. 8.

Minnesota Statutes 2008, 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 new text begin or new text end are certified as a priority project or deemed to be a priority
transmission project under section 216B.2425; and (ii) charges incurred by a utility that
accrue from other transmission owners' regionally planned transmission projects that have
been determined by the Midwest Independent System Operator to benefit the utility, 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 System Operator to benefit the utility, 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) 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;

(4) 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;

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

(6) allocates project costs appropriately between wholesale and retail customers;

(7) 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

(8) 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.

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

new text begin Subd. 7d. new text end

new text begin Central Corridor utility zone cost adjustment. new text end

new text begin (a) The Central
Corridor utility zone is the area extending from the Union Depot Station in St. Paul to the
proposed multimodal station in Minneapolis along the route of the light rail transit project
connecting those two points, and an area extending approximately one-quarter mile from
that route and including the entire University of Minnesota, Minneapolis campus.
new text end

new text begin (b) A public utility that provides retail electric service within the Central Corridor
utility zone and that is required to replace, relocate, construct, or install new facilities,
may apply to the commission for approval of new facilities in the Central Corridor
utility zone and facilities outside the zone that the utility demonstrates must be changed
as a direct result of changes within the zone. Facilities proposed under this subdivision
may include transmission facilities, distribution facilities, generation facilities, advanced
technology-assisted efficiency devices, and energy storage facilities not otherwise subject
to section 216B.243, or chapter 216E, 216F, or 216G. Upon approval under paragraph (c),
the utility may construct and install the facilities.
new text end

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

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

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

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

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

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

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

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

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

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

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

new text begin (d) Upon request of the commission, the utility shall submit periodic reports to
the commission reviewing the cost and benefits of the facilities constructed within the
Central Corridor utility zone and their potential applicability to other areas outside the
Central Corridor utility zone.
new text end

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

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

new text begin EFFECTIVE DATE. new text end

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

Sec. 10.

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

new text begin Within 60 days of the effective date of this section, each utility, as defined in section
216B.1691, subdivision 1, paragraph (b), shall file with the commission a standardized
contract form for the purchase of electricity from projects with a nameplate capacity
of 5 megawatts or less. The standardized contract form must be similar in all material
respects to the standard contract form previously filed with the commission under
section 216B.2423, subdivision 3, including any revisions to that contract on file with
the commission as of the effective date of this section. After consultation with wind
developers and producers, a utility governed by this section may modify the standardized
contract currently on file under section 216B.2423 prior to submitting its standard contract
form under this section if the modifications are reasonably necessary to account for
circumstances that are unique to that particular utility. The commission shall not approve
a contract that is not in compliance with 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 2008, section 216B.1645, subdivision 2a, is amended to
read:

Subd. 2a.

Cost recovery for utility's renewable facilities.

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

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

(i) return on investment;

(ii) depreciation;

(iii) ongoing operation and maintenance costs;

(iv) taxes; and

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

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

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

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

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

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

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

(2) an implementation schedule for the facilities;

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

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

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

Sec. 12.

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

Subd. 2.

Renewable and high-efficiency energy rate options.

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

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

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

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

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

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

new text begin (d) For the purposes of this section, "renewable energy" has the meaning given to
"eligible energy technology" in section 216B.1691, subdivision 1, paragraph (a), but
does not include energy recovered from combustion of mixed municipal solid waste or
refuse-derived fuel from mixed municipal solid waste.
new text end

Sec. 13.

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

Subd. 2a.

Eligible energy technology standard.

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

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

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

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

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

new text begin EFFECTIVE DATE. new text end

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

Sec. 14.

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

new text begin Subd. 1a. new text end

new text begin Authority to issue refund. new text end

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

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

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

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

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

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

new text begin EFFECTIVE DATE. new text end

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

Sec. 15.

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

Subd. 1c.

Energy-saving goals.

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

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

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

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

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

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

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

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

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

new text begin EFFECTIVE DATE. new text end

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

Sec. 16.

Minnesota Statutes 2008, section 216B.241, subdivision 5a, is amended to
read:

Subd. 5a.

Qualifying solar energy project.

(a) A utility or association may include
in its conservation plan programs for the installation of qualifying solar energy projects as
defined by section 216B.2411 to the extent of the spending allowed for generation projects
by section 216B.2411. The cost-effectiveness of a qualifying solar energy project may
be determined by a different standard than for other energy conservation improvements
under this section if the commissioner determines it is in the public interest to do so to
encourage solar energy projects. Energy savings from qualifying solar energy projects
may not be counted toward the minimum energy-savings goal of at least one percent
for energy conservation improvements required under subdivision 1c, but may, if the
conservation plan is approved:

(1) be counted toward energy savings above that minimum percentage; and

(2) be deleted text begin considered when establishing performance incentives under section 216B.241,
subdivision 2c deleted text end new text begin eligible for a performance incentive under section 216B.16, subdivision 6c,
or 216B.241, subdivision 2c, that is distinct from the incentive for energy conservation
and is based on the competitiveness and cost-effectiveness of solar projects in relation to
other potential solar projects available to the utility new text end .

(b) Qualifying solar energy projects may not be considered when establishing
demand-side management targets under section 216B.2422, 216B.243, or any other
section of this chapter.

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

new text begin Subd. 5b. new text end

new text begin Biomethane purchases. new text end

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

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

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

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

new text begin EFFECTIVE DATE. new text end

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

Sec. 18.

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

Subd. 9.

Building performance standards; Sustainable Building 2030.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

new text begin EFFECTIVE DATE. new text end

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

Sec. 19.

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

Subdivision 1.

Generation projects.

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

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

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

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

(b) new text begin A municipality, rural electric association, or public utility that offers a program
to customers to promote installing qualifying solar energy projects may request authority
from the commissioner to exceed the five percent limit in paragraph (a), but not to
exceed ten percent, to meet customer demand for installation of qualifying solar energy
projects. In considering this request, the commissioner shall consider customer interest in
qualifying solar energy and the impact on other customers. A municipality, rural electric
association, or public utility may not participate in a qualifying solar energy project on
a property unless it is provided evidence that all reasonable cost-effective conservation
investments have previously been made to the property.
new text end

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

Sec. 20.

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

Subd. 2.

Definitions.

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

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

(c) "Biomass" includes:

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

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

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

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

(5) landfill gas;

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

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

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

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

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

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

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

(g) "Residential property" means the principal residence of a homeowner at the time
the solar equipment is placed in service.

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

new text begin EFFECTIVE DATE. new text end

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

Sec. 21.

Minnesota Statutes 2008, section 216B.2412, subdivision 2, is amended to
read:

Subd. 2.

Decoupling criteria.

The commission shall, by order, establish criteria and
standards for decoupling. The commission new text begin may establish these criteria and standards in
a separate proceeding or in a general rate case or other proceeding in which it approves
a pilot program, and new text end shall design the criteria and standards to mitigate the impact on
public utilities of the energy-savings goals under section 216B.241 without adversely
affecting utility ratepayers. In designing the criteria, the commission shall consider energy
efficiency, weather, and cost of capital, among other factors.

new text begin EFFECTIVE DATE. new text end

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

Sec. 22.

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

Subd. 5a.

Reduction of biomass mandate.

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

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

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

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

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

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

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

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

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

new text begin EFFECTIVE DATE. new text end

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

Sec. 23.

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

Subd. 8.

Exemptions.

This section does not apply to:

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

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

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

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

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

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

deleted text begin (7) a large energy facility that (i) generates electricity from wind energy conversion
systems, (ii) will serve retail customers in Minnesota, (iii) is specifically intended to be
used to meet the renewable energy objective under section 216B.1691 or addresses a
resource need identified in a current commission-approved or commission-reviewed
resource plan under section 216B.2422, 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 .

new text begin EFFECTIVE DATE. new text end

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

Sec. 24.

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

Subd. 9.

Renewable energy standard facilities.

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

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

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

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

new text begin (4) the facility's ability to new text end maintain electric system reliability deleted text begin and consider deleted text end new text begin ;
new text end

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

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

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 2008, section 216B.62, subdivision 3, is amended to read:

Subd. 3.

Assessing all public utilities.

The department and commission shall
quarterly, at least 30 days before the start of each quarter, estimate the total of their
expenditures in the performance of their duties relating to (1) public utilities under section
216A.085, sections 216B.01 to 216B.67, other than amounts chargeable to public utilities
under subdivision 2 deleted text begin or deleted text end new text begin , new text end 6, new text begin or 7 new text end and (2) alternative energy engineering activity under
section 216C.261. The remainder, except the amount assessed against cooperatives and
municipalities for alternative energy engineering activity under subdivision 5, shall be
assessed by the commission and department to the several public utilities in proportion
to their respective gross operating revenues from retail sales of gas or electric service
within the state during the last calendar year. The assessment shall be paid into the state
treasury within 30 days after the bill has been transmitted via mail, personal delivery,
or electronic service to the several public utilities, which shall constitute notice of the
assessment and demand of payment thereof. The total amount which may be assessed to
the public utilities, under authority of this subdivision, shall not exceed one-sixth of one
percent of the total gross operating revenues of the public utilities during the calendar year
from retail sales of gas or electric service within the state. The assessment for the third
quarter of each fiscal year shall be adjusted to compensate for the amount by which actual
expenditures by the commission and department for the preceding fiscal year were more
or less than the estimated expenditures previously assessed.

new text begin EFFECTIVE DATE. new text end

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

Sec. 26.

Minnesota Statutes 2008, section 216B.62, subdivision 4, is amended to read:

Subd. 4.

Objections.

Within 30 days after the date of the transmittal of any bill as
provided by subdivisions 2 deleted text begin and deleted text end new text begin , new text end 3, new text begin and 7 new text end the public utility against which the bill has been
rendered may file with the commission objections setting out the grounds upon which it is
claimed the bill is excessive, erroneous, unlawful or invalid. The commission shall within
60 days hold a hearing and issue an order in accordance with its findings. The order shall
be appealable in the same manner as other final orders of the commission.

new text begin EFFECTIVE DATE. new text end

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

Sec. 27.

Minnesota Statutes 2008, section 216B.62, is amended by adding a
subdivision to read:

new text begin Subd. 7. new text end

new text begin Audit investigation costs. new text end

new text begin The audit investigation account is created as a
separate account in the special revenue fund in the state treasury. If the commission, in a
proceeding upon its own motion, on complaint, or upon an application to it, determines
that it is necessary, in order to carry out its duties imposed under this chapter or chapter
216, 216A, 216E, 216F, or 216G, to conduct an investigation or audit of any public utility
operations, practices, or policies requiring specialized technical professional investigative
services for the inquiry, the commission may request the commissioner of commerce to
seek authority from the commissioner of finance to incur costs reasonably attributable to
the specialized services. If the investigation or audit is approved by the commissioner of
finance, the commissioner of commerce shall carry out the investigation in the manner
directed by the commission and shall render separate bills to the public utility for the
costs incurred for such technical professional investigative services. The bill constitutes
notice of the assessment and demand for payment. The amount assessed must be paid
by the public utility to the commissioner of commerce within 30 days after the date of
assessment. Money received under this subdivision must be deposited in the state treasury
and credited to the audit investigation account, and is appropriated to the commissioner of
commerce for the purposes of this subdivision.
new text end

new text begin EFFECTIVE DATE. new text end

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

Sec. 28.

new text begin [216C.054] ANNUAL TRANSMISSION ADEQUACY REPORT TO
LEGISLATURE.
new text end

new text begin The commissioner of commerce, in consultation with the Public Utilities
Commission, shall annually by January 15 submit a written report to the chairs and the
ranking minority members of the legislative committees with primary jurisdiction over
energy policy that contains a narrative describing what electric transmission infrastructure
is needed within the state over the next 15 years and what specific progress is being
made to meet that need. To the extent possible, the report must contain a description
of specific transmission needs and the current status of proposals to address that need.
The report must identify any barriers to meeting transmission infrastructure needs and
make recommendations, including any legislation, that are necessary to overcome those
barriers. The report must be based on the best available information and must describe
what assumptions are made as the basis for the report. If the commissioner determines
that there are difficulties in accurately assessing future transmission infrastructure needs,
the commissioner shall explain those difficulties as part of the report. The commissioner is
not required to conduct original research to support the report. The commissioner may
utilize information the commissioner, the commission, and the Office of Energy Security
possess and utilize in carrying out their existing statutory duties related to the state's
transmission infrastructure. The report must be in easily understood, nontechnical terms.
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. 29.

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

new text begin The annual legislative proposals required to be submitted by the commissioners
of commerce and the Pollution Control Agency under section 216H.07, subdivision
4, must include proposals regarding the use of solar energy and the combustion of
grasses, agricultural wastes, trees, and other vegetation to produce thermal energy for
heating commercial, industrial, and residential buildings and for industrial processes if
the commissioners determine that such policies are appropriate to achieve the state's
greenhouse gas emissions reduction goals. No legal claim against any person is allowed
under this section. This section does not apply to the combustion of municipal solid waste
or refuse-derived fuel to produce thermal energy. For purposes of this section, removal
of woody biomass from publicly owned forests must be consistent with the principles of
sustainable forest management.
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. 30.

Minnesota Statutes 2008, section 216C.11, is amended to read:

216C.11 ENERGY CONSERVATION INFORMATION CENTER.

The commissioner shall establish an Energy Information Center in the department's
offices in St. Paul. The information center shall maintain a toll-free telephone information
service and disseminate printed materials on energy conservation topics, including but
not limited to, availability of loans and other public and private financing methods
for energy conservation physical improvements, the techniques and materials used to
conserve energy in buildings, including retrofitting or upgrading insulation and installing
weatherstripping, the projected prices and availability of different sources of energy,
and alternative sources of energy.

The Energy Information Center shall serve as the official Minnesota Alcohol Fuels
Information Center and shall disseminate information, printed, by the toll-free telephone
information service, or otherwise on the applicability and technology of alcohol fuels.

The information center shall include information on the potential hazards of energy
conservation techniques and improvements in the printed materials disseminated. The
commissioner shall not be liable for damages arising from the installation or operation of
equipment or materials recommended by the information center.

The information center shall use the information collected under section 216C.02,
subdivision 1, to maintain a central source of information on conservation and other
energy-related programs, including both programs required by law or rule and programs
developed and carried on voluntarily. In particular, the information center shall compile
and maintain information on policies covering disconnections or denials of fuel
during cold weather adopted by public utilities and other fuel suppliers not governed
by deleted text begin Minnesota Rules, parts 7820.1500 to 7820.2300 deleted text end new text begin section 216B.096 or 216B.097 new text end ,
including the number of households disconnected or denied fuel and the duration of the
disconnections or denials.

new text begin EFFECTIVE DATE. new text end

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

Sec. 31.

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

Subd. 5a.

Renewable development account.

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

new text begin EFFECTIVE DATE. new text end

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

Sec. 32. new text begin NATURAL GAS UTILITIES; INTERIM ENERGY SAVINGS PLAN.
new text end

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

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

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

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

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

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

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

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

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

new text begin EFFECTIVE DATE. new text end

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

Sec. 33. new text begin UTILITY RATES STUDY.
new text end

new text begin The Public Utilities Commission, in consultation with the Office of Energy
Security, shall conduct a study of automatic cost-recovery mechanisms and alternative
forms of utility rate regulation. This study shall include an assessment of the impact of
automatic cost-recovery mechanisms on prices charged to utility consumers compared
to traditional cost-recovery mechanisms, an assessment of the impact of automatic
recovery mechanisms on the level of customer understanding of utility rates compared to
traditional cost-recovery mechanisms, and an assessment of alternative forms of utility
rate regulation that may be used in place of automatic cost-recovery mechanisms. The
study shall also address methods to improve administration and customer understanding
of automatic cost-recovery mechanisms. The commission shall submit this report to the
legislature on or before June 30, 2010. The commission may assess public utilities for
the cost of the study. The assessment is not subject to a cap on assessments provided by
section 216B.62 or any other law.
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. 34. new text begin MOUNTAIN IRON ECONOMIC DEVELOPMENT AUTHORITY;
WIND ENERGY PROJECT.
new text end

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

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

new text begin EFFECTIVE DATE. new text end

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

Sec. 35. new text begin SOLAR CITIES REPORT.
new text end

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

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

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

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

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

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

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

Sec. 36. new text begin CANCELLATION AND APPROPRIATION.
new text end

new text begin (a) Of the amount remaining from the appropriation to the commissioner of
commerce to provide competitive, cost-share grants to fund renewable energy research
in this state under Laws 2007, chapter 57, article 2, section 3, subdivision 6, $750,000 is
canceled to the special revenue fund.
new text end

new text begin (b) $750,000 in fiscal year 2010 is appropriated from the special revenue fund to the
commissioner of commerce for a onetime grant to BioBusiness Alliance of Minnesota
for bioscience business development programs to promote and position the state as
a global leader in bioscience business activities. These funds may be used to create,
recruit, retain, and expand biobusiness activity in Minnesota; implement the destination
2025 statewide plan; update a statewide assessment of the bioscience industry and the
competitive position of Minnesota-based bioscience businesses relative to other states and
other nations; and develop and implement business and scenario-planning models to
create, recruit, retain, and expand biobusiness activity 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. 37. new text begin REVISOR'S INSTRUCTION.
new text end

new text begin (a) The revisor of statutes shall replace the phrase "parts 7820.1500 to 7820.2300" in
Minnesota Rules, part 7826.0200, with the phrase "Minnesota Statutes, sections 216B.096
and 216B.097."
new text end

new text begin (b) The revisor of statutes shall replace the phrase "chapter 7820" in Minnesota
Rules, part 7826.1500, item B, with the phrase "Minnesota Statutes, sections 216B.096
and 216B.097."
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. 38. new text begin REPEALER.
new text end

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