SF 843

as introduced - 86th Legislature (2009 - 2010) Posted on 02/09/2010 02:16am

A bill for an act
relating to energy; establishing rate schedule for certain renewable energy
projects; requiring reports; proposing coding for new law in Minnesota Statutes,
chapter 216B.

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

Section 1.

new text begin [216B.1601] FINDINGS; PURPOSE; CITATION.
new text end

new text begin Subdivision 1. new text end

new text begin Findings. new text end

new text begin The legislature finds that:
new text end

new text begin (a) The state has a vital interest in ensuring that its citizens have a reasonable
opportunity to develop, own, and invest in renewable electricity generation.
new text end

new text begin (b) The economic benefits of local renewable energy development to Minnesota's
economy are critical factors in state agency decision making regarding energy procurement
and ratemaking.
new text end

new text begin (c) Opportunities to own renewable electricity generation projects are particularly
important to the future economic development and quality of life of the state's rural
communities.
new text end

new text begin (d) The citizens of Minnesota have a vital interest in participating in the state's
efforts to limit greenhouse gas emissions through the development and ownership of
renewable electricity generation projects.
new text end

new text begin (e) The vast majority of Minnesotans are unable to benefit from the existing federal
renewable energy tax credit and other financial incentives supporting renewable energy
projects, and are therefore at a disadvantage relative to the large entities that are able to
utilize these federal incentives.
new text end

new text begin (f) Development of renewable energy in Minnesota requires that the state provide
its citizens with an opportunity to sell power at a just and reasonable price to the utilities
that serve them.
new text end

new text begin Subd. 2. new text end

new text begin Purpose. new text end

new text begin The purpose of the tariff is to:
new text end

new text begin (1) allow all Minnesotans to participate in renewable electricity generation by
requiring that utilities purchase such energy at a just and reasonable price;
new text end

new text begin (2) stabilize the Minnesota marketplace for the development of renewable energy;
new text end

new text begin (3) reduce the volatility of future electricity prices;
new text end

new text begin (4) lower the long-term cost of electricity;
new text end

new text begin (5) stimulate the development of new jobs, technologies, and industry in Minnesota;
new text end

new text begin (6) enable the rapid and sustainable development of Minnesota's abundant renewable
energy resources for the generation of electricity with fewer environmental impacts, as
required by Minnesota's renewable energy standards under section 216B.1691;
new text end

new text begin (7) assist Minnesota in achieving the greenhouse gas emissions-reduction goals
established under section 216H.02, subdivision 1;
new text end

new text begin (8) reduce air pollution from Minnesota's electric generation sector;
new text end

new text begin (9) protect Minnesota's natural resources; and
new text end

new text begin (10) place Minnesota at the forefront among North America's renewable energy
innovators.
new text end

new text begin Subd. 3. new text end

new text begin Citation. new text end

new text begin Sections 216B.1601 to 216B.1610 may be referred to as the
Energy Security and Economic Development Act of 2009.
new text end

Sec. 2.

new text begin [216B.1602] DEFINITIONS.
new text end

new text begin Subdivision 1. new text end

new text begin Scope. new text end

new text begin For purposes of sections 216B.1601 to 216B.1610, the
following terms have the meanings given them.
new text end

new text begin Subd. 2. new text end

new text begin Adequate renewable energy development. new text end

new text begin "Adequate renewable energy
development" means a rate of development necessary to accomplish the renewable energy
objectives and standards in section 216B.1691, subdivisions 2 and 2a.
new text end

new text begin Subd. 3. new text end

new text begin Average specific yield. new text end

new text begin "Average specific yield" means the average
number of kilowatt hours produced during the initial five years of production of a wind
energy conversion system, excluding the maximum and minimum years of production,
divided by the rotor-swept area in square meters.
new text end

new text begin Subd. 4. new text end

new text begin Capacity. new text end

new text begin "Capacity" means the nameplate capacity of a renewable
electricity generator.
new text end

new text begin Subd. 5. new text end

new text begin Community-based energy development project or C-BED project.
new text end

new text begin "Community-based energy development project" or "C-BED project" has the meaning
given in section 216B.1612, subdivision 2, paragraph (g).
new text end

new text begin Subd. 6. new text end

new text begin Electric utility. new text end

new text begin "Electric utility" means a public utility providing electric
service, or a generation or cooperative electric association that elects to be subject to rate
regulation by the commission under section 216B.026.
new text end

new text begin Subd. 7. new text end

new text begin Electrical distribution system. new text end

new text begin "Electrical distribution system" means
that portion of the electric power system over which the Federal Energy Regulatory
Commission does not have authority to interconnect electric generators that sell electricity
in intrastate commerce only.
new text end

new text begin Subd. 8. new text end

new text begin Open field project. new text end

new text begin "Open field project" means a photovoltaic device that
has no physical connection to a building other than electric lines to transport electricity.
new text end

new text begin Subd. 9. new text end

new text begin Photovoltaic device. new text end

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

new text begin Subd. 10. new text end

new text begin Qualifying owner. new text end

new text begin "Qualifying owner" has the meaning given in section
216B.1612, subdivision 2, paragraph (c).
new text end

new text begin Subd. 11. new text end

new text begin Reasonable profit. new text end

new text begin "Reasonable profit" means a rate of profit that is just
and reasonable, but not less than ten percent per year.
new text end

new text begin Subd. 12. new text end

new text begin Renewable electricity generator. new text end

new text begin "Renewable electricity generator"
means a project:
new text end

new text begin (1) that generates electrical energy by means of a wind energy conversion system or
a photovoltaic device; and
new text end

new text begin (2) in which one or more qualifying owners have at least a 51 percent ownership
interest.
new text end

new text begin Subd. 13. new text end

new text begin Rooftop project. new text end

new text begin "Rooftop project" means a project in which a
photovoltaic device is physically attached to the roof of a building.
new text end

new text begin Subd. 14. new text end

new text begin Rotor-swept area. new text end

new text begin "Rotor-swept area" means an area equal to 3.1416
multiplied by the square of the length of the rotor of a wind energy conversion system.
new text end

new text begin Subd. 15. new text end

new text begin Small wind turbine. new text end

new text begin "Small wind turbine" means a single wind turbine
with a rotor-swept area of no more than 1,000 square feet.
new text end

new text begin Subd. 16. new text end

new text begin Wind energy conversion system. new text end

new text begin "Wind energy conversion system" or
"WECS" has the meaning given in section 216C.06, subdivision 19.
new text end

Sec. 3.

new text begin [216B.1603] TARIFF ESTABLISHED.
new text end

new text begin A tariff is established to provide opportunities for Minnesotans to own and invest in
renewable electricity generation by requiring utilities to purchase electrical energy at a
just and reasonable price from Minnesota-owned renewable electricity generation projects
connected to the electrical distribution system in accordance with the standard terms and
rates provided in sections 216B.1601 to 216B.1610.
new text end

Sec. 4.

new text begin [216B.1604] TARIFF.
new text end

new text begin Subdivision 1. new text end

new text begin Utilities to offer tariff. new text end

new text begin By December 1, 2009, each public utility
providing electric service at retail shall file for commission approval a tariff consistent
with this section. Within 90 days of the first commission approval order under this
section, each cooperative electric association, generation and transmission cooperative
electric association, and municipal power agency shall adopt a tariff as consistent as
possible with this section.
new text end

new text begin Subd. 2. new text end

new text begin Tariff terms. new text end

new text begin An electric utility shall enter into a power purchase
agreement with the qualifying owners of a renewable electricity generator connected to the
electrical distribution system to purchase all of the electricity produced by the renewable
electricity generator. The term of the power purchase agreement must not be less than
20 years from the date of commissioning of the renewable electricity generator. The
rates of the power purchase agreement must be the rates established by the commission
under subdivision 3.
new text end

new text begin Subd. 3. new text end

new text begin Tariff rate schedule for electricity from WECS. new text end

new text begin The rate for electricity
generated by a wind energy conversion system must be the rate needed to ensure adequate
renewable energy development, plus a reasonable profit, but no less than the following:
new text end

new text begin (1) for years one through five following commissioning of the project, $0.105 per
kilowatt hour;
new text end

new text begin (2) for years six through 20 following commissioning of the project:
new text end

new text begin (i) $0.105 per kilowatt hour for projects with an average specific yield less than 700
kilowatt hours per square meter per year;
new text end

new text begin (ii) $0.08 per kilowatt hour for projects with an average specific yield greater than
1,100 kilowatt hours per square meter per year; and
new text end

new text begin (iii) a linear extrapolation between the rates in items (i) and (ii) for a project with an
average specific yield greater than 700 kilowatt hours per square meter per year but less
than 1,100 kilowatt hours per square meter per year; and
new text end

new text begin (3) for a small wind energy conversion system, $0.25 per kilowatt hour.
new text end

new text begin Subd. 4. new text end

new text begin Tariff rate schedule for electricity from photovoltaic device. new text end

new text begin The rate for
electricity generated by a photovoltaic device must be the rate needed to ensure adequate
renewable energy development plus a reasonable profit, but no less than the following:
new text end

new text begin (1) $0.50 per kilowatt hour for an open field project with a capacity of one megawatt
or less;
new text end

new text begin (2) $0.65 per kilowatt hour for a rooftop project with a capacity below 30 kilowatts;
new text end

new text begin (3) $0.62 per kilowatt hour for a rooftop project with a capacity of at least 30
kilowatts but less than 100 kilowatts; and
new text end

new text begin (4) $0.61 per kilowatt hour for a rooftop project with a capacity of at least 100
kilowatts but no greater than one megawatt;
new text end

new text begin Subd. 5. new text end

new text begin Subsequent rate schedules. new text end

new text begin (a) The minimum rates established under
subdivisions 3 and 4 apply to a power purchase agreement signed during the first year the
tariff is offered by an electric utility. The minimum rates for power purchase agreements
signed in subsequent years must decrease on January 1 of each subsequent year the tariff
is offered, by two percent per year for wind energy conversion systems, and by eight
percent per year for photovoltaic devices.
new text end

new text begin (b) The tariff rates established under this section must remain constant over the
entire term of a power purchase agreement, except as provided for in subdivision 3.
new text end

new text begin Subd. 6. new text end

new text begin Reduction for other incentive programs. new text end

new text begin The commission may not
approve a tariff established in this section that allows a project owner to receive federal or
state subsidies, tax credits, or other financial incentives available to owners of renewable
electric generation facilities, unless the tariff requires that those subsidies, tax credits,
or other financial incentives are deducted from the amounts paid to the project owner.
This subdivision does not apply to a photovoltaic device, to a tax under chapter 272,
or to financial incentives available to businesses that do not generate electricity from
renewable sources.
new text end

new text begin Subd. 7. new text end

new text begin Sale to nonqualifying owners limited. new text end

new text begin During the term of a power
purchase agreement entered into under the tariff established in this section, no qualifying
owner may voluntarily sell its ownership interest in the renewable energy generator
unless the sale is to another qualifying owner and is approved by the commission. This
subdivision does not restrict transfers of interest by means other than voluntary sales.
new text end

new text begin Subd. 8. new text end

new text begin Ownership limit. new text end

new text begin A single qualifying owner is limited to receiving
payments under tariffs established in this section from projects whose aggregate capacity
does not exceed 50 megawatts.
new text end

new text begin Subd. 9. new text end

new text begin Utility purchase limit. new text end

new text begin An electric utility may purchase power under
tariffs established in this section that comprises up to 20 percent of its renewable energy
obligation under section 216B.1691.
new text end

new text begin Subd. 10. new text end

new text begin Tariff review and adjustment. new text end

new text begin (a) Beginning February 1, 2012, and
every two years thereafter, the commission shall review and adjust rates adopted under
the tariff in this section every two years as necessary to achieve adequate renewable
energy development; account for inflation; provide for a reasonable, but not excessive,
profit to owners of renewable electricity generators; promote development of C-BED
projects; and minimize costs to ratepayers of a utility's compliance with the renewable
energy standards under section 216B.1691.
new text end

new text begin (b) After notice and hearing and upon finding that the objectives in section
216B.1691 are not likely to be met without extending this tariff to renewable electricity
projects connected to the electrical transmission system, the commission may require
electric utilities to enter into power purchase agreements with qualifying owners at rates
in accordance with subdivision 2 as are necessary to achieve adequate renewable energy
development upon such terms needed to ensure accomplishment of C-BED procurement
goals and adequate local benefits as defined in section 216B.1691.
new text end

new text begin Subd. 11. new text end

new text begin Interconnection. new text end

new text begin (a) The tariff in this section must provide that electric
utilities will interconnect renewable energy generators to the electrical distribution system
under the jurisdiction of the commission to the maximum extent of state jurisdiction
allowed under federal law.
new text end

new text begin (b) The commission shall consult with the Federal Energy Regulatory Commission,
the Midwest Independent Transmission System Operator Inc., and other appropriate
entities to establish an interconnection request review procedure to promptly and
efficiently determine whether or not the commission may interconnect a renewable energy
generator that requests interconnection under state authority.
new text end

new text begin (c) The commission shall issue orders necessary to establish interconnection tariffs
for the standardized, cost-effective, timely, reliable, and safe interconnection of renewable
electricity generators under state authority.
new text end

new text begin (d) The commission shall establish standard interconnection contracts and
interconnection schedules.
new text end

new text begin (e) A qualifying owner is responsible for paying the cost to interconnect a project
to the nearest electrical distribution system line. If the project is interconnected to an
electrical transmission system line, a qualifying owner is responsible for that portion
of interconnection costs equal to the cost of interconnecting the project to the nearest
electrical distribution system line. All other interconnection costs are the responsibility of
the electric utility.
new text end

new text begin (f) An electric utility's costs associated with the interconnection of renewable
electricity generators, including direct interconnection costs, distribution system
enhancements, and electric utility compliance costs, are recoverable as provided in section
216B.1605.
new text end

new text begin Subd. 12. new text end

new text begin Standard contract. new text end

new text begin The commission shall approve a standard contract to
be used in all power purchase agreements under the tariff established under this section.
The contract must include the price paid for each kilowatt hour generated, a method to
adjust the price for inflation, and the duration of the contract.
new text end

Sec. 5.

new text begin [216B.1605] COST RECOVERY.
new text end

new text begin The commission shall require an electric utility to file rate schedules containing
provisions for the automatic adjustment of charges for electric utility service in direct
relation to the cost of electricity purchased from renewable electricity generators under the
tariff established under sections 216B.1601 to 216B.1610 and all other costs required to
comply with the tariff established under section 216B.1604.
new text end

Sec. 6.

new text begin [216B.1606] INFORMATION REQUIRED.
new text end

new text begin (a) By March 1, 2011, and each year thereafter, a utility that has filed a tariff
established in this section with the commission must report to the commission, for the
previous calendar year, the quantities A through C, where:
new text end

new text begin (1) A = the total number of kilowatt hours purchased under contracts utilizing the
tariff established under section 216B.1604;
new text end

new text begin (2) B = the total revenues paid by the utility for electricity purchased under contracts
utilizing the tariff established under section 216B.1604; and
new text end

new text begin (3) C = the total number of kilowatt hours sold to Minnesota retail customers.
new text end

new text begin (b) Upon request, renewable energy generators, qualifying owners that own all or
part of a renewable energy generator, and electric utilities shall provide the commission
any information that may be relevant to the commission performing its duties under
sections 216B.1601 to 216B.1610, including but not limited to assessment of project
development costs, equipment costs, electricity production costs, interconnection costs,
automatic rate adjustments, and compliance costs.
new text end

Sec. 7.

new text begin [216B.1607] EQUALIZATION CHARGES AND PAYMENTS.
new text end

new text begin (a) For the purposes of this section:
new text end

new text begin (1) ∑A = the statewide aggregation of data for all utilities reported under section
216B.1606, paragraph (a), clause (1);
new text end

new text begin (2) ∑B = the statewide aggregation of data for all utilities reported under section
216B.1606, paragraph (a), clause (2); and
new text end

new text begin (3) ∑C = the statewide aggregation of data for all utilities reported under section
216B.1606, paragraph (a), clause (3).
new text end

new text begin (b) By June 1, 2011, and each year thereafter, the commission shall:
new text end

new text begin (1) calculate ∑A, ∑B, and ∑C;
new text end

new text begin (2) calculate the ratio ∑B divided by ∑C, which represents the cost of electricity
purchased under contracts utilizing the tariff established in section 216B.1604 spread over
all the electricity sold at retail in Minnesota, expressed in cents per kilowatt hour; and
new text end

new text begin (3) for each utility reporting under section 216B.1606, paragraph (a), calculate the
quotient B divided by C, which represents the cost of electricity purchased under contracts
utilizing the tariff established in section 216B.1604 spread over all the electricity sold at
retail by the utility, expressed in cents per kilowatt hour.
new text end

new text begin (c) For any utility for which the ratio B divided by C is less than the ratio ∑B divided
by ∑C, the commission shall assess the utility an equalization charge equal to the amount
((∑B/∑C) – (B/C)) times C. The commission shall send a notice of the assessment to the
utility by August 1. Utilities must remit assessments to the commission by October 1.
new text end

new text begin (d) For any utility for which the ratio B divided by C is greater than the ratio ∑B
divided by ∑C, the commission shall remit to the utility, by November 15, an equalization
payment equal to the amount ((B/C) – (∑B/∑C)) times C. Equalization payments shall be
made from the renewable energy equalization account established in section 216B.1608.
new text end

new text begin (e) The commission may adopt rules under chapter 14 to implement this section.
new text end

Sec. 8.

new text begin [216B.1608] RENEWABLE ENERGY EQUALIZATION ACCOUNT.
new text end

new text begin Subdivision 1. new text end

new text begin Establishment. new text end

new text begin The renewable energy equalization account
is established. The renewable energy equalization account is to be managed by the
commission. The commission shall deposit all revenues received as a result of assessments
made under section 216B.1607, paragraph (c), into the account.
new text end

new text begin Subd. 2. new text end

new text begin Purpose. new text end

new text begin The purpose of the renewable energy equalization account is
to equalize expenditures made under the tariff established in section 216B.1604 on a
per-kilowatt-hour basis across all electric utilities in the state.
new text end

new text begin Subd. 3. new text end

new text begin Appropriations. new text end

new text begin Money from the account is appropriated continuously
from the fund to the commission for the purpose of making payments to utilities under
section 216B.1607, paragraph (c).
new text end

new text begin Subd. 4. new text end

new text begin Carryover. new text end

new text begin Money in the account at the end of the fiscal year does not
cancel to the state general fund, but remains in the account to be used for the purposes
of this section.
new text end

Sec. 9.

new text begin [216B.1609] LOAN ELIGIBILITY.
new text end

new text begin A renewable electricity generator is eligible for a loan under section 216C.39,
subdivision 5.
new text end

Sec. 10.

new text begin [216B.1610] REPORT.
new text end

new text begin By January 1 of 2011 and 2012 and every four years thereafter, the commission shall
submit a report to the governor and legislature that must include all of the following:
new text end

new text begin (1) the number of new renewable electricity generators in this state and the
environmental effects of the addition of those generators, including but not limited to the
effects on progress toward achieving the renewable energy objectives and standards in
section 216B.1691;
new text end

new text begin (2) recommendations for legislation and changes to the rates in section 216B.1604,
if any; and
new text end

new text begin (3) actions taken by the commission to implement sections 216B.1601 to 216B.1610
and to use the tariff to achieve the renewable energy objectives and standards in section
216B.1691.
new text end

Sec. 11. new text begin EFFECTIVE DATE.
new text end

new text begin Sections 1 to 10 are effective the day following final enactment.
new text end