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Minnesota Legislature

Office of the Revisor of Statutes

SF 550A

Conference Committee Report - 86th Legislature (2009 - 2010) Posted on 01/15/2013 08:28pm

KEY: stricken = removed, old language.
underscored = added, new language.
1.2A bill for an act
1.3relating to energy; providing for energy conservation; regulating utility rates;
1.4removing prohibition on issuing certificate of need for new nuclear power
1.5plant; providing for various Legislative Energy Commission studies; regulating
1.6utilities; amending Minnesota Statutes 2008, sections 216A.03, subdivision 6, by
1.7adding a subdivision; 216B.16, subdivisions 2, 6c, 7b, by adding a subdivision;
1.8216B.1645, subdivision 2a; 216B.169, subdivision 2; 216B.1691, subdivision 2a;
1.9216B.23, by adding a subdivision; 216B.241, subdivisions 1c, 5a, 9; 216B.2411,
1.10subdivisions 1, 2; 216B.2424, subdivision 5a; 216B.243, subdivisions 3b, 8, 9;
1.11216C.11; proposing coding for new law in Minnesota Statutes, chapter 216C;
1.12repealing Laws 2007, chapter 3, section 3.
1.13May 13, 2009
1.14The Honorable James P. Metzen
1.15President of the Senate
1.16The Honorable Margaret Anderson Kelliher
1.17Speaker of the House of Representatives
1.18We, the undersigned conferees for S.F. No. 550 report that we have agreed upon the
1.19items in dispute and recommend as follows:
1.20That the House recede from its amendments and that S.F. No. 550 be further
1.21amended as follows:
1.22Delete everything after the enacting clause and insert:

1.23    "Section 1. Minnesota Statutes 2008, section 116C.779, subdivision 2, is amended to
1.25    Subd. 2. Renewable energy production incentive. (a) Until January 1, 2018 2021,
1.26up to $10,900,000 annually must be allocated from available funds in the account to
1.27fund renewable energy production incentives. $9,400,000 of this annual amount is for
1.28incentives for up to 200 megawatts of electricity generated by wind energy conversion
1.29systems that are eligible for the incentives under section 216C.41 or Laws 2005, chapter
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 portion of the $10,900,000 not expended in any calendar year for the
2.6incentive is available for other spending purposes under this section. This subdivision
2.7does not create an obligation to contribute funds to the account.
2.8(b) (d) The Department of Commerce shall determine eligibility of projects under
2.9section 216C.41 for the purposes of this subdivision. At least quarterly, the Department of
2.10Commerce shall notify the public utility of the name and address of each eligible project
2.11owner and the amount due to each project under section 216C.41. The public utility shall
2.12make payments within 15 working days after receipt of notification of payments due.

2.13    Sec. 2. Minnesota Statutes 2008, section 116C.779, is amended by adding a subdivision
2.14to read:
2.15    Subd. 3. Initiative for Renewable Energy and the Environment (a) Beginning
2.16July 1, 2009, and each July 1 through 2012, $5,000,000 must be allocated from the
2.17renewable development account to fund a grant to the Board of Regents of the University
2.18of Minnesota for the Initiative for Renewable Energy and the Environment for the purposes
2.19described in paragraph (b). The Initiative for Renewable Energy and the Environment
2.20must set aside at least 15 percent of the funds received annually under the grant for
2.21qualified projects conducted at a rural campus or experiment station. Any set-aside funds
2.22not awarded to a rural campus or experiment station at the end of the fiscal year revert
2.23back to the Initiative for Renewable Energy and the Environment for its exclusive use.
2.24This subdivision does not create an obligation to contribute funds to the account.
2.25(b) Activities funded under this grant may include, but are not limited to:
2.26(1) environmentally sound production of energy from a renewable energy source,
2.27including biomass and agricultural crops;
2.28(2) environmentally sound production of hydrogen from biomass and any other
2.29renewable energy source for energy storage and energy utilization;
2.30(3) development of energy conservation and efficient energy utilization technologies;
2.31(4) energy storage technologies; and
2.32(5) analysis of policy options to facilitate adoption of technologies that use or
2.33produce low-carbon renewable energy.
2.34(c) For the purposes of this subdivision:
2.35(1) "biomass" means plant and animal material, agricultural and forest residues,
2.36mixed municipal solid waste, and sludge from wastewater treatment; and
3.1(2) "renewable energy source" means hydro, wind, solar, biomass, and geothermal
3.2energy, and microorganisms used as an energy source.
3.3(d) Beginning January 15 of 2010, and each year thereafter, the director of the
3.4Initiative for Renewable Energy and the Environment at the University of Minnesota shall
3.5submit a report to the chair and ranking minority members of the senate and house of
3.6representatives committees with primary jurisdiction over energy finance describing the
3.7activities conducted during the previous year funded under this subdivision.
3.8EFFECTIVE DATE.This section is effective the day following final enactment.

3.9    Sec. 3. Minnesota Statutes 2008, section 117.189, is amended to read:
3.11 Sections 117.031; 117.036; 117.055, subdivision 2, paragraph (b); 117.186; 117.187;
3.12117.188 ; and 117.52, subdivisions 1a and 4, do not apply to public service corporations.
3.13For purposes of an award of appraisal fees under section 117.085, the fees awarded may
3.14not exceed $500 $1,500 for all types of property except for a public service corporation's
3.15use of eminent domain for a high-voltage transmission line, where the award may not
3.16exceed $3,000.
3.17EFFECTIVE DATE.This section is effective the day following final enactment.

3.18    Sec. 4. Minnesota Statutes 2008, section 216A.03, subdivision 6, is amended to read:
3.19    Subd. 6. Record of proceedings. An audio magnetic or audio electronic recording
3.20device shall be used to keep a record of all proceedings before the commission unless the
3.21commission provides a hearing reporter to record the proceeding.
3.22EFFECTIVE DATE.This section is effective the day following final enactment.

3.23    Sec. 5. Minnesota Statutes 2008, section 216A.03, is amended by adding a subdivision
3.24to read:
3.25    Subd. 6a. Hearing reporter. The commission may delegate to the executive
3.26secretary authority to require hearing reporter services. The cost of hearing reporter
3.27services must be borne by the utility, telephone company, or telecommunications carrier
3.28that is the subject of the proceeding. If more than one company is the subject of a
3.29proceeding, the commission or, if the commission so delegates, the executive secretary,
3.30shall determine how the hearing reporter costs are to be allocated for the proceeding.
3.31EFFECTIVE DATE.This section is effective the day following final enactment.

3.32    Sec. 6. Minnesota Statutes 2008, section 216B.16, subdivision 2, is amended to read:
4.1    Subd. 2. Suspension of proposed rate; hearing; final determination defined. (a)
4.2Whenever there is filed with the commission a schedule modifying or resulting in a change
4.3in any rates then in force as provided in subdivision 1, the commission may suspend the
4.4operation of the schedule by filing with the schedule of rates and delivering to the affected
4.5utility a statement in writing of its reasons for the suspension at any time before the rates
4.6become effective. The suspension shall not be for a longer period than ten months beyond
4.7the initial filing date except as provided in this subdivision or subdivision 1a.
4.8(b) During the suspension the commission shall determine whether all questions of
4.9the reasonableness of the rates requested raised by persons deemed interested or by the
4.10department can be resolved to the satisfaction of the commission. If the commission
4.11finds that all significant issues raised have not been resolved to its satisfaction, or upon
4.12petition by ten percent of the affected customers or 250 affected customers, whichever is
4.13less, it shall refer the matter to the Office of Administrative Hearings with instructions
4.14for a public hearing as a contested case pursuant to chapter 14, except as otherwise
4.15provided in this section.
4.16(c) The commission may order that the issues presented by the proposed rate
4.17changes be bifurcated into two separate hearings as follows: (1) determination of the
4.18utility's revenue requirements and (2) determination of the rate design. Upon issuance of
4.19both administrative law judge reports, the issues shall again be joined for consideration
4.20and final determination by the commission.
4.21(d) All prehearing discovery activities of state agency intervenors shall be
4.22consolidated and conducted by the Department of Commerce.
4.23(e) If the commission does not make a final determination concerning a schedule of
4.24rates within ten months after the initial filing date, the schedule shall be deemed to have
4.25been approved by the commission; except if:
4.26(1) an extension of the procedural schedule has been granted under paragraph (f) or
4.27subdivision 1a, in which case the schedule of rates is deemed to have been approved by
4.28the commission on the last day of the extended period of suspension; or
4.29(2) a settlement has been submitted to and rejected by the commission and the
4.30commission does not make a final determination concerning the schedule of rates, the
4.31schedule of rates is deemed to have been approved 60 days after the initial or, if applicable,
4.32the extended period of suspension.
4.33(f) If the commission finds that it has insufficient time during the suspension period
4.34to make a final determination of a case involving changes in general rates because of the
4.35need to make a final determination of another previously filed any pending case involving
4.36changes in general rates under this section or section 237.075, the commission may extend
5.1the suspension period to the extent necessary to allow itself 20 working days to allow up
5.2to a total of 90 additional calendar days to make the final determination after it has made a
5.3final determination in the previously filed case. An extension of the suspension period
5.4under this paragraph does not alter the setting of interim rates under subdivision 3.
5.5(g) For the purposes of this section, "final determination" means the initial decision
5.6of the commission and not any order which may be entered by the commission in response
5.7to a petition for rehearing or other further relief. The commission may further suspend
5.8rates until it determines all those petitions.
5.9EFFECTIVE DATE.This section is effective the day following final enactment.

5.10    Sec. 7. Minnesota Statutes 2008, section 216B.16, subdivision 6c, is amended to read:
5.11    Subd. 6c. Incentive plan for energy conservation improvement. (a) The
5.12commission may order public utilities to develop and submit for commission approval
5.13incentive plans that describe the method of recovery and accounting for utility
5.14conservation expenditures and savings. In developing the incentive plans the commission
5.15shall ensure the effective involvement of interested parties.
5.16(b) In approving incentive plans, the commission shall consider:
5.17(1) whether the plan is likely to increase utility investment in cost-effective energy
5.19(2) whether the plan is compatible with the interest of utility ratepayers and other
5.20interested parties;
5.21(3) whether the plan links the incentive to the utility's performance in achieving
5.22cost-effective conservation; and
5.23(4) whether the plan is in conflict with other provisions of this chapter.
5.24(c) The commission may set rates to encourage the vigorous and effective
5.25implementation of utility conservation programs. The commission may:
5.26(1) increase or decrease any otherwise allowed rate of return on net investment based
5.27upon the utility's skill, efforts, and success in conserving energy;
5.28(2) share between ratepayers and utilities the net savings resulting from energy
5.29conservation programs to the extent justified by the utility's skill, efforts, and success in
5.30conserving energy; and
5.31(3) compensate the utility for earnings lost as a result of its conservation
5.32programs adopt any mechanism that satisfies the criteria of this subdivision, such that
5.33implementation of cost-effective conservation is a preferred resource choice for the public
5.34utility considering the impact of conservation on earnings of the public utility.
5.35EFFECTIVE DATE.This section is effective the day following final enactment.

6.1    Sec. 8. Minnesota Statutes 2008, section 216B.16, subdivision 7b, is amended to read:
6.2    Subd. 7b. Transmission cost adjustment. (a) Notwithstanding any other provision
6.3of this chapter, the commission may approve a tariff mechanism for the automatic annual
6.4adjustment of charges for the Minnesota jurisdictional costs of (i) new transmission
6.5facilities that have been separately filed and reviewed and approved by the commission
6.6under section 216B.243 or are certified as a priority project or deemed to be a priority
6.7transmission project under section 216B.2425; and (ii) charges incurred by a utility that
6.8accrue from other transmission owners' regionally planned transmission projects that have
6.9been determined by the Midwest Independent System Operator to benefit the utility, as
6.10provided for under a federally approved tariff.
6.11    (b) Upon filing by a public utility or utilities providing transmission service, the
6.12commission may approve, reject, or modify, after notice and comment, a tariff that:
6.13    (1) allows the utility to recover on a timely basis the costs net of revenues of
6.14facilities approved under section 216B.243 or certified or deemed to be certified under
6.15section 216B.2425 or exempt from the requirements of section 216B.243;
6.16    (2) allows the charges incurred by a utility that accrue from other transmission
6.17owners' regionally planned transmission projects that have been determined by the
6.18Midwest Independent System Operator to benefit the utility, as provided for under a
6.19federally approved tariff. These charges must be reduced or offset by revenues received
6.20by the utility and by amounts the utility charges to other regional transmission owners, to
6.21the extent those revenues and charges have not been otherwise offset;
6.22    (3) allows a return on investment at the level approved in the utility's last general
6.23rate case, unless a different return is found to be consistent with the public interest;
6.24    (4) provides a current return on construction work in progress, provided that
6.25recovery from Minnesota retail customers for the allowance for funds used during
6.26construction is not sought through any other mechanism;
6.27    (5) allows for recovery of other expenses if shown to promote a least-cost project
6.28option or is otherwise in the public interest;
6.29    (6) allocates project costs appropriately between wholesale and retail customers;
6.30    (7) provides a mechanism for recovery above cost, if necessary to improve the
6.31overall economics of the project or projects or is otherwise in the public interest; and
6.32    (8) terminates recovery once costs have been fully recovered or have otherwise
6.33been reflected in the utility's general rates.
6.34    (c) A public utility may file annual rate adjustments to be applied to customer bills
6.35paid under the tariff approved in paragraph (b). In its filing, the public utility shall provide:
6.36    (1) a description of and context for the facilities included for recovery;
7.1    (2) a schedule for implementation of applicable projects;
7.2    (3) the utility's costs for these projects;
7.3    (4) a description of the utility's efforts to ensure the lowest costs to ratepayers for
7.4the project; and
7.5    (5) calculations to establish that the rate adjustment is consistent with the terms
7.6of the tariff established in paragraph (b).
7.7    (d) Upon receiving a filing for a rate adjustment pursuant to the tariff established in
7.8paragraph (b), the commission shall approve the annual rate adjustments provided that,
7.9after notice and comment, the costs included for recovery through the tariff were or are
7.10expected to be prudently incurred and achieve transmission system improvements at the
7.11lowest feasible and prudent cost to ratepayers.
7.12EFFECTIVE DATE.This section is effective the day following final enactment.

7.13    Sec. 9. Minnesota Statutes 2008, section 216B.16, is amended by adding a subdivision
7.14to read:
7.15    Subd. 7d. Central Corridor utility zone cost adjustment. (a) The Central
7.16Corridor utility zone is the area extending from the Union Depot Station in St. Paul to the
7.17proposed multimodal station in Minneapolis along the route of the light rail transit project
7.18connecting those two points, and an area extending approximately one-quarter mile from
7.19that route and including the entire University of Minnesota, Minneapolis campus.
7.20(b) A public utility that provides retail electric service within the Central Corridor
7.21utility zone and that is required to replace, relocate, construct, or install new facilities,
7.22may apply to the commission for approval of new facilities in the Central Corridor
7.23utility zone and facilities outside the zone that the utility demonstrates must be changed
7.24as a direct result of changes within the zone. Facilities proposed under this subdivision
7.25may include transmission facilities, distribution facilities, generation facilities, advanced
7.26technology-assisted efficiency devices, and energy storage facilities not otherwise subject
7.27to section 216B.243, or chapter 216E, 216F, or 216G. Upon approval under paragraph (c),
7.28the utility may construct and install the facilities.
7.29(c) The commission may approve the construction and installation of facilities in
7.30the Central Corridor mass transit utility zone proposed by a utility under paragraph (b)
7.31upon a finding:
7.32(1) that the facilities:
7.33(i) are necessary to provide electric service;
7.34(ii) assist future development of renewable energy, conservation, electric vehicles,
7.35and advanced technology-assisted efficiency programs and devices; or
8.1(iii) are exploratory, experimental, or research facilities to advance the use of
8.2renewable energy, conservation, electric vehicles, and advanced technology-assisted
8.3efficiency programs and devices;
8.4(2) that the utility has engaged in a cooperative process with affected local and state
8.5government agencies in the design, planning, or construction of the Central Corridor
8.6utility zone project and changes to utility facilities;
8.7(3) that the utility and local units of government have made reasonable efforts to seek
8.8federal, state, or private funds that may be available to mass transit and energy projects;
8.9(4) that the utility has made reasonable efforts to minimize the project costs and
8.10maximize the value of the facilities to customers;
8.11(5) that the utility has a plan to offer a comprehensive array of programs for
8.12residential, commercial, and industrial customers located within the mass transit zone;
8.13(6) that the utility direct existing and planned solar energy programs to develop solar
8.14energy along the mass transit utility zone; and
8.15(7) that the utility has made reasonable efforts to apply for federal funds to develop
8.16technology-assisted efficiency programs and devices within the mass transit utility zone.
8.17(d) Upon request of the commission, the utility shall submit periodic reports to
8.18the commission reviewing the cost and benefits of the facilities constructed within the
8.19Central Corridor utility zone and their potential applicability to other areas outside the
8.20Central Corridor utility zone.
8.21(e) Notwithstanding any other provision of this chapter, the commission may approve
8.22a tariff mechanism for automatic adjustment of charges for new, replaced, or relocated
8.23facilities installed under this subdivision in a manner consistent with this subdivision and
8.24the standards and procedures contained in subdivision 7b, except that no approval under
8.25section 216B.243 or certification under section 216B.2425 is required unless otherwise
8.26required by law. This section does not authorize a city-requested facilities surcharge.
8.27(f) For the purpose of this subdivision, "technology-assisted efficiency programs and
8.28devices" includes, but is not limited to, infrastructure that integrates digital information and
8.29controls technology to improve the reliability, security, and efficiency of the electric grid.
8.30EFFECTIVE DATE.This section is effective the day following final enactment.

8.31    Sec. 10. [216B.1613] STANDARDIZED CONTRACT.
8.32Within 60 days of the effective date of this section, each utility, as defined in section
8.33216B.1691, subdivision 1, paragraph (b), shall file with the commission a standardized
8.34contract form for the purchase of electricity from projects with a nameplate capacity
8.35of 5 megawatts or less. The standardized contract form must be similar in all material
8.36respects to the standard contract form previously filed with the commission under
9.1section 216B.2423, subdivision 3, including any revisions to that contract on file with
9.2the commission as of the effective date of this section. After consultation with wind
9.3developers and producers, a utility governed by this section may modify the standardized
9.4contract currently on file under section 216B.2423 prior to submitting its standard contract
9.5form under this section if the modifications are reasonably necessary to account for
9.6circumstances that are unique to that particular utility. The commission shall not approve
9.7a contract that is not in compliance with this section.
9.8EFFECTIVE DATE.This section is effective the day following final enactment.

9.9    Sec. 11. Minnesota Statutes 2008, section 216B.1645, subdivision 2a, is amended to
9.11    Subd. 2a. Cost recovery for utility's renewable facilities. (a) A utility may petition
9.12the commission to approve a rate schedule that provides for the automatic adjustment of
9.13charges to recover prudently incurred investments, expenses, or costs associated with
9.14facilities constructed, owned, or operated by a utility to satisfy the requirements of section
9.15216B.1691 , provided those facilities were previously approved by the commission under
9.16section 216B.2422 or 216B.243, or were determined by the commission to be reasonable
9.17and prudent under section 216B.243, subdivision 9. For facilities not subject to review
9.18by the commission under section 216B.2422 or 216B.243, a utility shall petition the
9.19commission for eligibility for cost recovery under this section prior to requesting cost
9.20recovery for the facility. The commission may approve, or approve as modified, a rate
9.21schedule that:
9.22    (1) allows a utility to recover directly from customers on a timely basis the costs of
9.23qualifying renewable energy projects, including:
9.24    (i) return on investment;
9.25    (ii) depreciation;
9.26    (iii) ongoing operation and maintenance costs;
9.27    (iv) taxes; and
9.28    (v) costs of transmission and other ancillary expenses directly allocable to
9.29transmitting electricity generated from a project meeting the specifications of this
9.31    (2) provides a current return on construction work in progress, provided that recovery
9.32of these costs from Minnesota ratepayers is not sought through any other mechanism;
9.33    (3) allows recovery of other expenses incurred that are directly related to a
9.34renewable energy project, including expenses for energy storage, provided that the
9.35utility demonstrates to the commission's satisfaction that the expenses improve project
10.1economics, ensure project implementation, advance research and understanding of how
10.2storage devices may improve renewable energy projects, or facilitate coordination with
10.3the development of transmission necessary to transport energy produced by the project
10.4to market;
10.5    (4) allocates recoverable costs appropriately between wholesale and retail customers;
10.6    (5) terminates recovery when costs have been fully recovered or have otherwise
10.7been reflected in a utility's rates.
10.8    (b) A petition filed under this subdivision must include:
10.9    (1) a description of the facilities for which costs are to be recovered;
10.10    (2) an implementation schedule for the facilities;
10.11    (3) the utility's costs for the facilities;
10.12    (4) a description of the utility's efforts to ensure that costs of the facilities are
10.13reasonable and were prudently incurred; and
10.14    (5) a description of the benefits of the project in promoting the development of
10.15renewable energy in a manner consistent with this chapter.

10.16    Sec. 12. Minnesota Statutes 2008, section 216B.169, subdivision 2, is amended to read:
10.17    Subd. 2. Renewable and high-efficiency energy rate options. (a) Each A
10.18utility shall may offer its customers, and shall advertise the offer at least annually,
10.19one or more options that allow a customer to determine that a certain amount of the
10.20electricity generated or purchased on behalf of the customer is renewable energy or energy
10.21generated by high-efficiency, low-emissions, distributed generation such as fuel cells and
10.22microturbines fueled by a renewable fuel.
10.23(b) Each public utility shall file an implementation plan within 90 days of July 1,
10.242001, to implement paragraph (a).
10.25(c) (b) Rates charged to customers must be calculated using the utility's cost of
10.26acquiring the energy for the customer and must:
10.27(1) reflect the difference between the cost of generating or purchasing the
10.28additional renewable energy and the cost of generating or purchasing the same amount
10.29of nonrenewable energy and the cost that would otherwise be attributed to the customer
10.30for the same amount of energy based on the utility's mix of renewable and nonrenewable
10.31energy sources; and
10.32(2) be distributed on a per kilowatt-hour basis among all customers who choose to
10.33participate in the program.
10.34(d) Implementation of these rate options may reflect a reasonable amount of lead
10.35time necessary to arrange acquisition of the energy. (c) The utility may acquire the
10.36energy demanded by customers, in whole or in part, through procuring or generating the
11.1renewable energy directly, or through the purchase of credits from a provider that has
11.2received certification of eligible power supply pursuant to subdivision 3. If a utility is not
11.3able to arrange an adequate supply of renewable or high-efficiency energy to meet its
11.4customers' demand under this section, the utility must file a report with the commission
11.5detailing its efforts and reasons for its failure.
11.6(d) For the purposes of this section, "renewable energy" has the meaning given to
11.7"eligible energy technology" in section 216B.1691, subdivision 1, paragraph (a), but
11.8does not include energy recovered from combustion of mixed municipal solid waste or
11.9refuse-derived fuel from mixed municipal solid waste.

11.10    Sec. 13. Minnesota Statutes 2008, section 216B.1691, subdivision 2a, is amended to
11.12    Subd. 2a. Eligible energy technology standard. (a) Except as provided in
11.13paragraph (b), each electric utility shall generate or procure sufficient electricity generated
11.14by an eligible energy technology to provide its retail customers in Minnesota, or the
11.15retail customers of a distribution utility to which the electric utility provides wholesale
11.16electric service, so that at least the following standard percentages of the electric utility's
11.17total retail electric sales to retail customers in Minnesota are generated by eligible energy
11.18technologies by the end of the year indicated:
12 percent
17 percent
20 percent
25 percent.
11.23    (b) An electric utility that owned a nuclear generating facility as of January 1, 2007,
11.24must meet the requirements of this paragraph rather than paragraph (a). An electric utility
11.25subject to this paragraph must generate or procure sufficient electricity generated by
11.26an eligible energy technology to provide its retail customers in Minnesota or the retail
11.27customer of a distribution utility to which the electric utility provides wholesale electric
11.28service so that at least the following percentages of the electric utility's total retail electric
11.29sales to retail customers in Minnesota are generated by eligible energy technologies by the
11.30end of the year indicated:
15 percent
18 percent
25 percent
30 percent.
12.3Of the 30 percent in 2020, at least 25 percent must be generated by solar energy or
12.4wind energy conversion systems and the remaining five percent by other eligible energy
12.5technology. Of the 25 percent that must be generated by wind or solar, no more than
12.6one percent may be solar generated and the remaining 24 percent or greater must be
12.7wind generated.
12.8EFFECTIVE DATE.This section is effective the day following final enactment.

12.9    Sec. 14. Minnesota Statutes 2008, section 216B.23, is amended by adding a
12.10subdivision to read:
12.11    Subd. 1a. Authority to issue refund. (a) On determining that a public utility has
12.12charged a rate in violation of this chapter, a commission rule, or a commission order, the
12.13commission, after conducting a proceeding, may require the public utility to refund to its
12.14customers, in a manner approved by the commission, any revenues the commission finds
12.15were collected as a result of the unlawful conduct. Any refund authorized by this section
12.16is permitted in addition to any remedies authorized by section 216B.16 or any other law
12.17governing rates. Exercising authority under this section does not preclude the commission
12.18from pursuing penalties under sections 216B.57 to 216B.61 for the same conduct.
12.19(b) This section must not be construed as allowing:
12.20(1) retroactive ratemaking;
12.21(2) refunds based on claims that prior or current approved rates have been unjust,
12.22unreasonable, unreasonably preferential, discriminatory, insufficient, inequitable, or
12.23inconsistent in application to a class of customers; or
12.24(3) refunds based on claims that approved rates have not encouraged energy
12.25conservation or renewable energy use, or have not furthered the goals of section 216B.164,
12.26216B.241, or 216C.05.
12.27    (c) A refund under this subdivision does not apply to revenues collected more than
12.28six years before the date of the notice of the commission proceeding required under this
12.30EFFECTIVE DATE.This section is effective the day following final enactment.

12.31    Sec. 15. Minnesota Statutes 2008, section 216B.241, subdivision 1c, is amended to
13.1    Subd. 1c. Energy-saving goals. (a) The commissioner shall establish energy-saving
13.2goals for energy conservation improvement expenditures and shall evaluate an energy
13.3conservation improvement program on how well it meets the goals set.
13.4    (b) Each individual utility and association shall have an annual energy-savings
13.5goal equivalent to 1.5 percent of gross annual retail energy sales unless modified by the
13.6commissioner under paragraph (d). The savings goals must be calculated based on the
13.7most recent three-year weather normalized average. A utility or association may elect to
13.8carry forward energy savings in excess of 1.5 percent for a year to the succeeding three
13.9calendar years, except that savings from electric utility infrastructure projects allowed
13.10under paragraph (d) may be carried forward for five years. A particular energy savings can
13.11be used only for one year's goal.
13.12    (c) The commissioner must adopt a filing schedule that is designed to have all
13.13utilities and associations operating under an energy-savings plan by calendar year 2010.
13.14    (d) In its energy conservation improvement plan filing, a utility or association may
13.15request the commissioner to adjust its annual energy-savings percentage goal based on
13.16its historical conservation investment experience, customer class makeup, load growth,
13.17a conservation potential study, or other factors the commissioner determines warrants
13.18an adjustment. The commissioner may not approve a plan that provides for an annual
13.19energy-savings goal of less than one percent of gross annual retail energy sales from
13.20energy conservation improvements.
13.21A utility or association may include in its energy conservation plan energy savings
13.22from electric utility infrastructure projects approved by the commission under section
13.23216B.1636 or waste heat recovery converted into electricity projects that may count as
13.24energy savings in addition to the minimum energy-savings goal of at least one percent for
13.25energy conservation improvements. Electric utility infrastructure projects must result in
13.26increased energy efficiency greater than that which would have occurred through normal
13.27maintenance activity.
13.28    (e) An energy-savings goal is not satisfied by attaining the revenue expenditure
13.29requirements of subdivisions 1a and 1b, but can only be satisfied by meeting the
13.30energy-savings goal established in this subdivision.
13.31    (f) An association or utility is not required to make energy conservation investments
13.32to attain the energy-savings goals of this subdivision that are not cost-effective even
13.33if the investment is necessary to attain the energy-savings goals. For the purpose of
13.34this paragraph, in determining cost-effectiveness, the commissioner shall consider the
13.35costs and benefits to ratepayers, the utility, participants, and society. In addition, the
14.1commissioner shall consider the rate at which an association or municipal utility is
14.2increasing its energy savings and its expenditures on energy conservation.
14.3    (g) On an annual basis, the commissioner shall produce and make publicly available
14.4a report on the annual energy savings and estimated carbon dioxide reductions achieved
14.5by the energy conservation improvement programs for the two most recent years for
14.6which data is available. The commissioner shall report on program performance both in
14.7the aggregate and for each entity filing an energy conservation improvement plan for
14.8approval or review by the commissioner.
14.9    (h) By January 15, 2010, the commissioner shall report to the legislature whether
14.10the spending requirements under subdivisions 1a and 1b are necessary to achieve the
14.11energy-savings goals established in this subdivision.
14.12EFFECTIVE DATE.This section is effective the day following final enactment.

14.13    Sec. 16. Minnesota Statutes 2008, section 216B.241, subdivision 5a, is amended to
14.15    Subd. 5a. Qualifying solar energy project. (a) A utility or association may include
14.16in its conservation plan programs for the installation of qualifying solar energy projects as
14.17defined by section 216B.2411 to the extent of the spending allowed for generation projects
14.18by section 216B.2411. The cost-effectiveness of a qualifying solar energy project may
14.19be determined by a different standard than for other energy conservation improvements
14.20under this section if the commissioner determines it is in the public interest to do so to
14.21encourage solar energy projects. Energy savings from qualifying solar energy projects
14.22may not be counted toward the minimum energy-savings goal of at least one percent
14.23for energy conservation improvements required under subdivision 1c, but may, if the
14.24conservation plan is approved:
14.25    (1) be counted toward energy savings above that minimum percentage; and
14.26    (2) be considered when establishing performance incentives under section 216B.241,
14.27subdivision 2c eligible for a performance incentive under section 216B.16, subdivision 6c,
14.28or 216B.241, subdivision 2c, that is distinct from the incentive for energy conservation
14.29and is based on the competitiveness and cost-effectiveness of solar projects in relation to
14.30other potential solar projects available to the utility.
14.31    (b) Qualifying solar energy projects may not be considered when establishing
14.32demand-side management targets under section 216B.2422, 216B.243, or any other
14.33section of this chapter.
14.34EFFECTIVE DATE.This section is effective the day following final enactment.

15.1    Sec. 17. Minnesota Statutes 2008, section 216B.241, is amended by adding a
15.2subdivision to read:
15.3    Subd. 5b. Biomethane purchases. (a) A natural gas utility may include in its
15.4conservation plan purchases of biomethane, and may use up to five percent of the total
15.5amount to be spent on energy conservation improvements under this section for that
15.6purpose. The cost-effectiveness of biomethane purchases may be determined by a
15.7different standard than for other energy conservation improvements under this section if
15.8the commissioner determines that doing so is in the public interest in order to encourage
15.9biomethane purchases. Energy savings from purchasing biomethane may not be counted
15.10toward the minimum energy-savings goal of at least one percent for energy conservation
15.11improvements required under subdivision 1c, but may, if the conservation plan is approved:
15.12(1) be counted toward energy savings above that minimum percentage; and
15.13(2) be considered when establishing performance incentives under subdivision 2c.
15.14(b) For the purposes of this subdivision, "biomethane" means biogas produced
15.15through anaerobic digestion of biomass, gasification of biomass, or other effective
15.16conversion processes, that is cleaned and purified into biomethane that meets natural gas
15.17utility quality specifications for use in a natural gas utility distribution system.
15.18EFFECTIVE DATE.This section is effective the day following final enactment.

15.19    Sec. 18. Minnesota Statutes 2008, section 216B.241, subdivision 9, is amended to read:
15.20    Subd. 9. Building performance standards; Sustainable Building 2030. (a) The
15.21purpose of this subdivision is to establish cost-effective energy-efficiency performance
15.22standards for new and substantially reconstructed commercial, industrial, and institutional
15.23buildings that can significantly reduce carbon dioxide emissions by lowering energy use in
15.24new and substantially reconstructed buildings. For the purposes of this subdivision, the
15.25establishment of these standards may be referred to as Sustainable Building 2030.
15.26    (b) The commissioner shall contract with the Center for Sustainable Building
15.27Research at the University of Minnesota to coordinate development and implementation
15.28of energy-efficiency performance standards, strategic planning, research, data analysis,
15.29technology transfer, training, and other activities related to the purpose of Sustainable
15.30Building 2030. The commissioner and the Center for Sustainable Building Research
15.31shall, in consultation with utilities, builders, developers, building operators, and experts
15.32in building design and technology, develop a Sustainable Building 2030 implementation
15.33plan that must address, at a minimum, the following issues:
15.34    (1) training architects to incorporate the performance standards in building design;
16.1    (2) incorporating the performance standards in utility conservation improvement
16.2programs; and
16.3    (3) developing procedures for ongoing monitoring of energy use in buildings that
16.4have adopted the performance standards.
16.5The plan must be submitted to the chairs and ranking minority members of the senate and
16.6house of representatives committees with primary jurisdiction over energy policy by
16.7July 1, 2009.
16.8    (c) Sustainable Building 2030 energy-efficiency performance standards must be firm,
16.9quantitative measures of total building energy use and associated carbon dioxide emissions
16.10per square foot for different building types and uses, that allow for accurate determinations
16.11of a building's conformance with a performance standard. The energy-efficiency
16.12performance standards must be updated every three or five years to incorporate all
16.13cost-effective measures. The performance standards must reflect the reductions in carbon
16.14dioxide emissions per square foot resulting from actions taken by utilities to comply
16.15with the renewable energy standards in section 216B.1691. The performance standards
16.16should be designed to achieve reductions equivalent to the following reduction schedule,
16.17measured against energy consumption by an average building in each applicable building
16.18sector in 2003: (1) 60 percent in 2010; (2) 70 percent in 2015; (3) 80 percent in 2020;
16.19and (4) 90 percent in 2025. A performance standard must not be established or increased
16.20absent a conclusive engineering analysis that it is cost-effective based upon established
16.21practices used in evaluating utility conservation improvement programs.
16.22    (d) The annual amount of the contract with the Center for Sustainable Building
16.23Research is up to $500,000. The Center for Sustainable Building Research shall expend
16.24no more than $150,000 of this amount each year on administration, coordination, and
16.25oversight activities related to Sustainable Building 2030. The balance of contract funds
16.26must be spent on substantive programmatic activities allowed under this subdivision that
16.27may be conducted by the Center for Sustainable Building Research and others, and for
16.28subcontracts with not-for-profit energy organizations, architecture and engineering firms,
16.29and other qualified entities to undertake technical projects and activities in support of
16.30Sustainable Building 2030. The primary work to be accomplished each year by qualified
16.31technical experts under subcontracts is the development and thorough justification of
16.32recommendations for specific energy-efficiency performance standards. Additional work
16.33may include:
16.34    (1) research, development, and demonstration of new energy-efficiency technologies
16.35and techniques suitable for commercial, industrial, and institutional buildings;
17.1    (2) analysis and evaluation of practices in building design, construction,
17.2commissioning and operations, and analysis and evaluation of energy use in the
17.3commercial, industrial, and institutional sectors;
17.4    (3) analysis and evaluation of the effectiveness and cost-effectiveness of Sustainable
17.5Building 2030 performance standards, conservation improvement programs, and building
17.6energy codes;
17.7    (4) development and delivery of training programs for architects, engineers,
17.8commissioning agents, technicians, contractors, equipment suppliers, developers, and
17.9others in the building industries; and
17.10    (5) analyze and evaluate the effect of building operations on energy use.
17.11    (e) The commissioner shall require utilities to develop and implement conservation
17.12improvement programs that are expressly designed to achieve energy efficiency goals
17.13consistent with the Sustainable Building 2030 performance standards. These programs
17.14must include offerings of design assistance and modeling, financial incentives, and the
17.15verification of the proper installation of energy-efficient design components in new and
17.16substantially reconstructed buildings. A utility's design assistance program must consider
17.17the strategic planting of trees and shrubs around buildings as an energy conservation
17.18strategy for the designed project. A utility making an expenditure under its conservation
17.19improvement program that results in a building meeting the Sustainable Building 2030
17.20performance standards may claim the energy savings toward its energy-savings goal
17.21established in subdivision 1c.
17.22    (f) The commissioner shall report to the legislature every three years, beginning
17.23January 15, 2010, on the cost-effectiveness and progress of implementing the Sustainable
17.24Building 2030 performance standards and shall make recommendations on the need to
17.25continue the program as described in this section.
17.26EFFECTIVE DATE.This section is effective the day following final enactment.

17.27    Sec. 19. Minnesota Statutes 2008, section 216B.2411, subdivision 1, is amended to
17.29    Subdivision 1. Generation projects. (a) Any municipality or rural electric
17.30association providing electric service and subject to section 216B.241 may, and each
17.31public utility may, use five percent of the total amount to be spent on energy conservation
17.32improvements under section 216B.241, on:
17.33    (1) projects in Minnesota to construct an electric generating facility that utilizes
17.34eligible renewable energy sources as defined in subdivision 2, such as methane or other
17.35combustible gases derived from the processing of plant or animal wastes, biomass fuels
18.1such as short-rotation woody or fibrous agricultural crops, or other renewable fuel, as
18.2its primary fuel source;
18.3    (2) projects in Minnesota to install a distributed generation facility of ten megawatts
18.4or less of interconnected capacity that is fueled by natural gas, renewable fuels, or another
18.5similarly clean fuel; or
18.6    (3) projects in Minnesota to install a qualifying solar energy project as defined in
18.7subdivision 2.
18.8    (b) A municipality, rural electric association, or public utility that offers a program
18.9to customers to promote installing qualifying solar energy projects may request authority
18.10from the commissioner to exceed the five percent limit in paragraph (a), but not to
18.11exceed ten percent, to meet customer demand for installation of qualifying solar energy
18.12projects. In considering this request, the commissioner shall consider customer interest in
18.13qualifying solar energy and the impact on other customers. A municipality, rural electric
18.14association, or public utility may not participate in a qualifying solar energy project on
18.15a property unless it is provided evidence that all reasonable cost-effective conservation
18.16investments have previously been made to the property.
18.17For public utilities, as defined under section 216B.02, subdivision 4, (c) For a
18.18municipality, rural electric association, or public utility, projects under this section must
18.19be considered energy conservation improvements as defined in section 216B.241. For
18.20cooperative electric associations and municipal utilities, projects under this section must
18.21be considered load-management activities described in section 216B.241, subdivision 1.

18.22    Sec. 20. Minnesota Statutes 2008, section 216B.2411, subdivision 2, is amended to
18.24    Subd. 2. Definitions. (a) For the purposes of this section, the terms defined in this
18.25subdivision and section 216B.241, subdivision 1, have the meanings given them.
18.26    (b) "Eligible renewable energy sources" means fuels and technologies to generate
18.27electricity through the use of any of the resources listed in section 216B.1691, subdivision
, paragraph (a), except that the incineration of wastewater sludge is not an eligible
18.29renewable energy source, "biomass" has the meaning provided under paragraph (c), and
18.30"solar" must be from a qualified solar energy project as defined in paragraph (d).
18.31    (c) "Biomass" includes:
18.32    (1) methane or other combustible gases derived from the processing of plant or
18.33animal material;
18.34    (2) alternative fuels derived from soybean and other agricultural plant oils or animal
19.1    (3) combustion of barley hulls, corn, soy-based products, or other agricultural
19.3    (4) wood residue from the wood products industry in Minnesota or other wood
19.4products such as short-rotation woody or fibrous agricultural crops;
19.5    (5) landfill gas;
19.6(6) the predominantly organic components of wastewater effluent, sludge, or related
19.7byproducts from publicly owned treatment works; and
19.8(7) mixed municipal solid waste, and refuse-derived fuel from mixed municipal
19.9solid waste.
19.10    (d) "Qualifying solar energy project" means a qualifying solar thermal project or
19.11qualifying solar electric project.
19.12    (e) "Qualifying solar thermal project" means a flat plate or evacuated tube that meets
19.13the requirements of section 216C.25 with a fixed orientation that collects the sun's radiant
19.14energy and transfers it to a storage medium for distribution as energy to heat or cool air or
19.15water, but does not include equipment used to heat water at a residential property (1) for
19.16domestic use if less than one-half of the energy used for that purpose is derived from the
19.17sun or (2) for use in a hot tub or swimming pool.
19.18    (f) "Qualifying solar electric project" means:
19.19(1) solar electric equipment that: (i) meets the requirements of section 216C.25
19.20with a total; (ii) has a peak generating capacity of 100 kilowatts or less; and (iii) is
19.21used for generating to generate electricity primarily for use in a residential property or
19.22small business to reduce the effective electric load for that residence or small business,
19.23commercial, or publicly owned property or facility; and
19.24(2) if applicable, equipment that is used to store the electricity generated by a
19.25qualified solar electric project under clause (1) and that is located proximate to the
19.26property or facility using the electricity.
19.27    (g) "Residential property" means the principal residence of a homeowner at the time
19.28the solar equipment is placed in service.
19.29    (h) "Small business" has the meaning given to it in section 645.445.
19.30EFFECTIVE DATE.This section is effective the day following final enactment.

19.31    Sec. 21. Minnesota Statutes 2008, section 216B.2412, subdivision 2, is amended to
19.33    Subd. 2. Decoupling criteria. The commission shall, by order, establish criteria and
19.34standards for decoupling. The commission may establish these criteria and standards in
19.35a separate proceeding or in a general rate case or other proceeding in which it approves
20.1a pilot program, and shall design the criteria and standards to mitigate the impact on
20.2public utilities of the energy-savings goals under section 216B.241 without adversely
20.3affecting utility ratepayers. In designing the criteria, the commission shall consider energy
20.4efficiency, weather, and cost of capital, among other factors.
20.5EFFECTIVE DATE.This section is effective the day following final enactment.

20.6    Sec. 22. Minnesota Statutes 2008, section 216B.2424, subdivision 5a, is amended to
20.8    Subd. 5a. Reduction of biomass mandate. (a) Notwithstanding subdivision 5, the
20.9biomass electric energy mandate must be reduced from 125 megawatts to 110 megawatts.
20.10(b) The Public Utilities Commission shall approve a request pending before the
20.11commission as of May 15, 2003, for amendments to and assignment of a power purchase
20.12agreement with the owner of a facility that uses short-rotation, woody crops as its primary
20.13fuel previously approved to satisfy a portion of the biomass mandate if the owner of
20.14the project agrees to reduce the size of its project from 50 megawatts to 35 megawatts,
20.15while maintaining an average price for energy in nominal dollars measured over the term
20.16of the power purchase agreement at or below $104 per megawatt-hour, exclusive of any
20.17price adjustments that may take effect subsequent to commission approval of the power
20.18purchase agreement, as amended. The commission shall also approve, as necessary, any
20.19subsequent assignment or sale of the power purchase agreement or ownership of the
20.20project to an entity owned or controlled, directly or indirectly, by two municipal utilities
20.21located north of Constitutional Route No. 8, as described in section 161.114, which
20.22currently own electric and steam generation facilities using coal as a fuel and which
20.23propose to retrofit their existing municipal electrical generating facilities to utilize biomass
20.24fuels in order to perform the power purchase agreement.
20.25(c) If the power purchase agreement described in paragraph (b) is assigned to an
20.26entity that is, or becomes, owned or controlled, directly or indirectly, by two municipal
20.27entities as described in paragraph (b), and the power purchase agreement meets the
20.28price requirements of paragraph (b), the commission shall approve any amendments to
20.29the power purchase agreement necessary to reflect the changes in project location and
20.30ownership and any other amendments made necessary by those changes. The commission
20.31shall also specifically find that:
20.32(1) the power purchase agreement complies with and fully satisfies the provisions of
20.33this section to the full extent of its 35-megawatt capacity;
21.1(2) all costs incurred by the public utility and all amounts to be paid by the public
21.2utility to the project owner under the terms of the power purchase agreement are fully
21.3recoverable pursuant to section 216B.1645;
21.4(3) subject to prudency review by the commission, the public utility may recover
21.5from its Minnesota retail customers the Minnesota jurisdictional portion of the amounts
21.6that may be incurred and paid by the public utility during the full term of the power
21.7purchase agreement; and
21.8(4) if the purchase power agreement meets the requirements of this subdivision,
21.9it is reasonable and in the public interest.
21.10(d) The commission shall specifically approve recovery by the public utility of
21.11any and all Minnesota jurisdictional costs incurred by the public utility to improve,
21.12construct, install, or upgrade transmission, distribution, or other electrical facilities owned
21.13by the public utility or other persons in order to permit interconnection of the retrofitted
21.14biomass-fueled generating facilities or to obtain transmission service for the energy
21.15provided by the facilities to the public utility pursuant to section 216B.1645, and shall
21.16disapprove any provision in the power purchase agreement that requires the developer
21.17or owner of the project to pay the jurisdictional costs or that permit the public utility to
21.18terminate the power purchase agreement as a result of the existence of those costs or the
21.19public utility's obligation to pay any or all of those costs.
21.20(e) Upon request by the project owner, the public utility shall agree to amend the
21.21power purchase agreement described in paragraph (b) and approved by the commission
21.22as required by paragraph (c). The amendment must be negotiated and executed within
21.2345 days of the effective date of this section and must apply to prices paid after January
21.241, 2009. The average price for energy in nominal dollars measured over the term of the
21.25power purchase agreement must not exceed $104 per megawatt hour by more than five
21.26percent. The public utility shall request approval of the amendment by the commission
21.27within 30 days of execution of the amended power purchase agreement. The amendment
21.28is not effective until approval by the commission. The commission shall act on the
21.29amendment within 90 days of submission of the request by the public utility. Upon
21.30approval of the amended power purchase agreement, the commission shall allow the
21.31public utility to recover the costs of the amended power purchase agreement, as provided
21.32in section 216B.1645.
21.33EFFECTIVE DATE.This section is effective the day following final enactment.

21.34    Sec. 23. Minnesota Statutes 2008, section 216B.243, subdivision 8, is amended to read:
21.35    Subd. 8. Exemptions. This section does not apply to:
22.1(1) cogeneration or small power production facilities as defined in the Federal Power
22.2Act, United States Code, title 16, section 796, paragraph (17), subparagraph (A), and
22.3paragraph (18), subparagraph (A), and having a combined capacity at a single site of less
22.4than 80,000 kilowatts; plants or facilities for the production of ethanol or fuel alcohol; or
22.5any case where the commission has determined after being advised by the attorney general
22.6that its application has been preempted by federal law;
22.7(2) a high-voltage transmission line proposed primarily to distribute electricity to
22.8serve the demand of a single customer at a single location, unless the applicant opts to
22.9request that the commission determine need under this section or section 216B.2425;
22.10(3) the upgrade to a higher voltage of an existing transmission line that serves
22.11the demand of a single customer that primarily uses existing rights-of-way, unless the
22.12applicant opts to request that the commission determine need under this section or section
22.13216B.2425 ;
22.14(4) a high-voltage transmission line of one mile or less required to connect a new or
22.15upgraded substation to an existing, new, or upgraded high-voltage transmission line;
22.16(5) conversion of the fuel source of an existing electric generating plant to using
22.17natural gas; or
22.18(6) the modification of an existing electric generating plant to increase efficiency,
22.19as long as the capacity of the plant is not increased more than ten percent or more than
22.20100 megawatts, whichever is greater; or
22.21(7) a large energy facility that (i) generates electricity from wind energy conversion
22.22systems, (ii) will serve retail customers in Minnesota, (iii) is specifically intended to be
22.23used to meet the renewable energy objective under section 216B.1691 or addresses a
22.24resource need identified in a current commission-approved or commission-reviewed
22.25resource plan under section 216B.2422, and (iv) derives at least ten percent of the total
22.26nameplate capacity of the proposed project from one or more C-BED projects, as defined
22.27under section 216B.1612, subdivision 2, paragraph (f).
22.28EFFECTIVE DATE.This section is effective the day following final enactment.

22.29    Sec. 24. Minnesota Statutes 2008, section 216B.243, subdivision 9, is amended to read:
22.30    Subd. 9. Renewable energy standard facilities. The requirements of This section
22.31do does not apply to a wind energy conversion system or a solar electric generation
22.32facility that is intended to be used to meet or exceed the obligations of section 216B.1691;
22.33provided that, after notice and comment, the commission determines that the facility is
22.34a reasonable and prudent approach to meeting a utility's obligations under that section.
22.35When making this determination, the commission may must consider:
23.1(1) the size of the facility relative to a utility's total need for renewable resources and;
23.2(2) alternative approaches for supplying the renewable energy to be supplied by
23.3the proposed facility, and must consider;
23.4(3) the facility's ability to promote economic development, as required under section
23.5216B.1691 , subdivision 9,;
23.6(4) the facility's ability to maintain electric system reliability and consider;
23.7(5) impacts on ratepayers,; and
23.8(6) other criteria as the commission may determine are relevant.
23.9EFFECTIVE DATE.This section is effective the day following final enactment.

23.10    Sec. 25. Minnesota Statutes 2008, section 216B.62, subdivision 3, is amended to read:
23.11    Subd. 3. Assessing all public utilities. The department and commission shall
23.12quarterly, at least 30 days before the start of each quarter, estimate the total of their
23.13expenditures in the performance of their duties relating to (1) public utilities under section
23.14216A.085 , sections 216B.01 to 216B.67, other than amounts chargeable to public utilities
23.15under subdivision 2 or, 6, or 7 and (2) alternative energy engineering activity under
23.16section 216C.261. The remainder, except the amount assessed against cooperatives and
23.17municipalities for alternative energy engineering activity under subdivision 5, shall be
23.18assessed by the commission and department to the several public utilities in proportion
23.19to their respective gross operating revenues from retail sales of gas or electric service
23.20within the state during the last calendar year. The assessment shall be paid into the state
23.21treasury within 30 days after the bill has been transmitted via mail, personal delivery,
23.22or electronic service to the several public utilities, which shall constitute notice of the
23.23assessment and demand of payment thereof. The total amount which may be assessed to
23.24the public utilities, under authority of this subdivision, shall not exceed one-sixth of one
23.25percent of the total gross operating revenues of the public utilities during the calendar year
23.26from retail sales of gas or electric service within the state. The assessment for the third
23.27quarter of each fiscal year shall be adjusted to compensate for the amount by which actual
23.28expenditures by the commission and department for the preceding fiscal year were more
23.29or less than the estimated expenditures previously assessed.
23.30EFFECTIVE DATE.This section is effective the day following final enactment.

23.31    Sec. 26. Minnesota Statutes 2008, section 216B.62, subdivision 4, is amended to read:
23.32    Subd. 4. Objections. Within 30 days after the date of the transmittal of any bill as
23.33provided by subdivisions 2 and, 3, and 7 the public utility against which the bill has been
23.34rendered may file with the commission objections setting out the grounds upon which it is
24.1claimed the bill is excessive, erroneous, unlawful or invalid. The commission shall within
24.260 days hold a hearing and issue an order in accordance with its findings. The order shall
24.3be appealable in the same manner as other final orders of the commission.
24.4EFFECTIVE DATE.This section is effective the day following final enactment.

24.5    Sec. 27. Minnesota Statutes 2008, section 216B.62, is amended by adding a
24.6subdivision to read:
24.7    Subd. 7. Audit investigation costs. The audit investigation account is created as a
24.8separate account in the special revenue fund in the state treasury. If the commission, in a
24.9proceeding upon its own motion, on complaint, or upon an application to it, determines
24.10that it is necessary, in order to carry out its duties imposed under this chapter or chapter
24.11216, 216A, 216E, 216F, or 216G, to conduct an investigation or audit of any public utility
24.12operations, practices, or policies requiring specialized technical professional investigative
24.13services for the inquiry, the commission may request the commissioner of commerce to
24.14seek authority from the commissioner of finance to incur costs reasonably attributable to
24.15the specialized services. If the investigation or audit is approved by the commissioner of
24.16finance, the commissioner of commerce shall carry out the investigation in the manner
24.17directed by the commission and shall render separate bills to the public utility for the
24.18costs incurred for such technical professional investigative services. The bill constitutes
24.19notice of the assessment and demand for payment. The amount assessed must be paid
24.20by the public utility to the commissioner of commerce within 30 days after the date of
24.21assessment. Money received under this subdivision must be deposited in the state treasury
24.22and credited to the audit investigation account, and is appropriated to the commissioner of
24.23commerce for the purposes of this subdivision.
24.24EFFECTIVE DATE.This section is effective the day following final enactment.

24.27The commissioner of commerce, in consultation with the Public Utilities
24.28Commission, shall annually by January 15 submit a written report to the chairs and the
24.29ranking minority members of the legislative committees with primary jurisdiction over
24.30energy policy that contains a narrative describing what electric transmission infrastructure
24.31is needed within the state over the next 15 years and what specific progress is being
24.32made to meet that need. To the extent possible, the report must contain a description
24.33of specific transmission needs and the current status of proposals to address that need.
24.34The report must identify any barriers to meeting transmission infrastructure needs and
24.35make recommendations, including any legislation, that are necessary to overcome those
25.1barriers. The report must be based on the best available information and must describe
25.2what assumptions are made as the basis for the report. If the commissioner determines
25.3that there are difficulties in accurately assessing future transmission infrastructure needs,
25.4the commissioner shall explain those difficulties as part of the report. The commissioner is
25.5not required to conduct original research to support the report. The commissioner may
25.6utilize information the commissioner, the commission, and the Office of Energy Security
25.7possess and utilize in carrying out their existing statutory duties related to the state's
25.8transmission infrastructure. The report must be in easily understood, nontechnical terms.
25.9EFFECTIVE DATE.This section is effective the day following final enactment.

25.12The annual legislative proposals required to be submitted by the commissioners
25.13of commerce and the Pollution Control Agency under section 216H.07, subdivision
25.144, must include proposals regarding the use of solar energy and the combustion of
25.15grasses, agricultural wastes, trees, and other vegetation to produce thermal energy for
25.16heating commercial, industrial, and residential buildings and for industrial processes if
25.17the commissioners determine that such policies are appropriate to achieve the state's
25.18greenhouse gas emissions reduction goals. No legal claim against any person is allowed
25.19under this section. This section does not apply to the combustion of municipal solid waste
25.20or refuse-derived fuel to produce thermal energy. For purposes of this section, removal
25.21of woody biomass from publicly owned forests must be consistent with the principles of
25.22sustainable forest management.
25.23EFFECTIVE DATE.This section is effective the day following final enactment.

25.24    Sec. 30. Minnesota Statutes 2008, section 216C.11, is amended to read:
25.26The commissioner shall establish an Energy Information Center in the department's
25.27offices in St. Paul. The information center shall maintain a toll-free telephone information
25.28service and disseminate printed materials on energy conservation topics, including but
25.29not limited to, availability of loans and other public and private financing methods
25.30for energy conservation physical improvements, the techniques and materials used to
25.31conserve energy in buildings, including retrofitting or upgrading insulation and installing
25.32weatherstripping, the projected prices and availability of different sources of energy,
25.33and alternative sources of energy.
26.1The Energy Information Center shall serve as the official Minnesota Alcohol Fuels
26.2Information Center and shall disseminate information, printed, by the toll-free telephone
26.3information service, or otherwise on the applicability and technology of alcohol fuels.
26.4The information center shall include information on the potential hazards of energy
26.5conservation techniques and improvements in the printed materials disseminated. The
26.6commissioner shall not be liable for damages arising from the installation or operation of
26.7equipment or materials recommended by the information center.
26.8The information center shall use the information collected under section 216C.02,
26.9subdivision 1
, to maintain a central source of information on conservation and other
26.10energy-related programs, including both programs required by law or rule and programs
26.11developed and carried on voluntarily. In particular, the information center shall compile
26.12and maintain information on policies covering disconnections or denials of fuel
26.13during cold weather adopted by public utilities and other fuel suppliers not governed
26.14by Minnesota Rules, parts 7820.1500 to 7820.2300 section 216B.096 or 216B.097,
26.15including the number of households disconnected or denied fuel and the duration of the
26.16disconnections or denials.
26.17EFFECTIVE DATE.This section is effective the day following final enactment.

26.18    Sec. 31. Minnesota Statutes 2008, section 216C.41, subdivision 5a, is amended to read:
26.19    Subd. 5a. Renewable development account. The Department of Commerce
26.20shall authorize payment of the renewable energy production incentive to wind energy
26.21conversion systems for 200 megawatts of nameplate capacity and that are eligible under
26.22this section or Laws 2005, chapter 40, to on-farm biogas recovery facilities, and to
26.23hydroelectric facilities. Payment of the incentive shall be made from the renewable energy
26.24development account as provided under section 116C.779, subdivision 2.
26.25EFFECTIVE DATE.This section is effective the day following final enactment.

26.27(a) The commissioner of commerce may approve an energy conservation
26.28improvement plan under Minnesota Statutes, section 216B.241, subdivision 1c, paragraph
26.29(d), that:
26.30(1) is submitted to the commissioner in calendar year 2009 by a utility that provides
26.31natural gas service at retail;
26.32(2) governs the conservation improvements to be undertaken by the utility over the
26.33next three-year time period; and
26.34(3) is accompanied by a study that specifies how the utility may:
27.1(i) average savings of at least 0.75 percent over the three years following submission
27.2of the plan;
27.3(ii) meet and exceed the minimum energy savings goal of one percent of gross
27.4annual retail sales within five years of submission of the plan; and
27.5(iii) achieve average annual savings of at least one percent over years four through
27.6nine following submission of the plan.
27.7(b) The plan must include projections of the total amount spent by the utility to
27.8achieve energy savings each year and the cost per unit of energy saved.
27.9(c) Nothing in this section precludes the commissioner from requiring additional
27.10energy conservation improvement activities and programs beyond those proposed by a
27.11utility in its proposed plan so long as those additional activities and programs meet the
27.12requirements of Minnesota Statutes, section 216B.241. The commissioner shall require
27.13all reasonable actions by a utility that will increase the likelihood of the utility's meeting
27.14and exceeding the minimum one percent energy savings goal and the 1.5 percent goal
27.15as soon as reasonably feasible.
27.16EFFECTIVE DATE.This section is effective the day following final enactment.

27.17    Sec. 33. UTILITY RATES STUDY.
27.18The Public Utilities Commission, in consultation with the Office of Energy
27.19Security, shall conduct a study of automatic cost-recovery mechanisms and alternative
27.20forms of utility rate regulation. This study shall include an assessment of the impact of
27.21automatic cost-recovery mechanisms on prices charged to utility consumers compared
27.22to traditional cost-recovery mechanisms, an assessment of the impact of automatic
27.23recovery mechanisms on the level of customer understanding of utility rates compared to
27.24traditional cost-recovery mechanisms, and an assessment of alternative forms of utility
27.25rate regulation that may be used in place of automatic cost-recovery mechanisms. The
27.26study shall also address methods to improve administration and customer understanding
27.27of automatic cost-recovery mechanisms. The commission shall submit this report to the
27.28legislature on or before June 30, 2010. The commission may assess public utilities for
27.29the cost of the study. The assessment is not subject to a cap on assessments provided by
27.30section 216B.62 or any other law.
27.31EFFECTIVE DATE.This section is effective the day following final enactment.

27.34(a) The Mountain Iron Economic Development Authority may form or become a
27.35member of a limited liability company organized under Minnesota Statutes, chapter 322B,
28.1for the purpose of developing a community-based energy development project pursuant
28.2to Minnesota Statutes, section 216B.1612. A limited liability company formed or joined
28.3under this section is subject to the open meeting requirements established in Minnesota
28.4Statutes, chapter 13D. A project authorized by this section may not sell, transmit, or
28.5distribute the electrical energy at retail or provide for end use of the electricity to an
28.6off-site facility of the economic development corporation or the limited liability company.
28.7Nothing in this section modifies the exclusive service territories or exclusive right to serve
28.8as provided in Minnesota Statutes, sections 216B.37 to 216B.43.
28.9(b) The authority may acquire a leasehold interest in property outside its corporate
28.10boundaries for the purpose of developing a community-based energy development project
28.11as provided in Minnesota Statutes, section 216B.1612.
28.12EFFECTIVE DATE.This section is effective the day after the city of Mountain
28.13Iron and its chief clerical officer comply with Minnesota Statutes, section 645.021,
28.14subdivisions 2 and 3.

28.15    Sec. 35. SOLAR CITIES REPORT.
28.16The cities of Minneapolis and St. Paul, designated as solar cities under the federal
28.17Department of Energy's Solar America Initiative, shall, by October 1, 2009, and October
28.181, 2010, submit a report to the cochairs of the Legislative Energy Commission containing
28.19strategies to accelerate the rate of solar thermal and solar electric energy installations
28.20in all building types throughout the state. The report must, at a minimum, address the
28.21following issues:
28.22(1) identify legal, administrative, financial, and operational barriers to increasing the
28.23installation of solar energy, and measures to overcome them;
28.24(2) identify financial and regulatory mechanisms that stimulate the development of
28.25solar energy;
28.26(3) identify ways to link solar energy development with energy conservation and
28.27energy efficiency strategies and programs;
28.28(4) how efforts and initiatives undertaken by St. Paul and Minneapolis can be
28.29integrated with activities undertaken in other parts of the state; and
28.30(5) how projected trends in solar technologies and the costs of solar generation can
28.31be integrated into the state's strategy to advance adoption of solar energy.
28.32In preparing these reports, the cities may confer with any person whose experience
28.33and expertise will assist in preparing the reports, including utilities, businesses providing
28.34solar energy installation services, nonprofit organizations promoting solar energy, and

29.2(a) Of the amount remaining from the appropriation to the commissioner of
29.3commerce to provide competitive, cost-share grants to fund renewable energy research
29.4in this state under Laws 2007, chapter 57, article 2, section 3, subdivision 6, $750,000 is
29.5canceled to the special revenue fund.
29.6(b) $750,000 in fiscal year 2010 is appropriated from the special revenue fund to the
29.7commissioner of commerce for a onetime grant to BioBusiness Alliance of Minnesota
29.8for bioscience business development programs to promote and position the state as
29.9a global leader in bioscience business activities. These funds may be used to create,
29.10recruit, retain, and expand biobusiness activity in Minnesota; implement the destination
29.112025 statewide plan; update a statewide assessment of the bioscience industry and the
29.12competitive position of Minnesota-based bioscience businesses relative to other states and
29.13other nations; and develop and implement business and scenario-planning models to
29.14create, recruit, retain, and expand biobusiness activity in Minnesota.
29.15EFFECTIVE DATE.This section is effective the day following final enactment.

29.16    Sec. 37. REVISOR'S INSTRUCTION.
29.17(a) The revisor of statutes shall replace the phrase "parts 7820.1500 to 7820.2300" in
29.18Minnesota Rules, part 7826.0200, with the phrase "Minnesota Statutes, sections 216B.096
29.19and 216B.097."
29.20(b) The revisor of statutes shall replace the phrase "chapter 7820" in Minnesota
29.21Rules, part 7826.1500, item B, with the phrase "Minnesota Statutes, sections 216B.096
29.22and 216B.097."
29.23EFFECTIVE DATE.This section is effective the day following final enactment.

29.24    Sec. 38. REPEALER.
29.25Laws 2007, chapter 3, section 3, is repealed."
29.26Delete the title and insert:
29.27"A bill for an act
29.28relating to energy; providing for energy conservation; regulating utilities and
29.29utility rates; modifying or adding provisions relating to renewable energy
29.30production incentives and initiatives, high-voltage transmission lines, central
29.31corridor utility zone cost adjustments, contracts, renewable energy purchases,
29.32decoupling criteria, certain appraisal fees, energy conservation, utility costs
29.33and refunds, renewable and high-efficiency energy rate options, solar energy,
29.34utility energy savings, biomethane purchases, Sustainable Building 2030,
29.35certificate of need exemptions, energy facilities, renewable development account,
29.36and Mountain Iron Economic Development Authority; providing for audit
29.37investigation costs and appropriating money; requiring studies, legislative reports
29.38and proposals; cancelling appropriations; appropriating money;amending
29.39Minnesota Statutes 2008, sections 116C.779, subdivision 2, by adding a
30.1subdivision; 117.189; 216A.03, subdivision 6, by adding a subdivision; 216B.16,
30.2subdivisions 2, 6c, 7b, by adding a subdivision; 216B.1645, subdivision 2a;
30.3216B.169, subdivision 2; 216B.1691, subdivision 2a; 216B.23, by adding
30.4a subdivision; 216B.241, subdivisions 1c, 5a, 9, by adding a subdivision;
30.5216B.2411, subdivisions 1, 2; 216B.2412, subdivision 2; 216B.2424, subdivision
30.65a; 216B.243, subdivisions 8, 9; 216B.62, subdivisions 3, 4, by adding a
30.7subdivision; 216C.11; 216C.41, subdivision 5a; proposing coding for new law
30.8in Minnesota Statutes, chapters 216B; 216C; repealing Laws 2007, chapter 3,
30.9section 3."
We request the adoption of this report and repassage of the bill.Senate Conferees: (Signed) Yvonne Prettner Solon, John Doll, D. Scott Dibble, David Senjem, Dan SparksHouse Conferees: (Signed) Bill Hilty, Andrew Falk, Sheldon Johnson, Jeremy Kalin, Michael Beard
We request the adoption of this report and repassage of the bill.
Senate Conferees:(Signed)
Yvonne Prettner Solon
John Doll
D. Scott Dibble
David Senjem
Dan Sparks
House Conferees:(Signed)
Bill Hilty
Andrew Falk
Sheldon Johnson
Jeremy Kalin
Michael Beard