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Minnesota Legislature

Office of the Revisor of Statutes

SF 550

2nd Unofficial Engrossment - 86th Legislature (2009 - 2010) Posted on 12/26/2012 11:17pm

KEY: stricken = removed, old language.
underscored = added, new language.
1.1A bill for an act
1.2relating to energy; modifying or adding provisions relating to renewable energy
1.3production incentives and initiatives, C-BED contracts, renewable energy
1.4purchases, certain appraisal fees, energy conservation, utility costs and refunds,
1.5renewable and high-efficiency energy rate options, solar energy, utility energy
1.6savings, renewable residential heating, biomethane purchases, Sustainable
1.7Building 2030, power purchase agreements, power transmission, certificate
1.8of need exemptions, energy facilities, renewable development account, the
1.9reliability administrator, wind energy conversion systems, and Mountain
1.10Iron Economic Development Authority; requiring legislative reports and
1.11proposals; appropriating money;amending Minnesota Statutes 2008, sections
1.12116C.779, subdivision 2, by adding a subdivision; 117.189; 117.225; 216B.16,
1.13subdivision 6c, by adding a subdivision; 216B.1612, by adding a subdivision;
1.14216B.1645, subdivision 2a; 216B.169, subdivision 2; 216B.1691, subdivision
1.152a; 216B.23, by adding a subdivision; 216B.241, subdivisions 1c, 9, by adding
1.16subdivisions; 216B.2411, subdivisions 1, 2; 216B.2424, subdivision 5a;
1.17216B.243, subdivisions 8, 9; 216C.052, subdivision 2; 216C.41, subdivision 5a;
1.18216F.01, subdivisions 2, 3; 216F.012; 216F.02; 216F.08; proposing coding for
1.19new law in Minnesota Statutes, chapters 216B; 216C; repealing Laws 2007,
1.20chapter 3, section 3.
1.21BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.22    Section 1. Minnesota Statutes 2008, section 116C.779, subdivision 2, is amended to
1.23read:
1.24    Subd. 2. Renewable energy production incentive. (a) Until January 1, 2018 2021,
1.25up to $10,900,000 annually must be allocated from available funds in the account to
1.26fund renewable energy production incentives. $9,400,000 of this annual amount is for
1.27incentives for up to 200 megawatts of electricity generated by wind energy conversion
1.28systems that are eligible for the incentives under section 216C.41 or Laws 2005, chapter
1.2940.
2.1(b) The balance of this amount, up to $1,500,000 annually, may be used for
2.2production incentives for on-farm biogas recovery facilities and hydroelectric facilities
2.3that are eligible for the incentive under section 216C.41 or for production incentives for
2.4other renewables, to be provided in the same manner as under section 216C.41.
2.5(c) Any funds allocated to incentive payments for wind energy conversion systems
2.6under paragraph (a) that are not expended for that purpose must be allocated to incentive
2.7payments under paragraph (b) if necessary to fully pay eligible claims for incentive
2.8payments to qualified on-farm biogas recovery facilities and hydroelectric facilities.
2.9(d) If funds allocated in calendar year 2010 under paragraphs (b) and (c) are
2.10insufficient to fully pay eligible claims for incentive payments to qualified on-farm biogas
2.11recovery facilities and hydroelectric facilities, up to $500,000 of additional funds in the
2.12renewable development account must be allocated to make up the insufficiency.
2.13(e) Any portion of the $10,900,000 not expended in any calendar year for the
2.14incentive is available for other spending purposes under this section. This subdivision
2.15does not create an obligation to contribute funds to the account.
2.16(b) (f) The Department of Commerce shall determine eligibility of projects under
2.17section 216C.41 for the purposes of this subdivision. At least quarterly, the Department of
2.18Commerce shall notify the public utility of the name and address of each eligible project
2.19owner and the amount due to each project under section 216C.41. The public utility shall
2.20make payments within 15 working days after receipt of notification of payments due.

2.21    Sec. 2. Minnesota Statutes 2008, section 116C.779, is amended by adding a subdivision
2.22to read:
2.23    Subd. 3. Initiative for Renewable Energy and the Environment (a) Beginning
2.24July 1, 2011, and each July 1 thereafter, $5,000,000 must be allocated from the renewable
2.25development account to fund a grant to the Board of Regents of the University of
2.26Minnesota for the Initiative for Renewable Energy and the Environment for the purposes
2.27described in paragraph (b). The Initiative for Renewable Energy and the Environment
2.28must set aside at least 15 percent of the funds received annually under the grant for
2.29qualified projects conducted at a rural campus or experiment station. Any set-aside funds
2.30not awarded to a rural campus or experiment station at the end of the fiscal year revert
2.31back to the Initiative for Renewable Energy and the Environment for its exclusive use.
2.32This subdivision does not create an obligation to contribute funds to the account.
2.33(b) Activities funded under this grant may include, but are not limited to:
2.34(1) environmentally sound production of energy from a renewable energy source,
2.35including biomass and agricultural crops;
3.1(2) environmentally sound production of hydrogen from biomass and any other
3.2renewable energy source for energy storage and energy utilization;
3.3(3) development of energy conservation and efficient energy utilization technologies;
3.4(4) energy storage technologies; and
3.5(5) analysis of policy options to facilitate adoption of technologies that use or
3.6produce low-carbon renewable energy.
3.7(c) For the purposes of this subdivision:
3.8(1) "biomass" means plant and animal material, agricultural and forest residues,
3.9mixed municipal solid waste, and sludge from wastewater treatment; and
3.10(2) "renewable energy source" means hydro, wind, solar, biomass, and geothermal
3.11energy, and microorganisms used as an energy source.
3.12"(d) Beginning January 15 of 2011, and each year thereafter, the director of the
3.13Initiative for Renewable Energy and the Environment at the University of Minnesota
3.14shall submit a report to the chair and ranking minority members of the senate and house
3.15committees with primary jurisdiction over energy finance describing the activities
3.16conducted during the previous year funded under this subdivision.

3.17    Sec. 3. Minnesota Statutes 2008, section 117.189, is amended to read:
3.18117.189 PUBLIC SERVICE CORPORATION EXCEPTIONS.
3.19(a) Sections 117.031; 117.036; 117.055, subdivision 2, paragraph (b); 117.186;
3.20117.187 ; 117.188; and 117.52, subdivisions 1a and 4, do not apply to public service
3.21corporations. For purposes of an award of appraisal fees under section 117.085, the fees
3.22awarded may not exceed $500 $1,500 for all types of property.
3.23(b) Paragraph (a) does not apply to a public service corporation's use of eminent
3.24domain for a high-voltage transmission line.

3.25    Sec. 4. Minnesota Statutes 2008, section 117.225, is amended to read:
3.26117.225 EASEMENT DISCHARGE.
3.27Whenever claiming that an easement acquired by condemnation is not being used for
3.28the purposes for which it was acquired, the underlying fee owner may apply to the district
3.29court of the county in which the land is situated for an order discharging the easement,
3.30upon such terms as are just and equitable. Due notice of said application shall be given to
3.31all interested parties. Provided, however, This section shall does not apply to easements,
3.32other than easements for a high-voltage transmission line, acquired by condemnation by a
3.33public service corporation now or hereafter doing business in the state of Minnesota.

4.1    Sec. 5. Minnesota Statutes 2008, section 216B.16, subdivision 6c, is amended to read:
4.2    Subd. 6c. Incentive plan for energy conservation improvement. (a) The
4.3commission may order public utilities to develop and submit for commission approval
4.4incentive plans that describe the method of recovery and accounting for utility
4.5conservation expenditures and savings. In developing the incentive plans the commission
4.6shall ensure the effective involvement of interested parties.
4.7(b) In approving incentive plans, the commission shall consider:
4.8(1) whether the plan is likely to increase utility investment in cost-effective energy
4.9conservation;
4.10(2) whether the plan is compatible with the interest of utility ratepayers and other
4.11interested parties;
4.12(3) whether the plan links the incentive to the utility's performance in achieving
4.13cost-effective conservation; and
4.14(4) whether the plan is in conflict with other provisions of this chapter.
4.15(c) The commission may set rates to encourage the vigorous and effective
4.16implementation of utility conservation programs. The commission may:
4.17(1) increase or decrease any otherwise allowed rate of return on net investment based
4.18upon the utility's skill, efforts, and success in conserving energy;
4.19(2) share between ratepayers and utilities the net savings resulting from energy
4.20conservation programs to the extent justified by the utility's skill, efforts, and success in
4.21conserving energy; and
4.22(3) compensate the utility for earnings lost as a result of its conservation programs
4.23adopt any mechanism that satisfies the criteria of this subdivision.
4.24(d) In its review under section 216B.241, subdivision 2c, the commission shall
4.25provide an incentive that makes effective implementation of cost-effective conservation
4.26the most profitable resource choice for public utilities.

4.27    Sec. 6. Minnesota Statutes 2008, section 216B.16, is amended by adding a subdivision
4.28to read:
4.29    Subd. 7d. University Avenue light rail transit utility zone cost adjustment. (a)
4.30"University Avenue light rail transit utility zone" or "utility zone" means an area extending
4.31no more than one-half mile on either side of the route for the planned light rail transit
4.32system connecting the cities of Minneapolis and St. Paul along University Avenue.
4.33(b) A public utility that provides retail electric service within the utility zone,
4.34and which is required to replace, relocate, construct, or install facilities because of the
4.35mass transit system, may apply to the commission for approval of new facilities in the
5.1utility zone. Facilities proposed under this subdivision are not limited to those facilities
5.2that actually replace dislocated facilities and may include any transmission facilities,
5.3distribution facilities, generation facilities, advanced technology-assisted efficiency
5.4devices, and energy storage facilities within the utility zone. Upon approval under
5.5paragraph (c), the utility may construct and install the facilities.
5.6(c) The commission may approve the construction and installation of facilities in a
5.7mass transit utility zone proposed by a utility under paragraph (b) upon a finding:
5.8(1) that the facilities:
5.9(i) are necessary to provide electric service;
5.10(ii) assist future development of renewable energy, conservation, electric vehicles, or
5.11advanced technology-assisted efficiency programs and devices; or
5.12(iii) are exploratory, experimental, or research facilities to advance the use of
5.13renewable energy, conservation, electric vehicles, or advanced technology-assisted
5.14efficiency programs and devices;
5.15(2) that the utility has engaged in a cooperative process with affected local and state
5.16government agencies in the design, planning, or construction of the utility zone project
5.17and changes to utility facilities;
5.18(3) that the utility and local units of government have made reasonable efforts to seek
5.19federal, state, or private funds that may be available to mass transit and energy projects;
5.20(4) that the utility has made reasonable efforts to minimize the costs and maximize
5.21the value to customers of the facilities;
5.22(5) that the utility has a plan to offer a comprehensive array of programs for
5.23residential, commercial, and industrial customers located within the mass transit zone;
5.24(6) that the utility direct existing and planned solar energy programs to develop solar
5.25energy along the mass transit utility zone; and
5.26(7) that the utility has made reasonable efforts to apply for federal funds to develop
5.27technology-assisted efficiency programs and devices within the mass transit utility zone.
5.28(d) Notwithstanding any other provision of this chapter, the commission may approve
5.29a tariff mechanism for automatic adjustment of charges for new, replaced, or relocated
5.30facilities installed under this subdivision in a manner consistent with this subdivision and
5.31the standards and procedures contained in subdivision 7b, except that no approval under
5.32section 216B.243 or certification under section 216B.2425 is required unless otherwise
5.33required by law. This section does not authorize a city-requested facilities surcharge.
5.34(e) For the purpose of this subdivision, "technology-assisted efficiency programs and
5.35devices" includes, but is not limited to, infrastructure that integrates digital information and
5.36controls technology to improve the reliability, security, and efficiency of the electric grid.

6.1    Sec. 7. Minnesota Statutes 2008, section 216B.1612, is amended by adding a
6.2subdivision to read:
6.3    Subd. 10. Certification of compliance for C-BED projects. Beginning February
6.41, 2010, and each year thereafter, each qualifying owner of a C-BED project must
6.5certify to the commissioner in writing that the qualifying owner is in compliance with
6.6the requirements of this section.
6.7EFFECTIVE DATE.This section is effective the day following final enactment.

6.8    Sec. 8. Minnesota Statutes 2008, section 216B.1612, is amended by adding a
6.9subdivision to read:
6.10    Subd. 10. Certification of residency for C-BED projects. Beginning February 1,
6.112010, and each year thereafter, each qualifying owner of a C-BED project must certify
6.12to the commissioner in writing that the qualifying owner is in compliance with the
6.13requirements of subdivision 2, paragraph (c).
6.14EFFECTIVE DATE.This section is effective the day following final enactment.

6.15    Sec. 9. [216B.1613] STANDARDIZED C-BED CONTRACT.
6.16(a) Within 60 days of the effective date of this section, the commission shall initiate
6.17a proceeding to standardize all contract provisions, except those establishing the power
6.18purchase price, for two classes of C-BED projects:
6.19(1) projects with a nameplate capacity of five megawatts or less; and
6.20(2) projects with a nameplate capacity of greater than five megawatts.
6.21    (b) The proceeding shall provide for participation by the public and stakeholders.
6.22The commission shall issue an order containing standardized contract language for each
6.23class of C-BED project identified in this section no later than 90 days after the opening of
6.24the proceeding. The standardized contract form must be similar in all material respects to
6.25the standard contract form previously filed with the commission under section 216B.2423,
6.26subdivision 3, including any revisions to that contract on file with the commission as of
6.27the effective date of this section. Any applicable C-BED contract signed after the date of
6.28the commission's order whose provisions are not identical to the standardized contract
6.29contained in the commission's order is invalid.
6.30EFFECTIVE DATE.This section is effective the day following final enactment.

6.31    Sec. 10. [216B.1614] SMALL RENEWABLE PROJECTS PURCHASE.
7.1Between the effective date of this section and December 31, 2010, electric utilities,
7.2as defined in section 216B.1691, subdivision 1, paragraph (b), must purchase or contract to
7.3purchase energy from a sufficient number of renewable energy projects with a nameplate
7.4capacity of five megawatts or less so as to total at least 200 megawatts in the aggregate.
7.5Such projects must be constructed or under construction by December 31, 2010, and must
7.6meet the eligibility requirements for a renewable energy incentive under the American
7.7Recovery and Reinvestment Act of 2009, the federal Rural Energy for America Program,
7.8or other renewable energy incentive program. Before December 31, 2010, an electric
7.9utility must undertake such projects in approximate proportion to its share of the total
7.10amount of electrical energy sold within this state. This requirement does not prevent an
7.11electric utility from developing or acquiring electrical energy from other sources either
7.12within or outside the state regardless of whether such sources use renewable energy. No
7.13person may participate financially in more than one project that counts towards the 200
7.14megawatt requirement established in this section.

7.15    Sec. 11. Minnesota Statutes 2008, section 216B.1645, subdivision 2a, is amended to
7.16read:
7.17    Subd. 2a. Cost recovery for utility's renewable facilities. (a) A utility may petition
7.18the commission to approve a rate schedule that provides for the automatic adjustment of
7.19charges to recover prudently incurred investments, expenses, or costs associated with
7.20facilities constructed, owned, or operated by a utility to satisfy the requirements of section
7.21216B.1691 , provided those facilities were previously approved by the commission under
7.22section 216B.2422 or 216B.243, or were determined by the commission to be reasonable
7.23and prudent under section 216B.243, subdivision 9. For a facility not subject to review
7.24by the commission under section 216B.2422 or 216B.243, a utility shall first petition
7.25the commission to determine the utility's eligibility to apply for cost recovery for the
7.26facility under this section. The commission may approve, or approve as modified, a
7.27rate schedule that:
7.28    (1) allows a utility to recover directly from customers on a timely basis the costs of
7.29qualifying renewable energy projects, including:
7.30    (i) return on investment;
7.31    (ii) depreciation;
7.32    (iii) ongoing operation and maintenance costs;
7.33    (iv) taxes; and
8.1    (v) costs of transmission and other ancillary expenses directly allocable to
8.2transmitting electricity generated from a project meeting the specifications of this
8.3paragraph;
8.4    (2) provides a current return on construction work in progress, provided that recovery
8.5of these costs from Minnesota ratepayers is not sought through any other mechanism;
8.6    (3) allows recovery of other expenses incurred that are directly related to a
8.7renewable energy project, including expenses for energy storage, provided that the
8.8utility demonstrates to the commission's satisfaction that the expenses improve project
8.9economics, ensure project implementation, advance research and understanding of how
8.10storage devices may improve renewable energy projects, or facilitate coordination with
8.11the development of transmission necessary to transport energy produced by the project
8.12to market;
8.13    (4) allocates recoverable costs appropriately between wholesale and retail customers;
8.14    (5) terminates recovery when costs have been fully recovered or have otherwise
8.15been reflected in a utility's rates.
8.16    (b) A petition filed under this subdivision must include:
8.17    (1) a description of the facilities for which costs are to be recovered;
8.18    (2) an implementation schedule for the facilities;
8.19    (3) the utility's costs for the facilities;
8.20    (4) a description of the utility's efforts to ensure that costs of the facilities are
8.21reasonable and were prudently incurred; and
8.22    (5) a description of the benefits of the project in promoting the development of
8.23renewable energy in a manner consistent with this chapter.

8.24    Sec. 12. Minnesota Statutes 2008, section 216B.169, subdivision 2, is amended to read:
8.25    Subd. 2. Renewable and high-efficiency energy rate options. (a) Each A
8.26utility shall may offer its customers, and shall advertise the offer at least annually,
8.27one or more options that allow a customer to determine that a certain amount of the
8.28electricity generated or purchased on behalf of the customer is renewable energy or energy
8.29generated by high-efficiency, low-emissions, distributed generation such as fuel cells and
8.30microturbines fueled by a renewable fuel.
8.31(b) Each public utility shall file an implementation plan within 90 days of July 1,
8.322001, to implement paragraph (a).
8.33(c) (b) Rates charged to customers must be calculated using the utility's cost of
8.34acquiring the energy for the customer and must:
9.1(1) reflect the difference between the cost of generating or purchasing the
9.2additional renewable energy and the cost of generating or purchasing the same amount
9.3of nonrenewable energy and the cost that would otherwise be attributed to the customer
9.4for the same amount of energy based on the utility's mix of renewable and nonrenewable
9.5energy sources; and
9.6(2) be distributed on a per kilowatt-hour basis among all customers who choose to
9.7participate in the program.
9.8(d) Implementation of these rate options may reflect a reasonable amount of
9.9lead time necessary to arrange acquisition of the energy. The utility may acquire the
9.10energy demanded by customers, in whole or in part, through procuring or generating the
9.11renewable energy directly, or through the purchase of credits from a provider that has
9.12received certification of eligible power supply pursuant to subdivision 3. If a utility is not
9.13able to arrange an adequate supply of renewable or high-efficiency energy to meet its
9.14customers' demand under this section, the utility must file a report with the commission
9.15detailing its efforts and reasons for its failure.
9.16EFFECTIVE DATE.This section is effective the day following final enactment.

9.17    Sec. 13. Minnesota Statutes 2008, section 216B.1691, subdivision 2a, is amended to
9.18read:
9.19    Subd. 2a. Eligible energy technology standard. (a) Except as provided in
9.20paragraph (b), each electric utility shall generate or procure sufficient electricity generated
9.21by an eligible energy technology to provide its retail customers in Minnesota, or the
9.22retail customers of a distribution utility to which the electric utility provides wholesale
9.23electric service, so that at least the following standard percentages of the electric utility's
9.24total retail electric sales to retail customers in Minnesota are generated by eligible energy
9.25technologies by the end of the year indicated:
9.26
(1)
2012
12 percent
9.27
(2)
2016
17 percent
9.28
(3)
2020
20 percent
9.29
(4)
2025
25 percent.
9.30    (b) An electric utility that owned a nuclear generating facility as of January 1, 2007,
9.31must meet the requirements of this paragraph rather than paragraph (a). An electric utility
9.32subject to this paragraph must generate or procure sufficient electricity generated by
9.33an eligible energy technology to provide its retail customers in Minnesota or the retail
9.34customer of a distribution utility to which the electric utility provides wholesale electric
9.35service so that at least the following percentages of the electric utility's total retail electric
10.1sales to retail customers in Minnesota are generated by eligible energy technologies by the
10.2end of the year indicated:
10.3
(1)
2010
15 percent
10.4
(2)
2012
18 percent
10.5
(3)
2016
25 percent
10.6
(4)
2020
30 percent.
10.7Of the 30 percent in 2020, at least 25 percent must be generated by wind or solar
10.8energy conversion systems and the remaining five percent by other eligible energy
10.9technology.

10.10    Sec. 14. Minnesota Statutes 2008, section 216B.23, is amended by adding a
10.11subdivision to read:
10.12    Subd. 1a. Authority to issue refund. (a) On determining that a public utility has
10.13charged a rate in violation of this chapter, a commission rule, or a commission order, the
10.14commission, after conducting a proceeding, may require the public utility to refund to its
10.15customers, in a manner approved by the commission, any revenues the commission finds
10.16were collected as a result of the unlawful conduct. Any refund authorized by this section
10.17is permitted in addition to any remedies authorized by section 216B.16 or any other law
10.18governing rates. Exercising authority under this section does not preclude the commission
10.19from pursuing penalties under sections 216B.57 to 216B.61 for the same conduct.
10.20(b) This section must not be construed as allowing:
10.21(1) retroactive ratemaking;
10.22(2) refunds based on claims that prior or current approved rates have been unjust,
10.23unreasonable, unreasonably preferential, discriminatory, insufficient, inequitable, or
10.24inconsistent in application to a class of customers; or
10.25(3) refunds based on claims that approved rates have not encouraged energy
10.26conservation or renewable energy use, or have not furthered the goals of section 216B.164,
10.27216B.241, or 216C.05.
10.28    (c) A refund under this subdivision does not apply to revenues collected more than
10.29six years before the date of the notice of the commission proceeding required under this
10.30subdivision.

10.31    Sec. 15. Minnesota Statutes 2008, section 216B.241, subdivision 1c, is amended to
10.32read:
11.1    Subd. 1c. Energy-saving goals. (a) The commissioner shall establish energy-saving
11.2goals for energy conservation improvement expenditures and shall evaluate an energy
11.3conservation improvement program on how well it meets the goals set.
11.4    (b) Each individual utility and association shall have an annual energy-savings
11.5goal equivalent to 1.5 percent of gross annual retail energy sales unless modified by the
11.6commissioner under paragraph (d). The savings goals must be calculated based on the
11.7most recent three-year weather normalized average. A utility or association may elect to
11.8carry forward energy savings in excess of 1.5 percent for a year to the succeeding three
11.9calendar years, provided that a particular energy savings can apply only to one year's goal.
11.10    (c) The commissioner must adopt a filing schedule that is designed to have all
11.11utilities and associations operating under an energy-savings plan by calendar year 2010.
11.12    (d) In its energy conservation improvement plan filing, a utility or association may
11.13request the commissioner to adjust its annual energy-savings percentage goal based on
11.14its historical conservation investment experience, customer class makeup, load growth,
11.15a conservation potential study, or other factors the commissioner determines warrants
11.16an adjustment. The commissioner may not approve a plan that provides for an annual
11.17energy-savings goal of less than one percent of gross annual retail energy sales from
11.18energy conservation improvements.
11.19A utility or association may include in its energy conservation plan energy savings
11.20from electric utility infrastructure projects approved by the commission under section
11.21216B.1636 or waste heat recovery converted into electricity projects that may count as
11.22energy savings in addition to the minimum energy-savings goal of at least one percent for
11.23energy conservation improvements. Electric utility infrastructure projects must result in
11.24increased energy efficiency greater than that which would have occurred through normal
11.25maintenance activity.
11.26    (e) An energy-savings goal is not satisfied by attaining the revenue expenditure
11.27requirements of subdivisions 1a and 1b, but can only be satisfied by meeting the
11.28energy-savings goal established in this subdivision.
11.29    (f) An association or utility is not required to make energy conservation investments
11.30to attain the energy-savings goals of this subdivision that are not cost-effective even
11.31if the investment is necessary to attain the energy-savings goals. For the purpose of
11.32this paragraph, in determining cost-effectiveness, the commissioner shall consider the
11.33costs and benefits to ratepayers, the utility, participants, and society. In addition, the
11.34commissioner shall consider the rate at which an association or municipal utility is
11.35increasing its energy savings and its expenditures on energy conservation.
12.1    (g) On an annual basis, the commissioner shall produce and make publicly available
12.2a report on the annual energy savings and estimated carbon dioxide reductions achieved
12.3by the energy conservation improvement programs for the two most recent years for
12.4which data is available. The commissioner shall report on program performance both in
12.5the aggregate and for each entity filing an energy conservation improvement plan for
12.6approval or review by the commissioner.
12.7    (h) By January 15, 2010, the commissioner shall report to the legislature whether
12.8the spending requirements under subdivisions 1a and 1b are necessary to achieve the
12.9energy-savings goals established in this subdivision.
12.10EFFECTIVE DATE.This section is effective the day following final enactment.

12.11    Sec. 16. Minnesota Statutes 2008, section 216B.241, is amended by adding a
12.12subdivision to read:
12.13    Subd. 2d. Renewable residential heating. (a) Up to five percent of a utility's
12.14conservation spending obligation under subdivision 1a or any amount expended in order
12.15to satisfy a utility's energy-savings goal under subdivision 1c may be used for a project
12.16located in this state that provides rebates to homeowners who install the following types of
12.17projects to heat the homeowner's primary residence:
12.18(1) a solar thermal project, as defined in section 216B.2411, subdivision 2, paragraph
12.19(e);
12.20(2) a geothermal project;
12.21(3) a heating unit that burns exclusively either biodiesel, shelled corn, or wood chips
12.22or wood pellets, provided that the heating unit is listed by Underwriters Laboratories.
12.23    (b) A rebate awarded under this subdivision must not exceed the lesser of 25 percent
12.24of the purchase and installation costs of the project or $500.
12.25EFFECTIVE DATE.This section is effective the day following final enactment.

12.26    Sec. 17. Minnesota Statutes 2008, section 216B.241, is amended by adding a
12.27subdivision to read:
12.28    Subd. 5b. Biomethane purchases. (a) A natural gas utility may include in its
12.29conservation plan purchases of biomethane, and may use up to five percent of the total
12.30amount to be spent on energy conservation improvements under this section for that
12.31purpose. The cost-effectiveness of biomethane purchases may be determined by a
12.32different standard than for other energy conservation improvements under this section if
12.33the commissioner determines that doing so is in the public interest in order to encourage
13.1biomethane purchases. Energy savings from purchasing biomethane may not be counted
13.2toward the minimum energy-savings goal of at least one percent for energy conservation
13.3improvements required under subdivision 1c, but may, if the conservation plan is approved:
13.4(1) be counted toward energy savings above that minimum percentage; and
13.5(2) be considered when establishing performance incentives under subdivision 2c.
13.6(b) For the purposes of this subdivision, "biomethane" means biogas produced
13.7through anaerobic digestion of biomass, gasification of biomass, or other effective
13.8conversion processes, that is cleaned and purified into biomethane that meets natural gas
13.9utility quality specifications for use in a natural gas utility distribution system.
13.10EFFECTIVE DATE.This section is effective the day following final enactment.

13.11    Sec. 18. Minnesota Statutes 2008, section 216B.241, subdivision 9, is amended to read:
13.12    Subd. 9. Building performance standards; Sustainable Building 2030. (a) The
13.13purpose of this subdivision is to establish cost-effective energy-efficiency performance
13.14standards for new and substantially reconstructed commercial, industrial, and institutional
13.15buildings that can significantly reduce carbon dioxide emissions by lowering energy use in
13.16new and substantially reconstructed buildings. For the purposes of this subdivision, the
13.17establishment of these standards may be referred to as Sustainable Building 2030.
13.18    (b) The commissioner shall contract with the Center for Sustainable Building
13.19Research at the University of Minnesota to coordinate development and implementation
13.20of energy-efficiency performance standards, strategic planning, research, data analysis,
13.21technology transfer, training, and other activities related to the purpose of Sustainable
13.22Building 2030. The commissioner and the Center for Sustainable Building Research
13.23shall, in consultation with utilities, builders, developers, building operators, and experts
13.24in building design and technology, develop a Sustainable Building 2030 implementation
13.25plan that must address, at a minimum, the following issues:
13.26    (1) training architects to incorporate the performance standards in building design;
13.27    (2) incorporating the performance standards in utility conservation improvement
13.28programs; and
13.29    (3) developing procedures for ongoing monitoring of energy use in buildings that
13.30have adopted the performance standards.
13.31The plan must be submitted to the chairs and ranking minority members of the senate and
13.32house of representatives committees with primary jurisdiction over energy policy by
13.33July 1, 2009.
14.1    (c) Sustainable Building 2030 energy-efficiency performance standards must be firm,
14.2quantitative measures of total building energy use and associated carbon dioxide emissions
14.3per square foot for different building types and uses, that allow for accurate determinations
14.4of a building's conformance with a performance standard. The energy-efficiency
14.5performance standards must be updated every three or five years to incorporate all
14.6cost-effective measures. The performance standards must reflect the reductions in carbon
14.7dioxide emissions per square foot resulting from actions taken by utilities to comply
14.8with the renewable energy standards in section 216B.1691. The performance standards
14.9should be designed to achieve reductions equivalent to the following reduction schedule,
14.10measured against energy consumption by an average building in each applicable building
14.11sector in 2003: (1) 60 percent in 2010; (2) 70 percent in 2015; (3) 80 percent in 2020;
14.12and (4) 90 percent in 2025. A performance standard must not be established or increased
14.13absent a conclusive engineering analysis that it is cost-effective based upon established
14.14practices used in evaluating utility conservation improvement programs.
14.15    (d) The annual amount of the contract with the Center for Sustainable Building
14.16Research is up to $500,000. The Center for Sustainable Building Research shall expend
14.17no more than $150,000 of this amount each year on administration, coordination, and
14.18oversight activities related to Sustainable Building 2030. The balance of contract funds
14.19must be spent on substantive programmatic activities allowed under this subdivision
14.20that may be conducted by the Center for Sustainable Building Research and for
14.21subcontracts with not-for-profit energy organizations, architecture and engineering firms,
14.22and other qualified entities to undertake technical projects and activities in support of
14.23Sustainable Building 2030. The primary work to be accomplished each year by qualified
14.24technical experts under subcontracts is the development and thorough justification of
14.25recommendations for specific energy-efficiency performance standards. Additional work
14.26may include:
14.27    (1) research, development, and demonstration of new energy-efficiency technologies
14.28and techniques suitable for commercial, industrial, and institutional buildings;
14.29    (2) analysis and evaluation of practices in building design, construction,
14.30commissioning and operations, and analysis and evaluation of energy use in the
14.31commercial, industrial, and institutional sectors;
14.32    (3) analysis and evaluation of the effectiveness and cost-effectiveness of Sustainable
14.33Building 2030 performance standards, conservation improvement programs, and building
14.34energy codes;
15.1    (4) development and delivery of training programs for architects, engineers,
15.2commissioning agents, technicians, contractors, equipment suppliers, developers, and
15.3others in the building industries; and
15.4    (5) analyze and evaluate the effect of building operations on energy use.
15.5    (e) The commissioner shall require utilities to develop and implement conservation
15.6improvement programs that are expressly designed to achieve energy efficiency goals
15.7consistent with the Sustainable Building 2030 performance standards. These programs
15.8must include offerings of design assistance and modeling, financial incentives, and the
15.9verification of the proper installation of energy-efficient design components in new and
15.10substantially reconstructed buildings. A utility's design assistance program must consider
15.11the strategic planting of trees and shrubs around buildings as an energy conservation
15.12strategy for the designed project. A utility making an expenditure under its conservation
15.13improvement program that results in a building meeting the Sustainable Building 2030
15.14performance standards may claim the energy savings toward its energy-savings goal
15.15established in subdivision 1c.
15.16    (f) The commissioner shall report to the legislature every three years, beginning
15.17January 15, 2010, on the cost-effectiveness and progress of implementing the Sustainable
15.18Building 2030 performance standards and shall make recommendations on the need to
15.19continue the program as described in this section.
15.20EFFECTIVE DATE.This section is effective the day following final enactment.

15.21    Sec. 19. Minnesota Statutes 2008, section 216B.2411, subdivision 1, is amended to
15.22read:
15.23    Subdivision 1. Generation projects. (a) Any municipality or rural electric
15.24association providing electric service and subject to section 216B.241 may, and each
15.25public utility may, use five percent of the total amount to be spent on energy conservation
15.26improvements under section 216B.241, on:
15.27    (1) projects in Minnesota to construct an electric generating facility that utilizes
15.28eligible renewable energy sources as defined in subdivision 2, such as methane or other
15.29combustible gases derived from the processing of plant or animal wastes, biomass fuels
15.30such as short-rotation woody or fibrous agricultural crops, or other renewable fuel, as
15.31its primary fuel source;
15.32    (2) projects in Minnesota to install a distributed generation facility of ten megawatts
15.33or less of interconnected capacity that is fueled by natural gas, renewable fuels, or another
15.34similarly clean fuel; or
16.1    (3) projects in Minnesota to install a qualifying solar energy project as defined in
16.2subdivision 2.
16.3    (b) A utility that offers a program to customers to promote installing qualifying solar
16.4energy projects may request authority from the commissioner to exceed the five percent
16.5limit in paragraph (a) to meet customer demand for installation of qualifying solar energy
16.6projects. In considering this request, the commissioner shall consider customer interest in
16.7qualifying solar energy and the impact on other customers.
16.8For public utilities, as defined under section 216B.02, subdivision 4, (c) For a utility
16.9subject to this section, projects under this section must be considered energy conservation
16.10improvements as defined in section 216B.241. For cooperative electric associations and
16.11municipal utilities, projects under this section must be considered load-management
16.12activities described in section 216B.241, subdivision 1.

16.13    Sec. 20. Minnesota Statutes 2008, section 216B.2411, subdivision 2, is amended to
16.14read:
16.15    Subd. 2. Definitions. (a) For the purposes of this section, the terms defined in this
16.16subdivision and section 216B.241, subdivision 1, have the meanings given them.
16.17    (b) "Eligible renewable energy sources" means fuels and technologies to generate
16.18electricity through the use of any of the resources listed in section 216B.1691, subdivision
16.191
, paragraph (a), except that the incineration of wastewater sludge is not an eligible
16.20renewable energy source, "biomass" has the meaning provided under paragraph (c), and
16.21"solar" must be from a qualified solar energy project as defined in paragraph (d).
16.22    (c) "Biomass" includes:
16.23    (1) methane or other combustible gases derived from the processing of plant or
16.24animal material;
16.25    (2) alternative fuels derived from soybean and other agricultural plant oils or animal
16.26fats;
16.27    (3) combustion of barley hulls, corn, soy-based products, or other agricultural
16.28products;
16.29    (4) wood residue from the wood products industry in Minnesota or other wood
16.30products such as short-rotation woody or fibrous agricultural crops;
16.31    (5) landfill gas;
16.32(6) the predominantly organic components of wastewater effluent, sludge, or related
16.33byproducts from publicly owned treatment works; and
16.34(7) mixed municipal solid waste, and refuse-derived fuel from mixed municipal
16.35solid waste.
17.1    (d) "Qualifying solar energy project" means a qualifying solar thermal project or
17.2qualifying solar electric project.
17.3    (e) "Qualifying solar thermal project" means a flat plate or evacuated tube that meets
17.4the requirements of section 216C.25 with a fixed orientation that collects the sun's radiant
17.5energy and transfers it to a storage medium for distribution as energy to heat or cool air or
17.6water, but does not include equipment used to heat water at a residential property (1) for
17.7domestic use if less than one-half of the energy used for that purpose is derived from the
17.8sun or (2) for use in a hot tub or swimming pool.
17.9    (f) "Qualifying solar electric project" means:
17.10(1) solar electric equipment that: (i) meets the requirements of section 216C.25
17.11with a total; (ii) has a peak generating capacity of 100 kilowatts or less; and (iii) is
17.12used for generating to generate electricity primarily for use in a residential property or
17.13small business to reduce the effective electric load for that residence or small business,
17.14commercial, or publicly owned building or facility; and
17.15(2) if applicable, equipment that is used to store the electricity generated by a
17.16qualified solar electric project under clause (1) and that is located proximate to the
17.17building or facility using the electricity.
17.18    (g) "Residential property building" means the principal residence of a homeowner at
17.19the time the solar equipment is placed in service.
17.20    (h) "Small business" has the meaning given to it in section 645.445.
17.21EFFECTIVE DATE.This section is effective the day following final enactment.

17.22    Sec. 21. Minnesota Statutes 2008, section 216B.2424, subdivision 5a, is amended to
17.23read:
17.24    Subd. 5a. Reduction of biomass mandate. (a) Notwithstanding subdivision 5, the
17.25biomass electric energy mandate must be reduced from 125 megawatts to 110 megawatts.
17.26(b) The Public Utilities Commission shall approve a request pending before the
17.27commission as of May 15, 2003, for amendments to and assignment of a power purchase
17.28agreement with the owner of a facility that uses short-rotation, woody crops as its primary
17.29fuel previously approved to satisfy a portion of the biomass mandate if the owner of
17.30the project agrees to reduce the size of its project from 50 megawatts to 35 megawatts,
17.31while maintaining an average price for energy in nominal dollars measured over the term
17.32of the power purchase agreement at or below $104 per megawatt-hour, exclusive of any
17.33price adjustments that may take effect subsequent to commission approval of the power
17.34purchase agreement, as amended. The commission shall also approve, as necessary, any
17.35subsequent assignment or sale of the power purchase agreement or ownership of the
18.1project to an entity owned or controlled, directly or indirectly, by two municipal utilities
18.2located north of Constitutional Route No. 8, as described in section 161.114, which
18.3currently own electric and steam generation facilities using coal as a fuel and which
18.4propose to retrofit their existing municipal electrical generating facilities to utilize biomass
18.5fuels in order to perform the power purchase agreement.
18.6(c) If the power purchase agreement described in paragraph (b) is assigned to an
18.7entity that is, or becomes, owned or controlled, directly or indirectly, by two municipal
18.8entities as described in paragraph (b), and the power purchase agreement meets the
18.9price requirements of paragraph (b), the commission shall approve any amendments to
18.10the power purchase agreement necessary to reflect the changes in project location and
18.11ownership and any other amendments made necessary by those changes. The commission
18.12shall also specifically find that:
18.13(1) the power purchase agreement complies with and fully satisfies the provisions of
18.14this section to the full extent of its 35-megawatt capacity;
18.15(2) all costs incurred by the public utility and all amounts to be paid by the public
18.16utility to the project owner under the terms of the power purchase agreement are fully
18.17recoverable pursuant to section 216B.1645;
18.18(3) subject to prudency review by the commission, the public utility may recover
18.19from its Minnesota retail customers the Minnesota jurisdictional portion of the amounts
18.20that may be incurred and paid by the public utility during the full term of the power
18.21purchase agreement; and
18.22(4) if the purchase power agreement meets the requirements of this subdivision,
18.23it is reasonable and in the public interest.
18.24(d) The commission shall specifically approve recovery by the public utility of
18.25any and all Minnesota jurisdictional costs incurred by the public utility to improve,
18.26construct, install, or upgrade transmission, distribution, or other electrical facilities owned
18.27by the public utility or other persons in order to permit interconnection of the retrofitted
18.28biomass-fueled generating facilities or to obtain transmission service for the energy
18.29provided by the facilities to the public utility pursuant to section 216B.1645, and shall
18.30disapprove any provision in the power purchase agreement that requires the developer
18.31or owner of the project to pay the jurisdictional costs or that permit the public utility to
18.32terminate the power purchase agreement as a result of the existence of those costs or the
18.33public utility's obligation to pay any or all of those costs.
18.34(e) Upon request by the project owner, the public utility shall agree to amend the
18.35power purchase agreement described in paragraph (b) and approved by the commission
18.36as required by paragraph (c). The amendment must be negotiated and executed within
19.145 days of the effective date of this section and must apply to prices paid after January
19.21, 2009. The average price for energy in nominal dollars measured over the term of the
19.3power purchase agreement must not exceed $104 per megawatt hour by more than five
19.4percent. The public utility shall request approval of the amendment by the commission
19.5within 30 days of execution of the amended power purchase agreement. The amendment
19.6is not effective until approval by the commission. The commission shall act on the
19.7amendment within 90 days of submission of the request by the public utility. Upon
19.8approval of the amended power purchase agreement, the commission shall allow the
19.9public utility to recover the costs of the amended power purchase agreement, as provided
19.10in section 216B.1645.
19.11EFFECTIVE DATE.This section is effective the day following final enactment.

19.12    Sec. 22. Minnesota Statutes 2008, section 216B.243, subdivision 8, is amended to read:
19.13    Subd. 8. Exemptions. This section does not apply to:
19.14(1) cogeneration or small power production facilities as defined in the Federal Power
19.15Act, United States Code, title 16, section 796, paragraph (17), subparagraph (A), and
19.16paragraph (18), subparagraph (A), and having a combined capacity at a single site of less
19.17than 80,000 kilowatts; plants or facilities for the production of ethanol or fuel alcohol; or
19.18any case where the commission has determined after being advised by the attorney general
19.19that its application has been preempted by federal law;
19.20(2) a high-voltage transmission line proposed primarily to distribute electricity to
19.21serve the demand of a single customer at a single location, unless the applicant opts to
19.22request that the commission determine need under this section or section 216B.2425;
19.23(3) the upgrade to a higher voltage of an existing transmission line that serves
19.24the demand of a single customer that primarily uses existing rights-of-way, unless the
19.25applicant opts to request that the commission determine need under this section or section
19.26216B.2425 ;
19.27(4) a high-voltage transmission line of one mile or less required to connect a new or
19.28upgraded substation to an existing, new, or upgraded high-voltage transmission line;
19.29(5) conversion of the fuel source of an existing electric generating plant to using
19.30natural gas;
19.31(6) the modification of an existing electric generating plant to increase efficiency,
19.32as long as the capacity of the plant is not increased more than ten percent or more than
19.33100 megawatts, whichever is greater; or
19.34(7) a large energy facility that:
19.35(i) generates electricity from wind energy conversion systems,;
20.1(ii) will serve retail customers in Minnesota,; and
20.2(iii) meets any of the following conditions:
20.3(A) is specifically intended to be used to meet the renewable energy objective under
20.4section 216B.1691 or;
20.5(B) addresses a resource need identified in a current commission-approved or
20.6commission-reviewed resource plan under section 216B.2422, and (iv); or
20.7(C) derives at least ten percent of the total nameplate capacity of the proposed project
20.8from one or more C-BED projects, as defined under section 216B.1612, subdivision 2,
20.9paragraph (f)
.

20.10    Sec. 23. Minnesota Statutes 2008, section 216B.243, subdivision 9, is amended to read:
20.11    Subd. 9. Renewable energy standard facilities. The requirements of this section
20.12do not apply to a wind energy conversion system or a solar electric generation facility that
20.13is intended to be used to meet or exceed the obligations of section 216B.1691; provided
20.14that, after notice and comment, the commission determines that the facility is a reasonable
20.15and prudent approach to meeting a utility's obligations under that section. When making
20.16this determination, the commission may consider:
20.17(1) the size of the facility relative to a utility's total need for renewable resources and;
20.18(2) alternative approaches for supplying the renewable energy to be supplied by
20.19the proposed facility, and must consider;
20.20(3) the facility's ability to promote economic development, as required under section
20.21216B.1691 , subdivision 9, maintain;
20.22(4) maintenance of electric system reliability and consider;
20.23(5) impacts on ratepayers, ; and
20.24(6) other criteria as that the commission may determine determines are relevant.

20.25    Sec. 24. Minnesota Statutes 2008, section 216C.052, subdivision 2, is amended to read:
20.26    Subd. 2. Administrative issues. (a) The commissioner may select the administrator.
20.27The administrator must have at least five years of experience working as a power systems
20.28engineer planner or transmission planner, or in a position dealing with power system
20.29reliability issues, and may not have been a party or a participant in a commission energy
20.30proceeding for at least one year prior to selection by the commissioner. The commissioner
20.31shall oversee and direct the work of the administrator, annually review the expenses of the
20.32administrator, and annually approve the budget of the administrator. The administrator
20.33may hire staff and may contract for technical expertise in performing duties when existing
21.1state resources are required for other state responsibilities or when special expertise is
21.2required. The salary of the administrator is governed by section 15A.0815, subdivision 2.
21.3    (b) Costs relating to a specific proceeding, analysis, or project are not general
21.4administrative costs. For purposes of this section, "energy utility" means public utilities,
21.5generation and transmission cooperative electric associations, and municipal power
21.6agencies providing natural gas or electric service in the state.
21.7    (c) The Department of Commerce shall pay:
21.8    (1) the general administrative costs of the administrator, not to exceed $1,000,000
21.9in a fiscal year, and shall assess energy utilities for those administrative costs. These
21.10costs must be consistent with the budget approved by the commissioner under paragraph
21.11(a). The department shall apportion the costs among all energy utilities in proportion to
21.12their respective gross operating revenues from sales of gas or electric service within
21.13the state during the last calendar year, and shall then render a bill to each utility on a
21.14regular basis; and
21.15    (2) costs relating to a specific proceeding analysis or project and shall render a bill to
21.16the specific energy utility or utilities participating in the proceeding, analysis, or project
21.17directly, either at the conclusion of a particular proceeding, analysis, or project, or from
21.18time to time during the course of the proceeding, analysis, or project.
21.19    (d) For purposes of administrative efficiency, the department shall assess energy
21.20utilities and issue bills in accordance with the billing and assessment procedures provided
21.21in section 216B.62, to the extent that these procedures do not conflict with this subdivision.
21.22The amount of the bills rendered by the department under paragraph (c) must be paid by
21.23the energy utility into an account in the special revenue fund in the state treasury within
21.2430 days from the date of billing and is appropriated to the department for the purposes
21.25provided in this section. The commission shall approve or approve as modified a rate
21.26schedule providing for the automatic adjustment of charges to recover amounts paid by
21.27utilities under this section. All amounts assessed under this section are in addition to
21.28amounts appropriated to the commission and the department by other law.

21.29    Sec. 25. [216C.055] KEY ROLE OF SOLAR AND BIOMASS RESOURCES IN
21.30PRODUCING THERMAL ENERGY.
21.31The legislature recognizes that the use of solar energy and the combustion of grasses,
21.32agricultural wastes, trees, and other vegetation to produce thermal energy for heating
21.33commercial, industrial, and residential buildings and for industrial process can play a
21.34significant role in helping Minnesota meet its future energy needs and its greenhouse gas
21.35emissions reduction goals. The annual legislative proposals required to be submitted by
22.1the commissioners of commerce and the Pollution Control Agency under section 216H.07,
22.2subdivision 4, must include proposals regarding the use of the renewable energy sources
22.3described in this section if the commissioners determine that such policies are appropriate
22.4to achieve the state's greenhouse gas emissions reduction goals. No legal claim against
22.5any person is allowed under this section. The combustion of municipal solid waste or
22.6refuse-derived fuel to produce thermal energy is not addressed under this section. For
22.7purposes of this section, removal of woody biomass from publicly owned forests must be
22.8consistent with the principles of sustainable forest management.

22.9    Sec. 26. Minnesota Statutes 2008, section 216C.41, subdivision 5a, is amended to read:
22.10    Subd. 5a. Renewable development account. The Department of Commerce
22.11shall authorize payment of the renewable energy production incentive to wind energy
22.12conversion systems for 200 megawatts of nameplate capacity and that are eligible under
22.13this section or Laws 2005, chapter 40, to on-farm biogas recovery facilities, and to
22.14hydroelectric facilities. Payment of the incentive shall be made from the renewable energy
22.15development account as provided under section 116C.779, subdivision 2.

22.16    Sec. 27. Minnesota Statutes 2008, section 216F.01, subdivision 2, is amended to read:
22.17    Subd. 2. Large wind energy conversion system or LWECS. "Large wind energy
22.18conversion system" or "LWECS" means any combination of WECS with a combined
22.19nameplate capacity of 5,000 greater than 25,000 kilowatts or more.
22.20EFFECTIVE DATE.This section is effective the day following final enactment.

22.21    Sec. 28. Minnesota Statutes 2008, section 216F.01, subdivision 3, is amended to read:
22.22    Subd. 3. Small wind energy conversion system or SWECS. "Small wind energy
22.23conversion system" or "SWECS" means any combination of WECS with a combined
22.24nameplate capacity of less than 5,000 or equal to 25,000 kilowatts.
22.25EFFECTIVE DATE.This section is effective the day following final enactment.

22.26    Sec. 29. Minnesota Statutes 2008, section 216F.012, is amended to read:
22.27216F.012 SIZE ELECTION.
22.28    (a) A wind energy conversion system of less than 25 megawatts of nameplate
22.29capacity as determined under section 216F.011 is a small wind energy conversion system
22.30if, by July 1, 2009, the owner so elects in writing and submits a completed application for
22.31zoning approval and the written election to the county or counties in which the project is
23.1proposed to be located. The owner must notify the Public Utilities Commission of the
23.2election at the time the owner submits the election to the county.
23.3    (b) Notwithstanding paragraph (a), A wind energy conversion system with a
23.4nameplate capacity exceeding five megawatts that is proposed to be located wholly or
23.5partially within a wind access buffer adjacent to state lands that are part of the outdoor
23.6recreation system, as enumerated in section 86A.05, is a large wind energy conversion
23.7system. The Department of Natural Resources shall negotiate in good faith with a system
23.8owner regarding siting and may support the system owner in seeking a variance from the
23.9system setback requirements if it determines that a variance is in the public interest.
23.10    (c) (b) The Public Utilities Commission shall issue an annual report to the chairs
23.11and ranking minority members of the house of representatives and senate committees
23.12with primary jurisdiction over energy policy and natural resource policy regarding any
23.13variances applied for and not granted for systems subject to paragraph (b).
23.14EFFECTIVE DATE.This section is effective July 1, 2009.

23.15    Sec. 30. Minnesota Statutes 2008, section 216F.02, is amended to read:
23.16216F.02 EXEMPTIONS.
23.17(a) The requirements of chapter 216E do not apply to the siting of LWECS a WECS
23.18with a combined nameplate greater than 5,000 kilowatts that applies to the commission for
23.19a site permit, except for sections 216E.01; 216E.03, subdivision 7; 216E.08; 216E.11;
23.20216E.12 ; 216E.14; 216E.15; 216E.17; and 216E.18, subdivision 3, which do apply.
23.21(b) Any person may construct an SWECS with a combined nameplate capacity less
23.22than or equal to 5,000 kilowatts without complying with chapter 216E or this chapter.
23.23(c) Nothing in this chapter shall preclude precludes a local governmental unit from
23.24establishing requirements for the siting and construction of SWECS.
23.25EFFECTIVE DATE.This section is effective the day following final enactment.

23.26    Sec. 31. Minnesota Statutes 2008, section 216F.08, is amended to read:
23.27216F.08 PERMIT AUTHORITY; ASSUMPTION BY COUNTIES.
23.28    (a) A county board may, by resolution and upon written notice to the Public Utilities
23.29Commission, assume responsibility for processing applications for permits required under
23.30this chapter for LWECS with a combined nameplate capacity of less than 25,000 kilowatts
23.31SWECS. The responsibility for permit application processing, if assumed by a county,
23.32may be delegated by the county board to an appropriate county officer or employee.
24.1Processing by A county shall be done process applications in accordance with procedures
24.2and processes established under chapter 394.
24.3    (b) A county board that exercises its option under paragraph (a) may issue, deny,
24.4modify, impose conditions upon, or revoke permits pursuant to this section. The action of
24.5the a county board about with respect to a permit application is final, subject to appeal as
24.6provided in section 394.27.
24.7    (c) The commission shall, by order, establish general permit standards, including
24.8appropriate property line set-backs, governing site permits for LWECS under this section
24.9and SWECS. The order must consider existing and historic commission standards for
24.10wind permits issued by the commission. The general permit standards shall may apply
24.11to permits issued by counties and must apply to permits issued by the commission for
24.12LWECS with a combined nameplate capacity of less than 25,000 kilowatts and SWECS.
24.13The general permit standards must establish a setback for a SWECS from a road or
24.14property line equal to 1.1 times the maximum tip height of a rotor blade measured from
24.15ground level when the blade is in a vertical position. Counties are encouraged to consider
24.16an identical setback standard in permits they issue. The commission or a county may grant
24.17a variance from a general permit standard if the variance is found to be in the public
24.18interest. Permit standards established by a county under this section supersede general
24.19permit standards established by the commission.
24.20    (d) Upon request by a county, the commission and the commissioner of commerce
24.21shall provide technical assistance to a county with respect to the processing of LWECS
24.22SWECS site permit applications.
24.23EFFECTIVE DATE.This section is effective the day following final enactment.

24.24    Sec. 32. MOUNTAIN IRON ECONOMIC DEVELOPMENT AUTHORITY;
24.25WIND ENERGY PROJECT.
24.26(a) The Mountain Iron Economic Development Authority may form or become a
24.27member of a limited liability company organized under Minnesota Statutes, chapter 322B,
24.28for the purpose of developing a community-based energy development project pursuant
24.29to Minnesota Statutes, section 216B.1612. A limited liability company formed or joined
24.30under this section is subject to the open meeting requirements established in Minnesota
24.31Statutes, chapter 13D. A project authorized by this section may not sell, transmit, or
24.32distribute the electrical energy at retail or provide for end use of the electricity to an
24.33off-site facility of the economic development corporation or the limited liability company.
24.34Nothing in this section modifies the exclusive service territories or exclusive right to serve
24.35as provided in Minnesota Statutes, sections 216B.37 to 216B.43.
25.1(b) The authority may acquire a leasehold interest in property outside its corporate
25.2boundaries for the purpose of developing a community-based energy development project
25.3as provided in Minnesota Statutes, section 216B.1612.
25.4EFFECTIVE DATE.This section is effective the day after the city of Mountain
25.5Iron and its chief clerical officer comply with Minnesota Statutes, section 645.021,
25.6subdivisions 2 and 3.

25.7    Sec. 33. SOLAR CITIES REPORT.
25.8The cities of Minneapolis and St. Paul, designated as solar cities under the federal
25.9Department of Energy's Solar America Initiative, shall, by October 1, 2009, and October
25.101, 2010, submit a report to the cochairs of the Legislative Energy Committee containing
25.11strategies to accelerate the rate of solar thermal and solar electric energy installations
25.12in all building types throughout the state. The report must, at a minimum, address the
25.13following issues:
25.14(1) identify legal, administrative, financial, and operational barriers to increasing the
25.15installation of solar energy, and measures to overcome them;
25.16(2) identify financial and regulatory mechanisms that stimulate the development of
25.17solar energy;
25.18(3) identify ways to link solar energy development with energy conservation and
25.19energy efficiency strategies and programs;
25.20(4) how efforts and initiatives undertaken by St. Paul and Minneapolis can be
25.21integrated with activities undertaken in other parts of the state; and
25.22(5) how projected trends in solar technologies and the costs of solar generation can
25.23be integrated into the state's strategy to advance adoption of solar energy.
25.24In preparing these reports, the cities may confer with any person whose experience
25.25and expertise will assist in preparing the reports, including utilities, businesses providing
25.26solar energy installation services, nonprofit organizations promoting solar energy, and
25.27others.

25.28    Sec. 34. NATURAL GAS UTILITIES; INTERIM ENERGY SAVINGS PLAN.
25.29(a) The commissioner of commerce may approve an energy conservation
25.30improvement plan under Minnesota Statutes, section 216B.241, subdivision 1c, paragraph
25.31(d), that:
25.32(1) is submitted to the commissioner in calendar year 2009 by a utility that provides
25.33natural gas service at retail;
26.1(2) governs the conservation improvements to be undertaken by the utility over the
26.2next three-year time period; and
26.3(3) is accompanied by a study that specifies how the utility may:
26.4(i) average savings of at least 0.75 percent over the three years following submission
26.5of the plan;
26.6(ii) meet and exceed the minimum energy savings goal of one percent of gross
26.7annual retail sales within five years of submission of the plan; and
26.8(iii) achieve average annual savings of at least one percent over the nine years
26.9following submission of the plan.
26.10(b) The plan must include projections of the total amount spent by the utility to
26.11achieve energy savings each year and the cost per unit of energy saved.
26.12(c) Nothing in this section precludes the commissioner from requiring additional
26.13energy conservation improvement activities and programs beyond those proposed by a
26.14utility in its proposed plan so long as those additional activities and programs meet the
26.15requirements of Minnesota Statutes, section 216B.241. The commissioner shall require
26.16all reasonable actions by a utility that will increase the likelihood of the utility's meeting
26.17and exceeding the minimum one percent energy savings goal and the 1.5 percent goal
26.18as soon as reasonably feasible.

26.19    Sec. 35. CLEAN ENERGY RESOURCE TEAMS; APPROPRIATION.
26.20The utility subject to Minnesota Statutes, section 116C.779, shall transfer $563,000
26.21in fiscal year 2010 and $563,000 in fiscal year 2011 from the renewable development
26.22account established in Minnesota Statutes, section 116C.779, to the Department of
26.23Commerce on a schedule to be determined by the commissioner of commerce. The funds
26.24must be deposited in the special revenue fund and are appropriated to the commissioner
26.25for the purposes of this section.
26.26$563,000 in fiscal year 2010 and $563,000 in fiscal year 2011 are for continued
26.27funding of community energy technical assistance and outreach on renewable energy and
26.28energy efficiency, as described in Minnesota Statutes, section 216C.385. Of this amount,
26.29$113,000 each year is for technical assistance in the metropolitan area.

26.30    Sec. 36. REPEALER.
26.31Laws 2007, chapter 3, section 3, is repealed.