SF 129

as introduced - 85th Legislature (2007 - 2008) Posted on 12/15/2009 12:00am

A bill for an act
relating to energy; requiring utilities to meet certain renewable energy standards;
regulating certificates of need for large energy facilities; modifying integrated
resource planning requirements; modifying transmission planning process;
providing for taxation of certain transmission lines; making technical changes;
amending Minnesota Statutes 2006, sections 216B.1612, subdivision 5;
216B.1645, subdivision 1; 216B.1691; 216B.2411, subdivisions 1, 3; 216B.2421;
216B.2422; 216B.2425, subdivision 7; 216B.2426; 216B.243; 216C.053;
216C.315; 272.02, by adding a subdivision; repealing Minnesota Statutes 2006,
section 216B.169.

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

Section 1.

Minnesota Statutes 2006, section 216B.1612, subdivision 5, is amended to
read:

Subd. 5.

Priority for C-BED projects.

(a) A utility subject to section 216B.1691
that needs to construct new generation, or purchase the output from new generation, as
part of its plan to satisfy its good faith objective the standard under that section should
take reasonable steps to determine if one or more C-BED projects are available that meet
the utility's cost and reliability requirements, applying standard reliability criteria, to fulfill
some or all of the identified need at minimal impact to customer rates.

Nothing in this section shall be construed to obligate a utility to enter into a power
purchase agreement under a C-BED tariff developed under this section.

(b) Each utility shall include in its resource plan submitted under section 216B.2422
a description of its efforts to purchase energy from C-BED projects, including a list of the
projects under contract and the amount of C-BED energy purchased.

(c) The commission shall consider the efforts and activities of a utility to purchase
energy from C-BED projects when evaluating its good faith effort towards meeting the
renewable energy objective standard under section 216B.1691.

Sec. 2.

Minnesota Statutes 2006, section 216B.1645, subdivision 1, is amended to read:

Subdivision 1.

Commission authority.

Upon the petition of a public utility, the
Public Utilities Commission shall approve or disapprove power purchase contracts,
investments, or expenditures entered into or made by the utility to satisfy the wind and
biomass mandates contained in sections 216B.169, 216B.2423, and 216B.2424, and to
satisfy the renewable energy objectives standards set forth in section 216B.1691, including
reasonable investments and expenditures made to:

(1) transmit the electricity generated from sources developed under those sections
that is ultimately used to provide service to the utility's retail customers, including
studies necessary to identify new transmission facilities needed to transmit electricity to
Minnesota retail customers from generating facilities constructed to satisfy the renewable
energy objectives standards, provided that the costs of the studies have not been recovered
previously under existing tariffs and the utility has filed an application for a certificate
of need or for certification as a priority project under section 216B.2425 for the new
transmission facilities identified in the studies; or

(2) develop renewable energy sources from the account required in section 116C.779.

Sec. 3.

Minnesota Statutes 2006, section 216B.1691, is amended to read:

216B.1691 RENEWABLE ENERGY OBJECTIVES STANDARDS.

Subdivision 1.

Definitions.

(a) Unless otherwise specified in law For purposes of
this section, "eligible renewable energy technology" means an energy technology that:

(1) generates electricity from the following a renewable energy sources source of
any kind, including, but not limited to: solar; wind; hydroelectric with a capacity of less
than 60 100 megawatts; hydrogen, provided that after January 1, 2010, the hydrogen
must be generated from the resources listed in this clause; or biomass, which includes an
energy recovery facility used to capture the heat value of mixed municipal solid waste or
refuse-derived fuel from mixed municipal solid waste as a primary fuel; or landfill gas. and

(2) was not mandated by Laws 1994, chapter 641, or by commission order issued
pursuant to that chapter prior to August 1, 2001.

(b) "Electric utility" means a public utility providing electric service, a generation
and transmission cooperative electric association, or a municipal power agency, or a
power district.

(c) "Total retail electric sales" means the kilowatt-hours of electricity sold in a year
by an electric utility to retail customers of the electric utility or to a distribution utility for
distribution to the retail customers of the distribution utility.

Subd. 2.

Eligible Renewable energy objectives standards.

(a) Each electric utility
shall make a good faith effort to generate or procure sufficient electricity generated by
an eligible a renewable energy technology to provide its retail consumers, or the retail
customers of a distribution utility to which the electric utility provides wholesale electric
service, so that at least the following percentages of the electric utility's total retail electric
sales are generated by renewable energy technologies by the end of the year indicated:

(1) 2015 - 10 percent

(2) 2020 - 20 percent

(1) commencing in 2005, at least one percent of the electric utility's total retail
electric sales is generated by eligible energy technologies;

(2) the amount provided under clause (1) is increased by one percent of the utility's
total retail electric sales each year until 2015; and

(3) ten percent of the electric energy provided to retail customers in Minnesota is
generated by eligible energy technologies.

(b) Of the eligible energy technology generation required under paragraph (a),
clauses (1) and (2), not less than 0.5 percent of the energy must be generated by biomass
energy technologies, including an energy recovery facility used to capture the heat value
of mixed municipal solid waste or refuse-derived fuel from mixed municipal solid waste
as a primary fuel, by 2005. By 2010, one percent of the eligible technology generation
required under paragraph (a), clauses (1) and (2), shall be generated by biomass energy
technologies. An energy recovery facility used to capture the heat value of mixed
municipal solid waste or refuse-derived fuel from mixed municipal solid waste, with a
power sales agreement in effect as of May 29, 2003, that terminates after December 31,
2010, does not qualify as an eligible energy technology unless the agreement provides for
rate adjustment in the event the facility qualifies as a renewable energy source.

(c) By June 1, 2004, and as needed thereafter, the commission shall issue an order
detailing the criteria and standards by which it will measure an electric utility's efforts to
meet the renewable energy objectives of this section to determine whether the utility is
making the required good faith effort. In this order, The commission shall include criteria
and standards that protect against delay or modify the standard for an electric utility if it
finds that compliance with a standard is not in the public interest because compliance:

(1) will produce undesirable impacts on the reliability of the utility's system and;

(2) will produce undesirable economic impacts on the utility's ratepayers and that
consider technical feasibility;

(3) is not feasible due to delays in acquiring, or due to rejection of, necessary siting
or other permitting approvals;

(4) is not feasible due to delays, cancellations, or nondelivery of necessary
equipment for the construction or commercial operation of a renewable energy facility;

(5) is not feasible due to transmission constraints preventing delivery of service; or

(6) is otherwise not technically feasible.

(d) In its order under paragraph (c), the commission shall provide for a weighted
scale of how energy produced by various eligible energy technologies shall count toward a
utility's objective. In establishing this scale, the commission shall consider the attributes
of various technologies and fuels, and shall establish a system that grants multiple credits
toward the objectives for those technologies and fuels the commission determines is in
the public interest to encourage.

(c) The commission must accept findings of fact related to this subdivision, as
determined and presented by the governing body of a generation and transmission
cooperative association or municipal power agency or power district.

Subd. 3.

Utility plans filed with commission.

(a) Each electric utility shall
report on its plans, activities, and progress compliance with regard to these objectives
standards either in its filings under section 216B.2422 or in a separate report submitted
to the commission every two years, whichever is more frequent, demonstrating to the
commission that the utility is making the required good faith utility's effort to comply with
this section. In its resource plan or a separate report, each electric utility shall provide a
description of:

(1) the status of the utility's renewable energy mix relative to the good faith objective
these standards;

(2) efforts taken to meet the objective standards;

(3) any obstacles encountered or anticipated in meeting the objective standards; and

(4) potential solutions to the obstacles.

(b) The commissioner shall compile the information provided to the commission
under paragraph (a), and report to the chairs of the house of representatives and senate
committees with jurisdiction over energy and environment policy issues as to the progress
of utilities in the state in increasing the amount of renewable energy provided to retail
customers, with any recommendations for regulatory or legislative action, by January
15 of each odd-numbered year.

Subd. 4.

Renewable energy credits.

(a) To facilitate compliance with this section,
the commission, by rule or order, may shall establish a program for tradable renewable
energy credits for electricity generated by an eligible a renewable energy technology that
treats all renewable energy equally, and shall do so no later than January 1, 2008. In doing
so, the commission shall implement a system that constrains or limits the cost of credits,
taking care to ensure that such a system does not undermine the market for those credits.
The program shall treat all renewable energy technology equally and shall not give more or
less credit to energy based on the state where the energy was generated or the technology
with which the energy was generated. The program shall provide for the banking of
unused credits to allow renewable energy generated in one year but not used to satisfy the
standard in that same year to be carried forward to satisfy the mandate in future years.

(b) In lieu of generating or procuring energy directly to satisfy the renewable energy
objective standard of this section, an electric utility may purchase sufficient renewable
energy credits, issued pursuant to this subdivision, to meet its objective utilize renewable
energy credits issued pursuant to this subdivision. Each kilowatt-hour of renewable
energy credits shall be treated the same as a kilowatt-hour of renewable energy generated
or procured by an electric utility.

(c) Upon the passage of a renewable energy standard, portfolio, or objective in
a bordering state that includes a similar definition of eligible energy technology or
renewable energy, The commission may shall facilitate the trading of renewable energy
credits between states.

(d) An electric supplier may only utilize renewable energy credits generated by an
eligible energy technology if the credits were acquired after January 1, 2001, and the
credits can be demonstrated to have been sold only once.

Subd. 5.

Technology based on fuel combustion Renewable technology
restrictions.

(a) Energy production that was mandated by Laws 1994, chapter 641, or
by commission order issued under that chapter prior to August 1, 2001, does not apply
toward an electric utility's requirement under this section.

(b) To apply toward an electric utility's requirement under this section, energy must
be generated by a facility located in the United States that was originally placed in service
after January 1, 1975, unless the facility is a municipally owned hydroelectric plant in
Minnesota that provides electricity only to a municipal system.

(c) Electricity produced by fuel combustion may only count toward a utility's
objectives standard if the generation facility:

(1) was constructed in compliance with new source performance standards
promulgated under the federal Clean Air Act for a generation facility of that type; or

(2) employs the maximum achievable or best available control technology available
for a generation facility of that type.

(b) An eligible (d) A renewable energy technology may blend or co-fire a fuel listed
in subdivision 1, paragraph (a), clause (1), with other fuels in the generation facility, but
only the percentage of electricity that is attributable to a fuel listed in that clause can be
counted toward an electric utility's renewable energy objectives standard.

Subd. 6.

Electric utility that owns nuclear generation facility.

(a) An electric
utility that owns a nuclear generation facility, as part of its good faith effort requirement
under this subdivision and subdivision 2, shall deploy an additional 300 megawatts of
nameplate capacity of wind energy conversion systems by 2010, beyond the amount of
wind energy capacity to which the utility is required by law or commission order as of
May 1, 2003. At least 100 megawatts of this capacity are to be wind energy conversion
systems of two megawatts or less, which shall not be eligible for the production incentive
under section 216C.41. To the greatest extent technically feasible and economic, these
300 megawatts of wind energy capacity are to be distributed geographically throughout
the state. The utility may opt to own, construct, and operate up to 100 megawatts of this
wind energy capacity, except that the utility may not own, construct, or operate any of
the facilities that are under two megawatts of nameplate capacity. The deployment of the
wind energy capacity under this subdivision must be consistent with the outcome of the
engineering study required under Laws 2003, First Special Session chapter 11, article
2, section 21.

(b) The renewable energy objective set forth in subdivision 2 shall be a requirement
for the public utility that owns the Prairie Island nuclear generation plant. The objective is
a requirement subject to resource planning and least-cost planning requirements in section
216B.2422, unless implementation of the objective can reasonably be shown to jeopardize
the reliability of the electric system. The least-cost planning analysis must include the
costs of ancillary services and other necessary generation and transmission upgrades.

(c) Also as part of its good faith effort requirements under this section, the utility that
owns a nuclear generation facility is to enter into a power purchase agreement by January
1, 2004, for ten to 20 megawatts of biomass energy and capacity at an all-inclusive price
not to exceed $55 per megawatt-hour, for a project described in section 216B.2424,
subdivision 5, paragraph (e), clause (2). The project must be operational and producing
energy by June 30, 2005.

Subd. 7.

Compliance.

The commission, on its own motion or upon petition,
may investigate whether an electric supplier is in compliance with the standard under
subdivisions 2 and 6. If the commission finds noncompliance it may order the electric
supplier to construct facilities or purchase credits to achieve compliance. If an electric
supplier fails to comply with an order under this subdivision, the commission may impose
a financial penalty on the electric supplier in an amount up to the electric supplier's
estimated cost of compliance, not to exceed the lesser of the cost to construct facilities
or purchase credits.

Sec. 4.

Minnesota Statutes 2006, section 216B.2411, subdivision 1, is amended to read:

Subdivision 1.

Generation projects.

(a) Any municipality or rural electric
association providing electric service and subject to section 216B.241 that is meeting
the objectives standards under section 216B.1691 may, and each public utility may, use
five percent of the total amount to be spent on energy conservation improvements under
section 216B.241, on:

(1) projects in Minnesota to construct an electric generating facility that utilizes
eligible renewable energy sources as defined in subdivision 2, such as methane or other
combustible gases derived from the processing of plant or animal wastes, biomass fuels
such as short-rotation woody or fibrous agricultural crops, or other renewable fuel, as its
primary fuel source; or

(2) projects in Minnesota to install a distributed generation facility of ten megawatts
or less of interconnected capacity that is fueled by natural gas, renewable fuels, or another
similarly clean fuel.

(b) For public utilities, as defined under section 216B.02, subdivision 4, projects
under this section must be considered energy conservation improvements as defined in
section 216B.241. For cooperative electric associations and municipal utilities, projects
under this section must be considered load-management activities described in section
216B.241, subdivision 1, paragraph (i).

Sec. 5.

Minnesota Statutes 2006, section 216B.2411, subdivision 3, is amended to read:

Subd. 3.

Other provisions.

(a) Electricity generated by a facility constructed with
funds provided under this section and using an eligible renewable energy source may be
counted toward the renewable energy objectives standards in section 216B.1691, subject
to the provisions of that section.

(b) Two or more entities may pool resources under this section to provide assistance
jointly to proposed eligible renewable energy projects. The entities shall negotiate and
agree among themselves for allocation of benefits associated with a project, such as
the ability to count energy generated by a project toward a utility's renewable energy
objectives under section 216B.1691. The entities shall provide a summary of the allocation
of benefits to the commissioner. A utility may spend funds under this section for projects
in Minnesota that are outside the service territory of the utility.

Sec. 6.

Minnesota Statutes 2006, section 216B.2421, is amended to read:

216B.2421 DEFINITION OF LARGE ENERGY FACILITY.

Subdivision 1.

Applicability.

The definition definitions in this section applies
apply to this section and sections 216B.2422 and 216B.243.

Subd. 2.

Large energy facility.

"Large energy facility" means includes the
following facilities described in clauses (1) to (6):

(1) "power plant" means any electric power generating plant or combination
of plants at a single site with a combined capacity of 50,000 kilowatts or more and
transmission lines directly associated with the plant that are necessary to interconnect the
plant to the transmission system;

(2) "high-voltage transmission line" means:

(i) any high-voltage transmission line with a capacity of 200 kilovolts or more and
greater than 1,500 feet in length, and associated transmission substations; or

(3) (ii) any high-voltage transmission line with a capacity of 100 kilovolts or more
with more than ten miles of its length in Minnesota or that crosses a state line, and
associated transmission substations;

(4) (3) "pipeline" means:

(i) any pipeline greater than six inches in diameter and having more than 50 miles of
its length in Minnesota used for the transportation of coal, crude petroleum or petroleum
fuels or oil, or their derivatives; or

(5) (ii) any pipeline for transporting natural or synthetic gas at pressures in excess of
200 pounds per square inch with more than 50 miles of its length in Minnesota;

(6) (4) "storage facility" means:

(i) any facility designed for or capable of storing on a single site more than 100,000
gallons of liquefied natural gas or synthetic gas; or

(7) (ii) any underground gas storage facility requiring a permit pursuant to section
103I.681;

(8) (5) any nuclear fuel processing or nuclear waste storage or disposal facility; and

(9) (6) any facility intended to convert any material into any other combustible fuel
and having the capacity to process in excess of 75 tons of the material per hour.

Sec. 7.

Minnesota Statutes 2006, section 216B.2422, is amended to read:

216B.2422 RESOURCE PLANNING; RENEWABLE ENERGY.

Subdivision 1.

Definitions.

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

(b) "Utility" means an entity with the capability of generating 100,000 kilowatts or
more of electric power and serving, either directly or indirectly, the needs of 10,000 retail
customers in Minnesota. Utility does not include federal power agencies.

(c) "Renewable energy" means electricity generated through use of any of the
following resources:

(1) wind;

(2) solar;

(3) geothermal;

(4) hydro;

(5) trees or other vegetation; or

(6) landfill gas.

(d) "Resource plan" means a set of resource options that a utility could use to
meet the service needs of its customers over a forecast period, including an explanation
of the supply and demand circumstances under which, and the extent to which, each
resource option would be used to meet those service needs. These resource options
include using, refurbishing, and constructing utility plant and equipment, buying power
generated by other entities, controlling customer loads, and implementing customer
energy conservation.

(e) (d) "Refurbish" means to rebuild or substantially modify an existing electricity
generating resource of 30 megawatts or greater.

Subd. 2.

Resource plan filing and approval.

A utility shall file a resource plan
with the commission periodically in accordance with rules adopted by the commission.
The commission shall approve, reject, or modify the plan of a public utility, as defined
in section 216B.02, subdivision 4, consistent with the public interest. In the resource
plan proceedings of all other utilities, the commission's order shall be advisory and the
order's findings and conclusions shall constitute prima facie evidence which may be
rebutted by substantial evidence in all other proceedings. With respect to utilities other
than those defined in section 216B.02, subdivision 4, the commission shall consider the
filing requirements and decisions in any comparable proceedings in another jurisdiction.
As a part of its resource plan filing, a utility shall include the least cost plan for meeting
50 and 75 percent of all new and refurbished capacity needs through a combination of
conservation and renewable energy resources.

Subd. 2a.

Historical data and advance forecast.

Each utility required to file a
resource plan under this section shall include in the filing all applicable annual information
required by section 216C.17, subdivision 2, and the rules adopted under that section. To
the extent that a utility complies with this subdivision, it is not required to file annual
advance forecasts with the department under section 216C.17, subdivision 2.

Subd. 3.

Environmental costs.

(a) The commission shall, to the extent practicable,
quantify and establish a range of environmental costs associated with each method of
electricity generation. A utility shall use the values established by the commission in
conjunction with other external factors, including socioeconomic costs, when evaluating
and selecting resource options in all proceedings before the commission, including
resource plan and certificate of need proceedings.

(b) The commission shall establish interim environmental cost values associated
with each method of electricity generation by March 1, 1994. These values expire on the
date the commission establishes environmental cost values under paragraph (a).

Subd. 4.

Preference for renewable energy facility.

The commission shall not
approve a new or refurbished nonrenewable energy facility in an integrated resource plan
or a certificate of need, pursuant to section , nor shall the commission allow rate
recovery pursuant to section for such a nonrenewable energy facility, unless the
utility has demonstrated that a renewable energy facility is not in the public interest.

Subd. 5.

Bidding; exemption from certificate of need proceeding.

(a) A utility
may select resources to meet its projected energy demand through a bidding process
approved or established by the commission. A utility shall use the environmental cost
estimates determined under subdivision 3 in evaluating bids submitted in a process
established under this subdivision.

(b) Notwithstanding any other provision of this section, if an electric a power
generating plant, as described in section 216B.2421, subdivision 2, clause (1), is selected
in a bidding process approved or established by the commission, a certificate of need
proceeding under section 216B.243 is not required.

(c) A certificate of need proceeding is also not required for an electric a power
generating plant that has been selected in a bidding process approved or established by the
commission, or such other selection process approved by the commission, to satisfy, in
whole or in part, the wind power mandate of section 216B.2423 or the biomass mandate
of section 216B.2424.

Subd. 6.

Consolidation of resource planning and certificate of need.

A utility
shall indicate in its resource plan whether it intends to site or construct a large energy
facility power plant. If the utility's resource plan includes a proposed large energy facility
power plant and construction of that facility is likely to begin before the utility files its
next resource plan, the commission shall conduct the resource plan proceeding consistent
with the requirements of section 216B.243 with respect to the proposed facility. If the
commission approves the proposed facility in the resource plan, a separate certificate of
need proceeding is not required.

Sec. 8.

Minnesota Statutes 2006, section 216B.2425, subdivision 7, is amended to read:

Subd. 7.

Transmission needed to support renewable resources.

(a) Each entity
subject to this section shall determine necessary transmission upgrades to support
development of renewable energy resources required to meet objectives standards under
section 216B.1691 and shall include those upgrades in its report under subdivision 2.

(b) Transmission projects determined by the commission to be necessary to support
facilitate a utility's plan under compliance with section 216B.1691 to meet its obligations
under that section must be certified as a priority electric transmission project, satisfying
the requirements of section 216B.243. In determining that a proposed transmission project
is necessary to support facilitate a utility's plan under compliance with section 216B.1691,
the commission must find that the applicant has met the following factors:

(1) that the transmission facility is necessary to allow the delivery of power from
renewable sources of energy to retail customers in Minnesota;

(2) that the applicant has signed or will sign power purchase agreements, subject
to commission approval, for resources to meet the renewable energy objective that
are dependent upon or will use the capacity of the transmission facility to serve retail
customers in Minnesota;

(3) that the installation and commercial operation date of the renewable resources to
satisfy the renewable energy objective standard will match the planned in-service date
of the transmission facility; and

(4) (3) that the proposed transmission facility is consistent with a least-cost solution
to the utility's need for additional electricity.

Sec. 9.

Minnesota Statutes 2006, section 216B.2426, is amended to read:

216B.2426 OPPORTUNITIES FOR DISTRIBUTED GENERATION.

The commission shall ensure that opportunities for the installation of distributed
generation, as that term is defined in section 216B.169, subdivision 1, paragraph (c), are
considered in any proceeding under section 216B.2422, 216B.2425, or 216B.243.

Sec. 10.

Minnesota Statutes 2006, section 216B.243, is amended to read:

216B.243 CERTIFICATE OF NEED FOR LARGE ENERGY FACILITY.

Subdivision 1.

Assessment of need criteria.

The commission shall, pursuant to
chapter 14 and sections 216C.05 to 216C.30 and this section, adopt assessment of need
criteria to be used in the determination of need for large energy facilities pursuant to
this section.

Subd. 2.

Certificate required.

No large energy facility shall be sited or constructed
in Minnesota without the issuance of a certificate of need by the commission pursuant
to sections 216C.05 to 216C.30 and this section and consistent with the criteria for
assessment of need.

Subd. 3.

Showing required for construction of large energy facility.

No proposed
large energy facility, as defined in section 216B.2421, subdivision 2, clauses (3) to (6),
shall be certified for construction unless the applicant can show that demand for electricity
cannot be met more cost effectively through energy conservation and load-management
measures and unless the applicant has otherwise justified its need. In assessing need,
the commission shall evaluate:

(1) the accuracy of the long-range energy demand forecasts on which the necessity
for the facility is based;

(2) the effect of existing or possible energy conservation programs under sections
216C.05 to 216C.30 and this section or other federal or state legislation on long-term
energy demand;

(3) the relationship of the proposed facility to overall state energy needs, as
described in the most recent state energy policy and conservation report prepared under
section 216C.18, or, in the case of a high-voltage transmission line, the relationship of the
proposed line to regional energy needs, as presented in the transmission plan submitted
under section 216B.2425;

(4) promotional activities that may have given rise to the demand for this facility;

(5) benefits of this facility, including its uses to protect or enhance environmental
quality, and to increase reliability of energy supply in Minnesota and the region;

(6) (5) possible alternatives for satisfying the energy demand or transmission needs
including, but not limited to, potential for increased efficiency and upgrading of existing
energy generation and transmission facilities, load-management programs, and distributed
generation;

(7) (6) the policies, rules, and regulations of other state and federal agencies and
local governments; and

(8) (7) any feasible combination of energy conservation improvements, required
under section 216B.241, that can (i) replace part or all of the energy to be provided by the
proposed facility, and (ii) compete with it economically;.

(9) with respect to a high-voltage transmission line, the benefits of enhanced regional
reliability, access, or deliverability to the extent these factors improve the robustness of
the transmission system or lower costs for electric consumers in Minnesota;

(10) whether the applicant or applicants are in compliance with applicable provisions
of sections and 216B.2425, subdivision 7, and have filed or will file by a
date certain an application for certificate of need under this section or for certification as
a priority electric transmission project under section for any transmission
facilities or upgrades identified under section 216B.2425, subdivision 7;

(11) whether the applicant has made the demonstrations required under subdivision
3a; and

(12) if the applicant is proposing a nonrenewable generating plant, the applicant's
assessment of the risk of environmental costs and regulation on that proposed facility
over the expected useful life of the plant, including a proposed means of allocating costs
associated with that risk.

Subd. 3a.

Use of renewable resource.

The commission may not issue a certificate
of need under this section for a large energy facility that generates electric power by means
of a nonrenewable energy source, or that transmits electric power generated by means of
a nonrenewable energy source, unless the applicant for the certificate has demonstrated
to the commission's satisfaction that it has explored the possibility of generating power
by means of renewable energy sources and has demonstrated that the alternative selected
is less expensive (including environmental costs) than power generated by a renewable
energy source. For purposes of this subdivision, "renewable energy source" includes
hydro, wind, solar, and geothermal energy and the use of trees or other vegetation as fuel.

Subd. 3b.

Nuclear power plant; new construction prohibited; relicensing.

(a) The commission may not issue a certificate of need for the construction of a new
nuclear-powered electric generating plant.

(b) Any certificate of need for additional storage of spent nuclear fuel for a facility
seeking a license extension shall address the impacts of continued operations over the
period for which approval is sought.

Subd. 3c.

Showing required for construction of power plant.

No proposed power
plant, as defined in section 216B.2421, subdivision 2, clause (1), shall be certified for
construction unless the applicant can show that demand for electricity cannot be met
more cost effectively through energy conservation and load-management measures and
unless the applicant has otherwise justified its need. In assessing need, the commission
shall evaluate:

(1) the accuracy of the long-range energy demand forecasts on which the necessity
for the facility is based;

(2) the effect of existing or possible energy conservation programs under sections
216C.05 to 216C.30, and this section or other federal or state legislation on long-term
energy demand;

(3) the relationship of the proposed facility to overall state energy needs, as
described in the most recent state energy policy and conservation report prepared under
section 216C.18;

(4) benefits of the facility, including its uses to protect or enhance environmental
quality, and to increase reliability of energy supply in Minnesota and the region; and

(5) possible alternatives for satisfying the energy demand including, but not limited
to, potential for increased efficiency and upgrading of existing energy generation and
transmission facilities, load-management programs, and distributed generation.

Subd. 3d.

Showing required for construction of high-voltage transmission line.

No proposed high-voltage transmission line, as defined in section 216B.2421, subdivision
2, clause (2), shall be certified for construction unless the applicant has otherwise justified
its need. In assessing need, the commission shall evaluate:

(1) the relationship of the proposed line to regional energy needs, as presented in
the transmission plan submitted under section 216B.2425;

(2) possible alternatives for satisfying the transmission needs, including, but not
limited to, potential for upgrading existing transmission facilities;

(3) the benefits of the facility, including its uses to protect or enhance environmental
quality and to increase reliability of energy supply in Minnesota and the region;

(4) the benefits of enhanced regional reliability, access, or deliverability to the extent
these factors improve the robustness of the transmission system or lower costs for electric
consumers in Minnesota;

(5) whether the applicant or applicants have filed, or will file by a date certain,
an application for certification as a priority electric transmission project under section
216B.2425 for any transmission facilities or upgrades identified under section 216B.2425,
subdivision 7; and

(6) the commission may not make its determination of need for a new, or need for
upgrade of an existing, high-voltage transmission line based on the nature or character of
the source of the electric power that will be transmitted over the proposed line or lines.

Subd. 4.

Application for certificate; hearing.

Any person proposing to construct a
large energy facility shall apply for a certificate of need and for a site or route permit under
chapter 216E prior to construction of the facility. The application shall be on forms and in
a manner established by the commission. In reviewing each application the commission
shall hold at least one public hearing pursuant to chapter 14. The public hearing shall
be held at a location and hour reasonably calculated to be convenient for the public.
An objective of the public hearing shall be to obtain public opinion on the necessity of
granting a certificate of need and, if a joint hearing is held, a site or route permit. The
commission shall designate a commission employee whose duty shall be to facilitate
citizen participation in the hearing process. Unless the commission determines that a joint
hearing on siting and need under this subdivision and section 216E.03, subdivision 6, is
not feasible or more efficient, or otherwise not in the public interest, a joint hearing under
those subdivisions shall be held.

Subd. 5.

Approval, denial, or modification.

(a) Within 12 months of the
submission of an application, the commission shall approve or deny a certificate of need
for the facility. Approval or denial of the certificate shall be accompanied by a statement
of the reasons for the decision. Issuance of the certificate may be made contingent upon
modifications required by the commission. If the commission has not issued an order on
the application within the 12 months provided, the commission may extend the time
period upon receiving the consent of the parties or on its own motion, for good cause, by
issuing an order explaining the good cause justification for extension.

(b) The commission shall compile an annual report on their workload in relationship
to applications for certificates of need during the previous calendar year, including the
number of applications filed, the number pending at the beginning and at the end of the
calendar year, the nature of the applications, whether each application has been approved,
denied, or modified, and the status of each application that remains pending at the end of
the calendar year. The report shall identify whether the commission has acted on each
application within the 12 months provided. For each application that has not been acted
upon within the required 12-month period, the commission shall provide a description of
the reason for the delay. The commission shall provide the report annually to the chairs
of the committees of the house of representatives and the senate with jurisdiction over
energy matters by January 31 of each year.

Subd. 6.

Application fees; rules.

Any application for a certificate of need shall be
accompanied by the application fee required pursuant to this subdivision. The application
fee is to be applied toward the total costs reasonably necessary to complete the evaluation
of need for the proposed facility. The maximum application fee shall be is $50,000,
except for an application for an electric a power generating plant, as defined in section
216B.2421, subdivision 2, clause (1), or a high-voltage transmission line, as defined in
section 216B.2421, subdivision 2, clause (2), for which the maximum application fee shall
be is $100,000. Costs exceeding the application fee and reasonably necessary to complete
the evaluation of need for the proposed facility shall be recovered from the applicant.
If the applicant is a public utility, a cooperative electric association, a generation and
transmission cooperative electric association, a municipal power agency, a municipal
electric utility, or a transmission company, the recovery shall be done pursuant to section
216B.62. The commission shall establish by rule pursuant to chapter 14 and sections
216C.05 to 216C.30 and this section, a schedule of fees based on the output or capacity
of the facility and the difficulty of assessment of need. Money collected in this manner
shall be credited to the general fund of the state treasury.

Subd. 7.

Participation by other agency or political subdivision.

(a) Other
state agencies authorized to issue permits for siting, construction, or operation of large
energy facilities, and those state agencies authorized to participate in matters before the
commission involving utility rates and adequacy of utility services, shall present their
position regarding need and participate in the public hearing process prior to the issuance
or denial of a certificate of need. Issuance or denial of certificates of need shall be the sole
and exclusive prerogative of the commission and these determinations and certificates
shall be binding upon other state departments and agencies, regional, county, and local
governments and special purpose government districts except as provided in sections
116C.01 to 116C.08 and 116D.04, subdivision 9.

(b) An applicant for a certificate of need shall notify the commissioner of agriculture
if the proposed project will impact cultivated agricultural land, as that term is defined in
section 216G.01, subdivision 4. The commissioner may participate in any proceeding on
the application and advise the commission as to whether to grant the certificate of need,
and the best options for mitigating adverse impacts to agricultural lands if the certificate is
granted. The Department of Agriculture shall be the lead agency on the development of
any agricultural mitigation plan required for the project.

Subd. 8.

Exemptions.

This section does not apply to:

(1) cogeneration or small power production facilities as defined in the Federal Power
Act, United States Code, title 16, section 796, paragraph (17), subparagraph (A), and
paragraph (18), subparagraph (A), and having a combined capacity at a single site of less
than 80,000 kilowatts; plants or facilities for the production of ethanol or fuel alcohol; or
any case where the commission has determined after being advised by the attorney general
that its application has been preempted by federal law;

(2) a high-voltage transmission line proposed primarily to distribute electricity to
serve the demand of a single customer at a single location, unless the applicant opts to
request that the commission determine need under this section or section 216B.2425;

(3) the upgrade to a higher voltage of an existing transmission line that serves
the demand of a single customer that primarily uses existing rights-of-way, unless the
applicant opts to request that the commission determine need under this section or section
216B.2425;

(4) a high-voltage transmission line of one mile or less required to connect a new or
upgraded substation to an existing, new, or upgraded high-voltage transmission line;

(5) conversion of the fuel source of an existing electric generating power plant to
using natural gas;

(6) the modification of an existing electric generating power plant to increase
efficiency, as long as the capacity of the plant is not increased more than ten percent or
more than 100 megawatts, whichever is greater; or

(7) a large energy facility that (i) generates electricity from wind energy
conversion systems, (ii) will serve, directly or indirectly, retail customers in Minnesota,
and (iii) is specifically intended to be used to meet the renewable energy objective
under section 216B.1691 or addresses address a resource need identified in a current
commission-approved or commission-reviewed resource plan under section 216B.2422,
and (iv) derives at least ten percent of the total nameplate capacity of the proposed project
from one or more C-BED projects, as defined under section 216B.1612, subdivision 2,
paragraph (f).

Sec. 11.

Minnesota Statutes 2006, section 216C.053, is amended to read:

216C.053 RENEWABLE ENERGY DEVELOPMENT.

The commissioner of commerce must engage in activities to encourage deployment
of cost-effective renewable energy developments within the state. The commissioner shall
compile and maintain information concerning existing and potential renewable energy
developments and resources in the state. The commissioner shall provide, as appropriate,
this information in proceedings for the determination of need for large energy facilities
and for the review of a utility's integrated resource plan. To the extent practicable, and in
addition to any other obligation of an electric utility to furnish information, an electric
utility seeking to add generation to its supply portfolio to serve Minnesota consumers shall
provide the commissioner with notice of its intention.

Sec. 12.

Minnesota Statutes 2006, section 216C.315, is amended to read:

216C.315 ALTERNATIVE ENERGY ECONOMIC ANALYSIS.

The commissioner shall carry out the following energy economic analysis duties:

(1) provide continued analysis of alternative energy issues for the biennial report,
certificates of need, and legislative requests;

(2) provide alternative energy information to consumers and business;

(3) assist in the maintenance and improvement of alternative energy input-output
multipliers and market penetration models;

(4) provide analysis of alternative energy data.

Sec. 13.

Minnesota Statutes 2006, section 272.02, is amended by adding a subdivision
to read:

Subd. 85.

New high-voltage transmission lines; exemption phase-out.

Notwithstanding subdivision 9, clause (a), each high-voltage transmission line, as
defined in section 216B.2421, subdivision 2, clause (2), and its associated transmission
substations, the construction of which is commenced on or after January 1, 2007, is
exempt for the first taxable year after the line or substation is initially placed in service,
and property taxes as otherwise determined by law on the transmission line and its
associated transmission substations must be reduced by:

(1) 75 percent for the second taxable year of operation of the transmission line;

(2) 50 percent for the third taxable year of operation of the transmission line; and

(3) 25 percent for the fourth taxable year of operation of the transmission line.

After the fourth taxable year of operation of the transmission line and associated
transmission substations, the transmission line and its associated transmission substations
are taxed in compliance with chapter 272.

For purposes of this subdivision, "initially placed in service" includes both new
construction and substantial expansion of the carrying capacity of a preexisting line.
"Substantial expansion" means an increase in carrying capacity of 50 percent or more.

Sec. 14. REPEALER.

Minnesota Statutes 2006, section 216B.169, is repealed.