1.2relating to energy; providing cost recovery for utility's renewable facilities;
1.3providing for high-efficiency utility rate options; amending Minnesota Statutes
1.42008, sections 216B.1645, subdivision 2a; 216B.169, subdivision 2; repealing
1.5Laws 2007, chapter 3, section 3.
1.6BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.7    Section 1. Minnesota Statutes 2008, section 216B.1645, subdivision 2a, is amended to
1.8read:
1.9    Subd. 2a. Cost recovery for utility's renewable facilities. (a) A utility may petition
1.10the commission to approve a rate schedule that provides for the automatic adjustment of
1.11charges to recover prudently incurred investments, expenses, or costs associated with
1.12facilities constructed, owned, or operated by a utility to satisfy the requirements of section
1.13216B.1691 , provided those facilities were previously approved by the commission under
1.14section 216B.2422 or 216B.243, or were determined by the commission to be reasonable
1.15and prudent under section 216B.243, subdivision 9. The commission may approve, or
1.16approve as modified, a rate schedule that:
1.17    (1) allows a utility to recover directly from customers on a timely basis the costs of
1.18qualifying renewable energy projects, including:
1.19    (i) return on investment;
1.20    (ii) depreciation;
1.21    (iii) ongoing operation and maintenance costs;
1.22    (iv) taxes; and
1.23    (v) costs of transmission and other ancillary expenses directly allocable to
1.24transmitting electricity generated from a project meeting the specifications of this
1.25paragraph;
2.1    (2) provides a current return on construction work in progress, provided that recovery
2.2of these costs from Minnesota ratepayers is not sought through any other mechanism;
2.3    (3) allows recovery of other expenses incurred that are directly related to a
2.4renewable energy project, including expenses for energy storage, provided that the
2.5utility demonstrates to the commission's satisfaction that the expenses improve project
2.6economics, ensure project implementation, advance research and understanding of how
2.7storage devices may improve renewable energy projects, or facilitate coordination with
2.8the development of transmission necessary to transport energy produced by the project
2.9to market;
2.10    (4) allocates recoverable costs appropriately between wholesale and retail customers;
2.11    (5) terminates recovery when costs have been fully recovered or have otherwise
2.12been reflected in a utility's rates.
2.13    (b) A petition filed under this subdivision must include:
2.14    (1) a description of the facilities for which costs are to be recovered;
2.15    (2) an implementation schedule for the facilities;
2.16    (3) the utility's costs for the facilities;
2.17    (4) a description of the utility's efforts to ensure that costs of the facilities are
2.18reasonable and were prudently incurred; and
2.19    (5) a description of the benefits of the project in promoting the development of
2.20renewable energy in a manner consistent with this chapter.

2.21    Sec. 2. Minnesota Statutes 2008, section 216B.169, subdivision 2, is amended to read:
2.22    Subd. 2. Renewable and high-efficiency energy rate options. (a) Each A utility
2.23shall may offer its customers, and shall advertise the offer at least annually, one or
2.24more options that allow a customer to determine that a certain amount of the electricity
2.25generated or purchased on behalf of the customer is renewable energy or energy
2.26generated by high-efficiency, low-emissions, distributed generation such as fuel cells and
2.27microturbines fueled by a renewable fuel.
2.28(b) Each A public utility that offers a rate option under this subdivision shall file an
2.29implementation plan within 90 days of July 1, 2001 2009, to implement paragraph (a).
2.30(c) Rates charged to customers must be calculated using the utility's cost of acquiring
2.31the energy for the customer and must:
2.32(1) reflect the difference between the cost of generating or purchasing the renewable
2.33energy and the cost of generating or purchasing the same amount of nonrenewable energy;
2.34and
3.1(2) be distributed on a per kilowatt-hour basis among all customers who choose to
3.2participate in the program.
3.3(d) Implementation of these rate options may reflect a reasonable amount of
3.4lead time necessary to arrange acquisition of the energy. The utility may acquire the
3.5energy demanded by customers, in whole or in part, through procuring or generating the
3.6renewable energy directly, or through the purchase of credits from a provider that has
3.7received certification of eligible power supply pursuant to subdivision 3. If a utility is not
3.8able to arrange an adequate supply of renewable or high-efficiency energy to meet its
3.9customers' demand under this section, the utility must file a report with the commission
3.10detailing its efforts and reasons for its failure.
3.11EFFECTIVE DATE.This section is effective the day following final enactment.

3.12    Sec. 3. REPEALER.
3.13Laws 2007, chapter 3, section 3, is repealed.