1.1                          A bill for an act 
  1.2             relating to energy; providing for certain electric 
  1.3             service for on-site distributed generation owned and 
  1.4             operated by political subdivision; amending Minnesota 
  1.5             Statutes 2002, section 216B.1611, subdivision 2. 
  1.6   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.7      Section 1.  Minnesota Statutes 2002, section 216B.1611, 
  1.8   subdivision 2, is amended to read: 
  1.9      Subd. 2.  [DISTRIBUTED GENERATION; GENERIC PROCEEDING.] (a) 
  1.10  The commission shall initiate a proceeding within 30 days of 
  1.11  July 1, 2001, to establish, by order, generic standards for 
  1.12  utility tariffs for the interconnection and parallel operation 
  1.13  of distributed generation fueled by natural gas or a renewable 
  1.14  fuel, or another similarly clean fuel or combination of fuels of 
  1.15  no more than ten megawatts of interconnected capacity.  At a 
  1.16  minimum, these tariff standards must:  
  1.17     (1) to the extent possible, be consistent with industry and 
  1.18  other federal and state operational and safety standards; 
  1.19     (2) provide for the low-cost, safe, and standardized 
  1.20  interconnection of facilities; 
  1.21     (3) take into account differing system requirements and 
  1.22  hardware, as well as the overall demand load requirements of 
  1.23  individual utilities; 
  1.24     (4) allow for reasonable terms and conditions, consistent 
  1.25  with the cost and operating characteristics of the various 
  2.1   technologies, so that a utility can reasonably be assured of the 
  2.2   reliable, safe, and efficient operation of the interconnected 
  2.3   equipment; and 
  2.4      (5) establish (i) a standard interconnection agreement that 
  2.5   sets forth the contractual conditions under which a company and 
  2.6   a customer agree that one or more facilities may be 
  2.7   interconnected with the company's utility system, and (ii) a 
  2.8   standard application for interconnection and parallel operation 
  2.9   with the utility system. 
  2.10     (b) The commission may develop financial incentives based 
  2.11  on a public utility's performance in encouraging residential and 
  2.12  small business customers to participate in on-site generation. 
  2.13     (c) A public utility shall provide a political subdivision 
  2.14  owning or operating on-site distributed generation in parallel 
  2.15  with the utility the option of purchasing maintenance, 
  2.16  interruptible, supplemental, and backup electric power service 
  2.17  from the utility on the basis of (1) reserved capacity and 
  2.18  payment of related reservation fees, (2) available replacement 
  2.19  capacity and energy at market prices, or (3) available 
  2.20  replacement capacity and energy from any other utility 
  2.21  interconnected to the regional transmission system serving the 
  2.22  utility in which service territory the on-site generation is 
  2.23  located.  These options must be made available to any political 
  2.24  subdivision by the public utility regardless of the voltage 
  2.25  level at which the on-site distributed generation is connected 
  2.26  to the public utility electric system.  The commission shall 
  2.27  adopt rules by July 1, 2005, governing the right of political 
  2.28  subdivisions owning or operating on-site generation to exercise 
  2.29  the different options required in this subdivision for the 
  2.30  purchase of maintenance, interruptible, supplemental, and backup 
  2.31  electric power service. 
  2.32     <b>[EFFECTIVE DATE.]</b> This section is effective July 1, 2004.