1.1 	A bill for an act
1.2 	relating to energy; establishing rate schedule for certain renewable energy 
1.3 	projects; requiring reports;proposing coding for new law in Minnesota Statutes, 
1.4 	chapter 216B.
1.5 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.6 	Section 1. [216B.1601] FINDINGS; PURPOSE; CITATION.
1.7 		Subdivision 1.Findings. The legislature finds that:
1.8 	(a) The state has a vital interest in ensuring that its citizens have a reasonable 
1.9 	opportunity to develop, own, and invest in renewable electricity generation.
1.10 	(b) The economic benefits of local renewable energy development to Minnesota's 
1.11 	economy are critical factors in state agency decision making regarding energy procurement 
1.12 	and ratemaking.
1.13 	(c) Opportunities to own renewable electricity generation projects are particularly 
1.14 	important to the future economic development and quality of life of the state's rural 
1.15 	communities.
1.16 	(d) The citizens of Minnesota have a vital interest in participating in the state's 
1.17 	efforts to limit greenhouse gas emissions through the development and ownership of 
1.18 	renewable electricity generation projects.
1.19 	(e) The vast majority of Minnesotans are unable to benefit from the existing federal 
1.20 	renewable energy tax credit and other financial incentives supporting renewable energy 
1.21 	projects, and are therefore at a disadvantage relative to the large entities that are able to 
1.22 	utilize these federal incentives.
2.1 	(f) Development of renewable energy in Minnesota requires that the state provide 
2.2 	its citizens with an opportunity to sell power at a just and reasonable price to the utilities 
2.3 	that serve them.
2.4 		Subd. 2.Purpose. The purpose of the tariff is to:
2.5 	(1) allow all Minnesotans to participate in renewable electricity generation by 
2.6 	requiring that utilities purchase such energy at a just and reasonable price;
2.7 	(2) stabilize the Minnesota marketplace for the development of renewable energy;
2.8 	(3) reduce the volatility of future electricity prices;
2.9 	(4) lower the long-term cost of electricity;
2.10 	(5) stimulate the development of new jobs, technologies, and industry in Minnesota;
2.11 	(6) enable the rapid and sustainable development of Minnesota's abundant renewable 
2.12 	energy resources for the generation of electricity with fewer environmental impacts, as 
2.13 	required by Minnesota's renewable energy standards under section 216B.1691;
2.14 	(7) assist Minnesota in achieving the greenhouse gas emissions-reduction goals 
2.15 	established under section 216H.02, subdivision 1;
2.16 	(8) reduce air pollution from Minnesota's electric generation sector;
2.17 	(9) protect Minnesota's natural resources; and
2.18 	(10) place Minnesota at the forefront among North America's renewable energy 
2.19 	innovators.
2.20 		Subd. 3.Citation. Sections 216B.1601 to 216B.1610 may be referred to as the 
2.21 	Energy Security and Economic Development Act of 2009.

2.22 	Sec. 2. [216B.1602] DEFINITIONS.
2.23 		Subdivision 1.Scope. For purposes of sections 216B.1601 to 216B.1610, the 
2.24 	following terms have the meanings given them.
2.25 		Subd. 2.Adequate renewable energy development. "Adequate renewable energy 
2.26 	development" means a rate of development necessary to accomplish the renewable energy 
2.27 	objectives and standards in section 216B.1691, subdivisions 2 and 2a.
2.28 		Subd. 3.Average specific yield. "Average specific yield" means the average 
2.29 	number of kilowatt hours produced during the initial five years of production of a wind 
2.30 	energy conversion system, excluding the maximum and minimum years of production, 
2.31 	divided by the rotor-swept area in square meters.
2.32 		Subd. 4.Capacity. "Capacity" means the nameplate capacity of a renewable 
2.33 	electricity generator.
3.1 		Subd. 5.Community-based energy development project or C-BED project.
 3.2 	"Community-based energy development project" or "C-BED project" has the meaning 
3.3 	given in section 216B.1612, subdivision 2, paragraph (g).
3.4 		Subd. 6.Electric utility. "Electric utility" means a public utility providing electric 
3.5 	service, or a generation or cooperative electric association that elects to be subject to rate 
3.6 	regulation by the commission under section 216B.026.
3.7 		Subd. 7.Electrical distribution system. "Electrical distribution system" means 
3.8 	that portion of the electric power system over which the Federal Energy Regulatory 
3.9 	Commission does not have authority to interconnect electric generators that sell electricity 
3.10 	in intrastate commerce only.
3.11 		Subd. 8.Open field project. "Open field project" means a photovoltaic device that 
3.12 	has no physical connection to a building other than electric lines to transport electricity.
3.13 		Subd. 9.Photovoltaic device. "Photovoltaic device" has the meaning given in 
3.14 	section 216C.06, subdivision 16.
3.15 		Subd. 10.Qualifying owner. "Qualifying owner" has the meaning given in section 
3.16 	216B.1612, subdivision 2, paragraph (c).
3.17 		Subd. 11.Reasonable profit. "Reasonable profit" means a rate of profit that is just 
3.18 	and reasonable, but not less than ten percent per year.
3.19 		Subd. 12.Renewable electricity generator. "Renewable electricity generator" 
3.20 	means a project:
3.21 	(1) that generates electrical energy by means of a wind energy conversion system or 
3.22 	a photovoltaic device; and
3.23 	(2) in which one or more qualifying owners have at least a 51 percent ownership 
3.24 	interest.
3.25 		Subd. 13.Rooftop project. "Rooftop project" means a project in which a 
3.26 	photovoltaic device is physically attached to the roof of a building.
3.27 		Subd. 14.Rotor-swept area. "Rotor-swept area" means an area equal to 3.1416 
3.28 	multiplied by the square of the length of the rotor of a wind energy conversion system.
3.29 		Subd. 15.Small wind turbine. "Small wind turbine" means a single wind turbine 
3.30 	with a rotor-swept area of no more than 1,000 square feet.
3.31 		Subd. 16.Wind energy conversion system. "Wind energy conversion system" or 
3.32 	"WECS" has the meaning given in section 216C.06, subdivision 19.

3.33 	Sec. 3. [216B.1603] TARIFF ESTABLISHED.
3.34 	A tariff is established to provide opportunities for Minnesotans to own and invest in 
3.35 	renewable electricity generation by requiring utilities to purchase electrical energy at a 
4.1 	just and reasonable price from Minnesota-owned renewable electricity generation projects 
4.2 	connected to the electrical distribution system in accordance with the standard terms and 
4.3 	rates provided in sections 216B.1601 to 216B.1610.

4.4 	Sec. 4. [216B.1604] TARIFF.
4.5 		Subdivision 1.Utilities to offer tariff. By December 1, 2009, each public utility 
4.6 	providing electric service at retail shall file for commission approval a tariff consistent 
4.7 	with this section. Within 90 days of the first commission approval order under this 
4.8 	section, each cooperative electric association, generation and transmission cooperative 
4.9 	electric association, and municipal power agency shall adopt a tariff as consistent as 
4.10 	possible with this section.
4.11 		Subd. 2.Tariff terms. An electric utility shall enter into a power purchase 
4.12 	agreement with the qualifying owners of a renewable electricity generator connected to the 
4.13 	electrical distribution system to purchase all of the electricity produced by the renewable 
4.14 	electricity generator. The term of the power purchase agreement must not be less than 
4.15 	20 years from the date of commissioning of the renewable electricity generator. The 
4.16 	rates of the power purchase agreement must be the rates established by the commission 
4.17 	under subdivision 3.
4.18 		Subd. 3.Tariff rate schedule for electricity from WECS. The rate for electricity 
4.19 	generated by a wind energy conversion system must be the rate needed to ensure adequate 
4.20 	renewable energy development, plus a reasonable profit, but no less than the following:
4.21 	(1) for years one through five following commissioning of the project, $0.105 per 
4.22 	kilowatt hour;
4.23 	(2) for years six through 20 following commissioning of the project:
4.24 	(i) $0.105 per kilowatt hour for projects with an average specific yield less than 700 
4.25 	kilowatt hours per square meter per year;
4.26 	(ii) $0.08 per kilowatt hour for projects with an average specific yield greater than 
4.27 	1,100 kilowatt hours per square meter per year; and
4.28 	(iii) a linear extrapolation between the rates in items (i) and (ii) for a project with an 
4.29 	average specific yield greater than 700 kilowatt hours per square meter per year but less 
4.30 	than 1,100 kilowatt hours per square meter per year; and
4.31 	(3) for a small wind energy conversion system, $0.25 per kilowatt hour.
4.32 		Subd. 4.Tariff rate schedule for electricity from photovoltaic device. The rate for 
4.33 	electricity generated by a photovoltaic device must be the rate needed to ensure adequate 
4.34 	renewable energy development plus a reasonable profit, but no less than the following:
5.1 	(1) $0.50 per kilowatt hour for an open field project with a capacity of one megawatt 
5.2 	or less;
5.3 	(2) $0.65 per kilowatt hour for a rooftop project with a capacity below 30 kilowatts;
5.4 	(3) $0.62 per kilowatt hour for a rooftop project with a capacity of at least 30 
5.5 	kilowatts but less than 100 kilowatts; and
5.6 	(4) $0.61 per kilowatt hour for a rooftop project with a capacity of at least 100 
5.7 	kilowatts but no greater than one megawatt;
5.8 		Subd. 5.Subsequent rate schedules. (a) The minimum rates established under 
5.9 	subdivisions 3 and 4 apply to a power purchase agreement signed during the first year the 
5.10 	tariff is offered by an electric utility. The minimum rates for power purchase agreements 
5.11 	signed in subsequent years must decrease on January 1 of each subsequent year the tariff 
5.12 	is offered, by two percent per year for wind energy conversion systems, and by eight 
5.13 	percent per year for photovoltaic devices.
5.14 	(b) The tariff rates established under this section must remain constant over the 
5.15 	entire term of a power purchase agreement, except as provided for in subdivision 3.
5.16 		Subd. 6.Reduction for other incentive programs. The commission may not 
5.17 	approve a tariff established in this section that allows a project owner to receive federal or 
5.18 	state subsidies, tax credits, or other financial incentives available to owners of renewable 
5.19 	electric generation facilities, unless the tariff requires that those subsidies, tax credits, 
5.20 	or other financial incentives are deducted from the amounts paid to the project owner. 
5.21 	This subdivision does not apply to a photovoltaic device, to a tax under chapter 272, 
5.22 	or to financial incentives available to businesses that do not generate electricity from 
5.23 	renewable sources.
5.24 		Subd. 7.Sale to nonqualifying owners limited. During the term of a power 
5.25 	purchase agreement entered into under the tariff established in this section, no qualifying 
5.26 	owner may voluntarily sell its ownership interest in the renewable energy generator 
5.27 	unless the sale is to another qualifying owner and is approved by the commission. This 
5.28 	subdivision does not restrict transfers of interest by means other than voluntary sales.
5.29 		Subd. 8.Ownership limit. A single qualifying owner is limited to receiving 
5.30 	payments under tariffs established in this section from projects whose aggregate capacity 
5.31 	does not exceed 50 megawatts.
5.32 		Subd. 9.Utility purchase limit. An electric utility may purchase power under 
5.33 	tariffs established in this section that comprises up to 20 percent of its renewable energy 
5.34 	obligation under section 216B.1691.
5.35 		Subd. 10.Tariff review and adjustment. (a) Beginning February 1, 2012, and 
5.36 	every two years thereafter, the commission shall review and adjust rates adopted under 
6.1 	the tariff in this section every two years as necessary to achieve adequate renewable 
6.2 	energy development; account for inflation; provide for a reasonable, but not excessive, 
6.3 	profit to owners of renewable electricity generators; promote development of C-BED 
6.4 	projects; and minimize costs to ratepayers of a utility's compliance with the renewable 
6.5 	energy standards under section 216B.1691.
6.6 	(b) After notice and hearing and upon finding that the objectives in section 
6.7 	216B.1691 are not likely to be met without extending this tariff to renewable electricity 
6.8 	projects connected to the electrical transmission system, the commission may require 
6.9 	electric utilities to enter into power purchase agreements with qualifying owners at rates 
6.10 	in accordance with subdivision 2 as are necessary to achieve adequate renewable energy 
6.11 	development upon such terms needed to ensure accomplishment of C-BED procurement 
6.12 	goals and adequate local benefits as defined in section 216B.1691.
6.13 		Subd. 11.Interconnection. (a) The tariff in this section must provide that electric 
6.14 	utilities will interconnect renewable energy generators to the electrical distribution system 
6.15 	under the jurisdiction of the commission to the maximum extent of state jurisdiction 
6.16 	allowed under federal law.
6.17 	(b) The commission shall consult with the Federal Energy Regulatory Commission, 
6.18 	the Midwest Independent Transmission System Operator Inc., and other appropriate 
6.19 	entities to establish an interconnection request review procedure to promptly and 
6.20 	efficiently determine whether or not the commission may interconnect a renewable energy 
6.21 	generator that requests interconnection under state authority.
6.22 	(c) The commission shall issue orders necessary to establish interconnection tariffs 
6.23 	for the standardized, cost-effective, timely, reliable, and safe interconnection of renewable 
6.24 	electricity generators under state authority.
6.25 	(d) The commission shall establish standard interconnection contracts and 
6.26 	interconnection schedules.
6.27 	(e) A qualifying owner is responsible for paying the cost to interconnect a project 
6.28 	to the nearest electrical distribution system line. If the project is interconnected to an 
6.29 	electrical transmission system line, a qualifying owner is responsible for that portion 
6.30 	of interconnection costs equal to the cost of interconnecting the project to the nearest 
6.31 	electrical distribution system line. All other interconnection costs are the responsibility of 
6.32 	the electric utility.
6.33 	(f) An electric utility's costs associated with the interconnection of renewable 
6.34 	electricity generators, including direct interconnection costs, distribution system 
6.35 	enhancements, and electric utility compliance costs, are recoverable as provided in section 
6.36 	216B.1605.
7.1 		Subd. 12.Standard contract. The commission shall approve a standard contract to 
7.2 	be used in all power purchase agreements under the tariff established under this section. 
7.3 	The contract must include the price paid for each kilowatt hour generated, a method to 
7.4 	adjust the price for inflation, and the duration of the contract.

7.5 	Sec. 5. [216B.1605] COST RECOVERY.
7.6 	The commission shall require an electric utility to file rate schedules containing 
7.7 	provisions for the automatic adjustment of charges for electric utility service in direct 
7.8 	relation to the cost of electricity purchased from renewable electricity generators under the 
7.9 	tariff established under sections 216B.1601 to 216B.1610 and all other costs required to 
7.10 	comply with the tariff established under section 216B.1604. 

7.11 	Sec. 6. [216B.1606] INFORMATION REQUIRED.
7.12 	(a) By March 1, 2011, and each year thereafter, a utility that has filed a tariff 
7.13 	established in this section with the commission must report to the commission, for the 
7.14 	previous calendar year, the quantities A through C, where: 
7.15 	(1) A = the total number of kilowatt hours purchased under contracts utilizing the 
7.16 	tariff established under section 216B.1604; 
7.17 	(2) B = the total revenues paid by the utility for electricity purchased under contracts 
7.18 	utilizing the tariff established under section 216B.1604; and
7.19 	(3) C = the total number of kilowatt hours sold to Minnesota retail customers.
7.20 	(b) Upon request, renewable energy generators, qualifying owners that own all or 
7.21 	part of a renewable energy generator, and electric utilities shall provide the commission 
7.22 	any information that may be relevant to the commission performing its duties under 
7.23 	sections 216B.1601 to 216B.1610, including but not limited to assessment of project 
7.24 	development costs, equipment costs, electricity production costs, interconnection costs, 
7.25 	automatic rate adjustments, and compliance costs.

7.26 	Sec. 7. [216B.1607] EQUALIZATION CHARGES AND PAYMENTS.
7.27 	(a) For the purposes of this section: 
7.28 	(1) ∑A = the statewide aggregation of data for all utilities reported under section 
7.29 	216B.1606, paragraph (a), clause (1); 
7.30 	 (2) ∑B = the statewide aggregation of data for all utilities reported under section 
7.31 	216B.1606, paragraph (a), clause (2); and 
7.32 	 (3) ∑C = the statewide aggregation of data for all utilities reported under section 
7.33 	216B.1606, paragraph (a), clause (3). 
8.1 	 (b) By June 1, 2011, and each year thereafter, the commission shall:
8.2 	 (1) calculate ∑A, ∑B, and ∑C; 
8.3 	 (2) calculate the ratio ∑B divided by ∑C, which represents the cost of electricity 
8.4 	purchased under contracts utilizing the tariff established in section 216B.1604 spread over 
8.5 	all the electricity sold at retail in Minnesota, expressed in cents per kilowatt hour; and 
8.6 	 (3) for each utility reporting under section 216B.1606, paragraph (a), calculate the 
8.7 	quotient B divided by C, which represents the cost of electricity purchased under contracts 
8.8 	utilizing the tariff established in section 216B.1604 spread over all the electricity sold at 
8.9 	retail by the utility, expressed in cents per kilowatt hour.
8.10 	 (c) For any utility for which the ratio B divided by C is less than the ratio ∑B divided 
8.11 	by ∑C, the commission shall assess the utility an equalization charge equal to the amount 
8.12 	((∑B/∑C) – (B/C)) times C. The commission shall send a notice of the assessment to the 
8.13 	utility by August 1. Utilities must remit assessments to the commission by October 1.
8.14 	 (d) For any utility for which the ratio B divided by C is greater than the ratio ∑B 
8.15 	divided by ∑C, the commission shall remit to the utility, by November 15, an equalization 
8.16 	payment equal to the amount ((B/C) – (∑B/∑C)) times C. Equalization payments shall be 
8.17 	made from the renewable energy equalization account established in section 216B.1608.
8.18 	 (e) The commission may adopt rules under chapter 14 to implement this section.

8.19 	Sec. 8. [216B.1608] RENEWABLE ENERGY EQUALIZATION ACCOUNT.
8.20 		Subdivision 1.Establishment. The renewable energy equalization account 
8.21 	is established. The renewable energy equalization account is to be managed by the 
8.22 	commission. The commission shall deposit all revenues received as a result of assessments 
8.23 	made under section 216B.1607, paragraph (c), into the account. 
8.24 		Subd. 2.Purpose. The purpose of the renewable energy equalization account is 
8.25 	to equalize expenditures made under the tariff established in section 216B.1604 on a 
8.26 	per-kilowatt-hour basis across all electric utilities in the state. 
8.27 		Subd. 3.Appropriations. Money from the account is appropriated continuously 
8.28 	from the fund to the commission for the purpose of making payments to utilities under 
8.29 	section 216B.1607, paragraph (c).
8.30 		Subd. 4.Carryover. Money in the account at the end of the fiscal year does not 
8.31 	cancel to the state general fund, but remains in the account to be used for the purposes 
8.32 	of this section.

8.33 	Sec. 9. [216B.1609] LOAN ELIGIBILITY.
9.1 	A renewable electricity generator is eligible for a loan under section 216C.39, 
9.2 	subdivision 5.

9.3 	Sec. 10. [216B.1610] REPORT.
9.4 	By January 1 of 2011 and 2012 and every four years thereafter, the commission shall 
9.5 	submit a report to the governor and legislature that must include all of the following:
9.6 	(1) the number of new renewable electricity generators in this state and the 
9.7 	environmental effects of the addition of those generators, including but not limited to the 
9.8 	effects on progress toward achieving the renewable energy objectives and standards in 
9.9 	section 216B.1691;
9.10 	(2) recommendations for legislation and changes to the rates in section 216B.1604, 
9.11 	if any; and
9.12 	(3) actions taken by the commission to implement sections 216B.1601 to 216B.1610 
9.13 	and to use the tariff to achieve the renewable energy objectives and standards in section 
9.14 	216B.1691.

9.15 	Sec. 11. EFFECTIVE DATE.
 9.16 	Sections 1 to 10 are effective the day following final enactment.