1.1 	A bill for an act
1.2 	relating to energy; regulating eligibility for grants
1.3 	from the renewable development fund; amending
1.4 	Minnesota Statutes 2004, section 216B.1694,
1.5 	subdivision 2.
1.6 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.7 	Section 1. Minnesota Statutes 2004, section 216B.1694,
1.8 	subdivision 2, is amended to read:
1.9 		Subd. 2.Regulatory incentives.  (a) An innovative energy
1.10 	project:
1.11 	(1) is exempted from the requirements for a certificate of
1.12 	need under section 216B.243, for the generation facilities, and
1.13 	transmission infrastructure associated with the generation
1.14 	facilities, but is subject to all applicable environmental
1.15 	review and permitting procedures of sections 116C.51 to 116C.69;
1.16 	(2) once permitted and constructed, is eligible to increase
1.17 	the capacity of the associated transmission facilities without
1.18 	additional state review upon filing notice with the commission;
1.19 	(3) has the power of eminent domain, which shall be limited
1.20 	to the sites and routes approved by the Environmental Quality
1.21 	Board for the project facilities.  The project shall be
1.22 	considered a utility as defined in section 116C.52, subdivision
1.23 	10, for the limited purpose of section 116C.63.  The project
1.24 	shall report any intent to exercise eminent domain authority to
1.25 	the board;
2.1 	(4) shall qualify as a "clean energy technology" as defined
2.2 	in section 216B.1693;
2.3 	(5) shall, prior to the approval by the commission of any
2.4 	arrangement to build or expand a fossil-fuel-fired generation
2.5 	facility, or to enter into an agreement to purchase capacity or
2.6 	energy from such a facility for a term exceeding five years, be
2.7 	considered as a supply option for the generation facility, and
2.8 	the commission shall ensure such consideration and take any
2.9 	action with respect to such supply proposal that it deems to be
2.10 	in the best interest of ratepayers;
2.11 	(6) shall make a good faith effort to secure funding from
2.12 	the United States Department of Energy and the United States
2.13 	Department of Agriculture to conduct a demonstration project at
2.14 	the facility for either geologic or terrestrial carbon
2.15 	sequestration projects to achieve reductions in facility
2.16 	emissions or carbon dioxide; and 
2.17 	(7) shall be entitled to enter into a contract with a
2.18 	public utility that owns a nuclear generation facility in the
2.19 	state to provide 450 megawatts of baseload capacity and energy
2.20 	under a long-term contract, subject to the approval of the terms
2.21 	and conditions of the contract by the commission.  The
2.22 	commission may approve, disapprove, amend, or modify the
2.23 	contract in making its public interest determination, taking
2.24 	into consideration the project's economic development benefits
2.25 	to the state; the use of abundant domestic fuel sources; the
2.26 	stability of the price of the output from the project; the
2.27 	project's potential to contribute to a transition to hydrogen as
2.28 	a fuel resource; and the emission reductions achieved compared
2.29 	to other solid fuel baseload technologies; and 
2.30 	(8) shall be eligible for a grant from the renewable
2.31 	development account, subject to the approval of the entity
2.32 	administering that account, of $2,000,000 a year for five years
2.33 	for development and engineering costs, including those costs
2.34 	related to mercury-removal technology; thermal efficiency
2.35 	optimization and emission minimization; environmental impact
2.36 	statement preparation and licensing; development of hydrogen
3.1 	production capabilities; and fuel cell development and
3.2 	utilization.
3.3 	(b) This subdivision does not apply to nor affect a
3.4 	proposal to add utility-owned resources that is pending on May
3.5 	29, 2003, before the Public Utilities Commission or to
3.6 	competitive bid solicitations to provide capacity or energy that
3.7 	is scheduled to be on line by December 31, 2006.

3.8 	Sec. 2. EFFECTIVE DATE.
 3.9 	Section 1 is effective the day following final enactment
3.10 	and is retroactive to May 30, 2003.  Any grant approved by the
3.11 	Public Utilities Commission under authority of Minnesota
3.12 	Statutes 2004, section 216B.1694, subdivision 2, clause (8), is
3.13 	revoked and cancelled and no funds may be disbursed from the
3.14 	account for the grant.