SF 1687

1st Engrossment - 84th Legislature (2005 - 2006) Posted on 12/15/2009 12:00am

A bill for an act
relating to energy; requiring utilities to meet certain renewable energy standards;
amending Minnesota Statutes 2004, section 216B.1691.

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

Section 1.

Minnesota Statutes 2004, section 216B.1691, is amended to read:

216B.1691 RENEWABLE ENERGY new text begin STANDARDS AND new text end OBJECTIVES.

Subdivision 1.

Definitions.

(a) Unless otherwise specified in law, "eligible energy
technology" means an energy technology that:

(1) generates electricity from the following renewable energy sources: solar; wind;
hydroelectric with a capacity of less than 60 megawatts; hydrogen, provided that after
January 1, 2010, the hydrogen must be generated from the resources listed in this clause;
or biomass, which includes an energy recovery facility used to capture the heat value of
mixed municipal solid waste or refuse-derived fuel from mixed municipal solid waste as
a primary fuel; and

(2) was not mandated by Laws 1994, chapter 641, or by commission order issued
pursuant to that chapter prior to August 1, 2001.

(b) "Electric utility" means a public utility providing electric service, a generation
and transmission cooperative electric association, or a municipal power agency.

(c) "Total retail electric sales" means the kilowatt-hours of electricity sold in a year
by an electric utility to retail customers of the electric utility or to a distribution utility for
distribution to the retail customers of the distribution utility.

Subd. 2.

Eligible energy objectives.

(a) Each electric utility shall make a good
faith effort to generate or procure sufficient electricity generated by an eligible energy
technology to provide its retail consumers, or the retail customers of a distribution utility
to which the electric utility provides wholesale electric service, so that:

(1) commencing in 2005, at least one percent of the electric utility's total retail
electric sales is generated by eligible energy technologies;

(2) the amount provided under clause (1) is increased by one percent of the utility's
total retail electric sales each year until deleted text begin 2015 deleted text end new text begin 2010 new text end ; and

(3) deleted text begin ten deleted text end new text begin five new text end percent of the electric energy provided to retail customers in Minnesota
new text begin by 2010 new text end is generated by eligible energy technologies.

(b) Of the eligible energy technology generation required under paragraph (a),
clauses (1) and (2), not less than 0.5 percent of the energy must be generated by biomass
energy technologies, including an energy recovery facility used to capture the heat value
of mixed municipal solid waste or refuse-derived fuel from mixed municipal solid waste
as a primary fuel, by 2005. By 2010, one percent of the eligible technology generation
required under paragraph (a), clauses (1) and (2), shall be generated by biomass energy
technologies. An energy recovery facility used to capture the heat value of mixed
municipal solid waste or refuse-derived fuel from mixed municipal solid waste, with a
power sales agreement in effect as of May 29, 2003, that terminates after December 31,
2010, does not qualify as an eligible energy technology unless the agreement provides for
rate adjustment in the event the facility qualifies as a renewable energy source.

new text begin Subd. 2a. new text end

new text begin Eligible energy standard. new text end

new text begin Each electric utility shall generate or procure
sufficient electricity generated by an eligible energy technology to provide its retail
customers, or the retail customers of a distribution utility to which the electric utility
provides wholesale electric service, so that at least the following percentages of the
electric utility's total retail electric sales is generated by eligible energy technologies
by the end of the year indicated:
new text end

new text begin (1) new text end	new text begin 2013 new text end	new text begin ten percent new text end
new text begin (2) new text end	new text begin 2015 new text end	new text begin 15 percent new text end
new text begin (3) new text end	new text begin 2020 new text end	new text begin 20 percent new text end

new text begin To be counted toward satisfying the standard, energy must be generated by a facility
originally placed in service after January 1, 1975. The commission must delay or modify
the standard for an electric utility if it finds that compliance with a standard is not in
the public interest because compliance will either produce undesirable impacts on the
reliability of the utility's system or on the utility's ratepayers or if it finds that compliance
is not technically feasible. The standard is both an individual electric utility standard and a
statewide standard so that by the end of 2020 at least 20 percent of the electric energy
provided to retail customers in Minnesota is generated by eligible energy technologies.
new text end

deleted text begin (c) deleted text end new text begin Subd. 2b. new text end

Commission order.

By June 1, 2004, and as needed thereafter, the
commission shall issue an order detailing the criteria and standards by which it will
measure an electric utility's efforts to meet the renewable energy objectives new text begin and standards
new text end of this section to determine whether the utility is making the required good faith effort
new text begin and is meeting the standards new text end . In this order, the commission shall include criteria and
standards that protect against undesirable impacts on the reliability of the utility's system
and economic impacts on the utility's ratepayers and that consider technical feasibility.

deleted text begin (d) In its order under paragraph (c), the commission shall provide for a weighted
scale of how energy produced by various eligible energy technologies shall count toward a
utility's objective. In establishing this scale, the commission shall consider the attributes
of various technologies and fuels, and shall establish a system that grants multiple credits
toward the objectives for those technologies and fuels the commission determines is in
the public interest to encourage.
deleted text end

Subd. 3.

Utility plans filed with commission.

(a) Each electric utility shall report
on its plans, activities, and progress with regard to these objectives new text begin and standards new text end in its
filings under section 216B.2422 or in a separate report submitted to the commission every
two years, whichever is more frequent, demonstrating to the commission deleted text begin that deleted text end the deleted text begin utility is
making the required good faith deleted text end new text begin utility's new text end effort new text begin to comply with this section new text end . In its resource
plan or a separate report, each electric utility shall provide a description of:

(1) the status of the utility's renewable energy mix relative to the deleted text begin good faith
deleted text end objective new text begin and standards new text end ;

(2) efforts taken to meet the objective new text begin and standards new text end ;

(3) any obstacles encountered or anticipated in meeting the objective new text begin or standards new text end ;
and

(4) potential solutions to the obstacles.

(b) The commissioner shall compile the information provided to the commission
under paragraph (a), and report to the chairs of the house of representatives and senate
committees with jurisdiction over energy and environment policy issues as to the progress
of utilities in the state in increasing the amount of renewable energy provided to retail
customers, with any recommendations for regulatory or legislative action, by January
15 of each odd-numbered year.

Subd. 4.

Renewable energy credits.

(a) To facilitate compliance with this section,
the commission, by rule or order, may establish a program for tradable credits for
electricity generated by an eligible energy technology. In doing so, the commission shall
implement a system that constrains or limits the cost of credits, taking care to ensure that
such a system does not undermine the market for those credits.

(b) In lieu of generating or procuring energy directly to satisfy the renewable energy
objective new text begin and standard new text end of this section, an electric utility may purchase sufficient renewable
energy credits, issued pursuant to this subdivision, to meet its objective new text begin and standard new text end .

(c) Upon the passage of a renewable energy standard, portfolio, or objective in
a bordering state that includes a similar definition of eligible energy technology or
renewable energy, the commission may facilitate the trading of renewable energy credits
between states.

Subd. 5.

Technology based on fuel combustion.

(a) Electricity produced by fuel
combustion may only count toward a utility's objectives new text begin or standards new text end if the generation
facility:

(1) was constructed in compliance with new source performance standards
promulgated under the federal Clean Air Act for a generation facility of that type; or

(2) employs the maximum achievable or best available control technology available
for a generation facility of that type.

(b) An eligible energy technology may blend or co-fire a fuel listed in subdivision 1,
paragraph (a), clause (1), with other fuels in the generation facility, but only the percentage
of electricity that is attributable to a fuel listed in that clause can be counted toward an
electric utility's renewable energy objectives.

Subd. 6.

Electric utility that owns nuclear generation facility.

(a) An electric
utility that owns a nuclear generation facility, as part of its good faith effort under this
subdivision and subdivision 2, shall deploy an additional 300 megawatts of nameplate
capacity of wind energy conversion systems by 2010, beyond the amount of wind energy
capacity to which the utility is required by law or commission order as of May 1, 2003.
At least 100 megawatts of this capacity are to be wind energy conversion systems of two
megawatts or less, which shall not be eligible for the production incentive under section
216C.41. To the greatest extent technically feasible and economic, these 300 megawatts
of wind energy capacity are to be distributed geographically throughout the state. The
utility may opt to own, construct, and operate up to 100 megawatts of this wind energy
capacity, except that the utility may not own, construct, or operate any of the facilities
that are under two megawatts of nameplate capacity. The deployment of the wind energy
capacity under this subdivision must be consistent with the outcome of the engineering
study required under Laws 2003, First Special Session chapter 11, article 2, section 21.

(b) deleted text begin The renewable energy objective set forth in subdivision 2 shall be a requirement
for the public utility that owns the Prairie Island nuclear generation plant. The objective is
a requirement subject to resource planning and least-cost planning requirements in section
216B.2422, unless implementation of the objective can reasonably be shown to jeopardize
the reliability of the electric system. The least-cost planning analysis must include the
costs of ancillary services and other necessary generation and transmission upgrades.
deleted text end

deleted text begin (c) deleted text end Also as part of its good faith effort under this section, the utility that owns a
nuclear generation facility is to enter into a power purchase agreement by January 1, 2004,
for ten to 20 megawatts of biomass energy and capacity at an all-inclusive price not to
exceed $55 per megawatt-hour, for a project described in section 216B.2424, subdivision
5, paragraph (e), clause (2). The project must be operational and producing energy by
June 30, 2005.

new text begin Subd. 7. new text end

new text begin Compliance. new text end

new text begin The commission, on its own motion or upon petition, may
investigate whether an electric utility is in compliance with its standard obligation under
subdivision 2a and if it finds noncompliance may order the electric utility to construct
facilities or purchase credits to achieve compliance. If an electric utility fails to comply
with an order under this subdivision, the commission may impose a financial penalty on
the electric utility in an amount up to the electric utility's estimated cost of compliance.
new text end