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Minnesota Legislature

Office of the Revisor of Statutes

SF 3131

2nd Engrossment - 89th Legislature (2015 - 2016) Posted on 09/27/2016 04:11pm

KEY: stricken = removed, old language.
underscored = added, new language.

Bill Text Versions

Engrossments
Introduction Posted on 03/22/2016
1st Engrossment Posted on 04/07/2016
2nd Engrossment Posted on 05/04/2016

Current Version - 2nd Engrossment

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A bill for an act
relating to local government; listing reimbursable costs for purposes of a
power purchase agreement; authorizing an increase in Hibbing's Public Utility
Commission membership; abolishing and replacing existing council member
wards of the city of Hibbing; changing form of government of the city of
Hibbing; amending Minnesota Statutes 2014, section 216B.2424, subdivision
5a; Laws 1949, chapter 422, section 2, as amended.

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

Section 1.

Minnesota Statutes 2014, section 216B.2424, subdivision 5a, is amended to
read:


Subd. 5a.

Reduction of biomass mandate.

(a) Notwithstanding subdivision 5, the
biomass electric energy mandate must be reduced from 125 megawatts to 110 megawatts.

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

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

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

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

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

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

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

(e) Upon request by the project owner, the public utility shall agree to amend the
power purchase agreement described in paragraph (b) and approved by the commission
as required by paragraph (c). The amendment must be negotiated and executed within
45 days of May 14, 2013, and must apply to prices paid after January 1, 2014. The
average price for energy in nominal dollars measured over the term of the power purchase
agreement must not exceed $109.20 per megawatt hour. The public utility shall request
approval of the amendment by the commission within 30 days of execution of the
amended power purchase agreement. The amendment is not effective until approval
by the commission. The commission shall act on the amendment within 90 days of
submission of the request by the public utility. Upon approval of the amended power
purchase agreement, the commission shall allow the public utility to recover the costs of
the amended power purchase agreement, as provided in section 216B.1645.

(f) With respect to the power purchase agreement described in paragraph (b), and
amended and approved by the commission pursuant to paragraphs (c) and (e), upon
request by the project owner, the public utility shall agree to amend the power purchase
agreement to include a fuel cost adjustment clause which requires the public utility to
reimburse the project owner monthly for all costs incurred by the project owner during
the applicable month to procure and transport all fuel used to produce energy for delivery
to the public utility pursuant to the power purchase agreement to the extent such costs
exceeded $3.40 per million metric British thermal unit (MMBTU), in addition to the price
to be paid for the energy produced and delivered by the project owner. new text beginReimbursable
costs include but are not limited to: (1) all costs incurred to load fuel at its source; (2)
costs to transport fuel (i) to the biomass-fueled generating facilities or to an intermediate
woodyard, storage facility, or handling facility, or (ii) from a facility to the biomass-fueled
generating facilities; (3) depreciation of any depreciable loading, woodyard, storage,
handling, or transportation equipment whether the vehicle or equipment is located at the
fuel source, a woodyard, storage facility, handling facility, or at the generating facilities;
and (4) costs to unload fuel at the generating facilities.
new text endBeginning with 2014, at the end of
each calendar year of the term of the power purchase agreement, the project owner shall
calculate the amount by which actual fuel costs for the year exceeded $3.40 per MMBTU,
and prior monthly payment for such fuel costs shall be reconciled against actual fuel costs
for the applicable calendar year. If such prior monthly fuel payments for the year in the
aggregate exceed the amount due based on the annual calculation, the project owner shall
credit the public utility for the excess paid. If the annual calculation of fuel costs due
exceeds the prior monthly fuel payments for the year in the aggregate, the project owner
shall be entitled to be paid for the deficiency with the next invoice to the public utility.
The amendment shall be negotiated and executed within 45 days of May 13, 2013, and
shall be effective for fuel costs incurred and prices after January 1, 2014. The public
utility shall request approval of the amendment by the commission, and the commission
shall approve the amendment as reasonable and in the public interest and allow the public
utility to recover from its Minnesota retail customers the amounts paid by the public utility
to the project owner pursuant to the power purchase agreement during the full term of
the power purchase agreement, including the reimbursement of fuel costs pursuant to the
power purchase agreement amendment, new text beginreimbursable costs as provided in this paragraph,
new text endpursuant to section 216B.1645, or otherwise.

(g) With respect to the power purchase agreement described in paragraph (b) and
approved by the commission pursuant to paragraphs (c) and (e), the public utility is
prohibited from recovering from the project owner any costs which were not actually and
reasonably incurred by the utility, notwithstanding any provision in the power purchase
agreement to the contrary. In addition, beginning with 2012, the public utility shall pay for
all energy delivered by the project owner pursuant to the power purchase agreement at
the full price for such energy in the power purchase agreement approved and amended
pursuant to paragraph (e), provided that the project owner does not deliver more than
110 percent of the amount scheduled for delivery in any year of the power purchase
agreement, and does not deliver, on average over any five consecutive years of the power
purchase agreement, an amount greater than 105 percent of the amount scheduled for
delivery over the five-year period.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively from January 1, 2014.
new text end

Sec. 2.

Laws 1949, chapter 422, section 2, as amended by Laws 1951, chapter 680,
section 2, is amended to read:


Sec. 2. MEMBERS; APPOINTMENT, TERM, MEETINGS, QUORUM.

deleted text begin The commission, consisting of three members, shall be appointed by the village
council for a term of three years. The original appointees shall serve one, two and three
years respectively as designated by the council. Each commissioner shall hold office until
his successor is appointed and qualified by subscribing to an oath that he will faithfully
and impartially perform the duties of this office. A member of the commission shall be
chairman of the commission during the last year of the term for which he is appointed. All
members of any such existing commission shall remain in office until the expiration of
their respective terms and until the appointment and qualification of their successors in
deleted text end deleted text begin office. The commission shall meet at least twice each month. Special meetings may be
called by the chairman of the commission, and in addition, a majority of the members may
call a special meeting by giving two days' written mailed notice thereof to all members who
have not joined in the request for such special meeting. Two members of said commission
constitute a quorum.
deleted text end new text begin The commission shall consist of five members appointed by the city
council. The three members serving on the effective date of this section shall continue
in office until their terms expire and their successors have been appointed and qualified.
The council shall appoint two additional members, one to serve for two years and one to
serve for three years. Thereafter, each member shall serve a three-year term and until the
member's successor is appointed and qualified. To be qualified, a member must take an
oath that the member will faithfully and impartially perform the duties of the office. The
commission shall elect a member to serve as chair of the commission at the first commission
meeting in April each year. A member may not serve as chair for two consecutive years.
The commission shall meet at least twice each month. Special meetings may be called by
the chair, and, in addition, a majority of the commission may call a special meeting by
giving two days' written notice sent by first class mail to each member that did not join in
the request for the special meeting. Three members of the commission constitute a quorum.
new text end

new text begin LOCAL APPROVAL. new text end

new text begin This section is effective the day after the Hibbing City
Council and the city's chief clerical officer timely complete compliance with Minnesota
Statutes, section 645.021, subdivisions 2 and 3.
new text end

Sec. 3. new text beginCITY OF HIBBING; CHANGING WARD SYSTEM; ADOPTING
OPTIONAL PLAN A.
new text end

new text begin Subdivision 1. new text end

new text begin Abolishing existing ward system. new text end

new text begin Notwithstanding Minnesota
Statutes, section 414.031, subdivision 4a, paragraph (d), the ward system for the election
of council persons that was established by the Order in the Matter of the Joint Resolution
of the Town of Stuntz and the City of Hibbing for Annexation of the Town of Stuntz to the
City of Hibbing, dated July 25, 1979, is abolished.
new text end

new text begin Subd. 2. new text end

new text begin Plan of government; council members; wards. new text end

new text begin (a) The city of Hibbing
must operate under the Optional Plan A form of government. Notwithstanding Minnesota
Statutes, section 412.551, no referendum is required. The council must consist of a
mayor and six council members. Two council members are elected at-large and four
council members are elected by ward. The mayor and council members serve staggered,
four-year terms.
new text end

new text begin (b) The city council shall, by ordinance, define the ward boundaries for new wards 1,
2, 3, and 4. The wards must comply with the requirements of Minnesota Statutes, section
205.84. The city council shall hold a public hearing on the proposed ordinance before its
adoption. The city clerk must publish notice in the official newspaper one week before
the hearing. The ordinance shall be published no earlier than 90 days before the primary
election in 2018 and no later than on the date of the primary election in 2018. The ordinance
shall be effective on the date of publication in the official newspaper of the city of Hibbing.
new text end

new text begin Subd. 3. new text end

new text begin Transition. new text end

new text begin (a) The city clerk-treasurer serving in office on the effective
date of this act shall complete the term. The clerk-treasurer position shall become an
appointed position when the term expires or the clerk-treasurer chooses to leave office,
whichever is sooner.
new text end

new text begin (b) The members in office on the effective date of this act shall finish the terms to
which the members were elected. The mayor, one at-large council member, and council
members for wards 1 and 2 shall be elected in 2018 and serve four-year terms. One at-large
council member and council members for wards 3 and 4 shall be elected in 2018 and serve
two-year terms. Thereafter, the mayor and all council members shall serve four-year terms.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day after the governing body of
the city of Hibbing and its chief clerical officer timely complete their compliance with
Minnesota Statutes, section 645.021, subdivisions 2 and 3.
new text end