S.F. No. 9 - 2003 First Special Session Omnibus Energy Bill
Author:	Senator Steve Murphy
Prepared by:	Matthew S. Grosser, Senate Research (296-1890)
Date:	June 2, 2003

ARTICLE 1

NUCLEAR ENERGY PROVISIONS

Section 1 amends the definition of a radioactive waste management facility to excluded on-site dry cask storage of spent nuclear fuel at a nuclear generation facility in Minnesota at which the spent fuel is generated.

Section 2, subdivision 1 authorizes sufficient additional dry cask storage of spent nuclear fuel at Prairie Island to permit the plant to continue operating until the end of its current licenses in 2013 and 2014.

Section 2, subdivision 2 specifies that any future nuclear storage facility or additional dry casks at either the Prairie Island or Monticello nuclear generation facilities is subject to the approval of the Minnesota Public Utilities Commission, and must receive a certificate of need from the commission.

Grants the Public Utilities Commission (PUC) explicit authority to make a decision that could result in a shut down of a nuclear generation facility.

Requires the PUC to consider whether the utility is in compliance with the renewable energy objectives, and the utility's past performance with regard to those objectives.

Subdivision 3 stays a decision on a request for a certificate of need for additional storage pending opportunity by the legislature to review the decision. Specifies that the stay expires as of June 1 following the legislative session, if the legislature does not act to modify or reject the commission's decision.

Subdivision 4 specifies that the storage of spent nuclear fuel in the pool and in dry casks at Prairie Island is to be managed to facilitate the shipment of waste out of state as soon as feasible in a manner that allows the continued operation of the plant. Clarifies that the authorization for storage capacity is limited to storage of spent fuel generated by a Minnesota nuclear generation facility, and stored on the site of that facility.

Subdivision 5 specifies that a dry cask storage facility is subject to certain specified groundwater protection standards.

Subdivision 6 states that the siting, construction and operation of a dry cask storage facility is subject to all of the environmental review and protection provisions of chapters 115, 115B, 116, 116B, 116D, and 216B, except those that apply specifically to a radioactive waste management facility.

Requires an environmental impact statement (EIS) for a proposal to construct and operate a new or expanded dry cask storage facility. Requires the EIS to demonstrate the facility is designed to meet the groundwater standards in Minnesota Statutes, section 116C.76, subdivision 1, clauses (1) to (3).

Section 3 authorizes the Xcel Energy to recover the costs of a settlement with the Mdewakanton Dakota Tribal Council at Prairie Island regarding the contractual agreement entered into in 1994 from rate payers. Requires the PUC to approve a rate schedule, which accomplishes that without a general rate case. Specifies that, although payments under the settlement may be used for the purchase of up to 1,500 acres of land within 50 miles of the current reservation at Prairie Island for placement in trust for housing and other residential purposes, the Governor reserves the right to oppose any particular application to place land in trust.

Section 4 requires a certificate of need for additional storage of spent nuclear fuel for a facility seeking a license extension to address the impacts of continued operation over the period for which approval is sought.

Section 5 directs the Commissioner of Health to review data collected by the department and determine, in the context of information developed by the national institute for health and other entities, whether a further health study funded by the owners of the Prairie Island nuclear facility is necessary. The commissioner shall report that determination to the legislature by January 1, 2004.

Section 6 establishes an effective date for this article the day following final enactment.

ARTICLE 2

RENEWABLE ENERGY DEVELOPMENT

Section 1, subdivision 1 requires the public utility that owns the Prairie Island nuclear generation plant to transfer $16 million annually to the renewable development account for each year the plant is in operation, and $7,500,000 for each year thereafter the if the PUC determines the utility is not making a good faith effort to move the spent fuel out of state.

Subdivision 2 allocates up to $6 million annually until 2018 from the renewable development account to fund renewable energy production incentives, $4.5 million of which is for wind production incentives up to 100 megawatts from wind conversion systems meeting the requirements in Minnesota Statutes, section 216C.41, and $1.5 million of which may be used as production incentives for on-farm biogas recovery facilities or other renewables.

Section 2 establishes a state goal of moving toward hydrogen as an increasing source of energy for electrical power, heating, and transportation.

Section 3, subdivision 1 adds hydrogen to the list of renewable energy sources. Adds mixed municipal solid waste and refuse-derived fuel from mixed municipal solid waste to the definition of biomass. Provides a definition for "total retail electric sales."

Subdivision 2 allows generation using mixed municipal solid waste or refuse-derived fuel to count toward a utility's biomass energy objective but, excludes a facility with a power sales agreement that terminates December 31, 2010 in effect as of the date of final enactment of this act unless the agreement provides for a rate adjustment in the event the facility qualifies as a renewable energy source. Requires the PUC to issue criteria and standards by which it will measure a utility's performance towards its renewable energy objectives, as well as a weighted scale for various eligible fuel sources, to provide multiple credit toward the objectives for fuel sources that the commission finds are in the public interest to encourage. Permits a utility to satisfy up to 20 percent of its renewable energy objective through the use "clean energy technology," defined as coal as a primary fuel in a highly efficient combined-cycle configuration with significantly reduced emissions. Electricity from such clean energy technology is counted as one kilowatt toward the renewable energy objective for every two kilowatts produced.

Subdivision 3 makes explicit that utilities must file their plans and activities regarding the renewable energy objectives with the commission, demonstrating that the utility is making a good faith effort. Requires the Commissioner of Commerce to report to the legislature on utilities' progress toward the renewable energy objectives every two years.

Subdivision 4 authorizes the commission to establish a system for tradable credits for renewable energy. Allows a utility to meet some or all of its renewable energy objective by purchasing credits.

Subdivision 5 states that electricity produced by fuel consumption may only count toward the renewable energy objectives if the facility was constructed in compliance with federal Clean Air Act new source performance standards or employs the maximum achievable or best available control technology.

Subdivision 6 specifies that a public utility that owns nuclear generation in the state shall deploy an additional 300 megawatts of wind energy capacity by 2010, 100 megawatts of which is to be under 2 megawatts and distributed geographically. Also as part of its good faith effort, that utility is to enter into a power purchase agreement for ten to 20 megawatts of biomass energy from a project described in Minnesota Statutes, section 216B.2424, subdivision 5, paragraph (e), clause (2). Makes the good faith objective a requirement for that utility, to the extent the eligible resources are the utility's least cost resource.

Section 4 defines "clean energy technology" as technology utilized in the project described in article 4, section 1, subdivision 1, which uses coal as a primary fuel in a highly efficient combined-cycle configuration with significantly reduced emissions.

Section 5 directs a public utility that owns a nuclear generation facility to spend five percent of its conservation improvement expenditures to support basic and applied research at the University of Minnesota Initiative for Renewable Energy and the Environment.

Section 6, subdivision 1 amends current law requiring public utilities and municipal or rural electric associations to spend five percent of their required conservation spending on eligible renewable energy sources and distributed generation if the utility is not meeting their good faith objective.

Subdivision 2 defines eligible renewable energy sources to include: wind, hydrogen, solar, geothermal, small hydro, biomass, landfill gas, mixed municipal solid waste, and refuse-derived fuel from mixed municipal solid waste. Authorizes utilities to pool resources under this section.

Section 7 increases the statutory cap on the amount of the biomass mandate for the St. Paul District Energy wood waste biomass facility by eight megawatts and the FibroMinn turkey litter facility by five megawatts.

Section 8 directs utilities subject to the state transmission planning process to determine necessary transmission upgrades to support development of renewable energy resources, and to include those upgrades in the utility's biennial transmission planning report.

Section 9 amends the definition in current statute of a qualified wind energy conversion facility to include those facilities owned by a municipal utility, cooperative electrical association, or political subdivision, and exclude facilities owned by an entity prohibited from owning agricultural land under Minnesota Statutes, section 500.24.

Section 10 specifies that incentive payment appropriations, other than wind energy production incentive payments, are made to the Commissioner of Commerce.

Section 11 extends the eligibility window for the renewable energy production incentive payments from 2015 to 2017.

Section 12 extends the payment period for the renewable energy production incentive payment from 2015 to 2017.

Section 13 eliminates a requirement to rank qualifying claims for the renewable production incentive payments for wind energy in excess of the 100 megawatt cap.

Section 14 authorizes payments from the renewable energy development account for the renewable energy production incentive to on-farm biogas recovery facilities and an additional 100 megawatts of wind energy capacity.

Section 15 establishes an eligibility process for the renewable energy production incentive payments.

Section 16 reduces the biomass mandate from 125 to 110, and directs the whole tree biomass project to reduce the size of its project by 15 megawatts.

Section 17 authorizes the PUC to review the appropriateness of transferring the administration of the renewable development fund from to an independent administrator answerable to a board of directors, rather than administration by the public utility. Authorizes the PUC to approve the transfer if it finds the transfer to be in the public interest.

Section 18 transfers $10 million of the unobligated funds in the renewable development fund to the University of Minnesota for its Initiative for Renewable Energy and the Environment, to support basic and applied research and demonstration activities regarding hydrogen and other renewables. Directs the University to ensure that at least $3 million of this amount is available to one rural campus or experiment station.

Section 19, subdivision 1 requires the Department of Trade and Economic Development to develop a targeted program to promote and encourage the development and attraction of businesses engaged in defined aspects of the hydrogen economy. The department is required to report to the Legislature by January 15, 2004, on legislative changes or funding needed, if any, to accomplish the purposes of this section.

Subdivision 2 directs the Commissioner of Trade and Economic Development, in consultation with the Commissioners of Commerce and Revenue, to develop a plan to designate not more than three energy innovation zones to spur the development of fuel cells, fuel cell components, hydrogen infrastructure, and other energy efficiency and renewable energy technologies in the state. Requires the commissioner to report to the Legislature by January 15, 2004.

Section 20 requires the Commissioner of Commerce, in consultation with the Commissioner of Trade and Economic Development, to develop and issue a request for proposal for the construction of a hydrogen-to-electricity demonstration project.

Section 21 directs the utility subject to Minnesota Statutes, section 216B.1691, subdivision 7, to contract for an independent study of the impacts of intermittent resources on the utility's electric system. The costs of the study are recoverable under Minnesota Statutes, section 216B.1645.

Section 22 establishes an effective date for this article the day following final enactment.

ARTICLE 3

OTHER PROVISIONS

Sections 1 and 2 amend the definition of disconnection during cold weather to include any device that limits or interrupts electric service in any way.

Section 3 prohibits a utility from disconnecting residential service when an excessive heat watch, heat advisory, or excessive heat warning has been issued.

Section 4 specifies that the overview of a municipality with less than $2.5 million in annual gross revenues may consist of a letter from the governing board of the municipal utility to the department certifying that the required amount has been spent on conservation programs.

Authorizes a municipal utility to use up to 50 percent of its required conservation spending on the refurbishment of an existing district energy system, and that this authority expires as of June 2007.

Section 5 authorizes a township to enter into an agreement with a natural gas utility to provide service within the township. Specifies that, in the event of an annexation of township land for which the utility has an agreement to serve, the utility continues to have a nonexclusive right to offer and provide service in the area identified by the agreement.

Clarifies that the utility's right to provide service is subject to the annexing city's authority to manage public rights of way within the city under Minnesota Statutes, sections 216B.36, 237.162 and 237.163. Retains a municipality existing right to acquire property of a public utility.

Section 6 directs the Electric Energy Task Force to gather information and make recommendations to the Legislature regarding potential electric energy resources, in light of current electric energy guidelines and resource plan proceedings before the PUC. Directs the task force to consider certain resource supply options, as well as issues related to transportation of spent nuclear fuel. Directs the public utility that owns the Prairie Island nuclear generation facility to update certain reports required by the 1994 Prairie Island legislation.

Section 7 requires the task force to issue a report to the Legislature every two years beginning January 15, 2005.

Section 8 increases the assessment authority of the task force, to $250,000 annually.

Section 9 extends the expiration date of the task force from 2005 to 2007.

Sections 10 and 11 amend the process for making assessments for the budget of the reliability administrator and for funding the Department of Administration's public buildings conservation program.

Section 12 facilitates PUC approval of the Metropolitan Emissions Reduction Program, to repower two metro area coal-fired generation facilities to use natural gas, and to add significant pollution control technology to a third. Directs the Xcel Energy to implement the proposal once approved, or explain to the commission its decision not to do so. Current law only requires notice to the commission if the utility decides not to move forward with an approved emissions reduction project.

Section 13 provides for an evaluation of the Conservation Investment Program (CIP) overall. Allows the Department of Commerce to recover the cost of the evaluation through a utility assessment.

Section 14 and 15 provide legislative authorization for the consumptive use of water for natural gas generation facilities in Mankato and Rosemount, subject to the determination by the Commissioner of the Department of Natural Resources that water resources will be adequate.

Section 16 repeals a requirement from the 1994 Prairie Island legislation that Xcel find and site an alternative spent fuel storage site in Goodhue County away from Prairie Island. Repeals sections of the Electric Energy Task Force statutes.

Section 17 establishes an effective date for this article the day following final enactment.

ARTICLE 4

INNOVATIVE ENERGY PROJECT

Section 1 provides for certain regulatory benefits for a coal gasification project on the Iron Range. This section exempts the project from the requirement for a certificate of need for the generation facilities and associated transmission infrastructure, grants the project eminent domain authority for the sites and routes approved by the Environmental Quality Board, specifies that the 50 percent of the output of the plant qualifies for the energy objectives under section 216B.1691, and entitles the project to enter into a contract with a public utility that owns a nuclear generation facility to provide that facility with 450 megawatts of baseload capacity and energy, subject to the explicit authority of the PUC to approve, deny, amend, or modify the contract.

Section 2 establishes an effective date for this article the day following final enactment.

MSG:rdr

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