HF 3254

as introduced - 91st Legislature (2019 - 2020) Posted on 02/13/2020 12:37pm

A bill for an act
relating to energy; establishing the Natural Gas Innovation Act; encouraging natural
gas utilities to develop alternative resources; providing for renewable natural gas
rate options and renewable natural gas credits; requiring a renewable natural gas
inventory; proposing coding for new law in Minnesota Statutes, chapter 216B.

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

Section 1. new text begin TITLE.
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new text begin This bill may be referred to as the "Natural Gas Innovation Act."
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Sec. 2.

new text begin [216B.2427] NATURAL GAS UTILITY ALTERNATIVE RESOURCE
PLANS.
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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.
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new text begin (b) "Alternative resource" means any resource or innovative technology that could be
used to meet energy demands and achieve the goals under this section. Alternative resource
includes but is not limited to biogas, power-to-gas, renewable natural gas, nonpipeline
solutions, and avoided energy usage that is not accounted for in the utility's conservation
improvement plan.
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new text begin (c) "Biogas" means gas that is generated from organic materials through anaerobic
digestion, gasification, pyrolysis, or other technology that converts organic material to gas.
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new text begin (d) "Natural gas utility" means a public utility as defined in section 216B.02, subdivision
4, that provides natural gas sales or transportation services to customers in Minnesota.
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new text begin (e) "Power-to-gas" means the conversion of electricity generated by an eligible energy
technology as defined in section 216B.1691, subdivision 1, paragraph (a), into a storable
gaseous fuel.
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new text begin (f) "Qualified investment" means any capital investment in infrastructure for the
production, processing, pipeline interconnection, storage, and distribution of renewable
natural gas or alternative resources that could be used to meet energy demands to achieve
the renewable energy and greenhouse gas reduction goals under sections 216C.05, subdivision
2, clause (3), and 216H.02, subdivision 1.
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new text begin (g) "Renewable natural gas" means gaseous fuel meeting pipeline quality standards that
is either:
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new text begin (1) biogas that has been processed to be interchangeable with conventional natural gas;
or
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new text begin (2) derived from power-to-gas.
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new text begin (h) "Total incremental cost" means:
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new text begin (1) the cost of all qualified investments, including the cost of capital established by the
commission in the natural gas utility's most recent general rate case, to Minnesota ratepayers;
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new text begin (2) operating costs associated with qualified investments;
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new text begin (3) the cost to procure renewable natural gas or renewable natural gas credits from third
parties;
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new text begin (4) any value received by the natural gas utility upon the resale of renewable gaseous
fuels not used for service to Minnesota customers, including any environmental credits
included with the resale of the renewable gaseous fuels; and
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new text begin (5) any savings achieved through avoidance of conventional natural gas purchases,
including but not limited to any avoided commodity purchases or avoided pipeline costs.
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new text begin Subd. 2. new text end

new text begin Renewable natural gas and alternative resource goals. new text end

new text begin A natural gas utility
may assist the state in meeting its renewable energy and greenhouse gas reduction goals
under sections 216C.05, subdivision 2, clause (3), and 216H.02, subdivision 1, by using
alternative resources to meet customer energy demands. The natural gas utility's total
incremental cost to achieve greenhouse gas reductions under this subdivision must not
exceed five percent of the natural gas utility's total annual revenue requirement excluding
gas costs, as determined in the natural gas utility's most recent general rate case.
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new text begin Subd. 3. new text end

new text begin Alternative resource plans. new text end

new text begin (a) A natural gas utility may file an alternative
resource plan with the commission. An alternative resource plan must include the
recommended alternative resources the utility plans to implement to advance the state's
goals established in sections 216C.05 and 216H.02, within the requirements and limitations
set forth in this section. The utility's recommended plan must separately discuss:
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new text begin (1) any pilot program proposed by the natural gas utility related to the development or
provision of renewable natural gas or alternative resources;
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new text begin (2) the carbon intensity of any alternative resources proposed to be included in the plan;
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new text begin (3) the forecasted greenhouse gas emissions reductions achieved or the greenhouse gas
emissions avoided if the alternative resources are implemented, including any: (i) avoided
emissions attributable to utility operations; (ii) avoided emissions from the production,
processing, and transmission of fuels prior to receipt by the utility, to the extent the utility
is able to quantify such emissions; and (iii) avoided emissions at the point of end use;
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new text begin (4) a discussion of whether the recommended plan supports the goals established in
sections 17.50 and 115A.02;
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new text begin (5) a description of third-party certifications that verify the environmental attributes of
alternative resources included in the recommended plan; and
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new text begin (6) a report on the utility's progress toward implementing the recommendations contained
in its previously filed alternative resource plan, if applicable.
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new text begin (b) The commission must approve or modify the plan within six months of filing upon
finding that the plan promotes the natural gas utility's ability to achieve the goals established
in sections 216C.05 and 216H.02 at a cost level consistent with this section. Commission
approval of a plan constitutes prima facie evidence of the reasonableness of the qualified
investments and costs incurred pursuant to the plan. Costs incurred pursuant to an approved
plan and costs incurred pursuant to paragraph (c), clause (2), are recoverable either: (1)
under section 216B.16, subdivision 7, clause (2), as a direct cost for natural gas delivered;
or (2) in the natural gas utility's next general rate case.
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new text begin (c) As part of the commission's review of an alternative resource plan, the commission
is not required to approve: (1) alternative resources acquired to satisfy a
commission-approved program that allows customers to choose to meet a portion of the
customers' energy needs through alternative resources; or (2) a purchase of alternative
resources if the purchase price falls within five percent of the average of Ventura and Demarc
index price at the time of the transaction.
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new text begin (d) A natural gas utility with an approved plan must provide annual status reports with
the commission regarding the work pursuant to the plan, including the costs incurred under
the plan and the resulting progress toward the state's goals. As part of the annual status
report the natural gas utility may propose to address changing circumstances. The commission
may approve an amended plan or require the utility to file a new plan to account for changed
circumstances.
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new text begin (e) A utility may file an alternative resource plan at any time after this section becomes
effective.
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Sec. 3.

new text begin [216B.2428] RENEWABLE NATURAL GAS CREDITS.
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new text begin The commission, by rule or order, must establish a program for tradable renewable
natural gas credits. The credits must represent renewable natural gas as defined in section
216B.2427, subdivision 1, paragraph (g). The commission must facilitate renewable natural
gas credit trading between states and must require all natural gas utilities offering renewable
natural gas to customers to participate in a commission-approved credit tracking system or
systems.
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Sec. 4. new text begin RENEWABLE NATURAL GAS INVENTORY.
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new text begin (a) The Department of Commerce must develop an inventory of renewable natural gas
resources as defined in Minnesota Statutes, section 216B.2427, subdivision 1, paragraph
(g), available to Minnesota. The inventory must include but is not limited to:
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new text begin (1) a list of the potential renewable natural gas sources in Minnesota and the estimated
potential production quantities available at each source;
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new text begin (2) an estimate of the energy content of listed renewable natural gas sources;
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new text begin (3) an estimate of the range of technologies available to Minnesota for renewable natural
gas production and an estimate of the potential energy production by technology, including:
(i) an estimate of the renewable gaseous fuel production potential using power-to-gas; (ii)
separate estimates for production from excess renewable electricity that would otherwise
be curtailed and for production from dedicated renewable generation facilities; and (iii) an
ideal site characterization that details the aspects of a power-to-gas facility that would
contribute to the facility's technical and economic success; and
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new text begin (4) a list of the existing biogas and renewable natural gas production sites in Minnesota
that includes: (i) the location of each site; (ii) an estimate of the life cycle greenhouse gas
emissions associated with the fuel produced at each site; and (iii) an assessment of the
supply-chain infrastructure associated with the site.
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