1.1 	A bill for an act
1.2 	relating to the environment; requiring mercury emissions reductions by public 
1.3 	utilities; amending Minnesota Statutes 2004, section 216B.1692, subdivision 8; 
1.4 	proposing coding for new law in Minnesota Statutes, chapter 216B.
1.5 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.6 	Section 1. TITLE.
 1.7 	This act may be cited as the Mercury Emissions Reduction Act of 2006.

1.8 	Sec. 2. Minnesota Statutes 2004, section 216B.1692, subdivision 8, is amended to read:
1.9 		Subd. 8.Sunset. This section is effective until June 30, 2006 June 30, 2012, and 
1.10 	applies to projects and riders approved prior to that date.

1.11 	Sec. 3. [216B.68] DEFINITIONS, MERCURY EMISSIONS REDUCTIONS.
1.12 		Subdivision 1.Scope. Terms used in sections 216B.68 to 216B.688 have the 
1.13 	meanings given them in this section and section 216B.02.
1.14 		Subd. 2.Qualifying facility. "Qualifying facility" means an electric generating 
1.15 	power plant in Minnesota that, as of January 1, 2006, had a total net dependable capacity 
1.16 	in excess of 750 megawatts from all coal-fired electric generating units at the power plant.
1.17 		Subd. 3.Targeted unit. "Targeted unit" means a coal-fired electric generation unit 
1.18 	greater than 300 megawatts at a qualifying facility.
1.19 		Subd. 4.Agency. "Agency" means the Minnesota Pollution Control Agency.
1.20 		Subd. 5.Federal mercury regulations. "Federal mercury regulations" means 
1.21 	the federal clean air mercury rule as of January 1, 2006, published in Code of Federal 
1.22 	Regulations, title 40, parts 60, 63, 70, and 72.
2.1 		Subd. 6.Reduction. "Reduction" means the capture of total mercury emissions 
2.2 	from a qualifying facility relative to the emissions baseline from that facility established 
2.3 	under section 216B.681, expressed as a percentage.
2.4 		Subd. 7.Dry scrubbed units. "Dry scrubbed units" means a targeted unit at which 
2.5 	pollution control technology that uses a spray dryer and fabric filter system to remove 
2.6 	pollutants from air emissions is installed.
2.7 		Subd. 8.Wet scrubbed units. "Web scrubbed units" means a targeted unit at which 
2.8 	pollution control technology that uses water or solutions to remove pollutants from air 
2.9 	emissions is installed.
2.10 		Subd. 9.Startup period. "Startup period" means a period of one year after the date 
2.11 	of compliance set forth in section 216B.682, paragraph (a), or such longer period as the 
2.12 	commission may approve after consultation with the Pollution Control Agency.

2.13 	Sec. 4. [216B.681] MONITORING MERCURY EMISSIONS.
2.14 	By July 1, 2007, a public utility that owns or operates a qualifying facility shall 
2.15 	install, maintain, and operate continuous mercury emissions monitoring systems on 
2.16 	coal-fired electric generation units that the utility may include in a mercury emissions 
2.17 	reduction plan under section 216B.682. The monitoring systems must use methods 
2.18 	set forth in federal mercury regulations or other methods as may be approved by the 
2.19 	agency. The data from monitoring systems or other methods of measurement approved 
2.20 	by the agency associated with a utility's qualifying facilities must be used to establish a 
2.21 	baseline for mercury emissions reductions under section 216B.682. The public utility shall 
2.22 	report to the agency the quality assured and controlled data produced from the systems 
2.23 	implemented pursuant to this section on a quarterly basis thereafter.

2.24 	Sec. 5. [216B.682] MERCURY EMISSIONS REDUCTION PLANS.
2.25 	(a) By December 31, 2007, for dry scrubbed units and by December 31, 2009, for 
2.26 	wet scrubbed units, a public utility that owns or operates a qualifying facility shall develop 
2.27 	and submit to the Pollution Control Agency and the Public Utilities Commission plans to 
2.28 	reduce mercury emissions in this state. A public utility filing a plan for a wet scrubbed 
2.29 	unit on or before December 31, 2007, may file a plan for any other wet scrubbed unit at 
2.30 	its qualifying facility by July 1, 2011. Mercury emissions reduction initiatives must be 
2.31 	implemented by December 31, 2010, at dry scrubbed units, and by December 31, 2013, at 
2.32 	wet scrubbed units.
2.33 	(b) A public utility must file a set of plans under paragraph (a) that, taken together, 
2.34 	are designed to achieve total mercury reductions among the utility's Minnesota facilities 
3.1 	equivalent to a goal of 90 percent reduction of mercury emissions at the utility's targeted 
3.2 	units by December 31, 2013.
3.3 	(c) The utility may also submit one or more alternatives to the plans required under 
3.4 	paragraph (b). The alternatives must be designed to achieve mercury emissions reductions 
3.5 	at its qualifying facilities greater and earlier than required under federal mercury 
3.6 	regulations. The utility shall also provide information as to how the utility would have 
3.7 	planned to meet federal mercury reduction requirements in the absence of this legislation 
3.8 	and the estimated cost and timing of meeting federal mercury reduction requirements.
3.9 	(d) For each required and alternative plan submitted pursuant to this subdivision, 
3.10 	the utility shall present information assessing that plan's ability to optimize human health 
3.11 	benefits and achieve cost efficiencies. The utility shall assess how each plan balances 
3.12 	environmental benefits with the associated costs, considering the impact of the resulting 
3.13 	electricity costs on both the utility's customers and the state's economy. Plans must 
3.14 	provide the cost, technical feasibility, and mercury emissions reduction expected for each 
3.15 	option. Plans may also provide measures to reduce the cost and maximize the flexibility of 
3.16 	each option, including, but not limited to, mercury emissions reductions achieved through 
3.17 	pretreatment of the coal burned at the facility, averaging mercury emissions reductions 
3.18 	among different generating units at the same plant and achieving equivalent mercury 
3.19 	emissions reductions on other plants in the public utility's electric system in Minnesota. 
3.20 	The plans may specify permit targets or conditions proposed by the public utility for each 
3.21 	mercury emissions control option, including, but not limited to, numeric emission targets, 
3.22 	percent removal expectations, emission control technology installation and operative 
3.23 	requirements, or work practice standards.
3.24 	(e) Mercury emissions reductions under a plan approved by the commission under 
3.25 	section 216B.1692 before January 1, 2006, may not be counted toward total mercury 
3.26 	emissions reductions of a plan under this section.

3.27 	Sec. 6. [216B.683] OTHER ENVIRONMENTAL IMPROVEMENT PLANS.
3.28 	In order to encourage a utility to address multiple pollutants, a utility required to 
3.29 	submit mercury reduction plans under sections 216B.68 to 216B.688 may also propose 
3.30 	plans and associated emission reduction riders addressing investments in additional 
3.31 	pollution control equipment and related expenses needed to comply with state or federal 
3.32 	statute or regulation that became effective after December 31, 2004. The plans must 
3.33 	propose to implement emission control initiatives that exceed or are implemented in 
3.34 	advance of state or federal requirements. The utility must show that plans submitted 
4.1 	under this subdivision and any related riders are the least-cost alternative for complying 
4.2 	with state and federal regulations.

4.3 	Sec. 7. [216B.684] EMISSIONS REDUCTION RIDERS.
4.4 	A public utility required to file a mercury emissions reduction plan under section 
4.5 	216B.682 may also file for approval of an emissions reduction rate rider pursuant to 
4.6 	section 216B.1692, subdivision 3, for its mercury control and other environmental 
4.7 	improvement initiatives under sections 216B.68 to 216B.688. The emissions reduction 
4.8 	rate rider may include recovery of costs associated with the installation of continuous 
4.9 	mercury emission monitoring systems, ongoing operation and maintenance costs 
4.10 	associated with the utility's mercury control initiatives, and any studies undertaken by 
4.11 	the utility in support of the mercury emissions reduction plan required under section 
4.12 	216B.682, in addition to the cost recovery provided by section 216B.1692, subdivision 3. 
4.13 	The utility may propose to phase in the emissions reduction riders to recover these costs 
4.14 	over the development and life of the projects.

4.15 	Sec. 8. [216B.685] ENVIRONMENTAL ASSESSMENT.
4.16 	The Pollution Control Agency shall evaluate a utility's mercury emissions reduction 
4.17 	plans and alternatives filed under section 216B.68 to 216B.688, and submit its evaluation 
4.18 	to the Public Utilities Commission within 180 days of the date the plan is filed with the 
4.19 	agency and commission under subdivision 3. In its review, the agency shall:
4.20 	(1) assess whether the utility's plan under section 216B.682, paragraph (b), meets 
4.21 	the requirements of that paragraph; 
4.22 	(2) evaluate the environmental and public health benefits of each plan submitted 
4.23 	under section 216B.682, including benefits associated with reductions in pollutants other 
4.24 	than mercury; 
4.25 	(3) assess the technical feasibility and cost-effectiveness of technologies proposed 
4.26 	for achieving mercury emissions reduction in each plan submitted; and
4.27 	(4) advise the commission of the appropriateness of each plan.

4.28 	Sec. 9. [216B.686] COMMISSION APPROVAL.
4.29 	(a) The Public Utilities Commission shall review and evaluate a utility's mercury 
4.30 	emissions reduction plans submitted under this section. In its review, the commission shall 
4.31 	consider the environmental and public health benefits, the agency's determination of a 
4.32 	technology's technical feasibility, competitiveness of customer rates and power supply 
4.33 	costs, and cost-effectiveness of the utility's proposed mercury control initiatives in light of 
5.1 	the agency's report under section 216B.685. The commission shall rely on the expertise of 
5.2 	the agency on issues regarding technical feasibility of emissions control technology. For 
5.3 	multi-emissions reduction plans, the commission shall consider the overall environmental 
5.4 	and public health benefits, total costs, and competitiveness of customer rates and power 
5.5 	supply costs.
5.6 	(b) Within 180 days of receiving the agency's report, the commission shall approve a 
5.7 	utility's mercury or multi-emissions reduction plans provided under section 216B.682, 
5.8 	paragraph (b), if the commission reasonably expects that set of plans will be technically 
5.9 	able to achieve, by December 31, 2013, total mercury reductions among the utility's 
5.10 	Minnesota facilities equivalent to a goal of 90 percent reduction of mercury emissions 
5.11 	at the utility's targeted units in a manner that does not impose excessive consumer and 
5.12 	power supply costs.
5.13 	(c) If the commission is unable to approve the utility's 90 percent reduction plan 
5.14 	under paragraph (b), the commission shall, in consultation with the agency, order the 
5.15 	utility to implement the most stringent mercury control alternatives proposed by the utility 
5.16 	under section 216B.682, paragraph (c), that will achieve the maximum mercury emissions 
5.17 	reductions technically feasible and protective of the public health and environment 
5.18 	without imposing excessive consumer and power supply costs. The commission shall 
5.19 	attempt to achieve the greatest level of mercury reduction that can be obtained without 
5.20 	imposing excessive consumer costs.
5.21 	(d) Section 216B.1692 applies to plans and emissions control riders proposed under 
5.22 	sections 216B.68 to 216B.688, except that projects included in a plan approved under 
5.23 	those sections are deemed to be qualifying projects for the purposes of section 216B.1692; 
5.24 	and section 216B.1692, subdivision 5, paragraph (c), and subdivision 6, do not apply to 
5.25 	plans or riders submitted under sections 216B.68 to 216B.688. Commission approval of 
5.26 	an emissions reduction plan under sections 216B.68 to 216B.688 includes approval of an 
5.27 	emissions reduction rider associated with that plan, if one was submitted by the utility. 
5.28 	Nothing in sections 216B.68 to 216B.688 requires a utility to convert a wet scrubbed unit 
5.29 	into a dry scrubbed unit as part of an emissions reduction plan.

5.30 	Sec. 10. [216B.687] IMPLEMENTATION AND OPERATION.
5.31 	(a) A public utility required to file a mercury emissions reduction plan under 
5.32 	section 216B.682 shall implement the plan as approved by the commission under section 
5.33 	216B.685.
5.34 	(b) During the startup period, except as required by federal regulation, any mercury 
5.35 	emission or reduction limit incorporated into a qualifying facility's permit as established 
6.1 	under the plan is a state-only condition of the permit and is not subject to enforcement by 
6.2 	the agency. If, after the startup period ends, it is determined that the qualifying facility 
6.3 	is able to comply with the applicable emission or reduction limit, the agency shall 
6.4 	incorporate the mercury limit into the facility's permit as an enforceable state-only limit. 
6.5 	If, after the startup period, despite the utility's reasonable best efforts consistent with the 
6.6 	approved plan, the equipment installed at a unit under an approved plan fails to achieve 
6.7 	the mercury reduction expected in the approved plan, the agency shall revise the mercury 
6.8 	limit for the qualifying facility to reflect the actual mercury emissions expected from the 
6.9 	unit and incorporate that limit as an enforceable state-only limit in the facility's permit. 
6.10 	The utility shall report periodically to the agency of its efforts to optimize the operation of 
6.11 	installed equipment, and the agency shall revise the unit's air permit within five years of 
6.12 	initial operation, to ensure optimal operation of equipment installed under a plan approved 
6.13 	pursuant to sections 216B.68 to 216B.688, in light of technical and operational advances 
6.14 	made since the date of plan approval.
6.15 	(c) For qualifying facilities using both dry scrubbed and wet scrubbed units, the 
6.16 	agency may establish permit limits as set forth in paragraph (b) for each individual 
6.17 	unit. After the startup periods for all units at the qualifying facility have concluded and 
6.18 	the actual mercury emissions for the units expected under the approved plan have been 
6.19 	determined, the agency may establish a single enforceable state-only mercury emission 
6.20 	limit for the qualifying facility covering all units at that facility.

6.21 	Sec. 11. [216B.688] RELATIONSHIP TO STATE AND FEDERAL 
6.22 	REGULATIONS.
6.23 	Mercury emissions reduction equipment installed under this section must fulfill all 
6.24 	applicable requirements related to mercury emissions from a qualifying facility, including 
6.25 	but not limited to any mercury-related requirements related to total maximum daily loads 
6.26 	under the federal Clean Water Act. Except as otherwise provided in this section, a public 
6.27 	utility implementing a mercury emissions reduction plan under sections 216B.68 to 
6.28 	216B.688 shall not be required to undertake additional investments to reduce mercury 
6.29 	by state law or regulation.