SF 1368

3rd Engrossment - 84th Legislature (2005 - 2006) Posted on 12/15/2009 12:00am

A bill for an act
relating to energy; providing for expedited cost
recovery for certain transmission investments;
authorizing and regulating transmission companies;
permitting the transfer of transmission assets and
operation to transmission companies; providing for
expedited regulatory approval of transmission projects
related to renewable generation; providing new
criteria to analyze the need for transmission
projects; establishing the framework for a wind energy
tariff related to community development; requiring a
wind integration study; transferring generation plant
siting and transmission line routing authority from
the Minnesota Environmental Quality Board to the
Public Utilities Commission; providing for technical
corrections to the energy assistance program;
providing for a sustainably managed woody biomass
generation project to satisfy the biomass mandate;
providing for an electronic mail filing system at the
Public Utilities Commission and Department of
Commerce; making changes to the conservation
investment program recommended by the legislative
auditor; authorizing the creation of energy quality
zones; regulating eligibility of biogas projects for
the renewable energy production incentive; providing
for the recovery of certain infrastructure investments
by gas utilities; requiring a study of compensation of
landowners for transmission easements; promoting the
use of soy-diesel; providing for the adjustment of
power purchase agreements to account for production
tax payments; promoting the use of hydrogen as an
energy source; requiring study of using biodiesel fuel
to heat homes; expanding authority of city of
Alexandria to enter into telecommunications-related
joint ventures; appropriating money; amending
Minnesota Statutes 2004, sections 13.681, by adding a
subdivision; 116C.52, subdivisions 2, 4; 116C.53,
subdivision 2; 116C.57, subdivisions 1, 2c, by adding
a subdivision; 116C.575, subdivision 5; 116C.577;
116C.58; 116C.61, subdivision 3; 116C.69, subdivisions
2, 2a; 119A.15, subdivision 5a; 216B.02, by adding a
subdivision; 216B.16, subdivision 6d, by adding
subdivisions; 216B.1645, subdivision 1; 216B.2421,
subdivision 2; 216B.2424, subdivisions 1, 2, 5a, 6, 8,
by adding a subdivision; 216B.2425, subdivisions 2, 7;
216B.243, subdivisions 3, 4, 5, 6, 7, 8; 216B.50,
subdivision 1; 216B.62, subdivision 5, by adding a
subdivision; 216B.79; 216C.052; 216C.09; 216C.41,
subdivision 1; 462A.05, subdivisions 21, 23; Laws
2002, chapter 329, section 5; proposing coding for new
law in Minnesota Statutes, chapters 216B; 216C.

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

ARTICLE 1

TRANSMISSION COMPANIES

Section 1.

Minnesota Statutes 2004, section 216B.02, is
amended by adding a subdivision to read:

new text begin Subd. 10. new text end

new text begin Transmission company. new text end

new text begin "Transmission company"
means persons, corporations, or other legal entities and their
lessees, trustees, and receivers, engaged in the business of
owning, operating, maintaining, or controlling in this state
equipment or facilities for furnishing electric transmission
service in Minnesota, but does not include public utilities,
municipal electric utilities, municipal power agencies,
cooperative electric associations, or generation and
transmission cooperative power associations.
new text end

Sec. 2.

Minnesota Statutes 2004, section 216B.16, is
amended by adding a subdivision to read:

new text begin Subd. 7b. new text end

new text begin Transmission cost adjustment. new text end

new text begin (a)
Notwithstanding any other provision of this chapter, the
commission may approve a tariff mechanism for the automatic
annual adjustment of charges for the Minnesota jurisdictional
costs of new transmission facilities that have been separately
filed and reviewed and approved by the commission under section
216B.243 or are certified as a priority project or deemed to be
a priority transmission project under section 216B.2425.
new text end

new text begin (b) Upon filing by a public utility or utilities providing
transmission service, the commission may approve, reject or
modify, after notice and comment, a tariff that:
new text end

new text begin (1) allows the utility to recover on a timely basis the
costs net of revenues of facilities approved under section
216B.243 or certified or deemed to be certified under section
216B.2425;
new text end

new text begin (2) allows a return on investment at the level approved in
the utility's last general rate case, unless a different return
is found to be consistent with the public interest;
new text end

new text begin (3) provides a current return on construction work in
progress, provided that recovery from Minnesota retail customers
for the allowance for funds used during construction is not
sought through any other mechanism;
new text end

new text begin (4) allows for recovery of other expenses if shown to
promote a least-cost project option or is otherwise in the
public interest;
new text end

new text begin (5) allocates project costs appropriately between wholesale
and retail customers;
new text end

new text begin (6) provides a mechanism for recovery above cost, if
necessary to improve the overall economics of the project or
projects or is otherwise in the public interest; and
new text end

new text begin (7) terminates recovery once costs have been fully
recovered or have otherwise been reflected in the utility's
general rates.
new text end

new text begin (c) A public utility may file annual rate adjustments to be
applied to customer bills paid under the tariff approved in
paragraph (b). In its filing, the public utility shall provide:
new text end

new text begin (1) a description of and context for the facilities
included for recovery;
new text end

new text begin (2) a schedule for implementation of applicable projects;
new text end

new text begin (3) the utility's costs for these projects;
new text end

new text begin (4) a description of the utility's efforts to ensure the
lowest costs to ratepayers for the project; and
new text end

new text begin (5) calculations to establish that the rate adjustment is
consistent with the terms of the tariff established in paragraph
(b).
new text end

new text begin (d) Upon receiving a filing for a rate adjustment pursuant
to the tariff established in paragraph (b), the commission shall
approve the annual rate adjustments provided that, after notice
and comment, the costs included for recovery through the tariff
were or are expected to be prudently incurred and achieve
transmission system improvements at the lowest feasible and
prudent cost to ratepayers.
new text end

Sec. 3.

Minnesota Statutes 2004, section 216B.16, is
amended by adding a subdivision to read:

new text begin Subd. 7c. new text end

new text begin Transmission assets transfer. new text end

new text begin (a) Public
utility owners of transmission facilities may, subject to Public
Utilities Commission approval, transfer operational control or
ownership of those transmission assets to a transmission company
subject to Federal Energy Regulatory Commission jurisdiction.
For transmission asset transfers by a public utility, the Public
Utilities Commission must review the request to transfer either
in the context of a general rate case under this section or by
initiating other proceedings it determines provide adequate
review of the transmission asset transfer. The Public Utilities
Commission may limit, in whole or in part, the transfer of
transmission assets or the timing of those transfers by a public
utility if it finds the limitation in the public interest. The
commission may only approve a transfer if it finds that the
transfer is consistent with the public interest.
new text end

new text begin In assessing the public interest, the commission shall
evaluate, among other things, whether the transfer:
new text end

new text begin (1) facilitates the development of transmission
infrastructure necessary to ensure reliability, encourages the
development of renewable resources, and accommodates energy
transfers within and between states;
new text end

new text begin (2) protects Minnesota ratepayers against the subsidization
of wholesale transactions through retail rates;
new text end

new text begin (3) ensures, in the case of operational control of
transmission assets, that the state retains jurisdiction over
the transferring utility for all aspects of service under
chapter 216B;
new text end

new text begin (4) impacts Minnesota retail rates; and
new text end

new text begin (5) protects Minnesota ratepayers from paying capital costs
for transmission assets that have already been recovered.
new text end

new text begin (b) A transfer of operational control or ownership of
transmission assets by a public utility under this subdivision
is subject to section 216B.50. The relationship between a
public utility transferring operational control of transmission
assets to another entity under this subdivision is subject to
the provisions of section 216B.48. If a public utility
transfers ownership of its transmission assets to a transmission
provider subject to the jurisdiction of the Federal Energy
Regulatory Commission, the Public Utilities Commission may
permit the utility to file a rate schedule providing for the
automatic adjustment of charges to recover the cost of
transmission services purchased under tariff rates approved by
the Federal Energy Regulatory Commission.
new text end

new text begin (c) A municipal utility, a municipal power agency, or a
joint venture pursuant to section 452.25 may transfer
operational control or ownership of transmission assets to a
transmission company, or make investments in a transmission
company, if the governing body of the municipal utility,
municipal power agency, or joint venture finds that the transfer
or investment is consistent with the public interest and will
facilitate the development of infrastructure necessary to ensure
reliability.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective August 1, 2005,
and applies to petitions for approval of transfer of
transmission assets filed on or after that date and does not
apply to proceedings pending before the Public Utilities
Commission before that date.
new text end

Sec. 4.

Minnesota Statutes 2004, section 216B.2421,
subdivision 2, is amended to read:

Subd. 2.

Large energy facility.

"Large energy facility"
means:

(1) any electric power generating plant or combination of
plants at a single site with a combined capacity of 50,000
kilowatts or more and transmission lines directly associated
with the plant that are necessary to interconnect the plant to
the transmission system;

(2) any high-voltage transmission line with a capacity of
200 kilovolts or more new text begin and greater than 1,500 feet in length new text end ;

(3) any high-voltage transmission line with a capacity of
100 kilovolts or more with more than ten miles of its length in
Minnesota or that crosses a state line;

(4) any pipeline greater than six inches in diameter and
having more than 50 miles of its length in Minnesota used for
the transportation of coal, crude petroleum or petroleum fuels
or oil, or their derivatives;

(5) any pipeline for transporting natural or synthetic gas
at pressures in excess of 200 pounds per square inch with more
than 50 miles of its length in Minnesota;

(6) any facility designed for or capable of storing on a
single site more than 100,000 gallons of liquefied natural gas
or synthetic gas;

(7) any underground gas storage facility requiring a permit
pursuant to section 103I.681;

(8) any nuclear fuel processing or nuclear waste storage or
disposal facility; and

(9) any facility intended to convert any material into any
other combustible fuel and having the capacity to process in
excess of 75 tons of the material per hour.

Sec. 5.

Minnesota Statutes 2004, section 216B.243,
subdivision 3, is amended to read:

Subd. 3.

Showing required for construction.

No proposed
large energy facility shall be certified for construction unless
the applicant can show that demand for electricity cannot be met
more cost effectively through energy conservation and
load-management measures and unless the applicant has otherwise
justified its need. In assessing need, the commission shall
evaluate:

(1) the accuracy of the long-range energy demand forecasts
on which the necessity for the facility is based;

(2) the effect of existing or possible energy conservation
programs under sections 216C.05 to 216C.30 and this section or
other federal or state legislation on long-term energy demand;

(3) the relationship of the proposed facility to overall
state energy needs, as described in the most recent state energy
policy and conservation report prepared under section 216C.18 new text begin ,
or, in the case of a high-voltage transmission line, the
relationship of the proposed line to regional energy needs, as
presented in the transmission plan submitted under section
216B.2425 new text end ;

(4) promotional activities that may have given rise to the
demand for this facility;

(5) benefits of this facility, including its uses to
protect or enhance environmental quality, and to increase
reliability of energy supply in Minnesota and the region;

(6) possible alternatives for satisfying the energy demand
or transmission needs including but not limited to potential for
increased efficiency and upgrading of existing energy generation
and transmission facilities, load-management programs, and
distributed generation;

(7) the policies, rules, and regulations of other state and
federal agencies and local governments; deleted text begin and
deleted text end

(8) any feasible combination of energy conservation
improvements, required under section 216B.241, that can (i)
replace part or all of the energy to be provided by the proposed
facility, and (ii) compete with it economically new text begin ;
new text end

new text begin (9) with respect to a high-voltage transmission line, the
benefits of enhanced regional reliability, access, or
deliverability to the extent these factors improve the
robustness of the transmission system or lower costs for
electric consumers in Minnesota;
new text end

new text begin (10) whether the applicant or applicants are in compliance
with applicable provisions of sections 216B.1691 and 216B.2425,
subdivision 7, and have filed or will file by a date certain an
application for certificate of need under this section or for
certification as a priority electric transmission project under
section 216B.2425 for any transmission facilities or upgrades
identified under section 216B.2425, subdivision 7;
new text end

new text begin (11) whether the applicant has made the demonstrations
required under subdivision 3a; and
new text end

new text begin (12) if the applicant is proposing a nonrenewable
generating plant, the applicant's assessment of the risk of
environmental costs and regulation on that proposed facility
over the expected useful life of the plant, including a proposed
means of allocating costs associated with that risk new text end .

Sec. 6.

Minnesota Statutes 2004, section 216B.243,
subdivision 6, is amended to read:

Subd. 6.

Application fees; rules.

Any application for a
certificate of need shall be accompanied by the new text begin application new text end fee
required pursuant to this subdivision. new text begin The application fee is
to be applied toward the total costs reasonably necessary to
complete the evaluation of need for the proposed facility. new text end The
maximum new text begin application new text end fee shall be $50,000, except for an
application for an electric power generating plant as defined in
section 216B.2421, subdivision 2, clause (1), or a high-voltage
transmission line as defined in section 216B.2421, subdivision
2, clause (2), for which the maximum new text begin application new text end fee shall be
$100,000. deleted text begin The commission may require an additional fee to
recover the costs of any rehearing. The fee for a rehearing
shall not be greater than the actual cost of the rehearing or
the maximum fee specified above, whichever is less. deleted text end new text begin Costs
exceeding the application fee and reasonably necessary to
complete the evaluation of need for the proposed facility shall
be recovered from the applicant. If the applicant is a public
utility, a cooperative electric association, a generation and
transmission cooperative electric association, a municipal power
agency, a municipal electric utility, or a transmission company,
the recovery shall be done pursuant to section 216B.62. new text end The
commission shall establish by rule pursuant to chapter 14 and
sections 216C.05 to 216C.30 and this section, a schedule of fees
based on the output or capacity of the facility and the
difficulty of assessment of need. Money collected in this
manner shall be credited to the general fund of the state
treasury.

Sec. 7.

Minnesota Statutes 2004, section 216B.2425,
subdivision 2, is amended to read:

Subd. 2.

List development new text begin ; transmission projects report new text end .

(a) By November 1 of each odd-numbered year, deleted text begin each deleted text end new text begin a transmission
projects report must be submitted to the commission by each
utility, organization, or company that:
new text end

new text begin (1) is a new text end public utility, new text begin a new text end municipal utility, deleted text begin and deleted text end new text begin a
new text end cooperative electric association, deleted text begin or deleted text end the generation and
transmission organization that serves each utility or
association, deleted text begin that deleted text end new text begin or a transmission company; and
new text end

new text begin (2) new text end owns or operates electric transmission lines in
Minnesota deleted text begin shall deleted text end new text begin .
new text end

new text begin (b) The report may be submitted new text end jointly or individually
deleted text begin submit a transmission projects report deleted text end to the commission.

new text begin (c) new text end The report must:

(1) list specific present and reasonably foreseeable future
inadequacies in the transmission system in Minnesota;

(2) identify alternative means of addressing each
inadequacy listed;

(3) identify general economic, environmental, and social
issues associated with each alternative; and

(4) provide a summary of public input deleted text begin the utilities and
associations have gathered deleted text end related to the list of inadequacies
and the role of local government officials and other interested
persons in assisting to develop the list and analyze
alternatives.

deleted text begin (b) deleted text end new text begin (d) new text end To meet the requirements of this subdivision,
deleted text begin entities deleted text end new text begin reporting parties new text end may rely on available information and
analysis developed by a regional transmission organization or
any subgroup of a regional transmission organization and may
develop and include additional information as necessary.

Sec. 8.

Minnesota Statutes 2004, section 216B.50,
subdivision 1, is amended to read:

Subdivision 1.

Commission approval required.

No public
utility shall sell, acquire, lease, or rent any plant as an
operating unit or system in this state for a total consideration
in excess of $100,000, or merge or consolidate with another
public utility new text begin or transmission company new text end operating in this state,
without first being authorized so to do by the commission. Upon
the filing of an application for the approval and consent of the
commission deleted text begin thereto deleted text end new text begin , new text end the commission shall investigate, with or
without public hearing deleted text begin , and in case of deleted text end new text begin . The commission shall
hold new text end a public hearing, upon such notice as the commission may
require deleted text begin , and if it shall find deleted text end new text begin . If the commission finds new text end that the
proposed action is consistent with the public interest new text begin , new text end it shall
give its consent and approval by order in writing. In reaching
its determination new text begin , new text end the commission shall take into consideration
the reasonable value of the property, plant, or securities to be
acquired or disposed of, or merged and consolidated. deleted text begin The
provisions of
deleted text end

This section deleted text begin shall deleted text end new text begin does new text end not deleted text begin be construed as
applicable deleted text end new text begin apply new text end to the purchase of deleted text begin units of deleted text end property deleted text begin for
replacement or to the addition deleted text end to new text begin replace or add to new text end the plant of
the public utility by construction.

Sec. 9.

Minnesota Statutes 2004, section 216B.62,
subdivision 5, is amended to read:

Subd. 5.

Assessing cooperatives and municipals.

The
commission and department may charge cooperative electric
associations new text begin , generation and transmission cooperative electric
associations, municipal power agencies, new text end and municipal electric
utilities their proportionate share of the expenses incurred in
the review and disposition of resource plans, adjudication of
service area disputes, proceedings under section new text begin 216B.1691,
new text end 216B.2425, new text begin or 216B.243, new text end and the costs incurred in the
adjudication of complaints over service standards, practices,
and rates. Cooperative electric associations electing to become
subject to rate regulation by the commission pursuant to section
216B.026, subdivision 4, are also subject to this section.
Neither a cooperative electric association nor a municipal
electric utility is liable for costs and expenses in a calendar
year in excess of the limitation on costs that may be assessed
against public utilities under subdivision 2. A cooperative
electric association new text begin , generation and transmission cooperative
electric association, municipal power agency, new text end or municipal
electric utility may object to and appeal bills of the
commission and department as provided in subdivision 4.

The department shall assess cooperatives and municipalities
for the costs of alternative energy engineering activities under
section 216C.261. Each cooperative and municipality shall be
assessed in proportion that its gross operating revenues for the
sale of gas and electric service within the state for the last
calendar year bears to the total of those revenues for all
public utilities, cooperatives, and municipalities.

Sec. 10.

Minnesota Statutes 2004, section 216B.62, is
amended by adding a subdivision to read:

new text begin Subd. 5a. new text end

new text begin Assessing transmission companies. new text end

new text begin The
commission and department may charge transmission companies
their proportionate share of the expenses incurred in the review
and disposition of proceedings under sections 216B.2425,
216B.243, 216B.48, 216B.50, and 216B.79. A transmission company
is not liable for costs and expenses in a calendar year in
excess of the limitation on costs that may be assessed against
public utilities under subdivision 2. A transmission company
may object to and appeal bills of the commission and department
as provided in subdivision 4.
new text end

Sec. 11.

Minnesota Statutes 2004, section 216B.79, is
amended to read:

216B.79 PREVENTATIVE MAINTENANCE.

The commission may order public utilities to make adequate
infrastructure investments and undertake sufficient preventative
maintenance with regard to generation, transmission, and
distribution facilities. new text begin The commission's authority under this
section also applies to any transmission company that owns or
operates electric transmission lines in Minnesota.
new text end

Sec. 12. new text begin STAKEHOLDER PROCESS AND REPORT.
new text end

new text begin Subdivision 1. new text end

new text begin Membership. new text end

new text begin By June 15, 2005, the
Legislative Electric Energy Task Force shall convene a
stakeholder group consisting of one representative from each of
the following groups: transmission-owning investor-owned
utilities, electric cooperatives, municipal power agencies,
energy consumer advocates, business energy consumer advocates,
residential energy consumer advocates, environmental
organizations, the Minnesota Department of Commerce, and the
Minnesota Public Utilities Commission. The task force, in its
sole discretion, may add other representatives to the
stakeholder group.
new text end

new text begin Subd. 2. new text end

new text begin Charge. new text end

new text begin (a) The stakeholder group shall explore
whether increased efficiencies and effectiveness can be obtained
through modifying current state statutes and administrative
processes to certify and route high-voltage transmission lines,
including modifications to section 216B.243.
new text end

new text begin (b) In developing its recommendations, the stakeholder
group shall consider:
new text end

new text begin (1) whether the certification process established under
section 216B.2425, subdivision 3, can be modified to encourage
utilities to apply for certification under that section;
new text end

new text begin (2) whether alternative certification processes are
feasible for different types of transmission facilities; and
new text end

new text begin (3) whether additional cooperation between state agencies
is needed to enhance the efficiency of the certification and
routing processes, and whether modifications to those processes
are appropriate.
new text end

new text begin Subd. 3. new text end

new text begin Report. new text end

new text begin By January 15, 2006, the task force
shall submit a report to the legislature summarizing the
stakeholder group findings and any recommended changes to the
certification and routing processes for high-voltage
transmission lines.
new text end

ARTICLE 2

C-BED AND RENEWABLE TRANSMISSION

Section 1.

new text begin [216B.1612] COMMUNITY-BASED ENERGY
DEVELOPMENT; TARIFF.
new text end

new text begin Subdivision 1. new text end

new text begin Tariff establishment. new text end

new text begin A tariff shall be
established to optimize local, regional, and state benefits from
wind energy development, and to facilitate widespread
development of community-based wind energy projects throughout
Minnesota.
new text end

new text begin Subd. 2. new text end

new text begin Definitions. new text end

new text begin (a) The terms used in this section
have the meanings given them in this subdivision.
new text end

new text begin (b) "C-BED tariff" or "tariff" means a community-based
energy development tariff.
new text end

new text begin (c) "Qualifying owner" means:
new text end

new text begin (1) a Minnesota resident;
new text end

new text begin (2) a limited liability corporation that is organized under
the laws of this state and that is made up of members who are
Minnesota residents;
new text end

new text begin (3) a Minnesota nonprofit organization organized under
chapter 317A;
new text end

new text begin (4) a Minnesota cooperative association organized under
chapter 308A or 308B, other than a rural electric cooperative
association or a generation and transmission cooperative;
new text end

new text begin (5) a Minnesota political subdivision or local government
other than a municipal electric utility or municipal power
agency, including, but not limited to, a county, statutory or
home rule charter city, town, school district, or public or
private higher education institution or any other local or
regional governmental organization such as a board, commission,
or association; or
new text end

new text begin (6) a tribal council.
new text end

new text begin (d) "Net present value rate" means a rate equal to the net
present value of the nominal payments to a project divided by
the total expected energy production of the project over the
life of its power purchase agreement.
new text end

new text begin (e) "Standard reliability criteria" means:
new text end

new text begin (1) can be safely integrated into and operated within the
utility's grid without causing any adverse or unsafe
consequences; and
new text end

new text begin (2) is consistent with the utility's resource needs as
identified in its most recent resource plan submitted under
section 216B.2422.
new text end

new text begin (f) "Community-based energy project" or "C-BED project"
means a new wind energy project that:
new text end

new text begin (1) has no single qualifying owner owning more than 15
percent of a C-BED project that consists of more than two
turbines; or
new text end

new text begin (2) for C-BED projects of one or two turbines, is owned
entirely by one or more qualifying owners, with at least 51
percent of the total financial benefits over the life of the
project flowing to qualifying owners; and
new text end

new text begin (3) has a resolution of support adopted by the county board
of each county in which the project is to be located, or in the
case of a project located within the boundaries of a
reservation, the tribal council for that reservation.
new text end

new text begin Subd. 3. new text end

new text begin Tariff rate. new text end

new text begin (a) The tariff described in
subdivision 4 must have a rate schedule that allows for a rate
up to a 2.7 cents per kilowatt hour net present value rate over
the 20-year life of the power purchase agreement. The tariff
must provide for a rate that is higher in the first ten years of
the power purchase agreement than in the last ten years. The
discount rate required to calculate the net present value must
be the utility's normal discount rate used for its other
business purposes.
new text end

new text begin (b) The commission shall consider mechanisms to encourage
the aggregation of C-BED projects.
new text end

new text begin (c) The commission shall require that qualifying owners
provide sufficient security to secure performance under the
power purchase agreement, and shall prohibit the transfer of the
C-BED project to a nonqualifying owner during the initial 20
years of the contract.
new text end

new text begin Subd. 4. new text end

new text begin Utilities to offer tariff. new text end

new text begin By December 1, 2005,
each public utility providing electric service at retail shall
file for commission approval a community-based energy
development tariff consistent with subdivision 3. Within 90
days of the first commission approval order under this
subdivision, each municipal power agency and generation and
transmission cooperative electric association shall adopt a
community-based energy development tariff as consistent as
possible with subdivision 3.
new text end

new text begin Subd. 5. new text end

new text begin Priority for c-bed projects. new text end

new text begin (a) A utility
subject to section 216B.1691 that needs to construct new
generation, or purchase the output from new generation, as part
of its plan to satisfy its good faith objective under that
section should take reasonable steps to determine if one or more
C-BED projects are available that meet the utility's cost and
reliability requirements, applying standard reliability
criteria, to fulfill some or all of the identified need at
minimal impact to customer rates.
new text end

new text begin Nothing in this section shall be construed to obligate a
utility to enter into a power purchase agreement under a C-BED
tariff developed under this section.
new text end

new text begin (b) Each utility shall include in its resource plan
submitted under section 216B.2422 a description of its efforts
to purchase energy from C-BED projects, including a list of the
projects under contract and the amount of C-BED energy purchased.
new text end

new text begin (c) The commission shall consider the efforts and
activities of a utility to purchase energy from C-BED projects
when evaluating its good faith effort towards meeting the
renewable energy objective under section 216B.1691.
new text end

new text begin Subd. 6. new text end

new text begin Property owner participation. new text end

new text begin To the extent
feasible, a developer of a C-BED project must provide, in
writing, an opportunity to invest in the C-BED project to each
property owner on whose property a high voltage transmission
line is constructed that will transmit the energy generated by
the C-BED project to market. This subdivision applies if the
property is located and the owner resides in the county where
the C-BED project is located.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This subdivision is effective July 1,
2005, and applies to transmission line construction beginning on
or after that date.
new text end

new text begin Subd. 7. new text end

new text begin Other c-bed tariff issues. new text end

new text begin (a) A
community-based project developer and a utility shall negotiate
the rate and power purchase agreement terms consistent with the
tariff established under subdivision 4.
new text end

new text begin (b) At the discretion of the developer, a community-based
project developer and a utility may negotiate a power purchase
agreement with terms different from the tariff established under
subdivision 4.
new text end

new text begin (c) A qualifying owner, or any combination of qualifying
owners, may develop a joint venture project with a nonqualifying
wind energy project developer. However, the terms of the C-BED
tariff may only apply to the portion of the energy production of
the total project that is directly proportional to the equity
share of the project owned by the qualifying owners.
new text end

new text begin (d) A project that is operating under a power purchase
agreement under a C-BED tariff is not eligible for net energy
billing under section 216B.164, subdivision 3, or for production
incentives under section 216C.41.
new text end

new text begin (e) A public utility must receive commission approval of a
power purchase agreement for a C-BED tariffed project. The
commission shall provide the utility's ratepayers an opportunity
to address the reasonableness of the proposed power purchase
agreement. Unless a party objects to a contract within 30 days
of submission of the contract to the commission the contract is
deemed approved.
new text end

Sec. 2.

Minnesota Statutes 2004, section 216B.1645,
subdivision 1, is amended to read:

Subdivision 1.

Commission authority.

Upon the petition
of a public utility, the Public Utilities Commission shall
approve or disapprove power purchase contracts, investments, or
expenditures entered into or made by the utility to satisfy the
wind and biomass mandates contained in sections 216B.169,
216B.2423, and 216B.2424, new text begin and to satisfy the renewable energy
objectives set forth in section 216B.1691, new text end including reasonable
investments and expenditures made to new text begin :
new text end

new text begin (1) new text end transmit the electricity generated from sources
developed under those sections that is ultimately used to
provide service to the utility's retail customers, deleted text begin or to
deleted text end new text begin including studies necessary to identify new transmission
facilities needed to transmit electricity to Minnesota retail
customers from generating facilities constructed to satisfy the
renewable energy objectives, provided that the costs of the
studies have not been recovered previously under existing
tariffs and the utility has filed an application for a
certificate of need or for certification as a priority project
under section 216B.2425 for the new transmission facilities
identified in the studies; or
new text end

new text begin (2) new text end develop renewable energy sources from the account
required in section 116C.779.

Sec. 3.

Minnesota Statutes 2004, section 216B.2425,
subdivision 7, is amended to read:

Subd. 7.

Transmission needed to support renewable
resources.

new text begin (a) new text end Each entity subject to this section shall
determine necessary transmission upgrades to support development
of renewable energy resources required to meet objectives under
section 216B.1691 and shall include those upgrades in its report
under subdivision 2.

new text begin (b) Transmission projects determined by the commission to
be necessary to support a utility's plan under section 216B.1691
to meet its obligations under that section must be certified as
a priority electric transmission project, satisfying the
requirements of section 216B.243. In determining that a
proposed transmission project is necessary to support a
utility's plan under section 216B.1691, the commission must find
that the applicant has met the following factors:
new text end

new text begin (1) that the transmission facility is necessary to allow
the delivery of power from renewable sources of energy to retail
customers in Minnesota;
new text end

new text begin (2) that the applicant has signed or will sign power
purchase agreements, subject to commission approval, for
resources to meet the renewable energy objective that are
dependent upon or will use the capacity of the transmission
facility to serve retail customers in Minnesota;
new text end

new text begin (3) that the installation and commercial operation date of
the renewable resources to satisfy the renewable energy
objective will match the planned in-service date of the
transmission facility; and
new text end

new text begin (4) that the proposed transmission facility is consistent
with a least cost solution to the utility's need for additional
electricity.
new text end

Sec. 4.

Minnesota Statutes 2004, section 216B.243,
subdivision 8, is amended to read:

Subd. 8.

Exemptions.

This section does not apply to:

(1) cogeneration or small power production facilities as
defined in the Federal Power Act, United States Code, title 16,
section 796, paragraph (17), subparagraph (A), and paragraph
(18), subparagraph (A), and having a combined capacity at a
single site of less than 80,000 kilowatts deleted text begin or to deleted text end new text begin ; new text end plants or
facilities for the production of ethanol or fuel alcohol deleted text begin nor in deleted text end new text begin ;
or new text end any case where the commission deleted text begin shall determine deleted text end new text begin has determined
new text end after being advised by the attorney general that its application
has been preempted by federal law;

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

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

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

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

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

new text begin (7) a large energy facility that (i) generates electricity
from wind energy conversion systems, (ii) will serve retail
customers in Minnesota, (iii) is specifically intended to be
used to meet the renewable energy objective under section
216B.1691 or addresses a resource need identified in a current
commission-approved or commission-reviewed resource plan under
section 216B.2422; and (iv) derives at least 10 percent of the
total nameplate capacity of the proposed project from one or
more C-BED projects, as defined under section 216B.1612,
subdivision 2, paragraph (f) new text end .

Sec. 5.

new text begin [216C.053] RENEWABLE ENERGY DEVELOPMENT.
new text end

new text begin The commissioner of commerce must engage in activities to
encourage deployment of cost effective renewable energy
developments within the state. The commissioner shall compile
and maintain information concerning existing and potential
renewable energy developments and resources in the state. The
commissioner shall provide, as appropriate, this information in
proceedings for the determination of need for large energy
facilities and for the review of a utility's integrated resource
plan. To the extent practicable, and in addition to any other
obligation of an electric utility to furnish information, an
electric utility seeking to add generation to its supply
portfolio to serve Minnesota consumers shall provide the
commissioner with notice of its intention.
new text end

Sec. 6. new text begin WIND INTEGRATION STUDY.
new text end

new text begin The commission shall order all electric utilities, as
defined in Minnesota Statutes, section 216B.1691, subdivision 1,
paragraph (b), to participate in a statewide wind integration
study. Utilities subject to Minnesota Statutes, section
216B.1691, shall jointly contract with an independent firm
selected by the reliability administrator to conduct an
engineering study of the impacts on reliability and costs
associated with increasing wind capacity to 20 percent of
Minnesota retail electric energy sales by the year 2020, and to
identify and develop options for utilities to use to manage the
intermittent nature of wind resources. The contracting
utilities shall cooperate with the firm conducting the study by
providing data requested. The reliability administrator shall
manage the study process and shall appoint a group of
stakeholders with experience in engineering and expertise in
power systems or wind energy to review the study's proposed
methods and assumptions and preliminary data. The study must be
completed by November 30, 2006. Using the study results, the
contracting utilities shall provide the commissioner of commerce
with estimates of the impact on their electric rates of
increasing wind capacity to 20 percent, assuming no reduction in
reliability. Electric utilities shall incorporate the study's
findings into their utility integrated resource plans prepared
under Minnesota Statutes, section 216B.2422. The costs of the
study are recoverable under Minnesota Statutes, section
216C.052, subdivision 2, paragraph (c), clause (2).
new text end

Sec. 7. new text begin EXPIRATION.
new text end

new text begin Section 3, paragraph (b), expires on January 1, 2010.
new text end

ARTICLE 3

ROUTING AND SITING AUTHORITY TRANSFER

Section 1.

Minnesota Statutes 2004, section 116C.52,
subdivision 2, is amended to read:

Subd. 2.

deleted text begin board deleted text end new text begin commission new text end .

deleted text begin "Board" shall mean the
Minnesota Environmental Quality Board deleted text end new text begin "Commission" means the
Public Utilities Commission new text end .

Sec. 2.

Minnesota Statutes 2004, section 116C.52,
subdivision 4, is amended to read:

Subd. 4.

High voltage transmission line.

"High voltage
transmission line" means a conductor of electric energy and
associated facilities designed for and capable of operation at a
nominal voltage of 100 kilovolts or more new text begin and is greater than
1,500 feet in length new text end .

Sec. 3.

Minnesota Statutes 2004, section 116C.53,
subdivision 2, is amended to read:

Subd. 2.

Jurisdiction.

The deleted text begin board deleted text end new text begin commission new text end is hereby
given the authority to provide for site and route selection for
large electric power facilities. The deleted text begin board deleted text end new text begin commission new text end shall
issue permits for large electric power facilities in a timely
fashion deleted text begin . When the Public Utilities Commission has determined
the deleted text end new text begin and in a manner consistent with the overall determination of
new text end need for the project under section 216B.243 or 216B.2425 deleted text begin , deleted text end new text begin .
new text end Questions of need, including size, type, and timing; alternative
system configurations; and voltage deleted text begin are not within the board's
siting and routing authority and deleted text end must not be included in the
scope of environmental review conducted under sections 116C.51
to 116C.69.

Sec. 4.

Minnesota Statutes 2004, section 116C.57,
subdivision 1, is amended to read:

Subdivision 1.

Site permit.

No person may construct a
large electric generating plant without a site permit from the
deleted text begin board deleted text end new text begin commission new text end . A large electric generating plant may be
constructed only on a site approved by the deleted text begin board deleted text end new text begin commission new text end .
The deleted text begin board deleted text end new text begin commission new text end must incorporate into one proceeding the
route selection for a high voltage transmission line that is
directly associated with and necessary to interconnect the large
electric generating plant to the transmission system and whose
need is certified deleted text begin as part of the generating plant project by the
Public Utilities Commission deleted text end new text begin under section 216B.243 new text end .

Sec. 5.

Minnesota Statutes 2004, section 116C.57,
subdivision 2c, is amended to read:

Subd. 2c.

Environmental review.

The deleted text begin board deleted text end new text begin commissioner
of the Department of Commerce new text end shall prepare new text begin for the commission
new text end an environmental impact statement on each proposed large
electric generating plant or high voltage transmission line for
which a complete application has been submitted. deleted text begin For any
project that has obtained a certificate of need from the Public
Utilities Commission, the board deleted text end new text begin The commissioner new text end shall not
consider whether or not the project is needed. No other state
environmental review documents shall be required. The deleted text begin board
deleted text end new text begin commissioner new text end shall study and evaluate any site or route proposed
by an applicant and any other site or route the deleted text begin board deleted text end new text begin commission
new text end deems necessary that was proposed in a manner consistent with
rules deleted text begin adopted by the board deleted text end concerning the form, content, and
timeliness of proposals for alternate sites or routes.

Sec. 6.

Minnesota Statutes 2004, section 116C.57, is
amended by adding a subdivision to read:

new text begin Subd. 9. new text end

new text begin Department of commerce to provide technical
expertise and other assistance. new text end

new text begin The commissioner of the
Department of Commerce shall consult with other state agencies
and provide technical expertise and other assistance to the
commission or to individual members of the commission for
activities and proceedings under this section, sections 116C.51
to 116C.697, and chapter 116I. This assistance shall include
the sharing of power plant siting and routing staff and other
resources as necessary. The commissioner shall periodically
report to the commission concerning the Department of Commerce's
costs of providing assistance. The report shall conform to the
schedule and include the required contents specified by the
commission. The commission shall include the costs of the
assistance in assessments for activities and proceedings under
those sections and reimburse the special revenue fund for those
costs. If either the commissioner or the commission deems it
necessary, the department and the commission shall enter into an
interagency agreement establishing terms and conditions for the
provision of assistance and sharing of resources under this
subdivision.
new text end

Sec. 7.

Minnesota Statutes 2004, section 116C.575,
subdivision 5, is amended to read:

Subd. 5.

Environmental review.

For the projects
identified in subdivision 2 and following these procedures, the
deleted text begin board deleted text end new text begin commissioner of the Department of Commerce new text end shall prepare
new text begin for the commission new text end an environmental assessment. The
environmental assessment shall contain information on the human
and environmental impacts of the proposed project and other
sites or routes identified by the deleted text begin board deleted text end new text begin commission new text end and shall
address mitigating measures for all of the sites or routes
considered. The environmental assessment shall be the only
state environmental review document required to be prepared on
the project.

Sec. 8.

Minnesota Statutes 2004, section 116C.577, is
amended to read:

116C.577 EMERGENCY PERMIT.

(a) Any utility whose electric power system requires the
immediate construction of a large electric power generating
plant or high voltage transmission line due to a major
unforeseen event may apply to the deleted text begin board deleted text end new text begin commission new text end for an
emergency permit deleted text begin after providing deleted text end new text begin . The application shall provide
new text end notice in writing deleted text begin to the Public Utilities Commission deleted text end of the
major unforeseen event and the need for immediate construction.
The permit must be issued in a timely manner, no later than 195
days after the deleted text begin board's deleted text end new text begin commission's new text end acceptance of the
application and upon a finding by the deleted text begin board deleted text end new text begin commission new text end that (1)
a demonstrable emergency exists, (2) the emergency requires
immediate construction, and (3) adherence to the procedures and
time schedules specified in section 116C.57 would jeopardize the
utility's electric power system or would jeopardize the
utility's ability to meet the electric needs of its customers in
an orderly and timely manner.

(b) A public hearing to determine if an emergency exists
must be held within 90 days of the application. The
deleted text begin board deleted text end new text begin commission new text end , after notice and hearing, shall adopt rules
specifying the criteria for emergency certification.

Sec. 9.

Minnesota Statutes 2004, section 116C.58, is
amended to read:

116C.58 ANNUAL HEARING.

The deleted text begin board deleted text end new text begin commission new text end shall hold an annual public hearing at
a time and place prescribed by rule in order to afford
interested persons an opportunity to be heard regarding any
matters relating to the siting of large electric generating
power plants and routing of high voltage transmission lines. At
the meeting, the deleted text begin board deleted text end new text begin commission new text end shall advise the public of the
permits issued by the deleted text begin board deleted text end new text begin commission new text end in the past year.
The deleted text begin board deleted text end new text begin commission new text end shall provide at least ten days but no more
than 45 days' notice of the annual meeting by mailing notice to
those persons who have requested notice and by publication in
the EQB Monitor new text begin and the commission's weekly calendar new text end .

Sec. 10.

Minnesota Statutes 2004, section 116C.61,
subdivision 3, is amended to read:

Subd. 3.

State agency participation.

new text begin (a) new text end State agencies
authorized to issue permits required for construction or
operation of large electric power generating plants or high
voltage transmission lines shall participate during routing and
siting at public hearings and all other activities of the board
on specific site or route designations and design considerations
of the board, and shall clearly state whether the site or route
being considered for designation or permit and other design
matters under consideration for approval will be in compliance
with state agency standards, rules, or policies.

new text begin (b) An applicant for a permit under this section or under
chapter 116I shall notify the commissioner of agriculture if the
proposed project will impact cultivated agricultural land, as
that term is defined in section 116I.01, subdivision 4. The
commissioner may participate and advise the commission as to
whether to grant a permit for the project and the best options
for mitigating adverse impacts to agricultural lands if the
permit is granted. The Department of Agriculture shall be the
lead agency on the development of any agricultural mitigation
plan required for the project.
new text end

Sec. 11.

Minnesota Statutes 2004, section 116C.69,
subdivision 2, is amended to read:

Subd. 2.

Site application fee.

Every applicant for a
site permit shall pay to the deleted text begin board deleted text end new text begin commissioner of commerce new text end a
fee deleted text begin in an amount equal to $500 for each $1,000,000 of production
plant investment in the proposed installation as defined in the
Federal Power Commission Uniform System of Accounts. The board
shall specify the time and manner of payment of the fee. If any
single payment requested by the board is in excess of 25 percent
of the total estimated fee, the board shall show that the excess
is reasonably necessary. The applicant shall pay within 30 days
of notification any additional fees reasonably necessary for
completion of the site evaluation and designation process by the
board. In no event shall the total fees required of the
applicant under this subdivision exceed an amount equal to 0.001
of said production plant investment ($1,000 for each $1,000,000)
deleted text end new text begin to cover the necessary and reasonable costs incurred by the
commission in acting on the permit application and carrying out
the requirements of sections 116C.51 to 116C.69. The commission
may adopt rules providing for the payment of the fee. Section
16A.1283 does not apply to establishment of this fee new text end . All money
received pursuant to this subdivision shall be deposited in a
special account. Money in the account is appropriated to
the deleted text begin board deleted text end new text begin commissioner of commerce new text end to pay expenses incurred in
processing applications for site permits in accordance with
sections 116C.51 to 116C.69 and in the event the expenses are
less than the fee paid, to refund the excess to the applicant.

Sec. 12.

Minnesota Statutes 2004, section 116C.69,
subdivision 2a, is amended to read:

Subd. 2a.

Route application fee.

Every applicant for a
transmission line route permit shall pay to the deleted text begin board
deleted text end new text begin commissioner of commerce new text end a deleted text begin base fee of $35,000 plus a fee in an
amount equal to $1,000 per mile length of the longest proposed
route. The board shall specify the time and manner of payment
of the fee. If any single payment requested by the board is in
excess of 25 percent of the total estimated fee, the board shall
show that the excess is reasonably necessary. In the event the
actual cost of processing an application up to the board's final
decision to designate a route exceeds the above fee schedule,
the board may assess the applicant any additional fees necessary
to cover the actual costs, not to exceed an amount equal to $500
per mile length of the longest proposed route deleted text end new text begin fee to cover the
necessary and reasonable costs incurred by the commission in
acting on the permit application and carrying out the
requirements of sections 116C.51 to 116C.69. The commission may
adopt rules providing for the payment of the fee. Section
16A.1283 does not apply to the establishment of this fee new text end . All
money received pursuant to this subdivision shall be deposited
in a special account. Money in the account is appropriated to
the deleted text begin board deleted text end new text begin commissioner of commerce new text end to pay expenses incurred in
processing applications for route permits in accordance with
sections 116C.51 to 116C.69 and in the event the expenses are
less than the fee paid, to refund the excess to the applicant.

Sec. 13.

Minnesota Statutes 2004, section 216B.243,
subdivision 4, is amended to read:

Subd. 4.

Application for certificate; hearing.

Any
person proposing to construct a large energy facility shall
apply for a certificate of need deleted text begin prior to applying deleted text end new text begin and new text end for a site
or route permit under sections 116C.51 to 116C.69 deleted text begin or deleted text end new text begin prior to
new text end construction of the facility. The application shall be on forms
and in a manner established by the commission. In reviewing
each application the commission shall hold at least one public
hearing pursuant to chapter 14. The public hearing shall be
held at a location and hour reasonably calculated to be
convenient for the public. An objective of the public hearing
shall be to obtain public opinion on the necessity of granting a
certificate of need new text begin and, if a joint hearing is held, a site or
route permit new text end . The commission shall designate a commission
employee whose duty shall be to facilitate citizen participation
in the hearing process. deleted text begin If deleted text end new text begin Unless new text end the commission deleted text begin and the
Environmental Quality Board determine deleted text end new text begin determines new text end that a joint
hearing on siting and need under this subdivision and section
116C.57, subdivision 2d, is new text begin not new text end feasible deleted text begin , deleted text end new text begin or new text end more efficient, deleted text begin and
may further deleted text end new text begin or otherwise not in new text end the public interest, a joint
hearing under those subdivisions deleted text begin may deleted text end new text begin shall new text end be held.

Sec. 14.

Minnesota Statutes 2004, section 216B.243,
subdivision 5, is amended to read:

Subd. 5.

Approval, denial, or modification.

Within
deleted text begin six deleted text end new text begin 12 new text end months of the submission of an application, the
commission shall approve or deny a certificate of need for the
facility. Approval or denial of the certificate shall be
accompanied by a statement of the reasons for the decision.
Issuance of the certificate may be made contingent upon
modifications required by the commission. new text begin If the commission has
not issued an order on the application within the 12 months
provided, the commission may extend the time period upon
receiving the consent of the parties or on its own motion, for
good cause, by issuing an order explaining the good cause
justification for extension.
new text end

Sec. 15.

Minnesota Statutes 2004, section 216B.243,
subdivision 7, is amended to read:

Subd. 7.

Participation by other agency or political
subdivision.

new text begin (a) new text end Other state agencies authorized to issue
permits for siting, construction or operation of large energy
facilities, and those state agencies authorized to participate
in matters before the commission involving utility rates and
adequacy of utility services, shall present their position
regarding need and participate in the public hearing process
prior to the issuance or denial of a certificate of need.
Issuance or denial of certificates of need shall be the sole and
exclusive prerogative of the commission and these determinations
and certificates shall be binding upon other state departments
and agencies, regional, county, and local governments and
special purpose government districts except as provided in
sections 116C.01 to 116C.08 and 116D.04, subdivision 9.

new text begin (b) An applicant for a certificate of need shall notify the
commissioner of agriculture if the proposed project will impact
cultivated agricultural land, as that term is defined in section
116I.01, subdivision 4. The commissioner may participate in any
proceeding on the application and advise the commission as to
whether to grant the certificate of need, and the best options
for mitigating adverse impacts to agricultural lands if the
certificate is granted. The Department of Agriculture shall be
the lead agency on the development of any agricultural
mitigation plan required for the project.
new text end

Sec. 16.

Minnesota Statutes 2004, section 216C.052, is
amended to read:

216C.052 RELIABILITY ADMINISTRATOR.

Subdivision 1.

Responsibilities.

(a) There is
established the position of reliability administrator in the
deleted text begin Department of Commerce deleted text end new text begin Public Utilities Commission new text end . The
administrator shall act as a source of independent expertise and
a technical advisor to deleted text begin the commissioner, deleted text end the commission deleted text begin , deleted text end new text begin and new text end the
public deleted text begin , and the Legislative Electric Energy Task Force deleted text end on issues
related to the reliability of the electric system. In
conducting its work, the administrator shall new text begin provide assistance
to the commission in administering and implementing the
commission's duties under sections 116C.51 to 116C.69; 116C.691
to 116C.697; 216B.2422; 216B.2425; 216B.243; chapter 116I; and
rules associated with those sections. Subject to resource
constraints, the reliability administrator may also new text end :

(1) model and monitor the use and operation of the energy
infrastructure in the state, including generation facilities,
transmission lines, natural gas pipelines, and other energy
infrastructure;

(2) develop and present to the commission and parties
technical analyses of proposed infrastructure projects, and
provide technical advice to the commission;

(3) present independent, factual, expert, and technical
information on infrastructure proposals and reliability issues
at public meetings hosted by the task force, the Environmental
Quality Board, the department, or the commission.

(b) Upon request and subject to resource constraints, the
administrator shall provide technical assistance regarding
matters unrelated to applications for infrastructure
improvements to the task force, the department, or the
commission.

(c) The administrator may not advocate for any particular
outcome in a commission proceeding, but may give technical
advice to the commission as to the impact on the reliability of
the energy system of a particular project or projects. deleted text begin The
administrator must not be considered a party or a participant in
any proceeding before the commission.
deleted text end

Subd. 2.

Administrative issues.

(a) The deleted text begin commissioner
deleted text end new text begin commission new text end may select the administrator who shall serve for a
four-year term. The administrator may not have been a party or
a participant in a commission energy proceeding for at least one
year prior to selection by the deleted text begin commissioner deleted text end new text begin commission new text end .
The deleted text begin commissioner deleted text end new text begin commission new text end shall oversee and direct the work of
the administrator, annually review the expenses of the
administrator, and annually approve the budget of the
administrator. new text begin Pursuant to commission approval, new text end the
administrator may hire staff and may contract for technical
expertise in performing duties when existing state resources are
required for other state responsibilities or when special
expertise is required. The salary of the administrator is
governed by section 15A.0815, subdivision 2.

(b) Costs relating to a specific proceeding, analysis, or
project are not general administrative costs. For purposes of
this section, "energy utility" means public utilities,
generation and transmission cooperative electric associations,
and municipal power agencies providing natural gas or electric
service in the state.

(c) The deleted text begin Department of Commerce deleted text end new text begin commission new text end shall pay:

(1) the general administrative costs of the administrator,
not to exceed $1,000,000 in a fiscal year, and shall assess
energy utilities for those administrative costs. These costs
must be consistent with the budget approved by the deleted text begin commissioner
deleted text end new text begin commission new text end under paragraph (a). The deleted text begin department deleted text end new text begin commission new text end shall
apportion the costs among all energy utilities in proportion to
their respective gross operating revenues from sales of gas or
electric service within the state during the last calendar year,
and shall then render a bill to each utility on a regular basis;
and

(2) costs relating to a specific proceeding analysis or
project and shall render a bill to the specific energy utility
or utilities participating in the proceeding, analysis, or
project directly, either at the conclusion of a particular
proceeding, analysis, or project, or from time to time during
the course of the proceeding, analysis, or project.

(d) For purposes of administrative efficiency, the
deleted text begin department deleted text end new text begin commission new text end shall assess energy utilities and issue
bills in accordance with the billing and assessment procedures
provided in section 216B.62, to the extent that these procedures
do not conflict with this subdivision. The amount of the bills
rendered by the deleted text begin department deleted text end new text begin commission new text end under paragraph (c) must
be paid by the energy utility into an account in the special
revenue fund in the state treasury within 30 days from the date
of billing and is appropriated to the deleted text begin commissioner deleted text end new text begin commission
new text end for the purposes provided in this section. The commission shall
approve or approve as modified a rate schedule providing for the
automatic adjustment of charges to recover amounts paid by
utilities under this section. All amounts assessed under this
section are in addition to amounts appropriated to the
commission deleted text begin and the department deleted text end by other law.

Subd. 3.

Assessment and appropriation.

In addition to
the amount noted in subdivision 2, the deleted text begin commissioner deleted text end new text begin commission
new text end may assess utilities, using the mechanism specified in that
subdivision, up to an additional $500,000 annually through June
30, 2006. The amounts assessed under this subdivision are
appropriated to the deleted text begin commissioner deleted text end new text begin commission new text end , and some or all of
the amounts assessed may be transferred to the commissioner of
administration, for the purposes specified in section 16B.325
and Laws 2001, chapter 212, article 1, section 3, as needed to
implement those sections.

Subd. 4.

Expiration.

This section expires June 30,
deleted text begin 2006 deleted text end new text begin 2007 new text end .

Sec. 17. new text begin TRANSFERRING POWER PLANT SITING
RESPONSIBILITIES.
new text end

new text begin To ensure greater public participation in energy
infrastructure approval proceedings and to better integrate and
align state energy and environmental policy goals with economic
decisions involving large energy infrastructure, all
responsibilities, as defined in Minnesota Statutes, section
15.039, subdivision 1, held by the Environmental Quality Board
relating to power plant siting and routing under Minnesota
Statutes, sections 116C.51 to 116C.69; wind energy conversion
systems under Minnesota Statutes, sections 116C.691 to 116C.697;
pipelines under Minnesota Statutes, chapter 116I; and rules
associated with those sections are transferred to the Public
Utilities Commission under Minnesota Statutes, section 15.039,
except that the responsibilities of the Environmental Quality
Board under Minnesota Statutes, section 116C.83, subdivision 6,
and Minnesota Rules, parts 4400.1700, 4400.2750, and 4410.7010
to 4410.7070, are transferred to the commissioner of the
Department of Commerce. The power plant siting staff of the
Environmental Quality Board are transferred to the Department of
Commerce. The department's budget shall be adjusted to reflect
the transfer.
new text end

new text begin The Department of Commerce and the Public Utilities Commission
shall carry out these duties in accordance with the provisions
of Minnesota Statutes, section 116D.03.
new text end

Sec. 18. new text begin TRANSFERRING RELIABILITY ADMINISTRATOR
RESPONSIBILITIES.
new text end

new text begin All responsibilities, as defined in Minnesota Statutes
2004, section 15.039, subdivision 1, held by the Minnesota
Department of Commerce relating to the reliability administrator
under Minnesota Statutes, section 216C.052, are transferred to
the Minnesota Public Utilities Commission under Minnesota
Statutes, section 15.039.
new text end

Sec. 19. new text begin REVISOR'S INSTRUCTION.
new text end

new text begin (a) The revisor of statutes shall change the words
"Environmental Quality Board," "board," "chair of the board,"
"chair," "board's," and similar terms, when they refer to the
Environmental Quality Board or chair of the Environmental
Quality Board, to the term "Public Utilities Commission,"
"commission," or "commission's," as appropriate, where they
appear in Minnesota Statutes, sections 13.741, subdivision 3,
116C.51 to 116C.697, and chapter 116I. The revisor shall also
make those changes in Minnesota Rules, chapters 4400, 4401, and
4415, except as specified in paragraph (b).
new text end

new text begin (b) The revisor of statutes shall change the words
"Environmental Quality Board," "board," "chair of the board,"
"chair," "board's," and similar terms, when they refer to the
Environmental Quality Board or chair of the Environmental
Quality Board, to the term "commissioner of the Department of
Commerce," "commissioner," or "commissioner's," as appropriate,
where they appear in Minnesota Statutes, section 116C.83,
subdivision 6; and Minnesota Rules, parts 4400.1700, subparts 1
to 9, 11, and 12; 4400.2750; and 4410.7010 to 4410.7070.
new text end

Sec. 20. new text begin EFFECTIVE DATE.
new text end

new text begin Sections 1 to 18 are effective July 1, 2005.
new text end

ARTICLE 4

ENERGY ASSISTANCE TECHNICAL CORRECTIONS

Section 1.

Minnesota Statutes 2004, section 13.681, is
amended by adding a subdivision to read:

new text begin Subd. 5. new text end

new text begin Energy programs. new text end

new text begin Treatment of data on
individuals applying for benefits or services under energy
programs is governed by section 216C.266.
new text end

Sec. 2.

Minnesota Statutes 2004, section 119A.15,
subdivision 5a, is amended to read:

Subd. 5a.

Excluded programs.

Programs transferred to the
Department of Education from the Department of Employment and
Economic Development may not be included in the consolidated
funding account and are ineligible for local consolidation. The
commissioner may not apply for federal waivers to include these
programs in funding consolidation initiatives. The programs
include the following:

(1) programs for the homeless under sections 116L.365 and
119A.43;

(2) emergency energy assistance and energy conservation
programs under sections deleted text begin 119A.40 and 119A.42 deleted text end new text begin 216C.263 and
216C.265 new text end ;

(3) weatherization programs under section deleted text begin 119A.41 deleted text end new text begin 216C.264 new text end ;

(4) foodshelf programs under section 119A.44 and the
emergency food assistance program; and

(5) lead abatement programs under section 119A.45.

Sec. 3.

Minnesota Statutes 2004, section 216C.09, is
amended to read:

216C.09 COMMISSIONER DUTIES.

(a) The commissioner shall:

(1) manage the department as the central repository within
the state government for the collection of data on energy;

(2) prepare and adopt an emergency allocation plan
specifying actions to be taken in the event of an impending
serious shortage of energy, or a threat to public health,
safety, or welfare;

(3) undertake a continuing assessment of trends in the
consumption of all forms of energy and analyze the social,
economic, and environmental consequences of these trends;

(4) carry out energy conservation measures as specified by
the legislature and recommend to the governor and the
legislature additional energy policies and conservation measures
as required to meet the objectives of sections 216C.05 to
216C.30;

(5) collect and analyze data relating to present and future
demands and resources for all sources of energy;

(6) evaluate policies governing the establishment of rates
and prices for energy as related to energy conservation, and
other goals and policies of sections 216C.05 to 216C.30, and
make recommendations for changes in energy pricing policies and
rate schedules;

(7) study the impact and relationship of the state energy
policies to international, national, and regional energy
policies;

(8) design and implement a state program for the
conservation of energy; this program shall include but not be
limited to, general commercial, industrial, and residential, and
transportation areas; such program shall also provide for the
evaluation of energy systems as they relate to lighting,
heating, refrigeration, air conditioning, building design and
operation, and appliance manufacturing and operation;

(9) inform and educate the public about the sources and
uses of energy and the ways in which persons can conserve
energy;

(10) dispense funds made available for the purpose of
research studies and projects of professional and civic
orientation, which are related to either energy conservation,
resource recovery, or the development of alternative energy
technologies which conserve nonrenewable energy resources while
creating minimum environmental impact;

(11) charge other governmental departments and agencies
involved in energy-related activities with specific information
gathering goals and require that those goals be met;

(12) design a comprehensive program for the development of
indigenous energy resources. The program shall include, but not
be limited to, providing technical, informational, educational,
and financial services and materials to persons, businesses,
municipalities, and organizations involved in the development of
solar, wind, hydropower, peat, fiber fuels, biomass, and other
alternative energy resources. The program shall be evaluated by
the alternative energy technical activity; and

(13) dispense loans, grants, or other financial aid from
money received from litigation or settlement of alleged
violations of federal petroleum-pricing regulations made
available to the department for that purpose. The commissioner
shall adopt rules under chapter 14 for this purpose. deleted text begin Money
dispersed under this clause must not include money received as a
result of the settlement of the parties and order of the United
States District Court for the District of Kansas in the case of
In Re Department of Energy Stripper Well Exemption Litigation,
578 F. Supp. 586 (D.Kan. 1983) and all money received after
August 1, 1988, by the governor, the commissioner of finance, or
any other state agency resulting from overcharges by oil
companies in violation of federal law.
deleted text end

(b) Further, the commissioner may participate fully in
hearings before the Public Utilities Commission on matters
pertaining to rate design, cost allocation, efficient resource
utilization, utility conservation investments, small power
production, cogeneration, and other rate issues. The
commissioner shall support the policies stated in section
216C.05 and shall prepare and defend testimony proposed to
encourage energy conservation improvements as defined in section
216B.241.

Sec. 4.

Minnesota Statutes 2004, section 462A.05,
subdivision 21, is amended to read:

Subd. 21.

Rental property loans.

The agency may make or
purchase loans to owners of rental property that is occupied or
intended for occupancy primarily by low- and moderate-income
tenants and which does not comply with the standards established
in section deleted text begin 216C.27 deleted text end new text begin 16B.61 new text end , subdivision deleted text begin 3 deleted text end new text begin 1 new text end , for the purpose of
energy improvements necessary to bring the property into full or
partial compliance with these standards. For property which
meets the other requirements of this subdivision, a loan may
also be used for moderate rehabilitation of the property. The
authority granted in this subdivision is in addition to and not
in limitation of any other authority granted to the agency in
this chapter. The limitations on eligible mortgagors contained
in section 462A.03, subdivision 13, do not apply to loans under
this subdivision. Loans for the improvement of rental property
pursuant to this subdivision may contain provisions that
repayment is not required in whole or in part subject to terms
and conditions determined by the agency to be necessary and
desirable to encourage owners to maximize rehabilitation of
properties.

Sec. 5.

Minnesota Statutes 2004, section 462A.05,
subdivision 23, is amended to read:

Subd. 23.

Insuring financial institution loans.

The
agency may participate in loans or establish a fund to insure
loans, or portions of loans, that are made by any banking
institution, savings association, or other lender approved by
the agency, organized under the laws of this or any other state
or of the United States having an office in this state, to
owners of renter occupied homes or apartments that do not comply
with standards set forth in section deleted text begin 216C.27 deleted text end new text begin 16B.61 new text end ,
subdivision deleted text begin 3 deleted text end new text begin 1 new text end , without limitations relating to the maximum
incomes of the owners or tenants. The proceeds of the insured
portion of the loan must be used to pay the costs of
improvements, including all related structural and other
improvements, that will reduce energy consumption.

Sec. 6. new text begin RECODIFICATION.
new text end

new text begin Minnesota Statutes 2004, sections 119A.40; 119A.41;
119A.42; 119A.425; and 216C.27, subdivision 8, are recodified as
sections 216C.263; 216C.264; 216C.265; 216C.266; and 16B.61,
subdivision 8, respectively.
new text end

ARTICLE 5

WOODY BIOMASS MANDATE PROJECT

Section 1.

Minnesota Statutes 2004, section 216B.2424,
subdivision 1, is amended to read:

Subdivision 1.

Farm-grown closed-loop biomass.

(a) For
the purposes of this section, "farm-grown closed-loop biomass"
means biomass, as defined in section 216C.051, subdivision 7,
that:

(1) is intentionally cultivated, harvested, and prepared
for use, in whole or in part, as a fuel for the generation of
electricity;

(2) when combusted, releases an amount of carbon dioxide
that is less than or approximately equal to the carbon dioxide
absorbed by the biomass fuel during its growing cycle; and

(3) is fired in a new or substantially retrofitted electric
generating facility that is:

(i) located within 400 miles of the site of the biomass
production; and

(ii) designed to use biomass to meet at least 75 percent of
its fuel requirements.

(b) The legislature finds that the negative environmental
impacts within 400 miles of the facility resulting from
transporting and combusting the biomass are offset in that
region by the environmental benefits to air, soil, and water of
the biomass production.

(c) Among the biomass fuel sources that meet the
requirements of paragraph (a), deleted text begin clause deleted text end new text begin clauses (1) and new text end (2) are
poplar, aspen, willow, switch grass, sorghum, alfalfa, deleted text begin and
deleted text end cultivated prairie grass new text begin and sustainably managed woody biomass new text end .

new text begin (d) For the purpose of this section, "sustainably managed
woody biomass" means:
new text end

new text begin (1) brush, trees, and other biomass harvested from within
designated utility, railroad, and road rights-of-way;
new text end

new text begin (2) upland and lowland brush harvested from lands
incorporated into brushland habitat management activities of the
Minnesota Department of Natural Resources;
new text end

new text begin (3) upland and lowland brush harvested from lands managed
in accordance with Minnesota Department of Natural Resources
"Best Management Practices for Managing Brushlands";
new text end

new text begin (4) logging slash or waste wood that is created by harvest,
precommercial timber stand improvement to meet silvicultural
objectives, or by fire, disease, or insect control treatments,
and that is managed in compliance with the Minnesota Forest
Resources Council's "Sustaining Minnesota Forest Resources:
Voluntary Site-Level Forest Management Guidelines for
Landowners, Loggers and Resource Managers" as modified by the
requirement of this subdivision; and
new text end

new text begin (5) trees or parts of trees that do not meet the
utilization standards for pulpwood, posts, bolts, or sawtimber
as described in the Minnesota Department of Natural Resources
Division of Forestry Timber Sales Manual, 1998, as amended as of
May 1, 2005, and the Minnesota Department of Natural Resources
Timber Scaling Manual, 1981, as amended as of May 1, 2005,
except as provided in paragraph (a), clause (1), and this
paragraph, clauses (1) to (3).
new text end

Sec. 2.

Minnesota Statutes 2004, section 216B.2424, is
amended by adding a subdivision to read:

new text begin Subd. 1a. new text end

new text begin Municipal waste-to-energy project. new text end

new text begin (a) This
subdivision applies only to a biomass project owned or
controlled, directly or indirectly, by two municipal utilities
as described in subdivision 5a, paragraph (b).
new text end

new text begin (b) Woody biomass from state-owned land must be harvested
in compliance with an adopted management plan and a program of
ecologically based third-party certification.
new text end

new text begin (c) The project must prepare a fuel plan on an annual basis
after commercial operation of the project as described in the
power contract between the project and the public utility, and
must also prepare annually certificates reflecting the types of
fuel used in the preceding year by the project, as described in
the power contract. The fuel plans and certificates shall also
be filed with the Minnesota Department of Natural Resources and
the Minnesota Department of Commerce within 30 days after being
provided to the public utility, as provided by the power
contract. Any person who believes the fuel plans, as amended,
and certificates show that the project does not or will not
comply with the fuel requirements of this subdivision may file a
petition with the commission seeking such a determination.
new text end

new text begin (d) The wood procurement process must utilize third-party
audit certification systems to verify that applicable best
management practices were utilized in the procurement of the
sustainably managed biomass. If there is a failure to so verify
in any two consecutive years during the original contract term,
the farm-grown closed-loop biomass requirements of subdivision 2
must be increased to 50 percent for the remaining contract term
period; however, if in two consecutive subsequent years after
the increase has been implemented, it is verified that the
conditions in this subdivision have been met, then for the
remaining original contract term the closed-loop biomass mandate
reverts to 25 percent. If there is a subsequent failure to
verify in a year after the first failure and implementation of
the 50 percent requirement, then the closed-loop percentage
shall remain at 50 percent for each remaining year of the
contract term.
new text end

new text begin (e) In the closed-loop plantation, no transgenic plants may
be used.
new text end

new text begin (f) No wood may be harvested from any lands identified by
the final or preliminary Minnesota County Biological Survey as
having statewide significance as native plant communities, large
populations or concentrations of rare species, or critical
animal habitat.
new text end

new text begin (g) A wood procurement plan must be prepared every five
years and public meetings must be held and written comments
taken on the plan and documentation must be provided on why or
why not the public inputs were used.
new text end

new text begin (h) Guidelines or best management practices for sustainably
managed woody biomass must be adopted by:
new text end

new text begin (1) the Minnesota Department of Natural Resources for
managing and maintaining brushland and open land habitat on
public and private lands, including, but not limited to,
provisions of sections 84.941, 84.942, and 97A.125; and
new text end

new text begin (2) the Minnesota Forest Resources Council for logging
slash, using the most recent available scientific information
regarding the removal of woody biomass from forest lands, to
sustain the management of forest resources as defined by section
89.001, subdivisions 8 and 9, with particular attention to soil
productivity, biological diversity as defined by section 89A.01,
subdivision 3, and wildlife habitat.
new text end

new text begin These guidelines must be completed by July 1, 2007, and the
process of developing them must incorporate public notification
and comment.
new text end

new text begin (i) The University of Minnesota Initiative for Renewable
Energy and the Environment is encouraged to solicit and fund
high-quality research projects to develop and consolidate
scientific information regarding the removal of woody biomass
from forest and brush lands, with particular attention to the
environmental impacts on soil productivity, biological
diversity, and sequestration of carbon. The results of this
research shall be made available to the public.
new text end

new text begin (j) The two utilities owning or controlling, directly or
indirectly, the biomass project described in subdivision 5a,
paragraph (b), shall fund or obtain funding from nonstate
sources of up to $150,000 to complete the guidelines or best
management practices described in paragraph (h). The
expenditures to be funded under this paragraph do not include
any of the expenditures to be funded under paragraph (i).
new text end

Sec. 3.

Minnesota Statutes 2004, section 216B.2424,
subdivision 2, is amended to read:

Subd. 2.

Interim exemption.

(a) A biomass project
proposing to use, as its primary fuel over the life of the
project, short-rotation woody crops, may use as an interim fuel
agricultural waste and other biomass which is not farm-grown
closed-loop biomass for up to six years after the project's
electric generating facility becomes operational; provided, the
project developer demonstrates the project will use the
designated short-rotation woody crops as its primary fuel after
the interim period and provided the location of the interim fuel
production meets the requirements of subdivision 1, paragraph
(a), clause (3).

(b) A biomass project proposing to use, as its primary fuel
over the life of the project, short-rotation woody crops, may
use as an interim fuel agricultural waste and other biomass
which is not farm-grown closed-loop biomass for up to three
years after the project's electric generating facility becomes
operational; provided, the project developer demonstrates the
project will use the designated short-rotation woody crops as
its primary fuel after the interim period.

(c) A biomass project that uses an interim fuel under the
terms of paragraph (b) may, in addition, use an interim fuel
under the terms of paragraph (a) for six years less the number
of years that an interim fuel was used under paragraph (b).

(d) A project developer proposing to use an exempt interim
fuel under paragraphs (a) and (b) must demonstrate to the public
utility that the project will have an adequate supply of
short-rotation woody crops which meet the requirements of
subdivision 1 to fuel the project after the interim period.

new text begin (e) If a biomass project using an interim fuel under this
subdivision is or becomes owned or controlled, directly or
indirectly, by two municipal utilities as described in
subdivision 5a, paragraph (b), the project is deemed to comply
with the requirement under this subdivision to use as its
primary fuel farm-grown closed-loop biomass if farm-grown
closed-loop biomass comprises no less than 25 percent of the
fuel used over the life of the project. For purposes of this
subdivision, "life of the project" means 20 years from the date
the project becomes operational or the term of the applicable
power purchase agreement between the project owner and the
public utility, whichever is longer.
new text end

Sec. 4.

Minnesota Statutes 2004, section 216B.2424,
subdivision 5a, is amended to read:

Subd. 5a.

Reduction of biomass mandate.

(a)
Notwithstanding subdivision 5, the biomass electric energy
mandate deleted text begin shall deleted text end new text begin must new text end be reduced from 125 megawatts to 110
megawatts.

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

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

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

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

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

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

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

Sec. 5.

Minnesota Statutes 2004, section 216B.2424,
subdivision 6, is amended to read:

Subd. 6.

Remaining megawatt compliance process.

(a) If
there remain megawatts of biomass power generating capacity to
fulfill the mandate in subdivision 5 after the commission has
taken final action on all contracts filed by September 1, 2000,
by a public utility, new text begin as amended and assigned, new text end this subdivision
governs final compliance with the biomass energy mandate in
subdivision 5 subject to the requirements of subdivisions 7 and
8.

(b) To the extent not inconsistent with this subdivision,
the provisions of subdivisions 2, 3, 4, and 5 apply to proposals
subject to this subdivision.

(c) A public utility must submit proposals to the
commission to complete the biomass mandate. The commission
shall require a public utility subject to this section to issue
a request for competitive proposals for projects for electric
generation utilizing biomass as defined in paragraph (f) of this
subdivision to provide the remaining megawatts of the mandate.
The commission shall set an expedited schedule for submission of
proposals to the utility, selection by the utility of proposals
or projects, negotiation of contracts, and review by the
commission of the contracts or projects submitted by the utility
to the commission.

(d) Notwithstanding the provisions of subdivisions 1 to 5
but subject to the provisions of subdivisions 7 and 8, a new or
existing facility proposed under this subdivision that is fueled
either by biomass or by co-firing biomass with nonbiomass may
satisfy the mandate in this section. Such a facility need not
use biomass that complies with the definition in subdivision 1
if it uses biomass as defined in paragraph (f) of this
subdivision. Generating capacity produced by co-firing of
biomass that is operational as of April 25, 2000, does not meet
the requirements of the mandate, except that additional
co-firing capacity added at an existing facility after April 25,
2000, may be used to satisfy this mandate. Only the number of
megawatts of capacity at a facility which co-fires biomass that
are directly attributable to the biomass and that become
operational after April 25, 2000, count toward meeting the
biomass mandate in this section.

(e) Nothing in this subdivision precludes a facility
proposed and approved under this subdivision from using fuel
sources that are not biomass in compliance with subdivision 3.

(f) Notwithstanding the provisions of subdivision 1, for
proposals subject to this subdivision, "biomass" includes
farm-grown closed-loop biomass; agricultural wastes, including
animal, poultry, and plant wastes; and waste wood, including
chipped wood, bark, brush, residue wood, and sawdust.

(g) Nothing in this subdivision affects in any way
contracts entered into as of April 25, 2000, to satisfy the
mandate in subdivision 5.

(h) Nothing in this subdivision requires a public utility
to retrofit its own power plants for the purpose of co-firing
biomass fuel, nor is a utility prohibited from retrofitting its
own power plants for the purpose of co-firing biomass fuel to
meet the requirements of this subdivision.

Sec. 6.

Minnesota Statutes 2004, section 216B.2424,
subdivision 8, is amended to read:

Subd. 8.

Agricultural biomass requirement.

Of the 125
megawatts mandated in subdivision 5, new text begin or 110 megawatts mandated
in subdivision 5a, new text end at least 75 megawatts of the generating
capacity must be generated by facilities that use agricultural
biomass as the principal fuel source. For purposes of this
subdivision, agricultural biomass includes only farm-grown
closed-loop biomass and agricultural waste, including animal,
poultry, and plant wastes. For purposes of this subdivision,
"principal fuel source" means a fuel source that satisfies at
least 75 percent of the fuel requirements of an electric power
generating facility. Nothing in this subdivision is intended to
expand the fuel source requirements of subdivision 5.

ARTICLE 6

E-FILING

Section 1. new text begin ESTABLISHMENT OF FUND.
new text end

new text begin The Department of Commerce's e-filing account is
established. The commissioner of commerce shall make a onetime
assessment of no more than $300,000 to cover the actual cost of
implementing this section. The funds assessed must be deposited
in the account. Any excess funds in the account upon completion
must be refunded to the utilities proportionately to the amount
assessed. Each public utility, generation and transmission
cooperative electric association, municipal power agency,
telephone company, and telecommunications carrier must be
assessed in proportion to its respective gross jurisdictional
operating revenues for sales of gas, electric, or
telecommunications service in the state in the last calendar
year. Revenue in the account is appropriated to the
commissioner of commerce for the costs associated with
establishing an e-filing system that allows documents filed with
the Public Utilities Commission to be filed and retrieved via
the Internet. Revenue in the account remains available until
expended.
new text end

Sec. 2. new text begin COMPLETION DATE.
new text end

new text begin The e-filing system described in section 1 must be
operational by July 1, 2006.
new text end

Sec. 3. new text begin EFFECTIVE DATE.
new text end

new text begin Sections 1 and 2 are effective the day following final
enactment.
new text end

ARTICLE 7

CIP TECHNICAL CORRECTIONS

Section 1.

Minnesota Statutes 2004, section 216B.241,
subdivision 1b, is amended to read:

Subd. 1b.

Conservation improvement by cooperative
association or municipality.

(a) This subdivision applies to:

(1) a cooperative electric association that provides retail
service to its members;

(2) a municipality that provides electric service to retail
customers; and

(3) a municipality with gross operating revenues in excess
of $5,000,000 from sales of natural gas to retail customers.

(b) Each cooperative electric association and municipality
subject to this subdivision shall spend and invest for energy
conservation improvements under this subdivision the following
amounts:

(1) for a municipality, 0.5 percent of its gross operating
revenues from the sale of gas and 1.5 percent of its gross
operating revenues from the sale of electricity, excluding gross
operating revenues from electric and gas service provided in the
state to large electric customer facilities; and

(2) for a cooperative electric association, 1.5 percent of
its gross operating revenues from service provided in the state,
excluding gross operating revenues from service provided in the
state to large electric customer facilities indirectly through a
distribution cooperative electric association.

(c) Each municipality and cooperative electric association
subject to this subdivision shall identify and implement energy
conservation improvement spending and investments that are
appropriate for the municipality or association, except that a
municipality or association may not spend or invest for energy
conservation improvements that directly benefit a large electric
customer facility for which the commissioner has issued an
exemption under subdivision 1a, paragraph (b).

(d) Each municipality and cooperative electric association
subject to this subdivision may spend and invest annually up to
ten percent of the total amount required to be spent and
invested on energy conservation improvements under this
subdivision on research and development projects that meet the
definition of energy conservation improvement in subdivision 1
and that are funded directly by the municipality or cooperative
electric association.

(e) Load-management activities that do not reduce energy
use but that increase the efficiency of the electric system may
be used to meet deleted text begin the following percentage deleted text end new text begin 50 percent new text end of the
conservation investment and spending requirements of this
subdivision deleted text begin :
deleted text end

deleted text begin (1) 2002 - 90 percent;
deleted text end

deleted text begin (2) 2003 - 80 percent;
deleted text end

deleted text begin (3) 2004 - 65 percent; and
deleted text end

deleted text begin (4) 2005 and thereafter - 50 percent deleted text end .

(f) A generation and transmission cooperative electric
association that provides energy services to cooperative
electric associations that provide electric service at retail to
consumers may invest in energy conservation improvements on
behalf of the associations it serves and may fulfill the
conservation, spending, reporting, and energy savings goals on
an aggregate basis. A municipal power agency or other
not-for-profit entity that provides energy service to municipal
utilities that provide electric service at retail may invest in
energy conservation improvements on behalf of the municipal
utilities it serves and may fulfill the conservation, spending,
reporting, and energy savings goals on an aggregate basis, under
an agreement between the municipal power agency or
not-for-profit entity and each municipal utility for funding the
investments.

(g) new text begin At least new text end every deleted text begin two deleted text end new text begin four new text end years, on a schedule determined
by the commissioner, each municipality or cooperative shall file
an overview of its conservation improvement plan with the
commissioner. With this overview, the municipality or
cooperative shall also provide an evaluation to the commissioner
detailing its energy conservation improvement spending and
investments for the previous period. The evaluation must
briefly describe each conservation program and must specify the
energy savings or increased efficiency in the use of energy
within the service territory of the utility or association that
is the result of the spending and investments. The evaluation
must analyze the cost-effectiveness of the utility's or
association's conservation programs, using a list of baseline
energy and capacity savings assumptions developed in
consultation with the department. The commissioner shall review
each evaluation and make recommendations, where appropriate, to
the municipality or association to increase the effectiveness of
conservation improvement activities. Up to three percent of a
utility's conservation spending obligation under this section
may be used for program pre-evaluation, testing, and monitoring
and program evaluation. The overview and evaluation filed by a
municipality with less than 60,000,000 kilowatt hours in annual
retail sales of electric service may consist of a letter from
the governing board of the municipal utility to the department
providing the amount of annual conservation spending required of
that municipality and certifying that the required amount has
been spent on conservation programs pursuant to this subdivision.

(h) The commissioner shall also review each evaluation for
whether a portion of the money spent on residential conservation
improvement programs is devoted to programs that directly
address the needs of renters and low-income persons unless an
insufficient number of appropriate programs are available. For
the purposes of this subdivision and subdivision 2, "low-income"
means an income at or below 50 percent of the state median
income.

(i) As part of its spending for conservation improvement, a
municipality or association may contribute to the energy and
conservation account. A municipality or association may propose
to the commissioner to designate that all or a portion of funds
contributed to the account be used for research and development
projects that can best be implemented on a statewide basis. Any
amount contributed must be remitted to the commissioner by
February 1 of each year.

(j) A municipality may spend up to 50 percent of its
required spending under this section to refurbish an existing
district heating or cooling system. This paragraph expires July
1, 2007.

Sec. 2.

Minnesota Statutes 2004, section 216B.241,
subdivision 2, is amended to read:

Subd. 2.

Programs.

(a) The commissioner may require
public utilities to make investments and expenditures in energy
conservation improvements, explicitly setting forth the interest
rates, prices, and terms under which the improvements must be
offered to the customers. The required programs must cover new text begin no
more than new text end a deleted text begin two-year deleted text end new text begin four-year new text end period. Public utilities shall
file conservation improvement plans by June 1, on a schedule
determined by order of the commissioner new text begin , but at least every four
years new text end . Plans received by a public utility by June 1 must be
approved or approved as modified by the commissioner by December
1 of that same year. The commissioner shall give special
consideration and encouragement to programs that bring about
significant net savings through the use of energy-efficient
lighting. The commissioner shall evaluate the program on the
basis of cost-effectiveness and the reliability of technologies
employed. The commissioner's order must provide to the extent
practicable for a free choice, by consumers participating in the
program, of the device, method, material, or project
constituting the energy conservation improvement and for a free
choice of the seller, installer, or contractor of the energy
conservation improvement, provided that the device, method,
material, or project seller, installer, or contractor is duly
licensed, certified, approved, or qualified, including under the
residential conservation services program, where applicable.

(b) The commissioner may require a utility to make an
energy conservation improvement investment or expenditure
whenever the commissioner finds that the improvement will result
in energy savings at a total cost to the utility less than the
cost to the utility to produce or purchase an equivalent amount
of new supply of energy. The commissioner shall nevertheless
ensure that every public utility operate one or more programs
under periodic review by the department.

(c) Each public utility subject to subdivision 1a may spend
and invest annually up to ten percent of the total amount
required to be spent and invested on energy conservation
improvements under this section by the utility on research and
development projects that meet the definition of energy
conservation improvement in subdivision 1 and that are funded
directly by the public utility.

(d) A public utility may not spend for or invest in energy
conservation improvements that directly benefit a large electric
customer facility for which the commissioner has issued an
exemption pursuant to subdivision 1a, paragraph (b). The
commissioner shall consider and may require a utility to
undertake a program suggested by an outside source, including a
political subdivision or a nonprofit or community organization.

(e) The commissioner may, by order, establish a list of
programs that may be offered as energy conservation improvements
by a public utility, municipal utility, cooperative electric
association, or other entity providing conservation services
pursuant to this section. The list of programs may include
rebates for high-efficiency appliances, rebates or subsidies for
high-efficiency lamps, small business energy audits, and
building recommissioning. The commissioner may, by order,
change this list to add or subtract programs as the commissioner
determines is necessary to promote efficient and effective
conservation programs.

(f) The commissioner shall ensure that a portion of the
money spent on residential conservation improvement programs is
devoted to programs that directly address the needs of renters
and low-income persons, in proportion to the amount the utility
has historically spent on such programs based on the most recent
three-year average relative to the utility's total conservation
spending under this section, unless an insufficient number of
appropriate programs are available.

(g) A utility, a political subdivision, or a nonprofit or
community organization that has suggested a program, the
attorney general acting on behalf of consumers and small
business interests, or a utility customer that has suggested a
program and is not represented by the attorney general under
section 8.33 may petition the commission to modify or revoke a
department decision under this section, and the commission may
do so if it determines that the program is not cost-effective,
does not adequately address the residential conservation
improvement needs of low-income persons, has a long-range
negative effect on one or more classes of customers, or is
otherwise not in the public interest. The commission shall
reject a petition that, on its face, fails to make a reasonable
argument that a program is not in the public interest.

(h) The commissioner may order a public utility to include,
with the filing of the utility's proposed conservation
improvement plan under paragraph (a), the results of an
independent audit of the utility's conservation improvement
programs and expenditures performed by the department or an
auditor with experience in the provision of energy conservation
and energy efficiency services approved by the commissioner and
chosen by the utility. The audit must specify the energy
savings or increased efficiency in the use of energy within the
service territory of the utility that is the result of the
spending and investments. The audit must evaluate the
cost-effectiveness of the utility's conservation programs.

(i) Up to three percent of a utility's conservation
spending obligation under this section may be used for program
pre-evaluation, testing, and monitoring and program audit and
evaluation.

ARTICLE 8

POWER QUALITY ZONES

Section 1.

new text begin [216B.2426] OPPORTUNITIES FOR DISTRIBUTED
GENERATION.
new text end

new text begin The commission shall ensure that opportunities for the
installation of distributed generation, as that term is defined
in section 216B.169, subdivision 1, paragraph (c), are
considered in any proceeding under section 216B.2422, 216B.2425,
or 216B.243.
new text end

Sec. 2.

new text begin [216B.82] LOCAL POWER QUALITY ZONES.
new text end

new text begin (a) Upon joint petition of a public utility as defined in
section 216B.02, subdivision 4, and any customer located within
the utility's service territory, the commission may establish a
zone within that utility's service territory where the utility
will install additional, redundant or upgraded components of the
electric distribution infrastructure that are designed to
decrease the risk of power outages, provided the utility and all
of its customers located within the proposed zone have approved
the installation of the components and the financial recovery
plan prior to the creation of the zone. Prior to commission
approval, the utility must notify each customer within the
proposed zone of the total costs of the installation, an
estimate of the customer's share of those costs, and the
potential benefits of the local power quality zone to the
customer.
new text end

new text begin (b) The commission shall authorize the utility to collect
all costs of the installation of any components under this
section, including initial investment, operation and maintenance
costs and taxes from all customers within the zone, through
tariffs and surcharges for service in a zone that appropriately
reflect the cost of service to those customers, provided the
customers agree to pay all costs for a predetermined period,
including costs of component removal, if appropriate.
new text end

new text begin (c) Nothing in this section limits the ability of the
utility and any customer to enter into customer-specific
agreements pursuant to applicable statutory, rule, or tariff
provisions.
new text end

new text begin Nothing in this section shall be construed to permit the quality
of service outside a designated zone to decline.
new text end

ARTICLE 9

BIOGAS INCENTIVE PAYMENTS

Section 1.

Minnesota Statutes 2004, section 216C.41,
subdivision 1, is amended to read:

Subdivision 1.

Definitions.

(a) The definitions in this
subdivision apply to this section.

(b) "Qualified hydroelectric facility" means a
hydroelectric generating facility in this state that:

(1) is located at the site of a dam, if the dam was in
existence as of March 31, 1994; and

(2) begins generating electricity after July 1, 1994, or
generates electricity after substantial refurbishing of a
facility that begins after July 1, 2001.

(c) "Qualified wind energy conversion facility" means a
wind energy conversion system in this state that:

(1) produces two megawatts or less of electricity as
measured by nameplate rating and begins generating electricity
after December 31, 1996, and before July 1, 1999;

(2) begins generating electricity after June 30, 1999,
produces two megawatts or less of electricity as measured by
nameplate rating, and is:

(i) owned by a resident of Minnesota or an entity that is
organized under the laws of this state, is not prohibited from
owning agricultural land under section 500.24, and owns the land
where the facility is sited;

(ii) owned by a Minnesota small business as defined in
section 645.445;

(iii) owned by a Minnesota nonprofit organization;

(iv) owned by a tribal council if the facility is located
within the boundaries of the reservation;

(v) owned by a Minnesota municipal utility or a Minnesota
cooperative electric association; or

(vi) owned by a Minnesota political subdivision or local
government, including, but not limited to, a county, statutory
or home rule charter city, town, school district, or any other
local or regional governmental organization such as a board,
commission, or association; or

(3) begins generating electricity after June 30, 1999,
produces seven megawatts or less of electricity as measured by
nameplate rating, and:

(i) is owned by a cooperative organized under chapter 308A
other than a Minnesota cooperative electric association; and

(ii) all shares and membership in the cooperative are held
by an entity that is not prohibited from owning agricultural
land under section 500.24.

(d) "Qualified on-farm biogas recovery facility" means an
anaerobic digester system that:

(1) is located at the site of an agricultural
operation; new text begin and
new text end

(2) is owned by an entity that is not prohibited from
owning agricultural land under section 500.24 and that owns or
rents the land where the facility is located deleted text begin ; and
deleted text end

deleted text begin (3) begins generating electricity after July 1, 2001 deleted text end .

(e) "Anaerobic digester system" means a system of
components that processes animal waste based on the absence of
oxygen and produces gas used to generate electricity.

ARTICLE 10

GAS INFRASTRUCTURE COST

Section 1.

new text begin [216B.1635] RECOVERY OF ELIGIBLE
INFRASTRUCTURE REPLACEMENT COSTS BY GAS UTILITIES.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin (a) "Gas utility" means a
public utility as defined in section 216B.02, subdivision 4,
that furnishes natural gas service to retail customers.
new text end

new text begin (b) "Gas utility infrastructure costs" or "GUIC" means gas
utility projects that:
new text end

new text begin (1) do not serve to increase revenues by directly
connecting the infrastructure replacement to new customers;
new text end

new text begin (2) are in service but were not included in the gas
utility's rate base in its most recent general rate case; and
new text end

new text begin (3) replace or modify existing infrastructure if the
replacement or modification does not constitute a betterment,
unless the betterment is required by a political subdivision, as
evidenced by specific documentation from the government entity
requiring the replacement or modification of infrastructure.
new text end

new text begin (c) "Gas utility projects" means relocation and replacement
of natural gas facilities located in the public right-of-way
required by the construction or improvement of a highway, road,
street, public building, or other public work by or on behalf of
the United States, the State of Minnesota, or a political
subdivision.
new text end

new text begin Subd. 2. new text end

new text begin Filing. new text end

new text begin (a) The commission may approve a gas
utility's petition for a rate schedule to recover GUIC under
this section. A gas utility may petition the commission to
recover a rate of return, income taxes on the rate of return,
incremental property taxes, plus incremental depreciation
expense associated with GUIC.
new text end

new text begin (b) The filing is subject to the following:
new text end

new text begin (1) a gas utility may submit a filing under this section no
more than once per year;
new text end

new text begin (2) a gas utility must file sufficient information to
satisfy the commission regarding the proposed GUIC or be subject
to denial by the commission. The information includes, but is
not limited to:
new text end

new text begin (i) the government entity ordering the gas utility project
and the purpose for which the project is undertaken;
new text end

new text begin (ii) the location, description, and costs associated with
the project;
new text end

new text begin (iii) a description of the costs, and salvage value, if
any, associated with the existing infrastructure replaced or
modified as a result of the project;
new text end

new text begin (iv) the proposed rate design and an explanation of why the
proposed rate design is in the public interest;
new text end

new text begin (v) the magnitude and timing of any known future gas
utility projects that the utility may seek to recover under this
section;
new text end

new text begin (vi) the magnitude of GUIC in relation to the gas utility's
base revenue as approved by the commission in the gas utility's
most recent general rate case, exclusive of gas purchase costs
and transportation charges;
new text end

new text begin (vii) the magnitude of GUIC in relation to the gas
utility's capital expenditures since its most recent general
rate case;
new text end

new text begin (viii) the amount of time since the utility last filed a
general rate case and the utility's reasons for seeking recovery
outside of a general rate case; and
new text end

new text begin (ix) documentation supporting the calculation of the GUIC.
new text end

new text begin Subd. 3. new text end

new text begin Commission authority. new text end

new text begin The commission may issue
orders and adopt rules necessary to implement and administer
this section.
new text end

new text begin EFFECTIVE DATE. new text end

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

Sec. 2. new text begin REPORT TO LEGISLATURE.
new text end

new text begin The Department of Commerce shall review the operation and
impact of the GUIC recovery mechanism established under
Minnesota Statutes, section 216B.1635, on ratepayers and the
utility and submit a report of its findings and recommendations
to the legislature four years after the effective date of this
section.
new text end

Sec. 3. new text begin SUNSET.
new text end

new text begin Sections 1 and 2 shall expire on June 30, 2015.
new text end

ARTICLE 11

EMINENT DOMAIN LANDOWNER COMPENSATION

Section. 1.

Landowner payments working group.

new text begin Subdivision 1. new text end

new text begin Membership. new text end

new text begin By June 15, 2005, the
Legislative Electric Energy Task Force shall convene a landowner
payments working group consisting of up to 12 members, including
representatives from each of the following groups:
transmission-owning investor-owned utilities, electric
cooperatives, municipal power agencies, Farm Bureau, Farmers
Union, county commissioners, real estate appraisers and others
with an interest and expertise in landowner rights and the
market value of rural property.
new text end

new text begin Subd. 2. new text end

new text begin Appointment. new text end

new text begin The chairs of the Legislative
Electric Energy Task Force and the chairs of the senate and
house committees with primary jurisdiction over energy policy
shall jointly appoint the working group members.
new text end

new text begin Subd. 3. new text end

new text begin Charge. new text end

new text begin (a) The landowner payments working
group shall research alternative methods of remunerating
landowners on whose land high voltage transmission lines have
been constructed.
new text end

new text begin (b) In developing its recommendations, the working group
shall:
new text end

new text begin (1) examine different methods of landowner payments that
operate in other states and countries;
new text end

new text begin (2) consider innovative alternatives to lump-sum payments
that extend payments over the life of the transmission line and
that run with the land if the land is conveyed to another owner;
new text end

new text begin (3) consider alternative ways of structuring payments that
are equitable to landowners and utilities.
new text end

new text begin Subd. 4. new text end

new text begin Expenses. new text end

new text begin Members of the working group shall be
reimbursed for expenses as provided in Minnesota Statutes,
section 15.059, subdivision 6. Expenses of the landowner
payments working group shall not exceed $10,000 without the
approval of the chairs of the Legislative Electric Energy Task
Force.
new text end

new text begin Subd. 5. new text end

new text begin Report. new text end

new text begin The landowner payments working group
shall present its findings and recommendations, including
legislative recommendations and model legislation, if any, in a
report to the Legislative Electric Energy Task Force by January
15, 2006.
new text end

ARTICLE 12

TECHNICAL CORRECTION

Section 1.

Minnesota Statutes 2004, section 216B.16,
subdivision 6d, is amended to read:

Subd. 6d.

Wind energy; property tax.

An owner of a wind
energy conversion facility which is required to pay property
taxes under section 272.02, subdivision 22, new text begin or production taxes
under section 272.029, and any related or successor provisions,
new text end or a public utility regulated by the Public Utilities Commission
which purchases the wind generated electricity may petition the
commission to include in any power purchase agreement between
the owner of the facility and the public utility the amount of
property taxes new text begin and production taxes new text end paid by the owner of the
facility. The Public Utilities Commission shall require the
public utility to amend the power purchase agreement to include
the property taxes new text begin and production taxes new text end paid by the owner of the
facility in the price paid by the utility for wind generated
electricity if the commission finds:

(1) the owner of the facility has paid the property taxes
new text begin or production taxes new text end required by this subdivision;

(2) the power purchase agreement between the public utility
and the owner does not already require the utility to pay the
amount of property taxes new text begin or production taxes new text end the owner has paid
under this subdivision new text begin , or, in the case of a power purchase
agreement entered into prior to 1997, the amount of property or
production taxes paid by the owner in any year of the power
purchase agreement exceeds the amount of such property or
production taxes included in the price paid by the utility to
the owner, as reflected in the owner's bid documents new text end ; and

(3) the commission has approved a rate schedule containing
provisions for the automatic adjustment of charges for utility
service in direct relation to the charges ordered by the
commission under section 272.02, subdivision 22 new text begin , or section
272.029 new text end .

ARTICLE 13

HYDROGEN

Section 1.

new text begin [216B.811] 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.811
to 216B.815, the terms defined in this section have the meanings
given them.
new text end

new text begin Subd. 2. new text end

new text begin Fuel cell. new text end

new text begin "Fuel cell" means an electrochemical
device that produces useful electricity, heat, and water vapor,
and operates as long as it is provided fuel.
new text end

new text begin Subd. 3. new text end

new text begin Hydrogen. new text end

new text begin "Hydrogen" means hydrogen produced
using native energy sources.
new text end

new text begin Subd. 4. new text end

new text begin Related technologies. new text end

new text begin "Related technologies"
means balance of plant components necessary to make hydrogen and
fuel cell systems function; turbines, reciprocating, and other
combustion engines capable of operating on hydrogen; and
electrolyzers, reformers, and other equipment and processes
necessary to produce, purify, store, distribute, and use
hydrogen for energy.
new text end

Sec. 2.

new text begin [216B.812] FOSTERING THE TRANSITION TOWARD ENERGY
SECURITY.
new text end

new text begin Subdivision 1. new text end

new text begin Early purchase and deployment of hydrogen,
fuel cells, and related technologies by the state. new text end

new text begin The
Department of Administration shall identify opportunities for
demonstrating the use of hydrogen fuel cells within state-owned
facilities, vehicle fleets, and operations.
new text end

new text begin The department shall purchase and demonstrate hydrogen,
fuel cells, and related technologies in ways that strategically
contribute to realizing Minnesota's hydrogen economy goal as set
forth in section 216B.013, and which contribute to the following
nonexclusive list of objectives:
new text end

new text begin (1) provide needed performance data to the marketplace;
new text end

new text begin (2) identify code and regulatory issues to be resolved;
new text end

new text begin (3) advance or validate a critical area of research;
new text end

new text begin (4) foster economic development and job creation in the
state;
new text end

new text begin (5) raise public awareness of hydrogen, fuel cells, and
related technologies; or
new text end

new text begin (6) reduce emissions of carbon dioxide and other pollutants.
new text end

new text begin Subd. 2. new text end

new text begin Support for strategic demonstration projects
that accelerate the commercialization of hydrogen, fuel cells,
and related technologies. new text end

new text begin (a) In consultation with appropriate
representatives from state agencies, local governments,
universities, businesses, and other interested parties, the
Department of Commerce shall report back to the legislature by
November 1, 2005, and every two years thereafter, with a slate
of proposed pilot projects that contribute to realizing
Minnesota's hydrogen economy goal as set forth in section
216B.013. The Department of Commerce must consider the
following nonexclusive list of priorities in developing the
proposed slate of pilot projects:
new text end

new text begin (1) demonstrate "bridge" technologies such as
hybrid-electric, off-road, and fleet vehicles running on
hydrogen or fuels blended with hydrogen;
new text end

new text begin (2) develop cost-competitive, on-site hydrogen production
technologies;
new text end

new text begin (3) demonstrate nonvehicle applications for hydrogen;
new text end

new text begin (4) improve the cost and efficiency of hydrogen from
renewable energy sources; and
new text end

new text begin (5) improve the cost and efficiency of hydrogen production
using direct solar energy without electricity generation as an
intermediate step.
new text end

new text begin (b) For all demonstrations, individual system components of
the technology must meet commercial performance standards and
systems modeling must be completed to predict commercial
performance, risk, and synergies. In addition, the proposed
pilots should meet as many of the following criteria as possible:
new text end

new text begin (1) advance energy security;
new text end

new text begin (2) capitalize on the state's native resources;
new text end

new text begin (3) result in economically competitive infrastructure being
put in place;
new text end

new text begin (4) be located where it will link well with existing and
related projects and be accessible to the public, now or in the
future;
new text end

new text begin (5) demonstrate multiple, integrated aspects of hydrogen
infrastructure;
new text end

new text begin (6) include an explicit public education and awareness
component;
new text end

new text begin (7) be scalable to respond to changing circumstances and
market demands;
new text end

new text begin (8) draw on firms and expertise within the state where
possible;
new text end

new text begin (9) include an assessment of its economic, environmental,
and social impact; and
new text end

new text begin (10) serve other needs beyond hydrogen development.
new text end

new text begin Subd. 3. new text end

new text begin Establishing initial, multifuel transition
infrastructure for hydrogen vehicles. new text end

new text begin The commissioner of
commerce may accept federal funds, expend funds, and participate
in projects to design, site, and construct multifuel hydrogen
fueling stations that eventually link urban centers along key
trade corridors across the jurisdictions of Manitoba, the
Dakotas, Minnesota, Iowa, and Wisconsin.
new text end

new text begin These energy stations must serve the priorities listed in
subdivision 2 and, as transition infrastructure, should
accommodate a wide variety of vehicle technologies and fueling
platforms, including hybrid, flexible-fuel, and fuel cell
vehicles. They may offer, but not be limited to, gasoline,
diesel, ethanol (E-85), biodiesel, and hydrogen, and may
simultaneously test the integration of on-site combined heat and
power technologies with the existing energy infrastructure.
new text end

new text begin The hydrogen portion of the stations may initially serve
local, dedicated on or off-road vehicles, but should eventually
support long-haul transport.
new text end

Sec. 3.

new text begin [216B.815] AUTHORIZE AND ENCOURAGE THE STATE'S
PUBLIC RESEARCH INSTITUTIONS TO COORDINATE AND LEVERAGE THEIR
STRENGTHS THROUGH A REGIONAL ENERGY RESEARCH AND EDUCATION
PARTNERSHIP.
new text end

new text begin The state's public research and higher education
institutions should work with one another and with similar
institutions in the region to establish Minnesota and the Upper
Midwest as a center of research, education, outreach, and
technology transfer for the production of renewable energy and
products, including hydrogen, fuel cells, and related
technologies. The partnership should be designed to create a
critical mass of research and education capability that can
compete effectively for federal and private investment in these
areas.
new text end

new text begin The partnership must include an advisory committee
comprised of government, industry, academic, and nonprofit
representatives to help focus its research and education efforts
on the most critical issues. Initiatives undertaken by the
partnership may include:
new text end

new text begin (1) collaborative and interdisciplinary research,
demonstration projects, and commercialization of market-ready
technologies;
new text end

new text begin (2) creation of undergraduate and graduate course offerings
and eventually degreed and vocational programs with reciprocity;
new text end

new text begin (3) establishment of fellows programs at the region's
institutes of higher learning that provide financial incentives
for relevant study, research, and exchange; and
new text end

new text begin (4) development and field-testing of relevant curricula,
teacher kits for all educational levels, and widespread teacher
training, in collaboration with state energy offices, teachers,
nonprofits, businesses, the United States Department of Energy,
and other interested parties.
new text end

Sec. 4. new text begin HYDROGEN REFUELING STATIONS; GRANTS.
new text end

new text begin The commissioner of commerce shall make assessments under
Minnesota Statutes, section 216C.052, of $300,000 in fiscal year
2006 and $300,000 in fiscal year 2007 for the purpose of
matching federal and private investments in three multifuel
hydrogen refueling stations in Moorhead, Alexandria, and the
Twin Cities respectively. The assessments are subject to the
assessment caps specified in Minnesota Statutes, section
216C.052. Sums assessed under this section are appropriated to
the commissioner of commerce for the purpose of this section.
The assessments and grants are contingent upon securing the
balance of the total project costs from nonstate sources.
new text end

Sec. 5. new text begin FUEL CELL CURRICULUM DEVELOPMENT PILOT.
new text end

new text begin The Board of Trustees of the Minnesota State Colleges and
Universities is encouraged to work with the Upper Midwest
Hydrogen Initiative and other interested parties to develop and
implement hydrogen and fuel cell curricula and training programs
that can be incorporated into existing relevant courses and
disciplines affected by these technologies. These disciplines
include, but are not limited to, chemical, electrical, and
mechanical engineering, including lab technicians; fuel cell
production, installation, and maintenance; fuel cell and
internal combustion vehicles, including hybrids, running on
hydrogen or biofuels; and the construction, installation, and
maintenance of facilities that will produce, use, or serve
hydrogen. The curricula should also be useful to secondary
educational institutions and should include, but not be limited
to, the production, purification, distribution, and use of
hydrogen in portable, stationary, and mobile applications and in
fuel cells, turbines, and reciprocating engines.
new text end

ARTICLE 14

SOY-DIESEL

Section 1. new text begin ALLOCATION; RENEWABLE DEVELOPMENT GRANT.
new text end

new text begin Notwithstanding any contrary provision of Minnesota
Statutes, section 116C.779, $150,000 is allocated in fiscal year
2006 to the Agricultural Utilization Research Institute from
available funds in the renewable development account established
under Minnesota Statutes, section 116C.779. The institute shall
disburse the money over three fiscal years as grants to an
applicant meeting the requirements of Minnesota Statutes,
section 216C.41, subdivision 1, paragraph (c), clause (2), item
(i), for a project that uses a soy-diesel generator to provide
backup power for a wind energy conversion system of one megawatt
or less of nameplate capacity. The institute shall disburse
$50,000 of the grant in three consecutive fiscal years beginning
July 1, 2005.
new text end

new text begin For the purpose of this section, "soy-diesel" means a
renewable, biodegradable, mono alkyl ester combustible liquid
fuel derived from agricultural plant oils that meets American
Society for Testing and Materials Specification D6751-02 for
Biodiesel Fuel (B100) Blend Stock for Distillate Fuels. This
section only applies if the entity receives qualifying
applications.
new text end

ARTICLE 15

BIODIESEL FUEL FOR HOME HEATING

Section 1. new text begin STUDY; BIODIESEL FUEL FOR HOME HEATING.
new text end

new text begin (a) From the money available to the commissioner of
commerce for purposes of studies and technical assistance by the
reliability administrator under Minnesota Statutes, section
216C.052, and in conformity with the goals and directives of
Minnesota Statutes, section 16B.325, the reliability
administrator shall perform a comprehensive technical and
economic analysis of the benefits to be derived from using
biodiesel fuel as defined in Minnesota Statutes, section 239.77,
subdivision 1, or biodiesel fuel blends, as a home heating
fuel. The analysis must consider blends ranging from B2 to
B100. No more than $25,000 may be expended for the analysis.
new text end

new text begin (b) Not later than March 15, 2007, the reliability
administrator shall report the results of the study and analysis
to the appropriate standing committees of the Minnesota senate
and house of representatives.
new text end

ARTICLE 16

CITY OF ALEXANDRIA JOINT VENTURE AUTHORITY

Section 1.

Laws 2002, chapter 329, section 5, is amended
to read:

Sec. 5 new text begin JOINT VENTURE AUTHORITY.
new text end

(a) The city of Alexandria may enter into a joint
venture new text begin or joint ventures new text end with new text begin one, two, or three of the
entities known as new text end Runestone Telephone Association deleted text begin and deleted text end new text begin , new text end Runestone
Electric Association new text begin , and Gardonville Telephone Cooperative new text end for
the purpose of providing local niche service, including internet
services, and point to point transmission of digital information.

(b) For purposes of this section, with respect to the
services described in paragraph (a), the city of Alexandria and
a joint venture to which it is a party shall have the rights and
authority granted by, and be subject to, Minnesota Statutes 2001
Supplement, section 452.25, except for the provisions of that
section which relate specifically and only to electric utilities.

(c) For the purposes of this section, "local niche service"
refers to point-to-point connections between end-user locations
within a service area and any telecommunications services under
the public utilities commission's jurisdiction under Minnesota
Statutes, chapter 237 that do not fall within the definition of
local service or the definition of interexchange service.

new text begin (d) If the city of Alexandria obtains authority to provide
local service or interexchange service under chapter 237, it may
enter into a joint venture with the entities identified in
paragraph (a) for those purposes.
new text end

[EFFECTIVE DATE; LOCAL APPROVAL.] new text begin This section is effective
as to the city of Alexandria the day after the city of
Alexandria's governing body and its chief clerical officer
timely complete compliance with Minnesota Statutes, section
645.021, subdivisions 2 and 3.
new text end