1.1 	A bill for an act
1.2 	relating to energy; allowing Public Utilities
1.3 	Commission to develop financial incentives for
1.4 	utilities to encourage community-based generation
1.5 	projects; providing price incentives to encourage
1.6 	purchase of renewable energy; requiring utilities to
1.7 	consider using community-based generation projects to
1.8 	address transmission inadequacies; requiring
1.9 	reliability administrator to conduct interconnection
1.10 	studies at request of community-based generation
1.11 	projects; amending Minnesota Statutes 2004, sections
1.12 	216B.1611, subdivision 2; 216B.169, subdivision 2;
1.13 	216B.2411, subdivision 1; 216B.2425, subdivision 2;
1.14 	216C.052, subdivision 1.
1.15 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.16 	Section 1. Minnesota Statutes 2004, section 216B.1611,
1.17 	subdivision 2, is amended to read:
1.18 		Subd. 2.Distributed generation; generic proceeding.  (a)
1.19 	The commission shall initiate a proceeding within 30 days of
1.20 	July 1, 2001, to establish, by order, generic standards for
1.21 	utility tariffs for the interconnection and parallel operation
1.22 	of distributed generation fueled by natural gas or a renewable
1.23 	fuel, or another similarly clean fuel or combination of fuels of
1.24 	no more than ten megawatts of interconnected capacity.  At a
1.25 	minimum, these tariff standards must:
1.26 	(1) to the extent possible, be consistent with industry and
1.27 	other federal and state operational and safety standards;
1.28 	(2) provide for the low-cost, safe, and standardized
1.29 	interconnection of facilities;
1.30 	(3) take into account differing system requirements and
2.1 	hardware, as well as the overall demand load requirements of
2.2 	individual utilities;
2.3 	(4) allow for reasonable terms and conditions, consistent
2.4 	with the cost and operating characteristics of the various
2.5 	technologies, so that a utility can reasonably be assured of the
2.6 	reliable, safe, and efficient operation of the interconnected
2.7 	equipment; and
2.8 	(5) establish (i) a standard interconnection agreement that
2.9 	sets forth the contractual conditions under which a company and
2.10 	a customer agree that one or more facilities may be
2.11 	interconnected with the company's utility system, and (ii) a
2.12 	standard application for interconnection and parallel operation
2.13 	with the utility system.
2.14 	(b) The commission may develop financial incentives based
2.15 	on a public utility's performance in encouraging residential and
2.16 	small business customers to participate in on-site generation,
2.17 	including community-based generation projects in remote
2.18 	locations that cooperatively allocate the energy generated to
2.19 	project owners.

2.20 	Sec. 2. Minnesota Statutes 2004, section 216B.169,
2.21 	subdivision 2, is amended to read:
2.22 		Subd. 2.Renewable and high-efficiency energy rate
2.23 	options.  (a) Each utility shall offer its customers, and shall
2.24 	advertise the offer at least annually, one or more options that
2.25 	allow a customer to determine that a certain amount of the
2.26 	electricity generated or purchased on behalf of the customer is
2.27 	renewable energy or energy generated by high-efficiency,
2.28 	low-emissions, distributed generation such as fuel cells and
2.29 	microturbines fueled by a renewable fuel.
2.30 	(b) Each public utility shall file an implementation plan
2.31 	within 90 days of July 1, 2001, to implement paragraph (a).
2.32 	(c) Rates charged to customers must be calculated using the
2.33 	utility's cost of acquiring the energy for the customer and must:
2.34 	(1) reflect the difference between the cost of generating
2.35 	or purchasing the renewable energy and the cost of generating or
2.36 	purchasing the same amount of nonrenewable energy; and 
3.1 	(2) be distributed on a per kilowatt-hour basis among all
3.2 	customers who choose to participate in the program; and 
3.3 	(3) offer declining block pricing as an incentive for
3.4 	consumers to purchase larger amounts of electricity generated
3.5 	from renewable sources of energy.
3.6 	(d) Implementation of these rate options may reflect a
3.7 	reasonable amount of lead time necessary to arrange acquisition
3.8 	of the energy.  The utility may acquire the energy demanded by
3.9 	customers, in whole or in part, through procuring or generating
3.10 	the renewable energy directly, or through the purchase of
3.11 	credits from a provider that has received certification of
3.12 	eligible power supply pursuant to subdivision 3.  If a utility
3.13 	is not able to arrange an adequate supply of renewable or
3.14 	high-efficiency energy to meet its customers' demand under this
3.15 	section, the utility must file a report with the commission
3.16 	detailing its efforts and reasons for its failure.

3.17 	Sec. 3. Minnesota Statutes 2004, section 216B.2411,
3.18 	subdivision 1, is amended to read:
3.19 		Subdivision 1.Generation projects.  (a) Any municipality
3.20 	or rural electric association providing electric service and
3.21 	subject to section 216B.241 that is meeting the objectives under
3.22 	section 216B.1691 may, and each public utility may, use five
3.23 	percent of the total amount to be spent on energy conservation
3.24 	improvements under section 216B.241, on:
3.25 	(1) community-based energy development projects in
3.26 	Minnesota to construct an electric generating facility that
3.27 	utilizes eligible renewable energy sources as defined in
3.28 	subdivision 2, such as methane or other combustible gases
3.29 	derived from the processing of plant or animal wastes, biomass
3.30 	fuels such as short-rotation woody or fibrous agricultural
3.31 	crops, or other renewable fuel, as its primary fuel source; or
3.32 	(2) projects in Minnesota to install a distributed
3.33 	generation facility of ten megawatts or less of interconnected
3.34 	capacity that is fueled by natural gas, renewable fuels, or
3.35 	another similarly clean fuel.
3.36 	(b) For public utilities, as defined under section 216B.02,
4.1 	subdivision 4, projects under this section must be considered
4.2 	energy conservation improvements as defined in section
4.3 	216B.241.  For cooperative electric associations and municipal
4.4 	utilities, projects under this section must be considered
4.5 	load-management activities described in section 216B.241,
4.6 	subdivision 1, paragraph (i).

4.7 	Sec. 4. Minnesota Statutes 2004, section 216B.2425,
4.8 	subdivision 2, is amended to read:
4.9 		Subd. 2.List development.  (a) By November 1 of each
4.10 	odd-numbered year, each public utility, municipal utility, and
4.11 	cooperative electric association, or the generation and
4.12 	transmission organization that serves each utility or
4.13 	association, that owns or operates electric transmission lines
4.14 	in Minnesota shall jointly or individually submit a transmission
4.15 	projects report to the commission.  The report must:
4.16 	(1) list specific present and reasonably foreseeable future
4.17 	inadequacies in the transmission system in Minnesota;
4.18 	(2) identify alternative means of addressing each
4.19 	inadequacy listed, including through increasing the number of
4.20 	community-based energy generation projects;
4.21 	(3) identify general economic, environmental, and social
4.22 	issues associated with each alternative; and
4.23 	(4) provide a summary of public input the utilities and
4.24 	associations have gathered related to the list of inadequacies
4.25 	and the role of local government officials and other interested
4.26 	persons in assisting to develop the list and analyze
4.27 	alternatives.
4.28 	(b) To meet the requirements of this subdivision, entities
4.29 	may rely on available information and analysis developed by a
4.30 	regional transmission organization or any subgroup of a regional
4.31 	transmission organization and may develop and include additional
4.32 	information as necessary.

4.33 	Sec. 5. Minnesota Statutes 2004, section 216C.052,
4.34 	subdivision 1, is amended to read:
4.35 		Subdivision 1.Responsibilities.  (a) There is
4.36 	established the position of reliability administrator in the
5.1 	Department of Commerce.  The administrator shall act as a source
5.2 	of independent expertise and a technical advisor to the
5.3 	commissioner, the commission, the public, and the Legislative
5.4 	Electric Energy Task Force on issues related to the reliability
5.5 	of the electric system.  In conducting its work, the
5.6 	administrator shall:
5.7 	(1) model and monitor the use and operation of the energy
5.8 	infrastructure in the state, including generation facilities,
5.9 	transmission lines, natural gas pipelines, and other energy
5.10 	infrastructure;
5.11 	(2) develop and present to the commission and parties
5.12 	technical analyses of proposed infrastructure projects, and 
5.13 	provide technical advice to the commission, and, upon request of
5.14 	an owner of any community-based energy project that meets the
5.15 	specifications of section 216C.41, subdivision 1, paragraph (c),
5.16 	clause (2) or (3), conduct analysis necessary to facilitate the
5.17 	interconnection of the community-based energy project to the
5.18 	electricity transmission or distribution system;
5.19 	(3) present independent, factual, expert, and technical
5.20 	information on infrastructure proposals and reliability issues
5.21 	at public meetings hosted by the task force, the Environmental
5.22 	Quality Board, the department, or the commission.
5.23 	(b) Upon request and subject to resource constraints, the
5.24 	administrator shall provide technical assistance regarding
5.25 	matters unrelated to applications for infrastructure
5.26 	improvements to the task force, the department, or the
5.27 	commission.
5.28 	(c) The administrator may not advocate for any particular
5.29 	outcome in a commission proceeding, but may give technical
5.30 	advice to the commission as to the impact on the reliability of
5.31 	the energy system of a particular project or projects.  The
5.32 	administrator must not be considered a party or a participant in
5.33 	any proceeding before the commission.

5.34 	Sec. 6. EFFECTIVE DATE.
 5.35 	Sections 1 to 5 are effective the day following final
5.36 	enactment.