HF 2928

as introduced - 94th Legislature (2025 - 2026) Posted on 03/27/2025 02:46pm

A bill for an act
relating to energy; requiring preapplication filings for large water appropriation
projects; adding information to permit applications for large water appropriation
projects; specifying the level of environmental review for data centers; removing
data centers' energy consumption from the calculation of a utility's energy savings
goal; exempting data centers from making financial contributions to an energy
conservation and optimization plan; depositing fee revenues in an account to be
used for energy conservation; modifying the definition of large energy facility;
establishing energy requirements for data centers; imposing a fee on data centers;
requiring the Public Utilities Commission to establish a new tariff for data centers;
amending Minnesota Statutes 2024, sections 103G.265, by adding a subdivision;
103G.271, by adding a subdivision; 116D.04, by adding a subdivision; 216B.2402,
subdivision 10; 216B.241, subdivisions 1a, 2a; 216B.2421, subdivision 2; proposing
coding for new law in Minnesota Statutes, chapter 216B.

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

Section 1.

Minnesota Statutes 2024, section 103G.265, is amended by adding a subdivision
to read:

new text begin Subd. 5. new text end

new text begin Preapplication evaluation of large water appropriation projects. new text end

new text begin (a) This
subdivision applies to a project whose proposed consumptive use exceeds 100 million
gallons per year or 250,000 gallons per day, whether under an existing permit, as the result
of a permit amendment, or under a new individual permit.
new text end

new text begin (b) To ensure that a project is compatible with the needs of other current and future
water users, to help maintain the water allocation priorities established under section
103G.261, to ensure adequate water supply in areas of the state with limited water
availability, and to promote a more efficient and timely permitting process, potential
applicants or persons working on behalf of potential applicants are encouraged to discuss
the project with the department as early in the project development process as possible,
preferably before a final project site has been selected, project design has been finalized,
or land has been acquired.
new text end

new text begin (c) A city or county employee that has been contacted by a person regarding a project
that is likely to be subject to this subdivision must, even if no final decision has been made
on the project's location, notify the department in writing within ten business days of the
contact, providing the name of and contact information for the person, and potential project
locations.
new text end

new text begin (d) In response to a contact from a potential applicant, the department may request
preapplication information that is helpful in assisting the department to assess the factors
affecting the ability of a water source to meet a project's water use needs at proposed
locations, including:
new text end

new text begin (1) a project description, including all potential locations;
new text end

new text begin (2) the project's estimated maximum daily, seasonal, and annual water use rates and
volumes;
new text end

new text begin (3) the anticipated source of water; and
new text end

new text begin (4) water quality or temperature requirements.
new text end

new text begin The department may request any additional information necessary to assist it to assess the
ability of a water source to meet a project's water use needs.
new text end

new text begin (e) The commissioner shall evaluate the information supplied by a potential applicant
under this subdivision and shall respond in writing, which may be electronically transmitted,
describing potential water availability constraints at each proposed project site.
new text end

new text begin (f) In determining the impact of a potential project on water quality and quantity, the
commissioner may consult with the commissioners of health, agriculture, the Pollution
Control Agency, and other state agencies.
new text end

new text begin (g) Any communication made or information exchanged under this subdivision between
a potential applicant and a government agency, or between government agencies, is nonpublic
data, as defined in section 13.02, until the project is either abandoned or the applicant files
an application for a water use permit under section 103G.285 or 103G.287, after which the
data is public.
new text end

new text begin (h) None of the discussions, filings, or evaluations made under this subdivision preclude
or supplant environmental review, preliminary well-construction approval, appropriation
permit review, or any other requirements under federal, state, or local law.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 2.

Minnesota Statutes 2024, section 103G.271, is amended by adding a subdivision
to read:

new text begin Subd. 5b. new text end

new text begin Large water appropriation projects; permit conditions. new text end

new text begin In issuing water
use permits to applicants that meet the criteria of section 103G.265, subdivision 5, the
department shall ensure that:
new text end

new text begin (1) water resources of the state are utilized in the public interest and that public health,
safety, and welfare are adequately protected;
new text end

new text begin (2) technologies that promote water conservation and the efficient use of water are fully
considered; and
new text end

new text begin (3) water use conflicts are addressed as prescribed in Minnesota Rules, part 6115.0740.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 3.

Minnesota Statutes 2024, section 116D.04, is amended by adding a subdivision to
read:

new text begin Subd. 18. new text end

new text begin Data centers; environmental review. new text end

new text begin (a) Notwithstanding any law to the
contrary, the proposed construction of a data center, as defined in section 216B.71, or the
expansion of the average hourly load of an existing data center by 100 megawatts or more,
requires preparation of an environmental impact statement according to the provisions of
subdivision 2a. The responsible governmental unit for the environmental impact statement
is the Public Utilities Commission.
new text end

new text begin (b) For the purposes of this subdivision, "average hourly load" means the amount of
electricity consumed by a facility each hour, averaged over an entire year.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 4.

Minnesota Statutes 2024, section 216B.2402, subdivision 10, is amended to read:

Subd. 10.

Gross annual retail energy sales.

"Gross annual retail energy sales" means
a utility's annual electric sales to all Minnesota retail customers, or natural gas throughput
to all retail customers, including natural gas transportation customers, on a utility's
distribution system in Minnesota. Gross annual retail energy sales does not include:

(1) gas sales to:

(i) a large energy facility;

(ii) a large customer facility whose natural gas utility has been exempted by the
commissioner under section 216B.241, subdivision 1a, paragraph (a), with respect to natural
gas sales made to the large customer facility; and

(iii) a commercial gas customer facility whose natural gas utility has been exempted by
the commissioner under section 216B.241, subdivision 1a, paragraph (b), with respect to
natural gas sales made to the commercial gas customer facility;

(2) electric sales to:

(i) a large customer facility whose electric utility has been exempted by the commissioner
under section 216B.241, subdivision 1a, paragraph (a), with respect to electric sales made
to the large customer facility; deleted text begin and
deleted text end

(ii) a data mining facility, if the facility:

(A) has provided a signed letter to the utility verifying the facility meets the definition
of a data mining facility; and

(B) imposes a peak electrical demand on a consumer-owned utility's system equal to or
greater than 40 percent of the peak electrical demand of the system, measured in the same
manner as the utility that serves the customer facility measures electric demand for billing
purposes; deleted text begin or deleted text end new text begin and
new text end

new text begin (iii) a data center, as defined in section 216B.71; or
new text end

(3) the amount of electric sales prior to December 31, 2032, that are associated with a
utility's program, rate, or tariff for electric vehicle charging based on a methodology and
assumptions developed by the department in consultation with interested stakeholders no
later than December 31, 2021. After December 31, 2032, incremental sales to electric
vehicles must be included in calculating a public utility's gross annual retail sales.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 5.

Minnesota Statutes 2024, section 216B.241, subdivision 1a, is amended to read:

Subd. 1a.

Large customer facility.

(a) The owner of a large customer facility may
petition the commissioner to exempt both electric and gas utilities serving the large customer
facility from contributing to investments and expenditures made under an energy and
conservation optimization plan filed under subdivision 2 or section 216B.2403, subdivision
3, with respect to retail revenues attributable to the large customer facility. The filing must
include a discussion of the competitive or economic pressures facing the owner of the facility
and the efforts taken by the owner to identify, evaluate, and implement energy conservation
and efficiency improvements. A filing submitted on or before October 1 of any year must
be approved within 90 days and become effective January 1 of the year following the filing,
unless the commissioner finds that the owner of the large customer facility has failed to
take reasonable measures to identify, evaluate, and implement energy conservation and
efficiency improvements. If a facility qualifies as a large customer facility solely due to its
peak electrical demand or annual natural gas usage, the exemption may be limited to the
qualifying utility if the commissioner finds that the owner of the large customer facility has
failed to take reasonable measures to identify, evaluate, and implement energy conservation
and efficiency improvements with respect to the nonqualifying utility. Once an exemption
is approved, the commissioner may request the owner of a large customer facility to submit,
not more often than once every five years, a report demonstrating the large customer facility's
ongoing commitment to energy conservation and efficiency improvement after the exemption
filing. The commissioner may request such reports for up to ten years after the effective
date of the exemption, unless the majority ownership of the large customer facility changes,
in which case the commissioner may request additional reports for up to ten years after the
change in ownership occurs. The commissioner may, within 180 days of receiving a report
submitted under this paragraph, rescind any exemption granted under this paragraph upon
a determination that the large customer facility is not continuing to make reasonable efforts
to identify, evaluate, and implement energy conservation improvements. A large customer
facility that is, under an order from the commissioner, exempt from the investment and
expenditure requirements of paragraph (a) as of December 31, 2010, is not required to
submit a report to retain its exempt status, except as otherwise provided in this paragraph
with respect to ownership changes. No exempt large customer facility may participate in a
utility conservation improvement program unless the owner of the facility submits a filing
with the commissioner to withdraw its exemption. new text begin A data center that pays the required fee
under section 216B.72 is exempt from the requirement to contribute to investments and
expenditures made under an energy conservation optimization plan filed under subdivision
2 or section 216B.2403, subdivision 3, and is not required to comply with the provisions
of this paragraph.
new text end

(b) A commercial gas customer that is not a large customer facility and that purchases
or acquires natural gas from a public utility having fewer than 600,000 natural gas customers
in Minnesota may petition the commissioner to exempt gas utilities serving the commercial
gas customer from contributing to investments and expenditures made under an energy and
conservation optimization plan filed under subdivision 2 or section 216B.2403, subdivision
3, with respect to retail revenues attributable to the commercial gas customer. The petition
must be supported by evidence demonstrating that the commercial gas customer has acquired
or can reasonably acquire the capability to bypass use of the utility's gas distribution system
by obtaining natural gas directly from a supplier not regulated by the commission. The
commissioner shall grant the exemption if the commissioner finds that the petitioner has
made the demonstration required by this paragraph.

(c) A public utility, consumer-owned utility, or owner of a large customer facility may
appeal a decision of the commissioner under paragraph (a) or (b) to the commission under
subdivision 2. In reviewing a decision of the commissioner under paragraph (a) or (b), the
commission shall rescind the decision if it finds the decision is not in the public interest.

(d) Notwithstanding paragraph (a), a large customer facility or commercial gas customer
that is exempt from the investment and expenditure requirements of this section pursuant
to an order from the commissioner as of December 31, 2020, is not required to submit
additional documentation to maintain the exemption and must not be assessed any costs
related to any energy conservation and optimization plan filed under this section or section
216B.2403, including but not limited to costs, incentives, or rates of return associated with
investments in programs for efficient fuel-switching improvements.

(e) A public utility is prohibited from spending for or investing in energy conservation
improvements that directly benefit a large energy facility or a large electric customer facility
the commissioner has issued an exemption to under this section.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 6.

Minnesota Statutes 2024, section 216B.241, subdivision 2a, is amended to read:

Subd. 2a.

Energy and conservation account.

new text begin (a) new text end The energy and conservation account
is established in the special revenue fund in the state treasury.

new text begin (b) new text end The commissioner must deposit money assessed or contributed under subdivisions
1d, 1e, 1f, and 7 in the state treasury and credit it to the energy and conservation account
in the special revenue fund. Money in the account new text begin assessed or contributed under subdivisions
1d, 1e, and 1f new text end is appropriated to the commissioner for the purposes of subdivisions 1d, 1e,
1f, and 7.

new text begin (c) The commissioner must deposit money transferred from the fee on data centers
established in section 216B.72 in the state treasury and credit it to the account. Money
transferred from the fee on data centers is appropriated to the commissioner to conduct
energy conservation, weatherization, and associated activities allowed under sections
216B.2403 and 216B.241, and the rules applicable to those sections. The commissioner
may spend money appropriated under this paragraph anywhere in the state, but only:
new text end

new text begin (1) on low-income programs; and
new text end

new text begin (2) as the result of a request for proposals process administered by the department.
new text end

new text begin (d) new text end Interest on money in the account accrues to the account.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 7.

Minnesota Statutes 2024, section 216B.2421, subdivision 2, is amended to read:

Subd. 2.

Large energy facility.

"Large energy facility" means:

(1) 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 new text begin . Large
energy facility includes backup generators designed to provide electricity to a data center,
as defined in section 216B.71, with a combined capacity of 50,000 kilowatts or more new text end ;

(2) any high-voltage transmission line with a capacity of 300 kilovolts or more and
greater than one mile in length in Minnesota;

(3) any high-voltage transmission line with a capacity of 100 kilovolts or more with
more than ten miles of its length in Minnesota;

(4) 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;

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

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

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

(9) 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.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 8.

new text begin [216B.71] DATA CENTERS; ENERGY REQUIREMENTS.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

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

new text begin (b) "Carbon-free" has the meaning given in section 216B.1691, subdivision 1.
new text end

new text begin (c) "Data center" means a facility whose primary purpose is the storage, management,
and processing of digital data via the interconnection and operation of information technology
and network telecommunications equipment, including all related facilities and infrastructure
for power distribution, environmental control, cooling, and security, and whose average
hourly electrical load is 100 megawatts or greater.
new text end

new text begin (d) "Political subdivision" means a county, statutory or home rule charter city, town, the
Metropolitan Council, a port authority, economic development authority, redevelopment
agency established under chapter 469, or regional development commission.
new text end

new text begin Subd. 2. new text end

new text begin Carbon-free energy. new text end

new text begin (a) A data center must, prior to December 31, 2030,
arrange to generate or procure carbon-free energy equal to at least 65 percent of its electricity
consumption, measured on an hourly basis.
new text end

new text begin (b) After December 31, 2030, a data center must generate or purchase carbon-free energy
equal to 100 percent of its electricity requirements, measured on an hourly basis.
new text end

new text begin (c) Tracking and verification of compliance with this subdivision shall be determined
by the Minnesota Renewable Energy Tracking System or another qualified entity approved
by the commission.
new text end

new text begin (d) Each data center shall, before beginning operations in this state, submit a plan to the
commission describing the actions it intends to take to comply with the requirement of
paragraph (b), and shall make additional filings as required by the commission.
new text end

new text begin (e) The commission may delay or modify a data center's compliance with the requirements
of paragraph (a) or (b) if it determines that technical constraints impair the ability to
accurately track and verify carbon-free energy transactions at an hourly level so as to enable
compliance with those requirements.
new text end

new text begin Subd. 3. new text end

new text begin State energy targets; modification. new text end

new text begin If a utility determines that providing
electric service to a data center may, in whole or in part, contribute to the utility's inability
to achieve a standard mandated under section 216B.1691, the utility must, no later than two
years before the standard is required to be met, submit a filing to the commission containing
a plan describing actions the utility intends to implement in order to achieve the standard
in a timely manner. The commission shall review and may accept, reject, or modify the plan
and may issue an order requiring implementation of an approved plan. The commission
shall require a utility whose plan was approved under this subdivision to file reports with
the commission describing actions taken and progress made in achieving the standard, on
a schedule determined by the commission.
new text end

new text begin Subd. 4. new text end

new text begin Prevailing wage. new text end

new text begin A contractor or subcontractor that constructs any portion of
a data center:
new text end

new text begin (1) must pay no less than the prevailing wage rate, as defined in section 177.42; and
new text end

new text begin (2) is subject to the requirements and enforcement provisions under sections 177.27,
177.30, 177.32, 177.41 to 177.435, and 177.45.
new text end

new text begin Subd. 5. new text end

new text begin Reporting. new text end

new text begin (a) Within one year of being placed in service, and annually
thereafter on a schedule determined by the commissioner, a data center owner must report
the following information to the commissioner on a form and on a schedule prescribed by
the commissioner of commerce:
new text end

new text begin (1) energy consumption during the most recently completed year and during each of the
past five years, if applicable, and projections of energy consumption for the coming year;
new text end

new text begin (2) efforts made to reduce energy consumption;
new text end

new text begin (3) efforts made to reduce waste heat and to utilize it as thermal energy or electricity;
and
new text end

new text begin (4) the amount, type, and country of origin of metals used to construct the data center,
and the percentage of metals used that were recycled.
new text end

new text begin (b) Within one year of being placed in service, and annually thereafter on a schedule
determined by the commissioner of natural resources, a data center owner must report the
following information to the commissioner of natural resources, on a form and on a schedule
prescribed by the commissioner of natural resources:
new text end

new text begin (1) the amount of water withdrawn under the data center's water use permit;
new text end

new text begin (2) the amount of water discharged by the data center to groundwater or surface waters;
and
new text end

new text begin (3) the amount of water evaporated when used for cooling data center equipment.
new text end

new text begin Subd. 6. new text end

new text begin Noncompliance; ineligibility for financial assistance. new text end

new text begin Notwithstanding any
other law, a data center that fails to comply with any of the requirements of this section is
ineligible to receive any financial incentives provided by this state for which it is otherwise
eligible, including tax incentives, until it has submitted documentation of compliance to the
commissioner of commerce and has received written notice from the commissioner of
commerce that it is in compliance with all the provisions of this section.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 9.

new text begin [216B.72] DATA CENTER FEE.
new text end

new text begin (a) A fee of $....... is imposed on a data center, as defined in section 216B.71, for each
megawatt of the data center's peak demand. The fee must be collected monthly by the utility
providing electric service to the data center and deposited in the energy and conservation
account established in section 216B.241, subdivision 2a.
new text end

new text begin (b) For the purposes of this section, "peak demand" means the largest demand a data
center imposes on an electric utility's system, expressed in megawatts, during a 30-minute
period within the most recent month.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 10. new text begin CLEAN ENERGY TARIFF.
new text end

new text begin (a) No later than January 1, 2026, the Public Utilities Commission shall develop and
establish a clean energy tariff and terms and conditions for energy supply agreements under
which a separate customer class composed solely of all data centers receiving electric service
from a public utility located in this state must operate. The tariff and energy supply agreement
must be designed to insulate the utility's other customers from the energy costs attributable
to data centers and to ensure that arrangements made to provide electric service to a data
center will:
new text end

new text begin (1) not interfere with or jeopardize a utility's achieving the mandated renewable energy
and carbon-free standards established under Minnesota Statutes, sections 216B.1691 and
216B.71, subdivision 2;
new text end

new text begin (2) not impair a utility's system reliability or its ability to provide electric service to its
other customers;
new text end

new text begin (3) require payment of the data center's full portion of the utility's cost to procure
electricity, and for the full transmission and distribution costs necessary to deliver that
electricity to the data center, including any construction or upgrading of transmission,
distribution, or other utility infrastructure; and
new text end

new text begin (4) ensure that ratepayers are fully protected from bearing any portion of the cost resulting
from:
new text end

new text begin (i) a data center's failure to meet its projected level of electricity demand;
new text end

new text begin (ii) a data center's termination of its operations in this state earlier than agreed to in an
energy supply agreement;
new text end

new text begin (iii) an electricity supplier's failure to fully meet the terms of its supply contract with
the utility; or
new text end

new text begin (iv) early termination of an energy supply agreement.
new text end

new text begin (b) The Public Utilities Commission may require a data center to post a bond of sufficient
magnitude to guarantee performance under the tariff and energy supply agreement.
new text end

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

new text begin (1) "data center" has the meaning given in Minnesota Statutes, section 216B.71,
subdivision 1; and
new text end

new text begin (2) "energy supply agreement" means an agreement between a data center and a utility
providing electric service to a data center governing the transfer of electricity from a generator
to the data center under a clean energy tariff.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end