Important Energy Legislation Adopted in Minnesota in 2008
By: CHRISTINA K. BRUSVEN
The 2008 Session of the Minnesota Legislature once again proved to be a very active session for Minnesota’s energy industry. Here are some of the important legislative changes adopted this year.
Drivers of alternative-fuel vehicles may soon have the option of selecting the blend of ethanol they use in their vehicles right at the pump. A new law allows ethanol to be blended at any percentage up to 85 percent at the retail location.
Minimum Biodiesel Standards
The minimum required biodiesel content in diesel fuel sold in Minnesota is set to increase from 2 percent to 20 percent by 2015. The new law increases the minimum to 5 percent in 2009, 10 percent in 2012, and 20 percent in 2015. The law provides that levels higher than 5 percent will only be required in the warmer months of April through October. In addition, several off ramps related to fuel standards, supply, adequate blending infrastructure, and price disparity were included to protect consumers in case adequate regulations and infrastructure are not in place to support the higher standards.
Exemption from Certificate of Need
Wind energy and solar facilities constructed to meet Minnesota’s Renewable Energy Standard (RES) are no longer required to obtain a certificate of need prior to construction. The projects will be subject to a less stringent review by the Minnesota Public Utilities Commission (PUC), including review of reasonableness and impact on ratepayers. This change should significantly reduce the regulatory approval timeline for projects—especially large wind projects—that were previously required to go through the six to eighteen-month process for a certificate of need.
Modified Termination for Wind Easements
Previously, Minnesota law stated that wind easements, options, and leases expired within seven years from the date they were entered into if the project had not yet reached commercial operation. The Legislature struck the language related to the seven-year termination; however, the change is not effective until June 1, 2010. The law requires the Minnesota Office of Energy Security (OES) to convene a mediation to work with stakeholders interested in the property rights termination and to report back to the Legislature in 2009. It remains to be seen whether the Legislature will ultimately allow this provision to become law or will modify this section again following the required mediation. If the Legislature takes no action on the issue, there will be no statutory termination of wind easements after June 1, 2010.
Size Selection for Siting
Wind projects of less than 25 megawatts (MW) are now allowed to elect to be treated as “small wind energy conversion systems” for the purposes of electing local approval, rather than PUC approval, for siting their wind facilities. Any wind project greater than 5 MW, however, must be treated as a “large wind energy conversion system” if it is located next to state land used as part of the recreational system. This provision was requested by the Minnesota Department of Natural Resources to protect its ability to negotiate setback requirements for these facilities.
Aggregate Purchases of Wind Turbines
The Legislature approved $100,000 to be used to develop a program that assists individuals, farmstead owners, Community-Based Energy Development (C-BED) projects, and local units of government in aggregating small purchases of wind turbines. The goal of the legislation is to improve economies of scale and access to turbines by combining smaller purchases.
Investment by Certain Government Units
Counties are allowed to enter into power purchase agreements, either individually or through joint agreements with other counties, for the purchase of up to 10 MW of renewable energy to meet each county’s needs. In addition, certain political subdivisions are authorized to plan, develop, and own C-BED projects and sell the power to others—as long as they do not acquire property for the projects through use of eminent domain.
Renewable Energy Storage Facilities
Utilities are allowed to recover expenses related to the development of storage facilities for renewable energy facilities. Such facilities may include storage of energy produced by wind or other intermittent resources.
Funds for Small-Scale Renewables
A micro-energy loan program is established to provide long-term, low-interest loans to local units of government and small businesses to construct small-scale renewable projects, including solar thermal projects, wind projects of less than 250 kilovolts (kV), anaerobic digestion, and small hydro and geothermal projects.
In addition, certain solar thermal projects are eligible to receive funding under a utility’s energy conservation improvement program, expanding the potential incentives available to these projects.
Notice to Local Governments
Applicants planning to file a route permit for a high-voltage transmission line must now provide notice to each affected local unit of government at least 90 days prior to filing an application with the PUC. The notice must describe the project and inform the local unit of government of the project’s obligation to meet with the government entity to discuss the project upon request.
A public utility, municipal utility, cooperative electric association, natural gas pipeline, or crude oil or petroleum pipeline company employing eminent domain to acquire property must provide landowners with the land-valuation appraisal prior to filing a formal condemnation petition. This requirement applies to all eminent domain proceeds begun on or after October 1, 2008.
Recovery of Transmission Investments
Utilities may now ask the PUC to allow them to recover from their ratepayers certain financial contributions they make to other utilities’ transmission projects if the Midwest Independent System Operator concludes the project will benefit the contributing utility.
The 2008 Minnesota Legislative Session made several technical, but important changes involving biofuels, wind, funds for small-scale renewables, and transmission.