1st Engrossment - 82nd Legislature (2001 - 2002) Posted on 12/15/2009 12:00am
1.1 A bill for an act 1.2 relating to energy; providing tax benefits for various 1.3 energy investments; funding various energy 1.4 conservation programs; exempting certain personal 1.5 property from taxation; appropriating money; amending 1.6 Minnesota Statutes 2000, sections 216C.41; 272.02, 1.7 subdivision 9, by adding a subdivision; 290.06, by 1.8 adding a subdivision; 297A.67, by adding a subdivision. 1.9 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 1.10 Section 1. Minnesota Statutes 2000, section 216C.41, is 1.11 amended to read: 1.12 216C.41 [RENEWABLE ENERGY PRODUCTION INCENTIVE.] 1.13 Subdivision 1. [DEFINITIONS.] (a) The definitions in this 1.14 subdivision apply to this section. 1.15 (b) "Qualified hydroelectric facility" means a 1.16 hydroelectric generating facility in this state that: 1.17 (1) is located at the site of a dam, if the dam was in 1.18 existence as of March 31, 1994; and 1.19 (2) either (i) begins generating electricity after July 1, 1.20 1994; or (ii) is generating electricity as of June 30, 2001, and 1.21 undergoes substantial refurbishing after that date, to be 1.22 completed by December 31, 2005. 1.23 (c) "Qualified wind energy conversion facility" means a 1.24 wind energy conversion system that: 1.25 (1) produces two megawatts or less of electricity as 1.26 measured by nameplate rating and begins generating electricity 1.27 after June 30, 1997, and before July 1, 1999; 2.1 (2) begins generating electricity after June 30, 1999, 2.2 produces two megawatts or less of electricity as measured by 2.3 nameplate rating, and is: 2.4 (i) located within one county and owned by a natural person 2.5 who owns the land where the facility is sited; 2.6 (ii) owned, in whole or in part, but in no event less than 2.7 51 percent by
aone or more Minnesota small 2.8 businessbusinesses as defined in section 645.445; 2.9 (iii) owned by a nonprofit organization; or 2.10 (iv) owned by a tribal council if the facility is located 2.11 within the boundaries of the reservation; or 2.12 (3) begins generating electricity after June 30, 1999, 2.13 produces seven megawatts or less of electricity as measured by 2.14 nameplate rating, and: 2.15 (i) is owned by a cooperative organized under chapter 308A; 2.16 and 2.17 (ii) all shares and membership in the cooperative are held 2.18 by natural persons or estates, at least 51 percent of whom 2.19 reside in a county or contiguous to a county where the wind 2.20 energy production facilities of the cooperative are located. 2.21 (d) "Qualified on-farm biogas recovery facility" means an 2.22 anaerobic digester system that: 2.23 (1) is located at the site of an agricultural operation; 2.24 (2) is owned by a natural person, or an entity that is 2.25 qualified to own or operate a farm under section 500.24, who or 2.26 that owns or rents the land where the facility is located; and 2.27 (3) begins generating electricity after July 1, 2001. 2.28 (e) "Anaerobic digester system" means a system of 2.29 components that processes animal waste based on the absence of 2.30 oxygen and produces gas used to generate electricity. 2.31 Subd. 2. [INCENTIVE PAYMENT.] (a) Incentive payments shall2.32 must be made according to this section to (1) the owner of a 2.33 qualified on-farm biogas recovery facility; (2) the owner or 2.34 operator of a qualified hydropower facility or qualified wind 2.35 energy conversion facility for electric energy generated and 2.36 sold by the facility; or , for(3) except as provided in 3.1 paragraph (b), a publicly owned hydropower facility ,for 3.2 electric energy that is generated by the facility and used by 3.3 the owner of the facility outside the facility. 3.4 (b) For a facility that is publicly owned and in need of 3.5 substantial refurbishment and repair, the incentive payment 3.6 shall be made to the public owner of the facility to finance 3.7 structural repairs and replacement of structural components. 3.8 (c) Payment may only be made upon receipt by the 3.9 commissioner of finance of an incentive payment application that 3.10 establishes that the applicant is eligible to receive an 3.11 incentive payment and that satisfies other requirements the 3.12 commissioner deems necessary. The application shallmust be in 3.13 a form and submitted at a time the commissioner establishes. 3.14 (d) There is annually appropriated from the general fund 3.15 sums sufficient to make the payments required under this section. 3.16 Subd. 3. [ELIGIBILITY WINDOW.] Payments may be made under 3.17 this section only for electricity generated: 3.18 (1) from a qualified hydroelectric facility that is 3.19 operational and generating electricity before December 31, 3.20 20012002, or that undergoes substantial refurbishing after June 3.21 30, 2001, to be completed by December 31, 2005; or3.22 (2) from a qualified wind energy conversion facility that 3.23 is operational and generating electricity before January 1, 3.24 2005; or 3.25 (3) from a qualified on-farm biogas recovery facility from 3.26 July 1, 2001, through December 31, 2015. 3.27 Subd. 4. [PAYMENT PERIOD.] A facility may receive payments 3.28 under this section for a ten-year period. No payment under this 3.29 section may be made for electricity generated: 3.30 (1) by a qualified hydroelectric facility after December 3.31 31, 2010, or December 31, 2015, if the facility undergoes 3.32 substantial refurbishing after June 30, 2001; or3.33 (2) by a qualified wind energy conversion facility after 3.34 December 31, 2015; or 3.35 (3) by a qualified on-farm biogas recovery facility after 3.36 December 31, 2015. 4.1 The payment period begins and runs consecutively from the 4.2 first year in which electricity generated from the facility is 4.3 eligible for incentive payment. 4.4 Subd. 5. [AMOUNT OF PAYMENT.] (a) An incentive payment is 4.5 based on the number of kilowatt hours of electricity generated. 4.6 The amount of the payment is 1.5 cents per kilowatt hour. For 4.7 electricity generated by qualified wind energy conversion 4.8 facilities, the incentive payment under this section is limited 4.9 to no more than 100125 megawatts of nameplate capacity. During 4.10 any period in which qualifying claims for incentive payments 4.11 exceed 100125 megawatts of nameplate capacity, the payments 4.12 must be made to producers in the order in which the production 4.13 capacity was brought into production. 4.14 (b) Beginning January 1, 2002, a qualified wind energy 4.15 conversion facility defined under subdivision 1, paragraph (c), 4.16 clause (1), (2), or (3), may not be located within five miles of 4.17 another qualified wind energy conversion facility constructed 4.18 within the same calendar year and owned by the same person. For 4.19 the purposes of this paragraph, the department shall determine 4.20 that the same person owns two qualified wind energy conversion 4.21 facilities when the underlying ownership structure contains 4.22 similar persons or entities, other than a person or entity that 4.23 provides equity financing, even if the ownership shares differ 4.24 between the facilities. 4.25 Subd. 6. [CURE RIGHTS.] If, during the incentive payment 4.26 period, a qualified facility loses the right to receive 4.27 incentive payments because of noncompliance with this section, 4.28 the qualified facility need only file an application to be 4.29 eligible to again receive the incentive payments upon cure of 4.30 the noncompliance. 4.31 [EFFECTIVE DATE.] This section is effective July 1, 2001. 4.32 Sec. 2. Minnesota Statutes 2000, section 272.02, 4.33 subdivision 9, is amended to read: 4.34 Subd. 9. [PERSONAL PROPERTY; EXCEPTIONS.] Except for the 4.35 taxable personal property enumerated below, all personal 4.36 property and the property described in section 272.03, 5.1 subdivision 1, paragraphs (c) and (d), shall be exempt. 5.2 The following personal property shall be taxable: 5.3 (a) personal property which is part of an electric 5.4 generating, transmission, or distribution system or a pipeline 5.5 system transporting or distributing water, gas, crude oil, or 5.6 petroleum products or mains and pipes used in the distribution 5.7 of steam or hot or chilled water for heating or cooling 5.8 buildings and structures, except to the extent exempted under 5.9 subdivision 45 or section 272.027, or other law; 5.10 (b) railroad docks and wharves which are part of the 5.11 operating property of a railroad company as defined in section 5.12 270.80; 5.13 (c) personal property defined in section 272.03, 5.14 subdivision 2, clause (3); 5.15 (d) leasehold or other personal property interests which 5.16 are taxed pursuant to section 272.01, subdivision 2; 273.124, 5.17 subdivision 7; or 273.19, subdivision 1; or any other law 5.18 providing the property is taxable as if the lessee or user were 5.19 the fee owner; 5.20 (e) manufactured homes and sectional structures, including 5.21 storage sheds, decks, and similar removable improvements 5.22 constructed on the site of a manufactured home, sectional 5.23 structure, park trailer or travel trailer as provided in section 5.24 273.125, subdivision 8, paragraph (f); and 5.25 (f) flight property as defined in section 270.071. 5.26 Sec. 3. Minnesota Statutes 2000, section 272.02, is 5.27 amended by adding a subdivision to read: 5.28 Subd. 45. [EXEMPTION FOR PERSONAL PROPERTY USED TO 5.29 GENERATE ELECTRICITY.] For a generation facility or a natural 5.30 gas peaking facility constructed and placed into service after 5.31 January 1, 2001, personal property used to generate electricity 5.32 is exempt from property taxation. This exemption does not apply 5.33 to transformers, transmission lines, distribution lines, or any 5.34 other tools, implements, and machinery that is part of an 5.35 electric substation, wherever located. 5.36 Sec. 4. Minnesota Statutes 2000, section 290.06, is 6.1 amended by adding a subdivision to read: 6.2 Subd. 29. [CREDIT FOR PURCHASES OF CERTAIN ENERGY 6.3 SYSTEMS.] (a) A taxpayer may take a credit against the tax due 6.4 under this chapter equal to 15 percent of the amount expended by 6.5 the taxpayer for purchase and installation of eligible energy 6.6 systems and $3 for each watt of installed photovoltaic property 6.7 capacity. The credit may not exceed $2,000 per year, except 6.8 that there is no cap on the credit for photovoltaics. 6.9 If the credit provided under this subdivision exceeds the 6.10 tax liability of the taxpayer for the taxable year, the excess 6.11 amount of the credit may be carried over to each of the ten 6.12 taxable years succeeding the taxable year. The entire amount of 6.13 the credit must be carried to the earliest taxable year to which 6.14 the amount may be carried. The unused portion of the credit 6.15 must be carried to the following taxable year. No credit may be 6.16 carried to a taxable year more than ten years after the taxable 6.17 year in which the credit was earned. 6.18 For the purpose of this subdivision, "eligible equipment" 6.19 means ground source heat pumps, solar water heating property, 6.20 solar space heating property, fuel cells, and distributed 6.21 electric generating equipment that uses renewable fuel, natural 6.22 gas, or a fuel as clean or cleaner than natural gas; and wind 6.23 energy conversion systems. 6.24 (b) In this subdivision, the following words have the 6.25 meanings indicated: 6.26 (1) "photovoltaic property" means solar energy property 6.27 that uses a solar photovoltaic process to generate electricity 6.28 and that meets applicable performance and quality standards and 6.29 certification requirements in effect at the time of acquisition 6.30 of the property, as specified by the commissioner of commerce; 6.31 (2) "solar space heating property" means equipment that 6.32 uses solar energy: 6.33 (i) to heat or cool a structure; or 6.34 (ii) to provide solar process heat; 6.35 solar space heating property does not include a swimming pool, 6.36 hot tub, or any energy storage medium that has a function other 7.1 than storage; 7.2 (3) "solar water heating property" means solar energy 7.3 property that: 7.4 (i) when installed in connection with a structure, uses 7.5 solar energy for the purpose of providing hot water for use 7.6 within the structure; and 7.7 (ii) meets applicable performance and quality standards and 7.8 certification requirements in effect at the time of acquisition 7.9 of the property, as specified by the commissioner of commerce; 7.10 and 7.11 (4) "wind energy conversion system" has the meaning given 7.12 in section 216C.06, subdivision 12. 7.13 [EFFECTIVE DATE.] This section is effective for property 7.14 placed in service after June 30, 2001. 7.15 Sec. 5. Minnesota Statutes 2000, section 297A.67, is 7.16 amended by adding a subdivision to read: 7.17 Subd. 26. [ENERGY-EFFICIENT APPLIANCES; HEATING, COOLING, 7.18 AND ENERGY-GENERATING EQUIPMENT.] The following items are exempt 7.19 from taxation: clothes washers, clothes dryers, refrigerators, 7.20 freezers, room air conditioners, central air conditioners, 7.21 boilers, water heaters, furnaces, and electric heat pumps that 7.22 meet or exceed the applicable energy star efficiency 7.23 requirements developed by the United States Environmental 7.24 Protection Agency and the United States Department of Energy and 7.25 in effect on April 1, 2001. For natural gas water heaters, the 7.26 commissioner of commerce shall set a comparable requirement. 7.27 [EFFECTIVE DATE.] This section is effective for sales after 7.28 June 30, 2001. 7.29 Sec. 6. [PUBLIC INFORMATION REGARDING EXEMPTIONS AND 7.30 RECYCLING PROGRAMS.] 7.31 The commissioner of revenue must provide information to the 7.32 public and must direct detailed information to appliance 7.33 retailers concerning the availability of: 7.34 (1) the exemptions provided under Minnesota Statutes, 7.35 section 297A.67, subdivision 26; and 7.36 (2) programs for recycling of used appliances, including 8.1 the appliance exchange program. 8.2 Sec. 7. [DISTRIBUTED ENERGY GENERATION DEMONSTRATION 8.3 GRANTS.] 8.4 $10,000,000 is appropriated from the general fund for the 8.5 biennium ending June 30, 2003, to the commissioner of commerce 8.6 for demonstration grants to local governments for the purchase 8.7 and installation in public buildings of distributed electric 8.8 energy generating equipment and requisite infrastructure that 8.9 uses renewable source or natural gas or a fuel that is as clean 8.10 or cleaner than natural gas. Demonstration grants are for 8.11 capital expenditures that create on-site capacity to generate 8.12 electric energy in public buildings. Eligible capital 8.13 expenditures include equipment, installation, construction, 8.14 planning, engineering, and design costs. The commissioner shall 8.15 create criteria for the award of demonstration grants and shall 8.16 award demonstration grants according to a competitive grant 8.17 process. 8.18 Sec. 8. [ENERGY CONSERVATION LOANS.] 8.19 (a) $25,000,000 is appropriated from the general fund for 8.20 the biennium ending June 30, 2003, to the commissioner of 8.21 commerce to establish an energy conservation revolving loan 8.22 program to finance energy conservation capital improvements. 8.23 Loans under this program may be provided to: 8.24 (1) a state agency or institution of higher education; 8.25 (2) a public school; and 8.26 (3) a political subdivision of the state. 8.27 (b) The department shall determine the terms under which a 8.28 loan may be made under this section and shall set the interest 8.29 rate for a loan at a low rate that the department determines 8.30 sufficient to recover the costs of administering the loan 8.31 program. 8.32 (c) Any borrower that receives a loan under this section 8.33 shall repay the principal and interest on the loan from the 8.34 value of the energy savings that accrue as a result of the 8.35 energy conservation measures implemented with the borrowed money. 8.36 (d) An institution that receives a loan under this section 9.1 shall repay the loan from the amount budgeted for the agency's 9.2 or institution's energy costs. Until the loan is repaid, the 9.3 legislature may not reduce the amount budgeted for those energy 9.4 costs to reflect the value of the energy savings that accrue as 9.5 a result of the energy conservation measures implemented with 9.6 the money borrowed under this program. 9.7 Sec. 9. [UNDERGROUND TRANSMISSION LINES.] 9.8 $....... is appropriated from the general fund to the 9.9 commissioner of commerce for a grant to a public utility to 9.10 pilot the burying of transmission lines that are located in 9.11 close proximity to residences. The purpose of the grant is to 9.12 evaluate the public health effect of burying the lines. The 9.13 commissioner of commerce, staff of the public utilities 9.14 commission, and the department of health shall cooperate in 9.15 evaluating the pilot.