1st Engrossment - 83rd Legislature, 2003 1st Special Session (2003 - 2003) Posted on 12/15/2009 12:00am
1.1 A bill for an act 1.2 relating to energy; modifying provisions relating to 1.3 radioactive waste storage; modifying incentives and 1.4 objectives for alternative energy development; 1.5 requiring studies; approving consumptive use of water; 1.6 amending Minnesota Statutes 2002, sections 116C.71, 1.7 subdivision 7; 116C.779; 216B.095; 216B.097, by adding 1.8 a subdivision; 216B.1645, by adding a subdivision; 1.9 216B.1691; 216B.241, subdivision 1b, by adding a 1.10 subdivision; 216B.2411; 216B.2424, subdivision 5, by 1.11 adding a subdivision; 216B.2425, by adding a 1.12 subdivision; 216B.243, subdivision 3b; 216C.051, 1.13 subdivisions 3, 6, 9, by adding a subdivision; 1.14 216C.052, subdivisions 2, 3; 216C.41, subdivisions 1, 1.15 2, 3, 4, 5, by adding subdivisions; proposing coding 1.16 for new law in Minnesota Statutes, chapters 116C; 1.17 216B; repealing Minnesota Statutes 2002, sections 1.18 116C.80; 216C.051, subdivisions 1, 4, 5. 1.19 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 1.20 ARTICLE 1 1.21 NUCLEAR ENERGY PROVISIONS 1.22 Section 1. Minnesota Statutes 2002, section 116C.71, 1.23 subdivision 7, is amended to read: 1.24 Subd. 7. [RADIOACTIVE WASTE MANAGEMENT FACILITY.] 1.25 "Radioactive waste management facility" means a geographic site, 1.26 including buildings, structures, and equipment in or upon which 1.27 radioactive waste is retrievably or irretrievably disposed by 1.28 burial in soil or permanently stored. An independent spent fuel 1.29 storage installation located on the site of a Minnesota nuclear 1.30 generation facility for dry cask storage of spent nuclear fuel 1.31 generated solely by that facility is not a radioactive waste 1.32 management facility. 2.1 Sec. 2. [116C.83] [AUTHORIZATION FOR ADDITIONAL DRY CASK 2.2 STORAGE.] 2.3 Subdivision 1. [AUTHORIZATION TO END OF CURRENT PRAIRIE 2.4 ISLAND LICENSE.] Subject to the dry cask storage limits of the 2.5 federal license for the independent spent fuel storage 2.6 installation at Prairie Island, the public utility that owns the 2.7 Prairie Island nuclear generation plant has authorization for 2.8 sufficient dry cask storage capacity at that installation to 2.9 allow: 2.10 (1) the unit 1 reactor at Prairie Island to operate until 2.11 the end of its current license in 2013; and 2.12 (2) the unit 2 reactor at Prairie Island to operate until 2.13 the end of its current license in 2014. 2.14 Subd. 2. [COMMISSION PROCESS FOR FUTURE ADDITIONAL 2.15 AUTHORIZATION.] Authorization of any additional dry cask storage 2.16 other than that provided for in subdivision 1, or expansion or 2.17 establishment of an independent spent fuel storage facility at a 2.18 nuclear generation facility in this state, is subject to 2.19 approval of a certificate of need by the public utilities 2.20 commission pursuant to section 216B.243. In any proceeding 2.21 under this subdivision, the commission may make a decision that 2.22 could result in a shutdown of a nuclear generating facility. In 2.23 considering an application for a certificate of need pursuant to 2.24 this subdivision, the commission may consider whether the public 2.25 utility that owns the nuclear generation facility in the state 2.26 is in compliance with section 216B.1691 and the utility's past 2.27 performance under that section. 2.28 Subd. 3. [LEGISLATIVE REVIEW.] (a) To allow opportunity 2.29 for review by the legislature, a decision by the commission on 2.30 an application for a certificate of need pursuant to subdivision 2.31 2 is stayed until the June 1 following the next regular annual 2.32 session of the legislature that begins after the date of the 2.33 commission decision. By January 15 of the year of that 2.34 legislative session, the commission shall issue a report to the 2.35 chairs of the house and senate committees with jurisdiction over 2.36 energy and environmental policy issues, providing a summary of 3.1 the commission's decision and the grounds for that decision, the 3.2 alternatives considered and rejected by the commission, and the 3.3 reasons for rejecting those alternatives. If the legislature 3.4 does not modify or reject the commission's decision by law 3.5 enacted during that regular legislative session, the 3.6 commission's decision shall become effective on the expiration 3.7 of the stay. 3.8 (b) The stay of a commission decision to approve an 3.9 application for a certificate of need for additional dry cask 3.10 storage under subdivision 2 does not apply to the fabrication of 3.11 the spent fuel storage casks. However, if the utility proceeds 3.12 with the fabrication of casks, it does so bearing the risk of an 3.13 adverse legislative decision. 3.14 Subd. 4. [OTHER CONDITIONS.] (a) The storage of spent 3.15 nuclear fuel in the pool and in dry casks at a nuclear 3.16 generating plant must be managed to facilitate the shipment of 3.17 waste out of state to a permanent or interim storage facility as 3.18 soon as feasible in a manner that allows the continued operation 3.19 of the plant consistent with sections 116C.71 to 116C.83 and 3.20 216B.1645, subdivision 4. 3.21 (b) The authorization for storage capacity pursuant to this 3.22 section is limited to the storage of spent nuclear fuel 3.23 generated by a Minnesota nuclear generation facility and stored 3.24 on the site of that facility. 3.25 Subd. 5. [WATER STANDARDS.] The standards established in 3.26 section 116C.76, subdivision 1, clauses (1) to (3), apply to an 3.27 independent spent fuel installation. Such an installation must 3.28 be operated in accordance with those standards. 3.29 Subd. 6. [ENVIRONMENTAL REVIEW AND PROTECTION.] (a) The 3.30 siting, construction, and operation of an independent spent fuel 3.31 storage installation located on the site of a Minnesota 3.32 generation facility for dry cask storage of spent nuclear fuel 3.33 generated solely by that facility is subject to all 3.34 environmental review and protection provisions of this chapter 3.35 and chapters 115, 115B, 116, 116B, 116D, and 216B, and rules 3.36 associated with those chapters, except those statutes and rules 4.1 that apply specifically to a radioactive waste management 4.2 facility as defined in section 116C.71, subdivision 7. 4.3 (b) An environmental impact statement is required under 4.4 chapter 116D for a proposal to construct and operate a new or 4.5 expanded independent spent fuel storage installation. The 4.6 environmental quality board shall be the responsible 4.7 governmental unit for the environmental impact statement. Prior 4.8 to finding the statement adequate, the board must find that the 4.9 applicant has demonstrated that the facility is designed to 4.10 provide a reasonable expectation that the operation of the 4.11 facility will not result in groundwater contamination in excess 4.12 of the standards established in section 116C.76, subdivision 1, 4.13 clauses (1) to (3). 4.14 Sec. 3. Minnesota Statutes 2002, section 216B.1645, is 4.15 amended by adding a subdivision to read: 4.16 Subd. 4. [SETTLEMENT WITH MDEWAKANTON DAKOTA TRIBAL 4.17 COUNCIL AT PRAIRIE ISLAND.] The commission shall approve a rate 4.18 schedule providing for the automatic adjustment of charges to 4.19 recover the costs or expenses of a settlement between the public 4.20 utility that owns the Prairie Island nuclear generation facility 4.21 and the Mdewakanton Dakota Tribal Council at Prairie Island, 4.22 resolving outstanding disputes regarding the provisions of Laws 4.23 1994, chapter 641, article 1, section 4. The settlement must 4.24 provide for annual payments, not to exceed $2,500,000 annually, 4.25 by the public utility to the Prairie Island Indian Community, to 4.26 be used for, among other purposes, acquiring up to 1,500 4.27 contiguous or noncontiguous acres of land in Minnesota within 50 4.28 miles of the tribal community's reservation at Prairie Island to 4.29 be taken into trust by the federal government for the benefit of 4.30 the tribal community for housing and other residential 4.31 purposes. The legislature acknowledges that the intent to 4.32 purchase land by the tribe for relocation purposes is part of 4.33 the settlement agreement and this act. However, the state, 4.34 through the governor, reserves the right to support or oppose 4.35 any particular application to place land in trust status. 4.36 Sec. 4. Minnesota Statutes 2002, section 216B.243, 5.1 subdivision 3b, is amended to read: 5.2 Subd. 3b. [NUCLEAR POWER PLANT; NEW CONSTRUCTION 5.3 PROHIBITED; RELICENSING.] (a) The commission may not issue a 5.4 certificate of need for the construction of a new 5.5 nuclear-powered electric generating plant. 5.6 (b) Any certificate of need for additional storage of spent 5.7 nuclear fuel for a facility seeking a license extension shall 5.8 address the impacts of continued operations over the period for 5.9 which approval is sought. 5.10 Sec. 5. [PERSONS LIVING NEAR A NUCLEAR FACILITY; HEALTH 5.11 STUDY.] 5.12 The commissioner of health shall review data collected by 5.13 the department, and in the context of other relevant information 5.14 developed by the National Institutes of Health and other 5.15 entities, report to the legislature by January 1, 2004, on 5.16 whether a further health study funded by the owner of the 5.17 Prairie Island nuclear facility is necessary. 5.18 Sec. 6. [EFFECTIVE DATE.] 5.19 This article is effective the day following final enactment. 5.20 ARTICLE 2 5.21 RENEWABLE ENERGY DEVELOPMENT 5.22 Section 1. Minnesota Statutes 2002, section 116C.779, is 5.23 amended to read: 5.24 116C.779 [FUNDING FOR RENEWABLE DEVELOPMENT.] 5.25 Subdivision 1. [RENEWABLE DEVELOPMENT ACCOUNT.] (a) The 5.26 public utility thatoperatesowns the Prairie Island nuclear 5.27 generating plant must transfer to a renewable development 5.28 account$500,000 each year for each dry cask containing spent5.29fuel that is located at the independent spent fuel storage5.30installation at Prairie Island after January 1, 1999$16,000,000 5.31 annually each year the plant is in operation, and $7,500,000 5.32 each year the plant is not in operation if ordered by the 5.33 commissioner pursuant to paragraph (c). The fund transfer must 5.34 be made if nuclear waste is stored in a dry cask at the 5.35 independent spent fuel storage facility at Prairie Island for 5.36 any part of a year. Funds in the account may be expended only 6.1 for development of renewable energy sources. Preference must be 6.2 given to development of renewable energy source projects located 6.3 within the state. 6.4 (b) Expenditures from the account may only be made after 6.5 approval by order of the public utilities commission upon a 6.6 petition by the public utility. 6.7 (c) After discontinuation of operation of the Prairie 6.8 Island nuclear plant and each year spent nuclear fuel is stored 6.9 in dry cask at the Prairie Island facility, the commission shall 6.10 require the public utility to pay $7,500,000 for any year in 6.11 which the commission finds, by the preponderance of the 6.12 evidence, that the public utility did not make a good faith 6.13 effort to remove the spent nuclear fuel stored at Prairie Island 6.14 to a permanent or interim storage site out of the state. This 6.15 determination shall be made at least every two years. 6.16 Subd. 2. [RENEWABLE ENERGY PRODUCTION INCENTIVE.] (a) 6.17 Until January 1, 2018, up to $6,000,000 annually must be 6.18 allocated from available funds in the account to fund renewable 6.19 energy production incentives. $4,500,000 of this annual amount 6.20 is for incentives for up to 100 megawatts of electricity 6.21 generated by wind energy conversion systems that are eligible 6.22 for the incentives under section 216C.41. The balance of this 6.23 amount, up to $1,500,000 annually, may be used for production 6.24 incentives for on-farm biogas recovery facilities that are 6.25 eligible for the incentive under section 216C.41 or for 6.26 production incentives for other renewables, to be provided in 6.27 the same manner as under section 216C.41. Any portion of the 6.28 $6,000,000 not expended in any calendar year for the incentive 6.29 is available for other spending purposes under this section. 6.30 This subdivision does not create an obligation to contribute 6.31 funds to the account. 6.32 (b) The department of commerce shall determine eligibility 6.33 of projects under section 216C.41 for the purposes of this 6.34 subdivision. At least quarterly, the department of commerce 6.35 shall notify the public utility of the name and address of each 6.36 eligible project owner and the amount due to each project under 7.1 section 216C.41. The public utility shall make payments within 7.2 15 working days after receipt of notification of payments due. 7.3 Sec. 2. [216B.013] [HYDROGEN ENERGY ECONOMY GOAL.] 7.4 It is a goal of this state that Minnesota move to hydrogen 7.5 as an increasing source of energy for its electrical power, 7.6 heating, and transportation needs. 7.7 Sec. 3. Minnesota Statutes 2002, section 216B.1691, is 7.8 amended to read: 7.9 216B.1691 [RENEWABLE ENERGY OBJECTIVES.] 7.10 Subdivision 1. [DEFINITIONS.] (a) Unless otherwise 7.11 specified in law, "eligible energy technology" means an energy 7.12 technology that: 7.13 (1) generates electricity from the following renewable 7.14 energy sources: solar,; wind,; hydroelectric with a capacity of 7.15 less than 60 megawatts,; hydrogen, provided that after January 7.16 1, 2010, the hydrogen must be generated from the resources 7.17 listed in this clause; or biomass, which includes an energy 7.18 recovery facility used to capture the heat value of mixed 7.19 municipal solid waste or refuse-derived fuel from mixed 7.20 municipal solid waste as a primary fuel; and 7.21 (2) was not mandated bystate lawLaws 1994, chapter 641, 7.22 or by commission orderenacted orissued pursuant to that 7.23 chapter prior to August 1, 2001. 7.24 (b) "Electric utility" means a public utility providing 7.25 electric service, a generation and transmission cooperative 7.26 electric association, or a municipal power agency. 7.27 (c) "Total retail electric sales" means the kilowatt-hours 7.28 of electricity sold in a year by an electric utility to retail 7.29 customers of the electric utility or to a distribution utility 7.30 for distribution to the retail customers of the distribution 7.31 utility. 7.32 Subd. 2. [ELIGIBLE ENERGY OBJECTIVES.] (a) Each electric 7.33 utility shall make a good faith effort to generate or procure 7.34 sufficient electricity generated by an eligible energy 7.35 technology to provide its retail consumers, or the retail 7.36memberscustomers of a distribution utility to which the 8.1 electric utility provides wholesale electric service, so that: 8.2 (1) commencing in 2005, at least one percent of the 8.3 electricenergy provided to those retail customersutility's 8.4 total retail electric sales is generated by eligible energy 8.5 technologies; 8.6 (2) the amount provided under clause (1) is increased by 8.7 one percent of the utility's total retail electric sales each 8.8 year until 2015; and 8.9 (3) ten percent of the electric energy provided to retail 8.10 customers in Minnesota is generated by eligible energy 8.11 technologies; and. 8.12(4)(b) Of the eligible energy technology generation 8.13 required under paragraph (a), clauses (1) and (2),at leastnot 8.14 less than 0.5 percent of the energy must be generated by biomass 8.15 energy technologies, including an energy recovery facility used 8.16 to capture the heat value of mixed municipal solid waste or 8.17 refuse-derived fuel from mixed municipal solid waste as a 8.18 primary fuel, by2010 and one percent by 20152005. By 2010, 8.19 one percent of the eligible technology generation required under 8.20 paragraph (a), clauses (1) and (2), shall be generated by 8.21 biomass energy technologies. An energy recovery facility used 8.22 to capture the heat value of mixed municipal solid waste or 8.23 refuse-derived fuel from mixed municipal solid waste, with a 8.24 power sales agreement in effect as of the date of final 8.25 enactment of this act that terminates after December 31, 2010, 8.26 does not qualify as an eligible energy technology unless the 8.27 agreement provides for rate adjustment in the event the facility 8.28 qualifies as a renewable energy source. 8.29(b)(c) By June 1, 2004, and as needed thereafter, the 8.30 commission shall issue an order detailing the criteria and 8.31 standards by which it will measure an electric utility's efforts 8.32 to meet the renewable energy objectives of this section to 8.33 determine whether the utility is making the required good faith 8.34 effort. In this order, the commission shall include criteria 8.35 and standards that protect against undesirable impacts on the 8.36 reliability of the utility's system and economic impacts on the 9.1 utility's ratepayers and that consider technical feasibility. 9.2 (d) In its order under paragraph (c), the commission shall 9.3 provide for a weighted scale of how energy produced by various 9.4 eligible energy technologies shall count toward a utility's 9.5 objective. In establishing this scale, the commission shall 9.6 consider the attributes of various technologies and fuels, and 9.7 shall establish a system that grants multiple credits toward the 9.8 objectives for those technologies and fuels the commission 9.9 determines is in the public interest to encourage. 9.10 (e) An electric utility may satisfy up to 20 percent of its 9.11 overall objectives under this subdivision from a clean energy 9.12 technology. For the purposes of this subdivision, "clean energy 9.13 technology" means an innovative energy project as defined in 9.14 article 4, section 1, subdivision 1. Electricity from a clean 9.15 energy technology shall count one kilowatt-hour toward an 9.16 electric utility's objectives for every two kilowatt-hours 9.17 produced by the technology and purchased by the utility for 9.18 distribution to retail customers in the state. 9.19 Subd. 3. [UTILITY PLANS FILED WITH THE COMMISSION.] (a) 9.20 Each electric utility shall report on its plans, activities, and 9.21 progress with regard to these objectives intheirits filings 9.22 under section 216B.2422 or in a separate report submitted to the 9.23 commission every two years, whichever is more frequent, 9.24 demonstrating to the commission that the utility is making the 9.25 required good faith effort. In its resource plan or a separate 9.26 report, each electric utility shall provide a description of: 9.27 (1) the status of the utility's renewable energy mix 9.28 relative to the good faith objective; 9.29 (2) efforts taken to meet the objective; 9.30 (3) any obstacles encountered or anticipated in meeting the 9.31 objective; and 9.32 (4) potential solutions to the obstacles. 9.33(c)(b) Thecommission, in consultation with the9.34 commissionerof commerce,shall compile the information provided 9.35 to the commission under paragraph(b)(a), and report to the 9.36 chairs of the house of representatives and senate committees 10.1 with jurisdiction over energy and environment policy issues as 10.2 to the progress of utilities in the state in increasing the 10.3 amount of renewable energy provided to retail customers, with 10.4 any recommendations for regulatory or legislative action, by 10.5 January 15, 2002of each odd-numbered year. 10.6 Subd. 4. [RENEWABLE ENERGY CREDITS.] (a) To facilitate 10.7 compliance with this section, the commission, by rule or order, 10.8 may establish a program for tradable credits for electricity 10.9 generated by an eligible energy technology. In doing so, the 10.10 commission shall implement a system that constrains or limits 10.11 the cost of credits, taking care to ensure that such a system 10.12 does not undermine the market for those credits. 10.13 (b) In lieu of generating or procuring energy directly to 10.14 satisfy the renewable energy objective of this section, an 10.15 electric utility may purchase sufficient renewable energy 10.16 credits, issued pursuant to this subdivision, to meet its 10.17 objective. 10.18 (c) Upon the passage of a renewable energy standard, 10.19 portfolio, or objective in a bordering state that includes a 10.20 similar definition of eligible energy technology or renewable 10.21 energy, the commission may facilitate the trading of renewable 10.22 energy credits between states. 10.23 Subd. 5. [TECHNOLOGY BASED ON FUEL COMBUSTION.] (a) 10.24 Electricity produced by fuel combustion may only count towards a 10.25 utility's objectives if the generation facility: 10.26 (1) was constructed in compliance with new source 10.27 performance standards promulgated under the federal Clean Air 10.28 Act for a generation facility of that type; or 10.29 (2) employs the maximum achievable or best available 10.30 control technology available for a generation facility of that 10.31 type. 10.32 (b) An eligible energy technology may blend or co-fire a 10.33 fuel listed in subdivision 1, paragraph (a), clause (1), with 10.34 other fuels in the generation facility, but only the percentage 10.35 of electricity that is attributable to a fuel listed in that 10.36 clause can be counted towards an electric utility's renewable 11.1 energy objectives. 11.2 Subd. 6. [ELECTRIC UTILITY THAT OWNS A NUCLEAR GENERATION 11.3 FACILITY.] (a) An electric utility that owns a nuclear 11.4 generation facility, as part of its good-faith effort under this 11.5 subdivision and subdivision 2, shall deploy an additional 300 11.6 megawatts of nameplate capacity of wind energy conversion 11.7 systems by 2010, beyond the amount of wind energy capacity to 11.8 which the utility is required by law or commission order as of 11.9 May 1, 2003. At least 100 megawatts of this capacity is to be 11.10 wind energy conversion systems of two megawatts or less, which 11.11 shall not be eligible for the production incentive under section 11.12 216C.41. Wind energy deployed under this paragraph from wind 11.13 energy conversion systems of greater than two megawatts shall 11.14 not qualify as "eligible energy technology" under section 11.15 216B.1691. To the greatest extent technically feasible and 11.16 economic, these 300 megawatts of wind energy capacity are to be 11.17 distributed geographically throughout the state. The utility 11.18 may opt to own, construct, and operate up to 100 megawatts of 11.19 this wind energy capacity, except that the utility may not own, 11.20 construct, or operate any of the facilities that are under two 11.21 megawatts of nameplate capacity. The deployment of the wind 11.22 energy capacity under this subdivision must be consistent with 11.23 the outcome of the engineering study required under section 20. 11.24 (b) The good faith objective set forth in subdivision 2 11.25 shall be a requirement for the public utility that owns the 11.26 Prairie Island nuclear generation plant. The objective is a 11.27 requirement to the extent that the eligible resources are the 11.28 utility's least cost resource, including the costs of ancillary 11.29 services and other generation and transmission upgrades 11.30 necessary to manage the intermittent nature of certain renewable 11.31 resources, or unless implementation of the objective can 11.32 reasonably be shown to jeopardize the reliability of the 11.33 electric system. 11.34 (c) Also as part of its good faith effort under this 11.35 section, the utility that owns a nuclear generation facility is 11.36 to enter into a power purchase agreement by January 1, 2004, for 12.1 ten to 20 megawatts of biomass energy and capacity at an 12.2 all-inclusive price not to exceed $55 per megawatt-hour, for a 12.3 project described in section 216B.2424, subdivision 5, paragraph 12.4 (e), clause (2). The project must be operational and producing 12.5 energy by June 30, 2005. 12.6 Sec. 4. Minnesota Statutes 2002, section 216B.241, is 12.7 amended by adding a subdivision to read: 12.8 Subd. 6. [RENEWABLE ENERGY RESEARCH.] (a) A public utility 12.9 that owns a nuclear generation facility in the state shall spend 12.10 five percent of the total amount that utility is required to 12.11 spend under this section to support basic and applied research 12.12 and demonstration activities at the University of Minnesota 12.13 Initiative for Renewable Energy and the Environment for the 12.14 development of renewable energy sources and technologies. The 12.15 utility shall transfer the required amount to the University of 12.16 Minnesota on or before July 1 of each year and that annual 12.17 amount shall be deducted from the amount of money the utility is 12.18 required to spend under this section. The University of 12.19 Minnesota shall transfer at least ten percent of these funds to 12.20 at least one rural campus or experiment station. 12.21 (b) Research funded under this subdivision shall include: 12.22 (1) development of environmentally sound production, 12.23 distribution, and use of energy, chemicals, and materials from 12.24 renewable sources; 12.25 (2) processing and utilization of agricultural and forestry 12.26 plant products and other bio-based, renewable sources as a 12.27 substitute for fossil-fuel-based energy, chemicals, and 12.28 materials using a variety of means including biocatalysis, 12.29 biorefining, and fermentation; 12.30 (3) conversion of state wind resources to hydrogen for 12.31 energy storage and transportation to areas of energy demand; 12.32 (4) improvements in scalable hydrogen fuel cell 12.33 technologies; and 12.34 (5) production of hydrogen from bio-based, renewable 12.35 sources; and sequestration of carbon. 12.36 (c) Notwithstanding other law to the contrary, the utility 13.1 may, but is not required to, spend more than two percent of its 13.2 gross operating revenues from service provided in this state 13.3 under this section or section 216B.2411. 13.4 (d) This subdivision expires June 30, 2008. 13.5 Sec. 5. Minnesota Statutes 2002, section 216B.2411, is 13.6 amended to read: 13.7 216B.2411 [DISTRIBUTED ENERGY RESOURCES.] 13.8 Subdivision 1. [GENERATION PROJECTS.] (a)To the extent13.9that cost-effective projects are available in the service13.10territory of a utility or association providing conservation13.11services under section 216B.241, the utility or associationEach 13.12 public utility, municipality, or rural electric association 13.13 providing electric service and subject to section 216B.241 that 13.14 is not meeting the objectives under section 216B.1691 shall, and 13.15 each public utility providing natural gas service may, use five 13.16 percent of the total amount to be spent on energy conservation 13.17 improvements under section 216B.241, on: 13.18 (1) projects in Minnesota to construct an electric 13.19 generating facility that utilizes eligible renewablefuels13.20 energy sources as defined insection 216B.2422,subdivision12, 13.21 such as methane or other combustible gases derived from the 13.22 processing of plant or animal wastes, biomass fuels such as 13.23 short-rotation woody or fibrous agricultural crops, or other 13.24 renewable fuel, as its primary fuel source; or 13.25 (2) projects in Minnesota to install a distributed 13.26 generation facility of ten megawatts or less of interconnected 13.27 capacity that is fueled by natural gas, renewable fuels, or 13.28 another similarly clean fuel. 13.29 (b) For public utilities, as defined under section 216B.02, 13.30 subdivision 4, projects under this section must be considered 13.31 energy conservation improvements as defined in section 13.32 216B.241. For cooperative electric associations and municipal 13.33 utilities, projects under this section must be considered 13.34 load-management activities described in section 216B.241, 13.35 subdivision 1, paragraph (i). 13.36(d) This section expires May 30, 2006.14.1 Subd. 2. [DEFINITIONS.] (a) For the purposes of this 14.2 section, the terms defined in this subdivision and section 14.3 216B.241, subdivision 1, have the meanings given them. 14.4 (b) "Eligible renewable energy sources" means fuels and 14.5 technologies to generate electricity through the use of any of 14.6 the resources listed in section 216B.1691, subdivision 1, 14.7 paragraph (a), clause (1), except that the term "biomass" has 14.8 the meaning provided under paragraph (c). 14.9 (c) "Biomass" includes: 14.10 (1) methane or other combustible gases derived from the 14.11 processing of plant or animal material; 14.12 (2) alternative fuels derived from soybean and other 14.13 agricultural plant oils or animal fats; 14.14 (3) combustion of barley hulls, corn, soy-based products, 14.15 or other agricultural products; 14.16 (4) wood residue from the wood products industry in 14.17 Minnesota or other wood products such as short-rotation woody or 14.18 fibrous agricultural crops; and 14.19 (5) landfill gas, mixed municipal solid waste, and 14.20 refuse-derived fuel from mixed municipal solid waste. 14.21 Subd. 3. [OTHER PROVISIONS.] (a) Electricity generated by 14.22 a facility constructed with funds provided under this section 14.23 and using an eligible renewable energy source may be counted 14.24 towards the renewable energy objectives in section 216B.1691, 14.25 subject to the provisions of that section. 14.26 (b) Two or more entities may pool resources under this 14.27 section to provide assistance jointly to proposed eligible 14.28 renewable energy projects. The entities shall negotiate and 14.29 agree among themselves for allocation of benefits associated 14.30 with a project, such as the ability to count energy generated by 14.31 a project toward a utility's renewable energy objectives under 14.32 section 216B.1691. The entities shall provide a summary of the 14.33 allocation of benefits to the commissioner. A utility may spend 14.34 funds under this section for projects in Minnesota that are 14.35 outside the service territory of the utility. 14.36 Sec. 6. Minnesota Statutes 2002, section 216B.2424, 15.1 subdivision 5, is amended to read: 15.2 Subd. 5. [MANDATE.] (a) A public utility, as defined in 15.3 section 216B.02, subdivision 4, that operates a nuclear-powered 15.4 electric generating plant within this state must construct and 15.5 operate, purchase, or contract to construct and operate (1) by 15.6 December 31, 1998, 50 megawatts of electric energy installed 15.7 capacity generated by farm-grown closed-loop biomass scheduled 15.8 to be operational by December 31, 2001; and (2) by December 31, 15.9 1998, an additional 75 megawatts of installed capacity so 15.10 generated scheduled to be operational by December 31, 2002. 15.11 (b) Of the 125 megawatts of biomass electricity installed 15.12 capacity required under this subdivision, no more than5055 15.13 megawatts of this capacity may be provided by a facility that 15.14 uses poultry litter as its primary fuel source and any such 15.15 facility: 15.16 (1) need not use biomass that complies with the definition 15.17 in subdivision 1; 15.18 (2) must enter into a contract with the public utility for 15.19 such capacity, that has an average purchase price per megawatt 15.20 hour over the life of the contract that is equal to or less than 15.21 the average purchase price per megawatt hour over the life of 15.22 the contract in contracts approved by the public utilities 15.23 commission before April 1, 2000, to satisfy the mandate of this 15.24 section, and file that contract with the public utilities 15.25 commission prior to September 1, 2000; and 15.26 (3) must schedule such capacity to be operational by 15.27 December 31, 2002. 15.28 (c) Of the total 125 megawatts of biomass electric energy 15.29 installed capacity required under this section, no more than 75 15.30 megawatts may be provided by a single project. 15.31 (d) Of the 75 megawatts of biomass electric energy 15.32 installed capacity required under paragraph (a), clause (2), no 15.33 more than2533 megawatts of this capacity may be provided by a 15.34 St. Paul district heating and cooling system cogeneration 15.35 facility utilizing waste wood as a primary fuel source. The St. 15.36 Paul district heating and cooling system cogeneration facility 16.1 need not use biomass that complies with the definition in 16.2 subdivision 1. 16.3 (e) The public utility must accept and consider on an equal 16.4 basis with other biomass proposals: 16.5 (1) a proposal to satisfy the requirements of this section 16.6 that includes a project that exceeds the megawatt capacity 16.7 requirements of either paragraph (a), clause (1) or (2), and 16.8 that proposes to sell the excess capacity to the public utility 16.9 or to other purchasers; and 16.10 (2) a proposal for a new facility to satisfy more than ten 16.11 but not more than 20 megawatts of the electrical generation 16.12 requirements by a small business-sponsored independent power 16.13 producer facility to be located within the northern quarter of 16.14 the state, which means the area located north of Constitutional 16.15 Route No. 8 as described in section 161.114, subdivision 2, and 16.16 that utilizes biomass residue wood, sawdust, bark, chipped wood, 16.17 or brush to generate electricity. A facility described in this 16.18 clause is not required to utilize biomass complying with the 16.19 definition in subdivision 1, but must have the capacity required 16.20 by this clause operational by December 31, 2002. 16.21 (f) If a public utility files a contract with the 16.22 commission for electric energy installed capacity that uses 16.23 poultry litter as its primary fuel source, the commission must 16.24 do a preliminary review of the contract to determine if it meets 16.25 the purchase price criteria provided in paragraph (b), clause 16.26 (2), of this subdivision. The commission shall perform its 16.27 review and advise the parties of its determination within 30 16.28 days of filing of such a contract by a public utility. A public 16.29 utility may submit by September 1, 2000, a revised contract to 16.30 address the commission's preliminary determination. 16.31 (g) The commission shall finally approve, modify, or 16.32 disapprove no later than July 1, 2001, all contracts submitted 16.33 by a public utility as of September 1, 2000, to meet the mandate 16.34 set forth in this subdivision. 16.35 (h) If a public utility subject to this section exercises 16.36 an option to increase the generating capacity of a project in a 17.1 contract approved by the commission prior to April 25, 2000, to 17.2 satisfy the mandate in this subdivision, the public utility must 17.3 notify the commission by September 1, 2000, that it has 17.4 exercised the option and include in the notice the amount of 17.5 additional megawatts to be generated under the option 17.6 exercised. Any review by the commission of the project after 17.7 exercise of such an option shall be based on the same criteria 17.8 used to review the existing contract. 17.9 (i) A facility specified in this subdivision qualifies for 17.10 exemption from property taxation under section 272.02, 17.11 subdivision 43. 17.12 Sec. 7. Minnesota Statutes 2002, section 216B.2424, is 17.13 amended by adding a subdivision to read: 17.14 Subd. 9. [STATUS REVIEW.] (a) By June 1, 2003, the public 17.15 utilities commission must initiate a review of all projects 17.16 selected to satisfy a portion of the biomass mandate pursuant to 17.17 this section to make a preliminary determination of each 17.18 project's status and viability. On or after January 1, 2004, 17.19 the commission shall deny any new requests for contract 17.20 extensions, for any project that: 17.21 (1) is not yet producing electricity; 17.22 (2) has not yet begun a continuous program of physical 17.23 on-site construction; or 17.24 (3) has not demonstrated continuous verified progress in 17.25 development of the project, including implementation of a 17.26 development budget and verifiable access to continued funding. 17.27 (b) If a biomass project fails after the date of enactment 17.28 of this subdivision: 17.29 (1) the amount of the biomass mandate shall be reduced by 17.30 the capacity of that project less the amount contracted for 17.31 under clause (3); 17.32 (2) the commission shall estimate the annual amount the 17.33 utility subject to this section would have paid in above-market 17.34 cost under the power purchase agreement for that project, and 17.35 direct the utility to add that annual amount to the amount the 17.36 utility is to spend annually from the renewable development fund 18.1 under section 116C.779; and 18.2 (3) the utility shall seek competitive bids for up to ten 18.3 megawatts of biomass capacity, giving preference to the 18.4 remaining biomass projects under contract to satisfy the biomass 18.5 mandate. 18.6 Sec. 8. Minnesota Statutes 2002, section 216B.2425, is 18.7 amended by adding a subdivision to read: 18.8 Subd. 7. [TRANSMISSION NEEDED TO SUPPORT RENEWABLE 18.9 RESOURCES.] Each entity subject to this section shall determine 18.10 necessary transmission upgrades to support development of 18.11 renewable energy resources required to meet objectives under 18.12 section 216B.1691 and shall include those upgrades in its report 18.13 under subdivision 2. 18.14 Sec. 9. Minnesota Statutes 2002, section 216C.41, 18.15 subdivision 1, is amended to read: 18.16 Subdivision 1. [DEFINITIONS.] (a) The definitions in this 18.17 subdivision apply to this section. 18.18 (b) "Qualified hydroelectric facility" means a 18.19 hydroelectric generating facility in this state that: 18.20 (1) is located at the site of a dam, if the dam was in 18.21 existence as of March 31, 1994; and 18.22 (2) begins generating electricity after July 1, 1994, or 18.23 generates electricity after substantial refurbishing of a 18.24 facility that begins after July 1, 2001. 18.25 (c) "Qualified wind energy conversion facility" means a 18.26 wind energy conversion system in this state that: 18.27 (1) produces two megawatts or less of electricity as 18.28 measured by nameplate rating and begins generating electricity 18.29 after December 31, 1996, and before July 1, 1999; 18.30 (2) begins generating electricity after June 30, 1999, 18.31 produces two megawatts or less of electricity as measured by 18.32 nameplate rating, and is: 18.33 (i)located within one county andowned bya natural person18.34whoan entity that is not prohibited from owning agricultural 18.35 land under section 500.24 that owns the land where the facility 18.36 is sited; 19.1 (ii) owned by a Minnesota small business as defined in 19.2 section 645.445; 19.3 (iii) owned by a Minnesota nonprofit organization;or19.4 (iv) owned by a tribal council if the facility is located 19.5 within the boundaries of the reservation;or19.6 (v) owned by a Minnesota municipal utility or a Minnesota 19.7 cooperative electric association; or 19.8 (vi) owned by a Minnesota political subdivision or local 19.9 government, including, but not limited to, a county, statutory 19.10 or home rule charter city, town, school district, or any other 19.11 local or regional governmental organization such as a board, 19.12 commission, or association; or 19.13 (3) begins generating electricity after June 30, 1999, 19.14 produces seven megawatts or less of electricity as measured by 19.15 nameplate rating, and: 19.16 (i) is owned by a cooperative organized under chapter 19.17 308A other than a Minnesota cooperative electric association; 19.18 and 19.19 (ii) all shares and membership in the cooperative are held 19.20 bynatural persons or estates, at least 51 percent of whom19.21reside in a county or contiguous to a county where the wind19.22energy production facilities of the cooperative are locatedan 19.23 entity that is not prohibited from owning agricultural land 19.24 under section 500.24. 19.25 (d) "Qualified on-farm biogas recovery facility" means an 19.26 anaerobic digester system that: 19.27 (1) is located at the site of an agricultural operation; 19.28 (2) is owned bya natural person whoan entity that is not 19.29 prohibited from owning agricultural land under section 500.24 19.30 that owns or rents the land where the facility is located; and 19.31 (3) begins generating electricity after July 1, 2001. 19.32 (e) "Anaerobic digester system" means a system of 19.33 components that processes animal waste based on the absence of 19.34 oxygen and produces gas used to generate electricity. 19.35 Sec. 10. Minnesota Statutes 2002, section 216C.41, 19.36 subdivision 2, is amended to read: 20.1 Subd. 2. [INCENTIVE PAYMENT; APPROPRIATION.] (a) Incentive 20.2 payments must be made according to this section to (1) a 20.3 qualified on-farm biogas recovery facility, (2) the owner or 20.4 operator of a qualified hydropower facility or qualified wind 20.5 energy conversion facility for electric energy generated and 20.6 sold by the facility, (3) a publicly owned hydropower facility 20.7 for electric energy that is generated by the facility and used 20.8 by the owner of the facility outside the facility, or (4) the 20.9 owner of a publicly owned dam that is in need of substantial 20.10 repair, for electric energy that is generated by a hydropower 20.11 facility at the dam and the annual incentive payments will be 20.12 used to fund the structural repairs and replacement of 20.13 structural components of the dam, or to retire debt incurred to 20.14 fund those repairs. 20.15 (b) Payment may only be made upon receipt by the 20.16 commissioner of finance of an incentive payment application that 20.17 establishes that the applicant is eligible to receive an 20.18 incentive payment and that satisfies other requirements the 20.19 commissioner deems necessary. The application must be in a form 20.20 and submitted at a time the commissioner establishes. 20.21 (c) There is annually appropriated from the general fund to 20.22 the commissioner of commerce sums sufficient to make the 20.23 payments required under this section, other than the amounts 20.24 funded by the renewable development account as specified in 20.25 subdivision 5a. 20.26 Sec. 11. Minnesota Statutes 2002, section 216C.41, 20.27 subdivision 3, is amended to read: 20.28 Subd. 3. [ELIGIBILITY WINDOW.] Payments may be made under 20.29 this section only for electricity generated: 20.30 (1) from a qualified hydroelectric facility that is 20.31 operational and generating electricity before December 31, 2005; 20.32 (2) from a qualified wind energy conversion facility that 20.33 is operational and generating electricity before January 1,200520.34 2007; or 20.35 (3) from a qualified on-farm biogas recovery facility from 20.36 July 1, 2001, through December 31,20152017. 21.1 Sec. 12. Minnesota Statutes 2002, section 216C.41, 21.2 subdivision 4, is amended to read: 21.3 Subd. 4. [PAYMENT PERIOD.] (a) A facility may receive 21.4 payments under this section for a ten-year period. No payment 21.5 under this section may be made for electricity generated: 21.6 (1) by a qualified hydroelectric facility after December 21.7 31,20152017; 21.8 (2) by a qualified wind energy conversion facility after 21.9 December 31,20152017; or 21.10 (3) by a qualified on-farm biogas recovery facility after 21.11 December 31, 2015. 21.12 (b) The payment period begins and runs consecutively from 21.13the first year in which electricity generated from the facility21.14is eligible for incentive paymentthe date the facility begins 21.15 generating electricity or, in the case of refurbishment of a 21.16 hydropower facility, after substantial repairs to the hydropower 21.17 facility dam funded by the incentive payments are initiated. 21.18 Sec. 13. Minnesota Statutes 2002, section 216C.41, 21.19 subdivision 5, is amended to read: 21.20 Subd. 5. [AMOUNT OF PAYMENT; WIND FACILITIES LIMIT.] (a) 21.21 An incentive payment is based on the number of kilowatt hours of 21.22 electricity generated. The amount of the payment is: 21.23 (1) for a facility described under subdivision 2, paragraph 21.24 (a), clause (4), 1.0 cent per kilowatt hour; and 21.25 (2) for all other facilities, 1.5 cents per kilowatt hour. 21.26 For electricity generated by qualified wind energy conversion 21.27 facilities, the incentive payment under this section is limited 21.28 to no more than 100 megawatts of nameplate capacity.During any21.29period in which qualifying claims for incentive payments exceed21.30100 megawatts of nameplate capacity, the payments must be made21.31to producers in the order in which the production capacity was21.32brought into production.21.33 (b) For wind energy conversion systems installed and 21.34 contracted for after January 1, 2002, the total size of a wind 21.35 energy conversion system under this section must be determined 21.36 according to this paragraph. Unless the systems are 22.1 interconnected with different distribution systems, the 22.2 nameplate capacity of one wind energy conversion system must be 22.3 combined with the nameplate capacity of any other wind energy 22.4 conversion system that is: 22.5 (1) located within five miles of the wind energy conversion 22.6 system; 22.7 (2) constructed within the same calendar year as the wind 22.8 energy conversion system; and 22.9 (3) under common ownership. 22.10 In the case of a dispute, the commissioner of commerce shall 22.11 determine the total size of the system, and shall draw all 22.12 reasonable inferences in favor of combining the systems. 22.13 (c) In making a determination under paragraph (b), the 22.14 commissioner of commerce may determine that two wind energy 22.15 conversion systems are under common ownership when the 22.16 underlying ownership structure contains similar persons or 22.17 entities, even if the ownership shares differ between the two 22.18 systems. Wind energy conversion systems are not under common 22.19 ownership solely because the same person or entity provided 22.20 equity financing for the systems. 22.21 Sec. 14. Minnesota Statutes 2002, section 216C.41, is 22.22 amended by adding a subdivision to read: 22.23 Subd. 5a. [RENEWABLE DEVELOPMENT ACCOUNT.] The department 22.24 of commerce shall authorize payment of the renewable energy 22.25 production incentive to wind energy conversion systems for 100 22.26 megawatts of nameplate capacity in addition to the capacity 22.27 authorized under subdivision 5 and to on-farm biogas recovery 22.28 facilities. Payment of the incentive shall be made from the 22.29 renewable energy development account as provided under section 22.30 116C.779, subdivision 2. 22.31 Sec. 15. Minnesota Statutes 2002, section 216C.41, is 22.32 amended by adding a subdivision to read: 22.33 Subd. 7. [ELIGIBILITY PROCESS.] (a) A qualifying project 22.34 is eligible for the incentive on the date the commissioner 22.35 receives: 22.36 (1) an application for payment of the incentive; 23.1 (2) one of the following: 23.2 (i) a copy of a signed power purchase agreement; 23.3 (ii) a copy of a binding agreement other than a power 23.4 purchase agreement to sell electricity generated by the project 23.5 to a third person; or 23.6 (iii) if the project developer or owner will sell 23.7 electricity to its own members or customers, a copy of the 23.8 purchase order for equipment to construct the project with a 23.9 delivery date and a copy of a signed receipt for a nonrefundable 23.10 deposit; and 23.11 (3) any other information the commissioner deems necessary 23.12 to determine whether the proposed project qualifies for the 23.13 incentive under this section. 23.14 (b) The commissioner shall determine whether a project 23.15 qualifies for the incentive and respond in writing to the 23.16 applicant approving or denying the application within 15 working 23.17 days of receipt of the information required in paragraph (a). A 23.18 project that is not operational within 18 months of receipt of a 23.19 letter of approval is no longer approved for the incentive. The 23.20 commissioner shall notify an applicant of potential loss of 23.21 approval not less than 60 days prior to the end of the 18-month 23.22 period. Eligibility for a project that loses approval may be 23.23 reestablished as of the date the commissioner receives a new 23.24 completed application. 23.25 Sec. 16. [REDUCTION OF BIOMASS MANDATE.] 23.26 Notwithstanding Minnesota Statutes, section 216B.2424, the 23.27 biomass electric energy mandate shall be reduced from 125 23.28 megawatts to 110 megawatts. The public utilities commission 23.29 shall approve a request pending before the public utilities 23.30 commission as of May 15, 2003, for an amendment and assignment 23.31 of a contract for power from a facility that uses 23.32 short-rotation, woody crops as its primary fuel previously 23.33 approved to satisfy a portion of the biomass mandate if the 23.34 developer of the project agrees to reduce the size of its 23.35 project from 50 megawatts to 35 megawatts, while maintaining a 23.36 price for energy at or below the current contract price. 24.1 Sec. 17. [RENEWABLE DEVELOPMENT FUND ADMINISTRATION.] 24.2 The public utilities commission may review the 24.3 appropriateness of the transfer of the administration of the 24.4 renewable development account under Minnesota Statutes, section 24.5 116C.779, to an independent administrator initially selected by 24.6 the commissioner of commerce and answerable to a board of 24.7 directors that includes representatives from the public utility 24.8 currently administering the fund, environmental organizations, 24.9 legislators, representatives of residential and business 24.10 consumers, the Mdewakanton Dakota community, and other affected 24.11 communities. Upon petition, the commission may approve the 24.12 transfer if, upon completion of the review, the transfer is 24.13 consistent with the public interest. 24.14 Sec. 18. [HYDROGEN ECONOMY RESEARCH.] 24.15 (a) Notwithstanding Minnesota Statutes, section 116C.779, 24.16 subdivision 1, paragraph (b), $10,000,000 from the renewable 24.17 development account established in Minnesota Statutes, section 24.18 116C.779, from unobligated funds in the account as of June 30, 24.19 2003, shall be distributed to the University of Minnesota 24.20 Initiative for Renewable Energy and the Environment to support 24.21 basic and applied research and demonstration activities at the 24.22 university. These funds shall be transferred to the University 24.23 of Minnesota on or before July 1, 2003. The university shall 24.24 ensure that at least $3,000,000 of these funds are available for 24.25 basic and applied research, for construction and deployment of 24.26 research technologies, or for other purposes in support of this 24.27 research, at one rural campus or experiment station. 24.28 (b) Research funded under this section must focus on: 24.29 (1) development of environmentally sound production, 24.30 distribution, and use of energy, chemicals, and materials from 24.31 renewable resources; 24.32 (2) processing and utilization of agricultural and forestry 24.33 plant products and other bio-based, renewable sources as a 24.34 substitute for fossil-fuel-based energy, chemicals, and 24.35 materials using a variety of means including biocatalysis, 24.36 biorefining, and fermentation; 25.1 (3) conversion of state wind resources to hydrogen for 25.2 energy storage and transportation to areas of energy demand; 25.3 (4) improvements in scalable hydrogen fuel cell 25.4 technologies; and 25.5 (5) production of hydrogen from bio-based, renewable 25.6 sources; and sequestration of carbon. 25.7 Sec. 19. [DEPARTMENT OF TRADE AND ECONOMIC DEVELOPMENT; 25.8 PROGRAM DEVELOPMENT.] 25.9 Subdivision 1. [DEVELOPMENT OF BUSINESSES ENGAGED IN 25.10 HYDROGEN PRODUCTION.] The department of trade and economic 25.11 development must develop a targeted program to promote and 25.12 encourage the development and attraction of businesses engaged 25.13 in the biocatalysis of agricultural and forestry plant products 25.14 for the production of hydrogen, the manufacture of hydrogen fuel 25.15 cells, and hydrogen electrolysis from renewable energy sources. 25.16 The program may make use of existing departmental programs, 25.17 either alone or in combination. The department shall report to 25.18 the legislature by January 15, 2004, on legislative changes or 25.19 additional funding needed, if any, to accomplish the purposes of 25.20 this section. 25.21 Subd. 2. [ENERGY INNOVATION ZONES.] (a) The commissioner 25.22 of trade and economic development, in consultation with the 25.23 commissioners of commerce and revenue, shall develop a plan to 25.24 designate not more than three energy innovation zones to spur 25.25 the development of fuel cells, fuel cell components, hydrogen 25.26 infrastructure, and other energy efficiency and renewable energy 25.27 technologies in the state. In developing the criteria for the 25.28 designations, the commissioner shall consider: 25.29 (1) the availability of business, academic, and government 25.30 partners; 25.31 (2) the likelihood of establishing a distributed, renewable 25.32 energy microgrid to power the zone, providing below-market 25.33 electricity and heat to businesses from within the zone; 25.34 (3) the prospect of tenants for the zone that will 25.35 represent net new jobs to the state; and 25.36 (4) the likelihood of the production, storage, 26.1 distribution, and use of hydrogen, including its use in fuel 26.2 cells, for electricity and heat. 26.3 (b) Energy under paragraph (a), clause (2), must come from 26.4 one or more of the following renewable sources: wind, water, 26.5 sun, biomass, not including municipal solid waste, or hydrogen 26.6 reformed from natural gas up to 2010. 26.7 (c) The plan must allow for interested parties to form 26.8 energy innovation cooperatives. In addition, the commissioner 26.9 must consider the feasibility of the sale of energy innovation 26.10 bonds for the construction of qualifying facilities. 26.11 (d) In drafting the plan, the commissioner must consider 26.12 incentives for investment in the zone, including: 26.13 (1) subsidization of construction of qualifying facilities; 26.14 (2) long-term contracts for market-rate heat and power; 26.15 (3) streamlined interconnection to the existing power grid; 26.16 (4) exemptions from property tax; 26.17 (5) expedited permitting; 26.18 (6) methods for providing technical assistance; and 26.19 (7) other methods of encouraging the development and use of 26.20 fuel cell and hydrogen generation technologies. 26.21 (e) The commissioner shall report to the legislature by 26.22 January 15, 2004, on legislative changes and necessary funding 26.23 to accomplish the purposes of this subdivision. 26.24 Sec. 20. [DEMONSTRATION PROJECT.] 26.25 (a) The department of commerce, in cooperation with the 26.26 department of trade and economic development, must develop and 26.27 issue a request for proposal for the construction of a 26.28 hydrogen-to-electricity demonstration project with the following 26.29 components: 26.30 (1) commercial-scale windmill-powered electrolysis of water 26.31 to hydrogen; 26.32 (2) on-site storage of hydrogen and fuel cells for 26.33 hydrogen-to-electricity conversion to maintain the supply of 26.34 electricity in the absence of wind; 26.35 (3) a hydrogen pipeline of less than ten miles to a public 26.36 facility demonstration site; and 27.1 (4) a public facility with on-site hydrogen fuel cells 27.2 providing hydrogen to electricity and, if practicable, 27.3 heating/cooling function. 27.4 (b) For purposes of this section, a "public facility" is a 27.5 municipal building, public school, state college or university, 27.6 or other public building. 27.7 Sec. 21. [INDEPENDENT STUDY ON INTERMITTENT RESOURCES.] 27.8 The commission shall order the electric utility subject to 27.9 Minnesota Statutes, section 216B.1691, subdivision 7, to 27.10 contract with a firm selected by the commissioner of commerce 27.11 for an independent engineering study of the impacts of 27.12 increasing wind capacity on its system above the 825 megawatts 27.13 of nameplate wind energy capacity to which the utility is 27.14 already committed, to evaluate options available to manage the 27.15 intermittent nature of this renewable resource. The study shall 27.16 be completed by June 1, 2004, and incorporated into the 27.17 utility's next resource plan filing. The costs of the study, 27.18 options pursued by the utility to manage the intermittent nature 27.19 of wind energy, and the costs of complying with Minnesota 27.20 Statutes, section 216B.1691, subdivision 7, shall be recoverable 27.21 under Minnesota Statutes, section 216B.1645. 27.22 Sec. 22. [EFFECTIVE DATE.] 27.23 This article is effective the day following final enactment. 27.24 ARTICLE 3 27.25 OTHER PROVISIONS 27.26 Section 1. Minnesota Statutes 2002, section 216B.095, is 27.27 amended to read: 27.28 216B.095 [DISCONNECTION DURING COLD WEATHER.] 27.29 The commission shall amend its rules governing 27.30 disconnection of residential utility customers who are unable to 27.31 pay for utility service during cold weather to include the 27.32 following: 27.33 (1) coverage of customers whose household income is less 27.34 than 50 percent of the state median income; 27.35 (2) a requirement that a customer who pays the utility at 27.36 least ten percent of the customer's income or the full amount of 28.1 the utility bill, whichever is less, in a cold weather month 28.2 cannot be disconnected during that month. The customer's income 28.3 means the actual monthly income of the customer or the average 28.4 monthly income of the customer computed on an annual calendar 28.5 year, whichever is less, and does not include any amount 28.6 received for energy assistance; 28.7 (3) that the ten percent figure in clause (2) must be 28.8 prorated between energy providers proportionate to each 28.9 provider's share of the customer's total energy costs where the 28.10 customer receives service from more than one provider; 28.11 (4) verification of income by the local energy assistance 28.12 provider or the utility, unless the customer is automatically 28.13 eligible for protection against disconnection as a recipient of 28.14 any form of public assistance, including energy assistance, that 28.15 uses income eligibility in an amount at or below the income 28.16 eligibility in clause (1); 28.17 (5) a requirement that the customer receive referrals to 28.18 energy assistance, weatherization, conservation, or other 28.19 programs likely to reduce the customer's energy bills; and 28.20 (6) a requirement that customers who have demonstrated an 28.21 inability to pay on forms provided for that purpose by the 28.22 utility, and who make reasonably timely payments to the utility 28.23 under a payment plan that considers the financial resources of 28.24 the household, cannot be disconnected from utility service from 28.25 October 15 through April 15. A customer who is receiving energy 28.26 assistance is deemed to have demonstrated an inability to pay. 28.27 For the purposes of this section, "disconnection" includes 28.28 a service or load limiter or any device that limits or 28.29 interrupts electric service in any way. 28.30 Sec. 2. Minnesota Statutes 2002, section 216B.097, is 28.31 amended by adding a subdivision to read: 28.32 Subd. 4. [APPLICATION TO SERVICE LIMITERS.] For the 28.33 purposes of this section, "disconnection" includes a service or 28.34 load limiter or any device that limits or interrupts electric 28.35 service in any way. 28.36 Sec. 3. [216B.0975] [DISCONNECTION DURING EXTREME HEAT 29.1 CONDITIONS; RECONNECTION.] 29.2 A utility may not effect an involuntary disconnection of 29.3 residential services in affected counties when an excessive heat 29.4 watch, heat advisory, or excessive heat warning issued by the 29.5 National Weather Service is in effect. For purposes of this 29.6 section, "utility" means a public utility providing electric 29.7 service, municipal utility, or cooperative electric association. 29.8 Sec. 4. Minnesota Statutes 2002, section 216B.241, 29.9 subdivision 1b, is amended to read: 29.10 Subd. 1b. [CONSERVATION IMPROVEMENT BY COOPERATIVE 29.11 ASSOCIATION OR MUNICIPALITY.] (a) This subdivision applies to: 29.12 (1) a cooperative electric association that provides retail 29.13 service to its members; 29.14 (2) a municipality that provides electric service to retail 29.15 customers; and 29.16 (3) a municipality with gross operating revenues in excess 29.17 of $5,000,000 from sales of natural gas to retail customers. 29.18 (b) Each cooperative electric association and municipality 29.19 subject to this subdivision shall spend and invest for energy 29.20 conservation improvements under this subdivision the following 29.21 amounts: 29.22 (1) for a municipality, 0.5 percent of its gross operating 29.23 revenues from the sale of gas and 1.5 percent of its gross 29.24 operating revenues from the sale of electricity, excluding gross 29.25 operating revenues from electric and gas service provided in the 29.26 state to large electric customer facilities; and 29.27 (2) for a cooperative electric association, 1.5 percent of 29.28 its gross operating revenues from service provided in the state, 29.29 excluding gross operating revenues from service provided in the 29.30 state to large electric customer facilities indirectly through a 29.31 distribution cooperative electric association. 29.32 (c) Each municipality and cooperative electric association 29.33 subject to this subdivision shall identify and implement energy 29.34 conservation improvement spending and investments that are 29.35 appropriate for the municipality or association, except that a 29.36 municipality or association may not spend or invest for energy 30.1 conservation improvements that directly benefit a large electric 30.2 customer facility for which the commissioner has issued an 30.3 exemption under subdivision 1a, paragraph (b). 30.4 (d) Each municipality and cooperative electric association 30.5 subject to this subdivision may spend and invest annually up to 30.6 ten percent of the total amount required to be spent and 30.7 invested on energy conservation improvements under this 30.8 subdivision on research and development projects that meet the 30.9 definition of energy conservation improvement in subdivision 1 30.10 and that are funded directly by the municipality or cooperative 30.11 electric association. 30.12 (e) Load-management activities that do not reduce energy 30.13 use but that increase the efficiency of the electric system may 30.14 be used to meet the following percentage of the conservation 30.15 investment and spending requirements of this subdivision: 30.16 (1) 2002 - 90 percent; 30.17 (2) 2003 - 80 percent; 30.18 (3) 2004 - 65 percent; and 30.19 (4) 2005 and thereafter - 50 percent. 30.20 (f) A generation and transmission cooperative electric 30.21 association that provides energy services to cooperative 30.22 electric associations that provide electric service at retail to 30.23 consumers may invest in energy conservation improvements on 30.24 behalf of the associations it serves and may fulfill the 30.25 conservation, spending, reporting, and energy savings goals on 30.26 an aggregate basis. A municipal power agency or other 30.27 not-for-profit entity that provides energy service to municipal 30.28 utilities that provide electric service at retail may invest in 30.29 energy conservation improvements on behalf of the municipal 30.30 utilities it serves and may fulfill the conservation, spending, 30.31 reporting, and energy savings goals on an aggregate basis, under 30.32 an agreement between the municipal power agency or 30.33 not-for-profit entity and each municipal utility for funding the 30.34 investments. 30.35 (g) By June 1, 2002, and every two years thereafter, each 30.36 municipality or cooperative shall file an overview of its 31.1 conservation improvement plan with the commissioner. With this 31.2 overview, the municipality or cooperative shall also provide an 31.3 evaluation to the commissioner detailing its energy conservation 31.4 improvement spending and investments for the previous period. 31.5 The evaluation must briefly describe each conservation program 31.6 and must specify the energy savings or increased efficiency in 31.7 the use of energy within the service territory of the utility or 31.8 association that is the result of the spending and investments. 31.9 The evaluation must analyze the cost effectiveness of the 31.10 utility's or association's conservation programs, using a list 31.11 of baseline energy and capacity savings assumptions developed in 31.12 consultation with the department. 31.13 The commissioner shall review each evaluation and make 31.14 recommendations, where appropriate, to the municipality or 31.15 association to increase the effectiveness of conservation 31.16 improvement activities. Up to three percent of a utility's 31.17 conservation spending obligation under this section may be used 31.18 for program pre-evaluation, testing, and monitoring and program 31.19 evaluation. The overview filed by a municipality with less than 31.20 $2,500,000 in annual gross revenues from the retail sale of 31.21 electric service may consist of a letter from the governing 31.22 board of the municipal utility to the department providing the 31.23 amount of annual conservation spending required of that 31.24 municipality and certifying that the required amount has been 31.25 spent on conservation programs pursuant to this subdivision. 31.26 (h) The commissioner shall also review each evaluation for 31.27 whether a portion of the money spent on residential conservation 31.28 improvement programs is devoted to programs that directly 31.29 address the needs of renters and low-income persons unless an 31.30 insufficient number of appropriate programs are available. For 31.31 the purposes of this subdivision and subdivision 2, "low-income" 31.32 means an income at or below 50 percent of the state median 31.33 income. 31.34 (i) As part of its spending for conservation improvement, a 31.35 municipality or association may contribute to the energy and 31.36 conservation account. A municipality or association may propose 32.1 to the commissioner to designate that all or a portion of funds 32.2 contributed to the account be used for research and development 32.3 projects that can best be implemented on a statewide basis. Any 32.4 amount contributed must be remitted to the commissioner by 32.5 February 1 of each year. 32.6 (j) A municipality may spend up to 50 percent of its 32.7 required spending under this section to refurbish an existing 32.8 district heating or cooling system. This paragraph expires July 32.9 1, 2007. 32.10 Sec. 5. [216B.361] [TOWNSHIP AGREEMENT WITH NATURAL GAS 32.11 UTILITY.] 32.12 A township may enter into an agreement with a public 32.13 utility providing natural gas services to provide services 32.14 within a designated portion or all of the township. If a city 32.15 annexes township land for which a utility has an agreement with 32.16 a township to serve, the utility shall continue to have a 32.17 nonexclusive right to offer and provide service in the area 32.18 identified by the agreement with the township for the term of 32.19 that agreement, subject to the authority of the annexing city to 32.20 manage public rights-of-way within the city as provided in 32.21 sections 216B.36, 237.162, and 237.163. 32.22 Nothing in this section precludes a city from acquiring the 32.23 property of a public utility under sections 216B.45 to 216B.47 32.24 for the purpose of allowing the city to own and operate a 32.25 natural gas utility, or to extend natural gas and other utility 32.26 services into newly annexed areas. 32.27 Sec. 6. Minnesota Statutes 2002, section 216C.051, 32.28 subdivision 3, is amended to read: 32.29 Subd. 3. [FUTURE ENERGY SOLUTIONS; TECHNICAL AND ECONOMIC 32.30 ANALYSIS.] (a) In light of the electric energy guidelines 32.31 established in subdivision 7 andin light of existing32.32conservation improvement programs and plans, utility resource32.33plans, and other existing energy plans and analyses, the32.34legislative task force on energy shall undertake an analysis of32.35the technical and economic feasibility of an electric energy32.36future for the state that relies on environmentally and33.1economically sustainable and advantageous electric energy supply33.2 utility resource plans and competitive bidding dockets before 33.3 the commission, the task force shall gather information and make 33.4 recommendations to the legislature regarding potential electric 33.5 energy resources. The task forceshallmay contract with one or 33.6 more energy policy experts and energy economists to assist it in 33.7 its analysis. The task force may not contract for service nor 33.8 employ any person who was involved in any capacity in any 33.9 portion of any proceeding before the public utilities 33.10 commission, the administrative law judge, the state court of 33.11 appeals, or the United States Nuclear Regulatory Commission 33.12 related to the dry cask storage proposal on Prairie Island. The 33.13 task force must gather information on at least the following 33.14 electric energy resources, but may expand its inquiry as 33.15 warranted by the information collected: 33.16 (1) wind energy; 33.17 (2) hydrogen as a fuel carrier produced from renewable and 33.18 fossil fuel resources; 33.19 (3) biomass; 33.20 (4) decomposition gases produced by solid waste management 33.21 facilities; 33.22 (5) solid waste as a direct fuel or refuse-derived fuel; 33.23 and 33.24 (6) clean coal technology. 33.25 (b)The analysis must addressIn evaluating these electric 33.26 energy resources, the task force must consider at least the 33.27 following: 33.28 (1) to the best of forecasting abilities, how much electric 33.29 generation capacity and demand for electric energy is necessary 33.30 to maintain a strong economy and a high quality of life in the 33.31 state over the next 15 to 20 years; how is this demand level 33.32 affected by achievement of the maximum reasonably feasible and 33.33 cost-effective demand side management and generation and 33.34 distribution efficiencies; 33.35 (2) what alternative forms of energy can provide a stable 33.36 supply of energy and are producible and sustainable in the state 34.1 and at what cost; 34.2 (3) what are the costs to the state and ratepayers to 34.3 ensure that new electric energy generation utilizes less 34.4 environmentally damaging sources; how do those costs change as 34.5 the time frame for development and implementation of new 34.6 generation sources is compressed; 34.7 (4) what are the implications for delivery systems for 34.8 energy produced in areas of the state that do not now have 34.9 high-volume transmission capability; are new transmission 34.10 technologies being developed that can address some of the 34.11 concerns with transmission; can a more dispersed electric 34.12 generation system lessen the need for long-distance 34.13 transmission; 34.14 (5) what are the actual costs and benefits of purchasing 34.15 electricity and fuel to generate electricity from outside the 34.16 state; what are the present costs to the state's economy of 34.17 exporting a large percentage of the state's energy dollars and 34.18 what is the future economic impact of continuing to do so; 34.19 (6) are there benefits to be had from a large immediate 34.20 investment in quickly implementing alternative electric energy 34.21 sources in terms of developing an exportable technology and/or 34.22 commodity; is it feasible to turn around the flow of dollars for 34.23 energy so that the state imports dollars and exports energy and 34.24 energy technology; what is a reasonable time frame for the shift 34.25 if it is possible; 34.26 (7) are there taxation or regulatory barriers to developing 34.27 more sustainable and less problematic electric energy 34.28 generation; what are they specifically and how can they be 34.29 specifically addressed; 34.30 (8) can an approach be developed that moves quickly to 34.31 development and implementation of alternative energy sources 34.32 that can be forgiving of interim failures but that is also 34.33 sufficiently deliberate to ensure ultimate success on a large 34.34 scale; and 34.35 (9) in what specific ways can the state assist regional 34.36 energy suppliers to accelerate phasing out energy production 35.1 processes that produce wastes or emissions that must necessarily 35.2 be carefully controlled and monitored to minimize adverse 35.3 effects on the environment and human health and to assist in 35.4 developing and implementing base load energy production that 35.5 both prevents or minimizes by its nature adverse environmental 35.6 and human health effects and utilizes resources that are 35.7 available or producible in the state;. 35.8(10) whether there is a need to establish additional35.9dislocated worker assistance for workers at the Prairie Island35.10nuclear power plant; if so, how that assistance should be35.11structured;35.12(11) can the state monitor, evaluate, and affect federal35.13actions relating to permanent storage of high-level radioactive35.14waste; what actions by the state over what period of time would35.15expedite federal action to take responsibility for the waste;35.16(12) should the state establish a legislative oversight35.17commission on energy issues; should the responsibilities of an35.18oversight commission be coordinated with the activities of the35.19public utilities commission and the department of public service35.20and if so, how; and35.21(13) is it feasible to convert existing nuclear power and35.22coal-fired electric generating plants to utilization of energy35.23sources that result in significantly less environmental damage;35.24if so, what are the short-term and long-term costs and benefits35.25of doing so; how do shorter or longer time periods for35.26conversion affect the cost/benefit analysis.35.27 (c) The task force must study issues related to the 35.28 transportation of spent nuclear fuel from this state to interim 35.29 or permanent repositories outside this state. 35.30 (d) The public utility that owns the Prairie Island and 35.31 Monticello nuclear generation facilities shall update the 35.32 reports required under section 116C.772, subdivisions 3 to 5, 35.33 and shall submit those updates periodically to the public 35.34 utilities commission with the utility's resource plan filing 35.35 under section 216B.2422 and to the task force. 35.36 Sec. 7. Minnesota Statutes 2002, section 216C.051, is 36.1 amended by adding a subdivision to read: 36.2 Subd. 4a. [REPORT AND RECOMMENDATIONS.] By January 15, 36.3 2005, and every two years thereafter, the task force shall 36.4 submit a report to the chairs of the committees in the house of 36.5 representatives and the senate that have responsibility for 36.6 energy and for environmental and natural resources issues that 36.7 contains an overview of information gathered and analyses that 36.8 have been prepared, and specific recommendations, if any, for 36.9 legislative action that will ensure development and 36.10 implementation of electric energy policy that will provide the 36.11 state with adequate, renewable, and economic electric power for 36.12 the long term. 36.13 Sec. 8. Minnesota Statutes 2002, section 216C.051, 36.14 subdivision 6, is amended to read: 36.15 Subd. 6. [ASSESSMENT; APPROPRIATION.] On request by the 36.16 cochairs of the legislative task force and after approval of the 36.17 legislative coordinating commission, the commissioner of 36.18 commerce shall assess from all public utilities, generation and 36.19 transmission cooperative electric associations, and municipal 36.20 power agencies providing electric or natural gas services in 36.21 Minnesota, in addition to assessments made under section 36.22 216B.62, the amount requested for the operation of the task 36.23 force not to exceed$150,000$250,000 in a fiscal year. The 36.24 amount assessed under this section is appropriated to the 36.25 director of the legislative coordinating commission for those 36.26 purposes, and is available until expended. The department shall 36.27 apportion those costs among all energy utilities in proportion 36.28 to their respective gross operating revenues from the sale of 36.29 gas or electric service within the state during the last 36.30 calendar year. For the purposes of administrative efficiency, 36.31 the department shall assess energy utilities and issue bills in 36.32 accordance with the billing and assessment procedures provided 36.33 in section 216B.62, to the extent that these procedures do not 36.34 conflict with this subdivision. 36.35 Sec. 9. Minnesota Statutes 2002, section 216C.051, 36.36 subdivision 9, is amended to read: 37.1 Subd. 9. [EXPIRATION.] This section is repealed June 37.2 30,20052007. 37.3 Sec. 10. Minnesota Statutes 2002, section 216C.052, 37.4 subdivision 2, is amended to read: 37.5 Subd. 2. [ADMINISTRATIVE ISSUES.] (a) The commissioner may 37.6 select the administrator who shall serve for a four-year term. 37.7 The administrator may not have been a party or a participant in 37.8 a commission energy proceeding for at least one year prior to 37.9 selection by the commissioner. The commissioner shall oversee 37.10 and direct the work of the administrator, annually review the 37.11 expenses of the administrator, and annually approve the budget 37.12 of the administrator. The administrator may hire staff and may 37.13 contract for technical expertise in performing duties when 37.14 existing state resources are required for other state 37.15 responsibilities or when special expertise is required. The 37.16 salary of the administrator is governed by section 15A.0815, 37.17 subdivision 2. 37.18 (b) Costs relating to a specific proceeding, analysis, or 37.19 project are not general administrative costs. For purposes of 37.20 this section, "energy utility" means public utilities, 37.21 generation and transmission cooperative electric associations, 37.22 and municipal power agencies providing natural gas or electric 37.23 service in the state. 37.24 (c) The department of commerce shall pay: 37.25 (1) the general administrative costs of the administrator, 37.26 not to exceed$1,500,000$1,000,000 in a fiscal year, and shall 37.27 assess energy utilitiesfor reimbursementfor those 37.28 administrative costs. These costs must be consistent with the 37.29 budget approved by the commissioner under paragraph (a). The 37.30 department shall apportion the costs among all energy utilities 37.31 in proportion to their respective gross operating revenues from 37.32 sales of gas or electric service within the state during the 37.33 last calendar year, and shall then render a bill to each utility 37.34 on a regular basis; and 37.35 (2) costs relating to a specific proceeding analysis or 37.36 project and shall render a billfor reimbursementto the 38.1 specific energy utility or utilities participating in the 38.2 proceeding, analysis, or project directly, either at the 38.3 conclusion of a particular proceeding, analysis, or project, or 38.4 from time to time during the course of the proceeding, analysis, 38.5 or project. 38.6 (d) For purposes of administrative efficiency, the 38.7 department shall assess energy utilities and issue bills in 38.8 accordance with the billing and assessment procedures provided 38.9 in section 216B.62, to the extent that these procedures do not 38.10 conflict with this subdivision. The amount of the bills 38.11 rendered by the department under paragraph (c) must be paid by 38.12 the energy utility into an account in the special revenue fund 38.13 in the state treasury within 30 days from the date of billing 38.14 and is appropriated to the commissioner for the purposes 38.15 provided in this section. The commission shall approve or 38.16 approve as modified a rate schedule providing for the automatic 38.17 adjustment of charges to recover amounts paid by utilities under 38.18 this section. All amounts assessed under this section are in 38.19 addition to amounts appropriated to the commission and the 38.20 department by other law. 38.21 Sec. 11. Minnesota Statutes 2002, section 216C.052, 38.22 subdivision 3, is amended to read: 38.23 Subd. 3. [ASSESSMENT AND APPROPRIATION.] In addition to 38.24 the amount noted in subdivision 2, the commissionerof commerce38.25shall transfermay assess utilities, using the mechanism 38.26 specified in that subdivision, up to an additional $500,000 38.27 annuallyof the amounts provided for in subdivision 2 to the38.28commissioner of administrationthrough June 30, 2006. The 38.29 amounts assessed under this subdivision are appropriated to the 38.30 commissioner, and some or all of the amounts assessed may be 38.31 transferred to the commissioner of administration, for the 38.32 purposesprovidedspecified in section 16B.325 and Laws 2001, 38.33 chapter 212, article 1, section 3, as needed to implementthat38.34sectionthose sections. 38.35 Sec. 12. [REFURBISHMENT OF METROPOLITAN GENERATING 38.36 PLANTS.] 39.1 Notwithstanding Minnesota Statutes, section 216B.1692, 39.2 subdivision 1, clause (2), and subdivision 5, paragraphs (c) and 39.3 (d), all investments in repowering, emissions reduction 39.4 technologies and equipment, and power plant rehabilitation and 39.5 life extension described in the primary metropolitan emission 39.6 reduction proposal filed with the public utilities commission in 39.7 July 2002 by the public utility that owns the Prairie Island 39.8 nuclear generation facility and currently pending before the 39.9 commission are deemed qualifying projects under Minnesota 39.10 Statutes, section 216B.1692, and all costs related to all such 39.11 investments are eligible for rider recovery under Minnesota 39.12 Statutes, section 216B.1692, subdivision 5. Upon receiving 39.13 approval by the commission, the utility shall implement the 39.14 approved proposal or justify to the commission its decision not 39.15 to do so. 39.16 Sec. 13. [CONSERVATION IMPROVEMENT PROGRAM; EVALUATION.] 39.17 Subdivision 1. [CONSERVATION IMPROVEMENT PROGRAM; GENERAL 39.18 EVALUATION.] (a) The commissioner of commerce shall contract 39.19 with the legislative auditor or other independent third party 39.20 for a review of: 39.21 (1) the relevant state statutes, to determine if 39.22 conservation requirements could be eliminated or modified to 39.23 ensure that conservation dollars are directed toward the most 39.24 cost-effective conservation investments; 39.25 (2) the relevant state rules, to determine if current rules 39.26 allow or facilitate optimum conservation practices and 39.27 procedures; and 39.28 (3) the department of commerce's conservation regulatory 39.29 processes, to determine if the regulatory review process 39.30 currently employed results in optimum conservation investments. 39.31 (b) The costs of the review under paragraph (a) may be 39.32 recovered by the department as a general administrative expense 39.33 under Minnesota Statutes, section 216C.052, subdivision 2. 39.34 Sec. 14. [LEGISLATIVE APPROVAL OF CONSUMPTIVE USE OF 39.35 WATER; PROPOSED FACILITY ROSEMOUNT.] 39.36 Pursuant to Minnesota Statutes, section 103G.265, 40.1 subdivision 3, the legislature approves the consumptive use 40.2 under a permit of more than 2,000,000 gallons per day average in 40.3 a 30-day period in Rosemount, in connection with a gas-fueled 40.4 combined-cycle electric generating facility, subject to the 40.5 commissioner of natural resources making a determination that 40.6 the water remaining in the basin of origin will be adequate to 40.7 meet the basin's need for water and approval by the commissioner 40.8 of natural resources of all applicable permits. 40.9 Sec. 15. [LEGISLATIVE APPROVAL OF CONSUMPTIVE USE OF 40.10 WATER; PROPOSED FACILITY MANKATO.] 40.11 Pursuant to Minnesota Statutes, section 103G.265, 40.12 subdivision 3, the legislature approves the consumptive use 40.13 under a permit of more than 2,000,000 gallons per day average in 40.14 a 30-day period in Mankato, in connection with a gas-fueled 40.15 combined-cycle electric generating facility, subject to the 40.16 commissioner of natural resources making a determination that 40.17 the water remaining in the basin of origin will be adequate to 40.18 meet the basin's need for water and approval by the commissioner 40.19 of natural resources of all applicable permits. 40.20 Sec. 16. [REPEALER.] 40.21 Minnesota Statutes 2002, sections 116C.80 and 216C.051, 40.22 subdivisions 1, 4, and 5, are repealed. 40.23 Sec. 17. [EFFECTIVE DATE.] 40.24 This article is effective the day following final enactment. 40.25 ARTICLE 4 40.26 INNOVATIVE ENERGY PROJECT 40.27 Section 1. [INNOVATIVE ENERGY PROJECT.] 40.28 Subdivision 1. [DEFINITION.] For the purposes of this 40.29 section, the term "innovative energy project" means a proposed 40.30 energy generation facility or group of facilities which may be 40.31 located on up to three sites: 40.32 (1) that makes use of an innovative generation technology 40.33 utilizing coal as a primary fuel in a highly efficient 40.34 combined-cycle configuration with significantly reduced sulfur 40.35 dioxide, nitrogen oxide, particulate, and mercury emissions from 40.36 those of traditional technologies; 41.1 (2) that the project developer or owner certifies is a 41.2 project capable of offering a long-term supply contract at a 41.3 hedged, predictable cost; and 41.4 (3) that is designated by the commissioner of the iron 41.5 range resources and rehabilitation board as a project that is 41.6 located in the taconite tax relief area on a site that has 41.7 substantial real property with adequate infrastructure to 41.8 support new or expanded development and that has received prior 41.9 financial and other support from the board. 41.10 Subd. 2. [REGULATORY INCENTIVES.] (a) An innovative energy 41.11 project: 41.12 (1) is exempted from the requirements for a certificate of 41.13 need under Minnesota Statutes, section 216B.243, for the 41.14 generation facilities, and transmission infrastructure 41.15 associated with the generation facilities, but is subject to all 41.16 applicable environmental review and permitting procedures of 41.17 Minnesota Statutes, sections 116C.51 to 116C.69; 41.18 (2) once permitted and constructed, is eligible to increase 41.19 the capacity of the associated transmission facilities without 41.20 additional state review upon filing notice with the commission; 41.21 (3) has the power of eminent domain, which shall be limited 41.22 to the sites and routes approved by the environmental quality 41.23 board for the project facilities. The project shall be 41.24 considered a utility as defined in Minnesota Statutes, section 41.25 116C.52, subdivision 10, for the limited purpose of Minnesota 41.26 Statutes, section 116C.63. The project shall report any intent 41.27 to exercise eminent domain authority to the board; 41.28 (4) shall qualify as a "clean energy technology" for 41.29 purposes of Minnesota Statutes, section 216B.1691, subdivision 41.30 2, paragraph (e); 41.31 (5) shall, prior to the approval by the commission of any 41.32 arrangement to build or expand a fossil-fuel-fired generation 41.33 facility, or to enter into an agreement to purchase capacity or 41.34 energy from such a facility for a term exceeding five years, be 41.35 considered as a supply option for the generation facility, and 41.36 the commission shall ensure such consideration and take any 42.1 action with respect to such supply proposal that it deems to be 42.2 in the best interest of ratepayers; 42.3 (6) shall make a good faith effort to secure funding from 42.4 the United States Department of Energy and the United States 42.5 Department of Agriculture to conduct a demonstration project at 42.6 the facility for either geologic or terrestrial carbon 42.7 sequestration projects to achieve reductions in facility 42.8 emissions or carbon dioxide; and 42.9 (7) shall be entitled to enter into a contract with a 42.10 public utility that owns a nuclear generation facility in the 42.11 state to provide 450 megawatts of baseload capacity and energy 42.12 under a long-term contract, subject to the approval of the terms 42.13 and conditions of the contract by the commission. The 42.14 commission may approve, disapprove, amend, or modify the 42.15 contract in making its public interest determination, taking 42.16 into consideration the project's economic development benefits 42.17 to the state; the use of abundant domestic fuel sources; the 42.18 stability of the price of the output from the project; the 42.19 project's potential to contribute to a transition to hydrogen as 42.20 a fuel resource; and the emission reductions achieved compared 42.21 to other solid fuel baseload technologies. 42.22 (b) This subdivision does not apply to nor affect a 42.23 proposal to add utility-owned resources that is pending on the 42.24 date of enactment of this act before the public utilities 42.25 commission or to competitive bid solicitations to provide 42.26 capacity or energy that is scheduled to be online by December 42.27 31, 2006. 42.28 Sec. 2. [EFFECTIVE DATE.] 42.29 This article is effective the day following final enactment.