1.1                          A bill for an act
  1.2             relating to wind energy; establishing rate policies 
  1.3             for certain small producers; amending Minnesota 
  1.4             Statutes 1994, section 216B.164, subdivisions 2, 3, 4, 
  1.5             6, 8, and by adding subdivisions.  
  1.6   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.7      Section 1.  Minnesota Statutes 1994, section 216B.164, 
  1.8   subdivision 2, is amended to read: 
  1.9      Subd. 2.  [APPLICABILITY.] This section as well as and any 
  1.10  rules promulgated by the commission to implement this section or 
  1.11  the public utility regulatory policies act of 1978, Public Law 
  1.12  Number 95-617, Statutes at Large, volume 92, page 3117, and the 
  1.13  federal Energy Regulatory Commission regulations thereunder, 
  1.14  Code of Federal Regulations, title 18, part 292, shall apply to 
  1.15  all Minnesota electric utilities, including cooperative electric 
  1.16  associations and municipal electric utilities.  
  1.17     Sec. 2.  Minnesota Statutes 1994, section 216B.164, is 
  1.18  amended by adding a subdivision to read: 
  1.19     Subd. 1a.  [DEFINITION.] "Farm-generated wind energy 
  1.20  production facility" means a wind energy conversion facility for 
  1.21  the generation of electricity and its base support structure, 
  1.22  switch gear, and associated equipment installed on agricultural 
  1.23  land. 
  1.24     Sec. 3.  Minnesota Statutes 1994, section 216B.164, 
  1.25  subdivision 3, is amended to read: 
  2.1      Subd. 3.  [PURCHASES; SMALL FACILITIES.] (a) For a 
  2.2   qualifying facility having less than 40 kilowatt capacity, the 
  2.3   customer shall be billed for the net energy supplied by the 
  2.4   utility according to the applicable rate schedule for sales to 
  2.5   that class of customer.  In the case of net input into the 
  2.6   utility system by a qualifying facility having less than 40 
  2.7   kilowatt capacity, compensation to the customer shall be at a 
  2.8   per kilowatt hour rate determined under paragraph (b) or (c) of 
  2.9   this subdivision.  
  2.10     (b) In setting rates, the commission shall consider the 
  2.11  fixed distribution costs to the utility not otherwise accounted 
  2.12  for in the basic monthly charge and shall ensure that the costs 
  2.13  charged to the qualifying facility are not discriminatory in 
  2.14  relation to the costs charged to other customers of the utility. 
  2.15  The commission shall set the rates for net input into the 
  2.16  utility system based on avoided costs as defined in the Code of 
  2.17  Federal Regulations, title 18, section 292.101(b)(6), the 
  2.18  factors listed in Code of Federal Regulations, title 18, section 
  2.19  292.304, and all other relevant factors.  
  2.20     (c) Notwithstanding any provision in this chapter to the 
  2.21  contrary, a qualifying facility having less than 40 kilowatt 
  2.22  capacity may elect that the compensation for net input by the 
  2.23  qualifying facility into the utility system shall be at the 
  2.24  average retail utility energy rate.  "Average retail utility 
  2.25  energy rate" is defined as the average of the retail energy 
  2.26  rates, exclusive of special rates based on income, age, or 
  2.27  energy conservation, according to the applicable rate schedule 
  2.28  of the utility for sales to that class of customer.  
  2.29     (d) If the qualifying facility is interconnected with a 
  2.30  nongenerating utility which has a sole source contract with a 
  2.31  municipal power agency or a generation and transmission utility, 
  2.32  the nongenerating utility may elect to treat its purchase of any 
  2.33  net input under this subdivision as being made on behalf of its 
  2.34  supplier and shall be reimbursed by its supplier for any 
  2.35  additional costs incurred in making the purchase.  Qualifying 
  2.36  facilities having less than 40 kilowatt capacity may, at the 
  3.1   customer's option, elect to be governed by the provisions of 
  3.2   subdivision 4.  
  3.3      Sec. 4.  Minnesota Statutes 1994, section 216B.164, is 
  3.4   amended by adding a subdivision to read: 
  3.5      Subd. 3a.  [PURCHASES; FARM-GENERATED WIND ENERGY; UNDER 
  3.6   TWO MEGAWATTS CAPACITY.] For farm-generated wind energy 
  3.7   production facilities having a generating capacity of two 
  3.8   megawatts or less the customer must be billed for the net energy 
  3.9   supplied by the utility according to the applicable rate 
  3.10  schedule for sales to that class of customer.  If, in any 
  3.11  billing period, the operation of a farm-generated wind energy 
  3.12  production facility results in a net input of electrical energy 
  3.13  into the utility system, the payment or credit to the customer 
  3.14  must be at a rate per net kilowatt hour equivalent to 80 percent 
  3.15  of the applicable rate schedule for sales to that class of 
  3.16  customer.  
  3.17     Sec. 5.  Minnesota Statutes 1994, section 216B.164, 
  3.18  subdivision 4, is amended to read: 
  3.19     Subd. 4.  [PURCHASES; WHEELING; COSTS.] (a) Except as 
  3.20  otherwise provided in paragraph (c), this subdivision shall 
  3.21  apply to all qualifying facilities or farm-generated wind energy 
  3.22  production facilities having 40 kilowatt capacity or more as 
  3.23  well as qualifying facilities as defined in subdivision 3 which 
  3.24  elect to be governed by its provisions.  
  3.25     (b) The utility to which the qualifying facility is 
  3.26  interconnected shall purchase all energy and capacity made 
  3.27  available by the qualifying facility.  The qualifying facility 
  3.28  or farm-generated wind energy production facility shall be paid 
  3.29  the utility's full avoided capacity and energy costs as 
  3.30  negotiated by the parties, as set by the commission, or as 
  3.31  determined through competitive bidding approved by the 
  3.32  commission.  The full avoided capacity and energy costs to be 
  3.33  paid a qualifying facility that generates electric power by 
  3.34  means of a renewable energy source are the utility's least cost 
  3.35  renewable energy facility or the bid of a competing supplier of 
  3.36  a least cost renewable energy facility, whichever is lower, 
  4.1   unless the commission's resource plan order, under section 
  4.2   216B.2422, subdivision 2, provides that the use of a renewable 
  4.3   resource to meet the identified capacity need is not in the 
  4.4   public interest.  
  4.5      (c) For all qualifying facilities or farm-generated wind 
  4.6   energy production facility having 30 kilowatt capacity or more, 
  4.7   the utility shall, at the qualifying facility's or the utility's 
  4.8   request, provide wheeling or exchange agreements wherever 
  4.9   practicable to sell the qualifying facility's output to any 
  4.10  other Minnesota utility having generation expansion anticipated 
  4.11  or planned for the ensuing ten years.  The commission shall 
  4.12  establish the methods and procedures to insure that except for 
  4.13  reasonable wheeling charges and line losses, the qualifying 
  4.14  facility receives the full avoided energy and capacity costs of 
  4.15  the utility ultimately receiving the output.  
  4.16     (d) The commission shall set rates for electricity 
  4.17  generated by renewable energy.  
  4.18     (e) In addition to the full avoided capacity and energy 
  4.19  costs determined in paragraph (b) or subdivision 3a, the utility 
  4.20  must provide to a farm-generated wind energy production facility 
  4.21  $0.01 per net kilowatt hour supplied to the utility in 
  4.22  recognition of foregone costs by the utility for transmission 
  4.23  expenses and losses, land acquisition, service roads, transfer 
  4.24  stations, and other costs of delivering electrical power in 
  4.25  low-customer-density service areas. 
  4.26     Sec. 6.  Minnesota Statutes 1994, section 216B.164, 
  4.27  subdivision 6, is amended to read: 
  4.28     Subd. 6.  [RULES AND UNIFORM CONTRACT.] (a) The commission 
  4.29  shall promulgate rules to implement the provisions of this 
  4.30  section.  The commission shall also establish a uniform 
  4.31  statewide form of contract for use between utilities and a 
  4.32  qualifying facility having less than 40 kilowatt capacity.  
  4.33     (b) The commission shall require the qualifying facility or 
  4.34  farm-generated wind energy production facility to provide the 
  4.35  utility with reasonable access to the premises and equipment of 
  4.36  the qualifying facility if the particular configuration of 
  5.1   the qualifying facility precludes disconnection or testing of 
  5.2   the qualifying facility from the utility side of the 
  5.3   interconnection with the utility remaining responsible for its 
  5.4   personnel.  
  5.5      (c) The uniform statewide form of contract shall be applied 
  5.6   to all new and existing interconnections established between a 
  5.7   utility and a qualifying facility having less than 40 kilowatt 
  5.8   capacity, except that existing contracts may remain in force 
  5.9   until written notice of election that the uniform statewide 
  5.10  contract form applies is given by either party to the other, 
  5.11  with the notice being of the shortest time period permitted 
  5.12  under the existing contract for termination of the existing 
  5.13  contract by either party, but not less than ten nor longer than 
  5.14  30 days.  
  5.15     (d) The commission may promulgate emergency rules for the 
  5.16  purpose of implementing this section.  The emergency rules are 
  5.17  subject to sections 14.29 to 14.36.  
  5.18     Sec. 7.  Minnesota Statutes 1994, section 216B.164, 
  5.19  subdivision 8, is amended to read: 
  5.20     Subd. 8.  [INTERCONNECTION REQUIRED; OBLIGATION FOR COSTS.] 
  5.21  (a) Except as provided in subdivision 8a, utilities shall be 
  5.22  required to interconnect with a qualifying facility or 
  5.23  farm-generated wind energy production facility that offers to 
  5.24  provide available energy or capacity and that satisfies the 
  5.25  requirements of this section.  
  5.26     (b) Nothing contained in this section shall be construed to 
  5.27  excuse the qualifying facility or farm-generated wind energy 
  5.28  production facility from any obligation for costs of 
  5.29  interconnection and wheeling in excess of those normally 
  5.30  incurred by the utility for customers with similar load 
  5.31  characteristics who are not cogenerators or small power 
  5.32  producers, or from any fixed charges normally assessed such 
  5.33  nongenerating customers. 
  5.34     Sec. 8.  Minnesota Statutes 1994, section 216B.164, is 
  5.35  amended by adding a subdivision to read: 
  5.36     Subd. 8a.  [LIMIT ON REQUIRED ENERGY PURCHASES; 
  6.1   REPORT.] (a) A utility interconnected to a qualifying facility 
  6.2   or farm-generated wind energy production facility must purchase 
  6.3   from the facility at the rates specified in subdivisions 3a and 
  6.4   4 for distribution to its retail customers no more than two 
  6.5   percent of projected annual kilowatt hour sales at retail.  
  6.6   Additional purchases may be made at a rate per kilowatt hour 
  6.7   negotiated between the utility and the facility or ordered by 
  6.8   the commission. 
  6.9      (b) Each utility interconnected to a qualifying facility or 
  6.10  farm-generated wind energy production facility shall report at 
  6.11  least once each year to the commission, on a date or dates 
  6.12  determined by the commission, the level of projected annual 
  6.13  kilowatt hour sales at retail that are being supplied by 
  6.14  qualifying facilities or farm-generated wind energy production 
  6.15  facilities.