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Office of the Revisor of Statutes

SF 145A

Conference Committee Report - 85th Legislature (2007 - 2008) Posted on 01/15/2013 08:28pm

KEY: stricken = removed, old language.
underscored = added, new language.
1.1CONFERENCE COMMITTEE REPORT ON S.F. No. 145
1.2A bill for an act
1.3relating to energy; providing for community-based energy development;
1.4requiring a plan to reduce greenhouse gas emissions;amending Minnesota
1.5Statutes 2006, sections 216B.1612, subdivisions 1, 2, 3, 5, by adding a
1.6subdivision; 216B.1691, by adding a subdivision; proposing coding for new law
1.7in Minnesota Statutes, chapter 216F.
1.8May 19, 2007
1.9The Honorable James P. Metzen
1.10President of the Senate
1.11The Honorable Margaret Anderson Kelliher
1.12Speaker of the House of Representatives
1.13We, the undersigned conferees for S.F. No. 145 report that we have agreed upon the
1.14items in dispute and recommend as follows:
1.15That the House recede from its amendments and that S.F. No. 145 be further
1.16amended as follows:
1.17Delete everything after the enacting clause and insert:

1.18"ARTICLE 1
1.19GENERAL PROVISIONS

1.20    Section 1. TITLE.
1.21    This act may be cited as the Next Generation Energy Act of 2007.

1.22    Sec. 2. Minnesota Statutes 2006, section 216C.05, is amended to read:
1.23216C.05 FINDINGS AND PURPOSE.
1.24    Subdivision 1. Energy planning. The legislature finds and declares that continued
1.25growth in demand for energy will cause severe social and economic dislocations, and that
1.26the state has a vital interest in providing for: increased efficiency in energy consumption,
1.27the development and use of renewable energy resources wherever possible, and the
1.28creation of an effective energy forecasting, planning, and education program.
2.1    The legislature further finds and declares that the protection of life, safety, and
2.2financial security for citizens during an energy crisis is of paramount importance.
2.3    Therefore, the legislature finds that it is in the public interest to review, analyze, and
2.4encourage those energy programs that will minimize the need for annual increases in
2.5fossil fuel consumption by 1990 and the need for additional electrical generating plants,
2.6and provide for an optimum combination of energy sources consistent with environmental
2.7protection and the protection of citizens.
2.8    The legislature intends to monitor, through energy policy planning and
2.9implementation, the transition from historic growth in energy demand to a period when
2.10demand for traditional fuels becomes stable and the supply of renewable energy resources
2.11is readily available and adequately utilized.
2.12    Subd. 2. Energy policy goals. It is the energy policy of the state of Minnesota that:
2.13    (1) the per capita use of fossil fuel as an energy input be reduced by 15 percent by
2.14the year 2015, through increased reliance on energy efficiency and renewable energy
2.15alternatives; and
2.16    (2) 25 percent of the total energy used in the state be derived from renewable energy
2.17resources by the year 2025.

2.18ARTICLE 2
2.19ENERGY EFFICIENCY AND CONSERVATION

2.20    Section 1. Minnesota Statutes 2006, section 216B.16, subdivision 1, is amended to read:
2.21    Subdivision 1. Notice. Unless the commission otherwise orders, no public utility
2.22shall change a rate which has been duly established under this chapter, except upon 60
2.23days' notice to the commission. The notice shall include statements of facts, expert
2.24opinions, substantiating documents, and exhibits, supporting the change requested, and
2.25state the change proposed to be made in the rates then in force and the time when the
2.26modified rates will go into effect. If the filing utility does not have an approved energy
2.27conservation improvement plan on file with the department, it shall also include in its
2.28notice an energy conservation plan pursuant to section 216B.241. A filing utility subject to
2.29rate regulation under section 216B.026 shall reference in its notice the energy conservation
2.30improvement plans of the generation and transmission cooperative providing energy
2.31conservation improvement programs to members of the filing utility pursuant to section
2.32216B.241. The filing utility shall give written notice, as approved by the commission, of
2.33the proposed change to the governing body of each municipality and county in the area
2.34affected. All proposed changes shall be shown by filing new schedules or shall be plainly
2.35indicated upon schedules on file and in force at the time.

3.1    Sec. 2. Minnesota Statutes 2006, section 216B.16, subdivision 6b, is amended to read:
3.2    Subd. 6b. Energy conservation improvement. (a) Except as otherwise provided
3.3in this subdivision, all investments and expenses of a public utility as defined in
3.4section 216B.241, subdivision 1, paragraph (e) (i), incurred in connection with energy
3.5conservation improvements shall be recognized and included by the commission in the
3.6determination of just and reasonable rates as if the investments and expenses were directly
3.7made or incurred by the utility in furnishing utility service.
3.8    (b) After December 31, 1999, Investments and expenses for energy conservation
3.9improvements shall not be included by the commission in the determination of (i) just and
3.10reasonable electric and gas rates for retail electric and gas service provided to large electric
3.11customer facilities that have been exempted by the commissioner of the department
3.12pursuant to section 216B.241, subdivision 1a, paragraph (b); or (ii) just and reasonable
3.13gas rates for large energy facilities. However, no public utility shall be prevented from
3.14recovering its investment in energy conservation improvements from all customers that
3.15were made on or before December 31, 1999, in compliance with the requirements of
3.16section 216B.241.
3.17    (c) The commission may permit a public utility to file rate schedules providing for
3.18annual recovery of the costs of energy conservation improvements. These rate schedules
3.19may be applicable to less than all the customers in a class of retail customers if necessary to
3.20reflect the differing minimum spending requirements of section 216B.241, subdivision 1a.
3.21After December 31, 1999,. The commission shall allow a public utility, without requiring
3.22a general rate filing under this section, to reduce the electric and gas rates applicable to
3.23large electric customer facilities that have been exempted by the commissioner of the
3.24department pursuant to section 216B.241, subdivision 1a, paragraph (b), and to reduce the
3.25gas rate applicable to a large energy facility by an amount that reflects the elimination
3.26of energy conservation improvement investments or expenditures for those facilities
3.27required on or before December 31, 1999. In the event that the commission has set
3.28electric or gas rates based on the use of an accounting methodology that results in the cost
3.29of conservation improvements being recovered from utility customers over a period of
3.30years, the rate reduction may occur in a series of steps to coincide with the recovery of
3.31balances due to the utility for conservation improvements made by the utility on or before
3.32December 31, 1999 2007.
3.33    (d) Investments and expenses of a public utility shall not include electric utility
3.34infrastructure costs as defined in section 216B.1636, subdivision 1, paragraph (b).

4.1    Sec. 3. [216B.1636] RECOVERY OF ELECTRIC UTILITY INFRASTRUCTURE
4.2COSTS.
4.3    Subdivision 1. Definitions. (a) "Electric utility" means a public utility as defined in
4.4section 216B.02, subdivision 4, that furnishes electric service to retail customers.
4.5    (b) "Electric utility infrastructure costs" or "EUIC" means costs for electric utility
4.6infrastructure projects that were not included in the electric utility's rate base in its most
4.7recent general rate case.
4.8    (c) "Electric utility infrastructure projects" means projects owned by an electric
4.9utility that:
4.10    (1) replace or modify existing electric utility infrastructure, including utility-owned
4.11buildings, if the replacement or modification is shown to conserve energy or use energy
4.12more efficiently, consistent with section 216B.241, subdivision 1c; or
4.13    (2) conserve energy or use energy more efficiently by using waste heat recovery
4.14converted into electricity as defined in section 216B.241, subdivision 1, paragraph (n).
4.15    Subd. 2. Filing. (a) The commission may approve an electric utility's petition for
4.16a rate schedule to recover EUIC under this section. An electric utility may petition the
4.17commission to recover a rate of return, income taxes on the rate of return, incremental
4.18property taxes, if any, plus incremental depreciation expense associated with EUIC.
4.19    (b) The filing is subject to the following:
4.20    (1) an electric utility may submit a filing under this section no more than once
4.21per year; and
4.22    (2) an electric utility must file sufficient information to satisfy the commission
4.23regarding the proposed EUIC or be subject to denial by the commission. The information
4.24includes, but is not limited to:
4.25    (i) the location, description, and costs associated with the project;
4.26    (ii) evidence that the electric utility infrastructure project will conserve energy or use
4.27energy more efficiently than similar utility facilities currently used by the electric utility;
4.28    (iii) the proposed schedule for implementation;
4.29    (iv) a description of the costs, and salvage value, if any, associated with the existing
4.30infrastructure replaced or modified as a result of the project;
4.31    (v) the proposed rate design and an explanation of why the proposed rate design
4.32is in the public interest;
4.33    (vi) the magnitude and timing of any known future electric utility projects that the
4.34utility may seek to recover under this section;
5.1    (vii) the magnitude of EUIC in relation to the electric utility's base revenue as
5.2approved by the commission in the electric utility's most recent general rate case,
5.3exclusive of fuel cost adjustments;
5.4    (viii) the magnitude of EUIC in relation to the electric utility's capital expenditures
5.5since its most recent general rate case;
5.6    (ix) the amount of time since the utility last filed a general rate case and the utility's
5.7reasons for seeking recovery outside of a general rate case;
5.8    (x) documentation supporting the calculation of the EUIC; and
5.9    (xi) a cost and benefit analysis showing that the electric utility infrastructure project
5.10is in the public interest.
5.11    (c) Upon approval of the proposed projects and associated EUIC rate schedule, the
5.12utility may implement the electric utility infrastructure projects.
5.13    Subd. 3. Commission authority; orders. The commission may issue orders
5.14necessary to implement and administer this section.

5.15    Sec. 4. [216B.2401] ENERGY CONSERVATION POLICY GOAL.
5.16    It is the energy policy of the state of Minnesota to achieve annual energy savings
5.17equal to 1.5 percent of annual retail energy sales of electricity and natural gas directly
5.18through energy conservation improvement programs and rate design, and indirectly
5.19through energy codes and appliance standards, programs designed to transform the market
5.20or change consumer behavior, energy savings resulting from efficiency improvements to
5.21the utility infrastructure and system, and other efforts to promote energy efficiency and
5.22energy conservation.

5.23    Sec. 5. Minnesota Statutes 2006, section 216B.241, is amended to read:
5.24216B.241 ENERGY CONSERVATION IMPROVEMENT.
5.25    Subdivision 1. Definitions. For purposes of this section and section 216B.16,
5.26subdivision 6b
, the terms defined in this subdivision have the meanings given them.
5.27    (a) "Commission" means the Public Utilities Commission.
5.28    (b) "Commissioner" means the commissioner of commerce.
5.29    (c) "Customer facility" means all buildings, structures, equipment, and installations
5.30at a single site.
5.31    (d) "Department" means the Department of Commerce.
5.32    (e) "Energy conservation" means demand-side management of energy supplies
5.33resulting in a net reduction in energy use. Load management that reduces overall energy
5.34use is energy conservation.
6.1    (f) "Energy conservation improvement" means a project that results in energy
6.2efficiency or energy conservation. Energy conservation improvement may include waste
6.3heat recovery converted into electricity but does not include electric utility infrastructure
6.4projects approved by the commission under section 216B.1636.
6.5    (g) "Energy efficiency" means measures or programs, including energy conservation
6.6measures or programs, that target consumer behavior, equipment, processes, or devices
6.7designed to produce either an absolute decrease in consumption of electric energy or
6.8natural gas or a decrease in consumption of electric energy or natural gas on a per unit
6.9of production basis without a reduction in the quality or level of service provided to
6.10the energy consumer.
6.11    (g) (h) "Gross annual retail energy sales" means annual electric sales to all retail
6.12customers in a utility's or association's Minnesota service territory or natural gas
6.13throughput to all retail customers, including natural gas transportation customers, on a
6.14utility's distribution system in Minnesota. For purposes of this section, gross annual
6.15retail energy sales exclude gas sales to a large energy facility and gas and electric sales
6.16to a large electric customer facility exempted by the commissioner under subdivision
6.171a, paragraph (b).
6.18    (i) "Investments and expenses of a public utility" includes the investments and
6.19expenses incurred by a public utility in connection with an energy conservation
6.20improvement, including but not limited to:
6.21    (1) the differential in interest cost between the market rate and the rate charged on a
6.22no-interest or below-market interest loan made by a public utility to a customer for the
6.23purchase or installation of an energy conservation improvement;
6.24    (2) the difference between the utility's cost of purchase or installation of energy
6.25conservation improvements and any price charged by a public utility to a customer for
6.26such improvements.
6.27    (h) (j) "Large electric customer facility" means a customer facility that imposes a
6.28peak electrical demand on an electric utility's system of not less than 20,000 kilowatts,
6.29measured in the same way as the utility that serves the customer facility measures
6.30electrical demand for billing purposes, and for which electric services are provided at
6.31retail on a single bill by a utility operating in the state.
6.32    (i) (k) "Large energy facility" has the meaning given it in section 216B.2421,
6.33subdivision 2, clause (1).
6.34    (l) "Load management" means an activity, service, or technology to change the
6.35timing or the efficiency of a customer's use of energy that allows a utility or a customer
7.1to respond to wholesale market fluctuations or to reduce the overall peak demand for
7.2energy or capacity.
7.3    (m) "Low-income programs" means energy conservation improvement programs
7.4that directly serve the needs of low-income persons, including low-income renters.
7.5    (n) "Waste heat recovery converted into electricity" means an energy recovery
7.6process that converts otherwise lost energy from the heat of exhaust stacks or pipes used
7.7for engines or manufacturing or industrial processes, or the reduction of high pressure
7.8in water or gas pipelines.
7.9    Subd. 1a. Investment, expenditure, and contribution; public utility. (a) For
7.10purposes of this subdivision and subdivision 2, "public utility" has the meaning given it
7.11in section 216B.02, subdivision 4. Each public utility shall spend and invest for energy
7.12conservation improvements under this subdivision and subdivision 2 the following
7.13amounts:
7.14    (1) for a utility that furnishes gas service, 0.5 percent of its gross operating revenues
7.15from service provided in the state;
7.16    (2) for a utility that furnishes electric service, 1.5 percent of its gross operating
7.17revenues from service provided in the state; and
7.18    (3) for a utility that furnishes electric service and that operates a nuclear-powered
7.19electric generating plant within the state, two percent of its gross operating revenues
7.20from service provided in the state.
7.21    For purposes of this paragraph (a), "gross operating revenues" do not include
7.22revenues from large electric customer facilities exempted by the commissioner under
7.23paragraph (b).
7.24    (b) The owner of a large electric customer facility may petition the commissioner
7.25to exempt both electric and gas utilities serving the large energy customer facility from
7.26the investment and expenditure requirements of paragraph (a) with respect to retail
7.27revenues attributable to the facility. At a minimum, the petition must be supported by
7.28evidence relating to competitive or economic pressures on the customer and a showing
7.29by the customer of reasonable efforts to identify, evaluate, and implement cost-effective
7.30conservation improvements at the facility. If a petition is filed on or before October 1 of
7.31any year, the order of the commissioner to exempt revenues attributable to the facility can
7.32be effective no earlier than January 1 of the following year. The commissioner shall
7.33not grant an exemption if the commissioner determines that granting the exemption is
7.34contrary to the public interest. The commissioner may, after investigation, rescind any
7.35exemption granted under this paragraph upon a determination that cost-effective the
7.36customer is not continuing to make reasonable efforts to identify, evaluate, and implement
8.1energy conservation improvements are available at the large electric customer facility.
8.2For the purposes of this paragraph, "cost-effective" means that the projected total cost of
8.3the energy conservation improvement at the large electric customer facility is less than
8.4the projected present value of the energy and demand savings resulting from the energy
8.5conservation improvement. For the purposes of investigations by the commissioner under
8.6this paragraph, the owner of any large electric customer facility shall, upon request,
8.7provide the commissioner with updated information comparable to that originally supplied
8.8in or with the owner's original petition under this paragraph.
8.9    (c) The commissioner may require investments or spending greater than the amounts
8.10required under this subdivision for a public utility whose most recent advance forecast
8.11required under section 216B.2422 or 216C.17 projects a peak demand deficit of 100
8.12megawatts or greater within five years under midrange forecast assumptions.
8.13    (d) A public utility or owner of a large electric customer facility may appeal
8.14a decision of the commissioner under paragraph (b) or (c) to the commission under
8.15subdivision 2. In reviewing a decision of the commissioner under paragraph (b) or (c),
8.16the commission shall rescind the decision if it finds that the required investments or
8.17spending will:
8.18    (1) not result in cost-effective energy conservation improvements; or
8.19    (2) otherwise not be in the public interest.
8.20    (e) Each utility shall determine what portion of the amount it sets aside for
8.21conservation improvement will be used for conservation improvements under subdivision
8.222 and what portion it will contribute to the energy and conservation account established in
8.23subdivision 2a. A public utility may propose to the commissioner to designate that all
8.24or a portion of funds contributed to the account established in subdivision 2a be used
8.25for research and development projects that can best be implemented on a statewide
8.26basis. Contributions must be remitted to the commissioner by February 1 of each year.
8.27Nothing in this subdivision prohibits a public utility from spending or investing for energy
8.28conservation improvement more than required in this subdivision.
8.29    Subd. 1b. Conservation improvement by cooperative association or
8.30municipality. (a) This subdivision applies to:
8.31    (1) a cooperative electric association that provides retail service to its members;
8.32    (2) a municipality that provides electric service to retail customers; and
8.33    (3) a municipality with gross operating revenues in excess of $5,000,000 from
8.34sales of more than 1,000,000,000 cubic feet in annual throughput sales to natural gas
8.35to retail customers.
9.1    (b) Each cooperative electric association and municipality subject to this subdivision
9.2shall spend and invest for energy conservation improvements under this subdivision
9.3the following amounts:
9.4    (1) for a municipality, 0.5 percent of its gross operating revenues from the sale of
9.5gas and 1.5 percent of its gross operating revenues from the sale of electricity, excluding
9.6gross operating revenues from electric and gas service provided in the state to large
9.7electric customer facilities; and
9.8    (2) for a cooperative electric association, 1.5 percent of its gross operating revenues
9.9from service provided in the state, excluding gross operating revenues from service
9.10provided in the state to large electric customer facilities indirectly through a distribution
9.11cooperative electric association.
9.12    (c) Each municipality and cooperative electric association subject to this subdivision
9.13shall identify and implement energy conservation improvement spending and investments
9.14that are appropriate for the municipality or association, except that a municipality
9.15or association may not spend or invest for energy conservation improvements that
9.16directly benefit a large energy facility or a large electric customer facility for which the
9.17commissioner has issued an exemption under subdivision 1a, paragraph (b).
9.18    (d) Each municipality and cooperative electric association subject to this subdivision
9.19may spend and invest annually up to ten percent of the total amount required to be spent
9.20and invested on energy conservation improvements under this subdivision on research
9.21and development projects that meet the definition of energy conservation improvement
9.22in subdivision 1 and that are funded directly by the municipality or cooperative electric
9.23association.
9.24    (e) Load-management activities that do not reduce energy use but that increase the
9.25efficiency of the electric system may be used to meet 50 percent of the conservation
9.26investment and spending requirements of this subdivision.
9.27    (f) A generation and transmission cooperative electric association that provides
9.28energy services to cooperative electric associations that provide electric service at retail to
9.29consumers may invest in energy conservation improvements on behalf of the associations
9.30it serves and may fulfill the conservation, spending, reporting, and energy savings goals on
9.31an aggregate basis. A municipal power agency or other not-for-profit entity that provides
9.32energy service to municipal utilities that provide electric service at retail may invest in
9.33energy conservation improvements on behalf of the municipal utilities it serves and may
9.34fulfill the conservation, spending, reporting, and energy savings goals on an aggregate
9.35basis, under an agreement between the municipal power agency or not-for-profit entity
9.36and each municipal utility for funding the investments.
10.1    (g) At least every four years, on a schedule determined by the commissioner, each
10.2municipality or cooperative shall file an overview of its conservation improvement plan
10.3with the commissioner. With this overview, Each municipality or cooperative shall file
10.4energy conservation improvement plans by June 1 on a schedule determined by order
10.5of the commissioner, but at least every three years. Plans received by June 1 must be
10.6approved or approved as modified by the commissioner by December 1 of the same year.
10.7The municipality or cooperative shall also provide an evaluation to the commissioner
10.8detailing its energy conservation improvement spending and investments for the previous
10.9period. The evaluation must briefly describe each conservation program and must specify
10.10the energy savings or increased efficiency in the use of energy within the service territory
10.11of the utility or association that is the result of the spending and investments. The
10.12evaluation must analyze the cost-effectiveness of the utility's or association's conservation
10.13programs, using a list of baseline energy and capacity savings assumptions developed
10.14in consultation with the department. The commissioner shall review each evaluation
10.15and make recommendations, where appropriate, to the municipality or association to
10.16increase the effectiveness of conservation improvement activities. Up to three percent of
10.17a utility's conservation spending obligation under this section may be used for program
10.18pre-evaluation, testing, and monitoring and program evaluation. The overview and
10.19evaluation filed by a municipality with less than 60,000,000 kilowatt-hours in annual
10.20retail sales of electric service may consist of a letter from the governing board of the
10.21municipal utility to the department providing the amount of annual conservation spending
10.22required of that municipality and certifying that the required amount has been spent on
10.23conservation programs pursuant to this subdivision.
10.24    (h) The commissioner shall also review each evaluation for whether a portion of the
10.25money spent on residential conservation improvement programs is devoted to programs
10.26that directly address the needs of renters and low-income persons unless an insufficient
10.27number of appropriate programs are available. For the purposes of this subdivision and
10.28subdivision 2, "low-income" means an income at or below 50 percent of the state median
10.29income.
10.30    (i) As part of its spending for conservation improvement, a municipality or
10.31association may contribute to the energy and conservation account. A municipality or
10.32association may propose to the commissioner to designate that all or a portion of funds
10.33contributed to the account be used for research and development projects that can best
10.34be implemented on a statewide basis. Any amount contributed must be remitted to the
10.35commissioner by February 1 of each year.
11.1    (j) (h) A municipality may spend up to 50 percent of its required spending under
11.2this section to refurbish an existing district heating or cooling system. This paragraph
11.3expires until July 1, 2007. From July 1, 2007, through June 30, 2011, expenditures made
11.4to refurbish a district heating or cooling system are considered to be load-management
11.5activities under paragraph (e). This paragraph expires July 1, 2011.
11.6    (i) The commissioner shall consider and may require a utility, association, or
11.7other entity providing energy efficiency and conservation services under this section to
11.8undertake a program suggested by an outside source, including a political subdivision,
11.9nonprofit corporation, or community organization.
11.10    Subd. 1c. Energy-saving goals. (a) The commissioner shall establish energy-saving
11.11goals for energy conservation improvement expenditures and shall evaluate an energy
11.12conservation improvement program on how well it meets the goals set.
11.13    (b) Each individual utility and association shall have an annual energy-savings
11.14goal equivalent to 1.5 percent of gross annual retail energy sales unless modified by the
11.15commissioner under paragraph (d). The savings goals must be calculated based on the
11.16most recent three-year weather normalized average.
11.17    (c) The commissioner must adopt a filing schedule that is designed to have all
11.18utilities and associations operating under an energy savings plan by calendar year 2010.
11.19    (d) In its energy conservation improvement plan filing, a utility or association may
11.20request the commissioner to adjust its annual energy savings percentage goal based on
11.21its historical conservation investment experience, customer class makeup, load growth,
11.22a conservation potential study, or other factors the commissioner determines warrants
11.23an adjustment. The commissioner may not approve a plan that provides for an annual
11.24energy savings goal of less than one percent of gross annual retail energy sales from
11.25energy conservation improvements. A utility or association may include in its energy
11.26conservation plan energy savings from electric utility infrastructure projects approved
11.27by the commission under section 216B.1636 or waste heat recovery converted into
11.28electricity projects that may count as energy savings in addition to the minimum energy
11.29savings goal of at least one percent for energy conservation improvements. Electric utility
11.30infrastructure projects must result in increased energy efficiency greater than that which
11.31would have occurred through normal maintenance activity.
11.32    (e) An energy savings goal is not satisfied by attaining the revenue expenditure
11.33requirements of subdivisions 1a and 1b, but can only be satisfied by meeting the energy
11.34savings goal established in this subdivision.
11.35    (f) An association or utility is not required to make energy conservation investments
11.36to attain the energy savings goals of this subdivision that are not cost-effective even
12.1if the investment is necessary to attain the energy savings goals. For the purpose of
12.2this paragraph, in determining cost-effectiveness, the commissioner shall consider the
12.3costs and benefits to ratepayers, the utility, participants, and society. In addition, the
12.4commissioner shall consider the rate at which an association or municipal utility is
12.5increasing its energy savings and its expenditures on energy conservation.
12.6    (g) On an annual basis, the commissioner shall produce and make publicly available
12.7a report on the annual energy savings and estimated carbon dioxide reductions achieved
12.8by the energy conservation improvement programs for the two most recent years for
12.9which data is available. The commissioner shall report on program performance both in
12.10the aggregate and for each entity filing an energy conservation improvement plan for
12.11approval or review by the commissioner.
12.12    (h) By January 15, 2010, the commissioner shall report to the legislature whether the
12.13spending requirements under subdivisions 1a and 1b are necessary to achieve the energy
12.14savings goals established in this subdivision.
12.15    Subd. 1d. Cooperative conservation investment increase phase-in Technical
12.16assistance. The increase in required conservation improvement expenditures by a
12.17cooperative electric association that results from the amendments in Laws 2001, chapter
12.18212, article 8, section 6, to subdivision 1b, paragraph (a), clause (1), must be phased
12.19in as follows:
12.20    (1) at least 25 percent shall be effective in year 2002;
12.21    (2) at least 50 percent shall be effective in year 2003;
12.22    (3) at least 75 percent shall be effective in year 2004; and
12.23    (4) all of the increase shall be effective in year 2005 and thereafter.
12.24    The commissioner shall evaluate energy conservation improvement programs
12.25on the basis of cost-effectiveness and the reliability of the technologies employed.
12.26The commissioner shall, by order, establish, maintain, and update energy savings
12.27assumptions that must be used when filing energy conservation improvement programs.
12.28The commissioner shall establish an inventory of the most effective energy conservation
12.29programs, techniques, and technologies, and encourage all Minnesota utilities to
12.30implement them, where appropriate, in their service territories. The commissioner shall
12.31describe these programs in sufficient detail to provide a utility reasonable guidance
12.32concerning implementation. The commissioner shall prioritize the opportunities in
12.33order of potential energy savings and in order of cost-effectiveness. The commissioner
12.34may contract with a third party to carry out any of the commissioner's duties under
12.35this subdivision, and to obtain technical assistance to evaluate the effectiveness of any
12.36conservation improvement program. The commissioner may assess up to $800,000
13.1annually until June 30, 2009, and $450,000 annually thereafter for the purposes of this
13.2subdivision. The assessments must be deposited in the state treasury and credited to the
13.3energy and conservation account created under subdivision 2a. An assessment made under
13.4this subdivision is not subject to the cap on assessments provided by section 216B.62, or
13.5any other law.
13.6    Subd. 1e. Applied research and development grants. The commissioner may, by
13.7order, approve and make grants for applied research and development projects of general
13.8applicability that identify new technologies or strategies to maximize energy savings,
13.9improve the effectiveness of energy conservation programs, or document the carbon
13.10dioxide reductions from energy conservation programs. When approving projects, the
13.11commissioner shall consider proposals and comments from utilities and other interested
13.12parties. The commissioner may assess up to $3,600,000 annually for the purposes of this
13.13subdivision. The assessments must be deposited in the state treasury and credited to the
13.14energy and conservation account created under subdivision 2a. An assessment made under
13.15this subdivision is not subject to the cap on assessments provided by section 216B.62, or
13.16any other law.
13.17    Subd. 1f. Facilities energy efficiency. (a) The commissioner of administration and
13.18the commissioner of commerce shall maintain and, as needed, revise the sustainable
13.19building design guidelines developed under section 16B.325.
13.20    (b) The commissioner of administration and the commissioner of commerce shall
13.21maintain and update the benchmarking tool developed under Laws 2001, chapter 212,
13.22article 1, section 3, so that all public buildings can use the benchmarking tool to maintain
13.23energy use information for the purposes of establishing energy efficiency benchmarks,
13.24tracking building performance, and measuring the results of energy efficiency and
13.25conservation improvements.
13.26    (c) The commissioner shall require that utilities include in their conservation
13.27improvement plans programs that facilitate professional engineering verification to qualify
13.28a building as Energy Star-labeled, Leadership in Energy and Environmental Design
13.29(LEED) certified, or Green Globes-certified. The state goal is to achieve certification of
13.301,000 commercial buildings as Energy Star-labeled, and 100 commercial buildings as
13.31LEED-certified or Green Globes-certified by December 31, 2010.
13.32    (d) The commissioner may assess up to $500,000 annually for the purposes of this
13.33subdivision. The assessments must be deposited in the state treasury and credited to the
13.34energy and conservation account created under subdivision 2a. An assessment made under
14.1this subdivision is not subject to the cap on assessments provided by section 216B.62, or
14.2any other law.
14.3    Subd. 2. Programs. (a) The commissioner may require public utilities to make
14.4investments and expenditures in energy conservation improvements, explicitly setting
14.5forth the interest rates, prices, and terms under which the improvements must be offered to
14.6the customers. The required programs must cover no more than a four-year three-year
14.7period. Public utilities shall file conservation improvement plans by June 1, on a schedule
14.8determined by order of the commissioner, but at least every four three years. Plans
14.9received by a public utility by June 1 must be approved or approved as modified by the
14.10commissioner by December 1 of that same year. The commissioner shall give special
14.11consideration and encouragement to programs that bring about significant net savings
14.12through the use of energy-efficient lighting. The commissioner shall evaluate the program
14.13on the basis of cost-effectiveness and the reliability of technologies employed. The
14.14commissioner's order must provide to the extent practicable for a free choice, by consumers
14.15participating in the program, of the device, method, material, or project constituting the
14.16energy conservation improvement and for a free choice of the seller, installer, or contractor
14.17of the energy conservation improvement, provided that the device, method, material, or
14.18project seller, installer, or contractor is duly licensed, certified, approved, or qualified,
14.19including under the residential conservation services program, where applicable.
14.20    (b) The commissioner may require a utility to make an energy conservation
14.21improvement investment or expenditure whenever the commissioner finds that the
14.22improvement will result in energy savings at a total cost to the utility less than the cost
14.23to the utility to produce or purchase an equivalent amount of new supply of energy. The
14.24commissioner shall nevertheless ensure that every public utility operate one or more
14.25programs under periodic review by the department.
14.26    (c) Each public utility subject to subdivision 1a may spend and invest annually up to
14.27ten percent of the total amount required to be spent and invested on energy conservation
14.28improvements under this section by the utility on research and development projects
14.29that meet the definition of energy conservation improvement in subdivision 1 and that
14.30are funded directly by the public utility.
14.31    (d) A public utility may not spend for or invest in energy conservation improvements
14.32that directly benefit a large energy facility or a large electric customer facility for which
14.33the commissioner has issued an exemption pursuant to subdivision 1a, paragraph (b). The
14.34commissioner shall consider and may require a utility to undertake a program suggested
14.35by an outside source, including a political subdivision or, a nonprofit corporation, or
14.36community organization.
15.1    (e) The commissioner may, by order, establish a list of programs that may be
15.2offered as energy conservation improvements by a public utility, municipal utility,
15.3cooperative electric association, or other entity providing conservation services pursuant
15.4to this section. The list of programs may include rebates for high-efficiency appliances,
15.5rebates or subsidies for high-efficiency lamps, small business energy audits, and building
15.6recommissioning. The commissioner may, by order, change this list to add or subtract
15.7programs as the commissioner determines is necessary to promote efficient and effective
15.8conservation programs.
15.9    (f) The commissioner shall ensure that a portion of the money spent on residential
15.10conservation improvement programs is devoted to programs that directly address the
15.11needs of renters and low-income persons, in proportion to the amount the utility has
15.12historically spent on such programs based on the most recent three-year average relative to
15.13the utility's total conservation spending under this section, unless an insufficient number of
15.14appropriate programs are available.
15.15    (g) (e) A utility, a political subdivision, or a nonprofit or community organization
15.16that has suggested a program, the attorney general acting on behalf of consumers and
15.17small business interests, or a utility customer that has suggested a program and is not
15.18represented by the attorney general under section 8.33 may petition the commission to
15.19modify or revoke a department decision under this section, and the commission may do
15.20so if it determines that the program is not cost-effective, does not adequately address the
15.21residential conservation improvement needs of low-income persons, has a long-range
15.22negative effect on one or more classes of customers, or is otherwise not in the public
15.23interest. The commission shall reject a petition that, on its face, fails to make a reasonable
15.24argument that a program is not in the public interest.
15.25    (h) (f) The commissioner may order a public utility to include, with the filing of the
15.26utility's proposed conservation improvement plan under paragraph (a), the results of an
15.27independent audit of the utility's conservation improvement programs and expenditures
15.28performed by the department or an auditor with experience in the provision of energy
15.29conservation and energy efficiency services approved by the commissioner and chosen by
15.30the utility. The audit must specify the energy savings or increased efficiency in the use
15.31of energy within the service territory of the utility that is the result of the spending and
15.32investments. The audit must evaluate the cost-effectiveness of the utility's conservation
15.33programs.
15.34    (i) Up to three percent of a utility's conservation spending obligation under this
15.35section may be used for program pre-evaluation, testing, and monitoring and program
15.36audit and evaluation.
16.1    Subd. 2a. Energy and conservation account. The energy and conservation
16.2account is established in the special revenue fund in the state treasury. The commissioner
16.3must deposit money contributed under subdivisions 1a and 1b assessed or contributed
16.4under subdivisions 1d, 1e, 1f, and 7 in the state treasury and credit it to the energy and
16.5conservation account in the general special revenue fund. Money in the account is
16.6appropriated to the department commissioner for programs designed to meet the energy
16.7conservation needs of low-income persons and to make energy conservation improvements
16.8in areas not adequately served under subdivision 2, including research and development
16.9projects included in the definition of energy conservation improvement in subdivision 1
16.10the purposes of subdivisions 1d, 1e, 1f, and 7. Interest on money in the account accrues to
16.11the account. Using information collected under section 216C.02, subdivision 1, paragraph
16.12(b)
, the commissioner must, to the extent possible, allocate enough money to programs
16.13for low-income persons to assure that their needs are being adequately addressed.
16.14The commissioner must request the commissioner of finance to transfer money from
16.15the account to the commissioner of education for an energy conservation program for
16.16low-income persons. In establishing programs, the commissioner must consult political
16.17subdivisions and nonprofit and community organizations, especially organizations
16.18engaged in providing energy and weatherization assistance to low-income persons. At
16.19least one program must address the need for energy conservation improvements in areas
16.20in which a high percentage of residents use fuel oil or propane to fuel their source of
16.21home heating. The commissioner may contract with a political subdivision, a nonprofit
16.22or community organization, a public utility, a municipality, or a cooperative electric
16.23association to implement its programs. The commissioner may provide grants to any
16.24person to conduct research and development projects in accordance with this section.
16.25    Subd. 2b. Recovery of expenses. The commission shall allow a utility to recover
16.26expenses resulting from a conservation improvement program required by the department
16.27and contributions and assessments to the energy and conservation account, unless the
16.28recovery would be inconsistent with a financial incentive proposal approved by the
16.29commission. The commission shall allow a cooperative electric association subject
16.30to rate regulation under section 216B.026, to recover expenses resulting from energy
16.31conservation improvement programs, load management programs, and assessments
16.32and contributions to the energy and conservation account unless the recovery would be
16.33inconsistent with a financial incentive proposal approved by the commission. In addition,
16.34a utility may file annually, or the Public Utilities Commission may require the utility
16.35to file, and the commission may approve, rate schedules containing provisions for the
16.36automatic adjustment of charges for utility service in direct relation to changes in the
17.1expenses of the utility for real and personal property taxes, fees, and permits, the amounts
17.2of which the utility cannot control. A public utility is eligible to file for adjustment for real
17.3and personal property taxes, fees, and permits under this subdivision only if, in the year
17.4previous to the year in which it files for adjustment, it has spent or invested at least 1.75
17.5percent of its gross revenues from provision of electric service, excluding gross operating
17.6revenues from electric service provided in the state to large electric customer facilities for
17.7which the commissioner has issued an exemption under subdivision 1a, paragraph (b), and
17.80.6 percent of its gross revenues from provision of gas service, excluding gross operating
17.9revenues from gas services provided in the state to large electric customer facilities for
17.10which the commissioner has issued an exemption under subdivision 1a, paragraph (b), for
17.11that year for energy conservation improvements under this section.
17.12    Subd. 2c. Performance incentives. By December 31, 2008, the commission
17.13shall review any incentive plan for energy conservation improvement it has approved
17.14under section 216B.16, subdivision 6c, and adjust the utility performance incentives to
17.15recognize making progress toward and meeting the energy savings goals established
17.16in subdivision 1c.
17.17    Subd. 3. Ownership of energy conservation improvement. An energy
17.18conservation improvement made to or installed in a building in accordance with this
17.19section, except systems owned by the utility and designed to turn off, limit, or vary the
17.20delivery of energy, are the exclusive property of the owner of the building except to the
17.21extent that the improvement is subjected to a security interest in favor of the utility in case
17.22of a loan to the building owner. The utility has no liability for loss, damage or injury
17.23caused directly or indirectly by an energy conservation improvement except for negligence
17.24by the utility in purchase, installation, or modification of the product.
17.25    Subd. 4. Federal law prohibitions. If investments by public utilities in energy
17.26conservation improvements are in any manner prohibited or restricted by federal law
17.27and there is a provision under which the prohibition or restriction may be waived, then
17.28the commission, the governor, or any other necessary state agency or officer shall take
17.29all necessary and appropriate steps to secure a waiver with respect to those public utility
17.30investments in energy conservation improvements included in this section.
17.31    Subd. 5. Efficient lighting program. (a) Each public utility, cooperative electric
17.32association, and municipal utility that provides electric service to retail customers shall
17.33include as part of its conservation improvement activities a program to strongly encourage
17.34the use of fluorescent and high-intensity discharge lamps. The program must include at
18.1least a public information campaign to encourage use of the lamps and proper management
18.2of spent lamps by all customer classifications.
18.3    (b) A public utility that provides electric service at retail to 200,000 or more
18.4customers shall establish, either directly or through contracts with other persons, including
18.5lamp manufacturers, distributors, wholesalers, and retailers and local government units, a
18.6system to collect for delivery to a reclamation or recycling facility spent fluorescent and
18.7high-intensity discharge lamps from households and from small businesses as defined in
18.8section 645.445 that generate an average of fewer than ten spent lamps per year.
18.9    (c) A collection system must include establishing reasonably convenient locations
18.10for collecting spent lamps from households and financial incentives sufficient to encourage
18.11spent lamp generators to take the lamps to the collection locations. Financial incentives
18.12may include coupons for purchase of new fluorescent or high-intensity discharge lamps,
18.13a cash back system, or any other financial incentive or group of incentives designed to
18.14collect the maximum number of spent lamps from households and small businesses that is
18.15reasonably feasible.
18.16    (d) A public utility that provides electric service at retail to fewer than 200,000
18.17customers, a cooperative electric association, or a municipal utility that provides electric
18.18service at retail to customers may establish a collection system under paragraphs (b) and
18.19(c) as part of conservation improvement activities required under this section.
18.20    (e) The commissioner of the Pollution Control Agency may not, unless clearly
18.21required by federal law, require a public utility, cooperative electric association, or
18.22municipality that establishes a household fluorescent and high-intensity discharge lamp
18.23collection system under this section to manage the lamps as hazardous waste as long as
18.24the lamps are managed to avoid breakage and are delivered to a recycling or reclamation
18.25facility that removes mercury and other toxic materials contained in the lamps prior to
18.26placement of the lamps in solid waste.
18.27    (f) If a public utility, cooperative electric association, or municipal utility contracts
18.28with a local government unit to provide a collection system under this subdivision,
18.29the contract must provide for payment to the local government unit of all the unit's
18.30incremental costs of collecting and managing spent lamps.
18.31    (g) All the costs incurred by a public utility, cooperative electric association, or
18.32municipal utility for promotion and collection of fluorescent and high-intensity discharge
18.33lamps under this subdivision are conservation improvement spending under this section.
18.34    Subd. 6. Renewable energy research. (a) A public utility that owns a nuclear
18.35generation facility in the state shall spend five percent of the total amount that utility
18.36is required to spend under this section to support basic and applied research and
19.1demonstration activities at the University of Minnesota Initiative for Renewable Energy
19.2and the Environment for the development of renewable energy sources and technologies.
19.3The utility shall transfer the required amount to the University of Minnesota on or before
19.4July 1 of each year and that annual amount shall be deducted from the amount of money the
19.5utility is required to spend under this section. The University of Minnesota shall transfer
19.6at least ten percent of these funds to at least one rural campus or experiment station.
19.7    (b) Research funded under this subdivision shall include:
19.8    (1) development of environmentally sound production, distribution, and use of
19.9energy, chemicals, and materials from renewable sources;
19.10    (2) processing and utilization of agricultural and forestry plant products and other
19.11bio-based, renewable sources as a substitute for fossil-fuel-based energy, chemicals, and
19.12materials using a variety of means including biocatalysis, biorefining, and fermentation;
19.13    (3) conversion of state wind resources to hydrogen for energy storage and
19.14transportation to areas of energy demand;
19.15    (4) improvements in scalable hydrogen fuel cell technologies; and
19.16    (5) production of hydrogen from bio-based, renewable sources; and sequestration
19.17of carbon.
19.18    (c) Notwithstanding other law to the contrary, the utility may, but is not required to,
19.19spend more than two percent of its gross operating revenues from service provided in this
19.20state under this section or section 216B.2411.
19.21    (d) This subdivision expires June 30, 2008.
19.22    Subd. 7. Low-income programs. (a) The commissioner shall ensure that each
19.23utility and association provides low-income programs. When approving spending and
19.24energy savings goals for low-income programs, the commissioner shall consider historic
19.25spending and participation levels, energy savings for low-income programs, and the
19.26number of low-income persons residing in the utility's service territory. A utility that
19.27furnishes gas service must spend at least 0.2 percent of its gross operating revenue from
19.28residential customers in the state on low-income programs. A utility or association that
19.29furnishes electric service must spend at least 0.1 percent of its gross operating revenue
19.30from residential customers in the state on low-income programs. For a generation and
19.31transmission cooperative association, this requirement shall apply to each association's
19.32members' aggregate gross operating revenue from sale of electricity to residential
19.33customers in the state. Beginning in 2010, a utility or association that furnishes electric
19.34service must spend 0.2 percent of its gross operating revenue from residential customers
19.35in the state on low-income programs.
20.1    (b) To meet the requirements of paragraph (a), a utility or association may contribute
20.2money to the energy and conservation account. An energy conservation improvement plan
20.3must state the amount, if any, of low-income energy conservation improvement funds the
20.4utility or association will contribute to the energy and conservation account. Contributions
20.5must be remitted to the commissioner by February 1 of each year.
20.6    (c) The commissioner shall establish low-income programs to utilize money
20.7contributed to the energy and conservation account under paragraph (b). In establishing
20.8low-income programs, the commissioner shall consult political subdivisions, utilities, and
20.9nonprofit and community organizations, especially organizations engaged in providing
20.10energy and weatherization assistance to low-income persons. Money contributed to
20.11the energy and conservation account under paragraph (b) must provide programs for
20.12low-income persons, including low-income renters, in the service territory of the utility or
20.13association providing the money. The commissioner shall record and report expenditures
20.14and energy savings achieved as a result of low-income programs funded through the
20.15energy and conservation account in the report required under subdivision 1c, paragraph
20.16(g). The commissioner may contract with a political subdivision, nonprofit or community
20.17organization, public utility, municipality, or cooperative electric association to implement
20.18low-income programs funded through the energy and conservation account.
20.19    (d) A utility or association may petition the commissioner to modify its required
20.20spending under paragraph (a) if the utility or association and the commissioner have been
20.21unable to expend the amount required under paragraph (a) for three consecutive years.
20.22    Subd. 8. Assessment. The commission or department may assess utilities subject to
20.23this section in proportion to their respective gross operating revenue from sales of gas or
20.24electric service within the state during the last calendar year to carry out the purposes of
20.25subdivisions 1d, 1e, and 1f. Those assessments are not subject to the cap on assessments
20.26provided by section 216B.62, or any other law.

20.27    Sec. 6. [216B.2412] DECOUPLING OF ENERGY SALES FROM REVENUES.
20.28    Subdivision 1. Definition and purpose. For the purpose of this section,
20.29"decoupling" means a regulatory tool designed to separate a utility's revenue from changes
20.30in energy sales. The purpose of decoupling is to reduce a utility's disincentive to promote
20.31energy efficiency.
20.32    Subd. 2. Decoupling criteria. The commission shall, by order, establish criteria
20.33and standards for decoupling. The commission shall design the criteria and standards to
20.34mitigate the impact on public utilities of the energy savings goals under section 216B.241
21.1without adversely affecting utility ratepayers. In designing the criteria, the commission
21.2shall consider energy efficiency, weather, and cost of capital, among other factors.
21.3    Subd. 3. Pilot programs. The commission shall allow one or more rate-regulated
21.4utilities to participate in a pilot program to assess the merits of a rate-decoupling strategy
21.5to promote energy efficiency and conservation. Each pilot program must utilize the
21.6criteria and standards established in subdivision 2 and be designed to determine whether
21.7a rate-decoupling strategy achieves energy savings. On or before a date established by
21.8the commission, the commission shall require electric and gas utilities that intend to
21.9implement a decoupling program to file a decoupling pilot plan, which shall be approved
21.10or approved as modified by the commission. A pilot program may not exceed three years
21.11in length. Any extension beyond three years can only be approved in a general rate case,
21.12unless that decoupling program was previously approved as part of a general rate case.
21.13The commission shall report on the programs annually to the chairs of the house of
21.14representatives and senate committees with primary jurisdiction over energy policy.

21.15    Sec. 7. [216C.03] STATE GOVERNMENT ENERGY SAVINGS PLAN.
21.16    The commissioner of commerce, in coordination with the commissioners of the
21.17agencies listed in section 15.01, the chancellor of the Minnesota State Colleges and
21.18Universities, and the president of the University of Minnesota, shall identify policy
21.19options, barriers, and economic benefits and costs for state government operations to
21.20achieve the energy savings goals in section 216B.2401 and the resulting carbon emission
21.21reductions. The commissioner of commerce must issue a report to the legislature by
21.22February 1, 2008.

21.23    Sec. 8. REVISOR'S INSTRUCTION.
21.24    The revisor of statutes shall change the reference to "section 216B.241, subdivision
21.251, paragraph (i)" found in section 216B.2411, subdivision 1, to read "section 216B.241,
21.26subdivision 1."

21.27    Sec. 9. EFFECTIVE DATE.
21.28    This article is effective July 1, 2007.

21.29ARTICLE 3
21.30MISCELLANEOUS

21.31    Section 1. Minnesota Statutes 2006, section 123B.65, subdivision 2, is amended to read:
22.1    Subd. 2. Energy efficiency contract. (a) Notwithstanding any law to the contrary,
22.2a school district may enter into a guaranteed energy savings contract with a qualified
22.3provider to significantly reduce energy or operating costs.
22.4    (b) Before entering into a contract under this subdivision, the board shall comply
22.5with clauses (1) to (5).
22.6    (1) The board must seek proposals from multiple qualified providers by publishing
22.7notice of the proposed guaranteed energy savings contract in the board's official newspaper
22.8and in other publications if the board determines that additional publication is necessary to
22.9notify multiple qualified providers.
22.10    (2) The school board must select the qualified provider that best meets the needs of
22.11the board. The board must provide public notice of the meeting at which it will select the
22.12qualified provider.
22.13    (3) The contract between the board and the qualified provider must describe the
22.14methods that will be used to calculate the costs of the contract and the operational and
22.15energy savings attributable to the contract.
22.16    (4) The qualified provider shall issue a report to the board giving a description of all
22.17costs of installations, modifications, or remodeling, including costs of design, engineering,
22.18installation, maintenance, repairs, or debt service, and giving detailed calculations of the
22.19amounts by which energy or operating costs will be reduced and the projected payback
22.20schedule in years.
22.21    (5) The board must provide published notice of the meeting in which it proposes to
22.22award the contract, the names of the parties to the proposed contract, and the contract's
22.23purpose.
22.24    (c) The board must provide a copy of any contract entered into under paragraph (a)
22.25and the report provided under paragraph (b), clause (4), to the commissioner of commerce
22.26within 30 days of the effective date of the contract.

22.27    Sec. 2. Minnesota Statutes 2006, section 216C.052, subdivision 8a, as added by Laws
22.282007, chapter 57, article 2, section 26, is amended to read:
22.29    Subd. 8a. Manitoba Hydro information. By January 1, 2008, and each year
22.30thereafter, the task force shall request the Manitoba Hydro-Electric Board to provide
22.31the following information for each community that is a signatory to the Northern Flood
22.32Agreement, including South Indian Lake:
22.33    (1) median household income and number of residents employed full time and
22.34part time;
23.1    (2) the number of outstanding claims filed against Manitoba Hydro by individuals
23.2and communities and the number of claims settled by Manitoba Hydro; and
23.3    (3) the amount of shoreline damaged by flooding and erosion and the amount of
23.4shoreline restored and cleaned.
23.5    Nothing in this section shall be construed as a directive to the government of Canada
23.6or the province of Manitoba.
23.7    For the purposes of this subdivision, "Northern Flood Agreement" means the
23.8agreement entered into by the Northern Flood Committee, Incorporated, the Manitoba
23.9Hydro-Electric Board, the province of Manitoba, and the government of Canada on
23.10December 16, 1977.

23.11    Sec. 3. Minnesota Statutes 2006, section 216C.31, is amended to read:
23.12216C.31 ENERGY AUDIT PROGRAMS.
23.13    The commissioner shall develop and administer state programs of energy audits of
23.14residential and commercial buildings including those required by United States Code, title
23.1542, sections 8211 to 8222 and sections 8281 to 8284. The commissioner shall continue
23.16to administer the residential energy audit program as originally established under the
23.17provisions of United States Code, title 42, sections 8211 to 8222; through July 1, 1986
23.18irrespective of any prior expiration date provided in United States Code, title 42, section
23.198216. The commissioner may approve temporary programs if they are likely to result
23.20in the installation of as many conservation measures as would have been installed had
23.21the utility met the requirements of United States Code, title 42, sections 8211 to 8222.
23.22The Consumer Services Division and the attorney general may release information on
23.23consumer comments about the operation of the program to the commissioner the training
23.24and qualifications necessary for the auditing of residential and commercial buildings under
23.25the auspices of a program created under section 216B.241.

23.26    Sec. 4. Minnesota Statutes 2006, section 471.345, subdivision 13, is amended to read:
23.27    Subd. 13. Energy efficiency projects. The following definitions apply to this
23.28subdivision.
23.29    (a) "Energy conservation measure" means a training program or facility alteration
23.30designed to reduce energy consumption or operating costs and includes:
23.31    (1) insulation of the building structure and systems within the building;
23.32    (2) storm windows and doors, caulking or weatherstripping, multiglazed windows
23.33and doors, heat absorbing or heat reflective glazed and coated window and door
24.1systems, additional glazing, reductions in glass area, and other window and door system
24.2modifications that reduce energy consumption;
24.3    (3) automatic energy control systems;
24.4    (4) heating, ventilating, or air conditioning system modifications or replacements;
24.5    (5) replacement or modifications of lighting fixtures to increase the energy efficiency
24.6of the lighting system without increasing the overall illumination of a facility, unless an
24.7increase in illumination is necessary to conform to the applicable state or local building
24.8code for the lighting system after the proposed modifications are made;
24.9    (6) energy recovery systems;
24.10    (7) cogeneration systems that produce steam or forms of energy such as heat, as well
24.11as electricity, for use primarily within a building or complex of buildings;
24.12    (8) energy conservation measures that provide long-term operating cost reductions.
24.13    (b) "Guaranteed energy savings contract" means a contract for the evaluation
24.14and recommendations of energy conservation measures, and for one or more energy
24.15conservation measures. The contract must provide that all payments, except obligations
24.16on termination of the contract before its expiration, are to be made over time, but not to
24.17exceed 15 years from the date of final installation, and the savings are guaranteed to the
24.18extent necessary to make payments for the systems.
24.19    (c) "Qualified provider" means a person or business experienced in the design,
24.20implementation, and installation of energy conservation measures. A qualified provider
24.21to whom the contract is awarded shall give a sufficient bond to the municipality for its
24.22faithful performance.
24.23    Notwithstanding any law to the contrary, a municipality may enter into a guaranteed
24.24energy savings contract with a qualified provider to significantly reduce energy or
24.25operating costs.
24.26    Before entering into a contract under this subdivision, the municipality shall provide
24.27published notice of the meeting in which it proposes to award the contract, the names of
24.28the parties to the proposed contract, and the contract's purpose.
24.29    Before installation of equipment, modification, or remodeling, the qualified provider
24.30shall first issue a report, summarizing estimates of all costs of installations, modifications,
24.31or remodeling, including costs of design, engineering, installation, maintenance, repairs,
24.32or debt service, and estimates of the amounts by which energy or operating costs will be
24.33reduced.
24.34    A guaranteed energy savings contract that includes a written guarantee that savings
24.35will meet or exceed the cost of energy conservation measures is not subject to competitive
25.1bidding requirements of section 471.345 or other law or city charter. The contract is
25.2not subject to section 123B.52.
25.3    A municipality may enter into a guaranteed energy savings contract with a qualified
25.4provider if, after review of the report, it finds that the amount it would spend on the energy
25.5conservation measures recommended in the report is not likely to exceed the amount
25.6to be saved in energy and operation costs over 15 years from the date of installation if
25.7the recommendations in the report were followed, and the qualified provider provides a
25.8written guarantee that the energy or operating cost savings will meet or exceed the costs
25.9of the system. The guaranteed energy savings contract may provide for payments over
25.10a period of time, not to exceed 15 years.
25.11    A municipality may enter into an installment payment contract for the purchase and
25.12installation of energy conservation measures. The contract must provide for payments
25.13of not less than 1/15 of the price to be paid within two years from the date of the first
25.14operation, and the remaining costs to be paid monthly, not to exceed a 15-year term from
25.15the date of the first operation.
25.16    A municipality entering into a guaranteed energy savings contract shall provide a
25.17copy of the contract and the report from the qualified provider to the commissioner of
25.18commerce within 30 days of the effective date of the contract.
25.19    Guaranteed energy savings contracts may extend beyond the fiscal year in which
25.20they become effective. The municipality shall include in its annual appropriations measure
25.21for each later fiscal year any amounts payable under guaranteed energy savings contracts
25.22during the year. Failure of a municipality to make such an appropriation does not affect
25.23the validity of the guaranteed energy savings contract or the municipality's obligations
25.24under the contracts.

25.25    Sec. 5. Minnesota Statutes 2006, section 504B.161, subdivision 1, is amended to read:
25.26    Subdivision 1. Requirements. (a) In every lease or license of residential premises,
25.27the landlord or licensor covenants:
25.28    (1) that the premises and all common areas are fit for the use intended by the parties;
25.29    (2) to keep the premises in reasonable repair during the term of the lease or license,
25.30except when the disrepair has been caused by the willful, malicious, or irresponsible
25.31conduct of the tenant or licensee or a person under the direction or control of the tenant or
25.32licensee; and
25.33    (3) to make the premises reasonably energy efficient by installing weatherstripping,
25.34caulking, storm windows, and storm doors when any such measure will result in energy
25.35procurement cost savings, based on current and projected average residential energy costs
26.1in Minnesota, that will exceed the cost of implementing that measure, including interest,
26.2amortized over the ten-year period following the incurring of the cost; and
26.3    (4) to maintain the premises in compliance with the applicable health and safety
26.4laws of the state, including the weatherstripping, caulking, storm window, and storm door
26.5energy efficiency standards for renter-occupied residences prescribed by section 216C.27,
26.6subdivisions 1 and 3
, and of the local units of government where the premises are located
26.7during the term of the lease or license, except when violation of the health and safety
26.8laws has been caused by the willful, malicious, or irresponsible conduct of the tenant or
26.9licensee or a person under the direction or control of the tenant or licensee.
26.10    (b) The parties to a lease or license of residential premises may not waive or modify
26.11the covenants imposed by this section.

26.12    Sec. 6. NUCLEAR ENERGY STUDY.
26.13    The legislative electric energy task force shall conduct an analysis of the economic
26.14and environmental costs of constructing a 600-megawatt nuclear-powered electric
26.15generating plant in Minnesota. The analysis must include predesign, design and
26.16construction costs, and waste storage costs. The study must compare these costs with
26.17the costs of constructing a pulverized coal plant with carbon capture and sequestration
26.18technology and a coal-gasification plant with carbon capture and sequestration technology.
26.19The study's findings must be submitted in a report to the chairs and ranking minority
26.20members of the committees of the house of representatives and senate with primary
26.21jurisdiction over energy policy by March 1, 2008.

26.22    Sec. 7. REPEALER.
26.23Minnesota Statutes 2006, sections 216B.165; 216C.27; and 216C.30, subdivision 5,
26.24and Minnesota Rules, parts 7635.0100; 7635.0110; 7635.0120; 7635.0130; 7635.0140;
26.257635.0150; 7635.0160; 7635.0170; 7635.0180; 7635.0200; 7635.0210; 7635.0220;
26.267635.0230; 7635.0240; 7635.0250; 7635.0260; 7635.0300; 7635.0310; 7635.0320;
26.277635.0330; 7635.0340; 7635.0400; 7635.0410; 7635.0420; 7635.0500; 7635.0510;
26.287635.0520; 7635.0530; 7635.0600; 7635.0610; 7635.0620; 7635.0630; 7635.0640;
26.297635.1000; 7635.1010; 7635.1020; 7635.1030; 7655.0100; 7655.0120; 7655.0200;
26.307655.0210; 7655.0220; 7655.0230; 7655.0240; 7655.0250; 7655.0260; 7655.0270;
26.317655.0280; 7655.0290; 7655.0300; 7655.0310; 7655.0320; 7655.0330; 7655.0400;
26.327655.0410; and 7655.0420, are repealed, effective July 1, 2007.

26.33    Sec. 8. EFFECTIVE DATE.
26.34    This article is effective July 1, 2007.

27.1ARTICLE 4
27.2C-BED AND RELATED ISSUES

27.3    Section 1. Minnesota Statutes 2006, section 216B.1612, subdivision 1, is amended to
27.4read:
27.5    Subdivision 1. Tariff establishment. A tariff shall be established to optimize local,
27.6regional, and state benefits from wind renewable energy development and to facilitate
27.7widespread development of community-based wind renewable energy projects throughout
27.8Minnesota.

27.9    Sec. 2. Minnesota Statutes 2006, section 216B.1612, subdivision 2, is amended to read:
27.10    Subd. 2. Definitions. (a) The terms used in this section have the meanings given
27.11them in this subdivision.
27.12    (b) "C-BED tariff" or "tariff" means a community-based energy development tariff.
27.13    (c) "Qualifying owner" means:
27.14    (1) a Minnesota resident;
27.15    (2) a limited liability company that is organized under the laws of this state chapter
27.16322B and that is made up of members who are Minnesota residents;
27.17    (3) a Minnesota nonprofit organization organized under chapter 317A;
27.18    (4) a Minnesota cooperative association organized under chapter 308A or 308B,
27.19other than including a rural electric cooperative association or a generation and
27.20transmission cooperative on behalf of and at the request of a member distribution utility;
27.21    (5) a Minnesota political subdivision or local government other than including,
27.22but not limited to, a municipal electric utility, or a municipal power agency on behalf
27.23of and at the request of a member distribution utility, including, but not limited to, a
27.24county, statutory or home rule charter city, town, school district, or public or private
27.25higher education institution or any other local or regional governmental organization such
27.26as a board, commission, or association; or
27.27    (6) a tribal council.
27.28    (d) "Net present value rate" means a rate equal to the net present value of the
27.29nominal payments to a project divided by the total expected energy production of the
27.30project over the life of its power purchase agreement.
27.31    (e) "Standard reliability criteria" means:
27.32    (1) can be safely integrated into and operated within the utility's grid without causing
27.33any adverse or unsafe consequences; and
27.34    (2) is consistent with the utility's resource needs as identified in its most recent
27.35resource plan submitted under section 216B.2422.
28.1    (f) "Renewable" refers to a technology listed in section 216B.1691, subdivision 1,
28.2paragraph (a).
28.3     (g) "Community-based energy development project" or "C-BED project" means
28.4a new wind renewable energy project that either as a stand-alone project or part of a
28.5partnership under subdivision 8:
28.6    (1) has no single qualifying owner owning more than 15 percent of a C-BED wind
28.7energy project that consists of more than two turbines; or unless: (i) the C-BED wind
28.8energy project consists of only one or two turbines; or (ii) the qualifying owner is a public
28.9entity listed under paragraph (b), clause (5), that is not a municipal utility;
28.10    (2) for C-BED projects of one or two turbines, is owned entirely by one or more
28.11qualifying owners, with demonstrates that at least 51 percent of the total financial benefits
28.12gross revenues from a power purchase agreement over the life of the project flowing
28.13will flow to qualifying owners and other local entities; and
28.14    (3) has a resolution of support adopted by the county board of each county in which
28.15the project is to be located, or in the case of a project located within the boundaries of a
28.16reservation, the tribal council for that reservation.
28.17EFFECTIVE DATE.This section is effective the day following final enactment.

28.18    Sec. 3. Minnesota Statutes 2006, section 216B.1612, subdivision 3, is amended to read:
28.19    Subd. 3. Tariff rate. (a) The tariff described in subdivision 4 must have a rate
28.20schedule that allows for a rate up to a 2.7 cents per kilowatt-hour net present value rate
28.21over the 20-year life of the power purchase agreement. The tariff must provide for a rate
28.22that is higher in the first ten years of the power purchase agreement than in the last ten
28.23years. The discount rate required to calculate the net present value must be the utility's
28.24normal discount rate used for its other business purposes.
28.25    (b) The commission shall consider mechanisms to encourage the aggregation
28.26of C-BED projects.
28.27    (c) The commission shall require that qualifying and nonqualifying owners provide
28.28sufficient security to secure performance under the power purchase agreement, and shall
28.29prohibit the transfer of the C-BED project to a nonqualifying owner during the initial
28.3020 years of the contract.
28.31EFFECTIVE DATE.This section is effective the day following final enactment.

28.32    Sec. 4. Minnesota Statutes 2006, section 216B.1612, subdivision 4, is amended to read:
28.33    Subd. 4. Utilities to offer tariff. By December 1, 2005 2007, each public utility
28.34providing electric service at retail shall file for commission approval a community-based
29.1energy development tariff consistent with subdivision 3. Within 90 days of the
29.2first commission approval order under this subdivision, each municipal power
29.3agency and generation and transmission cooperative electric association shall adopt a
29.4community-based energy development tariff as consistent as possible with subdivision 3.
29.5EFFECTIVE DATE.This section is effective the day following final enactment.

29.6    Sec. 5. Minnesota Statutes 2006, section 216B.1612, subdivision 5, is amended to read:
29.7    Subd. 5. Priority for C-BED projects. (a) A utility subject to section 216B.1691
29.8that needs to construct new generation, or purchase the output from new generation, as
29.9part of its plan to satisfy its good faith objective and standard under that section should
29.10must take reasonable steps to determine if one or more C-BED projects are available that
29.11meet the utility's cost and reliability requirements, applying standard reliability criteria, to
29.12fulfill some or all of the identified need at minimal impact to customer rates.
29.13Nothing in this section shall be construed to obligate a utility to enter into a power
29.14purchase agreement under a C-BED tariff developed under this section.
29.15    (b) Each utility shall include in its resource plan submitted under section 216B.2422
29.16a description of its efforts to purchase energy from C-BED projects, including a list of the
29.17projects under contract and the amount of C-BED energy purchased.
29.18    (c) The commission shall consider the efforts and activities of a utility to purchase
29.19energy from C-BED projects when evaluating its good faith effort towards meeting the
29.20renewable energy objective under section 216B.1691.
29.21    (d) A municipal power agency or generation and transmission cooperative shall,
29.22when issuing a request for proposals for C-BED projects to satisfy its standard obligation
29.23under section 216B.1691, provide notice to its member distribution utilities that they
29.24may propose, in partnership with other qualifying owners, a C-BED project for the
29.25consideration of the municipal power agency or generation and transmission cooperative.
29.26EFFECTIVE DATE.This section is effective the day following final enactment.

29.27    Sec. 6. Minnesota Statutes 2006, section 216B.1612, subdivision 7, is amended to read:
29.28    Subd. 7. Other C-BED tariff issues. (a) A community-based project developer
29.29and a utility shall negotiate the rate and power purchase agreement terms consistent with
29.30the tariff established under subdivision 4.
29.31    (b) At the discretion of the developer, a community-based project developer and
29.32a utility may negotiate a power purchase agreement with terms different from the tariff
29.33established under subdivision 4.
30.1    (c) A qualifying owner, or any combination of qualifying owners, may develop a
30.2joint venture project with a nonqualifying wind renewable energy project developer.
30.3However, the terms of the C-BED tariff may only apply to the portion of the energy
30.4production of the total project that is directly proportional to the equity share of the project
30.5owned by the qualifying owners.
30.6    (d) A project that is operating under a power purchase agreement under a C-BED
30.7tariff is not eligible for net energy billing under section 216B.164, subdivision 3, or for
30.8production incentives under section 216C.41.
30.9    (e) A public utility must receive commission approval of a power purchase
30.10agreement for a C-BED tariffed project. The commission shall provide the utility's
30.11ratepayers an opportunity to address the reasonableness of the proposed power purchase
30.12agreement. Unless a party objects to a contract within 30 days of submission of the
30.13contract to the commission the contract is deemed approved.
30.14EFFECTIVE DATE.This section is effective the day following final enactment.

30.15    Sec. 7. Minnesota Statutes 2006, section 216B.1612, is amended by adding a
30.16subdivision to read:
30.17    Subd. 8. Community energy partnerships. A utility providing electric service
30.18to retail or wholesale customers in Minnesota and an independent power producer may,
30.19subject to the limits specified in this section, participate in a community-based energy
30.20project, including as an owner, equity partner, or provider of technical or financial
30.21assistance.
30.22EFFECTIVE DATE.This section is effective the day following final enactment.

30.23    Sec. 8. Minnesota Statutes 2006, section 216B.1645, is amended by adding a
30.24subdivision to read:
30.25    Subd. 2b. Cost recovery for owned renewable facilities. (a) A utility may petition
30.26the commission to approve a rate schedule that provides for the automatic adjustment of
30.27charges to recover prudently incurred investments, expenses, or costs associated with
30.28facilities constructed, owned, or operated by a utility to satisfy the requirements of section
30.29216B.1691, provided those facilities were previously approved by the commission under
30.30section 216B.2422 or 216B.243. The commission may approve, or approve as modified, a
30.31rate schedule that:
30.32    (1) allows a utility to recover directly from customers on a timely basis the costs of
30.33qualifying renewable energy projects, including:
30.34    (i) return on investment;
31.1    (ii) depreciation;
31.2    (iii) ongoing operation and maintenance costs;
31.3    (iv) taxes; and
31.4    (v) costs of transmission and other ancillary expenses directly allocable to
31.5transmitting electricity generated from a project meeting the specifications of this
31.6paragraph;
31.7    (2) provides a current return on construction work in progress, provided that recovery
31.8of these costs from Minnesota ratepayers is not sought through any other mechanism;
31.9    (3) allows recovery of other expenses incurred that are directly related to a renewable
31.10energy project, provided that the utility demonstrates to the commission's satisfaction that
31.11the expenses improve project economics, ensure project implementation, or facilitate
31.12coordination with the development of transmission necessary to transport energy produced
31.13by the project to market;
31.14    (4) allocates recoverable costs appropriately between wholesale and retail customers;
31.15    (5) terminates recovery when costs have been fully recovered or have otherwise
31.16been reflected in a utility's rates.
31.17    (b) A petition filed under this subdivision must include:
31.18    (1) a description of the facilities for which costs are to be recovered;
31.19    (2) an implementation schedule for the facilities;
31.20    (3) the utility's costs for the facilities;
31.21    (4) a description of the utility's efforts to ensure that costs of the facilities are
31.22reasonable and were prudently incurred; and
31.23    (5) a description of the benefits of the project in promoting the development of
31.24renewable energy in a manner consistent with this chapter.

31.25    Sec. 9. [216B.1681] CURTAILMENT PAYMENTS.
31.26    The commission shall conduct a study of curtailment payments for wind energy
31.27projects to assess whether utilities are unduly discriminating among project ownership
31.28structures in regard to the contractual availability of curtailment payments. The
31.29commission shall submit the study to the chairs and ranking minority members of the
31.30senate and house of representatives committees with primary jurisdiction over energy
31.31policy by January 15, 2008.

31.32    Sec. 10. Minnesota Statutes 2006, section 216B.1691, is amended by adding a
31.33subdivision to read:
31.34    Subd. 7. Utility acquisition of resources. A competitive resource acquisition
31.35process established by the commission prior to June 1, 2007, shall not apply to a utility
32.1for the construction, ownership, and operation of generation facilities used to satisfy the
32.2requirements of this section unless, upon a finding that it is in the public interest, the
32.3commission issues an order on or after June 1, 2007, that requires compliance by a utility
32.4with a competitive resource acquisition process. A utility that owns a nuclear generation
32.5facility and intends to construct, own, or operate facilities under this section shall file with
32.6the commission on or before March 1, 2008, a renewable energy plan setting forth the
32.7manner in which the utility proposes to meet the requirements of this section, including
32.8a proposed schedule for purchasing renewable energy from C-BED and non-C-BED
32.9projects. The utility shall update the plan as necessary in its filing under section
32.10216B.2422. The commission shall approve the plan unless it determines, after public
32.11hearing and comment, that the plan is not in the public interest. As part of its determination
32.12of public interest, the commission shall consider the plan's allocation of projects among
32.13C-BED, non-C-BED, and utility-owned projects, balancing the state's interest in:
32.14    (1) promoting the policy of economic development in rural areas through the
32.15development of renewable energy projects, as expressed in subdivision 9;
32.16    (2) maintaining the reliability of the state's electric power grid; and
32.17    (3) minimizing cost impacts on ratepayers.

32.18    Sec. 11. Minnesota Statutes 2006, section 216C.052, is amended to read:
32.19216C.052 RELIABILITY ADMINISTRATOR.
32.20    Subdivision 1. Responsibilities. (a) There is established the position of reliability
32.21administrator in the Public Utilities Commission Department of Commerce. The
32.22administrator shall act as a source of independent expertise and a technical advisor to
32.23the commissioner, the commission and the public on issues related to the reliability of
32.24the electric system. In conducting its work, the administrator shall provide assistance
32.25to the commission commissioner in administering and implementing the commission's
32.26department's duties under sections 216B.1612, 216B.1691, 216B.2422, 216B.2425, and
32.27216B.243 ; chapters 216E, 216F, and 216G; and rules associated with those provisions.
32.28Subject to resource constraints, the reliability administrator may also and shall also:
32.29    (1) model and monitor the use and operation of the energy infrastructure in the
32.30state, including generation facilities, transmission lines, natural gas pipelines, and other
32.31energy infrastructure;
32.32    (2) develop and present to the commission and parties technical analyses of proposed
32.33infrastructure projects, and provide technical advice to the commission;
33.1    (3) present independent, factual, expert, and technical information on infrastructure
33.2proposals and reliability issues at public meetings hosted by the task force, the
33.3Environmental Quality Board, the department, or the commission.
33.4    (b) Upon request and subject to resource constraints, the administrator shall
33.5provide technical assistance regarding matters unrelated to applications for infrastructure
33.6improvements to the task force, the department, or the commission.
33.7    (c) The administrator may not advocate for any particular outcome in a commission
33.8proceeding, but may give technical advice to the commission as to the impact on the
33.9reliability of the energy system of a particular project or projects.
33.10    Subd. 2. Administrative issues. (a) The commission commissioner may select the
33.11administrator who shall serve for a four-year term. The administrator must have at least
33.12five years of experience working as a power systems engineer or transmission planner, or
33.13in a position dealing with power system reliability issues, and may not have been a party
33.14or a participant in a commission energy proceeding for at least one year prior to selection
33.15by the commission commissioner. The commission commissioner shall oversee and
33.16direct the work of the administrator, annually review the expenses of the administrator,
33.17and annually approve the budget of the administrator. Pursuant to commission approval,
33.18The administrator may hire staff and may contract for technical expertise in performing
33.19duties when existing state resources are required for other state responsibilities or when
33.20special expertise is required. The salary of the administrator is governed by section
33.2115A.0815, subdivision 2 .
33.22    (b) Costs relating to a specific proceeding, analysis, or project are not general
33.23administrative costs. For purposes of this section, "energy utility" means public utilities,
33.24generation and transmission cooperative electric associations, and municipal power
33.25agencies providing natural gas or electric service in the state.
33.26    (c) The commission Department of Commerce shall pay:
33.27    (1) the general administrative costs of the administrator, not to exceed $1,000,000 in
33.28a fiscal year, and shall assess energy utilities for those administrative costs. These costs
33.29must be consistent with the budget approved by the commission commissioner under
33.30paragraph (a). The commission department shall apportion the costs among all energy
33.31utilities in proportion to their respective gross operating revenues from sales of gas or
33.32electric service within the state during the last calendar year, and shall then render a
33.33bill to each utility on a regular basis; and
33.34    (2) costs relating to a specific proceeding analysis or project and shall render a bill to
33.35the specific energy utility or utilities participating in the proceeding, analysis, or project
34.1directly, either at the conclusion of a particular proceeding, analysis, or project, or from
34.2time to time during the course of the proceeding, analysis, or project.
34.3    (d) For purposes of administrative efficiency, the commission department shall
34.4assess energy utilities and issue bills in accordance with the billing and assessment
34.5procedures provided in section 216B.62, to the extent that these procedures do not
34.6conflict with this subdivision. The amount of the bills rendered by the commission
34.7department under paragraph (c) must be paid by the energy utility into an account in the
34.8special revenue fund in the state treasury within 30 days from the date of billing and is
34.9appropriated to the commission department for the purposes provided in this section.
34.10The commission shall approve or approve as modified a rate schedule providing for the
34.11automatic adjustment of charges to recover amounts paid by utilities under this section.
34.12All amounts assessed under this section are in addition to amounts appropriated to the
34.13commission and the department by other law.
34.14    Subd. 3. Assessment and appropriation. In addition to the amount noted in
34.15subdivision 2, the commission commissioner may assess utilities, using the mechanism
34.16specified in that subdivision, up to an additional $500,000 annually through June 30,
34.172008. The amounts assessed under this subdivision are appropriated to the commission
34.18commissioner, and some or all of the amounts assessed may be transferred to the
34.19commissioner of administration, for the purposes specified in section 16B.325 and Laws
34.202001, chapter 212, article 1, section 3, as needed to implement those sections.
34.21    Subd. 4. Expiration. Subdivisions 1 and 2 expire June 30, 2007 2012. Subdivision
34.223 expires June 30, 2008.

34.23    Sec. 12. [216F.011] SIZE DETERMINATION.
34.24    (a) The total size of a combination of wind energy conversion systems for the
34.25purpose of determining what jurisdiction has siting authority under this chapter must
34.26be determined according to this section. The nameplate capacity of one wind energy
34.27conversion system must be combined with the nameplate capacity of any other wind
34.28energy conversion system that:
34.29    (1) is located within five miles of the wind energy conversion system;
34.30    (2) is constructed within the same 12-month period as the wind energy conversion
34.31system; and
34.32    (3) exhibits characteristics of being a single development, including, but not limited
34.33to, ownership structure, an umbrella sales arrangement, shared interconnection, revenue
34.34sharing arrangements, and common debt or equity financing.
35.1    (b) The commissioner shall provide forms and assistance for project developers to
35.2make a request for a size determination. Upon written request of a project developer, the
35.3commissioner of commerce shall provide a written size determination within 30 days
35.4of receipt of the request and of any information requested by the commissioner. In the
35.5case of a dispute, the chair of the Public Utilities Commission shall make the final size
35.6determination.
35.7    (c) An application to a county for a permit under this chapter for a wind energy
35.8conversion system is not complete without a size determination made under this section.
35.9EFFECTIVE DATE.This section is effective January 15, 2008.

35.10    Sec. 13. [216F.08] PERMIT AUTHORITY; ASSUMPTION BY COUNTIES.
35.11    (a) A county board may, by resolution and upon written notice to the Public Utilities
35.12Commission, assume responsibility for processing applications for permits required
35.13under this chapter for LWECS with a combined nameplate capacity of less than 25,000
35.14kilowatts. The responsibility for permit application processing, if assumed by a county,
35.15may be delegated by the county board to an appropriate county officer or employee.
35.16Processing by a county shall be done in accordance with procedures and processes
35.17established under chapter 394.
35.18    (b) A county board that exercises its option under paragraph (a) may issue, deny,
35.19modify, impose conditions upon, or revoke permits pursuant to this section. The action
35.20of the county board about a permit application is final, subject to appeal as provided
35.21in section 394.27.
35.22    (c) The commission shall, by order, establish general permit standards, including
35.23appropriate property line set-backs, governing site permits for LWECS under this section.
35.24The order must consider existing and historic commission standards for wind permits
35.25issued by the commission. The general permit standards shall apply to permits issued by
35.26counties and to permits issued by the commission for LWECS with a combined nameplate
35.27capacity of less than 25,000 kilowatts. The commission or a county may grant a variance
35.28from a general permit standard if the variance is found to be in the public interest.
35.29    (d) The commission and the commissioner of commerce shall provide technical
35.30assistance to a county with respect to the processing of LWECS site permit applications.
35.31EFFECTIVE DATE.This section is effective January 15, 2008.

35.32    Sec. 14. [216F.081] APPLICATION OF COUNTY STANDARDS.
35.33    A county may adopt by ordinance standards for LWECS that are more stringent than
35.34standards in commission rules or in the commission's permit standards. The commission,
36.1in considering a permit application for LWECS in a county that has adopted more stringent
36.2standards, shall consider and apply those more stringent standards, unless the commission
36.3finds good cause not to apply the standards.

36.4    Sec. 15. Minnesota Statutes 2006, section 500.30, subdivision 2, is amended to read:
36.5    Subd. 2. Like any conveyance. Any property owner may grant a solar or wind
36.6easement in the same manner and with the same effect as a conveyance of an interest in
36.7real property. The easements shall be created in writing and shall be filed, duly recorded,
36.8and indexed in the office of the recorder of the county in which the easement is granted.
36.9No duly recorded easement shall be unenforceable on account of lack of privity of estate
36.10or privity of contract; such easements shall run with the land or lands benefited and
36.11burdened and shall constitute a perpetual easement, except that an easement may terminate
36.12upon the conditions stated therein or pursuant to the provisions of section 500.20. A wind
36.13easement, easement to install wind turbines on real property, option, or lease of wind
36.14rights shall also terminate after seven years from the date the easement is created or lease
36.15is entered into, if a wind energy project on the property to which the easement or lease
36.16applies does not begin commercial operation within the seven-year period.
36.17EFFECTIVE DATE.This section is effective the day following final enactment,
36.18and applies to wind easements created and wind rights leases entered into on and after
36.19the effective date of this section.

36.20    Sec. 16. RESOURCE ASSESSMENT.
36.21    The reliability administrator shall conduct an engineering assessment of Minnesota's
36.22electricity resource needs through 2025, with a focus on baseload resources. The
36.23reliability administrator may contract with an independent entity to conduct all or part of
36.24the study. The assessment must consider additional generation and transmission resources
36.25necessary to meet the state's renewable energy standard under Laws 2007, chapter 3,
36.26section 1, subdivision 2a, and projected energy savings resulting from the implementation
36.27of article 2. The assessment, among other activities, must review and evaluate the most
36.28recent Minnesota utility demand forecasts, integrated resource plans filed under section
36.29216B.2422, and transmission projects reports filed under section 216B.2425, including
36.30the assumptions underlying them, and provide independent projections of demand and
36.31baseload and nonbaseload generation and transmission resources available to meet
36.32projected demand in 2010, 2015, 2020, and 2025. The reliability administrator shall
36.33manage the assessment process and shall appoint a technical review committee to review
36.34the assessment's proposed methods, assumptions, and preliminary data and results. The
37.1reliability administrator must submit a report on the assessment to the chairs and ranking
37.2minority members of the senate and house of representatives committees with primary
37.3jurisdiction over energy policy. The cost of the assessment is recoverable under section
37.4216C.052, subdivision 2.

37.5    Sec. 17. STATEWIDE STUDY OF DISPERSED GENERATION POTENTIAL.
37.6    Subdivision 1. Definition. "Dispersed generation" means an electric generation
37.7project with a generating capacity between ten and 40 megawatts that utilizes an "eligible
37.8energy technology," as defined in Minnesota Statutes, section 216B.1691, subdivision 1,
37.9paragraph (a).
37.10    Subd. 2. Study participants. Each electric utility subject to Minnesota Statutes,
37.11section 216B.1691, must participate collaboratively in conducting a two-phase study of
37.12the potential for dispersed generation projects that can be developed in Minnesota.
37.13    Subd. 3. First phase study content; report. In the first phase of the study,
37.14participants must analyze the impacts of the addition of a total of 600 megawatts of
37.15new dispersed generation projects distributed among the following Minnesota electric
37.16transmission planning zones: the Northeast zone, the Northwest zone, the Southeast
37.17zone, the Southwest zone, and the West-Central zone. Study participants must use a
37.18generally accepted 2010 year transmission system model including all transmission
37.19facilities expected to be operating in 2010. The study must take into consideration
37.20regional projected load growth, planned changes in the bulk transmission network, and the
37.21long-range transmission conceptual plan being developed under Laws 2007, chapter 3,
37.22section 2. In determining locations for the installation of dispersed generation projects
37.23that consist of wind energy conversion systems, the study should consider, at a minimum,
37.24wind resource availability, existing and contracted wind projects, and current dispersed
37.25generation projects in the Midwest Independent System Operator interconnection queue.
37.26The study must analyze the impacts of individual projects and all projects in aggregate on
37.27the transmission system, and identify specific modifications to the transmission system
37.28necessary to remedy any problems caused by the installation of dispersed generation
37.29projects, including cost estimates for the modifications. The study must analyze the
37.30additional dispersed generation projects connected at the lowest voltage level transmission
37.31that exists in the vicinity of the projected generation sites. A preliminary analysis to
37.32identify transmission system problems must be conducted with the projects installed at
37.33initially selected locations. The technical review committee may, after reviewing the
37.34locations selected for installation, recommend moving the installation sites once to new
38.1locations to reduce undesirable transmission system impacts. The commissioner of
38.2commerce must submit a report containing the findings and recommendations of the first
38.3phase of the study to the commission no later than June 15, 2008.
38.4    Subd. 4. Second phase study content; report. In the second phase of the study,
38.5participants must analyze the impacts of an additional total of 600 megawatts of dispersed
38.6generation projects installed among the five transmission planning zones, or a higher total
38.7capacity amount if agreed to by both the utilities and the technical review committee. The
38.8utilities must employ an analysis method similar to that used in the first phase of the study,
38.9and must use the most recent information available, including information developed in
38.10the first phase. The second phase of the study must use a generally accepted 2013 year
38.11transmission system model including all transmission facilities that are expected to be
38.12in service at that time. The commissioner of commerce must submit a report containing
38.13the findings and recommendations of the second phase of the study to the commission no
38.14later than September 15, 2009.
38.15    Subd. 5. Technical review committee. Prior to the start of the first phase of
38.16the study, the commissioner of commerce must appoint a technical review committee
38.17consisting of between ten and 15 individuals with experience and expertise in electric
38.18transmission system engineering, renewable energy generation technology, and dispersed
38.19generation project development, including representatives from the federal Department
38.20of Energy, the Midwest Independent System Operator, and stakeholder interests. The
38.21technical review committee must oversee both phases of the study, and must:
38.22    (1) make recommendations to the utilities regarding the proposed methods and
38.23assumptions to be used in the technical study;
38.24    (2) in conjunction with the appropriate utilities, hold public meetings on each
38.25phase of the study in each electricity transmission planning zone prior to the beginning
38.26of each phase of study, after the impact analysis is completed, and when a draft final
38.27report is available;
38.28    (3) establish procedures for handling commercially sensitive information; and
38.29    (4) review the initial and final drafts of the study and make recommendations for
38.30improvement, including problems associated with the interconnections among utility
38.31systems that may be amenable to solution through cooperation between the utilities in each
38.32zone. During each phase of the study, the technical review committee may recommend
38.33that the installation of dispersed generation projects be moved to new locations that cause
38.34fewer undesirable transmission system impacts.
38.35EFFECTIVE DATE.This section is effective the day following final enactment.

39.1    Sec. 18. WIND DEVELOPMENT PROPERTY AGREEMENTS; STUDY.
39.2    The Legislative Electric Energy Task Force shall study whether the state should
39.3regulate easements, leases, and other agreements to acquire an interest in real property
39.4for the purpose of wind energy development. The purpose of the study is to determine
39.5whether the duration and other terms of those interests should be limited to promote
39.6wind energy development. The task force must report the results of its study and any
39.7recommendations to the chairs of the energy finance and policy committees of the
39.8legislature by February 1, 2008.
39.9EFFECTIVE DATE.This section is effective the day following final enactment.

39.10    Sec. 19. C-BED ADVISORY TASK FORCE.
39.11    Subdivision 1. Members. The Legislative Electric Energy Task Force shall oversee
39.12and appoint an advisory task force on community-based energy development (C-BED)
39.13under Minnesota Statutes, section 15.059, subdivision 6, consisting of representatives
39.14of the Department of Commerce, the Public Utilities Commission, public utilities,
39.15independent power producers, municipal utilities, rural cooperatives, landowners currently
39.16engaged in C-BED and non-C-BED wind development projects, advocacy organizations
39.17for wind developers, and environmental organizations, as well as wind energy experts,
39.18tribal representatives, and clean energy advocates.
39.19    Subd. 2. Issues. The task force shall study and make recommendations to the chairs
39.20and ranking minority members of the senate and house of representatives committees
39.21with primary jurisdiction over energy policy in a report submitted by January 15, 2008,
39.22on the following issues:
39.23    (1) the definition of a C-BED qualifying owner;
39.24    (2) the definition of gross revenues with respect to community benefits;
39.25    (3) the ability of Minnesota and non-Minnesota financial institutions to provide
39.26capital;
39.27    (4) compliance and enforcement;
39.28    (5) wind easements;
39.29    (6) feed-in tariffs for community energy;
39.30    (7) community energy models/project structure;
39.31    (8) credits toward utility renewable energy standard requirements for utility
39.32participation;
39.33    (9) utility compensation for additional work for community ownership projects;
40.1    (10) types of incentives, compensation, and encouragement for utility participation;
40.2and
40.3    (11) other topics related to and impacting the C-BED program, as determined by
40.4the task force.
40.5    Subd. 3. Expiration. This section, and the advisory task force on community-based
40.6energy development, expires January 16, 2008.
40.7EFFECTIVE DATE.This section is effective the day following final enactment.

40.8    Sec. 20. TRANSFERRING RELIABILITY ADMINISTRATOR
40.9RESPONSIBILITIES.
40.10    All responsibilities, as defined in Minnesota Statutes, section 15.039, subdivision
40.111, held by the Public Utilities Commission relating to the reliability administrator under
40.12Minnesota Statutes, section 216C.052, are transferred to the Minnesota Department of
40.13Commerce under Minnesota Statutes, section 15.039.

40.14    Sec. 21. TRANSMISSION AUTHORITY AND INTERCONNECTION
40.15EVALUATIONS.
40.16    The reliability administrator shall, in consultation with interested stakeholders:
40.17    (1) review the structures, powers, and duties for constructing, owning, maintaining,
40.18and operating transmission facilities of state transmission authorities established in
40.19Kansas, North Dakota, South Dakota, and Wyoming, and evaluate whether the existence
40.20of a similar organization in Minnesota would have the potential to increase the reliability
40.21and efficiency of the electrical grid in the state; hasten the development of needed
40.22transmission lines; accelerate the development of renewable energy projects, especially in
40.23rural areas of the state; and reduce delivered energy costs to Minnesota ratepayers; and
40.24    (2) assess the potential for and barriers to interconnecting dispersed generation
40.25projects to locations on the electric grid where a generator interconnection would not be
40.26subject to the interconnection rules of the Federal Energy Regulatory Commission or the
40.27Midwest Independent System Operator.
40.28No technical or engineering analyses are necessary in order to complete these duties. The
40.29reliability administrator must report its findings and any recommendations to the chairs of
40.30the senate and house of representatives committees with jurisdiction over energy policy by
40.31February 15, 2008.

41.1ARTICLE 5
41.2GLOBAL CLIMATE CHANGE; GREENHOUSE GAS EMISSIONS

41.3    Section 1. [216H.01] DEFINITIONS.
41.4    Subdivision 1. Scope. For the purpose of this chapter, the terms defined in this
41.5section have the meanings given them.
41.6    Subd. 2. Statewide greenhouse gas emissions. "Statewide greenhouse
41.7gas emissions" include emissions of carbon dioxide, methane, nitrous oxide,
41.8hydrofluorocarbons, perfluorocarbons, and sulfur hexafluoride emitted by anthropogenic
41.9sources within the state and from the generation of electricity imported from outside
41.10the state and consumed in Minnesota. Carbon dioxide that is injected into geological
41.11formations to prevent its release to the atmosphere in compliance with applicable laws,
41.12and carbon dioxide associated with the combustion of fuels other than coal, petroleum,
41.13and natural gas are not counted as contributing to statewide greenhouse gas emissions.

41.14    Sec. 2. [216H.02] GREENHOUSE GAS EMISSIONS CONTROL.
41.15    Subdivision 1. Greenhouse gas emissions reduction goal. It is the goal of the state
41.16to reduce statewide greenhouse gas emissions across all sectors producing those emissions
41.17to a level at least 15 percent below 2005 levels by 2015, to a level at least 30 percent
41.18below 2005 levels by 2025, and to a level at least 80 percent below 2005 levels by 2050.
41.19The levels shall be reviewed based on the climate change action plan study.
41.20    Subd. 2. Climate change action plan. By February 1, 2008, the commissioner of
41.21commerce, in consultation with the commissioners of the Pollution Control Agency,
41.22the Housing Finance Agency, and the Departments of Natural Resources, Agriculture,
41.23Employment and Economic Development, and Transportation, and the chair of the
41.24Metropolitan Council, shall submit to the legislature a climate change action plan that
41.25meets the requirements of this section.
41.26    Subd. 3. Stakeholder process. The plan required by subdivision 2 must be
41.27developed through a structured, broadly inclusive stakeholder-based review of potential
41.28policies and initiatives that will reduce statewide greenhouse gas emissions from a
41.29broad range of sources and activities. The commissioner shall engage a nationally
41.30recognized independent expert entity to conduct the stakeholder process. The report of
41.31the stakeholder process must form the basis for the plan submitted by the commissioner
41.32under subdivision 2.
41.33    Subd. 4. General elements of the plan. The plan must:
42.1    (1) estimate 1990 and 2005 greenhouse gas emissions in the state and make
42.2projections of emissions in 2015, 2025, and 2050;
42.3    (2) identify, evaluate, and integrate a broad range of statewide greenhouse gas
42.4reduction options for all emission sectors in the state;
42.5    (3) assess the costs, benefits, and feasibility of implementing the options;
42.6    (4) recommend an integrated set of reduction options and strategies for implementing
42.7the options that will achieve the goals in subdivision 1, including analysis of the associated
42.8costs and benefits to Minnesotans;
42.9    (5) estimate the statewide greenhouse gas emissions reductions anticipated from
42.10implementation of existing state policies;
42.11    (6) recommend a system to require the reporting of statewide greenhouse gas
42.12emissions, identifying which facilities must report, and how emission estimates should
42.13be made; and
42.14    (7) evaluate the option of exempting a project from the prohibitions contained in
42.15section 216H.03, subdivision 3, if the project contributes a specified fee per ton of carbon
42.16dioxide emissions emitted annually by the project, the proceeds of which would be used to
42.17fund permanent, quantifiable, verifiable, and enforceable reductions in greenhouse gas
42.18emissions that would not otherwise have occurred.
42.19    Subd. 5. Specific plan requirements. (a) The plan must evaluate and recommend
42.20interim goals as steps to achieve the goals in subdivision 1.
42.21    (b) The plan must determine the feasibility, assess the costs and benefits, and
42.22recommend how the state could adopt a regulatory system that imposes a cap on the
42.23aggregate air pollutant emissions of a group of sources, requires those subject to the
42.24cap to own an allowance for each ton of the air pollutant emitted, and allows for
42.25market-based trading of those allowances. The evaluation must contain an analysis of the
42.26state implementing a cap and trade system alone, in coordination with other states, and
42.27as a requirement of federal law applying to all states. The plan must recommend the
42.28parameters of a cap and trade system that includes a cap that would prevent significant
42.29increases in greenhouse gas emissions above current levels with a schedule for lowering
42.30the cap periodically to achieve the goals in subdivision 1 and interim goals recommended
42.31under paragraph (a). The plan must consider cost savings and cost increases on energy
42.32consumers in the state.
42.33    (c) The plan must include recommendations for improvements in the emissions
42.34inventory and recommend whether the state should require greenhouse gas emissions
42.35reporting from specific sources and, if so, which sources should be required to report. The
42.36plan must also evaluate options for an emissions registry after reviewing registries in other
43.1states and recommend a registry that will insure the greatest opportunity for Minnesota
43.2entities to obtain marketable credits.
43.3    Subd. 6. Regional activities. The state must, to the extent possible, with other states
43.4in the Midwest region, develop and implement a regional approach to reducing greenhouse
43.5gas emissions from activities in the region, including consulting on a regional cap and
43.6trade system. The commissioner of commerce shall coordinate Minnesota's regional
43.7activities under this subdivision and report to the legislative committees in the senate
43.8and house of representatives with jurisdiction over energy and environmental policy by
43.9February 1, 2008, and February 1, 2009, on the progress made and recommendations for
43.10further action. The commissioner of commerce, as part of the activities required under this
43.11subdivision, must meet with responsible officials from bordering states, other states in the
43.12Midwest region, and states in other regions of the country to: (1) determine whether other
43.13states are interested in establishing and cooperating in a multistate or regional greenhouse
43.14gas cap and trade allowance program; (2) identify and prepare an inventory of greenhouse
43.15gas reduction resources available to support a multistate or regional greenhouse gas cap
43.16and trade allowance program; (3) seek cooperation on a regional inventory of greenhouse
43.17gas emission sources; and (4) prepare an inventory of available renewable energy
43.18resources within a state or region. The commissioner of commerce must develop a
43.19definition of scope of this regional activity that is in addition to the components described
43.20in clauses (1) to (4). The commissioner must report on the additional scoping definitions
43.21to the chairs and ranking minority members of the legislative committees with jurisdiction
43.22over energy and environmental finance and policy on or before the commencement of the
43.232008 regular legislative session.

43.24    Sec. 3. [216H.03] FAILURE TO ADOPT GREENHOUSE GAS CONTROL
43.25PLAN.
43.26    Subdivision 1. Definition; new large energy facility. For the purpose of this
43.27section, "new large energy facility" means a large energy facility, as defined in section
43.28216B.2421, subdivision 2, clause (1), that is not in operation as of January 1, 2007, but
43.29does not include a facility that (1) uses natural gas as a primary fuel, (2) is designed to
43.30provide peaking, intermediate, emergency backup, or contingency services, (3) uses a
43.31simple cycle or combined cycle turbine technology, and (4) is capable of achieving full
43.32load operations within 45 minutes of startup for a simple cycle facility, or is capable
43.33of achieving minimum load operations within 185 minutes of startup for a combined
43.34cycle facility.
44.1    Subd. 2. Definition; statewide power sector carbon dioxide emissions. For the
44.2purpose of this section, "statewide power sector carbon dioxide emissions" means the total
44.3annual emissions of carbon dioxide from the generation of electricity within the state
44.4and all emissions of carbon dioxide from the generation of electricity imported from
44.5outside the state and consumed in Minnesota. Emissions of carbon dioxide associated
44.6with transmission and distribution line losses are included in this definition. Carbon
44.7dioxide that is injected into geological formations to prevent its release to the atmosphere
44.8in compliance with applicable laws, and emissions of carbon dioxide associated with
44.9the combustion of biomass, as defined in section 216B.2411, subdivision 2, paragraph
44.10(c), clauses (1) to (4), are not counted as contributing to statewide power sector carbon
44.11dioxide emissions.
44.12    Subd. 3. Long-term increased emissions from power plants prohibited. Unless
44.13preempted by federal law, until a comprehensive and enforceable state law or rule
44.14pertaining to greenhouse gases that directly limits and substantially reduces, over time,
44.15statewide power sector carbon dioxide emissions is enacted and in effect, and except as
44.16allowed in subdivisions 4 to 7, on and after August 1, 2009, no person shall:
44.17    (1) construct within the state a new large energy facility that would contribute to
44.18statewide power sector carbon dioxide emissions;
44.19    (2) import or commit to import from outside the state power from a new large energy
44.20facility that would contribute to statewide power sector carbon dioxide emissions; or
44.21    (3) enter into a new long-term power purchase agreement that would increase
44.22statewide power sector carbon dioxide emissions. For purposes of this section, a long-term
44.23power purchase agreement means an agreement to purchase 50 megawatts of capacity
44.24or more for a term exceeding five years.
44.25    Subd. 4. Exception for facilities that offset emissions. (a) The prohibitions in
44.26subdivision 3 do not apply if the project proponent demonstrates to the Public Utilities
44.27Commission's satisfaction that it will offset the new contribution to statewide power sector
44.28carbon dioxide emissions with a carbon dioxide reduction project identified in paragraph
44.29(b) and in compliance with paragraph (c).
44.30    (b) A project proponent may offset in an amount equal to or greater than the
44.31proposed new contribution to statewide power sector carbon dioxide emissions in either,
44.32or a combination of both, of the following ways:
44.33    (1) by reducing an existing facility's contribution to statewide power sector carbon
44.34dioxide emissions; or
45.1    (2) by purchasing carbon dioxide allowances from a state or group of states that has a
45.2carbon dioxide cap and trade system in place that produces verifiable emissions reductions.
45.3    (c) The Public Utilities Commission shall not find that a proposed carbon dioxide
45.4reduction project identified in paragraph (b) acceptably offsets a new contribution
45.5to statewide power sector carbon dioxide emissions unless the proposed offsets are
45.6permanent, quantifiable, verifiable, enforceable, and would not have otherwise occurred.
45.7This section does not exempt emissions that have been offset under this subdivision and
45.8emissions exempted under subdivisions 5 to 7 from a cap and trade system if adopted by
45.9the state.
45.10    Subd. 5. Exception for new steel production facility. The prohibitions in
45.11subdivision 3 do not apply to increases in statewide power sector carbon dioxide
45.12emissions from a new steel production project located in a taconite relief area that has
45.13filed an application for an air quality permit from the Pollution Control Agency prior
45.14to January 1, 2007.
45.15    Subd. 6. Exception for iron nugget production facility. The prohibitions in
45.16subdivision 3 do not apply to an iron nugget production facility that began construction
45.17prior to January 31, 2007, nor to associated mining activities and beneficiation facilities
45.18with a concentrate capacity of up to three million tons annually. For the purposes of this
45.19subdivision, "iron nugget" means a product with at least 90 percent iron content.
45.20    Subd. 7. Other exemptions. The prohibitions in subdivision 3 do not apply to:
45.21    (1) a new large energy facility under consideration by the Public Utilities
45.22Commission pursuant to proposals or applications filed with the Public Utilities
45.23Commission before April 1, 2007, or to any power purchase agreement related to a facility
45.24described in this clause. The exclusion of pending proposals and applications from the
45.25prohibitions in subdivision 3 does not limit the applicability of any other law and is not an
45.26expression of legislative intent regarding whether any pending proposal or application
45.27should be approved or denied;
45.28    (2) a contract not subject to commission approval that was entered into prior to
45.29April 1, 2007, to purchase power from a new large energy facility that was approved by
45.30a comparable authority in another state prior to that date, for which municipal or public
45.31power district bonds have been issued, and on which construction has begun; or
45.32    (3) a new large energy facility or a power purchase agreement between a Minnesota
45.33utility and a new large energy facility located outside Minnesota that the Public
45.34Utilities Commission has determined is essential to ensure the long-term reliability of
45.35Minnesota's electric system, to allow electric service for increased industrial demand,
46.1or to avoid placing a substantial financial burden on Minnesota ratepayers. An order
46.2of the commission granting an exemption under this clause is stayed until the June 1
46.3following the next regular or annual session of the legislature that begins after the date
46.4of the commission's final order.
46.5    Subd. 8. Enforcement. Whenever the commission or the Department of Commerce
46.6determines that any person is violating or about to violate this section, it may refer the
46.7matter to the attorney general who shall take appropriate legal action. This section may
46.8be enforced by the attorney general on the same basis as a law listed in section 8.31,
46.9subdivision 1, except that the remedies provided by section 8.31, subdivision 3a, do not
46.10apply to a violation of this section.

46.11    Sec. 4. [216H.06] GREENHOUSE GAS EMISSIONS CONSIDERATION IN
46.12RESOURCE PLANNING.
46.13    By January 1, 2008, the Public Utilities Commission shall establish an estimate of
46.14the likely range of costs of future carbon dioxide regulation on electricity generation.
46.15The estimate, which may be made in a commission order, must be used in all electricity
46.16generation resource acquisition proceedings. The estimates, and annual updates, must be
46.17made following informal proceedings conducted by the commissioners of commerce and
46.18pollution control that allow interested parties to submit comments.

46.19ARTICLE 6
46.20RENEWABLE ENERGY STANDARDS

46.21    Section 1. Minnesota Statutes 2006, section 216B.1691, subdivision 5, as amended by
46.22Laws 2007, chapter 3, section 1, subdivision 5, is amended to read:
46.23    Subd. 5. Technology based on fuel combustion. (a) Electricity produced by fuel
46.24combustion through fuel blending or co-firing under paragraph (b) may only count toward
46.25a utility's objectives or standards if the generation facility:
46.26    (1) was constructed in compliance with new source performance standards
46.27promulgated under the federal Clean Air Act for a generation facility of that type; or
46.28    (2) employs the maximum achievable or best available control technology available
46.29for a generation facility of that type.
46.30    (b) An eligible energy technology may blend or co-fire a fuel listed in subdivision
46.311, paragraph (a), clause (1) (5), with other fuels in the generation facility, but only the
46.32percentage of electricity that is attributable to a fuel listed in that clause can be counted
46.33toward an electric utility's renewable energy objectives.

47.1    Sec. 2. Minnesota Statutes 2006, section 216B.1691, subdivision 7, as added by Laws
47.22007, chapter 3, section 1, subdivision 7, is amended to read:
47.3    Subd. 7. Compliance. The commission must regularly investigate whether an
47.4electric utility is in compliance with its good-faith objective under subdivision 2 and
47.5standard obligation under subdivision 2a. If the commission finds noncompliance, it may
47.6order the electric utility to construct facilities, purchase energy generated by eligible
47.7energy technology, purchase renewable energy credits, or engage in other activities
47.8to achieve compliance. If an electric utility fails to comply with an order under this
47.9subdivision, the commission may impose a financial penalty on the electric utility in an
47.10amount not to exceed the estimated cost of the electric utility to achieve compliance. The
47.11penalty may not exceed the lesser of the cost of constructing facilities or purchasing
47.12credits. The commission must deposit financial penalties imposed under this subdivision
47.13in the energy and conservation account established in the special revenue fund under
47.14section 216B.241, subdivision 2a. This subdivision is in addition to and does not limit any
47.15other authority of the commission to enforce this section."
47.16Delete the title and insert:
47.17"A bill for an act
47.18relating to energy; modifying and adding provisions relating to energy efficiency
47.19and conservation, energy savings and audits, energy projects and information,
47.20residential energy requirements, a nuclear energy study, community-based
47.21energy development and related issues, the reliability administrator, an electricity
47.22resource assessment, wind energy conversion systems and authority of counties,
47.23greenhouse gas emissions and renewable energy standards; requiring studies;
47.24making technical and clarifying changes;amending Minnesota Statutes 2006,
47.25sections 123B.65, subdivision 2; 216B.16, subdivisions 1, 6b; 216B.1612,
47.26subdivisions 1, 2, 3, 4, 5, 7, by adding a subdivision; 216B.1645, by adding a
47.27subdivision; 216B.1691, subdivisions 5, as amended, 7, as added, by adding a
47.28subdivision; 216B.241; 216C.05; 216C.052; 216C.31; 471.345, subdivision
47.2913; 500.30, subdivision 2; 504B.161, subdivision 1; proposing coding for new
47.30law in Minnesota Statutes, chapters 216B; 216C; 216F; proposing coding for
47.31new law as Minnesota Statutes, chapter 216H; repealing Minnesota Statutes
47.322006, sections 216B.165; 216C.27; 216C.30, subdivision 5; Minnesota Rules,
47.33parts 7635.0100; 7635.0110; 7635.0120; 7635.0130; 7635.0140; 7635.0150;
47.347635.0160; 7635.0170; 7635.0180; 7635.0200; 7635.0210; 7635.0220;
47.357635.0230; 7635.0240; 7635.0250; 7635.0260; 7635.0300; 7635.0310;
47.367635.0320; 7635.0330; 7635.0340; 7635.0400; 7635.0410; 7635.0420;
47.377635.0500; 7635.0510; 7635.0520; 7635.0530; 7635.0600; 7635.0610;
47.387635.0620; 7635.0630; 7635.0640; 7635.1000; 7635.1010; 7635.1020;
47.397635.1030; 7655.0100; 7655.0120; 7655.0200; 7655.0210; 7655.0220;
47.407655.0230; 7655.0240; 7655.0250; 7655.0260; 7655.0270; 7655.0280;
47.417655.0290; 7655.0300; 7655.0310; 7655.0320; 7655.0330; 7655.0400;
47.427655.0410; 7655.0420."
We request the adoption of this report and repassage of the bill.Senate Conferees: (Signed) Yvonne Prettner Solon, Gary W. Kubly, D. Scott Dibble, Jim Carlson, Julie A. RosenHouse Conferees: (Signed) Bill Hilty, Aaron Peterson, Maria Ruud, Jeremy Kalin, John Berns
48.1
We request the adoption of this report and repassage of the bill.
48.2
Senate Conferees:
(Signed)
48.3




48.4
Yvonne Prettner Solon
Gary W. Kubly
48.5




48.6
D. Scott Dibble
Jim Carlson
48.7


48.8
Julie A. Rosen
48.9
House Conferees:
(Signed)
48.10




48.11
Bill Hilty
Aaron Peterson
48.12




48.13
Maria Ruud
Jeremy Kalin
48.14


48.15
John Berns