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Minnesota Legislature

Office of the Revisor of Statutes

SF 901

as introduced - 88th Legislature (2013 - 2014) Posted on 04/02/2013 12:44pm

KEY: stricken = removed, old language.
underscored = added, new language.
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A bill for an act
relating to energy; cogeneration and small power production; modifying
provisions governing net metered systems and aggregation of meters; prohibiting
limits on cumulative generation; authorizing rulemaking; establishing a solar
electricity standard; clarifying the repayment period for the energy improvements
program;amending Minnesota Statutes 2012, sections 216B.02, subdivision 4;
216B.164, subdivisions 3, 4, 6, by adding subdivisions; 216C.436, subdivisions
7, 8; proposing coding for new law in Minnesota Statutes, chapter 216B;
repealing Minnesota Statutes 2012, section 216B.164, subdivision 1.

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

Section 1.

Minnesota Statutes 2012, section 216B.02, subdivision 4, is amended to read:


Subd. 4.

Public utility.

"Public utility" means persons, corporations, or other legal
entities, their lessees, trustees, and receivers, now or hereafter operating, maintaining, or
controlling in this state equipment or facilities for furnishing at retail natural, manufactured,
or mixed gas or electric service to or for the public or engaged in the production and retail
sale thereof but does not include (1) a municipality or a cooperative electric association,
organized under the provisions of chapter 308A, producing or furnishing natural,
manufactured, or mixed gas or electric service; (2) a retail seller of compressed natural gas
used as a vehicular fuel which purchases the gas from a public utility; or (3) a retail seller
of electricity used to recharge a battery that powers an electric vehicle, as defined in section
169.011, subdivision 26a, and that is not otherwise a public utility under this chapter.
Except as otherwise provided, the provisions of this chapter shall not be applicable to any
sale of natural, manufactured, or mixed gas or electricity by a public utility to another
public utility for resale. In addition, the provisions of this chapter shall not apply to a
public utility whose total natural gas business consists of supplying natural, manufactured,
or mixed gas to not more than 650 customers within a city pursuant to a franchise
granted by the city, provided a resolution of the city council requesting exemption from
regulation is filed with the commission. The city council may rescind the resolution
requesting exemption at any time, and, upon the filing of the rescinding resolution with the
commission, the provisions of this chapter shall apply to the public utility. No person shall
be deemed to be a public utility if it furnishes its services only to tenants or cooperative or
condominium owners in buildings owned, leased, or operated by such person. No person
shall be deemed to be a public utility if it furnishes service to occupants of a manufactured
home or trailer park owned, leased, or operated by such person. No person shall be deemed
to be a public utility if it produces or furnishes service to less than 25 persons.new text begin No person
shall be deemed to be a public utility, a municipality, or a cooperative electric association
organized under chapter 308A if the person only furnishes consumers with electricity
or heat generated from solar generating equipment located on the consumer's property,
provided the equipment is owned or operated by an entity other than the consumer.
new text end

Sec. 2.

Minnesota Statutes 2012, section 216B.164, is amended by adding a
subdivision to read:


new text begin Subd. 2a. new text end

new text begin Definitions. new text end

new text begin (a) For the purposes of this section, the following terms
have the meanings given them:
new text end

new text begin (b)"Aggregated meter" means a meter located on the premises of a
customer-generator's owned or leased property that is contiguous with the
customer-generator's designated meter.
new text end

new text begin (c) "Cogeneration" means a combined process whereby electrical and useful thermal
energy are produced simultaneously.
new text end

new text begin (d) "Contiguous property" means property owned or leased by the
customer-generator, without regard to interruptions in contiguity caused by easements,
public thoroughfares, transportation rights-of-way, or utility rights-of-way.
new text end

new text begin (e) "Customer-generator" means the person who is named on the utility electric
bill for the premises.
new text end

new text begin (f) "Designated meter" means a meter that is physically attached to the
customer-generator's facility that the customer-generator designates as the primary meter
for billing purposes in the case of meter aggregation.
new text end

new text begin (g) "High-efficiency, low emissions, distributed generation" means a distributed
energy facility that includes waste heat, cogeneration, or fuel cell technology, and that
uses natural gas, renewable energy, or a similarly clean fuel.
new text end

new text begin (h) "Net metered system" means an electric generation facility with the primary
purpose of offsetting a customer-generator's energy use through the use of renewable
energy or high-efficiency, low emissions, distributed generation sources.
new text end

new text begin (i) "Renewable energy" has the meaning given in section 216B.2411, subdivision 2.
new text end

Sec. 3.

Minnesota Statutes 2012, section 216B.164, subdivision 3, is amended to read:


Subd. 3.

Purchases; small facilities.

(a) For a qualifying facility having less
than deleted text begin40-kilowattdeleted text endnew text begin 1,000-kilowattnew text end capacity, the customer shall be billed for the net energy
supplied by the utility according to the applicable rate schedule for sales to that class of
customer. In the case of net input into the utility system by a qualifying facility having less
than deleted text begin40-kilowattdeleted text endnew text begin 1,000-kilowattnew text end capacity, compensation to the customer shall be at a per
kilowatt-hour rate determined under paragraph (b) or (c).new text begin Compensation for net input into
the utility system shall be applied as a credit to the customer's energy bill, carried forward
and applied to subsequent energy bills for a period of up to 12 months. If any credit
remains after the 12-month period, the value of the remaining credit must be returned to
the customer, by check, within 15 days of the next billing date. The customer may choose
the month in which the 12-month billing and credit period begins.
new text end

(b) In setting rates, the commission shall consider the fixed distribution costs to the
utility not otherwise accounted for in the basic monthly charge and shall ensure that the
costs charged to the qualifying facility are not discriminatory in relation to the costs
charged to other customers of the utility. The commission shall set the rates for net
input into the utility system based on avoided costs as defined in the Code of Federal
Regulations, title 18, section 292.101, paragraph (b)(6), the factors listed in Code of
Federal Regulations, title 18, section 292.304, and all other relevant factors.

(c) new text beginFor qualifying facilities generating electricity before January 1, 2015, and
new text endnotwithstanding any provision in this chapter to the contrary, a qualifying facility having
less than 40-kilowatt capacity may elect that the compensation for net input by the
qualifying facility into the utility system shall be at the average retail utility energy rate.
"Average retail utility energy rate" is defined as the average of the retail energy rates,
exclusive of special rates based on income, age, or energy conservation, according to the
applicable rate schedule of the utility for sales to that class of customer.

(d) If the qualifying facility new text beginor net metered system new text endis interconnected with a
nongenerating utility which has a sole source contract with a municipal power agency
or a generation and transmission utility, the nongenerating utility may elect to treat its
purchase of any net input under this subdivision as being made on behalf of its supplier
and shall be reimbursed by its supplier for any additional costs incurred in making the
purchase. Qualifying facilitiesnew text begin or net metered systemsnew text end having less than deleted text begin40-kilowatt
deleted text endnew text begin 1,000-kilowattnew text end capacity may, at the customer's option, elect to be governed by the
provisions of subdivision 4.

Sec. 4.

Minnesota Statutes 2012, section 216B.164, subdivision 4, is amended to read:


Subd. 4.

Purchases; wheeling; costs.

(a) Except as otherwise provided in
paragraph (c), this subdivision shall apply to all qualifying facilities having deleted text begin40-kilowatt
deleted text endnew text begin 1,000-kilowattnew text end capacity or more as well as qualifying facilities as defined in subdivision 3
new text beginand net metered systems under subdivision 4a new text endwhich elect to be governed by its provisions.

(b) The utility to which the qualifying facility is interconnected shall purchase all
energy and capacity made available by the qualifying facility. The qualifying facility shall
be paid the utility's full avoided capacity and energy costs as negotiated by the parties, as
set by the commission, or as determined through competitive bidding approved by the
commission. The full avoided capacity and energy costs to be paid a qualifying facility
that generates electric power by means of a renewable energy source are the utility's least
cost renewable energy facility or the bid of a competing supplier of a least cost renewable
energy facility, whichever is lower, unless the commission's resource plan order, under
section 216B.2422, subdivision 2, provides that the use of a renewable resource to meet
the identified capacity need is not in the public interest.

(c) For all qualifying facilities having 30-kilowatt capacity or more, the utility
shall, at the qualifying facility's or the utility's request, provide wheeling or exchange
agreements wherever practicable to sell the qualifying facility's output to any other
Minnesota utility having generation expansion anticipated or planned for the ensuing ten
years. The commission shall establish the methods and procedures to insure that except
for reasonable wheeling charges and line losses, the qualifying facility receives the full
avoided energy and capacity costs of the utility ultimately receiving the output.

(d) The commission shall set rates for electricity generated by renewable energy.

Sec. 5.

Minnesota Statutes 2012, section 216B.164, is amended by adding a
subdivision to read:


new text begin Subd. 4a. new text end

new text begin Net metered systems. new text end

new text begin Notwithstanding any provision of this chapter
to the contrary, a customer with a net metered system having less than 1,000-kilowatt
capacity may elect the compensation for net input by the customer-generator into the
utility system. Compensation shall be in the form of a kilowatt-hour credit on the
customer's energy bill carried forward and applied to subsequent energy bills. To the
extent
new text end new text begin that net input by the customer-generator into the utility system exceeds the net
energy supplied by the utility during a 12-month period, compensation for net input by the
customer-generator into the utility system shall be at the utility's average retail rate until
December 31, 2014, then at the avoided cost rate set by the commission in subdivision 3,
paragraph (b), beginning January 1, 2015. The customer-generator may choose the month
in which the annual billing period begins.
new text end

Sec. 6.

Minnesota Statutes 2012, section 216B.164, is amended by adding a
subdivision to read:


new text begin Subd. 4b. new text end

new text begin Aggregation of meters. new text end

new text begin (a) For the purpose of measuring electricity under
subdivisions 3 and 4a, a utility must aggregate for billing purposes a customer-generator's
designated meter with one or more aggregated meters if a customer requests that it do so.
Any aggregation of meters must conform with the requirements of this section.
new text end

new text begin (b) This subdivision is mandatory for a public utility only when:
new text end

new text begin (1) the aggregated meters are located on the customer-generator's contiguous
property; and
new text end

new text begin (2) new text end new text begin the electricity recorded by the designated meter and any aggregated meters is
for the customer-generator's requirements.
new text end

new text begin (c) A customer-generator must give at least 60 days' notice to the utility to request
that additional meters be included in meter aggregation. The specific meters must be
identified at the time of the request. In the event that more than one meter is identified, the
customer-generator must designate the rank order for the aggregated meters to which the
net metered credits are to be applied, and must rank aggregated meters subject to the same
rate schedule as the designated
new text end new text begin meter above any other meters. At least 60 days prior to the
beginning of the next annual billing period, a customer-generator may amend the rank
order of the aggregated meters, subject to the same requirements of this subdivision.
new text end

new text begin (d) The aggregation of meters will apply only to charges that use kilowatt-hours
as the billing determinant. All other charges applicable to each meter account shall be
billed to the customer-generator.
new text end

new text begin (e) The utility will first apply the kilowatt-hour credit to the charges for the
designated meter and then to the charges for the aggregated meters in the rank order
specified by the customer-generator. If the net metered facility supplies more electricity
to the utility than the energy usage recorded by the customer-generator's designated and
aggregated meters during a monthly billing period, the utility shall apply credits to the
next monthly bill for the excess kilowatt-hours first to the designated meter, then to the
aggregated meters in the rank order specified by the customer-generator.
new text end

new text begin (f) With the commission's prior approval, a utility may charge the customer-generator
requesting to aggregate meters a reasonable fee to cover the administrative costs incurred in
implementing the costs of this subdivision, pursuant to a tariff approved by the commission
for a public utility or governing body for a municipal electric utility or electric cooperative.
new text end

Sec. 7.

Minnesota Statutes 2012, section 216B.164, is amended by adding a
subdivision to read:


new text begin Subd. 4c. new text end

new text begin Limiting cumulative generation prohibited. new text end

new text begin The commission and any
other governing body regulating public utilities, municipal electric utilities, or electric
cooperatives are prohibited from limiting the cumulative generation of net metered
systems under subdivision 4a and qualifying facilities under subdivision 3 to less than
five percent of a utility or cooperative's historic annual energy sales. After the cumulative
limit of five percent has been reached, a public utility, municipal electric utility, or electric
cooperative's obligation to offer net metering to a new customer-generator may be limited
by the commission or governing body if it determines doing so is in the public interest. The
commission may limit net metering obligations under this subdivision only after providing
notice and opportunity for public comment. The governing body of a municipal electric
utility or electric cooperative may limit net metering obligations under this subdivision
only after providing the affected municipal electric utility or electric cooperative's
customers with notice and opportunity to comment. When limiting net metering
obligations under this subdivision, the commission or governing body shall consider:
new text end

new text begin (1) the environmental and other public policy benefits of net metered systems;
new text end

new text begin (2) the impact of net metered systems on the electricity costs for customers without
net metered systems;
new text end

new text begin (3) the effects of net metering on the reliability of the electric system;
new text end

new text begin (4) technical advances or technical concerns; and
new text end

new text begin (5) other statutory obligations imposed on the commission or a utility.
new text end

new text begin The commission or governing body may limit net metering obligations under clauses
(2) to (4) only if it finds implementation would cause significant rate impact, require
significant measures to address reliability, or raise significant technical issues.
new text end

Sec. 8.

Minnesota Statutes 2012, section 216B.164, subdivision 6, is amended to read:


Subd. 6.

Rules and uniform contract.

(a) The commission shall promulgate rules
to implement the provisions of this section. The commission shall also establish a uniform
statewide form of contract for use between utilities and a new text beginnet metered or new text endqualifying facility
having less than deleted text begin40-kilowattdeleted text endnew text begin 1,000-kilowattnew text end capacity.

(b) The commission shall require the qualifying facility to provide the utility with
reasonable access to the premises and equipment of the qualifying facility if the particular
configuration of the qualifying facility precludes disconnection or testing of the qualifying
facility from the utility side of the interconnection with the utility remaining responsible
for its personnel.

(c) The uniform statewide form of contract shall be applied to all new and existing
interconnections established between a utility and a new text beginnet metered or new text endqualifying facility
having less than deleted text begin40-kilowattdeleted text endnew text begin 1,000-kilowattnew text end capacity, except that existing contracts may
remain in force until deleted text beginwritten notice of election that the uniform statewide contract form
applies is given by either party to the other, with the notice being of the shortest time
period permitted under the existing contract for termination of the existing contract by
either party, but not less than ten nor longer than 30 days
deleted text endnew text begin terminated by mutual agreement
between both parties
new text end.

new text begin (d) For generation facilities installed after the effective date of this section, a
renewable energy credit is owned by the owner of the renewable energy resource from
which it was derived, unless the generation owner explicitly transfers ownership of the
renewable energy credit.
new text end

new text begin (e) Standby charges do not apply to net metered systems under subdivision 3 or 4a.
new text end

Sec. 9.

new text begin [216B.2427] SOLAR ELECTRICITY STANDARD.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin (a) For the purposes of this section, the terms defined in
this subdivision have the meanings given them.
new text end

new text begin (b) "Electric utility" has the meaning given in section 216B.1691, subdivision 1,
paragraph (b).
new text end

new text begin (c) "Total retail electric sales" has the meaning given in section 216B.1691,
subdivision 1, paragraph (c).
new text end

new text begin Subd. 2. new text end

new text begin Solar electricity standard. new text end

new text begin (a) Except as otherwise provided in paragraph
(b), each electric utility shall generate or procure solar electric generation capacity for
its retail customers in Minnesota or the retail customers of a distribution utility to which
the electric utility provides wholesale electric services. At a minimum, the following
percentages of the electric utility's total retail sales to retail customers in Minnesota must
be generated by solar energy
new text end new text begin by the end of the year indicated:
new text end

new text begin (1) 2016: ....... percent;
new text end

new text begin (2) 2020: ....... percent; and
new text end

new text begin (3) 2025: ....... percent.
new text end

new text begin (b) An electric utility that owned a nuclear generating facility as of January 1, 2013,
must meet the requirements of this paragraph. An electric utility subject to this paragraph
must generate or procure solar electric generation capacity for its retail customers in
Minnesota or the retail customers of a distribution utility to which the electric utility
provides wholesale electric service. At a minimum, the following percentages of the
electric utility's total retail electric sales to retail customers in Minnesota must be
generated by solar energy by the end of the year indicated:
new text end

new text begin (1) 2016: ....... percent; and
new text end

new text begin (2) 2020: ....... percent.
new text end

new text begin (c) An electric utility may not use energy required by the solar energy standard under
this section to satisfy its standard obligation under section 216B.1691.
new text end

new text begin Subd. 3. new text end

new text begin Use of integrated resource planning process. new text end

new text begin The commission may
exercise its authority under this subdivision to modify or delay implementation of a
standard obligation as a part of an integrated resource planning proceeding under section
216B.2422. The commission's authority must be exercised according to this subdivision.
The order to delay or modify shall not be considered advisory with respect to any electric
utility. This subdivision shall not be construed to limit the commission's authority to
modify or delay implementation of a standard obligation in other proceedings before it.
new text end

new text begin Subd. 4. new text end

new text begin Utility plans filed with commission. new text end

new text begin Each electric utility shall report
to the commission on its plans, activities, and progress demonstrating the efforts made
towards complying with this section. The report shall be included in its filings under
section 216B.2422 or in a separate report submitted to the commission every two years,
whichever is more frequent. In its resource plan or separate report, each electric utility
shall provide a description of:
new text end

new text begin (1) the status of the utility's solar energy mix relative to the standards;
new text end

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

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

new text begin (4) potential solutions to the identified obstacles; and
new text end

new text begin (5) an estimation of the rate impact related to measures taken by the electric utility
necessary to comply with this section. The rate impact estimate must be for wholesale
rates and, if the electric utility makes retail sales, an estimate shall also be completed for
the impact on the electric utility's retail rates. Those activities include, without limitation,
energy purchases, generation facility acquisition or construction, and transmission
improvements. An estimation of rate impacts must also account for acquisition of energy
capacity, distribution, and transmission upgrades avoided as a result of the standards.
new text end

new text begin Subd. 5. new text end

new text begin Renewable energy credits. new text end

new text begin In lieu of generating or procuring energy
directly to satisfy the solar electricity standard of this section, an electric utility may
use renewable energy credits that originate from a solar electricity generator to satisfy
the standard. In doing so, an electric utility must follow protocols established by the
commission for registering, tracking, and retiring credits.
new text end

new text begin Subd. 6. new text end

new text begin Compliance; penalties. new text end

new text begin (a) The commission must regularly investigate
whether an electric utility is in compliance with its standard obligation under subdivision 2.
new text end

new text begin (b) If the commission finds noncompliance, it may order the electric utility to
construct solar energy facilities, purchase solar energy, purchase renewable energy credits
generated by solar energy, or engage in other activities to achieve compliance. If an
electric utility fails to comply with an order under this subdivision, the commission may
impose a financial penalty on the electric utility in an amount not to exceed the estimated
cost of the electric utility to achieve compliance. The penalty may not exceed the lesser
of the cost of constructing facilities or purchasing credits. The commission must deposit
financial penalties imposed under this subdivision in the energy and conservation account
established in the special revenue fund under section 216B.241, subdivision 2a.
new text end

new text begin (c) Nothing in this subdivision shall be construed to limit any other authority the
commission possesses to enforce this section.
new text end

Sec. 10.

Minnesota Statutes 2012, section 216C.436, subdivision 7, is amended to read:


Subd. 7.

Repayment.

An implementing entity that finances an energy improvement
under this section must:

(1) secure payment with a lien against the deleted text beginbenefiteddeleted text end qualifying real property; and

(2) collect repayments as a special assessment as provided for in section 429.101
or by charternew text begin, provided that special assessments may be made payable in up to 20 equal
annual installments
new text end.

If the implementing entity is an authority, the local government that authorized
the authority to act as implementing entity shall impose and collect special assessments
necessary to pay debt service on bonds issued by the implementing entity under subdivision
8, and shall transfer all collections of the assessments upon receipt to the authority.

Sec. 11.

Minnesota Statutes 2012, section 216C.436, subdivision 8, is amended to read:


Subd. 8.

Bond issuance; repayment.

(a) An implementing entity may issue
revenue bonds as provided in chapter 475 for the purposes of this sectionnew text begin, provided the
revenue bond must not be payable more than 20 years from the date of issuance
new text end.

(b) The bonds must be payable as to both principal and interest solely from the
revenues from the assessments established in subdivision 7.

(c) No holder of bonds issued under this subdivision may compel any exercise of the
taxing power of the implementing entity that issued the bonds to pay principal or interest
on the bonds, and if the implementing entity is an authority, no holder of the bonds may
compel any exercise of the taxing power of the local government. Bonds issued under
this subdivision are not a debt or obligation of the issuer or any local government that
issued them, nor is the payment of the bonds enforceable out of any money other than the
revenue pledged to the payment of the bonds.

Sec. 12. new text begin REPEALER.
new text end

new text begin Minnesota Statutes 2012, section 216B.164, subdivision 1, new text end new text begin is repealed.
new text end