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Minnesota Legislature

Office of the Revisor of Statutes

SF 3877

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

KEY: stricken = removed, old language.
underscored = added, new language.

Current Version - as introduced

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A bill for an act
relating to energy; establishing rate schedule for certain renewable energy
projects; requiring a report; 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 [216B.1601] FINDINGS; PURPOSE; CITATION.
new text end

new text begin (a) The legislature finds that:
new text end

new text begin (1) the state has a vital interest in ensuring that its citizens have a reasonable
opportunity to develop, own, and invest in renewable electricity generation;
new text end

new text begin (2) the economic benefits of local renewable energy development to Minnesota's
economy are critical factors in state agency decision making regarding energy procurement
and ratemaking;
new text end

new text begin (3) opportunities to own renewable electricity generation projects are particularly
important to the future economic development and quality of life of the state's rural
communities;
new text end

new text begin (4) the citizens of Minnesota have a vital interest in participating in the state's efforts
to limit greenhouse gas emissions through the development and ownership of renewable
electricity generation projects;
new text end

new text begin (5) the vast majority of Minnesotans are unable to benefit from the existing federal
renewable energy tax credit and other financial incentives supporting renewable energy
projects, and are therefore at a disadvantage relative to the large entities that are able to
utilize these federal incentives; and
new text end

new text begin (6) development of renewable energy in Minnesota requires that the state provide
its citizens with an opportunity to sell power at a just and reasonable price to the utilities
that serve them.
new text end

new text begin (b) The purpose of the tariff is to:
new text end

new text begin (1) allow all Minnesotans to participate in renewable electricity generation by
requiring that utilities purchase such energy at a just and reasonable price;
new text end

new text begin (2) stabilize the Minnesota marketplace for the development of renewable energy;
new text end

new text begin (3) reduce the volatility of future electricity prices;
new text end

new text begin (4) lower the long-term cost of electricity;
new text end

new text begin (5) stimulate the development of new jobs, technologies, and industry in Minnesota;
new text end

new text begin (6) enable the rapid and sustainable development of Minnesota's abundant renewable
energy resources for the generation of electricity with fewer environmental impacts, as
required by Minnesota's renewable energy standards under section 216B.1691;
new text end

new text begin (7) assist Minnesota in achieving the greenhouse gas emissions-reduction goals
established under section 216H.02, subdivision 1;
new text end

new text begin (8) reduce air pollution from Minnesota's electric generation sector;
new text end

new text begin (9) protect Minnesota's natural resources; and
new text end

new text begin (10) place Minnesota at the forefront among North America's renewable energy
innovators.
new text end

new text begin (c) Sections 216B.1601 to 216B.1608 may be referred to as the Renewable Energy
Feed-In Tariff Act of 2008.
new text end

Sec. 2.

new text begin [216B.1602] DEFINITIONS.
new text end

new text begin Subdivision 1. new text end

new text begin Adequate renewable energy development. new text end

new text begin "Adequate renewable
energy development" means a rate of development necessary to accomplish the renewable
energy objectives and standards in section 216B.1691, subdivisions 2 and 2a.
new text end

new text begin Subd. 2. new text end

new text begin Average specific yield. new text end

new text begin "Average specific yield" means the average
number of kilowatt hours produced during the initial five years of production of a wind
energy conversion system, excluding the maximum and minimum years of production,
divided by the rotor-swept area in square meters.
new text end

new text begin Subd. 3. new text end

new text begin Capacity. new text end

new text begin "Capacity" means the nameplate capacity of a renewable
electricity generator.
new text end

new text begin Subd. 4. new text end

new text begin Community-based energy development project or C-BED project.
new text end

new text begin "Community-based energy development project" or "C-BED project" has the meaning
given in section 216B.1612, subdivision 2, paragraph (g).
new text end

new text begin Subd. 5. new text end

new text begin Electric utility. new text end

new text begin "Electric utility" means a public utility providing electric
service, a generation and transmission cooperative electric association, a municipal power
agency, or a power district.
new text end

new text begin Subd. 6. new text end

new text begin Electrical distribution system. new text end

new text begin "Electrical distribution system" means
that portion of the electric power system over which the Federal Energy Regulatory
Commission does not have authority to interconnect electric generators that sell electricity
in intrastate commerce only.
new text end

new text begin Subd. 7. new text end

new text begin Facade cladding project. new text end

new text begin "Facade cladding project" means a project in
which a photovoltaic device is attached to the wall of a building.
new text end

new text begin Subd. 8. new text end

new text begin Open field project. new text end

new text begin "Open field project" means a photovoltaic device that
has no physical connection to a building other than electric lines to transport electricity.
new text end

new text begin Subd. 9. new text end

new text begin Photovoltaic device. new text end

new text begin "Photovoltaic device" has the meaning given in
section 216C.06, subdivision 16.
new text end

new text begin Subd. 10. new text end

new text begin Qualifying owner. new text end

new text begin "Qualifying owner" has the meaning given in section
216B.1612, subdivision 2, paragraph (c).
new text end

new text begin Subd. 11. new text end

new text begin Reasonable profit. new text end

new text begin "Reasonable profit" means a rate of profit that is just
and reasonable, but not less than ten percent per year.
new text end

new text begin Subd. 12. new text end

new text begin Renewable electricity generator. new text end

new text begin "Renewable electricity generator"
means a project:
new text end

new text begin (1) that generates electrical energy by means of an eligible energy technology as
defined in section 216B.1691, subdivision 1, but does not include 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; and
new text end

new text begin (2) in which one or more qualifying owners have at least a 51 percent ownership
interest.
new text end

new text begin Subd. 13. new text end

new text begin Rooftop project. new text end

new text begin "Rooftop project" means a project in which a
photovoltaic device is physically attached to the roof of a building.
new text end

new text begin Subd. 14. new text end

new text begin Rotor-swept area. new text end

new text begin "Rotor-swept area" means an area equal to 3.1416
multiplied by the square of the length of the rotor of a wind energy conversion system.
new text end

new text begin Subd. 15. new text end

new text begin Small wind turbine. new text end

new text begin "Small wind turbine" means a single wind turbine
with a rotor-swept area of no more than 1,000 square feet.
new text end

new text begin Subd. 16. new text end

new text begin Wind energy conversion system. new text end

new text begin "Wind energy conversion system" has
the meaning given in section 216C.06, subdivision 19.
new text end

Sec. 3.

new text begin [216B.1603] TARIFF ESTABLISHED.
new text end

new text begin A tariff is established to provide opportunities for Minnesotans to own and invest in
renewable electricity generation by requiring utilities to purchase electrical energy at a
just and reasonable price from Minnesota-owned renewable electricity generation projects
connected to the electrical distribution system in accordance with the standard terms and
rates provided in sections 216B.1601 to 216B.1608.
new text end

Sec. 4.

new text begin [216B.1604] TARIFF.
new text end

new text begin Subdivision 1. new text end

new text begin Utilities to offer tariff. new text end

new text begin By December 1, 2008, each electric utility
providing electric service at retail shall file for commission approval a tariff consistent
with this section.
new text end

new text begin Subd. 2. new text end

new text begin Tariff terms. new text end

new text begin An electric utility shall enter into a power purchase
agreement with the qualifying owners of a renewable electricity generator connected to the
electrical distribution system to purchase all of the electricity produced by the renewable
electricity generator. The term of the power purchase agreement must not be less than
20 years from the date of commissioning of the renewable electricity generator. The
rates of the power purchase agreement must be the rates established by the commission
under subdivision 3.
new text end

new text begin Subd. 3. new text end

new text begin Tariff rates. new text end

new text begin The tariff described in subdivision 1 must have a rate
schedule as follows.
new text end

new text begin (a) The rate for electricity generated by a wind energy conversion system must be
the rate needed to ensure adequate renewable energy development, plus a reasonable
profit, but no less than the following:
new text end

new text begin (1) for years one through five following commissioning of the project, $0.105 per
kilowatt hour;
new text end

new text begin (2) for years six through 20 following commissioning of the project:
new text end

new text begin (i) $0.105 per kilowatt hour for projects with an average specific yield less than 700
kilowatt hours per square meter per year;
new text end

new text begin (ii) $0.08 per kilowatt hour for projects with an average specific yield greater than
1,100 kilowatt hours per square meter per year; and
new text end

new text begin (iii) a linear extrapolation between the rates in (i) and (ii) for a project with an
average specific yield greater than 700 kilowatt hours per square meter per year but less
than 1,100 kilowatt hours per square meter per year; and
new text end

new text begin (3) for a small wind energy conversion system, $0.25 per kilowatt hour.
new text end

new text begin (b) The rate for electricity generated from hydroelectric power must be the lowest
rate needed to ensure adequate renewable energy development, plus a reasonable profit,
but no less than the following:
new text end

new text begin (1) $0.10 per kilowatt hour for a project with a capacity below 500 kilowatts;
new text end

new text begin (2) $0.085 per kilowatt hour for a project with a capacity of 500 kilowatts but less
than 10 megawatts; and
new text end

new text begin (3) $0.065 per kilowatt hour for a project with a capacity of at least ten megawatts
but less than 20 megawatts.
new text end

new text begin (c) The rate for electricity generated by an anaerobic digester system, as defined in
section 216C.41, subdivision 1, paragraph (e), or other biomass system, as defined in
section 216C.051, subdivision 7, paragraph (g), clause (1), that operates at an efficiency
of 60 percent or greater, must be the rate needed to ensure adequate renewable energy
development, plus a reasonable profit, but no less than the following:
new text end

new text begin (1) $0.145 per kilowatt hour for a project with a capacity below 150 kilowatts;
new text end

new text begin (2) $0.125 per kilowatt hour for a project with a capacity of at least 150 kilowatts
but less than 500 kilowatts;
new text end

new text begin (3) $0.115 per kilowatt hour for a project with a capacity greater than 500 kilowatts
but less than five megawatts; and
new text end

new text begin (4) $0.105 per kilowatt hour for a project with a capacity of at least five megawatts
but less than 20 megawatts.
new text end

new text begin (d) The rate for electricity generated by landfill gas that operates at an efficiency
of 60 percent or greater must be the rate needed to ensure adequate renewable energy
development, plus a reasonable profit, but no less than the following:
new text end

new text begin (1) $0.10 per kilowatt hour for a project with a capacity under 500 kilowatts; and
new text end

new text begin (2) $0.085 per kilowatt hour for a project with a capacity of 500 kilowatts or more.
new text end

new text begin (e) The rate for electricity generated by a photovoltaic device must be the rate
needed to ensure adequate renewable energy development plus a reasonable profit, but no
less than the following:
new text end

new text begin (1) $0.50 per kilowatt hour for a free standing or open field project;
new text end

new text begin (2) $0.65 per kilowatt hour for a rooftop project with a capacity below 30 kilowatts;
new text end

new text begin (3) $0.62 per kilowatt hour for a rooftop project with a capacity of at least 30
kilowatts but less than 100 kilowatts;
new text end

new text begin (4) $0.61 per kilowatt hour for a rooftop project with a capacity of 100 kilowatts
or more;
new text end

new text begin (5) $0.71 per kilowatt hour for a facade cladding project with a capacity below
30 kilowatts;
new text end

new text begin (6) $0.68 per kilowatt hour for a facade cladding project with a capacity of at least
30 kilowatts but less than 100 kilowatts; and
new text end

new text begin (7) $0.67 per kilowatt hour for a facade cladding project with a capacity of 100
kilowatts or more.
new text end

new text begin For the purposes of this subdivision, "efficiency" means the sum of the net useful power
output plus the net useful thermal output of an electricity generating system, which sum is
then divided by the total fuel input.
new text end

new text begin Subd. 3. new text end

new text begin Reduction for other incentive programs. new text end

new text begin The commission may not
approve a tariff established in this section that allows a project owner to receive federal or
state subsidies, tax credits, or other financial incentives available to owners of renewable
electric generation facilities, unless the tariff requires that those subsidies, tax credits, or
other financial incentives are deducted from the amounts paid to the project owner. This
subdivision does not apply to a tax under chapter 272 or to financial incentives available
to businesses that do not generate electricity from renewable sources.
new text end

new text begin Subd. 4. new text end

new text begin Sale to nonqualifying owners limited. new text end

new text begin During the term of a power
purchase agreement entered into under the tariff established in this section, no qualifying
owner may voluntarily sell its ownership interest in the renewable energy generator
unless the sale is to another qualifying owner and is approved by the commission. This
subdivision does not restrict transfers of interest by means other than voluntary sales.
new text end

new text begin Subd. 5. new text end

new text begin Tariff review and adjustment. new text end

new text begin (a) Beginning February 1, 2011, and
every two years thereafter, the commission shall review and adjust rates adopted under
the tariff in this section every two years as necessary to achieve adequate renewable
energy development; account for inflation; provide for a reasonable, but not excessive,
profit to owners of renewable electricity generators; promote development of C-BED
projects; and minimize costs to ratepayers of a utility's compliance with the renewable
energy standards under section 216B.1691.
new text end

new text begin (b) The commission may, after notice and hearing and upon finding that the
objectives in section 216B.1691 are not likely to be met without extending this tariff to
renewable electricity projects connected to the electrical transmission system, require
electric utilities to enter into power purchase agreements with qualifying owners at rates
in accordance with subdivision 2 as are necessary to achieve adequate renewable energy
development upon such terms needed to ensure accomplishment of C-BED procurement
goals and adequate local benefits as defined in section 216B.1691.
new text end

new text begin Subd. 6. new text end

new text begin Interconnection. new text end

new text begin The tariff in this section must provide that electric
utilities will interconnect renewable energy generators to the electrical distribution
system under the jurisdiction of the commission to the maximum extent of state
jurisdiction allowed under federal law. The commission shall consult with the Federal
Energy Regulatory Commission, the Midwest Independent System Operator, and other
appropriate entities to establish an interconnection request review procedure to promptly
and efficiently determine whether or not the commission may interconnect a renewable
energy generator that requests interconnection under state authority. The commission
shall issue orders necessary to establish interconnection tariffs for the standardized,
cost-effective, timely, reliable, and safe interconnection of renewable electricity
generators under state authority. The commission shall establish standard interconnection
contracts and interconnection schedules. The costs associated with the interconnection
of renewable electricity generators, including direct interconnection costs, distribution
system enhancements, and electric utility compliance costs, are recoverable as provided in
section 216B.1605.
new text end

new text begin Subd. 7. new text end

new text begin Standard contract. new text end

new text begin The commission shall approve a standard contract to
be used in all power purchase agreements under the tariff established under this section.
The contract must include the price paid for each kilowatt hour generated, a method to
adjust the price for inflation, and the duration of the contract.
new text end

Sec. 5.

new text begin [216B.1605] COST RECOVERY.
new text end

new text begin The commission shall require an electric utility to file rate schedules containing
provisions for the automatic adjustment of charges for electric utility service in direct
relation to the cost of electricity purchased from renewable electricity generators under the
tariff established under sections 216B.1601 to 216B.1608 and all other costs required to
comply with the tariff established under section 216B.1604.
new text end

Sec. 6.

new text begin [216B.1606] INFORMATION REQUIRED.
new text end

new text begin Renewable energy generators, qualifying owners that own all or part of a renewable
energy generator, and electric utilities shall, upon request, provide the commission any
information that may be relevant to the commission performing its duties under sections
216B.1601 to 216B.1608, including but not limited to assessment of project development
costs, equipment costs, electricity production costs, interconnection costs, automatic
rate adjustments, and compliance costs.
new text end

Sec. 7.

new text begin [216B.1607] LOAN ELIGIBILITY.
new text end

new text begin A renewable electricity generator is eligible for a loan under section 216C.39,
subdivision 5.
new text end

Sec. 8.

new text begin [216B.1608] REPORT.
new text end

new text begin By January 1 of 2010 and 2011 and every four years thereafter, the commission shall
submit a report to the governor and legislature that must include all of the following:
new text end

new text begin (1) the number of new renewable electricity generators in this state and the
environmental effects of the addition of those generators, including but not limited to the
effects on progress toward achieving the renewable energy objectives and standards in
section 216B.1691;
new text end

new text begin (2) recommendations for legislation and changes to the rates in section 216B.1604,
if any; and
new text end

new text begin (3) actions taken by the commission to implement sections 216B.1601 to 216B.1608
and to use the tariff to achieve the renewable energy objectives and standards in section
216B.1691.
new text end

Sec. 9. new text beginEFFECTIVE DATE.
new text end

new text begin Sections 1 to 8 are effective the day following final enactment.
new text end