1.1 	A bill for an act
1.2 	relating to economic development; allowing exemption
1.3 	for certain energy conservation investment expenses
1.4 	made by qualifying business; amending Minnesota
1.5 	Statutes 2004, section 216B.241, subdivisions 1, 1a.
1.6 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.7 	Section 1. Minnesota Statutes 2004, section 216B.241,
1.8 	subdivision 1, is amended to read:
1.9 		Subdivision 1.Definitions.  For purposes of this section
1.10 	and section 216B.16, subdivision 6b, the terms defined in this
1.11 	subdivision have the meanings given them.
1.12 	(a) "Commission" means the Public Utilities Commission.
1.13 	(b) "Commissioner" means the commissioner of commerce.
1.14 	(c) "Customer facility" means all buildings, structures,
1.15 	equipment, and installations at a single site.
1.16 	(d) "Department" means the Department of Commerce.
1.17 	(e) "Energy conservation" means demand-side management of
1.18 	energy supplies resulting in a net reduction in energy use.
1.19 	Load management that reduces overall energy use is energy
1.20 	conservation.
1.21 	(f) "Energy conservation improvement" means a project that
1.22 	results in energy conservation.
1.23 	(g) "Investments and expenses of a public utility" includes
1.24 	the investments and expenses incurred by a public utility in
1.25 	connection with an energy conservation improvement, including
2.1 	but not limited to:
2.2 	(1) the differential in interest cost between the market
2.3 	rate and the rate charged on a no-interest or below-market
2.4 	interest loan made by a public utility to a customer for the
2.5 	purchase or installation of an energy conservation improvement;
2.6 	(2) the difference between the utility's cost of purchase
2.7 	or installation of energy conservation improvements and any
2.8 	price charged by a public utility to a customer for such
2.9 	improvements.
2.10 	(h) "Large electric customer facility" means a customer
2.11 	facility that imposes a peak electrical demand on an electric
2.12 	utility's system of not less than 20,000 kilowatts, measured in
2.13 	the same way as the utility that serves the customer facility
2.14 	measures electrical demand for billing purposes, and for which
2.15 	electric services are provided at retail on a single bill by a
2.16 	utility operating in the state.
2.17 	(i) "Load management" means an activity, service, or
2.18 	technology to change the timing or the efficiency of a
2.19 	customer's use of energy that allows a utility or a customer to
2.20 	respond to wholesale market fluctuations or to reduce the
2.21 	overall demand for energy or capacity.
2.22 	(j) "Qualified business" has the meaning given it in
2.23 	section 469.310, subdivision 11.

2.24 	Sec. 2. Minnesota Statutes 2004, section 216B.241,
2.25 	subdivision 1a, is amended to read:
2.26 		Subd. 1a.Investment, expenditure, and contribution;
2.27 	public utility.  (a) For purposes of this subdivision and
2.28 	subdivision 2, "public utility" has the meaning given it in
2.29 	section 216B.02, subdivision 4.  Each public utility shall spend
2.30 	and invest for energy conservation improvements under this
2.31 	subdivision and subdivision 2 the following amounts:
2.32 	(1) for a utility that furnishes gas service, 0.5 percent
2.33 	of its gross operating revenues from service provided in the
2.34 	state;
2.35 	(2) for a utility that furnishes electric service, 1.5
2.36 	percent of its gross operating revenues from service provided in
3.1 	the state; and
3.2 	(3) for a utility that furnishes electric service and that
3.3 	operates a nuclear-powered electric generating plant within the
3.4 	state, two percent of its gross operating revenues from service
3.5 	provided in the state.
3.6 	For purposes of this paragraph (a), "gross operating
3.7 	revenues" do not include revenues from large electric customer
3.8 	facilities exempted by the commissioner under paragraph (b).
3.9 	(b) The owner of a large electric customer facility or
3.10 	qualified business customer facility may petition the
3.11 	commissioner to exempt both electric and gas utilities serving
3.12 	the large energy customer facility from the investment and
3.13 	expenditure requirements of paragraph (a) with respect to retail
3.14 	revenues attributable to the facility.  At a minimum, the
3.15 	petition must be supported by evidence relating to competitive
3.16 	or economic pressures on the customer and a showing by the
3.17 	customer of reasonable efforts to identify, evaluate, and
3.18 	implement cost-effective conservation improvements at the
3.19 	facility.  If a petition is filed on or before October 1 of any
3.20 	year, the order of the commissioner to exempt revenues
3.21 	attributable to the facility can be effective no earlier than
3.22 	January 1 of the following year.  The commissioner shall not
3.23 	grant an exemption if the commissioner determines that granting
3.24 	the exemption is contrary to the public interest.  The
3.25 	commissioner may, after investigation, rescind any exemption
3.26 	granted under this paragraph upon a determination that
3.27 	cost-effective energy conservation improvements are available at
3.28 	the large electric customer facility.  For the purposes of this
3.29 	paragraph, "cost-effective" means that the projected total cost
3.30 	of the energy conservation improvement at the large electric 
3.31 	customer facility is less than the projected present value of
3.32 	the energy and demand savings resulting from the energy
3.33 	conservation improvement.  For the purposes of investigations by
3.34 	the commissioner under this paragraph, the owner of any large
3.35 	electric customer facility shall, upon request, provide the
3.36 	commissioner with updated information comparable to that
4.1 	originally supplied in or with the owner's original petition
4.2 	under this paragraph.
4.3 	(c) The commissioner may require investments or spending
4.4 	greater than the amounts required under this subdivision for a
4.5 	public utility whose most recent advance forecast required under
4.6 	section 216B.2422 or 216C.17 projects a peak demand deficit of
4.7 	100 megawatts or greater within five years under midrange
4.8 	forecast assumptions.
4.9 	(d) A public utility or owner of a large electric customer
4.10 	facility or qualified business customer facility may appeal a
4.11 	decision of the commissioner under paragraph (b) or (c) to the
4.12 	commission under subdivision 2.  In reviewing a decision of the
4.13 	commissioner under paragraph (b) or (c), the commission shall
4.14 	rescind the decision if it finds that the required investments
4.15 	or spending will:
4.16 	(1) not result in cost-effective energy conservation
4.17 	improvements; or
4.18 	(2) otherwise not be in the public interest.
4.19 	(e) Each utility shall determine what portion of the amount
4.20 	it sets aside for conservation improvement will be used for
4.21 	conservation improvements under subdivision 2 and what portion
4.22 	it will contribute to the energy and conservation account
4.23 	established in subdivision 2a.  A public utility may propose to
4.24 	the commissioner to designate that all or a portion of funds
4.25 	contributed to the account established in subdivision 2a be used
4.26 	for research and development projects that can best be
4.27 	implemented on a statewide basis.  Contributions must be
4.28 	remitted to the commissioner by February 1 of each year.
4.29 	Nothing in this subdivision prohibits a public utility from
4.30 	spending or investing for energy conservation improvement more
4.31 	than required in this subdivision.