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and Fiscal Analysis
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Tom Bottern
State of Minnesota
S.F. No. 1692 - Energy and Utilities Omnibus Bill (First Engrossment)
Author: Senator David J. Osmek
Prepared By: Carlon D. Fontaine, Senate Counsel (651/296-4395)
Date: April 8, 2019


Article 1 - Appropriations

Section 1.  Energy and utilities appropriations.  Specifies definitions of fiscal years.

Section 2.  Department of Commerce. Provides appropriations to the Department of Commerce. See spreadsheet for details.

Section 3.  Public Utilities Commission.  Provides appropriations for the Public Utilities Commission. See spreadsheet for details.

Article 2 - Energy Policy

Section 1.  Community solar gardens.  Modifies the statute governing community solar gardens, which was enacted in 2013, by making the following changes:

Paragraph (a) requires the public utility subject to the statute (Xcel Energy) to file a new community solar garden plan for approval by the Public Utilities Commission (PUC) by September 30, 2019. After the new plan is approved by the PUC, the previous program would cease operations. A community solar garden application deemed complete under the prior program would continue to operate under the parameters of the previous program. The public utility would review qualified community solar garden proposals yearly. The public utility is allowed to submit qualified proposals to the program.

Paragraph (b) requires the public utility to make recommendations to the PUC, which makes the final selection of the proposals the public utility must accept. The qualified proposals with the lowest cost to the public utility's customers must be selected. The total nameplate capacity for qualified proposals selected is capped at 25 megawatts per year.

Paragraph (c) maintains the maximum amount for any one community solar garden at one megawatt, but requires the nameplate capacity of the community solar garden to be combined with the nameplate capacity of any other community solar garden that: (1) is constructed within the same 12-month period as the community solar garden; and (2) exhibits characteristics indicating a single development with the community solar garden, such as ownership structure, shared interconnection, revenue sharing arrangements, and common debt or equity financing.

Paragraph (e) eliminates the value of solar method of calculating the rate paid for energy from a community solar garden and instead allows a rate to be proposed by the public utility in their plan submitted to the PUC. Prohibits the PUC from increasing the rate from the amount contained in the proposal. Deletes a reference to the Made in Minnesota solar incentive program, which was repealed in 2017.

Paragraph (f) lists additional elements to be included with any community solar garden plans approved by the PUC. The additional elements include:

  • certification that estimates of the annual generation of electricity by the community solar garden and the length of time to fully recover a subscriber’s initial lump-sum payments are contained in promotional materials. Requires the estimates to be provided to prospective subscribers at least 15 days prior to the date a contract is entered into by the subscriber and the community solar garden owner;

  • certification that the utility and the solar garden owner submit copies of marketing and promotional material and sample contracts to the PUC;

  • certification that the solar garden owner has placed sufficient financial resources into an escrow account to reimburse subscribers for financial losses incurred if the project fails;

  • requiring a mechanism for subscribers to transfer subscriptions to other new or current subscribers, or to cancel subscriptions for a full refund;

  • requiring a solar garden owner and the utility purchasing electricity generated by the solar garden to forward customer complaints to the PUC;

  • requiring that the contract between a subscriber and the solar garden owner contains a warranty for a minimum level of electricity to be delivered to the subscriber from the community garden; and

  • reflecting the PUC's determination that the plan is financially viable; and the contract between a subscriber and the solar garden owner is fair, reasonable, and not discriminatory.

Paragraph (i) requires a community solar garden subscriber checklist to be developed.

Paragraph (j) requires community solar garden developers to submit a registration form to the PUC.

Paragraph (k) provides a definition of "qualified proposal" for purposes of the community solar garden program approved by the PUC. A qualified proposal must: (i) provide evidence the proposer is able to construct, own, and operate the community solar garden for its proposed life; (ii) deliver at least 60 percent of the energy generated by the community solar garden facility to residential customers; (iii) include a plan to seek low-income residential customers; (iv) provide a firm rate that customers of the public utility must pay for energy from the community solar garden; and (v) describe the benefits the community solar garden provides.

Paragraphs (l and m) require the PUC, by July 30, 2019, to develop a formula to estimate the annual amount of electricity generated by a solar garden and another formula to estimate the length of time required to fully recover a subscriber's up front lump-sum payments.

[Effective date] makes the changes applicable to any plan submitted to the PUC for approval on or after the effective date. Section 1 comes from S.F. 1193 (Osmek) and S.F. 488 (Osmek).

Section 2. Definitions. Removes the capacity cap for hydroelectric power from the definition of “eligible energy technology,” so that projects with a capacity of 100 megawatts or more would qualify under the renewable energy standard. Currently, only hydropower generated from a facility with less than a 100 megawatt capacity can be treated as renewable power. This is from S.F. 1372 (Mathews).

Section 3. Additional storage of spent nuclear fuel. Abolishes the prohibition that the Public Utilities Commission may not issue a certificate of need for the construction of a new nuclear-powered electric generating plant. This is from S.F. 633 (Osmek).

Sections 4 and 5. PACE loan program definitions. Amends the definitions of “cost-effective energy improvements” and “qualifying commercial real property” applicable to the PACE loan program to include application to new construction.

Section 6. Financing terms. Requires financing under the commercial PACE program to have a principal amount not to exceed the lesser of the greater of 20 percent of the assessed value of the real property or 20 percent of the real property's appraised value.

Section 7. Improvements; real property or fixture. Provides that a cost-effective energy improvement financed under a commercial PACE loan program is deemed real property or a fixture attached to the real property. Sections 4 to 7 are from S.F. 1779 (Pratt). 

Sections 8 and 9. C-LEAF. Corrects the misnaming of the renewable development account in two sections of session law enacted in 2017. This is from S.F. 2066 (Osmek).

Section 10. Department of Commerce; use of appropriations; prohibition. Prohibits the commissioner of commerce from using money appropriated to the Department of Commerce to fund any activities related to an appeal before the Minnesota Court of Appeals or Minnesota Supreme Court concerning the certificate of need issued by the Public Utilities Commission to Enbridge Energy for the Line 3 pipeline replacement project. This is from S.F. 1757 (Utke).

Article 3 - Conservation Improvement Programs

Section 1, subdivision 1. Definitions. Provides definitions, including the definition of a “consumer-owned utility” subject to the new section, “efficient electrification and conversion improvements,” “energy conservation and energy conservation improvements,” “fuel,” “fuel neutral,” and “source energy.” Other definitions are recodifications of terms found in existing statute at section 216B.241, subd. 1.

Subd. 2. Applicability. Provides that the conservation improvement program (CIP) requirements apply only to certain cooperative electric associations (providing electricity to more than 5,000 members), municipalities (providing retail service to more than 1,000 retail customers), and a municipality with more than 1,000,000,000 cubic feet in annual throughput sales to natural gas customers. This is also a recodification of the language that currently exists in section 216B.241, subd.1b.

Subd. 3. Savings goal. Specifies that consumer-owned utilities (COUs) subject to this section have an annual energy savings goal of 1.5 percent of gross annual retail energy sales. This is the current energy savings goal for municipal utilities and cooperative electric associations. Allows certain activities, including energy savings from efficient electrification and conversion improvements to be counted toward 0.5 percent of the goal for COUs.

Subd. 4. Consumer-owned utility; energy conservation and optimization plans. Requires COUs subject to the section to develop and submit their new CIP plans to the commissioner of Commerce by June 1, 2021.  Allows plans to cover a five-year period. Requires annual updates to the plan to be filed with the commissioner.  Establishes a formula for capturing the value of efficient electrification.

Subd. 5. Low-income programs. Recodification of current law requiring COUs to develop programs for low-income customers, but clarifies that COUs can aggregate resources to develop a more beneficial program. 

Subd. 6. Recovery of expenses. Recodifies current law for COUs allowing cooperative electric associations to recover expenses related to their CIP plan through rate adjustments.

Subd. 7. Ownership of energy conservation improvement.  Recodifies current law for COUs regarding ownership of energy conservation improvements.

Subd. 8. Criteria for efficient electrification or conversion improvements and load management.  Allows a COU to form a technical working group to design programs for efficient electrification or conversion improvements and load management and file rate schedules for recovering costs related to those activities. Provides criteria for utilizing benefits resulting from those efficient electrification and related efforts.

Subd. 9. Criteria for CIP solar rebates. Allows a COU to claim energy saving credits equal to the amount of solar energy produced for which the COU has issued a CIP solar rebate. Provides a definition of “CIP solar rebate.”

Subd. 10. Manner of filing and service. Recodifies current law for COUs regarding use of the Department of Commerce’s e-filing system.

Subd. 11. Assessments. Modifies the assessments that must be paid by a COU for activities related to administration of the program by the Department of Commerce or Public Utilities Commission to allow a COU to opt out of certain assessments for certain activities (applied research and development grants and facilities energy efficiency) that may not apply to a COU. 

Subd. 12. Waste heat recovery. Recodifies current law for COUs regarding waste heat recovery.

Subd. 13. Large customer facilities. Recodifies current law for COUs regarding the authority of certain large customers to opt out of CIP.

Sections 2 to 7. Clarify that these sections now apply only to “public” utilities and not municipal utilities and cooperative electric associations and removes obsolete language.

Section 6. Ownership of energy conservation improvement. Clarifies that a preweatherization measure installed in a building under the section is the property of the owner of the building.

Section 7. Low-income programs. Increases the amount a public utility must spend on low-income programs from 0.4 percent to 0.8 percent of the public utility’s most recent three-year average gross operating revenue from residential customers for a gas utility and from 0.1 to 0.4 percent of the public utility’s gross operating revenue from residential customers for an electric utility. Provides definitions for “multifamily building” and “preweatherization measures.”

Section 8. Repealer. Repeals the current conservation improvement requirements found in section 216B.241, subdivision 1b, applicable to cooperative associations and municipalities, which are codified as modified in new section 216B.2402. Article 3 is from S.F. 1915 (Rarick).

Article 4 - Renewable Development

Section 1.  Renewable development account. Beginning in 2020, fixes the annual contribution to the renewable development account required for Xcel Energy’s Prairie Island and Monticello nuclear generating plants at $33,000,000 in fiscal year 2020; $31,000,000 in fiscal year 2021; and $20,000,000 in fiscal year 2022 and thereafter. Once both nuclear plants are closed, the amount collected would be fixed at $12,750,000 per year ($7,500,000 attributed to the Prairie Island plant and $5,250,000 for the Monticello plant). Clarifies that recovery of funds withheld shall be done through a rate rider. Directs Xcel to select members of the advisory group. Allows Xcel Energy to pay the third party evaluator from money withheld from the transfer to the renewable development account. Provides a mechanism for determining when sufficient funds are in the account to require a grant cycle. Makes other technical, clarifying, and conforming changes. Sections 1, 9 to 11 and 14 are from S.F. 1039 (Goggin).

Section 2. Community energy transitions grants.  

Subdivision 1.  Definitions.  Provides definitions for terms including “commissioner” and “eligible community.” "Commissioner" means the commissioner of employment and economic development (DEED). "Eligible community" means a county, municipality, or tribal government that hosts an investor-owned electric generating plant powered by coal, nuclear energy, or natural gas.

Subd. 2.  Establishment. Requires the commissioner of employment and economic development to establish a community energy transition grant program.

Subd. 3.  Funding.  Creates a community energy transition account. Appropriates money in the account to the commissioner for community energy transition grants. Transfers $500,000 from the renewable development account on July 1, 2019, and $1 million each July 1, thereafter from the renewable development account for deposit in the community energy transition account. Specifies that grants to eligible communities with a plant that has not been scheduled for retirement or decommissioning is limited to $1 million and grants to eligible communities with a plant that has been scheduled for retirement or decommissioning is capped at $5 million. Allows DEED to retain five percent for administrative costs.

Subd. 4Cancellation of grant; return of grant money.  Requires money for a project that has been granted but not completed within five years must be returned to DEED for additional grants.

Subd. 5.  Grants to eligible communities.  Provides for a competitive process for grants to eligible communities for use to plan for or address the economic and social impact on the community of plant retirement or transition. Specific uses may include research, planning, studies, capital improvements, and incentives for businesses to open, relocate, or expand.

Subd. 6.  Priorities.  Lists the priorities that the advisory council must consider when evaluating projects.

Subd. 7.  Advisory council.  Creates the community energy transition grant advisory council, consisting of the following members: the commissioner of employment and economic development, or a designee; the commissioner of transportation, or a designee; the commissioner of the Minnesota Pollution Control Agency, or a designee; the commissioner of natural resources, or a designee; the commissioner of commerce, or a designee; the commissioner of administration, or a designee; one representative of the Prairie Island Indian community; two representatives of workers at investor-owned electric generating plants powered by coal, nuclear energy, or natural gas; and four representatives of eligible communities, of which, two must be counties, two must be municipalities, at least one must host a coal plant, and at least one must host a nuclear plant. Provides for other specifics for the administration of the advisory council.

Subd. 8.  Reports to the legislature.  Requires an annual report to the legislature beginning in 2021, detailing the use of grant funds, including any economic impact data. This section is from S.F. 1888 (Housley).

Section 3. Energy storage system pilot projects. Allows a public utility to petition the Public Utilities Commission to recover costs associated with implementation of an energy storage system pilot project. Sections 3 to 5, and 13, and are from S.F. 100 (Osmek).

Section 4.  Definitions. Provides a definition for “energy storage system” within the resource planning statute.

Section 5.  Energy storage systems assessment. Requires investor-owned utilities to include an assessment of energy storage systems in any integrated resource plan or plan modification filed by an investor-owned utility. Provides considerations for the Public Utilities Commission in approving a plan with respect to an energy storage system assessment submitted by an investor-owned utility.

Section 6. Solar for schools program. Establishes a solar for schools program within the Department of Commerce for the purpose of providing grants to stimulate the installation of solar energy systems on or adjacent to school buildings.

Section 7. Solar for schools program for certain utility service territory. Establishes a solar for schools program to be operated by Xcel Energy to supplement with additional funding financial arrangements that allow schools to benefit from state and federal tax and other financial  incentives that schools are ineligible to receive directly to install and operate solar energy systems. Requires the utility to file a plan with the commissioner of commerce. Provides specifics for system eligibility and the application process for schools seeking financial assistance. Sections 6 and 7 are from S.F. 1424 (Dibble).

Section 8.  Electric vehicle charging station revolving loan program.

Subdivision 1.  Definitions.  Provides definitions.

Subd. 2.  Revolving loan fund.  Requires the commissioner of commerce to establish an electric vehicle charging station revolving loan fund to make loans for charging station projects installed in Minnesota.

Subd. 3.  Administration.  Specifies that the minimum interest rates established by the commissioner must not exceed one percent interest for the state, other governmental entity, or a nonprofit organization; or three percent interest for private businesses. Requires 40 percent of a loan repayment to be returned to the renewable development account until the returned amount totals $1.5 million.

Subd. 4.  Applications.  Requires an applicant to submit the following information to the commissioner: (1) the estimated cost of the project and the loan amount; (2) other sources of funding; (3) sources of funds to repay loans received; and (4) ability of the borrower to repay loans.

Subd. 5.  Use of loan funds.  Allows loan funds to be used to design, develop, purchase, and install electric vehicle charging stations at locations in Minnesota. Requires an electric vehicle charging station project receiving loan funds to be available for public use.

Subd. 6.  Evaluation of projects.  Requires the commissioner to consider when evaluating a project:

  • the need for the project and why it is in the public interest;

  • the relationship of the project to the local area's needs;

  • the estimated project cost and the loan amount sought;

  • proposed sources of funding;

  • the need for the project as part of the overall transportation system; and

  • the overall economic impact of the project.

Allows the commissioner to consult with the commissioner of transportation regarding the electric vehicle charging needs throughout the state.

Subd. 7.  Maximum loan amount.  Provides a per project maximum loan amount of $30,000.

Subd. 8.  User fees.  Requires a borrower to charge a per hour fee for use of a charging station. Requires a borrower to use at least 25 percent of the fees collected to repay the loan and pay for expenses associated with operating and maintaining the electric vehicle charging station funded by the loan.

Subd 9.  Report to legislature.  Requires a report regarding the revolving loan program. Specifies that the report must include (1) a description of the projects and an account of loans made, (2) the revolving loan fund balance, and (3) an explanation of administrative expenses. This section is from S.F. 2342 (Osmek).

Section 9. Prairie Island Net Zero Project.  Establishes the Prairie Island Net Zero Project with the goal of having the Prairie Island Indian Community develop an energy system implementing renewable energy projects that results in net zero emissions. Requires the Prairie Island Indian Community to file a plan with the commissioner of employment and economic development by July 1, 2019, and updated annually until the program is complete, describing the project elements and implementation strategy.

Section 10Biomass Business Compensation.

Subdivision 1.  Definitions.  Provides definitions for “biomass plant,” “early termination,” and “operating income” as used in the bill.

Subd. 2.  Office of Administrative Hearings; claims process.  Requires the chief administrative law judge of the Office of Administrative Hearings to name an administrative law judge to administer a claims award process to compensate businesses negatively affected by the sale and closure of a biomass plant located in the city of Benson.  Allows the administrative law judge to create a process to consider claims for affected businesses and issue awards to eligible businesses.  Provides that awards are final and not subject to judicial review.  Specifies that an award does not constitute an admission of liability by the state.

Subd. 3.  Eligibility.  Establishes the eligibility threshold for compensation.  Requires an affected business to verify that as of May 1, 2017, it was operating under the terms of a valid contract or provide other documentation demonstrating an ongoing business relationship with the biomass plant or the fertilizer plant integrated within the biomass plant.

Subd. 4.  Types of claims.   Allows an eligible business to make claims based on either or both decreased operating income or the loss of value of investment in real or personal property.  Provides the information to be presented for each type of claim.

Subd. 5.  Limitations on awards.  Provides the limitations for a compensation award for decreased operating income claim.  Requires the use, sales, salvage, or scrap value of the property to be deducted from a compensation award for a loss of value of investments in real or personal property claim.  Requires any related payment received from business interruption insurance policies, settlements, or other forms of compensation to be deducted from any compensation award.

Subd. 6.  Priority.  Allows the administrative law judge to give priority to claims by eligible businesses that demonstrate a significant effort to pursue other business opportunities or mitigate losses resulting from the closure of the biomass plant.

Subd. 7.  Awarding claims.  Specifies that awards must be awarded proportionally if the amount provided for compensation in the biomass business compensation account is insufficient to fully award all eligible claims.

Subd. 8.  Deadlines.  Establishes deadlines for filing claims and for issuing orders on award determinations.

Subd. 9Expiration. Sets a section expiration date of June 30, 2022.

Section 11.  Biomass business compensation account.

Subdivision 1.  Account established.  Establishes a biomass business compensation account in the special revenue fund in the state treasury.

Subd. 2.  Funding for the special account.  Requires $40,000,000 to be transferred on July 1, 2019, from the renewable development account to the biomass business compensation account and appropriated for payment of eligible obligations under the biomass business compensation program.

Subd. 3.  Payment of expenses.  Provides a mechanism for the chief administrative law judge to certify costs incurred to administer the biomass business compensation claims process.  Specifies that the transfer of certified costs will come from the renewable development account, not to exceed $200,000 total.

Subd. 4Expiration. Sets a section expiration date of June 30, 2022.

Section 12. Green Roof Advisory Task Force; report.

Subdivision 1. Definition. Provides a definition of a "green roof."

Subd. 2. Membership. Paragraph (a) specifies membership of the Green Roof Advisory Task Force consisting of:  (1) the state building official or a designee; (2) a representative of the Building Owners and Managers Association Greater Minneapolis; (3) up to three representatives from Minnesota companies with extensive experience installing green roofs, appointed by the commissioner of the Pollution Control Agency; (4) a co-chair of the Committee on the Environment of the American Institute of Architects Minnesota or a designee; (5) a horticultural expert from the University of Minnesota Extension; (6) a representative of the University of Minnesota Center for Sustainable Building Research; (7) a representative of the Minnesota Solar Energy Industries Association; (8) a representative from the Minnesota Nursery and Landscape Association; (9) a representative of the Minnesota State Building Trades Council; (10) the commissioner of commerce or a designee; and (11) other members as appointed by the advisory task force.

Paragraph (b) provides that members of the task force are not compensated for task force activities. Requires the Department of Commerce to serve as staff to the advisory task force.

Subd. 3. Duties. Requires the advisory task force to review and evaluate laws relating to green roofs; estimates of the effects of operating green roofs on energy use in buildings and any associated reductions in the emission of greenhouse gases and other air pollutants, roof replacement costs, and storm water management costs; and  any other relevant information.

Subd. 4. Report. Requires the task force to submit a report by March 1, 2020, containing the task force's findings and recommendations, including discussion of the benefits and problems associated with requiring buildings of a certain type and size to install green roofs.

Subd. 5. Sunset. Sunsets the advisory task force on April 1, 2020. This section is from S.F. 297 (Dziedzic).

Section 13. Cost-benefit analysis of energy storage systems. Requires the commissioner of commerce to contract with an independent consultant selected through a request for proposal process to produce a report analyzing the potential costs and benefits of energy storage systems. Requires the study to be submitted to the Legislature by December 31, 2019.

Section 14. Appropriation; Prairie Island Net Zero Project.  Awards a grant over five years from the renewable development account to the Prairie Island Indian Community to develop a net zero emissions energy system as follows: $20,000,000 in fiscal year 2020; $7,500,000 in fiscal years 2021, 2022, and 2023; and $3,700,000 in fiscal year 2024.

Section 15.  Appropriation; energy storage cost-benefit analysis.  Appropriates $150,000 in fiscal year 2019 from the renewable development account for an energy storage systems cost-benefit analysis.

Section 16. Appropriation; green roof task force. Appropriates $55,000 in fiscal year 2020 from the renewable development account to the commissioner of commerce to complete the green roof report required under section 12.

Section 17. Appropriation; solar for schools. Appropriates $1,000,000 in fiscal year 2020 and $1,000,000 in fiscal year 2021 from the renewable development account to the commissioner of commerce for transfer to Xcel Energy for awarding grants and financial assistance to schools under the solar for schools program.

Section 18.  Appropriation; electric vehicle charging station revolving loan program. Appropriates $1,500,000 from the renewable development account to the commissioner of commerce for the loan program. Specifies that loans be made only for electric vehicle charging station projects in Xcel Energy service territory. Allows the commissioner to use up to three percent of this amount for administration.



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