1.1 	A bill for an act
1.2 	relating to energy; providing for community-based energy development; 
1.3 	requiring a plan to reduce greenhouse gas emissions;amending Minnesota 
1.4 	Statutes 2006, sections 216B.1612, subdivisions 1, 2, 3, 5, by adding a 
1.5 	subdivision; 216B.1691, by adding a subdivision; proposing coding for new law 
1.6 	in Minnesota Statutes, chapter 216F.
1.7 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.8 	ARTICLE 1
1.9 	C-BED AND RELATED ISSUES

1.10 	Section 1. Minnesota Statutes 2006, section 216B.1612, subdivision 1, is amended to 
1.11 	read:
1.12 		Subdivision 1.Tariff establishment. A tariff shall be established to optimize local, 
1.13 	regional, and state benefits from windrenewable energy development and to facilitate 
1.14 	widespread development of community-based windrenewable energy projects throughout 
1.15 	Minnesota.

1.16 	Sec. 2. Minnesota Statutes 2006, section 216B.1612, subdivision 2, is amended to read:
1.17 		Subd. 2.Definitions. (a) The terms used in this section have the meanings given 
1.18 	them in this subdivision.
1.19 	(b) "C-BED tariff" or "tariff" means a community-based energy development tariff.
1.20 	(c) "Qualifying owner" means:
1.21 	(1) a Minnesota resident;
1.22 	(2) a limited liability  company that is organized under the laws of this statechapter 
1.23 	322B and that is made up of members who are Minnesota residents;
1.24 	(3) a Minnesota nonprofit organization organized under chapter 317A;
2.1 	(4) a Minnesota cooperative association organized under chapter 308A or 308B, 
2.2 	other thanincluding a rural electric cooperative association or a generation and 
2.3 	transmission cooperative on behalf of and at the request of a member distribution utility;
2.4 	(5) a Minnesota political subdivision or local government other thanincluding, 
2.5 	but not limited to, a municipal electric utility, or a municipal power agency on behalf 
2.6 	of and at the request of a member distribution utility, including, but not limited to, a 
2.7 	county, statutory or home rule charter city, town, school district, or public or private 
2.8 	higher education institution or any other local or regional governmental organization such 
2.9 	as a board, commission, or association; or
2.10 	(6) a tribal council.
2.11 	(d) "Net present value rate" means a rate equal to the net present value of the 
2.12 	nominal payments to a project divided by the total expected energy production of the 
2.13 	project over the life of its power purchase agreement.
2.14 	(e) "Standard reliability criteria" means:
2.15 	(1) can be safely integrated into and operated within the utility's grid without causing 
2.16 	any adverse or unsafe consequences; and
2.17 	(2) is consistent with the utility's resource needs as identified in its most recent 
2.18 	resource plan submitted under section 216B.2422.
2.19 	(f) "Renewable" refers to a technology listed in section 216B.1691, subdivision 1, 
2.20 	paragraph (a).
2.21 	(g) "Community-based energy development project" or "C-BED project" means 
2.22 	a new windrenewable energy project that either as a stand-alone project or part of a 
2.23 	partnership under subdivision 8:
2.24 	(1) has no single qualifying owner owning more than 15 percent of a C-BED wind 
2.25 	energy project that consists of more than two turbines; or unless: (i) the C-BED wind 
2.26 	energy project consists of only one or two turbines; or (ii) the qualifying owner is a public 
2.27 	entity listed under paragraph (b), clause (5), that is not a municipal utility;
2.28 	(2) for C-BED projects of one or two turbines, is owned entirely by one or more 
2.29 	qualifying owners, withdemonstrates that at least 51 percent of the total financial benefits 
2.30 	over the life of the project flowingwill flow to qualifying owners; and
2.31 	(3) has a resolution of support adopted by the county board of each county in which 
2.32 	the project is to be located, or in the case of a project located within the boundaries of a 
2.33 	reservation, the tribal council for that reservation.

2.34 	EFFECTIVE DATE. This section is effective the day following final enactment.

2.35 	Sec. 3. Minnesota Statutes 2006, section 216B.1612, subdivision 3, is amended to read:
3.1 		Subd. 3.Tariff rate. (a) The tariff described in subdivision 4 must have a rate 
3.2 	schedule that allows for a rate up to a 2.7 cents per kilowatt-hour net present value rate 
3.3 	over the 20-year life of the power purchase agreement. The tariff must provide for a rate 
3.4 	that is higher in the first ten years of the power purchase agreement than in the last ten 
3.5 	years. The discount rate required to calculate the net present value must be the utility's 
3.6 	normal discount rate used for its other business purposes.
3.7 	(b) The commission shall consider mechanisms to encourage the aggregation 
3.8 	of C-BED projects.
3.9 	(c) The commission shall require that qualifying and nonqualifying owners provide 
3.10 	sufficient security to secure performance under the power purchase agreement, and shall 
3.11 	prohibit the transfer of the C-BED project to a nonqualifying owner during the initial 
3.12 	20 years of the contract.

3.13 	EFFECTIVE DATE. This section is effective the day following final enactment.

3.14 	Sec. 4. Minnesota Statutes 2006, section 216B.1612, subdivision 5, is amended to read:
3.15 		Subd. 5.Priority for C-BED projects. (a) A utility subject to section 216B.1691
3.16 	that needs to construct new generation, or purchase the output from new generation, as 
3.17 	part of its plan to satisfy its good faith objective or standard under that section should take 
3.18 	reasonable steps to determine if one or more C-BED projects are available that meet the 
3.19 	utility's cost and reliability requirements, applying standard reliability criteria, to fulfill 
3.20 	some or all of the identified need at minimal impact to customer rates.
3.21 	Nothing in this section shall be construed to obligate a utility to enter into a power 
3.22 	purchase agreement under a C-BED tariff developed under this section.
3.23 	(b) Each utility shall include in its resource plan submitted under section 216B.2422
3.24 	a description of its efforts to purchase energy from C-BED projects, including a list of the 
3.25 	projects under contract and the amount of C-BED energy purchased.
3.26 	(c) The commission shall consider the efforts and activities of a utility to purchase 
3.27 	energy from C-BED projects when evaluating its good faith effort towards meeting the 
3.28 	renewable energy objective under section 216B.1691.

3.29 	Sec. 5. Minnesota Statutes 2006, section 216B.1612, is amended by adding a 
3.30 	subdivision to read:
3.31 		Subd. 8.Community energy partnerships. A utility providing electric service 
3.32 	to retail or wholesale customers in Minnesota and an independent power producer may, 
3.33 	subject to the limits specified in this section, participate in a community-based energy 
4.1 	project, including as an owner, equity partner, or provider of technical or financial 
4.2 	assistance.

4.3 	EFFECTIVE DATE. This section is effective the day following final enactment.

4.4 	Sec. 6. Minnesota Statutes 2006, section 216B.1691, is amended by adding a 
4.5 	subdivision to read:
4.6 		Subd. 7.Utility acquisition of resources. A competitive resource acquisition 
4.7 	process established by the commission prior to June 1, 2007, shall not apply to a utility 
4.8 	for the construction, ownership, and operation of generation facilities used to satisfy the 
4.9 	requirements of this section unless, upon a finding that it is in the public interest, the 
4.10 	commission issues an order on or after June 1, 2007, that requires compliance by a utility 
4.11 	with a competitive resource acquisition process.

4.12 	Sec. 7. [216F.011] SIZE DETERMINATION.
4.13 	(a) The total size of a combination of wind energy conversion systems for the 
4.14 	purpose of determining what jurisdiction has siting authority under this chapter must 
4.15 	be determined according to this section. The nameplate capacity of one wind energy 
4.16 	conversion system must be combined with the nameplate capacity of any other wind 
4.17 	energy conversion system that: 
4.18 	(1) is located within five miles of the wind energy conversion system; 
4.19 	(2) is constructed within the same 12-month period as the wind energy conversion 
4.20 	system; and 
4.21 	(3) exhibits characteristics of being a single development, including, but not limited 
4.22 	to, ownership structure, an umbrella sales arrangement, shared interconnection, revenue 
4.23 	sharing arrangements, and common debt or equity financing. 
4.24 	(b) The commissioner shall provide forms and assistance for project developers to 
4.25 	make a request for a size determination. Upon written request of a project developer, the 
4.26 	commissioner of commerce shall provide a written size determination within 30 days 
4.27 	of receipt of the request and of any information requested by the commissioner. In the 
4.28 	case of a dispute, the chair of the Public Utilities Commission shall make the final size 
4.29 	determination.
4.30 	(c) An application to a county for a permit under this chapter for a wind energy 
4.31 	conversion system is not complete without a size determination made under this section.

4.32 	EFFECTIVE DATE. This section is effective January 15, 2008.

5.1 	Sec. 8. [216F.08] PERMIT AUTHORITY; ASSUMPTION BY COUNTIES.
5.2 	(a) A county board may, by resolution and upon written notice to the Public Utilities 
5.3 	Commission, assume responsibility for processing applications for permits required 
5.4 	under this chapter for LWECS with a combined nameplate capacity of less than 25,000 
5.5 	kilowatts. The responsibility for permit application processing, if assumed by a county, 
5.6 	may be delegated by the county board to an appropriate county officer or employee. 
5.7 	Processing by a county shall be done in accordance with procedures and processes 
5.8 	established under chapter 394. 
5.9 	(b) A county board that exercises its option under paragraph (a) may issue, deny, 
5.10 	modify, impose conditions upon, or revoke permits pursuant to this section. The action 
5.11 	of the county board about a permit application is final, subject to appeal as provided 
5.12 	in section 394.27. 
5.13 	(c) The commission shall, by order, establish general permit standards, including 
5.14 	appropriate property line set-backs, governing site permits for LWECS under this section. 
5.15 	The order must consider existing and historic commission standards for wind permits 
5.16 	issued by the commission. The general permit standards shall apply to permits issued by 
5.17 	counties and to permits issued by the commission for LWECS with a combined nameplate 
5.18 	capacity of less than 25,000 kilowatts. The commission or a county may grant a variance 
5.19 	from a general permit standard if the variance is found to be in the public interest.
5.20 	(d) The commission and the commissioner of commerce shall provide technical 
5.21 	assistance to a county with respect to the processing of LWECS site permit applications.

5.22 	EFFECTIVE DATE. This section is effective January 15, 2008.

5.23 	Sec. 9. [216F.081] APPLICATION OF COUNTY STANDARDS.
5.24 	A county may adopt by ordinance standards for LWECS that are more stringent than 
5.25 	standards in commission rules or in the commission's permit standards. The commission, 
5.26 	in considering a permit application for LWECS in a county that has adopted more stringent 
5.27 	standards, shall consider and apply those more stringent standards, unless the commission 
5.28 	finds good cause not to apply the standards.

5.29 	Sec. 10. STATEWIDE STUDY OF DISPERSED GENERATION POTENTIAL.
 5.30 		Subdivision 1.Definition. "Dispersed generation" means an electric generation 
5.31 	project with a generating capacity between ten and 40 megawatts that utilizes an "eligible 
5.32 	energy technology," as defined in Minnesota Statutes, section 216B.1691, subdivision 1, 
5.33 	paragraph (a).
6.1 		Subd. 2.Study participants. Each electric utility subject to Minnesota Statutes, 
6.2 	section 216B.1691, must participate collaboratively in conducting a two-phase study of 
6.3 	the potential for dispersed generation projects that can be developed in Minnesota.
6.4 		Subd. 3.First phase study content; report. In the first phase of the study, 
6.5 	participants must analyze the impacts of the addition of a total of 600 megawatts of 
6.6 	new dispersed generation projects distributed among the following Minnesota electric 
6.7 	transmission planning zones: the Northeast zone, the Northwest zone, the Southeast 
6.8 	zone, the Southwest zone, and the West-Central zone. Study participants must use a 
6.9 	generally accepted 2010 year transmission system model including all transmission 
6.10 	facilities expected to be operating in 2010. The study must take into consideration 
6.11 	regional projected load growth, planned changes in the bulk transmission network, and the 
6.12 	long-range transmission conceptual plan being developed under Laws 2007, chapter 3, 
6.13 	section 2. In determining locations for the installation of dispersed generation projects 
6.14 	that consist of wind energy conversion systems, the study should consider, at a minimum, 
6.15 	wind resource availability, existing and contracted wind projects, and current dispersed 
6.16 	generation projects in the Midwest Independent System Operator interconnection queue. 
6.17 	The study must analyze the impacts of individual projects and all projects in aggregate on 
6.18 	the transmission system, and identify specific modifications to the transmission system 
6.19 	necessary to remedy any problems caused by the installation of dispersed generation 
6.20 	projects, including cost estimates for the modifications. The study must analyze the 
6.21 	additional dispersed generation projects connected at the lowest voltage level transmission 
6.22 	that exists in the vicinity of the projected generation sites. A preliminary analysis to 
6.23 	identify transmission system problems must be conducted with the projects installed at 
6.24 	initially selected locations. The technical review committee may, after reviewing the 
6.25 	locations selected for installation, recommend moving the installation sites once to new 
6.26 	locations to reduce undesirable transmission system impacts. The commissioner of 
6.27 	commerce must submit a report containing the findings and recommendations of the first 
6.28 	phase of the study to the commission no later than June 15, 2008.
6.29 		Subd. 4.Second phase study content; report. In the second phase of the study, 
6.30 	participants must analyze the impacts of an additional total of 600 megawatts of dispersed 
6.31 	generation projects installed among the five transmission planning zones, or a higher total 
6.32 	capacity amount if agreed to by both the utilities and the technical review committee. The 
6.33 	utilities must employ an analysis method similar to that used in the first phase of the study, 
6.34 	and must use the most recent information available, including information developed in 
6.35 	the first phase. The second phase of the study must use a generally accepted 2013 year 
6.36 	transmission system model including all transmission facilities that are expected to be 
7.1 	in service at that time. The commissioner of commerce must submit a report containing 
7.2 	the findings and recommendations of the second phase of the study to the commission no 
7.3 	later than September 15, 2009.
7.4 		Subd. 5.Technical review committee. Prior to the start of the first phase of 
7.5 	the study, the commissioner of commerce must appoint a technical review committee 
7.6 	consisting of between ten and 15 individuals with experience and expertise in electric 
7.7 	transmission system engineering, renewable energy generation technology, and dispersed 
7.8 	generation project development, including representatives from the federal Department 
7.9 	of Energy, the Midwest Independent System Operator, and stakeholder interests. The 
7.10 	technical review committee must oversee both phases of the study, and must: 
7.11 	(1) make recommendations to the utilities regarding the proposed methods and 
7.12 	assumptions to be used in the technical study; 
7.13 	(2) in conjunction with the appropriate utilities, hold public meetings on each 
7.14 	phase of the study in each electricity transmission planning zone prior to the beginning 
7.15 	of each phase of study, after the impact analysis is completed, and when a draft final 
7.16 	report is available;
7.17 	(3) establish procedures for handling commercially sensitive information; and
7.18 	(4) review the initial and final drafts of the study and make recommendations for 
7.19 	improvement, including problems associated with the interconnections among utility 
7.20 	systems that may be amenable to solution through cooperation between the utilities in each 
7.21 	zone. During each phase of the study, the technical review committee may recommend 
7.22 	that the installation of dispersed generation projects be moved to new locations that cause 
7.23 	fewer undesirable transmission system impacts.

7.24 	Sec. 11. WIND DEVELOPMENT PROPERTY AGREEMENTS; STUDY.
 7.25 	The Legislative Electric Energy Task Force shall study whether the state should 
7.26 	regulate easements, leases, and other agreements to acquire an interest in real property 
7.27 	for the purpose of wind energy development. The purpose of the study is to determine 
7.28 	whether the duration and other terms of those interests should be limited to promote 
7.29 	wind energy development. The task force must report the results of its study and any 
7.30 	recommendations to the chairs of the energy finance and policy committees of the 
7.31 	legislature by February 1, 2008.

7.32 	ARTICLE 2
7.33 	GLOBAL CLIMATE CHANGE; GREENHOUSE GAS EMISSIONS

7.34 	Section 1. GREENHOUSE GAS EMISSIONS.
 8.1 		Subdivision 1.Greenhouse gas emissions reduction goal. (a) It is the goal of the 
8.2 	state to reduce statewide greenhouse gas emissions across all sectors producing those 
8.3 	emissions to a level at least 80 percent below 2005 levels by 2050.
8.4 	(b) For purposes of this section, statewide greenhouse gas emissions 
8.5 	include emissions of carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, 
8.6 	perfluorocarbons, and sulfur hexafluoride emitted by anthropogenic sources within the 
8.7 	state and from the generation of electricity imported from outside the state and consumed 
8.8 	in Minnesota. Carbon dioxide that is injected into geological formations to prevent 
8.9 	its release to the atmosphere in compliance with applicable laws, and carbon dioxide 
8.10 	associated with the combustion of fuels other than coal, petroleum, and natural gas are not 
8.11 	counted as contributing to statewide greenhouse gas emissions.
8.12 		Subd. 2.Climate change action plan. By February 1, 2008, the commissioner of 
8.13 	commerce, in consultation with the commissioners of the Pollution Control Agency, 
8.14 	the Housing Finance Agency, and the Departments of Natural Resources, Agriculture, 
8.15 	Employment and Economic Development, and Transportation, and the chair of the 
8.16 	Metropolitan Council, shall submit to the legislature a climate change action plan that 
8.17 	meets the requirements of this section.
8.18 		Subd. 3.Stakeholder process. The plan required by subdivision 2 must be 
8.19 	developed through a structured, broadly inclusive stakeholder-based review of potential 
8.20 	policies and initiatives that will reduce statewide greenhouse gas emissions from a 
8.21 	broad range of sources and activities. The commissioner shall engage a nationally 
8.22 	recognized independent expert entity to conduct the stakeholder process. The report of 
8.23 	the stakeholder process must form the basis for the plan submitted by the commissioner 
8.24 	under subdivision 2.
8.25 		Subd. 4.General elements of the plan. The plan must:
8.26 	(1) estimate 1990 and 2005 greenhouse gas emissions in the state and make 
8.27 	projections of emissions in 2015, 2025, and 2050;
8.28 	(2) identify, evaluate, and integrate a broad range of statewide greenhouse gas 
8.29 	reduction options for all emission sectors in the state;
8.30 	(3) assess the costs, benefits, and feasibility of implementing the options; and
8.31 	(4) recommend an integrated set of reduction options and strategies for implementing 
8.32 	the options that will achieve the goal in subdivision 1 and interim goals recommended 
8.33 	under subdivision 5, including analysis of the associated costs and benefits to Minnesotans.
8.34 		Subd. 5.Specific plan requirements. (a) The plan must evaluate and recommend 
8.35 	interim goals as steps to achieve the goal in subdivision 1. At a minimum, the plan must 
8.36 	evaluate and recommend the efficacy of reducing statewide greenhouse gas emissions to 
9.1 	a level at least 15 percent below 2005 emission levels by 2015 and to a level at least 30 
9.2 	percent below 2005 emission levels by 2025.
9.3 	(b) The plan must determine the feasibility, assess the costs and benefits, and 
9.4 	recommend how the state could adopt a regulatory system that imposes a cap on the 
9.5 	aggregate air pollutant emissions of a group of sources, requires those subject to the 
9.6 	cap to own an allowance for each ton of the air pollutant emitted, and allows for 
9.7 	market-based trading of those allowances. The evaluation must contain an analysis of the 
9.8 	state implementing a cap and trade system alone, in coordination with other states, and 
9.9 	as a requirement of federal law applying to all states. The plan must recommend the 
9.10 	parameters of a cap and trade system that includes a cap that would prevent significant 
9.11 	increases in greenhouse gas emissions above current levels with a schedule for lowering 
9.12 	the cap periodically to achieve the goal in subdivision 1 and interim goals recommended 
9.13 	under paragraph (a). The plan must consider cost savings and cost increases on energy 
9.14 	consumers in the state.
9.15 	(c) The plan must include recommendations for improvements in the emissions 
9.16 	inventory and recommend whether the state should require greenhouse gas emissions 
9.17 	reporting from specific sources and, if so, which sources should be required to report. The 
9.18 	plan must also evaluate options for an emissions registry after reviewing registries in other 
9.19 	states and recommend a registry that will insure the greatest opportunity for Minnesota 
9.20 	entities to obtain marketable credits.
9.21 		Subd. 6.Regional activities. The state must, with other states in the Midwest 
9.22 	region, develop and implement a regional approach to reducing greenhouse gas emissions 
9.23 	from activities in the region, including consulting on a regional cap and trade system. 
9.24 	The commissioner of commerce shall coordinate Minnesota's regional activities under 
9.25 	this subdivision and report to the legislative committees in the senate and house of 
9.26 	representatives with jurisdiction over energy and environmental policy by February 1, 
9.27 	2008, and February 1, 2009, on the progress made and recommendations for further action. 
9.28 	The commissioner of commerce, as part of the activities required under this subdivision, 
9.29 	must meet with responsible officials from bordering states, other states in the Midwest 
9.30 	region, and states in other regions of the country to: (1) determine whether other states are 
9.31 	interested in establishing and cooperating in a multistate or regional greenhouse gas cap 
9.32 	and trade allowance program; (2) identify and prepare an inventory of greenhouse gas 
9.33 	reduction resources available to support a multistate or regional greenhouse gas cap and 
9.34 	trade allowance program; (3) seek cooperation on a regional inventory of greenhouse gas 
9.35 	emission sources; and (4) prepare an inventory of available renewable energy resources 
9.36 	within a state or region. The commissioner of commerce must develop a definition of 
10.1 	scope of this regional activity that is in addition to the components described in clauses 
10.2 	(1) to (4). The commissioner must report on the additional scoping definitions to the 
10.3 	chairs and ranking minority members of the legislative committees with jurisdiction over 
10.4 	energy and environmental finance and policy on or before the commencement of the 
10.5 	2008 regular legislative session.