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; 
  1.11            216B.2425, by adding a subdivision; 216B.243, 
  1.12            subdivision 3b; 216C.051, subdivisions 3, 6, 9, by 
  1.13            adding a subdivision; 216C.052, subdivisions 2, 3; 
  1.14            216C.41, subdivisions 1, 2, 3, 4, 5, by adding 
  1.15            subdivisions; proposing coding for new law in 
  1.16            Minnesota Statutes, chapters 116C; 216B; repealing 
  1.17            Minnesota Statutes 2002, sections 116C.80; 216C.051, 
  1.18            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 that operates owns 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 spent 
  5.29  fuel that is located at the independent spent fuel storage 
  5.30  installation 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  commission pursuant to paragraph (c).  The fund transfer must be 
  5.34  made if nuclear waste is stored in a dry cask at the independent 
  5.35  spent fuel storage facility at Prairie Island for any part of a 
  5.36  year.  Funds in the account may be expended only for development 
  6.1   of renewable energy sources. Preference must be given to 
  6.2   development of renewable energy source projects located within 
  6.3   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 by state law Laws 1994, chapter 641, 
  7.22  or by commission order enacted or issued 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 
  7.36  members customers 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   electric energy provided to those retail customers utility'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 least not 
  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, by 2010 and one percent by 2015 2005.  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     Subd. 3.  [UTILITY PLANS FILED WITH THE COMMISSION.] (a) 
  9.11  Each electric utility shall report on its plans, activities, and 
  9.12  progress with regard to these objectives in their its filings 
  9.13  under section 216B.2422 or in a separate report submitted to the 
  9.14  commission every two years, whichever is more frequent, 
  9.15  demonstrating to the commission that the utility is making the 
  9.16  required good faith effort.  In its resource plan or a separate 
  9.17  report, each electric utility shall provide a description of: 
  9.18     (1) the status of the utility's renewable energy mix 
  9.19  relative to the good faith objective; 
  9.20     (2) efforts taken to meet the objective; 
  9.21     (3) any obstacles encountered or anticipated in meeting the 
  9.22  objective; and 
  9.23     (4) potential solutions to the obstacles. 
  9.24     (c) (b) The commission, in consultation with the 
  9.25  commissioner of commerce, shall compile the information provided 
  9.26  to the commission under paragraph (b) (a), and report to the 
  9.27  chairs of the house of representatives and senate committees 
  9.28  with jurisdiction over energy and environment policy issues as 
  9.29  to the progress of utilities in the state in increasing the 
  9.30  amount of renewable energy provided to retail customers, with 
  9.31  any recommendations for regulatory or legislative action, by 
  9.32  January 15, 2002 of each odd-numbered year. 
  9.33     Subd. 4.  [RENEWABLE ENERGY CREDITS.] (a) To facilitate 
  9.34  compliance with this section, the commission, by rule or order, 
  9.35  may establish a program for tradable credits for electricity 
  9.36  generated by an eligible energy technology.  In doing so, the 
 10.1   commission shall implement a system that constrains or limits 
 10.2   the cost of credits, taking care to ensure that such a system 
 10.3   does not undermine the market for those credits. 
 10.4      (b) In lieu of generating or procuring energy directly to 
 10.5   satisfy the renewable energy objective of this section, an 
 10.6   electric utility may purchase sufficient renewable energy 
 10.7   credits, issued pursuant to this subdivision, to meet its 
 10.8   objective. 
 10.9      (c) Upon the passage of a renewable energy standard, 
 10.10  portfolio, or objective in a bordering state that includes a 
 10.11  similar definition of eligible energy technology or renewable 
 10.12  energy, the commission may facilitate the trading of renewable 
 10.13  energy credits between states. 
 10.14     Subd. 5.  [TECHNOLOGY BASED ON FUEL COMBUSTION.] (a) 
 10.15  Electricity produced by fuel combustion may only count towards a 
 10.16  utility's objectives if the generation facility: 
 10.17     (1) was constructed in compliance with new source 
 10.18  performance standards promulgated under the federal Clean Air 
 10.19  Act for a generation facility of that type; or 
 10.20     (2) employs the maximum achievable or best available 
 10.21  control technology available for a generation facility of that 
 10.22  type. 
 10.23     (b) An eligible energy technology may blend or co-fire a 
 10.24  fuel listed in subdivision 1, paragraph (a), clause (1), with 
 10.25  other fuels in the generation facility, but only the percentage 
 10.26  of electricity that is attributable to a fuel listed in that 
 10.27  clause can be counted towards an electric utility's renewable 
 10.28  energy objectives. 
 10.29     Subd. 6.  [ELECTRIC UTILITY THAT OWNS A NUCLEAR GENERATION 
 10.30  FACILITY.] (a) An electric utility that owns a nuclear 
 10.31  generation facility, as part of its good-faith effort under this 
 10.32  subdivision and subdivision 2, shall deploy an additional 300 
 10.33  megawatts of nameplate capacity of wind energy conversion 
 10.34  systems by 2010, beyond the amount of wind energy capacity to 
 10.35  which the utility is required by law or commission order as of 
 10.36  May 1, 2003.  At least 100 megawatts of this capacity is to be 
 11.1   wind energy conversion systems of two megawatts or less, which 
 11.2   shall not be eligible for the production incentive under section 
 11.3   216C.41.  To the greatest extent technically feasible and 
 11.4   economic, these 300 megawatts of wind energy capacity are to be 
 11.5   distributed geographically throughout the state.  The utility 
 11.6   may opt to own, construct, and operate up to 100 megawatts of 
 11.7   this wind energy capacity, except that the utility may not own, 
 11.8   construct, or operate any of the facilities that are under two 
 11.9   megawatts of nameplate capacity.  The deployment of the wind 
 11.10  energy capacity under this subdivision must be consistent with 
 11.11  the outcome of the engineering study required under section 21. 
 11.12     (b) The renewable energy objective set forth in subdivision 
 11.13  2 shall be a requirement for the public utility that owns the 
 11.14  Prairie Island nuclear generation plant.  The objective is a 
 11.15  requirement subject to resource planning and least cost planning 
 11.16  requirements in section 216B.2422, unless implementation of the 
 11.17  objective can reasonably be shown to jeopardize the reliability 
 11.18  of the electric system.  The least cost planning analysis must 
 11.19  include the costs of ancillary services and other necessary 
 11.20  generation and transmission upgrades. 
 11.21     (c) Also as part of its good faith effort under this 
 11.22  section, the utility that owns a nuclear generation facility is 
 11.23  to enter into a power purchase agreement by January 1, 2004, for 
 11.24  ten to 20 megawatts of biomass energy and capacity at an 
 11.25  all-inclusive price not to exceed $55 per megawatt-hour, for a 
 11.26  project described in section 216B.2424, subdivision 5, paragraph 
 11.27  (e), clause (2).  The project must be operational and producing 
 11.28  energy by June 30, 2005. 
 11.29     Sec. 4.  [216B.1693] [CLEAN ENERGY TECHNOLOGY.] 
 11.30     (a) If the commission finds that a clean energy technology 
 11.31  is or is likely to be a least cost resource, including the costs 
 11.32  of ancillary services and other generation and transmission 
 11.33  upgrades necessary, the utility that owns a nuclear generating 
 11.34  facility shall supply at least two percent of the electric 
 11.35  energy provided to retail customers from clean energy technology.
 11.36     (b) Electric energy required by this section shall be 
 12.1   supplied by the innovative energy project defined in article 4, 
 12.2   section 1, subdivision 1, unless the commission finds doing so 
 12.3   contrary to the public interest.  
 12.4      (c) For purposes of this section, "clean energy technology" 
 12.5   means a technology utilizing coal as a primary fuel in a highly 
 12.6   efficient combined-cycle configuration with significantly 
 12.7   reduced sulfur dioxide, nitrogen oxide, particulate, and mercury 
 12.8   emissions from those of traditional technologies. 
 12.9      (d) This section expires January 1, 2012. 
 12.10     Sec. 5.  Minnesota Statutes 2002, section 216B.241, is 
 12.11  amended by adding a subdivision to read: 
 12.12     Subd. 6.  [RENEWABLE ENERGY RESEARCH.] (a) A public utility 
 12.13  that owns a nuclear generation facility in the state shall spend 
 12.14  five percent of the total amount that utility is required to 
 12.15  spend under this section to support basic and applied research 
 12.16  and demonstration activities at the University of Minnesota 
 12.17  Initiative for Renewable Energy and the Environment for the 
 12.18  development of renewable energy sources and technologies.  The 
 12.19  utility shall transfer the required amount to the University of 
 12.20  Minnesota on or before July 1 of each year and that annual 
 12.21  amount shall be deducted from the amount of money the utility is 
 12.22  required to spend under this section.  The University of 
 12.23  Minnesota shall transfer at least ten percent of these funds to 
 12.24  at least one rural campus or experiment station. 
 12.25     (b) Research funded under this subdivision shall include: 
 12.26     (1) development of environmentally sound production, 
 12.27  distribution, and use of energy, chemicals, and materials from 
 12.28  renewable sources; 
 12.29     (2) processing and utilization of agricultural and forestry 
 12.30  plant products and other bio-based, renewable sources as a 
 12.31  substitute for fossil-fuel-based energy, chemicals, and 
 12.32  materials using a variety of means including biocatalysis, 
 12.33  biorefining, and fermentation; 
 12.34     (3) conversion of state wind resources to hydrogen for 
 12.35  energy storage and transportation to areas of energy demand; 
 12.36     (4) improvements in scalable hydrogen fuel cell 
 13.1   technologies; and 
 13.2      (5) production of hydrogen from bio-based, renewable 
 13.3   sources; and sequestration of carbon. 
 13.4      (c) Notwithstanding other law to the contrary, the utility 
 13.5   may, but is not required to, spend more than two percent of its 
 13.6   gross operating revenues from service provided in this state 
 13.7   under this section or section 216B.2411. 
 13.8      (d) This subdivision expires June 30, 2008.  
 13.9      Sec. 6.  Minnesota Statutes 2002, section 216B.2411, is 
 13.10  amended to read: 
 13.11     216B.2411 [DISTRIBUTED ENERGY RESOURCES.] 
 13.12     Subdivision 1.  [GENERATION PROJECTS.] (a) To the extent 
 13.13  that cost-effective projects are available in the service 
 13.14  territory of a utility or association providing conservation 
 13.15  services under section 216B.241, the utility or association 
 13.16  shall Any municipality or rural electric association providing 
 13.17  electric service and subject to section 216B.241 that is meeting 
 13.18  the objectives under section 216B.1691 may, and each public 
 13.19  utility may, use five percent of the total amount to be spent on 
 13.20  energy conservation improvements under section 216B.241, on: 
 13.21     (1) projects in Minnesota to construct an electric 
 13.22  generating facility that utilizes eligible renewable fuels 
 13.23  energy sources as defined in section 216B.2422, subdivision 1 2, 
 13.24  such as methane or other combustible gases derived from the 
 13.25  processing of plant or animal wastes, biomass fuels such as 
 13.26  short-rotation woody or fibrous agricultural crops, or other 
 13.27  renewable fuel, as its primary fuel source; or 
 13.28     (2) projects in Minnesota to install a distributed 
 13.29  generation facility of ten megawatts or less of interconnected 
 13.30  capacity that is fueled by natural gas, renewable fuels, or 
 13.31  another similarly clean fuel.  
 13.32     (b) For public utilities, as defined under section 216B.02, 
 13.33  subdivision 4, projects under this section must be considered 
 13.34  energy conservation improvements as defined in section 
 13.35  216B.241.  For cooperative electric associations and municipal 
 13.36  utilities, projects under this section must be considered 
 14.1   load-management activities described in section 216B.241, 
 14.2   subdivision 1, paragraph (i).  
 14.3      (d) This section expires May 30, 2006.  
 14.4      Subd. 2.  [DEFINITIONS.] (a) For the purposes of this 
 14.5   section, the terms defined in this subdivision and section 
 14.6   216B.241, subdivision 1, have the meanings given them. 
 14.7      (b) "Eligible renewable energy sources" means fuels and 
 14.8   technologies to generate electricity through the use of any of 
 14.9   the resources listed in section 216B.1691, subdivision 1, 
 14.10  paragraph (a), clause (1), except that the term "biomass" has 
 14.11  the meaning provided under paragraph (c). 
 14.12     (c) "Biomass" includes: 
 14.13     (1) methane or other combustible gases derived from the 
 14.14  processing of plant or animal material; 
 14.15     (2) alternative fuels derived from soybean and other 
 14.16  agricultural plant oils or animal fats; 
 14.17     (3) combustion of barley hulls, corn, soy-based products, 
 14.18  or other agricultural products; 
 14.19     (4) wood residue from the wood products industry in 
 14.20  Minnesota or other wood products such as short-rotation woody or 
 14.21  fibrous agricultural crops; and 
 14.22     (5) landfill gas, mixed municipal solid waste, and 
 14.23  refuse-derived fuel from mixed municipal solid waste.  
 14.24     Subd. 3.  [OTHER PROVISIONS.] (a) Electricity generated by 
 14.25  a facility constructed with funds provided under this section 
 14.26  and using an eligible renewable energy source may be counted 
 14.27  towards the renewable energy objectives in section 216B.1691, 
 14.28  subject to the provisions of that section. 
 14.29     (b) Two or more entities may pool resources under this 
 14.30  section to provide assistance jointly to proposed eligible 
 14.31  renewable energy projects.  The entities shall negotiate and 
 14.32  agree among themselves for allocation of benefits associated 
 14.33  with a project, such as the ability to count energy generated by 
 14.34  a project toward a utility's renewable energy objectives under 
 14.35  section 216B.1691.  The entities shall provide a summary of the 
 14.36  allocation of benefits to the commissioner.  A utility may spend 
 15.1   funds under this section for projects in Minnesota that are 
 15.2   outside the service territory of the utility. 
 15.3      Sec. 7.  Minnesota Statutes 2002, section 216B.2424, 
 15.4   subdivision 5, is amended to read: 
 15.5      Subd. 5.  [MANDATE.] (a) A public utility, as defined in 
 15.6   section 216B.02, subdivision 4, that operates a nuclear-powered 
 15.7   electric generating plant within this state must construct and 
 15.8   operate, purchase, or contract to construct and operate (1) by 
 15.9   December 31, 1998, 50 megawatts of electric energy installed 
 15.10  capacity generated by farm-grown closed-loop biomass scheduled 
 15.11  to be operational by December 31, 2001; and (2) by December 31, 
 15.12  1998, an additional 75 megawatts of installed capacity so 
 15.13  generated scheduled to be operational by December 31, 2002.  
 15.14     (b) Of the 125 megawatts of biomass electricity installed 
 15.15  capacity required under this subdivision, no more than 50 55 
 15.16  megawatts of this capacity may be provided by a facility that 
 15.17  uses poultry litter as its primary fuel source and any such 
 15.18  facility:  
 15.19     (1) need not use biomass that complies with the definition 
 15.20  in subdivision 1; 
 15.21     (2) must enter into a contract with the public utility for 
 15.22  such capacity, that has an average purchase price per megawatt 
 15.23  hour over the life of the contract that is equal to or less than 
 15.24  the average purchase price per megawatt hour over the life of 
 15.25  the contract in contracts approved by the public utilities 
 15.26  commission before April 1, 2000, to satisfy the mandate of this 
 15.27  section, and file that contract with the public utilities 
 15.28  commission prior to September 1, 2000; and 
 15.29     (3) must schedule such capacity to be operational by 
 15.30  December 31, 2002.  
 15.31     (c) Of the total 125 megawatts of biomass electric energy 
 15.32  installed capacity required under this section, no more than 75 
 15.33  megawatts may be provided by a single project.  
 15.34     (d) Of the 75 megawatts of biomass electric energy 
 15.35  installed capacity required under paragraph (a), clause (2), no 
 15.36  more than 25 33 megawatts of this capacity may be provided by a 
 16.1   St. Paul district heating and cooling system cogeneration 
 16.2   facility utilizing waste wood as a primary fuel source.  The St. 
 16.3   Paul district heating and cooling system cogeneration facility 
 16.4   need not use biomass that complies with the definition in 
 16.5   subdivision 1.  
 16.6      (e) The public utility must accept and consider on an equal 
 16.7   basis with other biomass proposals: 
 16.8      (1) a proposal to satisfy the requirements of this section 
 16.9   that includes a project that exceeds the megawatt capacity 
 16.10  requirements of either paragraph (a), clause (1) or (2), and 
 16.11  that proposes to sell the excess capacity to the public utility 
 16.12  or to other purchasers; and 
 16.13     (2) a proposal for a new facility to satisfy more than ten 
 16.14  but not more than 20 megawatts of the electrical generation 
 16.15  requirements by a small business-sponsored independent power 
 16.16  producer facility to be located within the northern quarter of 
 16.17  the state, which means the area located north of Constitutional 
 16.18  Route No. 8 as described in section 161.114, subdivision 2, and 
 16.19  that utilizes biomass residue wood, sawdust, bark, chipped wood, 
 16.20  or brush to generate electricity.  A facility described in this 
 16.21  clause is not required to utilize biomass complying with the 
 16.22  definition in subdivision 1, but must have the capacity required 
 16.23  by this clause operational by December 31, 2002. 
 16.24     (f) If a public utility files a contract with the 
 16.25  commission for electric energy installed capacity that uses 
 16.26  poultry litter as its primary fuel source, the commission must 
 16.27  do a preliminary review of the contract to determine if it meets 
 16.28  the purchase price criteria provided in paragraph (b), clause 
 16.29  (2), of this subdivision.  The commission shall perform its 
 16.30  review and advise the parties of its determination within 30 
 16.31  days of filing of such a contract by a public utility.  A public 
 16.32  utility may submit by September 1, 2000, a revised contract to 
 16.33  address the commission's preliminary determination.  
 16.34     (g) The commission shall finally approve, modify, or 
 16.35  disapprove no later than July 1, 2001, all contracts submitted 
 16.36  by a public utility as of September 1, 2000, to meet the mandate 
 17.1   set forth in this subdivision.  
 17.2      (h) If a public utility subject to this section exercises 
 17.3   an option to increase the generating capacity of a project in a 
 17.4   contract approved by the commission prior to April 25, 2000, to 
 17.5   satisfy the mandate in this subdivision, the public utility must 
 17.6   notify the commission by September 1, 2000, that it has 
 17.7   exercised the option and include in the notice the amount of 
 17.8   additional megawatts to be generated under the option 
 17.9   exercised.  Any review by the commission of the project after 
 17.10  exercise of such an option shall be based on the same criteria 
 17.11  used to review the existing contract. 
 17.12     (i) A facility specified in this subdivision qualifies for 
 17.13  exemption from property taxation under section 272.02, 
 17.14  subdivision 43. 
 17.15     Sec. 8.  Minnesota Statutes 2002, section 216B.2425, is 
 17.16  amended by adding a subdivision to read: 
 17.17     Subd. 7.  [TRANSMISSION NEEDED TO SUPPORT RENEWABLE 
 17.18  RESOURCES.] Each entity subject to this section shall determine 
 17.19  necessary transmission upgrades to support development of 
 17.20  renewable energy resources required to meet objectives under 
 17.21  section 216B.1691 and shall include those upgrades in its report 
 17.22  under subdivision 2. 
 17.23     Sec. 9.  Minnesota Statutes 2002, section 216C.41, 
 17.24  subdivision 1, is amended to read: 
 17.25     Subdivision 1.  [DEFINITIONS.] (a) The definitions in this 
 17.26  subdivision apply to this section. 
 17.27     (b) "Qualified hydroelectric facility" means a 
 17.28  hydroelectric generating facility in this state that: 
 17.29     (1) is located at the site of a dam, if the dam was in 
 17.30  existence as of March 31, 1994; and 
 17.31     (2) begins generating electricity after July 1, 1994, or 
 17.32  generates electricity after substantial refurbishing of a 
 17.33  facility that begins after July 1, 2001. 
 17.34     (c) "Qualified wind energy conversion facility" means a 
 17.35  wind energy conversion system in this state that: 
 17.36     (1) produces two megawatts or less of electricity as 
 18.1   measured by nameplate rating and begins generating electricity 
 18.2   after December 31, 1996, and before July 1, 1999; 
 18.3      (2) begins generating electricity after June 30, 1999, 
 18.4   produces two megawatts or less of electricity as measured by 
 18.5   nameplate rating, and is: 
 18.6      (i) located within one county and owned by a natural person 
 18.7   who an entity that is not prohibited from owning agricultural 
 18.8   land under section 500.24 that owns the land where the facility 
 18.9   is sited; 
 18.10     (ii) owned by a Minnesota small business as defined in 
 18.11  section 645.445; 
 18.12     (iii) owned by a Minnesota nonprofit organization; or 
 18.13     (iv) owned by a tribal council if the facility is located 
 18.14  within the boundaries of the reservation; or 
 18.15     (v) owned by a Minnesota municipal utility or a Minnesota 
 18.16  cooperative electric association; or 
 18.17     (vi) owned by a Minnesota political subdivision or local 
 18.18  government, including, but not limited to, a county, statutory 
 18.19  or home rule charter city, town, school district, or any other 
 18.20  local or regional governmental organization such as a board, 
 18.21  commission, or association; or 
 18.22     (3) begins generating electricity after June 30, 1999, 
 18.23  produces seven megawatts or less of electricity as measured by 
 18.24  nameplate rating, and: 
 18.25     (i) is owned by a cooperative organized under chapter 
 18.26  308A other than a Minnesota cooperative electric association; 
 18.27  and 
 18.28     (ii) all shares and membership in the cooperative are held 
 18.29  by natural persons or estates, at least 51 percent of whom 
 18.30  reside in a county or contiguous to a county where the wind 
 18.31  energy production facilities of the cooperative are located an 
 18.32  entity that is not prohibited from owning agricultural land 
 18.33  under section 500.24. 
 18.34     (d) "Qualified on-farm biogas recovery facility" means an 
 18.35  anaerobic digester system that: 
 18.36     (1) is located at the site of an agricultural operation; 
 19.1      (2) is owned by a natural person who an entity that is not 
 19.2   prohibited from owning agricultural land under section 500.24 
 19.3   that owns or rents the land where the facility is located; and 
 19.4      (3) begins generating electricity after July 1, 2001.  
 19.5      (e) "Anaerobic digester system" means a system of 
 19.6   components that processes animal waste based on the absence of 
 19.7   oxygen and produces gas used to generate electricity. 
 19.8      Sec. 10.  Minnesota Statutes 2002, section 216C.41, 
 19.9   subdivision 2, is amended to read: 
 19.10     Subd. 2.  [INCENTIVE PAYMENT; APPROPRIATION.] (a) Incentive 
 19.11  payments must be made according to this section to (1) a 
 19.12  qualified on-farm biogas recovery facility, (2) the owner or 
 19.13  operator of a qualified hydropower facility or qualified wind 
 19.14  energy conversion facility for electric energy generated and 
 19.15  sold by the facility, (3) a publicly owned hydropower facility 
 19.16  for electric energy that is generated by the facility and used 
 19.17  by the owner of the facility outside the facility, or (4) the 
 19.18  owner of a publicly owned dam that is in need of substantial 
 19.19  repair, for electric energy that is generated by a hydropower 
 19.20  facility at the dam and the annual incentive payments will be 
 19.21  used to fund the structural repairs and replacement of 
 19.22  structural components of the dam, or to retire debt incurred to 
 19.23  fund those repairs. 
 19.24     (b) Payment may only be made upon receipt by the 
 19.25  commissioner of finance of an incentive payment application that 
 19.26  establishes that the applicant is eligible to receive an 
 19.27  incentive payment and that satisfies other requirements the 
 19.28  commissioner deems necessary.  The application must be in a form 
 19.29  and submitted at a time the commissioner establishes.  
 19.30     (c) There is annually appropriated from the general fund to 
 19.31  the commissioner of commerce sums sufficient to make the 
 19.32  payments required under this section, other than the amounts 
 19.33  funded by the renewable development account as specified in 
 19.34  subdivision 5a. 
 19.35     Sec. 11.  Minnesota Statutes 2002, section 216C.41, 
 19.36  subdivision 3, is amended to read: 
 20.1      Subd. 3.  [ELIGIBILITY WINDOW.] Payments may be made under 
 20.2   this section only for electricity generated: 
 20.3      (1) from a qualified hydroelectric facility that is 
 20.4   operational and generating electricity before December 31, 2005; 
 20.5      (2) from a qualified wind energy conversion facility that 
 20.6   is operational and generating electricity before January 1, 2005 
 20.7   2007; or 
 20.8      (3) from a qualified on-farm biogas recovery facility from 
 20.9   July 1, 2001, through December 31, 2015 2017. 
 20.10     Sec. 12.  Minnesota Statutes 2002, section 216C.41, 
 20.11  subdivision 4, is amended to read: 
 20.12     Subd. 4.  [PAYMENT PERIOD.] (a) A facility may receive 
 20.13  payments under this section for a ten-year period.  No payment 
 20.14  under this section may be made for electricity generated: 
 20.15     (1) by a qualified hydroelectric facility after December 
 20.16  31, 2015 2017; 
 20.17     (2) by a qualified wind energy conversion facility after 
 20.18  December 31, 2015 2017; or 
 20.19     (3) by a qualified on-farm biogas recovery facility after 
 20.20  December 31, 2015.  
 20.21     (b) The payment period begins and runs consecutively from 
 20.22  the first year in which electricity generated from the facility 
 20.23  is eligible for incentive payment the date the facility begins 
 20.24  generating electricity or, in the case of refurbishment of a 
 20.25  hydropower facility, after substantial repairs to the hydropower 
 20.26  facility dam funded by the incentive payments are initiated. 
 20.27     Sec. 13.  Minnesota Statutes 2002, section 216C.41, 
 20.28  subdivision 5, is amended to read: 
 20.29     Subd. 5.  [AMOUNT OF PAYMENT; WIND FACILITIES LIMIT.] (a) 
 20.30  An incentive payment is based on the number of kilowatt hours of 
 20.31  electricity generated. The amount of the payment is: 
 20.32     (1) for a facility described under subdivision 2, paragraph 
 20.33  (a), clause (4), 1.0 cent per kilowatt hour; and 
 20.34     (2) for all other facilities, 1.5 cents per kilowatt hour.  
 20.35  For electricity generated by qualified wind energy conversion 
 20.36  facilities, the incentive payment under this section is limited 
 21.1   to no more than 100 megawatts of nameplate capacity.  During any 
 21.2   period in which qualifying claims for incentive payments exceed 
 21.3   100 megawatts of nameplate capacity, the payments must be made 
 21.4   to producers in the order in which the production capacity was 
 21.5   brought into production.  
 21.6      (b) For wind energy conversion systems installed and 
 21.7   contracted for after January 1, 2002, the total size of a wind 
 21.8   energy conversion system under this section must be determined 
 21.9   according to this paragraph.  Unless the systems are 
 21.10  interconnected with different distribution systems, the 
 21.11  nameplate capacity of one wind energy conversion system must be 
 21.12  combined with the nameplate capacity of any other wind energy 
 21.13  conversion system that is: 
 21.14     (1) located within five miles of the wind energy conversion 
 21.15  system; 
 21.16     (2) constructed within the same calendar year as the wind 
 21.17  energy conversion system; and 
 21.18     (3) under common ownership. 
 21.19  In the case of a dispute, the commissioner of commerce shall 
 21.20  determine the total size of the system, and shall draw all 
 21.21  reasonable inferences in favor of combining the systems. 
 21.22     (c) In making a determination under paragraph (b), the 
 21.23  commissioner of commerce may determine that two wind energy 
 21.24  conversion systems are under common ownership when the 
 21.25  underlying ownership structure contains similar persons or 
 21.26  entities, even if the ownership shares differ between the two 
 21.27  systems.  Wind energy conversion systems are not under common 
 21.28  ownership solely because the same person or entity provided 
 21.29  equity financing for the systems. 
 21.30     Sec. 14.  Minnesota Statutes 2002, section 216C.41, is 
 21.31  amended by adding a subdivision to read: 
 21.32     Subd. 5a.  [RENEWABLE DEVELOPMENT ACCOUNT.] The department 
 21.33  of commerce shall authorize payment of the renewable energy 
 21.34  production incentive to wind energy conversion systems for 100 
 21.35  megawatts of nameplate capacity in addition to the capacity 
 21.36  authorized under subdivision 5 and to on-farm biogas recovery 
 22.1   facilities.  Payment of the incentive shall be made from the 
 22.2   renewable energy development account as provided under section 
 22.3   116C.779, subdivision 2. 
 22.4      Sec. 15.  Minnesota Statutes 2002, section 216C.41, is 
 22.5   amended by adding a subdivision to read: 
 22.6      Subd. 7.  [ELIGIBILITY PROCESS.] (a) A qualifying project 
 22.7   is eligible for the incentive on the date the commissioner 
 22.8   receives: 
 22.9      (1) an application for payment of the incentive; 
 22.10     (2) one of the following: 
 22.11     (i) a copy of a signed power purchase agreement; 
 22.12     (ii) a copy of a binding agreement other than a power 
 22.13  purchase agreement to sell electricity generated by the project 
 22.14  to a third person; or 
 22.15     (iii) if the project developer or owner will sell 
 22.16  electricity to its own members or customers, a copy of the 
 22.17  purchase order for equipment to construct the project with a 
 22.18  delivery date and a copy of a signed receipt for a nonrefundable 
 22.19  deposit; and 
 22.20     (3) any other information the commissioner deems necessary 
 22.21  to determine whether the proposed project qualifies for the 
 22.22  incentive under this section.  
 22.23     (b) The commissioner shall determine whether a project 
 22.24  qualifies for the incentive and respond in writing to the 
 22.25  applicant approving or denying the application within 15 working 
 22.26  days of receipt of the information required in paragraph (a).  A 
 22.27  project that is not operational within 18 months of receipt of a 
 22.28  letter of approval is no longer approved for the incentive.  The 
 22.29  commissioner shall notify an applicant of potential loss of 
 22.30  approval not less than 60 days prior to the end of the 18-month 
 22.31  period.  Eligibility for a project that loses approval may be 
 22.32  reestablished as of the date the commissioner receives a new 
 22.33  completed application. 
 22.34     Sec. 16.  [REDUCTION OF BIOMASS MANDATE.] 
 22.35     Notwithstanding Minnesota Statutes, section 216B.2424, the 
 22.36  biomass electric energy mandate shall be reduced from 125 
 23.1   megawatts to 110 megawatts.  The public utilities commission 
 23.2   shall approve a request pending before the public utilities 
 23.3   commission as of May 15, 2003, for an amendment and assignment 
 23.4   of a contract for power from a facility that uses 
 23.5   short-rotation, woody crops as its primary fuel previously 
 23.6   approved to satisfy a portion of the biomass mandate if the 
 23.7   developer of the project agrees to reduce the size of its 
 23.8   project from 50 megawatts to 35 megawatts, while maintaining a 
 23.9   price for energy at or below the current contract price. 
 23.10     Sec. 17.  [RENEWABLE DEVELOPMENT FUND ADMINISTRATION.] 
 23.11     The public utilities commission may review the 
 23.12  appropriateness of the transfer of the administration of the 
 23.13  renewable development account under Minnesota Statutes, section 
 23.14  116C.779, to an independent administrator initially selected by 
 23.15  the commissioner of commerce and answerable to a board of 
 23.16  directors that includes representatives from the public utility 
 23.17  currently administering the fund, environmental organizations, 
 23.18  legislators, representatives of residential and business 
 23.19  consumers, the Mdewakanton Dakota community, and other affected 
 23.20  communities.  Upon petition, the commission may approve the 
 23.21  transfer if, upon completion of the review, the transfer is 
 23.22  consistent with the public interest. 
 23.23     Sec. 18.  [HYDROGEN ECONOMY RESEARCH.] 
 23.24     (a) Notwithstanding Minnesota Statutes, section 116C.779, 
 23.25  subdivision 1, paragraph (b), $10,000,000 from the renewable 
 23.26  development account established in Minnesota Statutes, section 
 23.27  116C.779, from unobligated funds in the account as of June 30, 
 23.28  2003, shall be distributed to the University of Minnesota 
 23.29  Initiative for Renewable Energy and the Environment to support 
 23.30  basic and applied research and demonstration activities at the 
 23.31  university.  These funds shall be transferred to the University 
 23.32  of Minnesota on or before July 1, 2003.  The university shall 
 23.33  ensure that at least $3,000,000 of these funds are available for 
 23.34  basic and applied research, for construction and deployment of 
 23.35  research technologies, or for other purposes in support of this 
 23.36  research, at one rural campus or experiment station. 
 24.1      (b) Research funded under this section must focus on: 
 24.2      (1) development of environmentally sound production, 
 24.3   distribution, and use of energy, chemicals, and materials from 
 24.4   renewable resources; 
 24.5      (2) processing and utilization of agricultural and forestry 
 24.6   plant products and other bio-based, renewable sources as a 
 24.7   substitute for fossil-fuel-based energy, chemicals, and 
 24.8   materials using a variety of means including biocatalysis, 
 24.9   biorefining, and fermentation; 
 24.10     (3) conversion of state wind resources to hydrogen for 
 24.11  energy storage and transportation to areas of energy demand; 
 24.12     (4) improvements in scalable hydrogen fuel cell 
 24.13  technologies; and 
 24.14     (5) production of hydrogen from bio-based, renewable 
 24.15  sources; and sequestration of carbon. 
 24.16     Sec. 19.  [DEPARTMENT OF TRADE AND ECONOMIC DEVELOPMENT; 
 24.17  PROGRAM DEVELOPMENT.] 
 24.18     Subdivision 1.  [DEVELOPMENT OF BUSINESSES ENGAGED IN 
 24.19  HYDROGEN PRODUCTION.] The department of trade and economic 
 24.20  development must develop a targeted program to promote and 
 24.21  encourage the development and attraction of businesses engaged 
 24.22  in the biocatalysis of agricultural and forestry plant products 
 24.23  for the production of hydrogen, the manufacture of hydrogen fuel 
 24.24  cells, and hydrogen electrolysis from renewable energy sources.  
 24.25  The program may make use of existing departmental programs, 
 24.26  either alone or in combination.  The department shall report to 
 24.27  the legislature by January 15, 2004, on legislative changes or 
 24.28  additional funding needed, if any, to accomplish the purposes of 
 24.29  this section.  
 24.30     Subd. 2.  [ENERGY INNOVATION ZONES.] (a) The commissioner 
 24.31  of trade and economic development, in consultation with the 
 24.32  commissioners of commerce and revenue, shall develop a plan to 
 24.33  designate not more than three energy innovation zones to spur 
 24.34  the development of fuel cells, fuel cell components, hydrogen 
 24.35  infrastructure, and other energy efficiency and renewable energy 
 24.36  technologies in the state.  In developing the criteria for the 
 25.1   designations, the commissioner shall consider: 
 25.2      (1) the availability of business, academic, and government 
 25.3   partners; 
 25.4      (2) the likelihood of establishing a distributed, renewable 
 25.5   energy microgrid to power the zone, providing below-market 
 25.6   electricity and heat to businesses from within the zone; 
 25.7      (3) the prospect of tenants for the zone that will 
 25.8   represent net new jobs to the state; and 
 25.9      (4) the likelihood of the production, storage, 
 25.10  distribution, and use of hydrogen, including its use in fuel 
 25.11  cells, for electricity and heat. 
 25.12     (b) Energy under paragraph (a), clause (2), must come from 
 25.13  one or more of the following renewable sources:  wind, water, 
 25.14  sun, biomass, not including municipal solid waste, or hydrogen 
 25.15  reformed from natural gas up to 2010. 
 25.16     (c) The plan must allow for interested parties to form 
 25.17  energy innovation cooperatives.  In addition, the commissioner 
 25.18  must consider the feasibility of the sale of energy innovation 
 25.19  bonds for the construction of qualifying facilities. 
 25.20     (d) In drafting the plan, the commissioner must consider 
 25.21  incentives for investment in the zone, including: 
 25.22     (1) subsidization of construction of qualifying facilities; 
 25.23     (2) long-term contracts for market-rate heat and power; 
 25.24     (3) streamlined interconnection to the existing power grid; 
 25.25     (4) exemptions from property tax; 
 25.26     (5) expedited permitting; 
 25.27     (6) methods for providing technical assistance; and 
 25.28     (7) other methods of encouraging the development and use of 
 25.29  fuel cell and hydrogen generation technologies. 
 25.30     (e) The commissioner shall report to the legislature by 
 25.31  January 15, 2004, on legislative changes and necessary funding 
 25.32  to accomplish the purposes of this subdivision. 
 25.33     Sec. 20.  [DEMONSTRATION PROJECT.] 
 25.34     (a) The department of commerce, in cooperation with the 
 25.35  department of trade and economic development, must develop and 
 25.36  issue a request for proposal for the construction of a 
 26.1   hydrogen-to-electricity demonstration project with the following 
 26.2   components:  
 26.3      (1) commercial-scale windmill-powered electrolysis of water 
 26.4   to hydrogen; 
 26.5      (2) on-site storage of hydrogen and fuel cells for 
 26.6   hydrogen-to-electricity conversion to maintain the supply of 
 26.7   electricity in the absence of wind; 
 26.8      (3) a hydrogen pipeline of less than ten miles to a public 
 26.9   facility demonstration site; and 
 26.10     (4) a public facility with on-site hydrogen fuel cells 
 26.11  providing hydrogen to electricity and, if practicable, 
 26.12  heating/cooling function.  
 26.13     (b) For purposes of this section, a "public facility" is a 
 26.14  municipal building, public school, state college or university, 
 26.15  or other public building. 
 26.16     Sec. 21.  [INDEPENDENT STUDY ON INTERMITTENT RESOURCES.] 
 26.17     The commission shall order the electric utility subject to 
 26.18  Minnesota Statutes, section 216B.1691, subdivision 7, to 
 26.19  contract with a firm selected by the commissioner of commerce 
 26.20  for an independent engineering study of the impacts of 
 26.21  increasing wind capacity on its system above the 825 megawatts 
 26.22  of nameplate wind energy capacity to which the utility is 
 26.23  already committed, to evaluate options available to manage the 
 26.24  intermittent nature of this renewable resource.  The study shall 
 26.25  be completed by June 1, 2004, and incorporated into the 
 26.26  utility's next resource plan filing.  The costs of the study, 
 26.27  options pursued by the utility to manage the intermittent nature 
 26.28  of wind energy, and the costs of complying with Minnesota 
 26.29  Statutes, section 216B.1691, subdivision 7, shall be recoverable 
 26.30  under Minnesota Statutes, section 216B.1645. 
 26.31     Sec. 22.  [EFFECTIVE DATE.] 
 26.32     This article is effective the day following final enactment.
 26.33                             ARTICLE 3
 26.34                          OTHER PROVISIONS
 26.35     Section 1.  Minnesota Statutes 2002, section 216B.095, is 
 26.36  amended to read: 
 27.1      216B.095 [DISCONNECTION DURING COLD WEATHER.] 
 27.2      The commission shall amend its rules governing 
 27.3   disconnection of residential utility customers who are unable to 
 27.4   pay for utility service during cold weather to include the 
 27.5   following: 
 27.6      (1) coverage of customers whose household income is less 
 27.7   than 50 percent of the state median income; 
 27.8      (2) a requirement that a customer who pays the utility at 
 27.9   least ten percent of the customer's income or the full amount of 
 27.10  the utility bill, whichever is less, in a cold weather month 
 27.11  cannot be disconnected during that month.  The customer's income 
 27.12  means the actual monthly income of the customer or the average 
 27.13  monthly income of the customer computed on an annual calendar 
 27.14  year, whichever is less, and does not include any amount 
 27.15  received for energy assistance; 
 27.16     (3) that the ten percent figure in clause (2) must be 
 27.17  prorated between energy providers proportionate to each 
 27.18  provider's share of the customer's total energy costs where the 
 27.19  customer receives service from more than one provider; 
 27.20     (4) verification of income by the local energy assistance 
 27.21  provider or the utility, unless the customer is automatically 
 27.22  eligible for protection against disconnection as a recipient of 
 27.23  any form of public assistance, including energy assistance, that 
 27.24  uses income eligibility in an amount at or below the income 
 27.25  eligibility in clause (1); 
 27.26     (5) a requirement that the customer receive referrals to 
 27.27  energy assistance, weatherization, conservation, or other 
 27.28  programs likely to reduce the customer's energy bills; and 
 27.29     (6) a requirement that customers who have demonstrated an 
 27.30  inability to pay on forms provided for that purpose by the 
 27.31  utility, and who make reasonably timely payments to the utility 
 27.32  under a payment plan that considers the financial resources of 
 27.33  the household, cannot be disconnected from utility service from 
 27.34  October 15 through April 15.  A customer who is receiving energy 
 27.35  assistance is deemed to have demonstrated an inability to pay. 
 27.36     For the purposes of this section, "disconnection" includes 
 28.1   a service or load limiter or any device that limits or 
 28.2   interrupts electric service in any way. 
 28.3      Sec. 2.  Minnesota Statutes 2002, section 216B.097, is 
 28.4   amended by adding a subdivision to read: 
 28.5      Subd. 4.  [APPLICATION TO SERVICE LIMITERS.] For the 
 28.6   purposes of this section, "disconnection" includes a service or 
 28.7   load limiter or any device that limits or interrupts electric 
 28.8   service in any way. 
 28.9      Sec. 3.  [216B.0975] [DISCONNECTION DURING EXTREME HEAT 
 28.10  CONDITIONS; RECONNECTION.] 
 28.11     A utility may not effect an involuntary disconnection of 
 28.12  residential services in affected counties when an excessive heat 
 28.13  watch, heat advisory, or excessive heat warning issued by the 
 28.14  National Weather Service is in effect.  For purposes of this 
 28.15  section, "utility" means a public utility providing electric 
 28.16  service, municipal utility, or cooperative electric association. 
 28.17     Sec. 4.  Minnesota Statutes 2002, section 216B.241, 
 28.18  subdivision 1b, is amended to read: 
 28.19     Subd. 1b.  [CONSERVATION IMPROVEMENT BY COOPERATIVE 
 28.20  ASSOCIATION OR MUNICIPALITY.] (a) This subdivision applies to: 
 28.21     (1) a cooperative electric association that provides retail 
 28.22  service to its members; 
 28.23     (2) a municipality that provides electric service to retail 
 28.24  customers; and 
 28.25     (3) a municipality with gross operating revenues in excess 
 28.26  of $5,000,000 from sales of natural gas to retail customers.  
 28.27     (b) Each cooperative electric association and municipality 
 28.28  subject to this subdivision shall spend and invest for energy 
 28.29  conservation improvements under this subdivision the following 
 28.30  amounts: 
 28.31     (1) for a municipality, 0.5 percent of its gross operating 
 28.32  revenues from the sale of gas and 1.5 percent of its gross 
 28.33  operating revenues from the sale of electricity, excluding gross 
 28.34  operating revenues from electric and gas service provided in the 
 28.35  state to large electric customer facilities; and 
 28.36     (2) for a cooperative electric association, 1.5 percent of 
 29.1   its gross operating revenues from service provided in the state, 
 29.2   excluding gross operating revenues from service provided in the 
 29.3   state to large electric customer facilities indirectly through a 
 29.4   distribution cooperative electric association. 
 29.5      (c) Each municipality and cooperative electric association 
 29.6   subject to this subdivision shall identify and implement energy 
 29.7   conservation improvement spending and investments that are 
 29.8   appropriate for the municipality or association, except that a 
 29.9   municipality or association may not spend or invest for energy 
 29.10  conservation improvements that directly benefit a large electric 
 29.11  customer facility for which the commissioner has issued an 
 29.12  exemption under subdivision 1a, paragraph (b). 
 29.13     (d) Each municipality and cooperative electric association 
 29.14  subject to this subdivision may spend and invest annually up to 
 29.15  ten percent of the total amount required to be spent and 
 29.16  invested on energy conservation improvements under this 
 29.17  subdivision on research and development projects that meet the 
 29.18  definition of energy conservation improvement in subdivision 1 
 29.19  and that are funded directly by the municipality or cooperative 
 29.20  electric association.  
 29.21     (e) Load-management activities that do not reduce energy 
 29.22  use but that increase the efficiency of the electric system may 
 29.23  be used to meet the following percentage of the conservation 
 29.24  investment and spending requirements of this subdivision: 
 29.25     (1) 2002 - 90 percent; 
 29.26     (2) 2003 - 80 percent; 
 29.27     (3) 2004 - 65 percent; and 
 29.28     (4) 2005 and thereafter - 50 percent. 
 29.29     (f) A generation and transmission cooperative electric 
 29.30  association that provides energy services to cooperative 
 29.31  electric associations that provide electric service at retail to 
 29.32  consumers may invest in energy conservation improvements on 
 29.33  behalf of the associations it serves and may fulfill the 
 29.34  conservation, spending, reporting, and energy savings goals on 
 29.35  an aggregate basis.  A municipal power agency or other 
 29.36  not-for-profit entity that provides energy service to municipal 
 30.1   utilities that provide electric service at retail may invest in 
 30.2   energy conservation improvements on behalf of the municipal 
 30.3   utilities it serves and may fulfill the conservation, spending, 
 30.4   reporting, and energy savings goals on an aggregate basis, under 
 30.5   an agreement between the municipal power agency or 
 30.6   not-for-profit entity and each municipal utility for funding the 
 30.7   investments. 
 30.8      (g) By June 1, 2002, and every two years thereafter, each 
 30.9   municipality or cooperative shall file an overview of its 
 30.10  conservation improvement plan with the commissioner.  With this 
 30.11  overview, the municipality or cooperative shall also provide an 
 30.12  evaluation to the commissioner detailing its energy conservation 
 30.13  improvement spending and investments for the previous period.  
 30.14  The evaluation must briefly describe each conservation program 
 30.15  and must specify the energy savings or increased efficiency in 
 30.16  the use of energy within the service territory of the utility or 
 30.17  association that is the result of the spending and investments.  
 30.18  The evaluation must analyze the cost effectiveness of the 
 30.19  utility's or association's conservation programs, using a list 
 30.20  of baseline energy and capacity savings assumptions developed in 
 30.21  consultation with the department. 
 30.22  The commissioner shall review each evaluation and make 
 30.23  recommendations, where appropriate, to the municipality or 
 30.24  association to increase the effectiveness of conservation 
 30.25  improvement activities.  Up to three percent of a utility's 
 30.26  conservation spending obligation under this section may be used 
 30.27  for program pre-evaluation, testing, and monitoring and program 
 30.28  evaluation.  The overview filed by a municipality with less than 
 30.29  $2,500,000 in annual gross revenues from the retail sale of 
 30.30  electric service may consist of a letter from the governing 
 30.31  board of the municipal utility to the department providing the 
 30.32  amount of annual conservation spending required of that 
 30.33  municipality and certifying that the required amount has been 
 30.34  spent on conservation programs pursuant to this subdivision.  
 30.35     (h) The commissioner shall also review each evaluation for 
 30.36  whether a portion of the money spent on residential conservation 
 31.1   improvement programs is devoted to programs that directly 
 31.2   address the needs of renters and low-income persons unless an 
 31.3   insufficient number of appropriate programs are available.  For 
 31.4   the purposes of this subdivision and subdivision 2, "low-income" 
 31.5   means an income at or below 50 percent of the state median 
 31.6   income.  
 31.7      (i) As part of its spending for conservation improvement, a 
 31.8   municipality or association may contribute to the energy and 
 31.9   conservation account.  A municipality or association may propose 
 31.10  to the commissioner to designate that all or a portion of funds 
 31.11  contributed to the account be used for research and development 
 31.12  projects that can best be implemented on a statewide basis.  Any 
 31.13  amount contributed must be remitted to the commissioner by 
 31.14  February 1 of each year. 
 31.15     (j) A municipality may spend up to 50 percent of its 
 31.16  required spending under this section to refurbish an existing 
 31.17  district heating or cooling system.  This paragraph expires July 
 31.18  1, 2007. 
 31.19     Sec. 5.  [216B.361] [TOWNSHIP AGREEMENT WITH NATURAL GAS 
 31.20  UTILITY.] 
 31.21     A township may enter into an agreement with a public 
 31.22  utility providing natural gas services to provide services 
 31.23  within a designated portion or all of the township.  If a city 
 31.24  annexes township land for which a utility has an agreement with 
 31.25  a township to serve, the utility shall continue to have a 
 31.26  nonexclusive right to offer and provide service in the area 
 31.27  identified by the agreement with the township for the term of 
 31.28  that agreement, subject to the authority of the annexing city to 
 31.29  manage public rights-of-way within the city as provided in 
 31.30  sections 216B.36, 237.162, and 237.163. 
 31.31     Nothing in this section precludes a city from acquiring the 
 31.32  property of a public utility under sections 216B.45 to 216B.47 
 31.33  for the purpose of allowing the city to own and operate a 
 31.34  natural gas utility, or to extend natural gas and other utility 
 31.35  services into newly annexed areas. 
 31.36     Sec. 6.  Minnesota Statutes 2002, section 216C.051, 
 32.1   subdivision 3, is amended to read: 
 32.2      Subd. 3.  [FUTURE ENERGY SOLUTIONS; TECHNICAL AND ECONOMIC 
 32.3   ANALYSIS.] (a) In light of the electric energy guidelines 
 32.4   established in subdivision 7 and in light of existing 
 32.5   conservation improvement programs and plans, utility resource 
 32.6   plans, and other existing energy plans and analyses, the 
 32.7   legislative task force on energy shall undertake an analysis of 
 32.8   the technical and economic feasibility of an electric energy 
 32.9   future for the state that relies on environmentally and 
 32.10  economically sustainable and advantageous electric energy supply 
 32.11  utility resource plans and competitive bidding dockets before 
 32.12  the commission, the task force shall gather information and make 
 32.13  recommendations to the legislature regarding potential electric 
 32.14  energy resources.  The task force shall may contract with one or 
 32.15  more energy policy experts and energy economists to assist it in 
 32.16  its analysis.  The task force may not contract for service nor 
 32.17  employ any person who was involved in any capacity in any 
 32.18  portion of any proceeding before the public utilities 
 32.19  commission, the administrative law judge, the state court of 
 32.20  appeals, or the United States Nuclear Regulatory Commission 
 32.21  related to the dry cask storage proposal on Prairie Island.  The 
 32.22  task force must gather information on at least the following 
 32.23  electric energy resources, but may expand its inquiry as 
 32.24  warranted by the information collected: 
 32.25     (1) wind energy; 
 32.26     (2) hydrogen as a fuel carrier produced from renewable and 
 32.27  fossil fuel resources; 
 32.28     (3) biomass; 
 32.29     (4) decomposition gases produced by solid waste management 
 32.30  facilities; 
 32.31     (5) solid waste as a direct fuel or refuse-derived fuel; 
 32.32  and 
 32.33     (6) clean coal technology.  
 32.34     (b) The analysis must address In evaluating these electric 
 32.35  energy resources, the task force must consider at least the 
 32.36  following: 
 33.1      (1) to the best of forecasting abilities, how much electric 
 33.2   generation capacity and demand for electric energy is necessary 
 33.3   to maintain a strong economy and a high quality of life in the 
 33.4   state over the next 15 to 20 years; how is this demand level 
 33.5   affected by achievement of the maximum reasonably feasible and 
 33.6   cost-effective demand side management and generation and 
 33.7   distribution efficiencies; 
 33.8      (2) what alternative forms of energy can provide a stable 
 33.9   supply of energy and are producible and sustainable in the state 
 33.10  and at what cost; 
 33.11     (3) what are the costs to the state and ratepayers to 
 33.12  ensure that new electric energy generation utilizes less 
 33.13  environmentally damaging sources; how do those costs change as 
 33.14  the time frame for development and implementation of new 
 33.15  generation sources is compressed; 
 33.16     (4) what are the implications for delivery systems for 
 33.17  energy produced in areas of the state that do not now have 
 33.18  high-volume transmission capability; are new transmission 
 33.19  technologies being developed that can address some of the 
 33.20  concerns with transmission; can a more dispersed electric 
 33.21  generation system lessen the need for long-distance 
 33.22  transmission; 
 33.23     (5) what are the actual costs and benefits of purchasing 
 33.24  electricity and fuel to generate electricity from outside the 
 33.25  state; what are the present costs to the state's economy of 
 33.26  exporting a large percentage of the state's energy dollars and 
 33.27  what is the future economic impact of continuing to do so; 
 33.28     (6) are there benefits to be had from a large immediate 
 33.29  investment in quickly implementing alternative electric energy 
 33.30  sources in terms of developing an exportable technology and/or 
 33.31  commodity; is it feasible to turn around the flow of dollars for 
 33.32  energy so that the state imports dollars and exports energy and 
 33.33  energy technology; what is a reasonable time frame for the shift 
 33.34  if it is possible; 
 33.35     (7) are there taxation or regulatory barriers to developing 
 33.36  more sustainable and less problematic electric energy 
 34.1   generation; what are they specifically and how can they be 
 34.2   specifically addressed; 
 34.3      (8) can an approach be developed that moves quickly to 
 34.4   development and implementation of alternative energy sources 
 34.5   that can be forgiving of interim failures but that is also 
 34.6   sufficiently deliberate to ensure ultimate success on a large 
 34.7   scale; and 
 34.8      (9) in what specific ways can the state assist regional 
 34.9   energy suppliers to accelerate phasing out energy production 
 34.10  processes that produce wastes or emissions that must necessarily 
 34.11  be carefully controlled and monitored to minimize adverse 
 34.12  effects on the environment and human health and to assist in 
 34.13  developing and implementing base load energy production that 
 34.14  both prevents or minimizes by its nature adverse environmental 
 34.15  and human health effects and utilizes resources that are 
 34.16  available or producible in the state;. 
 34.17     (10) whether there is a need to establish additional 
 34.18  dislocated worker assistance for workers at the Prairie Island 
 34.19  nuclear power plant; if so, how that assistance should be 
 34.20  structured; 
 34.21     (11) can the state monitor, evaluate, and affect federal 
 34.22  actions relating to permanent storage of high-level radioactive 
 34.23  waste; what actions by the state over what period of time would 
 34.24  expedite federal action to take responsibility for the waste; 
 34.25     (12) should the state establish a legislative oversight 
 34.26  commission on energy issues; should the responsibilities of an 
 34.27  oversight commission be coordinated with the activities of the 
 34.28  public utilities commission and the department of public service 
 34.29  and if so, how; and 
 34.30     (13) is it feasible to convert existing nuclear power and 
 34.31  coal-fired electric generating plants to utilization of energy 
 34.32  sources that result in significantly less environmental damage; 
 34.33  if so, what are the short-term and long-term costs and benefits 
 34.34  of doing so; how do shorter or longer time periods for 
 34.35  conversion affect the cost/benefit analysis. 
 34.36     (c) The task force must study issues related to the 
 35.1   transportation of spent nuclear fuel from this state to interim 
 35.2   or permanent repositories outside this state.  The task force 
 35.3   must also gather information on at least the following factors, 
 35.4   but may expand its inquiry as warranted by the information 
 35.5   collected: 
 35.6      (1) Minnesota's actual and projected electricity demand; 
 35.7      (2) electricity export potential; 
 35.8      (3) inventory of energy resources currently used to 
 35.9   generate all electricity sold in Minnesota and an analysis of 
 35.10  the social, economic, and environmental benefits and burdens 
 35.11  associated with each energy resource; 
 35.12     (4) electricity demand savings from greater efficiency; and 
 35.13     (5) job growth and economic development potential. 
 35.14     (d) The public utility that owns the Prairie Island and 
 35.15  Monticello nuclear generation facilities shall update the 
 35.16  reports required under section 116C.772, subdivisions 3 to 5, 
 35.17  and shall submit those updates periodically to the public 
 35.18  utilities commission with the utility's resource plan filing 
 35.19  under section 216B.2422 and to the task force. 
 35.20     Sec. 7.  Minnesota Statutes 2002, section 216C.051, is 
 35.21  amended by adding a subdivision to read: 
 35.22     Subd. 4a.  [REPORT AND RECOMMENDATIONS.] By January 15, 
 35.23  2005, and every two years thereafter, the task force shall 
 35.24  submit a report to the chairs of the committees in the house of 
 35.25  representatives and the senate that have responsibility for 
 35.26  energy and for environmental and natural resources issues that 
 35.27  contains an overview of information gathered and analyses that 
 35.28  have been prepared, and specific recommendations, if any, for 
 35.29  legislative action that will ensure development and 
 35.30  implementation of electric energy policy that will provide the 
 35.31  state with adequate, renewable, and economic electric power for 
 35.32  the long term.  The report shall also identify issues that must 
 35.33  be addressed to provide Minnesotans with adequate electricity 
 35.34  from in-state renewable energy sources for the long term and 
 35.35  export to adjacent states.  
 35.36     Sec. 8.  Minnesota Statutes 2002, section 216C.051, 
 36.1   subdivision 6, is amended to read: 
 36.2      Subd. 6.  [ASSESSMENT; APPROPRIATION.] On request by the 
 36.3   cochairs of the legislative task force and after approval of the 
 36.4   legislative coordinating commission, the commissioner of 
 36.5   commerce shall assess from all public utilities, generation and 
 36.6   transmission cooperative electric associations, and municipal 
 36.7   power agencies providing electric or natural gas services in 
 36.8   Minnesota, in addition to assessments made under section 
 36.9   216B.62, the amount requested for the operation of the task 
 36.10  force not to exceed $150,000 $250,000 in a fiscal year.  The 
 36.11  amount assessed under this section is appropriated to the 
 36.12  director of the legislative coordinating commission for those 
 36.13  purposes, and is available until expended.  The department shall 
 36.14  apportion those costs among all energy utilities in proportion 
 36.15  to their respective gross operating revenues from the sale of 
 36.16  gas or electric service within the state during the last 
 36.17  calendar year.  For the purposes of administrative efficiency, 
 36.18  the department shall assess energy utilities and issue bills in 
 36.19  accordance with the billing and assessment procedures provided 
 36.20  in section 216B.62, to the extent that these procedures do not 
 36.21  conflict with this subdivision. 
 36.22     Sec. 9.  Minnesota Statutes 2002, section 216C.051, 
 36.23  subdivision 9, is amended to read: 
 36.24     Subd. 9.  [EXPIRATION.] This section is repealed June 
 36.25  30, 2005 2007. 
 36.26     Sec. 10.  Minnesota Statutes 2002, section 216C.052, 
 36.27  subdivision 2, is amended to read: 
 36.28     Subd. 2.  [ADMINISTRATIVE ISSUES.] (a) The commissioner may 
 36.29  select the administrator who shall serve for a four-year term.  
 36.30  The administrator may not have been a party or a participant in 
 36.31  a commission energy proceeding for at least one year prior to 
 36.32  selection by the commissioner.  The commissioner shall oversee 
 36.33  and direct the work of the administrator, annually review the 
 36.34  expenses of the administrator, and annually approve the budget 
 36.35  of the administrator.  The administrator may hire staff and may 
 36.36  contract for technical expertise in performing duties when 
 37.1   existing state resources are required for other state 
 37.2   responsibilities or when special expertise is required.  The 
 37.3   salary of the administrator is governed by section 15A.0815, 
 37.4   subdivision 2. 
 37.5      (b) Costs relating to a specific proceeding, analysis, or 
 37.6   project are not general administrative costs.  For purposes of 
 37.7   this section, "energy utility" means public utilities, 
 37.8   generation and transmission cooperative electric associations, 
 37.9   and municipal power agencies providing natural gas or electric 
 37.10  service in the state.  
 37.11     (c) The department of commerce shall pay: 
 37.12     (1) the general administrative costs of the administrator, 
 37.13  not to exceed $1,500,000 $1,000,000 in a fiscal year, and shall 
 37.14  assess energy utilities for reimbursement for those 
 37.15  administrative costs.  These costs must be consistent with the 
 37.16  budget approved by the commissioner under paragraph (a).  The 
 37.17  department shall apportion the costs among all energy utilities 
 37.18  in proportion to their respective gross operating revenues from 
 37.19  sales of gas or electric service within the state during the 
 37.20  last calendar year, and shall then render a bill to each utility 
 37.21  on a regular basis; and 
 37.22     (2) costs relating to a specific proceeding analysis or 
 37.23  project and shall render a bill for reimbursement to the 
 37.24  specific energy utility or utilities participating in the 
 37.25  proceeding, analysis, or project directly, either at the 
 37.26  conclusion of a particular proceeding, analysis, or project, or 
 37.27  from time to time during the course of the proceeding, analysis, 
 37.28  or project. 
 37.29     (d) For purposes of administrative efficiency, the 
 37.30  department shall assess energy utilities and issue bills in 
 37.31  accordance with the billing and assessment procedures provided 
 37.32  in section 216B.62, to the extent that these procedures do not 
 37.33  conflict with this subdivision.  The amount of the bills 
 37.34  rendered by the department under paragraph (c) must be paid by 
 37.35  the energy utility into an account in the special revenue fund 
 37.36  in the state treasury within 30 days from the date of billing 
 38.1   and is appropriated to the commissioner for the purposes 
 38.2   provided in this section.  The commission shall approve or 
 38.3   approve as modified a rate schedule providing for the automatic 
 38.4   adjustment of charges to recover amounts paid by utilities under 
 38.5   this section.  All amounts assessed under this section are in 
 38.6   addition to amounts appropriated to the commission and the 
 38.7   department by other law. 
 38.8      Sec. 11.  Minnesota Statutes 2002, section 216C.052, 
 38.9   subdivision 3, is amended to read:  
 38.10     Subd. 3.  [ASSESSMENT AND APPROPRIATION.] In addition to 
 38.11  the amount noted in subdivision 2, the commissioner of commerce 
 38.12  shall transfer may assess utilities, using the mechanism 
 38.13  specified in that subdivision, up to an additional $500,000 
 38.14  annually of the amounts provided for in subdivision 2 to the 
 38.15  commissioner of administration through June 30, 2006.  The 
 38.16  amounts assessed under this subdivision are appropriated to the 
 38.17  commissioner, and some or all of the amounts assessed may be 
 38.18  transferred to the commissioner of administration, for the 
 38.19  purposes provided specified in section 16B.325 and Laws 2001, 
 38.20  chapter 212, article 1, section 3, as needed to implement that 
 38.21  section those sections. 
 38.22     Sec. 12.  [REFURBISHMENT OF METROPOLITAN GENERATING 
 38.23  PLANTS.] 
 38.24     Notwithstanding Minnesota Statutes, section 216B.1692, 
 38.25  subdivision 1, clause (2), and subdivision 5, paragraphs (c) and 
 38.26  (d), all investments in repowering, emissions reduction 
 38.27  technologies and equipment, and power plant rehabilitation and 
 38.28  life extension described in the primary metropolitan emission 
 38.29  reduction proposal filed with the public utilities commission in 
 38.30  July 2002 by the public utility that owns the Prairie Island 
 38.31  nuclear generation facility and currently pending before the 
 38.32  commission are deemed qualifying projects under Minnesota 
 38.33  Statutes, section 216B.1692, and all costs related to all such 
 38.34  investments are eligible for rider recovery under Minnesota 
 38.35  Statutes, section 216B.1692, subdivision 5.  Upon receiving 
 38.36  approval by the commission, the utility shall implement the 
 39.1   approved proposal or justify to the commission its decision not 
 39.2   to do so. 
 39.3      Sec. 13.  [CONSERVATION IMPROVEMENT PROGRAM; EVALUATION.] 
 39.4      Subdivision 1.  [CONSERVATION IMPROVEMENT PROGRAM; GENERAL 
 39.5   EVALUATION.] (a) The commissioner of commerce shall contract 
 39.6   with the legislative auditor or other independent third party 
 39.7   for a review of: 
 39.8      (1) the relevant state statutes, to determine if 
 39.9   conservation requirements could be eliminated or modified to 
 39.10  ensure that conservation dollars are directed toward the most 
 39.11  cost-effective conservation investments; 
 39.12     (2) the relevant state rules, to determine if current rules 
 39.13  allow or facilitate optimum conservation practices and 
 39.14  procedures; and 
 39.15     (3) the department of commerce's conservation regulatory 
 39.16  processes, to determine if the regulatory review process 
 39.17  currently employed results in optimum conservation investments. 
 39.18     (b) The costs of the review under paragraph (a) may be 
 39.19  recovered by the department as a general administrative expense 
 39.20  under Minnesota Statutes, section 216C.052, subdivision 2. 
 39.21     Sec. 14.  [LEGISLATIVE APPROVAL OF CONSUMPTIVE USE OF 
 39.22  WATER; PROPOSED FACILITY ROSEMOUNT.] 
 39.23     Pursuant to Minnesota Statutes, section 103G.265, 
 39.24  subdivision 3, the legislature approves the consumptive use 
 39.25  under a permit of more than 2,000,000 gallons per day average in 
 39.26  a 30-day period in Rosemount, in connection with a gas-fueled 
 39.27  combined-cycle electric generating facility, subject to the 
 39.28  commissioner of natural resources making a determination that 
 39.29  the water remaining in the basin of origin will be adequate to 
 39.30  meet the basin's need for water and approval by the commissioner 
 39.31  of natural resources of all applicable permits. 
 39.32     Sec. 15.  [LEGISLATIVE APPROVAL OF CONSUMPTIVE USE OF 
 39.33  WATER; PROPOSED FACILITY MANKATO.] 
 39.34     Pursuant to Minnesota Statutes, section 103G.265, 
 39.35  subdivision 3, the legislature approves the consumptive use 
 39.36  under a permit of more than 2,000,000 gallons per day average in 
 40.1   a 30-day period in Mankato, in connection with a gas-fueled 
 40.2   combined-cycle electric generating facility, subject to the 
 40.3   commissioner of natural resources making a determination that 
 40.4   the water remaining in the basin of origin will be adequate to 
 40.5   meet the basin's need for water and approval by the commissioner 
 40.6   of natural resources of all applicable permits. 
 40.7      Sec. 16.  [REPEALER.] 
 40.8      Minnesota Statutes 2002, sections 116C.80 and 216C.051, 
 40.9   subdivisions 1, 4, and 5, are repealed.  
 40.10     Sec. 17.  [EFFECTIVE DATE.] 
 40.11     This article is effective the day following final enactment.
 40.12                             ARTICLE 4
 40.13                     INNOVATIVE ENERGY PROJECT
 40.14     Section 1.  [INNOVATIVE ENERGY PROJECT.] 
 40.15     Subdivision 1.  [DEFINITION.] For the purposes of this 
 40.16  section, the term "innovative energy project" means a proposed 
 40.17  energy generation facility or group of facilities which may be 
 40.18  located on up to three sites: 
 40.19     (1) that makes use of an innovative generation technology 
 40.20  utilizing coal as a primary fuel in a highly efficient 
 40.21  combined-cycle configuration with significantly reduced sulfur 
 40.22  dioxide, nitrogen oxide, particulate, and mercury emissions from 
 40.23  those of traditional technologies; 
 40.24     (2) that the project developer or owner certifies is a 
 40.25  project capable of offering a long-term supply contract at a 
 40.26  hedged, predictable cost; and 
 40.27     (3) that is designated by the commissioner of the iron 
 40.28  range resources and rehabilitation board as a project that is 
 40.29  located in the taconite tax relief area on a site that has 
 40.30  substantial real property with adequate infrastructure to 
 40.31  support new or expanded development and that has received prior 
 40.32  financial and other support from the board.  
 40.33     Subd. 2.  [REGULATORY INCENTIVES.] (a) An innovative energy 
 40.34  project: 
 40.35     (1) is exempted from the requirements for a certificate of 
 40.36  need under Minnesota Statutes, section 216B.243, for the 
 41.1   generation facilities, and transmission infrastructure 
 41.2   associated with the generation facilities, but is subject to all 
 41.3   applicable environmental review and permitting procedures of 
 41.4   Minnesota Statutes, sections 116C.51 to 116C.69; 
 41.5      (2) once permitted and constructed, is eligible to increase 
 41.6   the capacity of the associated transmission facilities without 
 41.7   additional state review upon filing notice with the commission; 
 41.8      (3) has the power of eminent domain, which shall be limited 
 41.9   to the sites and routes approved by the environmental quality 
 41.10  board for the project facilities.  The project shall be 
 41.11  considered a utility as defined in Minnesota Statutes, section 
 41.12  116C.52, subdivision 10, for the limited purpose of Minnesota 
 41.13  Statutes, section 116C.63.  The project shall report any intent 
 41.14  to exercise eminent domain authority to the board; 
 41.15     (4) shall qualify as a "clean energy technology" as defined 
 41.16  in section 216B.1693; 
 41.17     (5) shall, prior to the approval by the commission of any 
 41.18  arrangement to build or expand a fossil-fuel-fired generation 
 41.19  facility, or to enter into an agreement to purchase capacity or 
 41.20  energy from such a facility for a term exceeding five years, be 
 41.21  considered as a supply option for the generation facility, and 
 41.22  the commission shall ensure such consideration and take any 
 41.23  action with respect to such supply proposal that it deems to be 
 41.24  in the best interest of ratepayers; 
 41.25     (6) shall make a good faith effort to secure funding from 
 41.26  the United States Department of Energy and the United States 
 41.27  Department of Agriculture to conduct a demonstration project at 
 41.28  the facility for either geologic or terrestrial carbon 
 41.29  sequestration projects to achieve reductions in facility 
 41.30  emissions or carbon dioxide; 
 41.31     (7) shall be entitled to enter into a contract with a 
 41.32  public utility that owns a nuclear generation facility in the 
 41.33  state to provide 450 megawatts of baseload capacity and energy 
 41.34  under a long-term contract, subject to the approval of the terms 
 41.35  and conditions of the contract by the commission.  The 
 41.36  commission may approve, disapprove, amend, or modify the 
 42.1   contract in making its public interest determination, taking 
 42.2   into consideration the project's economic development benefits 
 42.3   to the state; the use of abundant domestic fuel sources; the 
 42.4   stability of the price of the output from the project; the 
 42.5   project's potential to contribute to a transition to hydrogen as 
 42.6   a fuel resource; and the emission reductions achieved compared 
 42.7   to other solid fuel baseload technologies; and 
 42.8      (8) shall be eligible for a grant from the renewable 
 42.9   development account, subject to the approval of the entity 
 42.10  administering that account, of $2,000,000 a year for five years 
 42.11  for development and engineering costs, including those costs 
 42.12  related to mercury removal technology; thermal efficiency 
 42.13  optimization and emission minimization; environmental impact 
 42.14  statement preparation and licensing; development of hydrogen 
 42.15  production capabilities; and fuel cell development and 
 42.16  utilization. 
 42.17     (b) This subdivision does not apply to nor affect a 
 42.18  proposal to add utility-owned resources that is pending on the 
 42.19  date of enactment of this act before the public utilities 
 42.20  commission or to competitive bid solicitations to provide 
 42.21  capacity or energy that is scheduled to be online by December 
 42.22  31, 2006. 
 42.23     Sec. 2.  [EFFECTIVE DATE.] 
 42.24     This article is effective the day following final enactment.