1.1 	A bill for an act
1.2 	relating to taxation; property; clarifying the market
1.3 	value exclusion for electric power generation
1.4 	efficiency; amending Minnesota Statutes 2004, section
1.5 	272.0211, subdivisions 1, 2.
1.6 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.7 	Section 1. Minnesota Statutes 2004, section 272.0211,
1.8 	subdivision 1, is amended to read:
1.9 		Subdivision 1.Efficiency determination and
1.10 	certification.  An owner or operator of a new or existing
1.11 	electric power generation facility, excluding wind energy
1.12 	conversion systems, may apply to the commissioner of revenue for
1.13 	a market value exclusion on the property as provided for in this
1.14 	section.  This exclusion shall apply only to the market value of
1.15 	the equipment of the facility, and shall not apply to the
1.16 	structures and the land upon which the facility is located.  The
1.17 	commissioner of revenue shall prescribe the forms and procedures
1.18 	for this application.  Upon receiving the application, the
1.19 	commissioner of revenue shall request the commissioner of
1.20 	commerce to make a determination of the efficiency of the
1.21 	applicant's electric power generation facility. In calculating
1.22 	the efficiency of a facility,The commissioner of commerce shall
1.23 	use a definition of calculate efficiency which calculates
1.24 	efficiency as the sum of:
1.25 	(1) the useful electrical power output; plus 
2.1 	(2) the useful thermal energy output; plus 
2.2 	(3) the fuel energy of the useful chemical products,
2.3 	all divided by the total energy input to the facility, expressed
2.4 	as a percentage as the ratio of useful energy outputs to energy
2.5 	inputs, expressed as a percentage, based on the performance of
2.6 	the facility's equipment during a heat rate test conducted in
2.7 	conformance with the American Society of Mechanical Engineers
2.8 	Performance Test Codes PTC-46-1996:  Performance Test Code on
2.9 	Overall Plant Performance.  The commissioner must include in
2.10 	this formula the energy used in any on-site preparation of
2.11 	materials necessary to convert the materials into the fuel used
2.12 	to generate electricity, such as a process to gasify petroleum
2.13 	coke.  The commissioner shall use the high heating value Higher
2.14 	Heating Value (HHV) for all substances in the commissioner's
2.15 	efficiency calculations, except for wood for fuel in a
2.16 	biomass-eligible project under section 216B.2424; for these
2.17 	instances, the commissioner shall adjust the heating value to
2.18 	allow for energy consumed for evaporation of the moisture in the
2.19 	wood.  The applicant shall provide the commissioner of commerce
2.20 	with whatever information the commissioner deems necessary to
2.21 	make the determination.  Within 30 days of the receipt of the
2.22 	necessary information, the commissioner of commerce shall
2.23 	certify the findings of the efficiency determination to the
2.24 	commissioner of revenue and to the applicant. The commissioner
2.25 	of commerce shall determine the efficiency of the facility and
2.26 	certify the findings of that determination to the commissioner
2.27 	of revenue every two years thereafter from the date of the
2.28 	original certification.
2.29 	
EFFECTIVE DATE. This section is effective for assessment
2.30 	year 2005 and thereafter, for taxes payable in 2006 and
2.31 	thereafter.

2.32 	Sec. 2. Minnesota Statutes 2004, section 272.0211,
2.33 	subdivision 2, is amended to read:
2.34 		Subd. 2.Sliding scale exclusion.  Based upon the
2.35 	efficiency determination provided by the commissioner of
2.36 	commerce as described in subdivision 1, the commissioner of
3.1 	revenue shall subtract five eight percent of the taxable market
3.2 	value of the qualifying property for each percentage point that
3.3 	the efficiency of the specific facility, as determined by the
3.4 	commissioner of commerce, is above 35 40 percent.  The reduction
3.5 	in taxable market value shall be reflected in the taxable market
3.6 	value of the facility beginning with the assessment year
3.7 	immediately following the determination.  For a facility that is
3.8 	assessed by the county in which the facility is located, the
3.9 	commissioner of revenue shall certify to the assessor of that
3.10 	county the percentage of the taxable market value of the
3.11 	facility to be excluded.
3.12 	
EFFECTIVE DATE. This section is effective for assessment
3.13 	year 2005 and thereafter, for taxes payable in 2006 and
3.14 	thereafter.