SF 145

1st Engrossment - 85th Legislature (2007 - 2008) Posted on 12/15/2009 12:00am

A bill for an act
relating to energy; providing for community-based energy development;
requiring a plan to reduce greenhouse gas emissions; amending Minnesota
Statutes 2006, sections 216B.1612, subdivisions 1, 2, 3, 5, by adding a
subdivision; 216B.1691, by adding a subdivision; proposing coding for new law
in Minnesota Statutes, chapter 216F.

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

ARTICLE 1

C-BED AND RELATED ISSUES

Section 1.

Minnesota Statutes 2006, section 216B.1612, subdivision 1, is amended to
read:

Subdivision 1.

Tariff establishment.

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

Sec. 2.

Minnesota Statutes 2006, section 216B.1612, subdivision 2, is amended to read:

Subd. 2.

Definitions.

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

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

(c) "Qualifying owner" means:

(1) a Minnesota resident;

(2) a limited liability company that is organized under deleted text begin the laws of this state deleted text end new text begin chapter
322B new text end and that is made up of members who are Minnesota residents;

(3) a Minnesota nonprofit organization organized under chapter 317A;

(4) a Minnesota cooperative association organized under chapter 308A or 308B,
deleted text begin other than deleted text end new text begin including new text end a rural electric cooperative association or a generation and
transmission cooperative new text begin on behalf of and at the request of a member distribution utility new text end ;

(5) a Minnesota political subdivision or local government deleted text begin other than deleted text end new text begin including,
but not limited to, new text end a municipal electric utility new text begin , new text end or new text begin a new text end municipal power agency new text begin on behalf
of and at the request of a member distribution utility new text end , deleted text begin including, but not limited to, deleted text end 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

(6) a tribal council.

(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.

(e) "Standard reliability criteria" means:

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

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

(f) new text begin "Renewable" refers to a technology listed in section 216B.1691, subdivision 1,
paragraph (a).
new text end

new text begin (g) new text end "Community-based energy new text begin development new text end project" or "C-BED project" means
a new deleted text begin wind deleted text end new text begin renewable new text end energy project that new text begin either as a stand-alone project or part of a
partnership under subdivision 8 new text end :

(1) has no single qualifying owner owning more than 15 percent of a C-BED new text begin wind
energy new text end project deleted text begin that consists of more than two turbines; or deleted text end new text begin unless: (i) the C-BED wind
energy project consists of only one or two turbines; or (ii) the qualifying owner is a public
entity listed under paragraph (b), clause (5), that is not a municipal utility;
new text end

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

(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 begin EFFECTIVE DATE. new text end

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

Sec. 3.

Minnesota Statutes 2006, section 216B.1612, subdivision 3, is amended to read:

Subd. 3.

Tariff rate.

(a) The tariff described in subdivision 4 must have a rate
schedule that allows for a deleted text begin rate up to a 2.7 cents per kilowatt-hour deleted text end 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.

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

(c) The commission shall require that qualifying new text begin and nonqualifying new text end 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 begin EFFECTIVE DATE. new text end

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

Sec. 4.

Minnesota Statutes 2006, section 216B.1612, subdivision 5, is amended to read:

Subd. 5.

Priority for C-BED projects.

(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 new text begin or standard new text end 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.

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.

(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.

(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.

Sec. 5.

Minnesota Statutes 2006, section 216B.1612, is amended by adding a
subdivision to read:

new text begin Subd. 8. new text end

new text begin Community energy partnerships. new text end

new text begin A utility providing electric service
to retail or wholesale customers in Minnesota and an independent power producer may,
subject to the limits specified in this section, participate in a community-based energy
project, including as an owner, equity partner, or provider of technical or financial
assistance.
new text end

new text begin EFFECTIVE DATE. new text end

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

Sec. 6.

Minnesota Statutes 2006, section 216B.1691, is amended by adding a
subdivision to read:

new text begin Subd. 7. new text end

new text begin Utility acquisition of resources. new text end

new text begin A competitive resource acquisition
process established by the commission prior to June 1, 2007, shall not apply to a utility
for the construction, ownership, and operation of generation facilities used to satisfy the
requirements of this section unless, upon a finding that it is in the public interest, the
commission issues an order on or after June 1, 2007, that requires compliance by a utility
with a competitive resource acquisition process.
new text end

Sec. 7.

new text begin [216F.011] SIZE DETERMINATION.
new text end

new text begin (a) The total size of a combination of wind energy conversion systems for the
purpose of determining what jurisdiction has siting authority under this chapter must
be determined according to this section. The nameplate capacity of one wind energy
conversion system must be combined with the nameplate capacity of any other wind
energy conversion system that:
new text end

new text begin (1) is located within five miles of the wind energy conversion system;
new text end

new text begin (2) is constructed within the same 12-month period as the wind energy conversion
system; and
new text end

new text begin (3) exhibits characteristics of being a single development, including, but not limited
to, ownership structure, an umbrella sales arrangement, shared interconnection, revenue
sharing arrangements, and common debt or equity financing.
new text end

new text begin (b) The commissioner shall provide forms and assistance for project developers to
make a request for a size determination. Upon written request of a project developer, the
commissioner of commerce shall provide a written size determination within 30 days
of receipt of the request and of any information requested by the commissioner. In the
case of a dispute, the chair of the Public Utilities Commission shall make the final size
determination.
new text end

new text begin (c) An application to a county for a permit under this chapter for a wind energy
conversion system is not complete without a size determination made under this section.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 15, 2008.
new text end

Sec. 8.

new text begin [216F.08] PERMIT AUTHORITY; ASSUMPTION BY COUNTIES.
new text end

new text begin (a) A county board may, by resolution and upon written notice to the Public Utilities
Commission, assume responsibility for processing applications for permits required
under this chapter for LWECS with a combined nameplate capacity of less than 25,000
kilowatts. The responsibility for permit application processing, if assumed by a county,
may be delegated by the county board to an appropriate county officer or employee.
Processing by a county shall be done in accordance with procedures and processes
established under chapter 394.
new text end

new text begin (b) A county board that exercises its option under paragraph (a) may issue, deny,
modify, impose conditions upon, or revoke permits pursuant to this section. The action
of the county board about a permit application is final, subject to appeal as provided
in section 394.27.
new text end

new text begin (c) The commission shall, by order, establish general permit standards, including
appropriate property line set-backs, governing site permits for LWECS under this section.
The order must consider existing and historic commission standards for wind permits
issued by the commission. The general permit standards shall apply to permits issued by
counties and to permits issued by the commission for LWECS with a combined nameplate
capacity of less than 25,000 kilowatts. The commission or a county may grant a variance
from a general permit standard if the variance is found to be in the public interest.
new text end

new text begin (d) The commission and the commissioner of commerce shall provide technical
assistance to a county with respect to the processing of LWECS site permit applications.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 15, 2008.
new text end

Sec. 9.

new text begin [216F.081] APPLICATION OF COUNTY STANDARDS.
new text end

new text begin A county may adopt by ordinance standards for LWECS that are more stringent than
standards in commission rules or in the commission's permit standards. The commission,
in considering a permit application for LWECS in a county that has adopted more stringent
standards, shall consider and apply those more stringent standards, unless the commission
finds good cause not to apply the standards.
new text end

Sec. 10. new text begin STATEWIDE STUDY OF DISPERSED GENERATION POTENTIAL.
new text end

new text begin Subdivision 1. new text end

new text begin Definition. new text end

new text begin "Dispersed generation" means an electric generation
project with a generating capacity between ten and 40 megawatts that utilizes an "eligible
energy technology," as defined in Minnesota Statutes, section 216B.1691, subdivision 1,
paragraph (a).
new text end

new text begin Subd. 2. new text end

new text begin Study participants. new text end

new text begin Each electric utility subject to Minnesota Statutes,
section 216B.1691, must participate collaboratively in conducting a two-phase study of
the potential for dispersed generation projects that can be developed in Minnesota.
new text end

new text begin Subd. 3. new text end

new text begin First phase study content; report. new text end

new text begin In the first phase of the study,
participants must analyze the impacts of the addition of a total of 600 megawatts of
new dispersed generation projects distributed among the following Minnesota electric
transmission planning zones: the Northeast zone, the Northwest zone, the Southeast
zone, the Southwest zone, and the West-Central zone. Study participants must use a
generally accepted 2010 year transmission system model including all transmission
facilities expected to be operating in 2010. The study must take into consideration
regional projected load growth, planned changes in the bulk transmission network, and the
long-range transmission conceptual plan being developed under Laws 2007, chapter 3,
section 2. In determining locations for the installation of dispersed generation projects
that consist of wind energy conversion systems, the study should consider, at a minimum,
wind resource availability, existing and contracted wind projects, and current dispersed
generation projects in the Midwest Independent System Operator interconnection queue.
The study must analyze the impacts of individual projects and all projects in aggregate on
the transmission system, and identify specific modifications to the transmission system
necessary to remedy any problems caused by the installation of dispersed generation
projects, including cost estimates for the modifications. The study must analyze the
additional dispersed generation projects connected at the lowest voltage level transmission
that exists in the vicinity of the projected generation sites. A preliminary analysis to
identify transmission system problems must be conducted with the projects installed at
initially selected locations. The technical review committee may, after reviewing the
locations selected for installation, recommend moving the installation sites once to new
locations to reduce undesirable transmission system impacts. The commissioner of
commerce must submit a report containing the findings and recommendations of the first
phase of the study to the commission no later than June 15, 2008.
new text end

new text begin Subd. 4. new text end

new text begin Second phase study content; report. new text end

new text begin In the second phase of the study,
participants must analyze the impacts of an additional total of 600 megawatts of dispersed
generation projects installed among the five transmission planning zones, or a higher total
capacity amount if agreed to by both the utilities and the technical review committee. The
utilities must employ an analysis method similar to that used in the first phase of the study,
and must use the most recent information available, including information developed in
the first phase. The second phase of the study must use a generally accepted 2013 year
transmission system model including all transmission facilities that are expected to be
in service at that time. The commissioner of commerce must submit a report containing
the findings and recommendations of the second phase of the study to the commission no
later than September 15, 2009.
new text end

new text begin Subd. 5. new text end

new text begin Technical review committee. new text end

new text begin Prior to the start of the first phase of
the study, the commissioner of commerce must appoint a technical review committee
consisting of between ten and 15 individuals with experience and expertise in electric
transmission system engineering, renewable energy generation technology, and dispersed
generation project development, including representatives from the federal Department
of Energy, the Midwest Independent System Operator, and stakeholder interests. The
technical review committee must oversee both phases of the study, and must:
new text end

new text begin (1) make recommendations to the utilities regarding the proposed methods and
assumptions to be used in the technical study;
new text end

new text begin (2) in conjunction with the appropriate utilities, hold public meetings on each
phase of the study in each electricity transmission planning zone prior to the beginning
of each phase of study, after the impact analysis is completed, and when a draft final
report is available;
new text end

new text begin (3) establish procedures for handling commercially sensitive information; and
new text end

new text begin (4) review the initial and final drafts of the study and make recommendations for
improvement, including problems associated with the interconnections among utility
systems that may be amenable to solution through cooperation between the utilities in each
zone. During each phase of the study, the technical review committee may recommend
that the installation of dispersed generation projects be moved to new locations that cause
fewer undesirable transmission system impacts.
new text end

Sec. 11. new text begin WIND DEVELOPMENT PROPERTY AGREEMENTS; STUDY.
new text end

new text begin The Legislative Electric Energy Task Force shall study whether the state should
regulate easements, leases, and other agreements to acquire an interest in real property
for the purpose of wind energy development. The purpose of the study is to determine
whether the duration and other terms of those interests should be limited to promote
wind energy development. The task force must report the results of its study and any
recommendations to the chairs of the energy finance and policy committees of the
legislature by February 1, 2008.
new text end

ARTICLE 2

GLOBAL CLIMATE CHANGE; GREENHOUSE GAS EMISSIONS

Section 1. new text begin GREENHOUSE GAS EMISSIONS.
new text end

new text begin Subdivision 1. new text end

new text begin Greenhouse gas emissions reduction goal. new text end

new text begin (a) It is the goal of the
state to reduce statewide greenhouse gas emissions across all sectors producing those
emissions to a level at least 80 percent below 2005 levels by 2050.
new text end

new text begin (b) For purposes of this section, statewide greenhouse gas emissions
include emissions of carbon dioxide, methane, nitrous oxide, hydrofluorocarbons,
perfluorocarbons, and sulfur hexafluoride emitted by anthropogenic sources within the
state and from the generation of electricity imported from outside the state and consumed
in Minnesota. Carbon dioxide that is injected into geological formations to prevent
its release to the atmosphere in compliance with applicable laws, and carbon dioxide
associated with the combustion of fuels other than coal, petroleum, and natural gas are not
counted as contributing to statewide greenhouse gas emissions.
new text end

new text begin Subd. 2. new text end

new text begin Climate change action plan. new text end

new text begin By February 1, 2008, the commissioner of
commerce, in consultation with the commissioners of the Pollution Control Agency,
the Housing Finance Agency, and the Departments of Natural Resources, Agriculture,
Employment and Economic Development, and Transportation, and the chair of the
Metropolitan Council, shall submit to the legislature a climate change action plan that
meets the requirements of this section.
new text end

new text begin Subd. 3. new text end

new text begin Stakeholder process. new text end

new text begin The plan required by subdivision 2 must be
developed through a structured, broadly inclusive stakeholder-based review of potential
policies and initiatives that will reduce statewide greenhouse gas emissions from a
broad range of sources and activities. The commissioner shall engage a nationally
recognized independent expert entity to conduct the stakeholder process. The report of
the stakeholder process must form the basis for the plan submitted by the commissioner
under subdivision 2.
new text end

new text begin Subd. 4. new text end

new text begin General elements of the plan. new text end

new text begin The plan must:
new text end

new text begin (1) estimate 1990 and 2005 greenhouse gas emissions in the state and make
projections of emissions in 2015, 2025, and 2050;
new text end

new text begin (2) identify, evaluate, and integrate a broad range of statewide greenhouse gas
reduction options for all emission sectors in the state;
new text end

new text begin (3) assess the costs, benefits, and feasibility of implementing the options; and
new text end

new text begin (4) recommend an integrated set of reduction options and strategies for implementing
the options that will achieve the goal in subdivision 1 and interim goals recommended
under subdivision 5, including analysis of the associated costs and benefits to Minnesotans.
new text end

new text begin Subd. 5. new text end

new text begin Specific plan requirements. new text end

new text begin (a) The plan must evaluate and recommend
interim goals as steps to achieve the goal in subdivision 1. At a minimum, the plan must
evaluate and recommend the efficacy of reducing statewide greenhouse gas emissions to
a level at least 15 percent below 2005 emission levels by 2015 and to a level at least 30
percent below 2005 emission levels by 2025.
new text end

new text begin (b) The plan must determine the feasibility, assess the costs and benefits, and
recommend how the state could adopt a regulatory system that imposes a cap on the
aggregate air pollutant emissions of a group of sources, requires those subject to the
cap to own an allowance for each ton of the air pollutant emitted, and allows for
market-based trading of those allowances. The evaluation must contain an analysis of the
state implementing a cap and trade system alone, in coordination with other states, and
as a requirement of federal law applying to all states. The plan must recommend the
parameters of a cap and trade system that includes a cap that would prevent significant
increases in greenhouse gas emissions above current levels with a schedule for lowering
the cap periodically to achieve the goal in subdivision 1 and interim goals recommended
under paragraph (a). The plan must consider cost savings and cost increases on energy
consumers in the state.
new text end

new text begin (c) The plan must include recommendations for improvements in the emissions
inventory and recommend whether the state should require greenhouse gas emissions
reporting from specific sources and, if so, which sources should be required to report. The
plan must also evaluate options for an emissions registry after reviewing registries in other
states and recommend a registry that will insure the greatest opportunity for Minnesota
entities to obtain marketable credits.
new text end

new text begin Subd. 6. new text end

new text begin Regional activities. new text end

new text begin The state must, with other states in the Midwest
region, develop and implement a regional approach to reducing greenhouse gas emissions
from activities in the region, including consulting on a regional cap and trade system.
The commissioner of commerce shall coordinate Minnesota's regional activities under
this subdivision and report to the legislative committees in the senate and house of
representatives with jurisdiction over energy and environmental policy by February 1,
2008, and February 1, 2009, on the progress made and recommendations for further action.
The commissioner of commerce, as part of the activities required under this subdivision,
must meet with responsible officials from bordering states, other states in the Midwest
region, and states in other regions of the country to: (1) determine whether other states are
interested in establishing and cooperating in a multistate or regional greenhouse gas cap
and trade allowance program; (2) identify and prepare an inventory of greenhouse gas
reduction resources available to support a multistate or regional greenhouse gas cap and
trade allowance program; (3) seek cooperation on a regional inventory of greenhouse gas
emission sources; and (4) prepare an inventory of available renewable energy resources
within a state or region. The commissioner of commerce must develop a definition of
scope of this regional activity that is in addition to the components described in clauses
(1) to (4). The commissioner must report on the additional scoping definitions to the
chairs and ranking minority members of the legislative committees with jurisdiction over
energy and environmental finance and policy on or before the commencement of the
2008 regular legislative session.
new text end