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Minnesota Legislature

Office of the Revisor of Statutes

Key: (1) language to be deleted (2) new language

                            CHAPTER 97-S.F.No. 1368 
                  An act relating to energy; providing for expedited 
                  cost recovery for certain transmission investments; 
                  authorizing and regulating transmission companies; 
                  permitting the transfer of transmission assets and 
                  operation to transmission companies; providing for 
                  expedited regulatory approval of transmission projects 
                  related to renewable generation; providing new 
                  criteria to analyze the need for transmission 
                  projects; establishing the framework for a wind energy 
                  tariff related to community development; requiring a 
                  wind integration study; transferring generation plant 
                  siting and transmission line routing authority from 
                  the Minnesota Environmental Quality Board to the 
                  Public Utilities Commission; providing for technical 
                  corrections to the energy assistance program; 
                  providing for a sustainably managed woody biomass 
                  generation project to satisfy the biomass mandate; 
                  providing for an electronic mail filing system at the 
                  Public Utilities Commission and Department of 
                  Commerce; making changes to the conservation 
                  investment program recommended by the legislative 
                  auditor; authorizing the creation of energy quality 
                  zones; regulating eligibility of biogas projects for 
                  the renewable energy production incentive; providing 
                  for the recovery of certain infrastructure investments 
                  by gas utilities; requiring a study of compensation of 
                  landowners for transmission easements; promoting the 
                  use of soy-diesel; providing for the adjustment of 
                  power purchase agreements to account for production 
                  tax payments; promoting the use of hydrogen as an 
                  energy source; requiring study of using biodiesel fuel 
                  to heat homes; expanding authority of city of 
                  Alexandria to enter into telecommunications-related 
                  joint ventures; appropriating money; amending 
                  Minnesota Statutes 2004, sections 13.681, by adding a 
                  subdivision; 116C.52, subdivisions 2, 4; 116C.53, 
                  subdivision 2; 116C.57, subdivisions 1, 2c, by adding 
                  a subdivision; 116C.575, subdivision 5; 116C.577; 
                  116C.58; 116C.61, subdivision 3; 116C.69, subdivisions 
                  2, 2a; 119A.15, subdivision 5a; 216B.02, by adding a 
                  subdivision; 216B.16, subdivision 6d, by adding 
                  subdivisions; 216B.1645, subdivision 1; 216B.2421, 
                  subdivision 2; 216B.2424, subdivisions 1, 2, 5a, 6, 8, 
                  by adding a subdivision; 216B.2425, subdivisions 2, 7; 
                  216B.243, subdivisions 3, 4, 5, 6, 7, 8; 216B.50, 
                  subdivision 1; 216B.62, subdivision 5, by adding a 
                  subdivision; 216B.79; 216C.052; 216C.09; 216C.41, 
                  subdivision 1; 462A.05, subdivisions 21, 23; Laws 
                  2002, chapter 329, section 5; proposing coding for new 
                  law in Minnesota Statutes, chapters 216B; 216C. 
        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 

                                   ARTICLE 1
                             TRANSMISSION COMPANIES 
           Section 1.  Minnesota Statutes 2004, section 216B.02, is 
        amended by adding a subdivision to read: 
           Subd. 10.  [TRANSMISSION COMPANY.] "Transmission company" 
        means persons, corporations, or other legal entities and their 
        lessees, trustees, and receivers, engaged in the business of 
        owning, operating, maintaining, or controlling in this state 
        equipment or facilities for furnishing electric transmission 
        service in Minnesota, but does not include public utilities, 
        municipal electric utilities, municipal power agencies, 
        cooperative electric associations, or generation and 
        transmission cooperative power associations. 
           Sec. 2.  Minnesota Statutes 2004, section 216B.16, is 
        amended by adding a subdivision to read: 
           Subd. 7b.  [TRANSMISSION COST ADJUSTMENT.] (a) 
        Notwithstanding any other provision of this chapter, the 
        commission may approve a tariff mechanism for the automatic 
        annual adjustment of charges for the Minnesota jurisdictional 
        costs of new transmission facilities that have been separately 
        filed and reviewed and approved by the commission under section 
        216B.243 or are certified as a priority project or deemed to be 
        a priority transmission project under section 216B.2425. 
           (b) Upon filing by a public utility or utilities providing 
        transmission service, the commission may approve, reject or 
        modify, after notice and comment, a tariff that: 
           (1) allows the utility to recover on a timely basis the 
        costs net of revenues of facilities approved under section 
        216B.243 or certified or deemed to be certified under section 
        216B.2425; 
           (2) allows a return on investment at the level approved in 
        the utility's last general rate case, unless a different return 
        is found to be consistent with the public interest; 
           (3) provides a current return on construction work in 
        progress, provided that recovery from Minnesota retail customers 
        for the allowance for funds used during construction is not 
        sought through any other mechanism; 
           (4) allows for recovery of other expenses if shown to 
        promote a least-cost project option or is otherwise in the 
        public interest; 
           (5) allocates project costs appropriately between wholesale 
        and retail customers; 
           (6) provides a mechanism for recovery above cost, if 
        necessary to improve the overall economics of the project or 
        projects or is otherwise in the public interest; and 
           (7) terminates recovery once costs have been fully 
        recovered or have otherwise been reflected in the utility's 
        general rates. 
           (c) A public utility may file annual rate adjustments to be 
        applied to customer bills paid under the tariff approved in 
        paragraph (b).  In its filing, the public utility shall provide: 
           (1) a description of and context for the facilities 
        included for recovery; 
           (2) a schedule for implementation of applicable projects; 
           (3) the utility's costs for these projects; 
           (4) a description of the utility's efforts to ensure the 
        lowest costs to ratepayers for the project; and 
           (5) calculations to establish that the rate adjustment is 
        consistent with the terms of the tariff established in paragraph 
        (b). 
           (d) Upon receiving a filing for a rate adjustment pursuant 
        to the tariff established in paragraph (b), the commission shall 
        approve the annual rate adjustments provided that, after notice 
        and comment, the costs included for recovery through the tariff 
        were or are expected to be prudently incurred and achieve 
        transmission system improvements at the lowest feasible and 
        prudent cost to ratepayers. 
           Sec. 3.  Minnesota Statutes 2004, section 216B.16, is 
        amended by adding a subdivision to read: 
           Subd. 7c.  [TRANSMISSION ASSETS TRANSFER.] (a) Public 
        utility owners of transmission facilities may, subject to Public 
        Utilities Commission approval, transfer operational control or 
        ownership of those transmission assets to a transmission company 
        subject to Federal Energy Regulatory Commission jurisdiction.  
        For transmission asset transfers by a public utility, the Public 
        Utilities Commission must review the request to transfer either 
        in the context of a general rate case under this section or by 
        initiating other proceedings it determines provide adequate 
        review of the transmission asset transfer.  The Public Utilities 
        Commission may limit, in whole or in part, the transfer of 
        transmission assets or the timing of those transfers by a public 
        utility if it finds the limitation in the public interest.  The 
        commission may only approve a transfer if it finds that the 
        transfer is consistent with the public interest.  
           In assessing the public interest, the commission shall 
        evaluate, among other things, whether the transfer: 
           (1) facilitates the development of transmission 
        infrastructure necessary to ensure reliability, encourages the 
        development of renewable resources, and accommodates energy 
        transfers within and between states; 
           (2) protects Minnesota ratepayers against the subsidization 
        of wholesale transactions through retail rates; 
           (3) ensures, in the case of operational control of 
        transmission assets, that the state retains jurisdiction over 
        the transferring utility for all aspects of service under 
        chapter 216B; 
           (4) impacts Minnesota retail rates; and 
           (5) protects Minnesota ratepayers from paying capital costs 
        for transmission assets that have already been recovered. 
           (b) A transfer of operational control or ownership of 
        transmission assets by a public utility under this subdivision 
        is subject to section 216B.50.  The relationship between a 
        public utility transferring operational control of transmission 
        assets to another entity under this subdivision is subject to 
        the provisions of section 216B.48.  If a public utility 
        transfers ownership of its transmission assets to a transmission 
        provider subject to the jurisdiction of the Federal Energy 
        Regulatory Commission, the Public Utilities Commission may 
        permit the utility to file a rate schedule providing for the 
        automatic adjustment of charges to recover the cost of 
        transmission services purchased under tariff rates approved by 
        the Federal Energy Regulatory Commission. 
           (c) A municipal utility, a municipal power agency, or a 
        joint venture pursuant to section 452.25 may transfer 
        operational control or ownership of transmission assets to a 
        transmission company, or make investments in a transmission 
        company, if the governing body of the municipal utility, 
        municipal power agency, or joint venture finds that the transfer 
        or investment is consistent with the public interest and will 
        facilitate the development of infrastructure necessary to ensure 
        reliability. 
           [EFFECTIVE DATE.] This section is effective August 1, 2005, 
        and applies to petitions for approval of transfer of 
        transmission assets filed on or after that date and does not 
        apply to proceedings pending before the Public Utilities 
        Commission before that date. 
           Sec. 4.  Minnesota Statutes 2004, 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; 
           (2) any high-voltage transmission line with a capacity of 
        200 kilovolts or more and greater than 1,500 feet in length; 
           (3) 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; 
           (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. 
           Sec. 5.  Minnesota Statutes 2004, section 216B.243, 
        subdivision 3, is amended to read: 
           Subd. 3.  [SHOWING REQUIRED FOR CONSTRUCTION.] No proposed 
        large energy facility 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) 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) the policies, rules, and regulations of other state and 
        federal agencies and local governments; and 
           (8) 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 216B.1691 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 216B.2425 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. 
           Sec. 6.  Minnesota Statutes 2004, section 216B.243, 
        subdivision 6, is amended to read: 
           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 $50,000, except for an 
        application for an electric 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 
        $100,000.  The commission may require an additional fee to 
        recover the costs of any rehearing.  The fee for a rehearing 
        shall not be greater than the actual cost of the rehearing or 
        the maximum fee specified above, whichever is less. 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. 
           Sec. 7.  Minnesota Statutes 2004, section 216B.2425, 
        subdivision 2, is amended to read: 
           Subd. 2.  [LIST DEVELOPMENT; TRANSMISSION PROJECTS REPORT.] 
        (a) By November 1 of each odd-numbered year, each a transmission 
        projects report must be submitted to the commission by each 
        utility, organization, or company that: 
           (1) is a public utility, a municipal utility, and a 
        cooperative electric association, or the generation and 
        transmission organization that serves each utility or 
        association, that or a transmission company; and 
           (2) owns or operates electric transmission lines in 
        Minnesota shall.  
           (b) The report may be submitted jointly or individually 
        submit a transmission projects report to the commission.  
           (c) The report must: 
           (1) list specific present and reasonably foreseeable future 
        inadequacies in the transmission system in Minnesota; 
           (2) identify alternative means of addressing each 
        inadequacy listed; 
           (3) identify general economic, environmental, and social 
        issues associated with each alternative; and 
           (4) provide a summary of public input the utilities and 
        associations have gathered related to the list of inadequacies 
        and the role of local government officials and other interested 
        persons in assisting to develop the list and analyze 
        alternatives. 
           (b) (d) To meet the requirements of this subdivision, 
        entities reporting parties may rely on available information and 
        analysis developed by a regional transmission organization or 
        any subgroup of a regional transmission organization and may 
        develop and include additional information as necessary.  
           Sec. 8.  Minnesota Statutes 2004, section 216B.50, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [COMMISSION APPROVAL REQUIRED.] No public 
        utility shall sell, acquire, lease, or rent any plant as an 
        operating unit or system in this state for a total consideration 
        in excess of $100,000, or merge or consolidate with another 
        public utility or transmission company operating in this state, 
        without first being authorized so to do by the commission.  Upon 
        the filing of an application for the approval and consent of the 
        commission thereto, the commission shall investigate, with or 
        without public hearing, and in case of.  The commission shall 
        hold a public hearing, upon such notice as the commission may 
        require, and if it shall find.  If the commission finds that the 
        proposed action is consistent with the public interest, it shall 
        give its consent and approval by order in writing.  In reaching 
        its determination, the commission shall take into consideration 
        the reasonable value of the property, plant, or securities to be 
        acquired or disposed of, or merged and consolidated.  The 
        provisions of 
           This section shall does not be construed as 
        applicable apply to the purchase of units of property for 
        replacement or to the addition to replace or add to the plant of 
        the public utility by construction. 
           Sec. 9.  Minnesota Statutes 2004, section 216B.62, 
        subdivision 5, is amended to read: 
           Subd. 5.  [ASSESSING COOPERATIVES AND MUNICIPALS.] The 
        commission and department may charge cooperative electric 
        associations, generation and transmission cooperative electric 
        associations, municipal power agencies, and municipal electric 
        utilities their proportionate share of the expenses incurred in 
        the review and disposition of resource plans, adjudication of 
        service area disputes, proceedings under section 216B.1691, 
        216B.2425, or 216B.243, and the costs incurred in the 
        adjudication of complaints over service standards, practices, 
        and rates.  Cooperative electric associations electing to become 
        subject to rate regulation by the commission pursuant to section 
        216B.026, subdivision 4, are also subject to this section.  
        Neither a cooperative electric association nor a municipal 
        electric utility is liable for costs and expenses in a calendar 
        year in excess of the limitation on costs that may be assessed 
        against public utilities under subdivision 2.  A cooperative 
        electric association, generation and transmission cooperative 
        electric association, municipal power agency, or municipal 
        electric utility may object to and appeal bills of the 
        commission and department as provided in subdivision 4.  
           The department shall assess cooperatives and municipalities 
        for the costs of alternative energy engineering activities under 
        section 216C.261.  Each cooperative and municipality shall be 
        assessed in proportion that its gross operating revenues for the 
        sale of gas and electric service within the state for the last 
        calendar year bears to the total of those revenues for all 
        public utilities, cooperatives, and municipalities. 
           Sec. 10.  Minnesota Statutes 2004, section 216B.62, is 
        amended by adding a subdivision to read: 
           Subd. 5a.  [ASSESSING TRANSMISSION COMPANIES.] The 
        commission and department may charge transmission companies 
        their proportionate share of the expenses incurred in the review 
        and disposition of proceedings under sections 216B.2425, 
        216B.243, 216B.48, 216B.50, and 216B.79.  A transmission company 
        is not liable for costs and expenses in a calendar year in 
        excess of the limitation on costs that may be assessed against 
        public utilities under subdivision 2.  A transmission company 
        may object to and appeal bills of the commission and department 
        as provided in subdivision 4. 
           Sec. 11.  Minnesota Statutes 2004, section 216B.79, is 
        amended to read: 
           216B.79 [PREVENTATIVE MAINTENANCE.] 
           The commission may order public utilities to make adequate 
        infrastructure investments and undertake sufficient preventative 
        maintenance with regard to generation, transmission, and 
        distribution facilities.  The commission's authority under this 
        section also applies to any transmission company that owns or 
        operates electric transmission lines in Minnesota.  
           Sec. 12.  [STAKEHOLDER PROCESS AND REPORT.] 
           Subdivision 1.  [MEMBERSHIP.] By June 15, 2005, the 
        Legislative Electric Energy Task Force shall convene a 
        stakeholder group consisting of one representative from each of 
        the following groups:  transmission-owning investor-owned 
        utilities, electric cooperatives, municipal power agencies, 
        energy consumer advocates, business energy consumer advocates, 
        residential energy consumer advocates, environmental 
        organizations, the Minnesota Department of Commerce, and the 
        Minnesota Public Utilities Commission.  The task force, in its 
        sole discretion, may add other representatives to the 
        stakeholder group. 
           Subd. 2.  [CHARGE.] (a) The stakeholder group shall explore 
        whether increased efficiencies and effectiveness can be obtained 
        through modifying current state statutes and administrative 
        processes to certify and route high-voltage transmission lines, 
        including modifications to section 216B.243. 
           (b) In developing its recommendations, the stakeholder 
        group shall consider: 
           (1) whether the certification process established under 
        section 216B.2425, subdivision 3, can be modified to encourage 
        utilities to apply for certification under that section; 
           (2) whether alternative certification processes are 
        feasible for different types of transmission facilities; and 
           (3) whether additional cooperation between state agencies 
        is needed to enhance the efficiency of the certification and 
        routing processes, and whether modifications to those processes 
        are appropriate. 
           Subd. 3.  [REPORT.] By January 15, 2006, the task force 
        shall submit a report to the legislature summarizing the 
        stakeholder group findings and any recommended changes to the 
        certification and routing processes for high-voltage 
        transmission lines. 

                                   ARTICLE 2
                        C-BED AND RENEWABLE TRANSMISSION
           Section 1.  [216B.1612] [COMMUNITY-BASED ENERGY 
        DEVELOPMENT; TARIFF.] 
           Subdivision 1.  [TARIFF ESTABLISHMENT.] A tariff shall be 
        established to optimize local, regional, and state benefits from 
        wind energy development, and to facilitate widespread 
        development of community-based wind energy projects throughout 
        Minnesota. 
           Subd. 2.  [DEFINITIONS.] (a) The terms used in this section 
        have the meanings given them in this subdivision. 
           (b) "C-BED tariff" or "tariff" means a community-based 
        energy development tariff. 
           (c) "Qualifying owner" means: 
           (1) a Minnesota resident; 
           (2) a limited liability corporation that is organized under 
        the laws of this state and that is made up of members who are 
        Minnesota residents; 
           (3) a Minnesota nonprofit organization organized under 
        chapter 317A; 
           (4) a Minnesota cooperative association organized under 
        chapter 308A or 308B, other than a rural electric cooperative 
        association or a generation and transmission cooperative; 
           (5) a Minnesota political subdivision or local government 
        other than a municipal electric utility or municipal power 
        agency, including, but not limited to, a county, statutory or 
        home rule charter city, town, school district, or public or 
        private higher education institution or any other local or 
        regional governmental organization such as a board, commission, 
        or association; or 
           (6) a tribal council. 
           (d) "Net present value rate" means a rate equal to the net 
        present value of the nominal payments to a project divided by 
        the total expected energy production of the project over the 
        life of its power purchase agreement.  
           (e) "Standard reliability criteria" means: 
           (1) can be safely integrated into and operated within the 
        utility's grid without causing any adverse or unsafe 
        consequences; and 
           (2) is consistent with the utility's resource needs as 
        identified in its most recent resource plan submitted under 
        section 216B.2422. 
           (f) "Community-based energy project" or "C-BED project" 
        means a new wind energy project that: 
           (1) has no single qualifying owner owning more than 15 
        percent of a C-BED project that consists of more than two 
        turbines; or 
           (2) for C-BED projects of one or two turbines, is owned 
        entirely by one or more qualifying owners, with at least 51 
        percent of the total financial benefits over the life of the 
        project flowing to qualifying owners; and 
           (3) has a resolution of support adopted by the county board 
        of each county in which the project is to be located, or in the 
        case of a project located within the boundaries of a 
        reservation, the tribal council for that reservation. 
           Subd. 3.  [TARIFF RATE.] (a) The tariff described in 
        subdivision 4 must have a rate schedule that allows for a rate 
        up to a 2.7 cents per kilowatt hour net present value rate over 
        the 20-year life of the power purchase agreement.  The tariff 
        must provide for a rate that is higher in the first ten years of 
        the power purchase agreement than in the last ten years.  The 
        discount rate required to calculate the net present value must 
        be the utility's normal discount rate used for its other 
        business purposes. 
           (b) The commission shall consider mechanisms to encourage 
        the aggregation of C-BED projects. 
           (c) The commission shall require that qualifying owners 
        provide sufficient security to secure performance under the 
        power purchase agreement, and shall prohibit the transfer of the 
        C-BED project to a nonqualifying owner during the initial 20 
        years of the contract. 
           Subd. 4.  [UTILITIES TO OFFER TARIFF.] By December 1, 2005, 
        each public utility providing electric service at retail shall 
        file for commission approval a community-based energy 
        development tariff consistent with subdivision 3.  Within 90 
        days of the first commission approval order under this 
        subdivision, each municipal power agency and generation and 
        transmission cooperative electric association shall adopt a 
        community-based energy development tariff as consistent as 
        possible with subdivision 3. 
           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 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 under section 216B.1691. 
           Subd. 6.  [PROPERTY OWNER PARTICIPATION.] To the extent 
        feasible, a developer of a C-BED project must provide, in 
        writing, an opportunity to invest in the C-BED project to each 
        property owner on whose property a high voltage transmission 
        line is constructed that will transmit the energy generated by 
        the C-BED project to market.  This subdivision applies if the 
        property is located and the owner resides in the county where 
        the C-BED project is located.  
           [EFFECTIVE DATE.] This subdivision is effective July 1, 
        2005, and applies to transmission line construction beginning on 
        or after that date. 
           Subd. 7.  [OTHER C-BED TARIFF ISSUES.] (a) A 
        community-based project developer and a utility shall negotiate 
        the rate and power purchase agreement terms consistent with the 
        tariff established under subdivision 4. 
           (b) At the discretion of the developer, a community-based 
        project developer and a utility may negotiate a power purchase 
        agreement with terms different from the tariff established under 
        subdivision 4. 
           (c) A qualifying owner, or any combination of qualifying 
        owners, may develop a joint venture project with a nonqualifying 
        wind energy project developer.  However, the terms of the C-BED 
        tariff may only apply to the portion of the energy production of 
        the total project that is directly proportional to the equity 
        share of the project owned by the qualifying owners. 
           (d) A project that is operating under a power purchase 
        agreement under a C-BED tariff is not eligible for net energy 
        billing under section 216B.164, subdivision 3, or for production 
        incentives under section 216C.41. 
           (e) A public utility must receive commission approval of a 
        power purchase agreement for a C-BED tariffed project.  The 
        commission shall provide the utility's ratepayers an opportunity 
        to address the reasonableness of the proposed power purchase 
        agreement.  Unless a party objects to a contract within 30 days 
        of submission of the contract to the commission the contract is 
        deemed approved. 
           Sec. 2.  Minnesota Statutes 2004, 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 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, or to 
        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, 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 2004, 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 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 a utility's plan under 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 a 
        utility's plan under 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 will match the planned in-service date of the 
        transmission facility; and 
           (4) that the proposed transmission facility is consistent 
        with a least cost solution to the utility's need for additional 
        electricity. 
           Sec. 4.  Minnesota Statutes 2004, section 216B.243, 
        subdivision 8, is amended to read: 
           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 or to; plants or 
        facilities for the production of ethanol or fuel alcohol nor in; 
        or any case where the commission shall determine 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 plant to using natural gas; or 
           (6) the modification of an existing electric generating 
        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 retail 
        customers in Minnesota, (iii) is specifically intended to be 
        used to meet the renewable energy objective under section 
        216B.1691 or addresses a resource need identified in a current 
        commission-approved or commission-reviewed resource plan under 
        section 216B.2422; and (iv) derives at least 10 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. 5.  [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. 6.  [WIND INTEGRATION STUDY.] 
           The commission shall order all electric utilities, as 
        defined in Minnesota Statutes, section 216B.1691, subdivision 1, 
        paragraph (b), to participate in a statewide wind integration 
        study.  Utilities subject to Minnesota Statutes, section 
        216B.1691, shall jointly contract with an independent firm 
        selected by the reliability administrator to conduct an 
        engineering study of the impacts on reliability and costs 
        associated with increasing wind capacity to 20 percent of 
        Minnesota retail electric energy sales by the year 2020, and to 
        identify and develop options for utilities to use to manage the 
        intermittent nature of wind resources.  The contracting 
        utilities shall cooperate with the firm conducting the study by 
        providing data requested.  The reliability administrator shall 
        manage the study process and shall appoint a group of 
        stakeholders with experience in engineering and expertise in 
        power systems or wind energy to review the study's proposed 
        methods and assumptions and preliminary data.  The study must be 
        completed by November 30, 2006.  Using the study results, the 
        contracting utilities shall provide the commissioner of commerce 
        with estimates of the impact on their electric rates of 
        increasing wind capacity to 20 percent, assuming no reduction in 
        reliability.  Electric utilities shall incorporate the study's 
        findings into their utility integrated resource plans prepared 
        under Minnesota Statutes, section 216B.2422.  The costs of the 
        study are recoverable under Minnesota Statutes, section 
        216C.052, subdivision 2, paragraph (c), clause (2). 
           Sec. 7.  [EXPIRATION.] 
           Section 3, paragraph (b), expires on January 1, 2010. 

                                   ARTICLE 3 
                     ROUTING AND SITING AUTHORITY TRANSFER 
           Section 1.  Minnesota Statutes 2004, section 116C.52, 
        subdivision 2, is amended to read: 
           Subd. 2.  [BOARD COMMISSION.] "Board" shall mean the 
        Minnesota Environmental Quality Board "Commission" means the 
        Public Utilities Commission. 
           Sec. 2.  Minnesota Statutes 2004, section 116C.52, 
        subdivision 4, is amended to read: 
           Subd. 4.  [HIGH VOLTAGE TRANSMISSION LINE.] "High voltage 
        transmission line" means a conductor of electric energy and 
        associated facilities designed for and capable of operation at a 
        nominal voltage of 100 kilovolts or more and is greater than 
        1,500 feet in length. 
           Sec. 3.  Minnesota Statutes 2004, section 116C.53, 
        subdivision 2, is amended to read: 
           Subd. 2.  [JURISDICTION.] The board commission is hereby 
        given the authority to provide for site and route selection for 
        large electric power facilities.  The board commission shall 
        issue permits for large electric power facilities in a timely 
        fashion.  When the Public Utilities Commission has determined 
        the and in a manner consistent with the overall determination of 
        need for the project under section 216B.243 or 216B.2425,.  
        Questions of need, including size, type, and timing; alternative 
        system configurations; and voltage are not within the board's 
        siting and routing authority and must not be included in the 
        scope of environmental review conducted under sections 116C.51 
        to 116C.69. 
           Sec. 4.  Minnesota Statutes 2004, section 116C.57, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [SITE PERMIT.] No person may construct a 
        large electric generating plant without a site permit from the 
        board commission.  A large electric generating plant may be 
        constructed only on a site approved by the board commission.  
        The board commission must incorporate into one proceeding the 
        route selection for a high voltage transmission line that is 
        directly associated with and necessary to interconnect the large 
        electric generating plant to the transmission system and whose 
        need is certified as part of the generating plant project by the 
        Public Utilities Commission under section 216B.243. 
           Sec. 5.  Minnesota Statutes 2004, section 116C.57, 
        subdivision 2c, is amended to read: 
           Subd. 2c.  [ENVIRONMENTAL REVIEW.] The board commissioner 
        of the Department of Commerce shall prepare for the commission 
        an environmental impact statement on each proposed large 
        electric generating plant or high voltage transmission line for 
        which a complete application has been submitted.  For any 
        project that has obtained a certificate of need from the Public 
        Utilities Commission, the board The commissioner shall not 
        consider whether or not the project is needed.  No other state 
        environmental review documents shall be required.  The board 
        commissioner shall study and evaluate any site or route proposed 
        by an applicant and any other site or route the board commission 
        deems necessary that was proposed in a manner consistent with 
        rules adopted by the board concerning the form, content, and 
        timeliness of proposals for alternate sites or routes.  
           Sec. 6.  Minnesota Statutes 2004, section 116C.57, is 
        amended by adding a subdivision to read: 
           Subd. 9.  [DEPARTMENT OF COMMERCE TO PROVIDE TECHNICAL 
        EXPERTISE AND OTHER ASSISTANCE.] The commissioner of the 
        Department of Commerce shall consult with other state agencies 
        and provide technical expertise and other assistance to the 
        commission or to individual members of the commission for 
        activities and proceedings under this section, sections 116C.51 
        to 116C.697, and chapter 116I.  This assistance shall include 
        the sharing of power plant siting and routing staff and other 
        resources as necessary.  The commissioner shall periodically 
        report to the commission concerning the Department of Commerce's 
        costs of providing assistance.  The report shall conform to the 
        schedule and include the required contents specified by the 
        commission.  The commission shall include the costs of the 
        assistance in assessments for activities and proceedings under 
        those sections and reimburse the special revenue fund for those 
        costs.  If either the commissioner or the commission deems it 
        necessary, the department and the commission shall enter into an 
        interagency agreement establishing terms and conditions for the 
        provision of assistance and sharing of resources under this 
        subdivision.  
           Sec. 7.  Minnesota Statutes 2004, section 116C.575, 
        subdivision 5, is amended to read: 
           Subd. 5.  [ENVIRONMENTAL REVIEW.] For the projects 
        identified in subdivision 2 and following these procedures, the 
        board commissioner of the Department of Commerce shall prepare 
        for the commission an environmental assessment.  The 
        environmental assessment shall contain information on the human 
        and environmental impacts of the proposed project and other 
        sites or routes identified by the board commission and shall 
        address mitigating measures for all of the sites or routes 
        considered.  The environmental assessment shall be the only 
        state environmental review document required to be prepared on 
        the project.  
           Sec. 8.  Minnesota Statutes 2004, section 116C.577, is 
        amended to read: 
           116C.577 [EMERGENCY PERMIT.] 
           (a) Any utility whose electric power system requires the 
        immediate construction of a large electric power generating 
        plant or high voltage transmission line due to a major 
        unforeseen event may apply to the board commission for an 
        emergency permit after providing.  The application shall provide 
        notice in writing to the Public Utilities Commission of the 
        major unforeseen event and the need for immediate construction.  
        The permit must be issued in a timely manner, no later than 195 
        days after the board's commission's acceptance of the 
        application and upon a finding by the board commission that (1) 
        a demonstrable emergency exists, (2) the emergency requires 
        immediate construction, and (3) adherence to the procedures and 
        time schedules specified in section 116C.57 would jeopardize the 
        utility's electric power system or would jeopardize the 
        utility's ability to meet the electric needs of its customers in 
        an orderly and timely manner. 
           (b) A public hearing to determine if an emergency exists 
        must be held within 90 days of the application.  The 
        board commission, after notice and hearing, shall adopt rules 
        specifying the criteria for emergency certification.  
           Sec. 9.  Minnesota Statutes 2004, section 116C.58, is 
        amended to read: 
           116C.58 [ANNUAL HEARING.] 
           The board commission shall hold an annual public hearing at 
        a time and place prescribed by rule in order to afford 
        interested persons an opportunity to be heard regarding any 
        matters relating to the siting of large electric generating 
        power plants and routing of high voltage transmission lines.  At 
        the meeting, the board commission shall advise the public of the 
        permits issued by the board commission in the past year.  
        The board commission shall provide at least ten days but no more 
        than 45 days' notice of the annual meeting by mailing notice to 
        those persons who have requested notice and by publication in 
        the EQB Monitor and the commission's weekly calendar. 
           Sec. 10.  Minnesota Statutes 2004, section 116C.61, 
        subdivision 3, is amended to read: 
           Subd. 3.  [STATE AGENCY PARTICIPATION.] (a) State agencies 
        authorized to issue permits required for construction or 
        operation of large electric power generating plants or high 
        voltage transmission lines shall participate during routing and 
        siting at public hearings and all other activities of the board 
        on specific site or route designations and design considerations 
        of the board, and shall clearly state whether the site or route 
        being considered for designation or permit and other design 
        matters under consideration for approval will be in compliance 
        with state agency standards, rules, or policies. 
           (b) An applicant for a permit under this section or under 
        chapter 116I shall notify the commissioner of agriculture if the 
        proposed project will impact cultivated agricultural land, as 
        that term is defined in section 116I.01, subdivision 4.  The 
        commissioner may participate and advise the commission as to 
        whether to grant a permit for the project and the best options 
        for mitigating adverse impacts to agricultural lands if the 
        permit is granted.  The Department of Agriculture shall be the 
        lead agency on the development of any agricultural mitigation 
        plan required for the project. 
           Sec. 11.  Minnesota Statutes 2004, section 116C.69, 
        subdivision 2, is amended to read: 
           Subd. 2.  [SITE APPLICATION FEE.] Every applicant for a 
        site permit shall pay to the board commissioner of commerce a 
        fee in an amount equal to $500 for each $1,000,000 of production 
        plant investment in the proposed installation as defined in the 
        Federal Power Commission Uniform System of Accounts.  The board 
        shall specify the time and manner of payment of the fee.  If any 
        single payment requested by the board is in excess of 25 percent 
        of the total estimated fee, the board shall show that the excess 
        is reasonably necessary.  The applicant shall pay within 30 days 
        of notification any additional fees reasonably necessary for 
        completion of the site evaluation and designation process by the 
        board.  In no event shall the total fees required of the 
        applicant under this subdivision exceed an amount equal to 0.001 
        of said production plant investment ($1,000 for each $1,000,000) 
        to cover the necessary and reasonable costs incurred by the 
        commission in acting on the permit application and carrying out 
        the requirements of sections 116C.51 to 116C.69.  The commission 
        may adopt rules providing for the payment of the fee.  Section 
        16A.1283 does not apply to establishment of this fee.  All money 
        received pursuant to this subdivision shall be deposited in a 
        special account.  Money in the account is appropriated to 
        the board commissioner of commerce to pay expenses incurred in 
        processing applications for site permits in accordance with 
        sections 116C.51 to 116C.69 and in the event the expenses are 
        less than the fee paid, to refund the excess to the applicant.  
           Sec. 12.  Minnesota Statutes 2004, section 116C.69, 
        subdivision 2a, is amended to read: 
           Subd. 2a.  [ROUTE APPLICATION FEE.] Every applicant for a 
        transmission line route permit shall pay to the board 
        commissioner of commerce a base fee of $35,000 plus a fee in an 
        amount equal to $1,000 per mile length of the longest proposed 
        route.  The board shall specify the time and manner of payment 
        of the fee.  If any single payment requested by the board is in 
        excess of 25 percent of the total estimated fee, the board shall 
        show that the excess is reasonably necessary.  In the event the 
        actual cost of processing an application up to the board's final 
        decision to designate a route exceeds the above fee schedule, 
        the board may assess the applicant any additional fees necessary 
        to cover the actual costs, not to exceed an amount equal to $500 
        per mile length of the longest proposed route fee to cover the 
        necessary and reasonable costs incurred by the commission in 
        acting on the permit application and carrying out the 
        requirements of sections 116C.51 to 116C.69.  The commission may 
        adopt rules providing for the payment of the fee.  Section 
        16A.1283 does not apply to the establishment of this fee.  All 
        money received pursuant to this subdivision shall be deposited 
        in a special account.  Money in the account is appropriated to 
        the board commissioner of commerce to pay expenses incurred in 
        processing applications for route permits in accordance with 
        sections 116C.51 to 116C.69 and in the event the expenses are 
        less than the fee paid, to refund the excess to the applicant.  
           Sec. 13.  Minnesota Statutes 2004, section 216B.243, 
        subdivision 4, is amended to read: 
           Subd. 4.  [APPLICATION FOR CERTIFICATE; HEARING.] Any 
        person proposing to construct a large energy facility shall 
        apply for a certificate of need prior to applying and for a site 
        or route permit under sections 116C.51 to 116C.69 or 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.  If Unless the commission and the 
        Environmental Quality Board determine determines that a joint 
        hearing on siting and need under this subdivision and section 
        116C.57, subdivision 2d, is not feasible, or more efficient, and 
        may further or otherwise not in the public interest, a joint 
        hearing under those subdivisions may shall be held. 
           Sec. 14.  Minnesota Statutes 2004, section 216B.243, 
        subdivision 5, is amended to read: 
           Subd. 5.  [APPROVAL, DENIAL, OR MODIFICATION.] Within 
        six 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.  
           Sec. 15.  Minnesota Statutes 2004, section 216B.243, 
        subdivision 7, is amended to read: 
           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 
        116I.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. 
           Sec. 16.  Minnesota Statutes 2004, section 216C.052, is 
        amended to read: 
           216C.052 [RELIABILITY ADMINISTRATOR.] 
           Subdivision 1.  [RESPONSIBILITIES.] (a) There is 
        established the position of reliability administrator in the 
        Department of Commerce Public Utilities Commission.  The 
        administrator shall act as a source of independent expertise and 
        a technical advisor to the commissioner, the commission, and the 
        public, and the Legislative Electric Energy Task Force on issues 
        related to the reliability of the electric system.  In 
        conducting its work, the administrator shall provide assistance 
        to the commission in administering and implementing the 
        commission's duties under sections 116C.51 to 116C.69; 116C.691 
        to 116C.697; 216B.2422; 216B.2425; 216B.243; chapter 116I; and 
        rules associated with those sections.  Subject to resource 
        constraints, the reliability administrator may also: 
           (1) model and monitor the use and operation of the energy 
        infrastructure in the state, including generation facilities, 
        transmission lines, natural gas pipelines, and other energy 
        infrastructure; 
           (2) develop and present to the commission and parties 
        technical analyses of proposed infrastructure projects, and 
        provide technical advice to the commission; 
           (3) present independent, factual, expert, and technical 
        information on infrastructure proposals and reliability issues 
        at public meetings hosted by the task force, the Environmental 
        Quality Board, the department, or the commission. 
           (b) Upon request and subject to resource constraints, the 
        administrator shall provide technical assistance regarding 
        matters unrelated to applications for infrastructure 
        improvements to the task force, the department, or the 
        commission. 
           (c) The administrator may not advocate for any particular 
        outcome in a commission proceeding, but may give technical 
        advice to the commission as to the impact on the reliability of 
        the energy system of a particular project or projects.  The 
        administrator must not be considered a party or a participant in 
        any proceeding before the commission. 
           Subd. 2.  [ADMINISTRATIVE ISSUES.] (a) The commissioner 
        commission may select the administrator who shall serve for a 
        four-year term.  The administrator may not have been a party or 
        a participant in a commission energy proceeding for at least one 
        year prior to selection by the commissioner commission.  
        The commissioner commission shall oversee and direct the work of 
        the administrator, annually review the expenses of the 
        administrator, and annually approve the budget of the 
        administrator.  Pursuant to commission approval, the 
        administrator may hire staff and may contract for technical 
        expertise in performing duties when existing state resources are 
        required for other state responsibilities or when special 
        expertise is required.  The salary of the administrator is 
        governed by section 15A.0815, subdivision 2. 
           (b) Costs relating to a specific proceeding, analysis, or 
        project are not general administrative costs.  For purposes of 
        this section, "energy utility" means public utilities, 
        generation and transmission cooperative electric associations, 
        and municipal power agencies providing natural gas or electric 
        service in the state.  
           (c) The Department of Commerce commission shall pay: 
           (1) the general administrative costs of the administrator, 
        not to exceed $1,000,000 in a fiscal year, and shall assess 
        energy utilities for those administrative costs.  These costs 
        must be consistent with the budget approved by the commissioner 
        commission under paragraph (a).  The department commission shall 
        apportion the costs among all energy utilities in proportion to 
        their respective gross operating revenues from sales of gas or 
        electric service within the state during the last calendar year, 
        and shall then render a bill to each utility on a regular basis; 
        and 
           (2) costs relating to a specific proceeding analysis or 
        project and shall render a bill to the specific energy utility 
        or utilities participating in the proceeding, analysis, or 
        project directly, either at the conclusion of a particular 
        proceeding, analysis, or project, or from time to time during 
        the course of the proceeding, analysis, or project. 
           (d) For purposes of administrative efficiency, the 
        department commission shall assess energy utilities and issue 
        bills in accordance with the billing and assessment procedures 
        provided in section 216B.62, to the extent that these procedures 
        do not conflict with this subdivision.  The amount of the bills 
        rendered by the department commission under paragraph (c) must 
        be paid by the energy utility into an account in the special 
        revenue fund in the state treasury within 30 days from the date 
        of billing and is appropriated to the commissioner commission 
        for the purposes provided in this section.  The commission shall 
        approve or approve as modified a rate schedule providing for the 
        automatic adjustment of charges to recover amounts paid by 
        utilities under this section.  All amounts assessed under this 
        section are in addition to amounts appropriated to the 
        commission and the department by other law. 
           Subd. 3.  [ASSESSMENT AND APPROPRIATION.] In addition to 
        the amount noted in subdivision 2, the commissioner commission 
        may assess utilities, using the mechanism specified in that 
        subdivision, up to an additional $500,000 annually through June 
        30, 2006.  The amounts assessed under this subdivision are 
        appropriated to the commissioner commission, and some or all of 
        the amounts assessed may be transferred to the commissioner of 
        administration, for the purposes specified in section 16B.325 
        and Laws 2001, chapter 212, article 1, section 3, as needed to 
        implement those sections. 
           Subd. 4.  [EXPIRATION.] This section expires June 30, 
        2006 2007. 
           Sec. 17.  [TRANSFERRING POWER PLANT SITING 
        RESPONSIBILITIES.] 
           To ensure greater public participation in energy 
        infrastructure approval proceedings and to better integrate and 
        align state energy and environmental policy goals with economic 
        decisions involving large energy infrastructure, all 
        responsibilities, as defined in Minnesota Statutes, section 
        15.039, subdivision 1, held by the Environmental Quality Board 
        relating to power plant siting and routing under Minnesota 
        Statutes, sections 116C.51 to 116C.69; wind energy conversion 
        systems under Minnesota Statutes, sections 116C.691 to 116C.697; 
        pipelines under Minnesota Statutes, chapter 116I; and rules 
        associated with those sections are transferred to the Public 
        Utilities Commission under Minnesota Statutes, section 15.039, 
        except that the responsibilities of the Environmental Quality 
        Board under Minnesota Statutes, section 116C.83, subdivision 6, 
        and Minnesota Rules, parts 4400.1700, 4400.2750, and 4410.7010 
        to 4410.7070, are transferred to the commissioner of the 
        Department of Commerce.  The power plant siting staff of the 
        Environmental Quality Board are transferred to the Department of 
        Commerce.  The department's budget shall be adjusted to reflect 
        the transfer.  
        The Department of Commerce and the Public Utilities Commission 
        shall carry out these duties in accordance with the provisions 
        of Minnesota Statutes, section 116D.03. 
           Sec. 18.  [TRANSFERRING RELIABILITY ADMINISTRATOR 
        RESPONSIBILITIES.] 
           All responsibilities, as defined in Minnesota Statutes 
        2004, section 15.039, subdivision 1, held by the Minnesota 
        Department of Commerce relating to the reliability administrator 
        under Minnesota Statutes, section 216C.052, are transferred to 
        the Minnesota Public Utilities Commission under Minnesota 
        Statutes, section 15.039. 
           Sec. 19.  [REVISOR'S INSTRUCTION.] 
           (a) The revisor of statutes shall change the words 
        "Environmental Quality Board," "board," "chair of the board," 
        "chair," "board's," and similar terms, when they refer to the 
        Environmental Quality Board or chair of the Environmental 
        Quality Board, to the term "Public Utilities Commission," 
        "commission," or "commission's," as appropriate, where they 
        appear in Minnesota Statutes, sections 13.741, subdivision 3, 
        116C.51 to 116C.697, and chapter 116I.  The revisor shall also 
        make those changes in Minnesota Rules, chapters 4400, 4401, and 
        4415, except as specified in paragraph (b). 
           (b) The revisor of statutes shall change the words 
        "Environmental Quality Board," "board," "chair of the board," 
        "chair," "board's," and similar terms, when they refer to the 
        Environmental Quality Board or chair of the Environmental 
        Quality Board, to the term "commissioner of the Department of 
        Commerce," "commissioner," or "commissioner's," as appropriate, 
        where they appear in Minnesota Statutes, section 116C.83, 
        subdivision 6; and Minnesota Rules, parts 4400.1700, subparts 1 
        to 9, 11, and 12; 4400.2750; and 4410.7010 to 4410.7070. 
           Sec. 20.  [EFFECTIVE DATE.] 
           Sections 1 to 18 are effective July 1, 2005. 

                                   ARTICLE 4 
                    ENERGY ASSISTANCE TECHNICAL CORRECTIONS 
           Section 1.  Minnesota Statutes 2004, section 13.681, is 
        amended by adding a subdivision to read: 
           Subd. 5.  [ENERGY PROGRAMS.] Treatment of data on 
        individuals applying for benefits or services under energy 
        programs is governed by section 216C.266. 
           Sec. 2.  Minnesota Statutes 2004, section 119A.15, 
        subdivision 5a, is amended to read: 
           Subd. 5a.  [EXCLUDED PROGRAMS.] Programs transferred to the 
        Department of Education from the Department of Employment and 
        Economic Development may not be included in the consolidated 
        funding account and are ineligible for local consolidation.  The 
        commissioner may not apply for federal waivers to include these 
        programs in funding consolidation initiatives.  The programs 
        include the following: 
           (1) programs for the homeless under sections 116L.365 and 
        119A.43; 
           (2) emergency energy assistance and energy conservation 
        programs under sections 119A.40 and 119A.42 216C.263 and 
        216C.265; 
           (3) weatherization programs under section 119A.41 216C.264; 
           (4) foodshelf programs under section 119A.44 and the 
        emergency food assistance program; and 
           (5) lead abatement programs under section 119A.45. 
           Sec. 3.  Minnesota Statutes 2004, section 216C.09, is 
        amended to read: 
           216C.09 [COMMISSIONER DUTIES.] 
           (a) The commissioner shall: 
           (1) manage the department as the central repository within 
        the state government for the collection of data on energy; 
           (2) prepare and adopt an emergency allocation plan 
        specifying actions to be taken in the event of an impending 
        serious shortage of energy, or a threat to public health, 
        safety, or welfare; 
           (3) undertake a continuing assessment of trends in the 
        consumption of all forms of energy and analyze the social, 
        economic, and environmental consequences of these trends; 
           (4) carry out energy conservation measures as specified by 
        the legislature and recommend to the governor and the 
        legislature additional energy policies and conservation measures 
        as required to meet the objectives of sections 216C.05 to 
        216C.30; 
           (5) collect and analyze data relating to present and future 
        demands and resources for all sources of energy; 
           (6) evaluate policies governing the establishment of rates 
        and prices for energy as related to energy conservation, and 
        other goals and policies of sections 216C.05 to 216C.30, and 
        make recommendations for changes in energy pricing policies and 
        rate schedules; 
           (7) study the impact and relationship of the state energy 
        policies to international, national, and regional energy 
        policies; 
           (8) design and implement a state program for the 
        conservation of energy; this program shall include but not be 
        limited to, general commercial, industrial, and residential, and 
        transportation areas; such program shall also provide for the 
        evaluation of energy systems as they relate to lighting, 
        heating, refrigeration, air conditioning, building design and 
        operation, and appliance manufacturing and operation; 
           (9) inform and educate the public about the sources and 
        uses of energy and the ways in which persons can conserve 
        energy; 
           (10) dispense funds made available for the purpose of 
        research studies and projects of professional and civic 
        orientation, which are related to either energy conservation, 
        resource recovery, or the development of alternative energy 
        technologies which conserve nonrenewable energy resources while 
        creating minimum environmental impact; 
           (11) charge other governmental departments and agencies 
        involved in energy-related activities with specific information 
        gathering goals and require that those goals be met; 
           (12) design a comprehensive program for the development of 
        indigenous energy resources.  The program shall include, but not 
        be limited to, providing technical, informational, educational, 
        and financial services and materials to persons, businesses, 
        municipalities, and organizations involved in the development of 
        solar, wind, hydropower, peat, fiber fuels, biomass, and other 
        alternative energy resources.  The program shall be evaluated by 
        the alternative energy technical activity; and 
           (13) dispense loans, grants, or other financial aid from 
        money received from litigation or settlement of alleged 
        violations of federal petroleum-pricing regulations made 
        available to the department for that purpose.  The commissioner 
        shall adopt rules under chapter 14 for this purpose.  Money 
        dispersed under this clause must not include money received as a 
        result of the settlement of the parties and order of the United 
        States District Court for the District of Kansas in the case of 
        In Re Department of Energy Stripper Well Exemption Litigation, 
        578 F. Supp. 586 (D.Kan. 1983) and all money received after 
        August 1, 1988, by the governor, the commissioner of finance, or 
        any other state agency resulting from overcharges by oil 
        companies in violation of federal law.  
           (b) Further, the commissioner may participate fully in 
        hearings before the Public Utilities Commission on matters 
        pertaining to rate design, cost allocation, efficient resource 
        utilization, utility conservation investments, small power 
        production, cogeneration, and other rate issues.  The 
        commissioner shall support the policies stated in section 
        216C.05 and shall prepare and defend testimony proposed to 
        encourage energy conservation improvements as defined in section 
        216B.241. 
           Sec. 4.  Minnesota Statutes 2004, section 462A.05, 
        subdivision 21, is amended to read: 
           Subd. 21.  [RENTAL PROPERTY LOANS.] The agency may make or 
        purchase loans to owners of rental property that is occupied or 
        intended for occupancy primarily by low- and moderate-income 
        tenants and which does not comply with the standards established 
        in section 216C.27 16B.61, subdivision 3 1, for the purpose of 
        energy improvements necessary to bring the property into full or 
        partial compliance with these standards.  For property which 
        meets the other requirements of this subdivision, a loan may 
        also be used for moderate rehabilitation of the property.  The 
        authority granted in this subdivision is in addition to and not 
        in limitation of any other authority granted to the agency in 
        this chapter.  The limitations on eligible mortgagors contained 
        in section 462A.03, subdivision 13, do not apply to loans under 
        this subdivision.  Loans for the improvement of rental property 
        pursuant to this subdivision may contain provisions that 
        repayment is not required in whole or in part subject to terms 
        and conditions determined by the agency to be necessary and 
        desirable to encourage owners to maximize rehabilitation of 
        properties. 
           Sec. 5.  Minnesota Statutes 2004, section 462A.05, 
        subdivision 23, is amended to read: 
           Subd. 23.  [INSURING FINANCIAL INSTITUTION LOANS.] The 
        agency may participate in loans or establish a fund to insure 
        loans, or portions of loans, that are made by any banking 
        institution, savings association, or other lender approved by 
        the agency, organized under the laws of this or any other state 
        or of the United States having an office in this state, to 
        owners of renter occupied homes or apartments that do not comply 
        with standards set forth in section 216C.27 16B.61, 
        subdivision 3 1, without limitations relating to the maximum 
        incomes of the owners or tenants.  The proceeds of the insured 
        portion of the loan must be used to pay the costs of 
        improvements, including all related structural and other 
        improvements, that will reduce energy consumption.  
           Sec. 6.  [RECODIFICATION.] 
           Minnesota Statutes 2004, sections 119A.40; 119A.41; 
        119A.42; 119A.425; and 216C.27, subdivision 8, are recodified as 
        sections 216C.263; 216C.264; 216C.265; 216C.266; and 16B.61, 
        subdivision 8, respectively. 

                                   ARTICLE 5 
                         WOODY BIOMASS MANDATE PROJECT 
           Section 1.  Minnesota Statutes 2004, section 216B.2424, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [FARM-GROWN CLOSED-LOOP BIOMASS.] (a) For 
        the purposes of this section, "farm-grown closed-loop biomass" 
        means biomass, as defined in section 216C.051, subdivision 7, 
        that: 
           (1) is intentionally cultivated, harvested, and prepared 
        for use, in whole or in part, as a fuel for the generation of 
        electricity; 
           (2) when combusted, releases an amount of carbon dioxide 
        that is less than or approximately equal to the carbon dioxide 
        absorbed by the biomass fuel during its growing cycle; and 
           (3) is fired in a new or substantially retrofitted electric 
        generating facility that is: 
           (i) located within 400 miles of the site of the biomass 
        production; and 
           (ii) designed to use biomass to meet at least 75 percent of 
        its fuel requirements. 
           (b) The legislature finds that the negative environmental 
        impacts within 400 miles of the facility resulting from 
        transporting and combusting the biomass are offset in that 
        region by the environmental benefits to air, soil, and water of 
        the biomass production. 
           (c) Among the biomass fuel sources that meet the 
        requirements of paragraph (a), clause clauses (1) and (2) are 
        poplar, aspen, willow, switch grass, sorghum, alfalfa, and 
        cultivated prairie grass and sustainably managed woody biomass.  
           (d) For the purpose of this section, "sustainably managed 
        woody biomass" means:  
           (1) brush, trees, and other biomass harvested from within 
        designated utility, railroad, and road rights-of-way; 
           (2) upland and lowland brush harvested from lands 
        incorporated into brushland habitat management activities of the 
        Minnesota Department of Natural Resources; 
           (3) upland and lowland brush harvested from lands managed 
        in accordance with Minnesota Department of Natural Resources 
        "Best Management Practices for Managing Brushlands"; 
           (4) logging slash or waste wood that is created by harvest, 
        precommercial timber stand improvement to meet silvicultural 
        objectives, or by fire, disease, or insect control treatments, 
        and that is managed in compliance with the Minnesota Forest 
        Resources Council's "Sustaining Minnesota Forest Resources: 
        Voluntary Site-Level Forest Management Guidelines for 
        Landowners, Loggers and Resource Managers" as modified by the 
        requirement of this subdivision; and 
           (5) trees or parts of trees that do not meet the 
        utilization standards for pulpwood, posts, bolts, or sawtimber 
        as described in the Minnesota Department of Natural Resources 
        Division of Forestry Timber Sales Manual, 1998, as amended as of 
        May 1, 2005, and the Minnesota Department of Natural Resources 
        Timber Scaling Manual, 1981, as amended as of May 1, 2005, 
        except as provided in paragraph (a), clause (1), and this 
        paragraph, clauses (1) to (3). 
           Sec. 2.  Minnesota Statutes 2004, section 216B.2424, is 
        amended by adding a subdivision to read:  
           Subd. 1a.  [MUNICIPAL WASTE-TO-ENERGY PROJECT.] (a) This 
        subdivision applies only to a biomass project owned or 
        controlled, directly or indirectly, by two municipal utilities 
        as described in subdivision 5a, paragraph (b). 
           (b) Woody biomass from state-owned land must be harvested 
        in compliance with an adopted management plan and a program of 
        ecologically based third-party certification.  
           (c) The project must prepare a fuel plan on an annual basis 
        after commercial operation of the project as described in the 
        power contract between the project and the public utility, and 
        must also prepare annually certificates reflecting the types of 
        fuel used in the preceding year by the project, as described in 
        the power contract.  The fuel plans and certificates shall also 
        be filed with the Minnesota Department of Natural Resources and 
        the Minnesota Department of Commerce within 30 days after being 
        provided to the public utility, as provided by the power 
        contract.  Any person who believes the fuel plans, as amended, 
        and certificates show that the project does not or will not 
        comply with the fuel requirements of this subdivision may file a 
        petition with the commission seeking such a determination.  
           (d) The wood procurement process must utilize third-party 
        audit certification systems to verify that applicable best 
        management practices were utilized in the procurement of the 
        sustainably managed biomass.  If there is a failure to so verify 
        in any two consecutive years during the original contract term, 
        the farm-grown closed-loop biomass requirements of subdivision 2 
        must be increased to 50 percent for the remaining contract term 
        period; however, if in two consecutive subsequent years after 
        the increase has been implemented, it is verified that the 
        conditions in this subdivision have been met, then for the 
        remaining original contract term the closed-loop biomass mandate 
        reverts to 25 percent.  If there is a subsequent failure to 
        verify in a year after the first failure and implementation of 
        the 50 percent requirement, then the closed-loop percentage 
        shall remain at 50 percent for each remaining year of the 
        contract term.  
           (e) In the closed-loop plantation, no transgenic plants may 
        be used.  
           (f) No wood may be harvested from any lands identified by 
        the final or preliminary Minnesota County Biological Survey as 
        having statewide significance as native plant communities, large 
        populations or concentrations of rare species, or critical 
        animal habitat.  
           (g) A wood procurement plan must be prepared every five 
        years and public meetings must be held and written comments 
        taken on the plan and documentation must be provided on why or 
        why not the public inputs were used.  
           (h) Guidelines or best management practices for sustainably 
        managed woody biomass must be adopted by:  
           (1) the Minnesota Department of Natural Resources for 
        managing and maintaining brushland and open land habitat on 
        public and private lands, including, but not limited to, 
        provisions of sections 84.941, 84.942, and 97A.125; and 
           (2) the Minnesota Forest Resources Council for logging 
        slash, using the most recent available scientific information 
        regarding the removal of woody biomass from forest lands, to 
        sustain the management of forest resources as defined by section 
        89.001, subdivisions 8 and 9, with particular attention to soil 
        productivity, biological diversity as defined by section 89A.01, 
        subdivision 3, and wildlife habitat. 
           These guidelines must be completed by July 1, 2007, and the 
        process of developing them must incorporate public notification 
        and comment. 
           (i) The University of Minnesota Initiative for Renewable 
        Energy and the Environment is encouraged to solicit and fund 
        high-quality research projects to develop and consolidate 
        scientific information regarding the removal of woody biomass 
        from forest and brush lands, with particular attention to the 
        environmental impacts on soil productivity, biological 
        diversity, and sequestration of carbon.  The results of this 
        research shall be made available to the public. 
           (j) The two utilities owning or controlling, directly or 
        indirectly, the biomass project described in subdivision 5a, 
        paragraph (b), shall fund or obtain funding from nonstate 
        sources of up to $150,000 to complete the guidelines or best 
        management practices described in paragraph (h).  The 
        expenditures to be funded under this paragraph do not include 
        any of the expenditures to be funded under paragraph (i). 
           Sec. 3.  Minnesota Statutes 2004, section 216B.2424, 
        subdivision 2, is amended to read: 
           Subd. 2.  [INTERIM EXEMPTION.] (a) A biomass project 
        proposing to use, as its primary fuel over the life of the 
        project, short-rotation woody crops, may use as an interim fuel 
        agricultural waste and other biomass which is not farm-grown 
        closed-loop biomass for up to six years after the project's 
        electric generating facility becomes operational; provided, the 
        project developer demonstrates the project will use the 
        designated short-rotation woody crops as its primary fuel after 
        the interim period and provided the location of the interim fuel 
        production meets the requirements of subdivision 1, paragraph 
        (a), clause (3). 
           (b) A biomass project proposing to use, as its primary fuel 
        over the life of the project, short-rotation woody crops, may 
        use as an interim fuel agricultural waste and other biomass 
        which is not farm-grown closed-loop biomass for up to three 
        years after the project's electric generating facility becomes 
        operational; provided, the project developer demonstrates the 
        project will use the designated short-rotation woody crops as 
        its primary fuel after the interim period. 
           (c) A biomass project that uses an interim fuel under the 
        terms of paragraph (b) may, in addition, use an interim fuel 
        under the terms of paragraph (a) for six years less the number 
        of years that an interim fuel was used under paragraph (b). 
           (d) A project developer proposing to use an exempt interim 
        fuel under paragraphs (a) and (b) must demonstrate to the public 
        utility that the project will have an adequate supply of 
        short-rotation woody crops which meet the requirements of 
        subdivision 1 to fuel the project after the interim period. 
           (e) If a biomass project using an interim fuel under this 
        subdivision is or becomes owned or controlled, directly or 
        indirectly, by two municipal utilities as described in 
        subdivision 5a, paragraph (b), the project is deemed to comply 
        with the requirement under this subdivision to use as its 
        primary fuel farm-grown closed-loop biomass if farm-grown 
        closed-loop biomass comprises no less than 25 percent of the 
        fuel used over the life of the project.  For purposes of this 
        subdivision, "life of the project" means 20 years from the date 
        the project becomes operational or the term of the applicable 
        power purchase agreement between the project owner and the 
        public utility, whichever is longer. 
           Sec. 4.  Minnesota Statutes 2004, section 216B.2424, 
        subdivision 5a, is amended to read: 
           Subd. 5a.  [REDUCTION OF BIOMASS MANDATE.] (a) 
        Notwithstanding subdivision 5, the biomass electric energy 
        mandate shall must be reduced from 125 megawatts to 110 
        megawatts.  
           (b) The Public Utilities Commission shall approve a request 
        pending before the Public Utilities commission as of May 15, 
        2003, for an amendment amendments to and assignment of a 
        contract for power from power purchase agreement with the owner 
        of a facility that uses short-rotation, woody crops as its 
        primary fuel previously approved to satisfy a portion of the 
        biomass mandate if the developer owner of the project agrees to 
        reduce the size of its project from 50 megawatts to 35 
        megawatts, while maintaining a an average price for energy at or 
        below the current contract price. in nominal dollars measured 
        over the term of the power purchase agreement at or below $104 
        per megawatt-hour, exclusive of any price adjustments that may 
        take effect subsequent to commission approval of the power 
        purchase agreement, as amended.  The commission shall also 
        approve, as necessary, any subsequent assignment or sale of the 
        power purchase agreement or ownership of the project to an 
        entity owned or controlled, directly or indirectly, by two 
        municipal utilities located north of Constitutional Route No. 8, 
        as described in section 161.114, which currently own electric 
        and steam generation facilities using coal as a fuel and which 
        propose to retrofit their existing municipal electrical 
        generating facilities to utilize biomass fuels in order to 
        perform the power purchase agreement. 
           (c) If the power purchase agreement described in paragraph 
        (b) is assigned to an entity that is, or becomes, owned or 
        controlled, directly or indirectly, by two municipal entities as 
        described in paragraph (b), and the power purchase agreement 
        meets the price requirements of paragraph (b), the commission 
        shall approve any amendments to the power purchase agreement 
        necessary to reflect the changes in project location and 
        ownership and any other amendments made necessary by those 
        changes.  The commission shall also specifically find that: 
           (1) the power purchase agreement complies with and fully 
        satisfies the provisions of this section to the full extent of 
        its 35-megawatt capacity; 
           (2) all costs incurred by the public utility and all 
        amounts to be paid by the public utility to the project owner 
        under the terms of the power purchase agreement are fully 
        recoverable pursuant to section 216B.1645; 
           (3) subject to prudency review by the commission, the 
        public utility may recover from its Minnesota retail customers 
        the Minnesota jurisdictional portion of the amounts that may be 
        incurred and paid by the public utility during the full term of 
        the power purchase agreement; and 
           (4) if the purchase power agreement meets the requirements 
        of this subdivision, it is reasonable and in the public interest.
           (d) The commission shall specifically approve recovery by 
        the public utility of any and all Minnesota jurisdictional costs 
        incurred by the public utility to improve, construct, install, 
        or upgrade transmission, distribution, or other electrical 
        facilities owned by the public utility or other persons in order 
        to permit interconnection of the retrofitted biomass-fueled 
        generating facilities or to obtain transmission service for the 
        energy provided by the facilities to the public utility pursuant 
        to section 216B.1645, and shall disapprove any provision in the 
        power purchase agreement that requires the developer or owner of 
        the project to pay the jurisdictional costs or that permit the 
        public utility to terminate the power purchase agreement as a 
        result of the existence of those costs or the public utility's 
        obligation to pay any or all of those costs. 
           Sec. 5.  Minnesota Statutes 2004, section 216B.2424, 
        subdivision 6, is amended to read: 
           Subd. 6.  [REMAINING MEGAWATT COMPLIANCE PROCESS.] (a) If 
        there remain megawatts of biomass power generating capacity to 
        fulfill the mandate in subdivision 5 after the commission has 
        taken final action on all contracts filed by September 1, 2000, 
        by a public utility, as amended and assigned, this subdivision 
        governs final compliance with the biomass energy mandate in 
        subdivision 5 subject to the requirements of subdivisions 7 and 
        8.  
           (b) To the extent not inconsistent with this subdivision, 
        the provisions of subdivisions 2, 3, 4, and 5 apply to proposals 
        subject to this subdivision. 
           (c) A public utility must submit proposals to the 
        commission to complete the biomass mandate.  The commission 
        shall require a public utility subject to this section to issue 
        a request for competitive proposals for projects for electric 
        generation utilizing biomass as defined in paragraph (f) of this 
        subdivision to provide the remaining megawatts of the mandate.  
        The commission shall set an expedited schedule for submission of 
        proposals to the utility, selection by the utility of proposals 
        or projects, negotiation of contracts, and review by the 
        commission of the contracts or projects submitted by the utility 
        to the commission. 
           (d) Notwithstanding the provisions of subdivisions 1 to 5 
        but subject to the provisions of subdivisions 7 and 8, a new or 
        existing facility proposed under this subdivision that is fueled 
        either by biomass or by co-firing biomass with nonbiomass may 
        satisfy the mandate in this section.  Such a facility need not 
        use biomass that complies with the definition in subdivision 1 
        if it uses biomass as defined in paragraph (f) of this 
        subdivision.  Generating capacity produced by co-firing of 
        biomass that is operational as of April 25, 2000, does not meet 
        the requirements of the mandate, except that additional 
        co-firing capacity added at an existing facility after April 25, 
        2000, may be used to satisfy this mandate.  Only the number of 
        megawatts of capacity at a facility which co-fires biomass that 
        are directly attributable to the biomass and that become 
        operational after April 25, 2000, count toward meeting the 
        biomass mandate in this section. 
           (e) Nothing in this subdivision precludes a facility 
        proposed and approved under this subdivision from using fuel 
        sources that are not biomass in compliance with subdivision 3. 
           (f) Notwithstanding the provisions of subdivision 1, for 
        proposals subject to this subdivision, "biomass" includes 
        farm-grown closed-loop biomass; agricultural wastes, including 
        animal, poultry, and plant wastes; and waste wood, including 
        chipped wood, bark, brush, residue wood, and sawdust. 
           (g) Nothing in this subdivision affects in any way 
        contracts entered into as of April 25, 2000, to satisfy the 
        mandate in subdivision 5.  
           (h) Nothing in this subdivision requires a public utility 
        to retrofit its own power plants for the purpose of co-firing 
        biomass fuel, nor is a utility prohibited from retrofitting its 
        own power plants for the purpose of co-firing biomass fuel to 
        meet the requirements of this subdivision. 
           Sec. 6.  Minnesota Statutes 2004, section 216B.2424, 
        subdivision 8, is amended to read: 
           Subd. 8.  [AGRICULTURAL BIOMASS REQUIREMENT.] Of the 125 
        megawatts mandated in subdivision 5, or 110 megawatts mandated 
        in subdivision 5a, at least 75 megawatts of the generating 
        capacity must be generated by facilities that use agricultural 
        biomass as the principal fuel source.  For purposes of this 
        subdivision, agricultural biomass includes only farm-grown 
        closed-loop biomass and agricultural waste, including animal, 
        poultry, and plant wastes.  For purposes of this subdivision, 
        "principal fuel source" means a fuel source that satisfies at 
        least 75 percent of the fuel requirements of an electric power 
        generating facility.  Nothing in this subdivision is intended to 
        expand the fuel source requirements of subdivision 5. 

                                   ARTICLE 6 
                                    E-FILING 
           Section 1.  [ESTABLISHMENT OF FUND.] 
           The Department of Commerce's e-filing account is 
        established.  The commissioner of commerce shall make a onetime 
        assessment of no more than $300,000 to cover the actual cost of 
        implementing this section.  The funds assessed must be deposited 
        in the account.  Any excess funds in the account upon completion 
        must be refunded to the utilities proportionately to the amount 
        assessed.  Each public utility, generation and transmission 
        cooperative electric association, municipal power agency, 
        telephone company, and telecommunications carrier must be 
        assessed in proportion to its respective gross jurisdictional 
        operating revenues for sales of gas, electric, or 
        telecommunications service in the state in the last calendar 
        year.  Revenue in the account is appropriated to the 
        commissioner of commerce for the costs associated with 
        establishing an e-filing system that allows documents filed with 
        the Public Utilities Commission to be filed and retrieved via 
        the Internet.  Revenue in the account remains available until 
        expended. 
           Sec. 2.  [COMPLETION DATE.] 
           The e-filing system described in section 1 must be 
        operational by July 1, 2006. 
           Sec. 3.  [EFFECTIVE DATE.] 
           Sections 1 and 2 are effective the day following final 
        enactment. 

                                   ARTICLE 7 
                           CIP TECHNICAL CORRECTIONS 
           Section 1.  Minnesota Statutes 2004, section 216B.241, 
        subdivision 1b, is amended to read: 
           Subd. 1b.  [CONSERVATION IMPROVEMENT BY COOPERATIVE 
        ASSOCIATION OR MUNICIPALITY.] (a) This subdivision applies to: 
           (1) a cooperative electric association that provides retail 
        service to its members; 
           (2) a municipality that provides electric service to retail 
        customers; and 
           (3) a municipality with gross operating revenues in excess 
        of $5,000,000 from sales of natural gas to retail customers.  
           (b) Each cooperative electric association and municipality 
        subject to this subdivision shall spend and invest for energy 
        conservation improvements under this subdivision the following 
        amounts: 
           (1) for a municipality, 0.5 percent of its gross operating 
        revenues from the sale of gas and 1.5 percent of its gross 
        operating revenues from the sale of electricity, excluding gross 
        operating revenues from electric and gas service provided in the 
        state to large electric customer facilities; and 
           (2) for a cooperative electric association, 1.5 percent of 
        its gross operating revenues from service provided in the state, 
        excluding gross operating revenues from service provided in the 
        state to large electric customer facilities indirectly through a 
        distribution cooperative electric association. 
           (c) Each municipality and cooperative electric association 
        subject to this subdivision shall identify and implement energy 
        conservation improvement spending and investments that are 
        appropriate for the municipality or association, except that a 
        municipality or association may not spend or invest for energy 
        conservation improvements that directly benefit a large electric 
        customer facility for which the commissioner has issued an 
        exemption under subdivision 1a, paragraph (b). 
           (d) Each municipality and cooperative electric association 
        subject to this subdivision may spend and invest annually up to 
        ten percent of the total amount required to be spent and 
        invested on energy conservation improvements under this 
        subdivision on research and development projects that meet the 
        definition of energy conservation improvement in subdivision 1 
        and that are funded directly by the municipality or cooperative 
        electric association.  
           (e) Load-management activities that do not reduce energy 
        use but that increase the efficiency of the electric system may 
        be used to meet the following percentage 50 percent of the 
        conservation investment and spending requirements of this 
        subdivision: 
           (1) 2002 - 90 percent; 
           (2) 2003 - 80 percent; 
           (3) 2004 - 65 percent; and 
           (4) 2005 and thereafter - 50 percent. 
           (f) A generation and transmission cooperative electric 
        association that provides energy services to cooperative 
        electric associations that provide electric service at retail to 
        consumers may invest in energy conservation improvements on 
        behalf of the associations it serves and may fulfill the 
        conservation, spending, reporting, and energy savings goals on 
        an aggregate basis.  A municipal power agency or other 
        not-for-profit entity that provides energy service to municipal 
        utilities that provide electric service at retail may invest in 
        energy conservation improvements on behalf of the municipal 
        utilities it serves and may fulfill the conservation, spending, 
        reporting, and energy savings goals on an aggregate basis, under 
        an agreement between the municipal power agency or 
        not-for-profit entity and each municipal utility for funding the 
        investments. 
           (g) At least every two four years, on a schedule determined 
        by the commissioner, each municipality or cooperative shall file 
        an overview of its conservation improvement plan with the 
        commissioner.  With this overview, the municipality or 
        cooperative shall also provide an evaluation to the commissioner 
        detailing its energy conservation improvement spending and 
        investments for the previous period.  The evaluation must 
        briefly describe each conservation program and must specify the 
        energy savings or increased efficiency in the use of energy 
        within the service territory of the utility or association that 
        is the result of the spending and investments.  The evaluation 
        must analyze the cost-effectiveness of the utility's or 
        association's conservation programs, using a list of baseline 
        energy and capacity savings assumptions developed in 
        consultation with the department.  The commissioner shall review 
        each evaluation and make recommendations, where appropriate, to 
        the municipality or association to increase the effectiveness of 
        conservation improvement activities.  Up to three percent of a 
        utility's conservation spending obligation under this section 
        may be used for program pre-evaluation, testing, and monitoring 
        and program evaluation.  The overview and evaluation filed by a 
        municipality with less than 60,000,000 kilowatt hours in annual 
        retail sales of electric service may consist of a letter from 
        the governing board of the municipal utility to the department 
        providing the amount of annual conservation spending required of 
        that municipality and certifying that the required amount has 
        been spent on conservation programs pursuant to this subdivision.
           (h) The commissioner shall also review each evaluation for 
        whether a portion of the money spent on residential conservation 
        improvement programs is devoted to programs that directly 
        address the needs of renters and low-income persons unless an 
        insufficient number of appropriate programs are available.  For 
        the purposes of this subdivision and subdivision 2, "low-income" 
        means an income at or below 50 percent of the state median 
        income.  
           (i) As part of its spending for conservation improvement, a 
        municipality or association may contribute to the energy and 
        conservation account.  A municipality or association may propose 
        to the commissioner to designate that all or a portion of funds 
        contributed to the account be used for research and development 
        projects that can best be implemented on a statewide basis.  Any 
        amount contributed must be remitted to the commissioner by 
        February 1 of each year. 
           (j) A municipality may spend up to 50 percent of its 
        required spending under this section to refurbish an existing 
        district heating or cooling system.  This paragraph expires July 
        1, 2007.  
           Sec. 2.  Minnesota Statutes 2004, section 216B.241, 
        subdivision 2, is amended to read: 
           Subd. 2.  [PROGRAMS.] (a) The commissioner may require 
        public utilities to make investments and expenditures in energy 
        conservation improvements, explicitly setting forth the interest 
        rates, prices, and terms under which the improvements must be 
        offered to the customers.  The required programs must cover no 
        more than a two-year four-year period.  Public utilities shall 
        file conservation improvement plans by June 1, on a schedule 
        determined by order of the commissioner, but at least every four 
        years.  Plans received by a public utility by June 1 must be 
        approved or approved as modified by the commissioner by December 
        1 of that same year.  The commissioner shall give special 
        consideration and encouragement to programs that bring about 
        significant net savings through the use of energy-efficient 
        lighting.  The commissioner shall evaluate the program on the 
        basis of cost-effectiveness and the reliability of technologies 
        employed.  The commissioner's order must provide to the extent 
        practicable for a free choice, by consumers participating in the 
        program, of the device, method, material, or project 
        constituting the energy conservation improvement and for a free 
        choice of the seller, installer, or contractor of the energy 
        conservation improvement, provided that the device, method, 
        material, or project seller, installer, or contractor is duly 
        licensed, certified, approved, or qualified, including under the 
        residential conservation services program, where applicable.  
           (b) The commissioner may require a utility to make an 
        energy conservation improvement investment or expenditure 
        whenever the commissioner finds that the improvement will result 
        in energy savings at a total cost to the utility less than the 
        cost to the utility to produce or purchase an equivalent amount 
        of new supply of energy.  The commissioner shall nevertheless 
        ensure that every public utility operate one or more programs 
        under periodic review by the department.  
           (c) Each public utility subject to subdivision 1a may spend 
        and invest annually up to ten percent of the total amount 
        required to be spent and invested on energy conservation 
        improvements under this section by the utility on research and 
        development projects that meet the definition of energy 
        conservation improvement in subdivision 1 and that are funded 
        directly by the public utility.  
           (d) A public utility may not spend for or invest in energy 
        conservation improvements that directly benefit a large electric 
        customer facility for which the commissioner has issued an 
        exemption pursuant to subdivision 1a, paragraph (b).  The 
        commissioner shall consider and may require a utility to 
        undertake a program suggested by an outside source, including a 
        political subdivision or a nonprofit or community organization. 
           (e) The commissioner may, by order, establish a list of 
        programs that may be offered as energy conservation improvements 
        by a public utility, municipal utility, cooperative electric 
        association, or other entity providing conservation services 
        pursuant to this section.  The list of programs may include 
        rebates for high-efficiency appliances, rebates or subsidies for 
        high-efficiency lamps, small business energy audits, and 
        building recommissioning.  The commissioner may, by order, 
        change this list to add or subtract programs as the commissioner 
        determines is necessary to promote efficient and effective 
        conservation programs. 
           (f) The commissioner shall ensure that a portion of the 
        money spent on residential conservation improvement programs is 
        devoted to programs that directly address the needs of renters 
        and low-income persons, in proportion to the amount the utility 
        has historically spent on such programs based on the most recent 
        three-year average relative to the utility's total conservation 
        spending under this section, unless an insufficient number of 
        appropriate programs are available. 
           (g) A utility, a political subdivision, or a nonprofit or 
        community organization that has suggested a program, the 
        attorney general acting on behalf of consumers and small 
        business interests, or a utility customer that has suggested a 
        program and is not represented by the attorney general under 
        section 8.33 may petition the commission to modify or revoke a 
        department decision under this section, and the commission may 
        do so if it determines that the program is not cost-effective, 
        does not adequately address the residential conservation 
        improvement needs of low-income persons, has a long-range 
        negative effect on one or more classes of customers, or is 
        otherwise not in the public interest.  The commission shall 
        reject a petition that, on its face, fails to make a reasonable 
        argument that a program is not in the public interest. 
           (h) The commissioner may order a public utility to include, 
        with the filing of the utility's proposed conservation 
        improvement plan under paragraph (a), the results of an 
        independent audit of the utility's conservation improvement 
        programs and expenditures performed by the department or an 
        auditor with experience in the provision of energy conservation 
        and energy efficiency services approved by the commissioner and 
        chosen by the utility.  The audit must specify the energy 
        savings or increased efficiency in the use of energy within the 
        service territory of the utility that is the result of the 
        spending and investments.  The audit must evaluate the 
        cost-effectiveness of the utility's conservation programs. 
           (i) Up to three percent of a utility's conservation 
        spending obligation under this section may be used for program 
        pre-evaluation, testing, and monitoring and program audit and 
        evaluation. 

                                   ARTICLE 8 
                              POWER QUALITY ZONES 
           Section 1.  [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. 2.  [216B.82] [LOCAL POWER QUALITY ZONES.] 
           (a) Upon joint petition of a public utility as defined in 
        section 216B.02, subdivision 4, and any customer located within 
        the utility's service territory, the commission may establish a 
        zone within that utility's service territory where the utility 
        will install additional, redundant or upgraded components of the 
        electric distribution infrastructure that are designed to 
        decrease the risk of power outages, provided the utility and all 
        of its customers located within the proposed zone have approved 
        the installation of the components and the financial recovery 
        plan prior to the creation of the zone.  Prior to commission 
        approval, the utility must notify each customer within the 
        proposed zone of the total costs of the installation, an 
        estimate of the customer's share of those costs, and the 
        potential benefits of the local power quality zone to the 
        customer. 
           (b) The commission shall authorize the utility to collect 
        all costs of the installation of any components under this 
        section, including initial investment, operation and maintenance 
        costs and taxes from all customers within the zone, through 
        tariffs and surcharges for service in a zone that appropriately 
        reflect the cost of service to those customers, provided the 
        customers agree to pay all costs for a predetermined period, 
        including costs of component removal, if appropriate. 
           (c) Nothing in this section limits the ability of the 
        utility and any customer to enter into customer-specific 
        agreements pursuant to applicable statutory, rule, or tariff 
        provisions. 
        Nothing in this section shall be construed to permit the quality 
        of service outside a designated zone to decline. 

                                   ARTICLE 9 
                           BIOGAS INCENTIVE PAYMENTS 
           Section 1.  Minnesota Statutes 2004, section 216C.41, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [DEFINITIONS.] (a) The definitions in this 
        subdivision apply to this section. 
           (b) "Qualified hydroelectric facility" means a 
        hydroelectric generating facility in this state that: 
           (1) is located at the site of a dam, if the dam was in 
        existence as of March 31, 1994; and 
           (2) begins generating electricity after July 1, 1994, or 
        generates electricity after substantial refurbishing of a 
        facility that begins after July 1, 2001. 
           (c) "Qualified wind energy conversion facility" means a 
        wind energy conversion system in this state that: 
           (1) produces two megawatts or less of electricity as 
        measured by nameplate rating and begins generating electricity 
        after December 31, 1996, and before July 1, 1999; 
           (2) begins generating electricity after June 30, 1999, 
        produces two megawatts or less of electricity as measured by 
        nameplate rating, and is: 
           (i) owned by a resident of Minnesota or an entity that is 
        organized under the laws of this state, is not prohibited from 
        owning agricultural land under section 500.24, and owns the land 
        where the facility is sited; 
           (ii) owned by a Minnesota small business as defined in 
        section 645.445; 
           (iii) owned by a Minnesota nonprofit organization; 
           (iv) owned by a tribal council if the facility is located 
        within the boundaries of the reservation; 
           (v) owned by a Minnesota municipal utility or a Minnesota 
        cooperative electric association; or 
           (vi) owned by a Minnesota political subdivision or local 
        government, including, but not limited to, a county, statutory 
        or home rule charter city, town, school district, or any other 
        local or regional governmental organization such as a board, 
        commission, or association; or 
           (3) begins generating electricity after June 30, 1999, 
        produces seven megawatts or less of electricity as measured by 
        nameplate rating, and: 
           (i) is owned by a cooperative organized under chapter 308A 
        other than a Minnesota cooperative electric association; and 
           (ii) all shares and membership in the cooperative are held 
        by an entity that is not prohibited from owning agricultural 
        land under section 500.24. 
           (d) "Qualified on-farm biogas recovery facility" means an 
        anaerobic digester system that: 
           (1) is located at the site of an agricultural 
        operation; and 
           (2) is owned by an entity that is not prohibited from 
        owning agricultural land under section 500.24 and that owns or 
        rents the land where the facility is located; and 
           (3) begins generating electricity after July 1, 2001.  
           (e) "Anaerobic digester system" means a system of 
        components that processes animal waste based on the absence of 
        oxygen and produces gas used to generate electricity. 

                                   ARTICLE 10 
                            GAS INFRASTRUCTURE COST 
           Section 1.  [216B.1635] [RECOVERY OF ELIGIBLE 
        INFRASTRUCTURE REPLACEMENT COSTS BY GAS UTILITIES.] 
           Subdivision 1.  [DEFINITIONS.] (a) "Gas utility" means a 
        public utility as defined in section 216B.02, subdivision 4, 
        that furnishes natural gas service to retail customers. 
           (b) "Gas utility infrastructure costs" or "GUIC" means gas 
        utility projects that: 
           (1) do not serve to increase revenues by directly 
        connecting the infrastructure replacement to new customers; 
           (2) are in service but were not included in the gas 
        utility's rate base in its most recent general rate case; and 
           (3) replace or modify existing infrastructure if the 
        replacement or modification does not constitute a betterment, 
        unless the betterment is required by a political subdivision, as 
        evidenced by specific documentation from the government entity 
        requiring the replacement or modification of infrastructure. 
           (c) "Gas utility projects" means relocation and replacement 
        of natural gas facilities located in the public right-of-way 
        required by the construction or improvement of a highway, road, 
        street, public building, or other public work by or on behalf of 
        the United States, the State of Minnesota, or a political 
        subdivision. 
           Subd. 2.  [FILING.] (a) The commission may approve a gas 
        utility's petition for a rate schedule to recover GUIC under 
        this section.  A gas utility may petition the commission to 
        recover a rate of return, income taxes on the rate of return, 
        incremental property taxes, plus incremental depreciation 
        expense associated with GUIC.  
           (b) The filing is subject to the following: 
           (1) a gas utility may submit a filing under this section no 
        more than once per year; 
           (2) a gas utility must file sufficient information to 
        satisfy the commission regarding the proposed GUIC or be subject 
        to denial by the commission.  The information includes, but is 
        not limited to: 
           (i) the government entity ordering the gas utility project 
        and the purpose for which the project is undertaken; 
           (ii) the location, description, and costs associated with 
        the project; 
           (iii) a description of the costs, and salvage value, if 
        any, associated with the existing infrastructure replaced or 
        modified as a result of the project; 
           (iv) the proposed rate design and an explanation of why the 
        proposed rate design is in the public interest; 
           (v) the magnitude and timing of any known future gas 
        utility projects that the utility may seek to recover under this 
        section; 
           (vi) the magnitude of GUIC in relation to the gas utility's 
        base revenue as approved by the commission in the gas utility's 
        most recent general rate case, exclusive of gas purchase costs 
        and transportation charges; 
           (vii) the magnitude of GUIC in relation to the gas 
        utility's capital expenditures since its most recent general 
        rate case; 
           (viii) the amount of time since the utility last filed a 
        general rate case and the utility's reasons for seeking recovery 
        outside of a general rate case; and 
           (ix) documentation supporting the calculation of the GUIC. 
           Subd. 3.  [COMMISSION AUTHORITY.] The commission may issue 
        orders and adopt rules necessary to implement and administer 
        this section. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 2.  [REPORT TO LEGISLATURE.] 
           The Department of Commerce shall review the operation and 
        impact of the GUIC recovery mechanism established under 
        Minnesota Statutes, section 216B.1635, on ratepayers and the 
        utility and submit a report of its findings and recommendations 
        to the legislature four years after the effective date of this 
        section. 
           Sec. 3.  [SUNSET.] 
           Sections 1 and 2 shall expire on June 30, 2015. 

                                   ARTICLE 11 
                     EMINENT DOMAIN LANDOWNER COMPENSATION 
           Section. 1.  [LANDOWNER PAYMENTS WORKING GROUP.] 
           Subdivision 1.  [MEMBERSHIP.] By June 15, 2005, the 
        Legislative Electric Energy Task Force shall convene a landowner 
        payments working group consisting of up to 12 members, including 
        representatives from each of the following groups: 
        transmission-owning investor-owned utilities, electric 
        cooperatives, municipal power agencies, Farm Bureau, Farmers 
        Union, county commissioners, real estate appraisers and others 
        with an interest and expertise in landowner rights and the 
        market value of rural property. 
           Subd. 2.  [APPOINTMENT.] The chairs of the Legislative 
        Electric Energy Task Force and the chairs of the senate and 
        house committees with primary jurisdiction over energy policy 
        shall jointly appoint the working group members. 
           Subd. 3.  [CHARGE.] (a) The landowner payments working 
        group shall research alternative methods of remunerating 
        landowners on whose land high voltage transmission lines have 
        been constructed. 
           (b) In developing its recommendations, the working group 
        shall: 
           (1) examine different methods of landowner payments that 
        operate in other states and countries; 
           (2) consider innovative alternatives to lump-sum payments 
        that extend payments over the life of the transmission line and 
        that run with the land if the land is conveyed to another owner; 
           (3) consider alternative ways of structuring payments that 
        are equitable to landowners and utilities. 
           Subd. 4.  [EXPENSES.] Members of the working group shall be 
        reimbursed for expenses as provided in Minnesota Statutes, 
        section 15.059, subdivision 6.  Expenses of the landowner 
        payments working group shall not exceed $10,000 without the 
        approval of the chairs of the Legislative Electric Energy Task 
        Force. 
           Subd. 5.  [REPORT.] The landowner payments working group 
        shall present its findings and recommendations, including 
        legislative recommendations and model legislation, if any, in a 
        report to the Legislative Electric Energy Task Force by January 
        15, 2006. 

                                   ARTICLE 12
                              TECHNICAL CORRECTION
           Section 1.  Minnesota Statutes 2004, section 216B.16, 
        subdivision 6d, is amended to read: 
           Subd. 6d.  [WIND ENERGY; PROPERTY TAX.] An owner of a wind 
        energy conversion facility which is required to pay property 
        taxes under section 272.02, subdivision 22, or production taxes 
        under section 272.029, and any related or successor provisions, 
        or a public utility regulated by the Public Utilities Commission 
        which purchases the wind generated electricity may petition the 
        commission to include in any power purchase agreement between 
        the owner of the facility and the public utility the amount of 
        property taxes and production taxes paid by the owner of the 
        facility.  The Public Utilities Commission shall require the 
        public utility to amend the power purchase agreement to include 
        the property taxes and production taxes paid by the owner of the 
        facility in the price paid by the utility for wind generated 
        electricity if the commission finds: 
           (1) the owner of the facility has paid the property taxes 
        or production taxes required by this subdivision; 
           (2) the power purchase agreement between the public utility 
        and the owner does not already require the utility to pay the 
        amount of property taxes or production taxes the owner has paid 
        under this subdivision, or, in the case of a power purchase 
        agreement entered into prior to 1997, the amount of property or 
        production taxes paid by the owner in any year of the power 
        purchase agreement exceeds the amount of such property or 
        production taxes included in the price paid by the utility to 
        the owner, as reflected in the owner's bid documents; and 
           (3) the commission has approved a rate schedule containing 
        provisions for the automatic adjustment of charges for utility 
        service in direct relation to the charges ordered by the 
        commission under section 272.02, subdivision 22, or section 
        272.029. 

                                   ARTICLE 13
                                    HYDROGEN
           Section 1.  [216B.811] [DEFINITIONS.] 
           Subdivision 1.  [SCOPE.] For purposes of sections 216B.811 
        to 216B.815, the terms defined in this section have the meanings 
        given them.  
           Subd. 2.  [FUEL CELL.] "Fuel cell" means an electrochemical 
        device that produces useful electricity, heat, and water vapor, 
        and operates as long as it is provided fuel. 
           Subd. 3.  [HYDROGEN.] "Hydrogen" means hydrogen produced 
        using native energy sources.  
           Subd. 4.  [RELATED TECHNOLOGIES.] "Related technologies" 
        means balance of plant components necessary to make hydrogen and 
        fuel cell systems function; turbines, reciprocating, and other 
        combustion engines capable of operating on hydrogen; and 
        electrolyzers, reformers, and other equipment and processes 
        necessary to produce, purify, store, distribute, and use 
        hydrogen for energy.  
           Sec. 2.  [216B.812] [FOSTERING THE TRANSITION TOWARD ENERGY 
        SECURITY.] 
           Subdivision 1.  [EARLY PURCHASE AND DEPLOYMENT OF HYDROGEN, 
        FUEL CELLS, AND RELATED TECHNOLOGIES BY THE STATE.] The 
        Department of Administration shall identify opportunities for 
        demonstrating the use of hydrogen fuel cells within state-owned 
        facilities, vehicle fleets, and operations.  
           The department shall purchase and demonstrate hydrogen, 
        fuel cells, and related technologies in ways that strategically 
        contribute to realizing Minnesota's hydrogen economy goal as set 
        forth in section 216B.013, and which contribute to the following 
        nonexclusive list of objectives:  
           (1) provide needed performance data to the marketplace; 
           (2) identify code and regulatory issues to be resolved; 
           (3) advance or validate a critical area of research; 
           (4) foster economic development and job creation in the 
        state; 
           (5) raise public awareness of hydrogen, fuel cells, and 
        related technologies; or 
           (6) reduce emissions of carbon dioxide and other pollutants.
           Subd. 2.  [SUPPORT FOR STRATEGIC DEMONSTRATION PROJECTS 
        THAT ACCELERATE THE COMMERCIALIZATION OF HYDROGEN, FUEL CELLS, 
        AND RELATED TECHNOLOGIES.] (a) In consultation with appropriate 
        representatives from state agencies, local governments, 
        universities, businesses, and other interested parties, the 
        Department of Commerce shall report back to the legislature by 
        November 1, 2005, and every two years thereafter, with a slate 
        of proposed pilot projects that contribute to realizing 
        Minnesota's hydrogen economy goal as set forth in section 
        216B.013.  The Department of Commerce must consider the 
        following nonexclusive list of priorities in developing the 
        proposed slate of pilot projects: 
           (1) demonstrate "bridge" technologies such as 
        hybrid-electric, off-road, and fleet vehicles running on 
        hydrogen or fuels blended with hydrogen; 
           (2) develop cost-competitive, on-site hydrogen production 
        technologies; 
           (3) demonstrate nonvehicle applications for hydrogen; 
           (4) improve the cost and efficiency of hydrogen from 
        renewable energy sources; and 
           (5) improve the cost and efficiency of hydrogen production 
        using direct solar energy without electricity generation as an 
        intermediate step.  
           (b) For all demonstrations, individual system components of 
        the technology must meet commercial performance standards and 
        systems modeling must be completed to predict commercial 
        performance, risk, and synergies.  In addition, the proposed 
        pilots should meet as many of the following criteria as possible:
           (1) advance energy security; 
           (2) capitalize on the state's native resources; 
           (3) result in economically competitive infrastructure being 
        put in place; 
           (4) be located where it will link well with existing and 
        related projects and be accessible to the public, now or in the 
        future; 
           (5) demonstrate multiple, integrated aspects of hydrogen 
        infrastructure; 
           (6) include an explicit public education and awareness 
        component; 
           (7) be scalable to respond to changing circumstances and 
        market demands; 
           (8) draw on firms and expertise within the state where 
        possible; 
           (9) include an assessment of its economic, environmental, 
        and social impact; and 
           (10) serve other needs beyond hydrogen development.  
           Subd. 3.  [ESTABLISHING INITIAL, MULTIFUEL TRANSITION 
        INFRASTRUCTURE FOR HYDROGEN VEHICLES.] The commissioner of 
        commerce may accept federal funds, expend funds, and participate 
        in projects to design, site, and construct multifuel hydrogen 
        fueling stations that eventually link urban centers along key 
        trade corridors across the jurisdictions of Manitoba, the 
        Dakotas, Minnesota, Iowa, and Wisconsin.  
           These energy stations must serve the priorities listed in 
        subdivision 2 and, as transition infrastructure, should 
        accommodate a wide variety of vehicle technologies and fueling 
        platforms, including hybrid, flexible-fuel, and fuel cell 
        vehicles.  They may offer, but not be limited to, gasoline, 
        diesel, ethanol (E-85), biodiesel, and hydrogen, and may 
        simultaneously test the integration of on-site combined heat and 
        power technologies with the existing energy infrastructure.  
           The hydrogen portion of the stations may initially serve 
        local, dedicated on or off-road vehicles, but should eventually 
        support long-haul transport.  
           Sec. 3.  [216B.815] [AUTHORIZE AND ENCOURAGE THE STATE'S 
        PUBLIC RESEARCH INSTITUTIONS TO COORDINATE AND LEVERAGE THEIR 
        STRENGTHS THROUGH A REGIONAL ENERGY RESEARCH AND EDUCATION 
        PARTNERSHIP.] 
           The state's public research and higher education 
        institutions should work with one another and with similar 
        institutions in the region to establish Minnesota and the Upper 
        Midwest as a center of research, education, outreach, and 
        technology transfer for the production of renewable energy and 
        products, including hydrogen, fuel cells, and related 
        technologies.  The partnership should be designed to create a 
        critical mass of research and education capability that can 
        compete effectively for federal and private investment in these 
        areas.  
           The partnership must include an advisory committee 
        comprised of government, industry, academic, and nonprofit 
        representatives to help focus its research and education efforts 
        on the most critical issues.  Initiatives undertaken by the 
        partnership may include: 
           (1) collaborative and interdisciplinary research, 
        demonstration projects, and commercialization of market-ready 
        technologies; 
           (2) creation of undergraduate and graduate course offerings 
        and eventually degreed and vocational programs with reciprocity; 
           (3) establishment of fellows programs at the region's 
        institutes of higher learning that provide financial incentives 
        for relevant study, research, and exchange; and 
           (4) development and field-testing of relevant curricula, 
        teacher kits for all educational levels, and widespread teacher 
        training, in collaboration with state energy offices, teachers, 
        nonprofits, businesses, the United States Department of Energy, 
        and other interested parties.  
           Sec. 4.  [HYDROGEN REFUELING STATIONS; GRANTS.] 
           The commissioner of commerce shall make assessments under 
        Minnesota Statutes, section 216C.052, of $300,000 in fiscal year 
        2006 and $300,000 in fiscal year 2007 for the purpose of 
        matching federal and private investments in three multifuel 
        hydrogen refueling stations in Moorhead, Alexandria, and the 
        Twin Cities respectively.  The assessments are subject to the 
        assessment caps specified in Minnesota Statutes, section 
        216C.052.  Sums assessed under this section are appropriated to 
        the commissioner of commerce for the purpose of this section. 
        The assessments and grants are contingent upon securing the 
        balance of the total project costs from nonstate sources. 
           Sec. 5.  [FUEL CELL CURRICULUM DEVELOPMENT PILOT.] 
           The Board of Trustees of the Minnesota State Colleges and 
        Universities is encouraged to work with the Upper Midwest 
        Hydrogen Initiative and other interested parties to develop and 
        implement hydrogen and fuel cell curricula and training programs 
        that can be incorporated into existing relevant courses and 
        disciplines affected by these technologies.  These disciplines 
        include, but are not limited to, chemical, electrical, and 
        mechanical engineering, including lab technicians; fuel cell 
        production, installation, and maintenance; fuel cell and 
        internal combustion vehicles, including hybrids, running on 
        hydrogen or biofuels; and the construction, installation, and 
        maintenance of facilities that will produce, use, or serve 
        hydrogen.  The curricula should also be useful to secondary 
        educational institutions and should include, but not be limited 
        to, the production, purification, distribution, and use of 
        hydrogen in portable, stationary, and mobile applications and in 
        fuel cells, turbines, and reciprocating engines. 

                                   ARTICLE 14
                                   SOY-DIESEL
           Section 1.  [ALLOCATION; RENEWABLE DEVELOPMENT GRANT.] 
           Notwithstanding any contrary provision of Minnesota 
        Statutes, section 116C.779, $150,000 is allocated in fiscal year 
        2006 to the Agricultural Utilization Research Institute from 
        available funds in the renewable development account established 
        under Minnesota Statutes, section 116C.779.  The institute shall 
        disburse the money over three fiscal years as grants to an 
        applicant meeting the requirements of Minnesota Statutes, 
        section 216C.41, subdivision 1, paragraph (c), clause (2), item 
        (i), for a project that uses a soy-diesel generator to provide 
        backup power for a wind energy conversion system of one megawatt 
        or less of nameplate capacity.  The institute shall disburse 
        $50,000 of the grant in three consecutive fiscal years beginning 
        July 1, 2005. 
           For the purpose of this section, "soy-diesel" means a 
        renewable, biodegradable, mono alkyl ester combustible liquid 
        fuel derived from agricultural plant oils that meets American 
        Society for Testing and Materials Specification D6751-02 for 
        Biodiesel Fuel (B100) Blend Stock for Distillate Fuels.  This 
        section only applies if the entity receives qualifying 
        applications. 

                                   ARTICLE 15
                        BIODIESEL FUEL FOR HOME HEATING
           Section 1.  [STUDY; BIODIESEL FUEL FOR HOME HEATING.] 
           (a) From the money available to the commissioner of 
        commerce for purposes of studies and technical assistance by the 
        reliability administrator under Minnesota Statutes, section 
        216C.052, and in conformity with the goals and directives of 
        Minnesota Statutes, section 16B.325, the reliability 
        administrator shall perform a comprehensive technical and 
        economic analysis of the benefits to be derived from using 
        biodiesel fuel as defined in Minnesota Statutes, section 239.77, 
        subdivision 1, or biodiesel fuel blends, as a home heating 
        fuel.  The analysis must consider blends ranging from B2 to 
        B100.  No more than $25,000 may be expended for the analysis.  
           (b) Not later than March 15, 2007, the reliability 
        administrator shall report the results of the study and analysis 
        to the appropriate standing committees of the Minnesota senate 
        and house of representatives. 

                                   ARTICLE 16
                   CITY OF ALEXANDRIA JOINT VENTURE AUTHORITY
           Section 1.  Laws 2002, chapter 329, section 5, is amended 
        to read:  
           Sec. 5.  [JOINT VENTURE AUTHORITY.] 
           (a) The city of Alexandria may enter into a joint 
        venture or joint ventures with one, two, or three of the 
        entities known as Runestone Telephone Association and, Runestone 
        Electric Association, and Gardonville Telephone Cooperative for 
        the purpose of providing local niche service, including internet 
        services, and point to point transmission of digital information.
           (b) For purposes of this section, with respect to the 
        services described in paragraph (a), the city of Alexandria and 
        a joint venture to which it is a party shall have the rights and 
        authority granted by, and be subject to, Minnesota Statutes 2001 
        Supplement, section 452.25, except for the provisions of that 
        section which relate specifically and only to electric utilities.
           (c) For the purposes of this section, "local niche service" 
        refers to point-to-point connections between end-user locations 
        within a service area and any telecommunications services under 
        the public utilities commission's jurisdiction under Minnesota 
        Statutes, chapter 237 that do not fall within the definition of 
        local service or the definition of interexchange service. 
           (d) If the city of Alexandria obtains authority to provide 
        local service or interexchange service under chapter 237, it may 
        enter into a joint venture with the entities identified in 
        paragraph (a) for those purposes. 
           [EFFECTIVE DATE; LOCAL APPROVAL.] This section is effective 
        as to the city of Alexandria the day after the city of 
        Alexandria's governing body and its chief clerical officer 
        timely complete compliance with Minnesota Statutes, section 
        645.021, subdivisions 2 and 3. 
           Presented to the governor May 21, 2005 
           Signed by the governor May 25, 2005, 1:10 p.m.