2nd Engrossment - 83rd Legislature (2003 - 2004) Posted on 12/15/2009 12:00am
1.1 A bill for an act 1.2 relating to energy; amending the definition of a 1.3 radioactive waste management facility; increasing 1.4 funding for renewable development; specifying the 1.5 applicability of the renewable development fund; 1.6 clarifying disconnection of residential utility; 1.7 authorizing sufficient dry cask storage capacity to 1.8 allow the nuclear reactors at the Prairie Island 1.9 nuclear generation facility to operate until the end 1.10 of their current licenses; modifying transmission 1.11 upgrade requirements; providing for environmental 1.12 review; modifying relicensing provisions; creating a 1.13 hydrogen production development program; providing for 1.14 township agreements; modifying duties of the 1.15 legislative energy task force; appropriating money; 1.16 amending Minnesota Statutes 2002, sections 116C.71, 1.17 subdivision 7; 116C.779; 216B.095; 216B.097, by adding 1.18 a subdivision; 216B.1645, by adding a subdivision; 1.19 216B.1691, subdivisions 1, 2, by adding subdivisions; 1.20 216B.241, subdivision 1b; 216B.2424, subdivision 5; 1.21 216B.243, subdivision 3b; 216C.051, subdivisions 2, 3, 1.22 6, 9, by adding a subdivision; 216C.052, subdivisions 1.23 2, 3; 216C.41, subdivisions 1, 2, 3, 4, 5, by adding a 1.24 subdivision; proposing coding for new law in Minnesota 1.25 Statutes, chapters 116C; 216B; repealing Minnesota 1.26 Statutes 2002, section 216C.051, subdivisions 1, 4, 5. 1.27 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 1.28 Section 1. Minnesota Statutes 2002, section 116C.71, 1.29 subdivision 7, is amended to read: 1.30 Subd. 7. [RADIOACTIVE WASTE MANAGEMENT FACILITY.] 1.31 "Radioactive waste management facility" means a geographic site, 1.32 including buildings, structures, and equipment in or upon which 1.33 radioactive waste is retrievably or irretrievably disposed by 1.34 burial in soil or permanently stored. An independent spent fuel 1.35 storage installation located on the site of a Minnesota nuclear 1.36 generation facility for dry cask storage of spent nuclear fuel 2.1 generated solely by that facility is not a radioactive waste 2.2 management facility. 2.3 Sec. 2. Minnesota Statutes 2002, section 116C.779, is 2.4 amended to read: 2.5 116C.779 [FUNDING FOR RENEWABLE DEVELOPMENT.] 2.6 Subdivision 1. [RENEWABLE DEVELOPMENT FUND.] (a) The 2.7 public utility thatoperatesowns the Prairie Island nuclear 2.8 generating plant must transfer to a renewable development 2.9 account$500,000 each year for each dry cask containing spent2.10fuel that is located at the independent spent fuel storage2.11installation at Prairie Island after January 1, 1999$8,500,000 2.12 annually. Beginning January 1, 2005, if a contracted biomass 2.13 project of 50 megawatts is terminated, the public utility shall 2.14 transfer an additional $11,000,000 per year to the renewable 2.15 development account. The fund transfer must be made if nuclear 2.16 waste is stored in a dry cask at the independent spent fuel 2.17 storage facility at Prairie Island for any part of a year in 2.18 which the plant is in operation. Funds in the account may be 2.19 expended only for development of renewable energy sources. 2.20 Preference must be given to development of renewable energy 2.21 source projects located within the state. 2.22 (b) Expenditures from the account may only be made after 2.23 approval by order of the public utilities commission upon a 2.24 petition by the public utility. 2.25 Subd. 2. [HYDROGEN ECONOMY RESEARCH.] (a) Notwithstanding 2.26 subdivision 1, $2,500,000 annually from the renewable 2.27 development account must be allocated from unobligated funds in 2.28 the account as of June 30, 2003, to support basic and applied 2.29 research at the Minnesota hydrogen and renewables research 2.30 center at the University of Minnesota. 2.31 (b) Research funded under this subdivision must focus on: 2.32 (1) conversion of state wind resources to hydrogen for 2.33 energy storage and transportation to areas of energy demand; 2.34 (2) improvement of scalable hydrogen fuel cells for 2.35 stationary combined electricity generation and heating/cooling 2.36 function for residential and commercial use; and 3.1 (3) processing of agricultural and forestry plant products 3.2 for production of hydrogen and other fuels and sequestration of 3.3 carbon using a variety of means, including biocatalysis and 3.4 fermentation. 3.5 Subd. 3. [WIND ENERGY PRODUCTION INCENTIVE.] (a) Until 3.6 January 1, 2018, up to $7,000,000 annually must be allocated 3.7 from available funds in the account to fund the renewable energy 3.8 production incentive for up to 150 megawatts of electricity 3.9 generated by wind energy conversion systems larger than 40 3.10 kilowatts in size that are eligible for the incentive under 3.11 section 216C.41. Any portion of the $7,000,000 not expended in 3.12 any calendar year for the incentive is available for other 3.13 spending purposes under this section. This subdivision does not 3.14 create an obligation to contribute funds to the account. 3.15 (b) The department of commerce shall determine eligibility 3.16 of projects under section 216C.41 for the purposes of this 3.17 subdivision. At least quarterly, the department of commerce 3.18 shall notify the public utility of the name and address of each 3.19 eligible project owner and the amount due to each project under 3.20 section 216C.41. The public utility shall make payments within 3.21 15 working days after receipt of notification of payments due. 3.22 Payments made more than 15 working days following receipt of 3.23 notification of payments due must include late fees of: 3.24 (1) five percent for payments made up to 20 working days of 3.25 notification; 3.26 (2) ten percent for payments made up to 25 working days of 3.27 notification; and 3.28 (3) 25 percent for payments made after 25 working days of 3.29 notification. 3.30 Late fees required under this section may not be charged to 3.31 the renewable development account and may not be recovered from 3.32 ratepayers. 3.33 Sec. 3. [116C.83] [AUTHORIZATION FOR ADDITIONAL DRY CASK 3.34 STORAGE.] 3.35 Subdivision 1. [AUTHORIZATION TO END OF CURRENT PRAIRIE 3.36 ISLAND LICENSE.] (a) Subject to the cask storage limits of the 4.1 federal license for the independent spent fuel storage 4.2 installation at Prairie Island, the public utility that owns the 4.3 Prairie Island nuclear generation plant has authorization for 4.4 sufficient dry cask storage capacity at that installation to 4.5 allow: 4.6 (1) the unit 1 reactor at Prairie Island to operate until 4.7 the end of its current license in 2013; and 4.8 (2) the unit 2 reactor at Prairie Island to operate until 4.9 the end of its current license in 2014. 4.10 (b) A settlement agreement between the Mdewakanton Dakota 4.11 Tribal Council at Prairie Island, a federally recognized Indian 4.12 Tribe, and the public utility, to resolve outstanding issues 4.13 with respect to the provisions of Laws 1994, chapter 641, 4.14 article 1, section 4, shall provide for payments to be used for, 4.15 among other purposes, acquiring land in the state of Minnesota 4.16 for placement in trust. 4.17 Subd. 2. [COMMISSION AND LEGISLATIVE PROCESS FOR FUTURE 4.18 ADDITIONAL AUTHORIZATION.] Authorization of any additional dry 4.19 cask storage other than that provided for in subdivision 1, or 4.20 expansion or establishment of an independent spent fuel storage 4.21 facility at a nuclear generation facility in this state is 4.22 subject to approval of a certificate of need by the public 4.23 utilities commission pursuant to section 216B.243. In any 4.24 proceeding under this subdivision, the commission may make a 4.25 decision that could result in a shutdown of a nuclear generating 4.26 facility. An authorization required by this subdivision is not 4.27 effective until ratified by a law that contains no other 4.28 provision than the ratification required by this subdivision. 4.29 Legislative ratification is not required for that part of a 4.30 certificate of need that authorizes the fabrication of spent 4.31 fuel storage casks. 4.32 Subd. 3. [OTHER CONDITIONS.] (a) The storage of spent 4.33 nuclear fuel in the pool and in dry casks at a nuclear 4.34 generating plant must be managed to facilitate the shipment of 4.35 waste out of state to a permanent or interim storage facility as 4.36 soon as feasible in a manner that allows the continued operation 5.1 of the plant consistent with sections 116C.71 to 116C.83 and 5.2 216B.1645, subdivision 2. 5.3 (b) The authorization for storage capacity pursuant to this 5.4 section is limited to the storage of spent nuclear fuel 5.5 generated by a Minnesota nuclear generation facility and stored 5.6 on the site of that facility. 5.7 Subd. 4. [WATER STANDARDS.] The standards established in 5.8 section 116C.76, subdivision 1, clauses (1) to (3), apply to an 5.9 independent spent fuel installation. Such an installation must 5.10 be operated in accordance with those standards. 5.11 Subd. 5. [ENVIRONMENTAL REVIEW AND PROTECTION.] (a) The 5.12 siting, construction, and operation of an independent spent fuel 5.13 storage installation located on the site of a Minnesota 5.14 generation facility for dry cask storage of spent nuclear fuel 5.15 generated solely by that facility is subject to all 5.16 environmental review and protection provisions of chapters 115, 5.17 115B, 116, 116B, 116C, 116D, and 216B and rules associated with 5.18 those chapters, except those statutes and rules that apply 5.19 specifically to a radioactive waste management facility as 5.20 defined in section 116C.71, subdivision 7. 5.21 (b) An environmental impact statement is required under 5.22 chapter 116D for a proposal to construct and operate a new or 5.23 expanded independent spent fuel storage installation. The 5.24 environmental quality board shall be the responsible 5.25 governmental unit for the environmental impact statement. Prior 5.26 to finding the statement adequate, the board must find that the 5.27 applicant has demonstrated that the facility is designed to 5.28 provide a reasonable expectation that the operation of the 5.29 facility will not result in groundwater contamination in excess 5.30 of the standards established in section 116C.76, subdivision 1, 5.31 clauses (1) to (3). 5.32 Sec. 4. [216B.013] [HYDROGEN ENERGY ECONOMY GOAL.] 5.33 It is a goal of this state that Minnesota move to hydrogen 5.34 as an increasing source of energy for its electrical power, 5.35 heating, and transportation needs. 5.36 Sec. 5. Minnesota Statutes 2002, section 216B.095, is 6.1 amended to read: 6.2 216B.095 [DISCONNECTION DURING COLD WEATHER.] 6.3 The commission shall amend its rules governing 6.4 disconnection of residential utility customers who are unable to 6.5 pay for utility service during cold weather to include the 6.6 following: 6.7 (1) coverage of customers whose household income is less 6.8 than 50 percent of the state median income; 6.9 (2) a requirement that a customer who pays the utility at 6.10 least ten percent of the customer's income or the full amount of 6.11 the utility bill, whichever is less, in a cold weather month 6.12 cannot be disconnected during that month. The customer's income 6.13 means the actual monthly income of the customer or the average 6.14 monthly income of the customer computed on an annual calendar 6.15 year, whichever is less, and does not include any amount 6.16 received for energy assistance; 6.17 (3) that the ten percent figure in clause (2) must be 6.18 prorated between energy providers proportionate to each 6.19 provider's share of the customer's total energy costs where the 6.20 customer receives service from more than one provider; 6.21 (4) verification of income by the local energy assistance 6.22 provider or the utility, unless the customer is automatically 6.23 eligible for protection against disconnection as a recipient of 6.24 any form of public assistance, including energy assistance, that 6.25 uses income eligibility in an amount at or below the income 6.26 eligibility in clause (1); 6.27 (5) a requirement that the customer receive referrals to 6.28 energy assistance, weatherization, conservation, or other 6.29 programs likely to reduce the customer's energy bills; and 6.30 (6) a requirement that customers who have demonstrated an 6.31 inability to pay on forms provided for that purpose by the 6.32 utility, and who make reasonably timely payments to the utility 6.33 under a payment plan that considers the financial resources of 6.34 the household, cannot be disconnected from utility service from 6.35 October 15 through April 15. A customer who is receiving energy 6.36 assistance is deemed to have demonstrated an inability to pay. 7.1 For the purposes of this section, disconnection includes a 7.2 service or load limiter or any device that limits or interrupts 7.3 electric service in any way. 7.4 Sec. 6. Minnesota Statutes 2002, section 216B.097, is 7.5 amended by adding a subdivision to read: 7.6 Subd. 4. [APPLICATION TO SERVICE LIMITERS.] For the 7.7 purposes of this section, disconnection includes a service or 7.8 load limiter or any device that limits or interrupts electric 7.9 service in any way. 7.10 Sec. 7. [216B.0975] [DISCONNECTION DURING EXTREME HEAT 7.11 CONDITIONS; RECONNECTION.] 7.12 A utility may not effect an involuntary disconnection of 7.13 services in affected counties when an excessive heat watch, heat 7.14 advisory, or excessive heat warning issued by the national 7.15 weather service is in effect. For purposes of this section, 7.16 "utility" means a public utility providing electric service, 7.17 municipal utility, or cooperative electric association. 7.18 Sec. 8. Minnesota Statutes 2002, section 216B.1645, is 7.19 amended by adding a subdivision to read: 7.20 Subd. 4. [SETTLEMENT WITH MDEWAKANTON DAKOTA TRIBAL 7.21 COUNCIL AT PRAIRIE ISLAND.] The commission shall approve a rate 7.22 schedule providing for the automatic adjustment of charges to 7.23 recover the costs or expenses of a settlement between the public 7.24 utility that owns the Prairie Island nuclear generation facility 7.25 and the Mdewakanton Dakota Tribal Council at Prairie Island, 7.26 resolving outstanding disputes regarding the provisions of Laws 7.27 1994, chapter 641, article 1, section 4. The settlement must 7.28 provide for annual payments, not to exceed $2,500,000 annually 7.29 by the public utility to the Prairie Island Indian Community, to 7.30 be used for, among other purposes, acquiring up to 1,500 7.31 contiguous or noncontiguous acres of land in the state of 7.32 Minnesota within 50 miles of the tribal community's reservation 7.33 at Prairie Island to be taken into trust by the federal 7.34 government for the benefit of the tribal community for housing 7.35 and other residential purposes. The legislature acknowledges 7.36 that the intent to purchase land by the tribe for relocation 8.1 purposes is part of the settlement agreement and this 8.2 legislation. However, the state, through the governor, reserves 8.3 the right to support or oppose any particular application to 8.4 place land in trust status. 8.5 Sec. 9. Minnesota Statutes 2002, section 216B.1691, 8.6 subdivision 1, is amended to read: 8.7 Subdivision 1. [DEFINITIONS.] (a) "Eligible energy 8.8 technology" means an energy technology that: 8.9 (1) generates electricity from the following renewable 8.10 energy sources: solar,; wind,; hydroelectric with a capacity of 8.11 less than 60 megawatts,; or biomass, which shall include an 8.12 energy recovery facility used to capture the heat value of mixed 8.13 municipal solid waste or refuse-derived fuel from mixed 8.14 municipal solid waste as a primary fuel; and 8.15 (2) was not mandated by state energy law or commission 8.16 order enacted or issued prior to August 1, 2001. 8.17 (b) "Electric utility" means a public utility providing 8.18 electric service, a generation and transmission cooperative 8.19 electric association, or a municipal power agency. 8.20 Sec. 10. Minnesota Statutes 2002, section 216B.1691, 8.21 subdivision 2, is amended to read: 8.22 Subd. 2. [ELIGIBLE ENERGY OBJECTIVES.] (a) Each electric 8.23 utility shall make a good faith effort to generate or procure 8.24 sufficient electricity generated by an eligible energy 8.25 technology to provide its retail consumers, or the retail 8.26 members of a distribution utility to which the electric utility 8.27 provides wholesale electric service, so that: 8.28 (1) commencing in 2005, at least one percent of the 8.29 electric energy provided to those retail customers is generated 8.30 by eligible energy technologies; 8.31 (2) the amount provided under clause (1) is increased by 8.32 one percent each year until 2015; 8.33 (3) ten percent of the electric energy provided to retail 8.34 customers in Minnesota is generated by eligible energy 8.35 technologies; and 8.36 (4) of the eligible energy technology generation required 9.1 under clauses (1) and (2),at leastnot less than 0.5 percent of 9.2 the energy must be generated by biomass energy technologies, 9.3 including an energy recovery facility used to capture the heat 9.4 value of mixed municipal solid waste or refuse-derived fuel from 9.5 mixed municipal solid waste as a primary fuel, by2010 and one9.6percent by 20152005. By 2010, 1.0 percent of the eligible 9.7 energy technology generation required under clauses (1) and (2) 9.8 shall be generated by the sources described in this clause. An 9.9 energy recovery facility, as described in subdivision 1, clause 9.10 (1), with a power sales agreement in effect as of the date of 9.11 this act that terminates after December 31, 2010, does not 9.12 qualify as an eligible energy technology unless the agreement 9.13 provides for rate adjustment in the event the facility qualifies 9.14 as a renewable energy source. 9.15 (b) Each electric utility shall report on its activities 9.16 and progress with regard to these objectives in their filings 9.17 under section 216B.2422. 9.18 (c) The commission, in consultation with the commissioner 9.19 of commerce, shall compile the information provided to the 9.20 commission under paragraph (b), and report to the chairs of the 9.21 house of representatives and senate committees with jurisdiction 9.22 over energy and environment policy issues as to the progress of 9.23 utilities in the state in increasing the amount of renewable 9.24 energy provided to retail customers, with any recommendations 9.25 for regulatory or legislative action, by January 15, 2002. 9.26 Sec. 11. Minnesota Statutes 2002, section 216B.1691, is 9.27 amended by adding a subdivision to read: 9.28 Subd. 3. [REQUIREMENT.] The good faith objective set forth 9.29 in subdivision 2 shall be a requirement for the public utility 9.30 that owns the Prairie Island nuclear generation plant. The 9.31 objective is a requirement to the extent that the eligible 9.32 resources are the utility's least cost resource, including the 9.33 costs of ancillary services and other generation and 9.34 transmission upgrades necessary to manage the intermittent 9.35 nature of certain renewable resources or implementation of the 9.36 objective can reasonably be shown to jeopardize the reliability 10.1 of the electric system. 10.2 Sec. 12. Minnesota Statutes 2002, section 216B.1691, is 10.3 amended by adding a subdivision to read: 10.4 Subd. 4. [TRANSMISSION.] (a) Each public electric utility 10.5 shall determine necessary transmission upgrades to support 10.6 development of renewable energy resources required to meet the 10.7 renewable energy objective under this section and shall: 10.8 (1) seek approval for those upgrades from the appropriate 10.9 regional transmission entity or entities at the earliest 10.10 practicable date; and 10.11 (2) submit to the commission an application for 10.12 certificates of need for those transmission upgrades, with a 10.13 firm schedule for construction, not later than January 1, 2005. 10.14 (b) Transmission capacity upgrades under paragraph (a) 10.15 qualify for rate treatment provided under section 216B.1645, 10.16 provided the utility coordinates the construction of the 10.17 transmission capacity with the signing of power purchase 10.18 agreements for wind generation. 10.19 Sec. 13. Minnesota Statutes 2002, section 216B.241, 10.20 subdivision 1b, is amended to read: 10.21 Subd. 1b. [CONSERVATION IMPROVEMENT BY COOPERATIVE 10.22 ASSOCIATION OR MUNICIPALITY.] (a) This subdivision applies to: 10.23 (1) a cooperative electric association that provides retail 10.24 service to its members; 10.25 (2) a municipality that provides electric service to retail 10.26 customers; and 10.27 (3) a municipality with gross operating revenues in excess 10.28 of $5,000,000 from sales of natural gas to retail customers. 10.29 (b) Each cooperative electric association and municipality 10.30 subject to this subdivision shall spend and invest for energy 10.31 conservation improvements under this subdivision the following 10.32 amounts: 10.33 (1) for a municipality, 0.5 percent of its gross operating 10.34 revenues from the sale of gas and 1.5 percent of its gross 10.35 operating revenues from the sale of electricity, excluding gross 10.36 operating revenues from electric and gas service provided in the 11.1 state to large electric customer facilities; and 11.2 (2) for a cooperative electric association, 1.5 percent of 11.3 its gross operating revenues from service provided in the state, 11.4 excluding gross operating revenues from service provided in the 11.5 state to large electric customer facilities indirectly through a 11.6 distribution cooperative electric association. 11.7 (c) Each municipality and cooperative electric association 11.8 subject to this subdivision shall identify and implement energy 11.9 conservation improvement spending and investments that are 11.10 appropriate for the municipality or association, except that a 11.11 municipality or association may not spend or invest for energy 11.12 conservation improvements that directly benefit a large electric 11.13 customer facility for which the commissioner has issued an 11.14 exemption under subdivision 1a, paragraph (b). 11.15 (d) Each municipality and cooperative electric association 11.16 subject to this subdivision may spend and invest annually up to 11.17 ten percent of the total amount required to be spent and 11.18 invested on energy conservation improvements under this 11.19 subdivision on research and development projects that meet the 11.20 definition of energy conservation improvement in subdivision 1 11.21 and that are funded directly by the municipality or cooperative 11.22 electric association. 11.23 (e) Load-management activities that do not reduce energy 11.24 use but that increase the efficiency of the electric system may 11.25 be used to meet the following percentage of the conservation 11.26 investment and spending requirements of this subdivision: 11.27 (1) 2002 - 90 percent; 11.28 (2) 2003 - 80 percent; 11.29 (3) 2004 - 65 percent; and 11.30 (4) 2005 and thereafter - 50 percent. 11.31 (f) A generation and transmission cooperative electric 11.32 association that provides energy services to cooperative 11.33 electric associations that provide electric service at retail to 11.34 consumers may invest in energy conservation improvements on 11.35 behalf of the associations it serves and may fulfill the 11.36 conservation, spending, reporting, and energy savings goals on 12.1 an aggregate basis. A municipal power agency or other 12.2 not-for-profit entity that provides energy service to municipal 12.3 utilities that provide electric service at retail may invest in 12.4 energy conservation improvements on behalf of the municipal 12.5 utilities it serves and may fulfill the conservation, spending, 12.6 reporting, and energy savings goals on an aggregate basis, under 12.7 an agreement between the municipal power agency or 12.8 not-for-profit entity and each municipal utility for funding the 12.9 investments. 12.10 (g) By June 1, 2002, and every two years thereafter, each 12.11 municipality or cooperative shall file an overview of its 12.12 conservation improvement plan with the commissioner. With this 12.13 overview, the municipality or cooperative shall also provide an 12.14 evaluation to the commissioner detailing its energy conservation 12.15 improvement spending and investments for the previous period. 12.16 The evaluation must briefly describe each conservation program 12.17 and must specify the energy savings or increased efficiency in 12.18 the use of energy within the service territory of the utility or 12.19 association that is the result of the spending and investments. 12.20 The evaluation must analyze the cost effectiveness of the 12.21 utility's or association's conservation programs, using a list 12.22 of baseline energy and capacity savings assumptions developed in 12.23 consultation with the department. 12.24 The commissioner shall review each evaluation and make 12.25 recommendations, where appropriate, to the municipality or 12.26 association to increase the effectiveness of conservation 12.27 improvement activities. Up to three percent of a utility's 12.28 conservation spending obligation under this section may be used 12.29 for program pre-evaluation, testing, and monitoring and program 12.30 evaluation. The overview filed by a municipality with less than 12.31 $2,500,000 in annual gross revenues from the retail sale of 12.32 electric service may consist of a letter from the governing 12.33 board of the municipal utility to the department providing the 12.34 amount of annual conservation spending required of that 12.35 municipality and certifying that the required amount has been 12.36 spent on conservation programs pursuant to this subdivision. 13.1 (h) The commissioner shall also review each evaluation for 13.2 whether a portion of the money spent on residential conservation 13.3 improvement programs is devoted to programs that directly 13.4 address the needs of renters and low-income persons unless an 13.5 insufficient number of appropriate programs are available. For 13.6 the purposes of this subdivision and subdivision 2, "low-income" 13.7 means an income at or below 50 percent of the state median 13.8 income. 13.9 (i) As part of its spending for conservation improvement, a 13.10 municipality or association may contribute to the energy and 13.11 conservation account. A municipality or association may propose 13.12 to the commissioner to designate that all or a portion of funds 13.13 contributed to the account be used for research and development 13.14 projects that can best be implemented on a statewide basis. Any 13.15 amount contributed must be remitted to the commissioner by 13.16 February 1 of each year. 13.17 (j) A municipality may spend up to 50 percent of its 13.18 required spending under this section to refurbish an existing 13.19 district heating or cooling system. 13.20 Sec. 14. Minnesota Statutes 2002, section 216B.2424, 13.21 subdivision 5, is amended to read: 13.22 Subd. 5. [MANDATE.] (a) A public utility, as defined in 13.23 section 216B.02, subdivision 4, that operates a nuclear-powered 13.24 electric generating plant within this state must construct and 13.25 operate, purchase, or contract to construct and operate (1) by 13.26 December 31, 1998, 50 megawatts of electric energy installed 13.27 capacity generated by farm-grown closed-loop biomass scheduled 13.28 to be operational by December 31, 2001; and (2) by December 31, 13.29 1998, an additional 75 megawatts of installed capacity so 13.30 generated scheduled to be operational by December 31, 2002. 13.31 (b) Of the 125 megawatts of biomass electricity installed 13.32 capacity required under this subdivision, no more than5055 13.33 megawatts of this capacity may be provided by a facility that 13.34 uses poultry litter as its primary fuel source and any such 13.35 facility: 13.36 (1) need not use biomass that complies with the definition 14.1 in subdivision 1; 14.2 (2) must enter into a contract with the public utility for 14.3 such capacity, that has an average purchase price per megawatt 14.4 hour over the life of the contract that is equal to or less than 14.5 the average purchase price per megawatt hour over the life of 14.6 the contract in contracts approved by the public utilities 14.7 commission before April 1, 2000, to satisfy the mandate of this 14.8 section, and file that contract with the public utilities 14.9 commission prior to September 1, 2000; and 14.10 (3) must schedule such capacity to be operational by 14.11 December 31, 2002. 14.12 (c) Of the total 125 megawatts of biomass electric energy 14.13 installed capacity required under this section, no more than 75 14.14 megawatts may be provided by a single project. 14.15 (d) Of the 75 megawatts of biomass electric energy 14.16 installed capacity required under paragraph (a), clause (2), no 14.17 more than2533 megawatts of this capacity may be provided by a 14.18 St. Paul district heating and cooling system cogeneration 14.19 facility utilizing waste wood as a primary fuel source. The St. 14.20 Paul district heating and cooling system cogeneration facility 14.21 need not use biomass that complies with the definition in 14.22 subdivision 1. 14.23 (e) The public utility must accept and consider on an equal 14.24 basis with other biomass proposals: 14.25 (1) a proposal to satisfy the requirements of this section 14.26 that includes a project that exceeds the megawatt capacity 14.27 requirements of either paragraph (a), clause (1) or (2), and 14.28 that proposes to sell the excess capacity to the public utility 14.29 or to other purchasers; and 14.30 (2) a proposal for a new facility to satisfy more than ten 14.31 but not more than 20 megawatts of the electrical generation 14.32 requirements by a small business-sponsored independent power 14.33 producer facility to be located within the northern quarter of 14.34 the state, which means the area located north of Constitutional 14.35 Route No. 8 as described in section 161.114, subdivision 2, and 14.36 that utilizes biomass residue wood, sawdust, bark, chipped wood, 15.1 or brush to generate electricity. A facility described in this 15.2 clause is not required to utilize biomass complying with the 15.3 definition in subdivision 1, but must have the capacity required 15.4 by this clause operational by December 31, 2002. 15.5 (f) If a public utility files a contract with the 15.6 commission for electric energy installed capacity that uses 15.7 poultry litter as its primary fuel source, the commission must 15.8 do a preliminary review of the contract to determine if it meets 15.9 the purchase price criteria provided in paragraph (b), clause 15.10 (2), of this subdivision. The commission shall perform its 15.11 review and advise the parties of its determination within 30 15.12 days of filing of such a contract by a public utility. A public 15.13 utility may submit by September 1, 2000, a revised contract to 15.14 address the commission's preliminary determination. 15.15 (g) The commission shall finally approve, modify, or 15.16 disapprove no later than July 1, 2001, all contracts submitted 15.17 by a public utility as of September 1, 2000, to meet the mandate 15.18 set forth in this subdivision. 15.19 (h) If a public utility subject to this section exercises 15.20 an option to increase the generating capacity of a project in a 15.21 contract approved by the commission prior to April 25, 2000, to 15.22 satisfy the mandate in this subdivision, the public utility must 15.23 notify the commission by September 1, 2000, that it has 15.24 exercised the option and include in the notice the amount of 15.25 additional megawatts to be generated under the option 15.26 exercised. Any review by the commission of the project after 15.27 exercise of such an option shall be based on the same criteria 15.28 used to review the existing contract. 15.29 (i) A facility specified in this subdivision qualifies for 15.30 exemption from property taxation under section 272.02, 15.31 subdivision 43. 15.32 Sec. 15. Minnesota Statutes 2002, section 216B.243, 15.33 subdivision 3b, is amended to read: 15.34 Subd. 3b. [NUCLEAR POWER PLANT; NEW CONSTRUCTION 15.35 PROHIBITED; RELICENSING.] (a) The commission may not issue a 15.36 certificate of need for the construction of a new 16.1 nuclear-powered electric generating plant. 16.2 (b) Any certificate of need for additional storage of spent 16.3 nuclear fuel for a facility seeking a license extension shall 16.4 address the impacts of continued operations over the period for 16.5 which approval is sought. 16.6 Sec. 16. [216B.361] [TOWNSHIP AGREEMENT WITH NATURAL GAS 16.7 UTILITY.] 16.8 A township may enter into an agreement with a public 16.9 utility providing natural gas services to provide services 16.10 within a designated portion or all of the township. If a city 16.11 annexes township land for which a utility has an agreement with 16.12 a township to serve, the utility shall continue to have a 16.13 nonexclusive right to offer and provide service in the area 16.14 identified by the agreement with the township for the term of 16.15 that agreement, subject to the authority of the annexing city to 16.16 manage public rights-of-way within the city as provided in 16.17 sections 216B.36, 237.162, and 237.163. 16.18 Nothing in this section precludes a city from acquiring the 16.19 property of a public utility under sections 216B.45 to 216B.47 16.20 for the purpose of allowing the city to own and operate a 16.21 natural gas utility, or to extend natural gas and other utility 16.22 services into newly annexed areas. 16.23 Sec. 17. Minnesota Statutes 2002, section 216C.051, 16.24 subdivision 2, is amended to read: 16.25 Subd. 2. [ESTABLISHMENT.] (a) There is established a 16.26 legislative electric energy task force to study future electric 16.27 energy sources and costs and to make recommendations for 16.28 legislation for an environmentally and economically sustainable 16.29 and advantageous electric energy supply. 16.30 (b) The task force consists of: 16.31 (1)teneight members of the house of representatives 16.32 including the chairs of the environment and natural resources 16.33committeeand regulated industriessubcommitteecommittees and 16.34eightsix members to be appointed by the speaker of the 16.35 house,fourthree of whom must be from the minority caucus; and 16.36 (2)teneight members of the senate including the chairs of 17.1 the environment and natural resources andjobs, energy, and17.2community developmentcommerce and utilities committees and 17.3eightsix members to be appointed by the subcommittee on 17.4 committees,fourthree of whom must be from the minority caucus. 17.5 (c) The task force may employ staff, contract for 17.6 consulting services, and may reimburse the expenses of persons 17.7 requested to assist it in its duties other than state employees 17.8 or employees of electric utilities. The director of the 17.9 legislative coordinating commission shall assist the task force 17.10 in administrative matters. The task force shall elect cochairs, 17.11 one member of the house and one member of the senate from among 17.12 the committeeand subcommitteechairs named to the committee. 17.13 The task force members from the house shall elect the house 17.14 cochair, and the task force members from the senate shall elect 17.15 the senate cochair. 17.16 Sec. 18. Minnesota Statutes 2002, section 216C.051, 17.17 subdivision 3, is amended to read: 17.18 Subd. 3. [FUTURE ENERGY SOLUTIONS; TECHNICAL AND ECONOMIC 17.19 ANALYSIS.] (a) In light of the electric energy guidelines 17.20 established in subdivision 7 andin light of existing17.21conservation improvement programs and plans, utility resource17.22plans, and other existing energy plans and analyses, the17.23legislative task force on energy shall undertake an analysis of17.24the technical and economic feasibility of an electric energy17.25future for the state that relies on environmentally and17.26economically sustainable and advantageous electric energy supply17.27 utility resource plans and competitive bidding dockets before 17.28 the commission, the task force shall gather information and make 17.29 recommendations to the legislature regarding potential electric 17.30 energy resources. The task forceshallmay contract with one or 17.31 more energy policy experts and energy economists to assist it in 17.32 its analysis. The task force may not contract for service nor 17.33 employ any person who was involved in any capacity in any 17.34 portion of any proceeding before the public utilities 17.35 commission, the administrative law judge, the state court of 17.36 appeals, or the United States Nuclear Regulatory Commission 18.1 related to the dry cask storage proposal on Prairie Island. The 18.2 task force must gather information on at least the following 18.3 electric energy resources, but may expand its inquiry as 18.4 warranted by the information collected: 18.5 (1) wind energy; 18.6 (2) hydrogen as a fuel carrier produced from renewable and 18.7 fossil fuel resources; 18.8 (3) biomass; 18.9 (4) decomposition gases produced by solid waste management 18.10 facilities; 18.11 (5) solid waste as a direct fuel or refuse-derived fuel; 18.12 and 18.13 (6) clean coal technology. 18.14 (b)The analysis must addressIn evaluating these electric 18.15 energy resources, the task force must consider at least the 18.16 following: 18.17 (1) to the best of forecasting abilities, how much electric 18.18 generation capacity and demand for electric energy is necessary 18.19 to maintain a strong economy and a high quality of life in the 18.20 state over the next 15 to 20 years; how is this demand level 18.21 affected by achievement of the maximum reasonably feasible and 18.22 cost-effective demand side management and generation and 18.23 distribution efficiencies; 18.24 (2) what alternative forms of energy can provide a stable 18.25 supply of energy and are producible and sustainable in the state 18.26 and at what cost; 18.27 (3) what are the costs to the state and ratepayers to 18.28 ensure that new electric energy generation utilizes less 18.29 environmentally damaging sources; how do those costs change as 18.30 the time frame for development and implementation of new 18.31 generation sources is compressed; 18.32 (4) what are the implications for delivery systems for 18.33 energy produced in areas of the state that do not now have 18.34 high-volume transmission capability; are new transmission 18.35 technologies being developed that can address some of the 18.36 concerns with transmission; can a more dispersed electric 19.1 generation system lessen the need for long-distance 19.2 transmission; 19.3 (5) what are the actual costs and benefits of purchasing 19.4 electricity and fuel to generate electricity from outside the 19.5 state; what are the present costs to the state's economy of 19.6 exporting a large percentage of the state's energy dollars and 19.7 what is the future economic impact of continuing to do so; 19.8 (6) are there benefits to be had from a large immediate 19.9 investment in quickly implementing alternative electric energy 19.10 sources in terms of developing an exportable technology and/or 19.11 commodity; is it feasible to turn around the flow of dollars for 19.12 energy so that the state imports dollars and exports energy and 19.13 energy technology; what is a reasonable time frame for the shift 19.14 if it is possible; 19.15 (7) are there taxation or regulatory barriers to developing 19.16 more sustainable and less problematic electric energy 19.17 generation; what are they specifically and how can they be 19.18 specifically addressed; 19.19 (8) can an approach be developed that moves quickly to 19.20 development and implementation of alternative energy sources 19.21 that can be forgiving of interim failures but that is also 19.22 sufficiently deliberate to ensure ultimate success on a large 19.23 scale; and 19.24 (9) in what specific ways can the state assist regional 19.25 energy suppliers to accelerate phasing out energy production 19.26 processes that produce wastes or emissions that must necessarily 19.27 be carefully controlled and monitored to minimize adverse 19.28 effects on the environment and human health and to assist in 19.29 developing and implementing base load energy production that 19.30 both prevents or minimizes by its nature adverse environmental 19.31 and human health effects and utilizes resources that are 19.32 available or producible in the state;19.33(10) whether there is a need to establish additional19.34dislocated worker assistance for workers at the Prairie Island19.35nuclear power plant; if so, how that assistance should be19.36structured;20.1(11) can the state monitor, evaluate, and affect federal20.2actions relating to permanent storage of high-level radioactive20.3waste; what actions by the state over what period of time would20.4expedite federal action to take responsibility for the waste;20.5(12) should the state establish a legislative oversight20.6commission on energy issues; should the responsibilities of an20.7oversight commission be coordinated with the activities of the20.8public utilities commission and the department of public service20.9and if so, how; and20.10(13) is it feasible to convert existing nuclear power and20.11coal-fired electric generating plants to utilization of energy20.12sources that result in significantly less environmental damage;20.13if so, what are the short-term and long-term costs and benefits20.14of doing so; how do shorter or longer time periods for20.15conversion affect the cost/benefit analysis. 20.16 (c) The task force must study issues related to the 20.17 transportation of spent nuclear fuel from this state to interim 20.18 or permanent repositories outside this state. 20.19 Sec. 19. Minnesota Statutes 2002, section 216C.051, is 20.20 amended by adding a subdivision to read: 20.21 Subd. 4a. [REPORT AND RECOMMENDATIONS.] By January 15, 20.22 2005, and every two years thereafter, the task force shall 20.23 submit a report to the chairs of the committees in the house of 20.24 representatives and in the senate that have responsibility for 20.25 energy and for environmental and natural resources issues that 20.26 contains an overview of information gathered and analyses that 20.27 have been prepared, and specific recommendations, if any, for 20.28 legislative action that will ensure development and 20.29 implementation of electric energy policy that will provide the 20.30 state with adequate, renewable, and economic electric power for 20.31 the long-term. 20.32 Sec. 20. Minnesota Statutes 2002, section 216C.051, 20.33 subdivision 6, is amended to read: 20.34 Subd. 6. [ASSESSMENT; APPROPRIATION.] On request by the 20.35 cochairs of the legislative task force and after approval of the 20.36 legislative coordinating commission, the commissioner of 21.1 commerce shall assess from all public utilities, generation and 21.2 transmission cooperative electric associations, and municipal 21.3 power agencies providing electric or natural gas services in 21.4 Minnesota, in addition to assessments made under section 21.5 216B.62, the amount requested for the operation of the task 21.6 force not to exceed$150,000$250,000 in a fiscal year. The 21.7 amount assessed under this section is appropriated to the 21.8 director of the legislative coordinating commission for those 21.9 purposes, and is available until expended. The department shall 21.10 apportion those costs among all energy utilities in proportion 21.11 to their respective gross operating revenues from the sale of 21.12 gas or electric service within the state during the last 21.13 calendar year. For the purposes of administrative efficiency, 21.14 the department shall assess energy utilities and issue bills in 21.15 accordance with the billing and assessment procedures provided 21.16 in section 216B.62, to the extent that these procedures do not 21.17 conflict with this subdivision. 21.18 Sec. 21. Minnesota Statutes 2002, section 216C.051, 21.19 subdivision 9, is amended to read: 21.20 Subd. 9. [EXPIRATION.] This section is repealed June 21.21 30,20052007. 21.22 Sec. 22. Minnesota Statutes 2002, section 216C.052, 21.23 subdivision 2, is amended to read: 21.24 Subd. 2. [ADMINISTRATIVE ISSUES.] (a) The commissioner may 21.25 select the administrator who shall serve for a four-year term. 21.26 The administrator may not have been a party or a participant in 21.27 a commission energy proceeding for at least one year prior to 21.28 selection by the commissioner. The commissioner shall oversee 21.29 and direct the work of the administrator, annually review the 21.30 expenses of the administrator, and annually approve the budget 21.31 of the administrator. The administrator may hire staff and may 21.32 contract for technical expertise in performing duties when 21.33 existing state resources are required for other state 21.34 responsibilities or when special expertise is required. The 21.35 salary of the administrator is governed by section 15A.0815, 21.36 subdivision 2. 22.1 (b) Costs relating to a specific proceeding, analysis, or 22.2 project are not general administrative costs. For purposes of 22.3 this section, "energy utility" means public utilities, 22.4 generation and transmission cooperative electric associations, 22.5 and municipal power agencies providing natural gas or electric 22.6 service in the state. 22.7 (c) The department of commerce shall pay: 22.8 (1) the general administrative costs of the administrator, 22.9 not to exceed$1,500,000$1,000,000 in a fiscal year, and shall 22.10 assess energy utilitiesfor reimbursementfor those 22.11 administrative costs. These costs must be consistent with the 22.12 budget approved by the commissioner under paragraph (a). The 22.13 department shall apportion the costs among all energy utilities 22.14 in proportion to their respective gross operating revenues from 22.15 sales of gas or electric service within the state during the 22.16 last calendar year, and shall then render a bill to each utility 22.17 on a regular basis; and 22.18 (2) costs relating to a specific proceeding analysis or 22.19 project and shall render a billfor reimbursementto the 22.20 specific energy utility or utilities participating in the 22.21 proceeding, analysis, or project directly, either at the 22.22 conclusion of a particular proceeding, analysis, or project, or 22.23 from time to time during the course of the proceeding, analysis, 22.24 or project. 22.25 (d) For purposes of administrative efficiency, the 22.26 department shall assess energy utilities and issue bills in 22.27 accordance with the billing and assessment procedures provided 22.28 in section 216B.62, to the extent that these procedures do not 22.29 conflict with this subdivision. The amount of the bills 22.30 rendered by the department under paragraph (c) must be paid by 22.31 the energy utility into an account in the special revenue fund 22.32 in the state treasury within 30 days from the date of billing 22.33 and is appropriated to the commissioner for the purposes 22.34 provided in this section. The commission shall approve or 22.35 approve as modified a rate schedule providing for the automatic 22.36 adjustment of charges to recover amounts paid by utilities under 23.1 this section. All amounts assessed under this section are in 23.2 addition to amounts appropriated to the commission and the 23.3 department by other law. 23.4 Sec. 23. Minnesota Statutes 2002, section 216C.052, 23.5 subdivision 3, is amended to read: 23.6 Subd. 3. [ASSESSMENT AND APPROPRIATION.] In addition to 23.7 the amount noted in subdivision 2, the commissionerof commerce23.8shall transfermay assess utilities, using the mechanism 23.9 specified in that subdivision, up to an additional $500,000 23.10 annuallyof the amounts provided for in subdivision 2 to the23.11commissioner of administrationthrough June 30, 2006. The 23.12 amounts assessed under this subdivision are appropriated to the 23.13 commissioner, and some or all of the amounts assessed may be 23.14 transferred to the commissioner of administration, for the 23.15 purposesprovidedspecified in section 16B.325 and Laws 2001, 23.16 chapter 212, article 1, section 3, as needed to implementthat23.17sectionthose sections. 23.18 Sec. 24. Minnesota Statutes 2002, section 216C.41, 23.19 subdivision 1, is amended to read: 23.20 Subdivision 1. [DEFINITIONS.] (a) The definitions in this 23.21 subdivision apply to this section. 23.22 (b) "Qualified hydroelectric facility" means a 23.23 hydroelectric generating facility in this state that: 23.24 (1) is located at the site of a dam, if the dam was in 23.25 existence as of March 31, 1994; and 23.26 (2) begins generating electricity after July 1, 1994, or 23.27 generates electricity after substantial refurbishing of a 23.28 facility that begins after July 1, 2001. 23.29 (c) "Qualified wind energy conversion facility" means a 23.30 wind energy conversion system in this state that: 23.31 (1) produces two megawatts or less of electricity as 23.32 measured by nameplate rating and begins generating electricity 23.33 after December 31, 1996, and before July 1, 1999; 23.34 (2) begins generating electricity after June 30, 1999, 23.35 produces two megawatts or less of electricity as measured by 23.36 nameplate rating, and is: 24.1 (i)located within one county andowned by a natural person 24.2 who owns the land where the facility is sited; 24.3 (ii) owned by a Minnesota small business as defined in 24.4 section 645.445; 24.5 (iii) owned by a Minnesota nonprofit organization;or24.6 (iv) owned by a tribal council if the facility is located 24.7 within the boundaries of the reservation;or24.8 (v) owned by a Minnesota municipal utility or a Minnesota 24.9 cooperative electric association; or 24.10 (vi) owned by a Minnesota political subdivision or local 24.11 government, including, but not limited to, a county, statutory 24.12 or home rule charter city, town, school district, or any other 24.13 local or regional governmental organization such as a board, 24.14 commission, or association; or 24.15 (3) begins generating electricity after June 30, 1999, 24.16 produces seven megawatts or less of electricity as measured by 24.17 nameplate rating, and: 24.18 (i) is owned by a cooperative organized under chapter 24.19 308A other than a Minnesota cooperative electric association; 24.20 and 24.21 (ii) all shares and membership in the cooperative are held 24.22 bynatural persons or estates, at least 51 percent of whom24.23reside in a county or contiguous to a county where the wind24.24energy production facilities of the cooperative are24.25locatedMinnesota residents or estates of persons who were 24.26 Minnesota residents. 24.27 (d) "Qualified on-farm biogas recovery facility" means an 24.28 anaerobic digester system that: 24.29 (1) is located at the site of an agricultural operation; 24.30 (2) is owned by a natural person who owns or rents the land 24.31 where the facility is located; and 24.32 (3) begins generating electricity after July 1, 2001. 24.33 (e) "Anaerobic digester system" means a system of 24.34 components that processes animal waste based on the absence of 24.35 oxygen and produces gas used to generate electricity. 24.36 [EFFECTIVE DATE.] This section is effective the day 25.1 following final enactment. 25.2 Sec. 25. Minnesota Statutes 2002, section 216C.41, 25.3 subdivision 2, is amended to read: 25.4 Subd. 2. [INCENTIVE PAYMENT; APPROPRIATION.] (a) Incentive 25.5 payments must be made according to this section to (1) a 25.6 qualified on-farm biogas recovery facility, (2) the owner or 25.7 operator of a qualified hydropower facility or qualified wind 25.8 energy conversion facility for electric energy generated and 25.9 sold by the facility, (3) a publicly owned hydropower facility 25.10 for electric energy that is generated by the facility and used 25.11 by the owner of the facility outside the facility, or (4) the 25.12 owner of a publicly owned dam that is in need of substantial 25.13 repair, for electric energy that is generated by a hydropower 25.14 facility at the dam and the annual incentive payments will be 25.15 used to fund the structural repairs and replacement of 25.16 structural components of the dam, or to retire debt incurred to 25.17 fund those repairs. 25.18 (b) Payment may only be made upon receipt by the 25.19 commissioner of finance of an incentive payment application that 25.20 establishes that the applicant is eligible to receive an 25.21 incentive payment and that satisfies other requirements the 25.22 commissioner deems necessary. The application must be in a form 25.23 and submitted at a time the commissioner establishes. 25.24 (c) There is annually appropriated from the general fund to 25.25 the commissioner of commerce sums sufficient to make the 25.26 payments required under this section, other than the amounts 25.27 funded by the renewable development account as specified in 25.28 subdivision 5a. 25.29 Sec. 26. Minnesota Statutes 2002, section 216C.41, 25.30 subdivision 3, is amended to read: 25.31 Subd. 3. [ELIGIBILITY WINDOW.] Payments may be made under 25.32 this section only for electricity generated: 25.33 (1) from a qualified hydroelectric facility that is 25.34 operational and generating electricity before December 31, 2005; 25.35 (2) from a qualified wind energy conversion facility that 25.36 is operational and generating electricity before January 1,200526.1 2007; or 26.2 (3) from a qualified on-farm biogas recovery facility from 26.3 July 1, 2001, through December 31, 2015. 26.4 [EFFECTIVE DATE.] This section is effective the day 26.5 following final enactment. 26.6 Sec. 27. Minnesota Statutes 2002, section 216C.41, 26.7 subdivision 4, is amended to read: 26.8 Subd. 4. [PAYMENT PERIOD.] (a) A facility may receive 26.9 payments under this section for a ten-year period. No payment 26.10 under this section may be made for electricity generated: 26.11 (1) by a qualified hydroelectric facility after December 26.12 31, 2015; 26.13 (2) by a qualified wind energy conversion facility after 26.14 December 31,20152017; or 26.15 (3) by a qualified on-farm biogas recovery facility after 26.16 December 31, 2015. 26.17 (b) The payment period begins and runs consecutively from 26.18the first year in which electricity generated from the facility26.19is eligible for incentive paymentthe date the facility begins 26.20 generating electricity or, in the case of refurbishment of a 26.21 hydropower facility, after substantial repairs to the hydropower 26.22 facility dam funded by the incentive payments are initiated. 26.23 [EFFECTIVE DATE.] This section is effective the day 26.24 following final enactment. 26.25 Sec. 28. Minnesota Statutes 2002, section 216C.41, 26.26 subdivision 5, is amended to read: 26.27 Subd. 5. [AMOUNT OF PAYMENT; WIND FACILITIES LIMIT.] (a) 26.28 An incentive payment is based on the number of kilowatt hours of 26.29 electricity generated. The amount of the payment is: 26.30 (1) for a facility described under subdivision 2, paragraph 26.31 (a), clause (4), 1.0 cent per kilowatt hour; and 26.32 (2) for all other facilities, 1.5 cents per kilowatt hour. 26.33 For electricity generated by qualified wind energy conversion 26.34 facilities greater than 40 kilowatts nameplate capacity, the 26.35 incentive payment under this section is limited to no more than 26.36 100 megawatts of nameplate capacity.During any period in which27.1qualifying claims for incentive payments exceed 100 megawatts of27.2nameplate capacity, the payments must be made to producers in27.3the order in which the production capacity was brought into27.4production.27.5 (b) For wind energy conversion systems installed and 27.6 contracted for after January 1, 2002, the total size of a wind 27.7 energy conversion system under this section must be determined 27.8 according to this paragraph. Unless the systems are 27.9 interconnected with different distribution systems, the 27.10 nameplate capacity of one wind energy conversion system must be 27.11 combined with the nameplate capacity of any other wind energy 27.12 conversion system that is: 27.13 (1) located within five miles of the wind energy conversion 27.14 system; 27.15 (2) constructed within the same calendar year as the wind 27.16 energy conversion system; and 27.17 (3) under common ownership. 27.18 In the case of a dispute, the commissioner of commerce shall 27.19 determine the total size of the system, and shall draw all 27.20 reasonable inferences in favor of combining the systems. 27.21 (c) In making a determination under paragraph (b), the 27.22 commissioner of commerce may determine that two wind energy 27.23 conversion systems are under common ownership when the 27.24 underlying ownership structure contains similar persons or 27.25 entities, even if the ownership shares differ between the two 27.26 systems. Wind energy conversion systems are not under common 27.27 ownership solely because the same person or entity provided 27.28 equity financing for the systems. 27.29 (d) A qualified wind energy conversion system is eligible 27.30 for the incentive on the date the commissioner receives: 27.31 (1) an application for payment of the incentive; 27.32 (2) one of the following: 27.33 (i) a copy of a signed power purchase agreement; 27.34 (ii) a copy of a binding agreement other than a power 27.35 purchase agreement to sell electricity generated by the facility 27.36 to a third person; or 28.1 (iii) if the facility developer or owner will sell 28.2 electricity to its own members or customers, a copy of the 28.3 purchase order for equipment to construct the facility with a 28.4 delivery date and a copy of a signed receipt for a nonrefundable 28.5 deposit; and 28.6 (3) any other information the commissioner deems necessary 28.7 to determine whether the proposed facility qualifies for the 28.8 incentive under this section. 28.9 (e) The commissioner or the commissioner's designee shall 28.10 determine whether a facility qualifies for the incentive and 28.11 respond in writing to the applicant approving or denying the 28.12 application within 15 working days of receipt of the information 28.13 required in paragraph (d). A facility that is not operational 28.14 within 18 months of receipt of a letter of approval is no longer 28.15 approved for the incentive. The commissioner shall notify an 28.16 applicant of potential loss of approval not less than 60 days 28.17 prior to the end of the 18-month period. Eligibility for a 28.18 facility that loses approval may be reestablished as of the date 28.19 the commissioner receives a new completed application. Approval 28.20 applies only to the person or persons who applied for the 28.21 incentive and may not be transferred to any other person or 28.22 persons. 28.23 [EFFECTIVE DATE.] This section is effective the day 28.24 following final enactment. 28.25 Sec. 29. Minnesota Statutes 2002, section 216C.41, is 28.26 amended by adding a subdivision to read: 28.27 Subd. 5a. [ADDITIONAL SMALL WIND ENERGY PRODUCTION 28.28 INCENTIVE.] The department of commerce shall authorize payment 28.29 of the renewable energy production incentive to wind energy 28.30 conversion systems larger than 40 kilowatts in size for 150 28.31 megawatts of nameplate capacity in addition to the capacity 28.32 authorized under subdivision 5. Payment of the incentive shall 28.33 be made from the renewable energy development account as 28.34 provided under section 116C.779, subdivision 3. Any amount 28.35 needed to fully fund incentive payments under this subdivision 28.36 in addition to funds available in the renewable energy 29.1 development account will be provided under subdivision 2, 29.2 notwithstanding the limit specified in subdivision 5. 29.3 Sec. 30. [REDUCTION OF BIOMASS MANDATE.] 29.4 Notwithstanding Minnesota Statutes, section 216B.2424, the 29.5 biomass electric energy mandate shall be reduced from 125 29.6 megawatts to 88 megawatts. The public utilities commission 29.7 shall not approve any request for a deadline extension for 29.8 obtaining financing beyond September 1, 2004, for any contract 29.9 previously approved to satisfy a portion of the biomass mandate. 29.10 Sec. 31. [REFURBISHMENT OF METROPOLITAN GENERATING 29.11 PLANTS.] 29.12 (a) The public utility that owns the Prairie Island nuclear 29.13 generation facility shall immediately provide all remaining 29.14 information that the commission may request with regard to its 29.15 plans to undertake the repowering and upgrading of its electric 29.16 generation facilities located in the metropolitan area, as 29.17 described in its metropolitan emission reduction plan filed with 29.18 the public utilities commission in July 2002. The commission 29.19 shall within six months render its decision on the plan. 29.20 (b) Notwithstanding Minnesota Statutes, section 216B.1692, 29.21 subdivision 1, clause (2), and subdivision 5, paragraphs (c) and 29.22 (d), all investments in repowering, emissions reduction 29.23 technologies and equipment, and power plant rehabilitation and 29.24 life extension described in the primary emission reduction 29.25 proposal filed in July 2002 and currently pending before the 29.26 commission are deemed qualifying projects under Minnesota 29.27 Statutes, section 216B.1692, and all costs related to all such 29.28 investments are eligible for rider recovery under Minnesota 29.29 Statutes, section 216B.1692, subdivision 5. 29.30 Sec. 32. [CREATION OF AN ENERGY ENTERPRISE ZONE.] 29.31 Subdivision 1. [PURPOSE.] In order to encourage the 29.32 state's interest in innovative clean energy sources and in 29.33 recovery in the most economically problematic regions of the 29.34 state, an energy enterprise zone is hereby authorized, to 29.35 consist of: 29.36 (1) one or more industrial sites capable of hosting at 30.1 least 750 megawatts of baseload or intermediate electrical 30.2 generation capacity, which shall not exceed 5,000 acres; and 30.3 (2) one or more sites capable of hosting up to 250 30.4 megawatts of renewable or hydrogen-fueled electrical generation 30.5 capacity not to exceed the aggregate of 250 megawatts. 30.6 Subd. 2. [ELIGIBILITY FOR ENERGY ENTERPRISE ZONE 30.7 DESIGNATION.] In order to be eligible for designation as an 30.8 energy enterprise zone under this section, a proposed energy 30.9 project must: 30.10 (1) make use of an innovative generation technology with 30.11 production efficiencies greater than traditional generation 30.12 technologies and with significantly reduced emissions; 30.13 (2) be located in the taconite tax relief area of the state 30.14 on a site with infrastructure to support new or expanded 30.15 development and be designated by the commissioner of the iron 30.16 range resources and rehabilitation board under subdivision 3; 30.17 and 30.18 (3) for the renewable or hydrogen-fueled project sites, use 30.19 as a primary fuel source solar, wind, fuel cells, pumped 30.20 storage, or biomass energy, hydrogen, or hydroelectric energy 30.21 with a capacity of less than 60 megawatts. 30.22 Subd. 3. [DESIGNATION OF ELIGIBLE AREA.] Upon receiving a 30.23 proposal for an energy enterprise zone under this section, the 30.24 commissioner of the iron range resources and rehabilitation 30.25 board shall determine whether the energy project satisfies the 30.26 criteria in subdivision 1 and shall designate the energy 30.27 enterprise zone. The commissioner shall give priority to any 30.28 projects that have received prior financial and other support 30.29 from the board. 30.30 Subd. 4. [REGULATORY INCENTIVES.] (a) Projects designated 30.31 as energy enterprise zones under this section: 30.32 (1) are granted a certificate of need under Minnesota 30.33 Statutes, section 216B.243, for the generation facilities and 30.34 transmission infrastructure associated with the generation 30.35 facilities, but are subject to all applicable environmental 30.36 review and permitting procedures of Minnesota Statutes, sections 31.1 116C.51 to 116C.69; 31.2 (2) once permitted and constructed, are eligible to 31.3 increase the capacity of the associated transmission facilities 31.4 without additional state review upon filing notice with the 31.5 commission; 31.6 (3) have the power of eminent domain, which shall be 31.7 limited to the sites and routes approved by the environmental 31.8 quality board for the project facilities; 31.9 (4) shall qualify as an "eligible energy technology" for 31.10 purposes of Minnesota Statutes, section 216B.1691; 31.11 (5) shall, prior to the approval by the commission of any 31.12 arrangement of an eligible entity to build or expand a 31.13 fossil-fuel-fired generation facility, or enter into an 31.14 agreement to purchase capacity or energy from such a facility 31.15 for a term exceeding five years, be considered as a supply 31.16 option for such generation facility, and the commission shall 31.17 ensure such consideration and take any action with respect to 31.18 such supply proposal that it deems to be in the best interest of 31.19 ratepayers. "Eligible entity" means any entity subject to the 31.20 resource planning requirements of state law, and whose most 31.21 recent resource plan demonstrates a need for at least 450 31.22 megawatts of new generation capacity or energy resources; 31.23 (6) shall, subject to approval of the terms and conditions 31.24 thereof by the commission, be entitled to enter into a contract 31.25 with an eligible entity to provide 450 megawatts of baseload 31.26 capacity and energy under a long-term contract; and 31.27 (7) shall make a good-faith effort to secure funding from 31.28 the United States Department of Energy and the United States 31.29 Department of Agriculture to conduct a demonstration project at 31.30 the facility for either geologic or terrestrial carbon 31.31 sequestration projects to achieve reductions in facility 31.32 emissions or carbon dioxide. 31.33 (b) This subdivision does not apply to a proposal to add 31.34 utility-owned resources that is pending before the public 31.35 utilities commission. 31.36 Sec. 33. [RENEWABLE DEVELOPMENT FUND ADMINISTRATION.] 32.1 The public utilities commission may review the 32.2 appropriateness of the transfer of the administration of the 32.3 renewable development account under Minnesota Statutes, section 32.4 116C.779, to an organization with a board of directors that 32.5 includes representatives from the public utility currently 32.6 administering the fund, environmental organizations, the 32.7 Mdewakanton Dakota Community, and other affected communities. 32.8 Sec. 34. [DEPARTMENT OF TRADE AND ECONOMIC DEVELOPMENT; 32.9 PROGRAM DEVELOPMENT.] 32.10 Subdivision 1. [DEVELOPMENT OF BUSINESSES ENGAGED IN 32.11 HYDROGEN PRODUCTION.] The department of trade and economic 32.12 development must develop a targeted program to promote and 32.13 encourage the development and attraction of businesses engaged 32.14 in the biocatalysis of agricultural and forestry plant products 32.15 for the production of hydrogen, the manufacture of hydrogen fuel 32.16 cells, and hydrogen electrolysis from renewable energy sources. 32.17 The program may make use of existing departmental programs, 32.18 either alone or in combination. The department shall report to 32.19 the legislature by January 15, 2004, on legislative changes or 32.20 additional funding needed, if any, to accomplish the purposes of 32.21 this section. 32.22 Subd. 2. [ENERGY INNOVATION ZONES.] (a) The commissioner 32.23 of trade and economic development, in consultation with the 32.24 commissioners of commerce and revenue, shall develop a plan to 32.25 designate not more than three energy innovation zones to spur 32.26 the development of fuel cells, fuel cell components, hydrogen 32.27 infrastructure, and other energy efficiency and renewable energy 32.28 technologies in the state. In developing the criteria for the 32.29 designations, the commissioner shall consider: 32.30 (1) the availability of business, academic, and government 32.31 partners; 32.32 (2) the likelihood of establishing a distributed, renewable 32.33 energy microgrid to power the zone, providing below-market 32.34 electricity and heat to businesses from within the zone; 32.35 (3) the prospect of tenants for the zone that will 32.36 represent net new jobs to the state; and 33.1 (4) the likelihood of the production, storage, 33.2 distribution, and use of hydrogen, including its use in fuel 33.3 cells, for electricity and heat. 33.4 (b) Energy under paragraph (a), clause (2), must come from 33.5 one or more of the following renewable sources: wind, water, 33.6 sun, biomass, not including municipal solid waste, or hydrogen 33.7 reformed from natural gas up to 2010. 33.8 (c) The plan must allow for interested parties to form 33.9 energy innovation cooperatives. In addition, the commissioner 33.10 must consider the feasibility of the sale of energy innovation 33.11 bonds for the construction of qualifying facilities. 33.12 (d) In drafting the plan, the commissioner must consider 33.13 incentives for investment in the zone, including 33.14 (1) subsidization of construction of qualifying facilities; 33.15 (2) long-term contracts for market-rate heat and power 33.16 (3) exemption from laws giving exclusive service territory; 33.17 (4) streamlined interconnection to the existing power grid; 33.18 (5) exemptions from property tax; 33.19 (6) expedited permitting; 33.20 (7) methods for providing technical assistance; and 33.21 (8) other methods of encouraging the development and use 33.22 and development of fuel cell and hydrogen generation 33.23 technologies. 33.24 (e) The commissioner shall report to the legislature by 33.25 January 15, 2004, on legislative changes and necessary funding 33.26 to accomplish the purposes of this subdivision. 33.27 Sec. 35. [DEMONSTRATION PROJECT.] 33.28 (a) The department of commerce, in cooperation with the 33.29 department of trade and economic development, must develop and 33.30 issue a request for proposal for the construction of a 33.31 hydrogen-to-electricity demonstration project with the following 33.32 components: 33.33 (1) commercial-scale windmill-powered electrolysis of water 33.34 to hydrogen; 33.35 (2) on-site storage of hydrogen and fuel cells for 33.36 hydrogen-to-electricity conversion to maintain the supply of 34.1 electricity in the absence of wind; 34.2 (3) a hydrogen pipeline of less than ten miles to a public 34.3 facility demonstration site; and 34.4 (4) a public facility with on-site hydrogen fuel cells 34.5 providing hydrogen-to-electricity and, if practicable, 34.6 heating/cooling function. 34.7 (b) For purposes of this section, a "public facility" is a 34.8 municipal building, public school, state college or university, 34.9 or other public building. 34.10 Sec. 36. [SUNSET.] 34.11 Minnesota Statutes, section 116C.779, subdivision 2, 34.12 expires June 30, 2007. Minnesota Statutes, section 216B.241, 34.13 subdivision 1b, paragraph (j), expires July 1, 2007. 34.14 Sec. 37. [REPEALER.] 34.15 Minnesota Statutes 2002, section 216C.051, subdivisions 1, 34.16 4, and 5, are repealed. 34.17 Sec. 38. [EFFECTIVE DATE.] 34.18 Sections 1 to 37 are effective the day following final 34.19 enactment.