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2006 Minnesota Statutes

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216B.2424 BIOMASS POWER MANDATE.
    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), clauses (1)
and (2), are poplar, aspen, willow, switch grass, sorghum, alfalfa, 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, by 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).
    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 by April 1, 2006, 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).
    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.
    Subd. 3. Fuel exemption. Over the duration of the contract of a biomass power facility
selected to satisfy the mandate in subdivision 5, fuel sources that are not biomass may be used to
satisfy up to 25 percent of the fuel requirements of a biomass power facility selected to satisfy the
biomass power mandate in subdivision 5, except that agricultural crop wastes, such as oat hulls,
may be used to satisfy more than 25 percent of the fuel requirements of a power facility selected
to satisfy the biomass power mandate in subdivision 5 if the wastes are co-fired with the fuel
authorized for the facility. A biomass power facility selected to satisfy the mandate in subdivision
5 also may use fuel sources that are not biomass during any period when biomass fuel sources
are not reasonably available to the facility due to any circumstances constituting an act of God.
Fuel sources that are not biomass used during such a period of biomass fuel source unavailability
shall not be counted toward the 25 percent exemption provided in this subdivision. For purposes
of this subdivision, "act of God" means any natural disaster or other natural phenomenon of an
exceptional, inevitable, or irresistible character, including, but not limited to, flood, fire, drought,
earthquake, and crop failure resulting from climatic conditions, infestation, or disease.
    Subd. 4. Financial viability. A biomass project developer must demonstrate to the public
utility evidence of sufficient financial viability necessary for the construction and operation of
the biomass project.
    Subd. 5. Mandate. (a) A public utility, as defined in section 216B.02, subdivision 4, that
operates a nuclear-powered electric generating plant within this state must construct and operate,
purchase, or contract to construct and operate (1) by December 31, 1998, 50 megawatts of
electric energy installed capacity generated by farm-grown closed-loop biomass scheduled to be
operational by December 31, 2001; and (2) by December 31, 1998, an additional 75 megawatts of
installed capacity so generated scheduled to be operational by December 31, 2002.
(b) Of the 125 megawatts of biomass electricity installed capacity required under this
subdivision, no more than 55 megawatts of this capacity may be provided by a facility that uses
poultry litter as its primary fuel source and any such facility:
(1) need not use biomass that complies with the definition in subdivision 1;
(2) must enter into a contract with the public utility for such capacity, that has an average
purchase price per megawatt hour over the life of the contract that is equal to or less than the
average purchase price per megawatt hour over the life of the contract in contracts approved by
the Public Utilities Commission before April 1, 2000, to satisfy the mandate of this section, and
file that contract with the Public Utilities Commission prior to September 1, 2000; and
(3) must schedule such capacity to be operational by December 31, 2002.
(c) Of the total 125 megawatts of biomass electric energy installed capacity required under
this section, no more than 75 megawatts may be provided by a single project.
(d) Of the 75 megawatts of biomass electric energy installed capacity required under
paragraph (a), clause (2), no more than 33 megawatts of this capacity may be provided by a St.
Paul district heating and cooling system cogeneration facility utilizing waste wood as a primary
fuel source. The St. Paul district heating and cooling system cogeneration facility need not use
biomass that complies with the definition in subdivision 1.
(e) The public utility must accept and consider on an equal basis with other biomass
proposals:
(1) a proposal to satisfy the requirements of this section that includes a project that exceeds
the megawatt capacity requirements of either paragraph (a), clause (1) or (2), and that proposes to
sell the excess capacity to the public utility or to other purchasers; and
(2) a proposal for a new facility to satisfy more than ten but not more than 20 megawatts
of the electrical generation requirements by a small business-sponsored independent power
producer facility to be located within the northern quarter of the state, which means the area
located north of Constitutional Route No. 8 as described in section 161.114, subdivision 2, and
that utilizes biomass residue wood, sawdust, bark, chipped wood, or brush to generate electricity.
A facility described in this clause is not required to utilize biomass complying with the definition
in subdivision 1, but must be under construction by December 31, 2005.
(f) If a public utility files a contract with the commission for electric energy installed capacity
that uses poultry litter as its primary fuel source, the commission must do a preliminary review of
the contract to determine if it meets the purchase price criteria provided in paragraph (b), clause
(2). The commission shall perform its review and advise the parties of its determination within 30
days of filing of such a contract by a public utility. A public utility may submit by September 1,
2000, a revised contract to address the commission's preliminary determination.
(g) The commission shall finally approve, modify, or disapprove no later than July 1,
2001, all contracts submitted by a public utility as of September 1, 2000, to meet the mandate
set forth in this subdivision.
(h) If a public utility subject to this section exercises an option to increase the generating
capacity of a project in a contract approved by the commission prior to April 25, 2000, to satisfy
the mandate in this subdivision, the public utility must notify the commission by September 1,
2000, that it has exercised the option and include in the notice the amount of additional megawatts
to be generated under the option exercised. Any review by the commission of the project after
exercise of such an option shall be based on the same criteria used to review the existing contract.
(i) A facility specified in this subdivision qualifies for exemption from property taxation
under section 272.02, subdivision 45.
    Subd. 5a. Reduction of biomass mandate. (a) Notwithstanding subdivision 5, the biomass
electric energy mandate must be reduced from 125 megawatts to 110 megawatts.
(b) The Public Utilities Commission shall approve a request pending before the commission
as of May 15, 2003, for amendments to and assignment of a 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 owner of the project agrees to reduce the size of
its project from 50 megawatts to 35 megawatts, while maintaining an average price for energy 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.
    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.
    Subd. 7. Effect on existing projects. The commission may not approve a project proposed
after April 25, 2000, which would have an adverse impact on the ability of a project approved
before April 25, 2000, to obtain an adequate supply of the fuel source designated for the project.
    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.
History: 1994 c 641 art 3 s 3; 1995 c 224 s 76; 1996 c 450 s 1; 1998 c 345 s 2; 2000 c 443 s
1-5; 2001 c 7 s 46; 1Sp2001 c 5 art 3 s 13; 2002 c 379 art 1 s 55; 2003 c 127 art 2 s 3; 1Sp2003 c
11 art 2 s 7,16; 2005 c 97 art 5 s 1-6; 1Sp2005 c 1 art 2 s 140; 2006 c 259 art 4 s 4

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