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SF 606

as introduced - 83rd Legislature (2003 - 2004) Posted on 12/15/2009 12:00am

KEY: stricken = removed, old language.
underscored = added, new language.
  1.1                          A bill for an act 
  1.2             relating to energy; establishing permanent pilot 
  1.3             program for promoting cleaner, innovative energy 
  1.4             sources and strategic economic development; providing 
  1.5             financial and regulatory incentives, including tax 
  1.6             exemptions and eminent domain power; authorizing 
  1.7             customers to purchase power supply services from pilot 
  1.8             projects.  
  1.12     Subdivision 1.  [PURPOSE.] In order to encourage the 
  1.13  state's interest in innovative, clean energy sources and in 
  1.14  recovery in the most economically problematic regions of the 
  1.15  state, the commissioner of commerce shall designate: 
  1.16     (1) an energy generation enterprise zone capable of hosting 
  1.17  at least 750 megawatts of baseload or intermediate electrical 
  1.18  generation capacity; and 
  1.19     (2) one or more pilot projects of intermittent or peaking 
  1.20  electrical generation capacity not to exceed the aggregate of 
  1.21  250 megawatts. 
  1.22     Subd. 2.  [ELIGIBILITY.] (a) In order to be eligible for 
  1.23  designation as an energy generation enterprise zone or as a 
  1.24  pilot project under this section, a proposed energy project must:
  1.25     (1) make use of an innovative generation technology with 
  1.26  production efficiencies greater than traditional generation 
  1.27  technologies and with significantly reduced emissions; 
  2.1      (2) be proposed to be located in an economically depressed 
  2.2   region of the state, as designated by the commissioner of trade 
  2.3   and economic development under subdivision 3; and 
  2.4      (3) in the case of baseload or intermediate generation: 
  2.5      (i) be comprised of no more than 5,000 acres, which may 
  2.6   consist of up to three separate parcels of land; and 
  2.7      (ii) produce emissions that are at least 50 percent lower 
  2.8   than the statewide average per kilowatt emissions from 
  2.9   equivalent thermal generation facilities used to serve retail 
  2.10  load in the state for sulphur dioxide, nitrogen oxide, and 
  2.11  particulate matter and be capable of removing at least 90 
  2.12  percent of potential mercury emissions; or 
  2.13     (4) for intermittent or peaking generation projects, use as 
  2.14  a primary fuel source solar, wind, pumped storage, or biomass 
  2.15  energy, or hydroelectric energy with a capacity of less than 60 
  2.16  megawatts. 
  2.17     (b) A coal gasification facility is a cogeneration or 
  2.18  polygeneration facility and must be treated as a qualifying 
  2.19  facility for the purposes of Minnesota Statutes, section 
  2.20  216B.164, if a portion of the synthesis gas can be used for 
  2.21  another purpose in addition to the generation of electricity.  A 
  2.22  utility with excess generation capacity in its system is not 
  2.23  required to purchase the output from a coal gasification 
  2.24  facility under this paragraph. 
  2.25     Subd. 3.  [DESIGNATION OF ELIGIBLE AREA.] Upon receiving a 
  2.26  proposal for an energy generation project enterprise zone or 
  2.27  pilot project under this section, the commissioner of commerce 
  2.28  shall determine whether the technology proposed to be utilized 
  2.29  qualifies under subdivision 2, paragraph (a), adhering to the 
  2.30  acreage limitations of that paragraph.  The commissioner shall 
  2.31  also request a designation by the commissioner of trade and 
  2.32  economic development as to whether the area in which the project 
  2.33  is proposed to be located is an economically depressed region.  
  2.34  In making this determination, the commissioner of trade and 
  2.35  economic development shall consider each region's need for 
  2.36  economic development and revitalization and shall consider as 
  3.1   indicators of need: 
  3.2      (1) the percentage of the population that is below the 
  3.3   poverty rate, compared with the state as a whole; 
  3.4      (2) the extent to which the area's unemployment rate is 
  3.5   significantly higher than the state unemployment rate; 
  3.6      (3) the amount of property in or near the area that is 
  3.7   deteriorated or underutilized; 
  3.8      (4) the amount of housing in or near the zone that is 
  3.9   deteriorated; 
  3.10     (5) the extent to which the median family income of the 
  3.11  area is lower than the state median family income; 
  3.12     (6) the extent to which the area experienced a population 
  3.13  loss between 1980 and 1990 or between 1990 and the most recent 
  3.14  estimates by the state demographer; 
  3.15     (7) the extent to which an area has experienced sudden or 
  3.16  severe job loss as a result of closing of businesses or other 
  3.17  employers; 
  3.18     (8) the extent to which property in the area would remain 
  3.19  underdeveloped or nonperforming due to physical characteristics; 
  3.20  and 
  3.21     (9) the extent to which the area has substantial real 
  3.22  property with adequate infrastructure to support new or expanded 
  3.23  development. 
  3.24     Subd. 4.  [TAX EXEMPTIONS.] (a) Effective upon designation 
  3.25  by the commissioner of commerce, the owner of and investors in 
  3.26  the enterprise zone or pilot project, with respect to the 
  3.27  operations of the zone or project, are: 
  3.28     (1) exempt from the individual income tax under chapter 
  3.29  290; and 
  3.30     (2) exempt from the corporate franchise tax under chapter 
  3.31  290. 
  3.32     (b) In addition, the property in the enterprise zone or the 
  3.33  pilot project is exempt from taxation under Minnesota Statutes, 
  3.34  section 272.01.  The exemption is limited to improvements and 
  3.35  personal property, such as attached machinery, and does not 
  3.36  apply to land. 
  4.1      (c) In addition, the income generated by facilities in the 
  4.2   enterprise zone or by the pilot project and received by the 
  4.3   owner of the zone or project is to be subtracted from federal 
  4.4   taxable income and excluded from alternative minimum taxable 
  4.5   income under Minnesota Statutes, section 290.0921, subdivision 3.
  4.6      (d) In addition, purchases of tangible personal property, 
  4.7   fuel, or taxable services by a person for use in a trade or 
  4.8   business are exempt from the sales and use taxes imposed under 
  4.9   Minnesota Statutes, chapter 297A, if the property or services 
  4.10  are primarily used or consumed by the facilities in the zone or 
  4.11  by the pilot project. 
  4.12     (e) In addition, the purchase and use of construction 
  4.13  materials and supplies for constructing improvements to real 
  4.14  property in the zone or on which the pilot project is located 
  4.15  are exempt from the sales and use taxes imposed under Minnesota 
  4.16  Statutes, chapter 297A, if the improvements after completion of 
  4.17  construction are to be used in the conduct of a trade or 
  4.18  business.  This exemption applies regardless of whether the 
  4.19  purchases are made by the business or a contractor. 
  4.20     (f) In addition, the owner of the zone or pilot project may 
  4.21  elect to employ an accelerated five-year depreciation schedule 
  4.22  for corporate and franchise tax purposes. 
  4.23     (g) The incentives listed in this subdivision also apply to 
  4.24  costs associated with necessary transmission infrastructure 
  4.25  construction and improvements wherever located. 
  4.26     Subd. 5.  [REGULATORY INCENTIVES.] Generation facilities 
  4.27  located in an enterprise zone and projects designated by the 
  4.28  commissioner of commerce as pilot projects under this section: 
  4.29     (1) are granted a certificate of need under Minnesota 
  4.30  Statutes, section 216B.243, for the generation facilities and 
  4.31  transmission infrastructure associated with the generation 
  4.32  facilities, but are subject to all applicable environmental 
  4.33  review and permitting procedures of Minnesota Statutes, sections 
  4.34  116C.51 to 116C.69; 
  4.35     (2) once permitted and constructed, are eligible to 
  4.36  increase the capacity of the associated transmission facilities 
  5.1   without additional state review upon filing notice with the 
  5.2   commission; 
  5.3      (3) have the power of eminent domain; and 
  5.4      (4) are eligible to sell electricity at retail according to 
  5.5   section 2. 
  5.7      Subdivision 1.  [DEFINITIONS.] (a) "Eligible customer" 
  5.8   means a customer, or aggregated group of customers, who: 
  5.9      (1) requires electric service with a connected load of 500 
  5.10  kilowatts or more; 
  5.11     (2) is a federal, state, or local government entity or 
  5.12  aggregated group of these entities; or 
  5.13     (3) is a school district or aggregated group of school 
  5.14  districts. 
  5.15     (b) "Power supply services" means the provision of electric 
  5.16  power supply to an eligible end-use customer.  Power supply 
  5.17  services includes services relating to the usage, purchase, or 
  5.18  sale of electric capacity and energy, but does not include the 
  5.19  provision of distribution or transmission services. 
  5.20     Subd. 2.  [ELIGIBLE CUSTOMER; ELECTION.] (a) 
  5.21  Notwithstanding the establishment of assigned service areas for 
  5.22  electric utilities provided for in Minnesota Statutes, section 
  5.23  216B.39, an eligible customer may choose to purchase power 
  5.24  supply services from a generation facility in an enterprise zone 
  5.25  or pilot project designated under section 1 if, after notice and 
  5.26  hearing, the commission determines that the customer's election 
  5.27  to purchase power supply services from a facility or project is 
  5.28  not likely to increase costs, in the short or long term, for the 
  5.29  remaining customers of the incumbent utility serving that 
  5.30  service area. 
  5.31     (b) An eligible customer that locates a new facility on or 
  5.32  adjacent to an energy generation enterprise zone or pilot 
  5.33  project may choose to purchase power supply services from the 
  5.34  zone or project without commission approval. 
  5.35     (c) The limitations in section 1, subdivision 1, clauses 
  5.36  (1) and (2), do not apply to wholesale transactions conducted 
  6.1   pursuant to federal law and regulation. 
  6.2      (d) Entities purchasing power supply services under this 
  6.3   section must be offered backup transmission and distribution 
  6.4   services and related services at a rate determined by the 
  6.5   commission to be just and reasonable.