1.1                          A bill for an act 
  1.2             relating to energy; modifying provisions relating to 
  1.3             radioactive waste management and renewable energy; 
  1.4             amending Minnesota Statutes 2002, sections 116C.71, 
  1.5             subdivision 7; 116C.779; 216B.1645, subdivision 2; 
  1.6             216B.2424, subdivisions 6, 8, by adding a subdivision; 
  1.7             216C.052, subdivision 1; proposing coding for new law 
  1.8             in Minnesota Statutes, chapters 116C; 216B; repealing 
  1.9             Minnesota Statutes 2002, section 216B.2411. 
  1.10  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.11     Section 1.  Minnesota Statutes 2002, section 116C.71, 
  1.12  subdivision 7, is amended to read: 
  1.13     Subd. 7.  [RADIOACTIVE WASTE MANAGEMENT FACILITY.] 
  1.14  "Radioactive waste management facility" means a geographic site, 
  1.15  including buildings, structures, and equipment in or upon which 
  1.16  radioactive waste is retrievably or irretrievably disposed by 
  1.17  burial in soil or permanently stored.  An independent spent fuel 
  1.18  storage installation located on the site of a Minnesota nuclear 
  1.19  generation facility for dry cask storage of spent nuclear fuel 
  1.20  generated solely by that facility is not a radioactive waste 
  1.21  management facility. 
  1.22     Sec. 2.  Minnesota Statutes 2002, section 116C.779, is 
  1.23  amended to read: 
  1.24     116C.779 [FUNDING FOR RENEWABLE DEVELOPMENT.] 
  1.25     Subdivision 1.  [APPLICABILITY.] This section applies only 
  1.26  to any 17 casks filled and placed at the Prairie Island 
  1.27  independent spent fuel storage installation. 
  2.1      Subd. 2.  [RENEWABLE DEVELOPMENT FUND.] (a) The public 
  2.2   utility that operates owns the Prairie Island nuclear generating 
  2.3   plant must transfer to a renewable development account $500,000 
  2.4   each year for each dry cask containing spent fuel that is 
  2.5   located at the independent spent fuel storage installation at 
  2.6   Prairie Island after January 1, 1999.  The fund transfer must be 
  2.7   made if waste is stored in a cask for any part of a year.  
  2.8      (b) Funds in the account may be expended only 
  2.9   for development of renewable energy sources.: 
  2.10     (1) payments, not to exceed $2,500,000 annually, by the 
  2.11  public utility under a settlement agreement with the Mdewakanton 
  2.12  Dakota Tribal Council at Prairie Island, a federally recognized 
  2.13  Indian tribe, for resolving outstanding disputes and to be used 
  2.14  for, among other purposes, acquiring land in the state of 
  2.15  Minnesota for placement in trust; and 
  2.16     (2) Preference must be given to development of renewable 
  2.17  energy source projects located within the state.  
  2.18  Payments from the fund in any year shall first be made to 
  2.19  satisfy the terms of the settlement agreement described in 
  2.20  clause (1).  No more than a total of $25,000,000 may be spent 
  2.21  from this account for payments by the public utility to the 
  2.22  Mdewakanton Dakota Tribal Council.  Only those projects that 
  2.23  have a direct benefit to Minnesota citizens may be funded under 
  2.24  this section.  
  2.25     (b) (c) Expenditures from the account for the purposes of 
  2.26  paragraph (b), clause (2), may only be made after approval by 
  2.27  order of the public utilities commission upon a petition by the 
  2.28  public utility. 
  2.29     (d) Of the amount required to be spent annually from this 
  2.30  account:  
  2.31     (1) up to 25 percent each year must be spent for production 
  2.32  incentives for small wind energy facilities, and production 
  2.33  incentives under this section must not exceed 1.5 cents per 
  2.34  kilowatt-hour for a period not greater than ten years; and 
  2.35     (2) up to 25 percent a year may be used to provide low- or 
  2.36  no-interest loans, grants, or other financial means to reduce 
  3.1   the capital costs for the construction of small wind energy 
  3.2   facilities.  Capital assistance awards under this clause may be 
  3.3   coordinated through nonprofit entities that provide financial 
  3.4   assistance to rural areas, such as designated federal economic 
  3.5   development districts. 
  3.6      (e) For the purposes of this section, "small wind energy 
  3.7   facility" means a wind energy facility, or group of facilities, 
  3.8   with a nameplate capacity of two megawatts or less that: 
  3.9      (1) is owned by one or more natural persons who are 
  3.10  residents of Minnesota and who own or rent the land where the 
  3.11  facility is sited or is owned by a Minnesota school district; 
  3.12     (2) is not enrolled in the renewable energy production 
  3.13  incentive program under section 216C.41; and 
  3.14     (3) begins generating electricity after June 30, 2003. 
  3.15     Sec. 3.  [116C.83] [AUTHORIZATION FOR ADDITIONAL DRY CASK 
  3.16  STORAGE.] 
  3.17     Subdivision 1.  [AUTHORIZATION.] (a) Subject to the cask 
  3.18  storage limits of the federal license for the independent spent 
  3.19  fuel storage installation at Prairie Island, the public utility 
  3.20  that owns the Prairie Island nuclear generation plant has 
  3.21  authorization for sufficient dry cask storage capacity at that 
  3.22  installation to allow:  
  3.23     (1) the unit 1 reactor at Prairie Island to operate until 
  3.24  the end of its current license in 2013; and 
  3.25     (2) the unit 2 reactor at Prairie Island to operate until 
  3.26  the end of its current license in 2014. 
  3.27     (b) Notwithstanding any law to the contrary: 
  3.28     (1) except as provided in paragraph (a), authorization of 
  3.29  any future nuclear storage facility or dry casks at either 
  3.30  nuclear generation facility in this state is limited to approval 
  3.31  by the public utilities commission pursuant to section 216B.243 
  3.32  and the commission's certificate of need rules; 
  3.33     (2) in any proceeding pursuant to clause (1), the 
  3.34  commission may make a decision that could result in a shut-down 
  3.35  of a nuclear generation facility; and 
  3.36     (3) the storage of spent nuclear fuel in the pool and in 
  4.1   dry casks at the Prairie Island nuclear generating plant must be 
  4.2   managed to facilitate the shipment of waste out of state to a 
  4.3   permanent or interim storage facility as soon as feasible in a 
  4.4   manner that allows the continued operation of the plant 
  4.5   consistent with sections 116C.71 to 116C.83 and 216B.1645, 
  4.6   subdivision 2. 
  4.7      (c) The authorization for storage capacity pursuant to 
  4.8   paragraphs (a) and (b) is limited to the storage of spent 
  4.9   nuclear fuel generated by a Minnesota nuclear generation 
  4.10  facility and stored on the site of that facility.  
  4.11     (d) The authority granted to the public utility in 
  4.12  paragraphs (a) and (b) is contingent on the public utility 
  4.13  maintaining the headquarters for the corporation in Minnesota.  
  4.14  If the corporation moves its headquarters outside the state, the 
  4.15  public utility must seek and receive express legislative 
  4.16  authorization for any additional storage of spent nuclear fuel. 
  4.17     Subd. 2.  [ENVIRONMENTAL REVIEW AND PROTECTION.] The 
  4.18  siting, construction, and operation of an independent spent fuel 
  4.19  storage installation located on the site of a Minnesota 
  4.20  generation facility for dry cask storage of spent nuclear fuel 
  4.21  generated solely by that facility is subject to all 
  4.22  environmental review and protection provisions of chapters 115, 
  4.23  115B, 116, 116B, 116C, 116D, and 216B and rules associated with 
  4.24  those chapters, except those statutes and rules that apply 
  4.25  specifically to a radioactive waste management facility as 
  4.26  defined in section 116C.71, subdivision 7. 
  4.27     Sec. 4.  Minnesota Statutes 2002, section 216B.1645, 
  4.28  subdivision 2, is amended to read: 
  4.29     Subd. 2.  [COST RECOVERY.] The expenses incurred by the 
  4.30  utility over the duration of the approved contract or useful 
  4.31  life of the investment and expenditures made pursuant to section 
  4.32  116C.779 and expenditures under an agreement with the 
  4.33  Mdewakanton Dakota Tribal Council at Prairie Island regarding 
  4.34  the provisions of Laws 1994, chapter 641, article 1, section 4, 
  4.35  to the extent that funds collected pursuant to section 116C.779 
  4.36  in any given year are insufficient to cover these settlement 
  5.1   costs, shall be recoverable from the ratepayers of the utility, 
  5.2   to the extent they are not offset by utility revenues 
  5.3   attributable to the contracts, investments, or expenditures.  
  5.4   Upon petition by a public utility, the commission shall approve 
  5.5   or approve as modified a rate schedule providing for the 
  5.6   automatic adjustment of charges to recover the expenses or costs 
  5.7   approved by the commission, which, in the case of transmission 
  5.8   expenditures, are limited to the portion of actual transmission 
  5.9   costs that are directly allocable to the need to transmit power 
  5.10  from the renewable sources of energy.  The commission may not 
  5.11  approve recovery of the costs for that portion of the power 
  5.12  generated from sources governed by this section that the utility 
  5.13  sells into the wholesale market.  
  5.14     Sec. 5.  [216B.2412] [RENEWABLE ENERGY PROJECTS.] 
  5.15     Subdivision 1.  [DEFINITIONS.] (a) For the purposes of this 
  5.16  section, the terms defined in this subdivision and section 
  5.17  216B.241, subdivision 1, have the meanings given them. 
  5.18     (b) "Energy utility" means any public utility, cooperative 
  5.19  electric association, or municipality subject to section 
  5.20  216B.241. 
  5.21     (c) "Renewable energy sources" means fuels and technologies 
  5.22  to generate electricity through the use of any of the following 
  5.23  resources: 
  5.24     (1) wind; 
  5.25     (2) hydrogen, provided that after January 1, 2010, the 
  5.26  hydrogen must be generated from the resources listed in this 
  5.27  paragraph; 
  5.28     (3) solar; 
  5.29     (4) geothermal; 
  5.30     (5) hydroelectric with a capacity of less than 60 
  5.31  megawatts; 
  5.32     (6) biomass; 
  5.33     (7) landfill gas; and 
  5.34     (8) refuse derived fuel and solid waste. 
  5.35     (d) "Biomass" includes: 
  5.36     (1) methane or other combustible gases derived from the 
  6.1   processing of plant or animal material; 
  6.2      (2) alternative fuels derived from soybean and other 
  6.3   agricultural plant oils or animal fats; 
  6.4      (3) combustion of barley hulls, corn, soy-based products, 
  6.5   or other agricultural products; and 
  6.6      (4) wood residue from the wood products industry in 
  6.7   Minnesota, or other wood products, such as short-rotation woody 
  6.8   or fibrous agricultural crops. 
  6.9      (e) "Sustainable energy project" is a project to either 
  6.10  conduct research into the development of renewable energy 
  6.11  sources and technologies or to deploy technologies in Minnesota 
  6.12  that utilize renewable energy sources in:  (1) a distributed 
  6.13  generation facility with an interconnected capacity of ten 
  6.14  megawatts or less; (2) a combined heat and power generation 
  6.15  facility; (3) a district energy system; or (4) other facility or 
  6.16  application consistent with the commissioner's order under 
  6.17  subdivision 6. 
  6.18     Subd. 2.  [RENEWABLE ENERGY RESEARCH.] (a) An energy 
  6.19  utility shall spend five percent of the total amount that 
  6.20  utility is required to spend under section 216B.241 to support 
  6.21  basic and applied research at the University of Minnesota for 
  6.22  the development of the sustainable energy sources and 
  6.23  technologies listed in subdivision 1, paragraph (c), clauses 
  6.24  (2), (3), and (6).  The University of Minnesota shall ensure 
  6.25  that at least 25 percent of funds spent under this section are 
  6.26  available for basic and applied research at least one rural 
  6.27  campus or experiment station. 
  6.28     (b) Research funded under this subdivision must have a 
  6.29  direct benefit to Minnesota.  Research funded under paragraph 
  6.30  (a) may focus on hydrogen, solar, and biomass and: 
  6.31     (1) conversion of state wind resources to hydrogen for 
  6.32  energy storage and transportation to areas of energy demand; 
  6.33     (2) improvement of scalable hydrogen fuel cells for 
  6.34  stationary combined electricity generation and heating/cooling 
  6.35  function for residential and commercial use; and 
  6.36     (3) processing of agricultural and forestry products for 
  7.1   production of hydrogen and other fuels and sequestration of 
  7.2   carbon using a variety of means, including biocatalysis and 
  7.3   fermentation. 
  7.4      (c) An energy utility may spend up to an additional five 
  7.5   percent of the total amount that utility is required to spend 
  7.6   under section 216B.241 on research for the development of the 
  7.7   renewable energy sources and technologies listed in subdivision 
  7.8   1, paragraph (c), clauses (2), (3), and (6), in a research 
  7.9   project consistent with determinations made by the commissioner 
  7.10  pursuant to subdivision 6.  
  7.11     Subd. 3.  [DEPLOYMENT OF RENEWABLE ENERGY SOURCES.] An 
  7.12  energy utility shall spend ten percent, and may spend up to 25 
  7.13  percent, of the total amount to be spent under section 216B.241 
  7.14  for the deployment of technologies that use renewable energy 
  7.15  sources.  Funds under this section may also be used for 
  7.16  incentives to convert existing Minnesota generation facilities 
  7.17  to use renewable energy sources, either exclusively or in 
  7.18  conjunction with other fuels.  Expenditures under this 
  7.19  subdivision must be consistent with the determination of the 
  7.20  commissioner pursuant to subdivision 6.  Electricity generated 
  7.21  using a renewable energy resource may be counted toward the 
  7.22  renewable energy goals in section 216B.1691.  
  7.23     Subd. 4.  [POOLING OF RESOURCES OF MULTIPLE UTILITIES.] Two 
  7.24  or more energy utilities may pool resources under this section 
  7.25  to provide assistance jointly to proposed sustainable energy 
  7.26  projects.  The utilities shall negotiate and agree among 
  7.27  themselves for allocation of benefits associated with a project, 
  7.28  such as the ability to count energy generated by a project 
  7.29  toward a utility's renewable energy objectives under section 
  7.30  216B.1691.  The utilities shall provide a summary of the 
  7.31  allocation of benefits to the commissioner. 
  7.32     Subd. 5.  [CREDIT FOR PROJECTS OUTSIDE OF SERVICE 
  7.33  TERRITORY.] An energy utility may spend funds under this section 
  7.34  for sustainable energy projects in Minnesota that are outside 
  7.35  the service territory of the utility.  Upon application by an 
  7.36  energy utility, the commission shall authorize a credit of three 
  8.1   percent of the amount the energy utility contributed toward a 
  8.2   sustainable energy project that is outside the energy utility's 
  8.3   service territory.  This credit shall be deducted from the 
  8.4   utility's overall required spending under section 216B.241.  The 
  8.5   commissioner may extend that credit to up to ten percent of the 
  8.6   amount the utility contributes to a project outside of its 
  8.7   service territory, if the commissioner determines that a 
  8.8   proposed project is important to the advancement of state policy 
  8.9   goals under subdivision 6 and would not occur without the 
  8.10  additional credit.  This section does not apply to contributions 
  8.11  toward research under subdivision 2, paragraph (a). 
  8.12     Subd. 6.  [ELIGIBLE RESEARCH AND TECHNOLOGIES; 
  8.13  DETERMINATION BY COMMISSIONER.] At least annually, and upon 
  8.14  consultation by an energy utility, the commissioner of commerce 
  8.15  shall, by order, identify research, technologies, and projects 
  8.16  that are eligible for expenditures under this section.  In 
  8.17  identifying eligible technologies and projects, the commissioner 
  8.18  shall consider the extent to which the technology or project 
  8.19  advances state policy goals, such as:  ensuring affordable, 
  8.20  reliable energy for Minnesota consumers; use of Minnesota energy 
  8.21  resources; and promoting local economic development and 
  8.22  protecting Minnesota's environment.  By January 15 of each year, 
  8.23  the commissioner shall issue a report to the legislature 
  8.24  detailing and evaluating expenditures under this section, as 
  8.25  well as the process and criteria used by the commissioner to 
  8.26  make decisions under this subdivision. 
  8.27     Sec. 6.  Minnesota Statutes 2002, section 216B.2424, 
  8.28  subdivision 6, is amended to read: 
  8.29     Subd. 6.  [REMAINING MEGAWATT COMPLIANCE PROCESS.] (a) If 
  8.30  there remain megawatts of biomass power generating capacity to 
  8.31  fulfill the mandate in subdivision 5 after the commission has 
  8.32  taken final action on all contracts filed by September 1, 2000, 
  8.33  by a public utility under subdivision 9, this subdivision 
  8.34  governs final compliance with the biomass energy mandate in 
  8.35  subdivision 5 subject to the requirements of subdivisions 7 and 
  8.36  8.  
  9.1      (b) To the extent not inconsistent with this subdivision, 
  9.2   the provisions of subdivisions 2, 3, 4, and 5 apply to proposals 
  9.3   subject to this subdivision. 
  9.4      (c) A public utility must submit proposals to the 
  9.5   commission to complete the biomass mandate.  The commission 
  9.6   shall require a public utility subject to this section to issue 
  9.7   a request for competitive proposals for projects for electric 
  9.8   generation utilizing biomass as defined in paragraph (f) of this 
  9.9   subdivision to provide the remaining megawatts of the mandate.  
  9.10  The commission shall set an expedited schedule for submission of 
  9.11  proposals to the utility, selection by the utility of proposals 
  9.12  or projects, negotiation of contracts, and review by the 
  9.13  commission of the contracts or projects submitted by the utility 
  9.14  to the commission. 
  9.15     (d) Notwithstanding the provisions of subdivisions 1 to 5 
  9.16  but subject to the provisions of subdivisions 7 and 8, a new or 
  9.17  existing facility proposed under this subdivision that is fueled 
  9.18  either by biomass or by co-firing biomass with nonbiomass may 
  9.19  satisfy the mandate in this section.  Such a facility need not 
  9.20  use biomass that complies with the definition in subdivision 1 
  9.21  if it uses biomass as defined in paragraph (f) of this 
  9.22  subdivision.  Generating capacity produced by co-firing of 
  9.23  biomass that is operational as of April 25, 2000, does not meet 
  9.24  the requirements of the mandate, except that additional 
  9.25  co-firing capacity added at an existing facility after April 25, 
  9.26  2000, may be used to satisfy this mandate.  Only the number of 
  9.27  megawatts of capacity at a facility which co-fires biomass that 
  9.28  are directly attributable to the biomass and that become 
  9.29  operational after April 25, 2000, final commission action under 
  9.30  subdivision 9 count toward meeting the biomass mandate in this 
  9.31  section. 
  9.32     (e) Nothing in this subdivision precludes a facility 
  9.33  proposed and approved under this subdivision from using fuel 
  9.34  sources that are not biomass in compliance with subdivision 3. 
  9.35     (f) Notwithstanding the provisions of subdivision 1, for 
  9.36  proposals subject to this subdivision, "biomass" includes: 
 10.1      (1) farm-grown closed-loop biomass; agricultural wastes, 
 10.2   including animal, poultry, and plant wastes 
 10.3      (2) methane or other combustible gases derived from the 
 10.4   processing of plant or animal material; 
 10.5      (3) alternative fuels derived from soybean and other 
 10.6   agricultural plant oils or animal fats; 
 10.7      (4) combustion of barley hulls, corn, soy-based products or 
 10.8   other agricultural products or wastes; and 
 10.9      (5) waste wood, including chipped wood, bark, brush, 
 10.10  residue wood, and sawdust. 
 10.11     (g) Nothing in this subdivision affects in any way 
 10.12  contracts entered into as of April 25, 2000, to satisfy the 
 10.13  mandate in subdivision 5.  
 10.14     (h) Nothing in this subdivision requires a public utility 
 10.15  to retrofit its own power plants for the purpose of co-firing 
 10.16  biomass fuel, nor is a utility prohibited from retrofitting its 
 10.17  own power plants for the purpose of co-firing biomass fuel to 
 10.18  meet the requirements of this subdivision. 
 10.19     Sec. 7.  Minnesota Statutes 2002, section 216B.2424, 
 10.20  subdivision 8, is amended to read: 
 10.21     Subd. 8.  [AGRICULTURAL BIOMASS REQUIREMENT.] Of the 125 
 10.22  megawatts mandated in subdivision 5, at least 75 megawatts of 
 10.23  the generating capacity must be generated by facilities that use 
 10.24  agricultural biomass as the principal fuel source.  For purposes 
 10.25  of this subdivision, agricultural biomass includes only 
 10.26  farm-grown closed-loop biomass and agricultural waste, including 
 10.27  animal, poultry, and plant wastes those biomass fuel sources 
 10.28  listed in subdivision 6, paragraph (f), clauses (1) to (4).  For 
 10.29  purposes of this subdivision, "principal fuel source" means a 
 10.30  fuel source that satisfies at least 75 percent of the fuel 
 10.31  requirements of an electric power generating facility.  Nothing 
 10.32  in this subdivision is intended to expand the fuel source 
 10.33  requirements of subdivision 5.  
 10.34     Sec. 8.  Minnesota Statutes 2002, section 216B.2424, is 
 10.35  amended by adding a subdivision to read: 
 10.36     Subd. 9.  [STATUS REVIEW.] In January of 2004, the public 
 11.1   utilities commission shall conduct an initial review of all 
 11.2   projects selected to satisfy a portion of the biomass mandate 
 11.3   pursuant to this section, to make a preliminary determination of 
 11.4   each project's status and viability.  The commission shall 
 11.5   conduct follow-up reviews in June of 2004, and December of 2004. 
 11.6   By December 31, 2004, the commission shall: 
 11.7      (1) make a final determination as to each project's 
 11.8   viability; 
 11.9      (2) cancel the contract for any project that is not yet 
 11.10  producing electricity and that the commission determines is not 
 11.11  viable; and 
 11.12     (3) direct the public utility subject to the biomass 
 11.13  mandate to request competitive proposals under subdivision 6 for 
 11.14  the biomass capacity in the amount of the canceled contracts.  
 11.15     Sec. 9.  Minnesota Statutes 2002, section 216C.052, 
 11.16  subdivision 1, is amended to read: 
 11.17     Subdivision 1.  [RESPONSIBILITIES.] (a) There is 
 11.18  established the position of reliability administrator in the 
 11.19  department of commerce.  The administrator shall act as a source 
 11.20  of independent expertise and a technical advisor to the 
 11.21  commissioner, the commission, the public, and the legislative 
 11.22  electric energy task force on issues related to the reliability 
 11.23  of the electric system.  In conducting its work, the 
 11.24  administrator shall: 
 11.25     (1) model and monitor the use and operation of the energy 
 11.26  infrastructure in the state, including generation facilities, 
 11.27  transmission lines, natural gas pipelines, and other energy 
 11.28  infrastructure; 
 11.29     (2) develop and present to the commission and parties 
 11.30  technical analyses of proposed infrastructure projects, and 
 11.31  provide technical advice to the commission; 
 11.32     (3) present independent, factual, expert, and technical 
 11.33  information on infrastructure proposals and reliability issues 
 11.34  at public meetings hosted by the task force, the environmental 
 11.35  quality board, the department, or the commission; and 
 11.36     (4) in consultation and collaboration with experts within 
 12.1   the industry, state government, and the University of Minnesota 
 12.2   system, research and identify present and emerging energy 
 12.3   issues, including adequacy of energy supply to consumers in the 
 12.4   state, energy infrastructure issues, demand and delivery 
 12.5   concerns, environmental constraints, emerging energy-related 
 12.6   technologies fuels and applications, and reliability matters 
 12.7   that affect energy prices paid by Minnesota consumers.  In so 
 12.8   doing, the administrator shall serve as an information resource 
 12.9   to state agencies and legislators on energy issues affecting 
 12.10  Minnesota consumers. 
 12.11     (b) Upon request and subject to resource constraints, the 
 12.12  administrator shall provide technical assistance regarding 
 12.13  matters unrelated to applications for infrastructure 
 12.14  improvements to the task force, the department, or the 
 12.15  commission. 
 12.16     (c) The administrator may not advocate for any particular 
 12.17  outcome in a commission proceeding, but may give technical 
 12.18  advice to the commission as to the impact on the reliability of 
 12.19  the energy system of a particular project or projects.  The 
 12.20  administrator must not be considered a party or a participant in 
 12.21  any proceeding before the commission.  
 12.22     Sec. 10.  [REPEALER.] 
 12.23     Minnesota Statutes 2002, section 216B.2411, is repealed. 
 12.24     Sec. 11.  [EFFECTIVE DATE.] 
 12.25     Sections 1 to 10 are effective the day following final 
 12.26  enactment.