Bill HF3229, SF3363

1.1          A bill for an act
1.2          relating to energy; requiring spent fuel located at Prairie Island to be transferred
1.3          to another site for storage; authorizing additional storage to be constructed at the
1.4          Monticello nuclear generating plant; authorizing the public utility to withhold
1.5          money from the renewable development account to pay for the cost to transport
1.6          spent fuel;amending Minnesota Statutes 2024, sections 116C.771; 116C.777;
1.7          116C.779, subdivision 1, by adding a subdivision; repealing Minnesota Statutes
1.8          2024, sections 116C.779, subdivision 2; 216C.41.
1.9          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.10       Section 1. Minnesota Statutes 2024, section 116C.771, is amended to read:
1.11       116C.771 ADDITIONAL CASK LIMITATIONS.
1.12       (a) Five casks may be filled and used at Prairie Island on May 11, 1994.
1.13       (b) An additional four casks may be filled and used at Prairie Island if the Environmental
1.14       Quality Board determines that, by December 31, 1996, the public utility operating the Prairie
1.15       Island plant has filed a license application with the United States Nuclear Regulatory
1.16       Commission for a spent nuclear fuel storage facility off of Prairie Island in Goodhue County,
1.17       is continuing to make a good faith effort to implement the site, and has constructed,
1.18       contracted for construction and operation, or purchased installed capacity of 100 megawatts
1.19       of wind power in addition to wind power under construction or contract on May 11, 1994.
1.20       (c)(1) An additional eight casks may be filled and placed at Prairie Island if the legislature
1.21       has not revoked the authorization under clause (2) or the public utility has satisfied the wind
1.22       power and biomass mandate requirements in sections 216B.2423, subdivision 1, paragraph
1.23       (a), clause (1), and 216B.2424, subdivision 5, paragraph (a), clause (1), and the alternative
1.24       site in Goodhue County is operational or under construction.
2.1          (2) If the site is not under construction or operational or the wind mandates are not
2.2          satisfied, the legislature may revoke the authorization for the additional eight casks by a
2.3          law enacted prior to June 1, 1999.
2.4          (d) Except as provided under paragraph (e), dry cask storage capacity for high-level
2.5          nuclear waste within the state may not be increased beyond the casks authorized by section
2.6          116C.77 or their equivalent storage capacity.
2.7          (e) (d) This section does not prohibit a public utility from applying for or the Public
2.8          Utilities Commission from granting a certificate of need for dry cask storage to accommodate
2.9          the decommissioning of a nuclear power plant within this state.
2.10       (e) An additional spent fuel storage facility must be constructed at the Monticello nuclear
2.11       generating plant to store spent nuclear fuel transferred from the Prairie Island nuclear
2.12       generating plant.

2.13       Sec. 2. Minnesota Statutes 2024, section 116C.777, is amended to read:
2.14       116C.777 SITE.
2.15       By January 1, 2028, the spent fuel contents of dry casks located on Prairie Island must
2.16       be moved immediately upon the availability of another site for storage of the spent fuel that
2.17       is not located on Prairie Island or at Monticello.

2.18       Sec. 3. Minnesota Statutes 2024, section 116C.779, subdivision 1, is amended to read:
2.19                       Subdivision 1.Renewable development account. (a) The renewable development
2.20       account is established as a separate account in the special revenue fund in the state treasury.
2.21       Appropriations and transfers to the account shall be credited to the account. Earnings, such
2.22       as interest, dividends, and any other earnings arising from assets of the account, shall be
2.23       credited to the account. Funds remaining in the account at the end of a fiscal year are not
2.24       canceled to the general fund but remain in the account until expended. The account shall
2.25       be administered by the commissioner of management and budget as provided under this
2.26       section.
2.27       (b) On July 1, 2017, the public utility that owns the Prairie Island nuclear generating
2.28       plant must transfer all funds in the renewable development account previously established
2.29       under this subdivision and managed by the public utility to the renewable development
2.30       account established in paragraph (a). Funds awarded to grantees in previous grant cycles
2.31       that have not yet been expended and unencumbered funds required to be paid in calendar
3.1          year 2017 under paragraphs (f) and (g), and sections 116C.7792 and 216C.41, are not subject
3.2          to transfer under this paragraph.
3.3          (c) (b) Except as provided in subdivision 1a, beginning January 15, 2018, and continuing
3.4          each January 15 thereafter, the public utility that owns the Prairie Island nuclear generating
3.5          plant must transfer to the renewable development account $500,000 each year for each dry
3.6          cask containing spent fuel that is located at the Prairie Island power plant for each year the
3.7          plant is in operation, and $7,500,000 each year the plant is not in operation if ordered by
3.8          the commission pursuant to paragraph (i) (e). The fund transfer must be made if nuclear
3.9          waste is stored in a dry cask at the independent spent-fuel storage facility at Prairie Island
3.10       for any part of a year. The total amount transferred annually under this paragraph must be
3.11       reduced by $3,750,000.
3.12       (d) (c) Except as provided in subdivision 1a, beginning January 15, 2018, and continuing
3.13       each January 15 thereafter until January 15, 2028, the public utility that owns the Monticello
3.14       nuclear generating plant must transfer to the renewable development account $350,000 each
3.15       year for each dry cask containing spent fuel that is located at the Monticello nuclear power
3.16       plant for each year the plant is in operation, and $5,250,000 each year the plant is not in
3.17       operation if ordered by the commission pursuant to paragraph (i) (e). The fund transfer must
3.18       be made if nuclear waste is stored in a dry cask at the independent spent-fuel storage facility
3.19       at Monticello for any part of a year.
3.20       (e) (d) Each year, the public utility shall withhold from the funds transferred to the
3.21       renewable development account under paragraphs (b) and (c) and (d) the amount necessary
3.22       to pay its obligations under paragraphs (f) and (g), and sections section116C.7792and
3.23       216C.41, for that calendar year.
3.24       (f) If the commission approves a new or amended power purchase agreement, the
3.25       termination of a power purchase agreement, or the purchase and closure of a facility under
3.26       section 216B.2424, subdivision 9, with an entity that uses poultry litter to generate electricity,
3.27       the public utility subject to this section shall enter into a contract with the city in which the
3.28       poultry litter plant is located to provide grants to the city for the purposes of economic
3.29       development on the following schedule: $4,000,000 in fiscal year 2018; $6,500,000 each
3.30       fiscal year in 2019 and 2020; and $3,000,000 in fiscal year 2021. The grants shall be paid
3.31       by the public utility from funds withheld from the transfer to the renewable development
3.32       account, as provided in paragraphs (b) and (e).
3.33       (g) If the commission approves a new or amended power purchase agreement, or the
3.34       termination of a power purchase agreement under section 216B.2424, subdivision 9, with
4.1          an entity owned or controlled, directly or indirectly, by two municipal utilities located north
4.2          of Constitutional Route No. 8, that was previously used to meet the biomass mandate in
4.3          section 216B.2424, the public utility that owns a nuclear generating plant shall enter into a
4.4          grant contract with such entity to provide $6,800,000 per year for five years, commencing
4.5          30 days after the commission approves the new or amended power purchase agreement, or
4.6          the termination of the power purchase agreement, and on each June 1 thereafter through
4.7          2021, to assist the transition required by the new, amended, or terminated power purchase
4.8          agreement. The grant shall be paid by the public utility from funds withheld from the transfer
4.9          to the renewable development account as provided in paragraphs (b) and (e).
4.10       (h) The collective amount paid under the grant contracts awarded under paragraphs (f)
4.11       and (g) is limited to the amount deposited into the renewable development account, and its
4.12       predecessor, the renewable development account, established under this section, that was
4.13       not required to be deposited into the account under Laws 1994, chapter 641, article 1, section
4.14       10.
4.15       (i) (e) After discontinuation of operation of the Prairie Island nuclear plant or the
4.16       Monticello nuclear plant and each year spent nuclear fuel is stored in dry cask at the
4.17       discontinued facility, the commission shall require the public utility to pay $7,500,000 for
4.18       the discontinued Prairie Island facility and $5,250,000 for the discontinued Monticello
4.19       facility for any year in which the commission finds, by the preponderance of the evidence,
4.20       that the public utility did not make a good faith effort to remove the spent nuclear fuel stored
4.21       at the facility to a permanent or interim storage site out of the state. This determination shall
4.22       be made at least every two years.
4.23       (j) (f) Funds in the account may be expended only for any of the following purposes:
4.24       (1) to stimulate research and development of renewable electric energy technologies;
4.25       (2) to encourage grid modernization, including, but not limited to, projects that implement
4.26       electricity storage, load control, and smart meter technology; and
4.27       (3) to stimulate other innovative energy projects that reduce demand and increase system
4.28       efficiency and flexibility.
4.29       Expenditures from the fund must benefit Minnesota ratepayers receiving electric service
4.30       from the utility that owns a nuclear-powered electric generating plant in this state or the
4.31       Prairie Island Indian community or its members.
4.32       The utility that owns a nuclear generating plant is eligible to apply for grants under this
4.33       subdivision.
5.1          (k) (g) For the purposes of paragraph (j) (f), the following terms have the meanings
5.2          given:
5.3          (1) "renewable" has the meaning given in section 216B.2422, subdivision 1, paragraph
5.4          (c), clauses (1), (2), (4), and (5); and
5.5          (2) "grid modernization" means:
5.6          (i) enhancing the reliability of the electrical grid;
5.7          (ii) improving the security of the electrical grid against cyberthreats and physical threats;
5.8          and
5.9          (iii) increasing energy conservation opportunities by facilitating communication between
5.10       the utility and its customers through the use of two-way meters, control technologies, energy
5.11       storage and microgrids, technologies to enable demand response, and other innovative
5.12       technologies.
5.13       (l) A renewable development account advisory group that includes, among others,
5.14       representatives of the public utility and its ratepayers, and includes at least one representative
5.15       of the Prairie Island Indian community appointed by that community's tribal council, shall
5.16       develop recommendations on account expenditures. The advisory group must design a
5.17       request for proposal and evaluate projects submitted in response to a request for proposals.
5.18       The advisory group must utilize an independent third-party expert to evaluate proposals
5.19       submitted in response to a request for proposal, including all proposals made by the public
5.20       utility. A request for proposal for research and development under paragraph (j), clause (1),
5.21       may be limited to or include a request to higher education institutions located in Minnesota
5.22       for multiple projects authorized under paragraph (j), clause (1). The request for multiple
5.23       projects may include a provision that exempts the projects from the third-party expert review
5.24       and instead provides for project evaluation and selection by a merit peer review grant system.
5.25       In the process of determining request for proposal scope and subject and in evaluating
5.26       responses to request for proposals, the advisory group must strongly consider, where
5.27       reasonable:
5.28       (1) potential benefit to Minnesota citizens and businesses and the utility's ratepayers;
5.29       and
5.30       (2) the proposer's commitment to increasing the diversity of the proposer's workforce
5.31       and vendors.
5.32       (m) The advisory group shall submit funding recommendations to the public utility,
5.33       which has full and sole authority to determine which expenditures shall be submitted by
6.1          the advisory group to the legislature. The commission may approve proposed expenditures,
6.2          may disapprove proposed expenditures that it finds not to be in compliance with this
6.3          subdivision or otherwise not in the public interest, and may, if agreed to by the public utility,
6.4          modify proposed expenditures. The commission shall, by order, submit its funding
6.5          recommendations to the legislature as provided under paragraph (n).
6.6          (n) The commission shall present its recommended appropriations from the account to
6.7          the senate and house of representatives committees with jurisdiction over energy policy and
6.8          finance annually by February 15. Expenditures from the account must be appropriated by
6.9          law. In enacting appropriations from the account, the legislature:
6.10       (1) may approve or disapprove, but may not modify, the amount of an appropriation for
6.11       a project recommended by the commission; and
6.12       (2) may not appropriate money for a project the commission has not recommended
6.13       funding.
6.14       (o) A request for proposal for renewable energy generation projects must, when feasible
6.15       and reasonable, give preference to projects that are most cost-effective for a particular energy
6.16       source.
6.17       (p) The advisory group must annually, by February 15, report to the chairs and ranking
6.18       minority members of the legislative committees with jurisdiction over energy policy on
6.19       projects funded by the account for the prior year and all previous years. The report must,
6.20       to the extent possible and reasonable, itemize the actual and projected financial benefit to
6.21       the public utility's ratepayers of each project.
6.22       (q) (h) A project receiving funds from the account must produce a written final report
6.23       that includes sufficient detail for technical readers and a clearly written summary for
6.24       nontechnical readers. The report must include an evaluation of the project's financial,
6.25       environmental, and other benefits to the state and the public utility's ratepayers. A project
6.26       receiving funds from the account must submit a report that meets the requirements of section
6.27       216C.51, subdivisions 3 and 4, each year the project funded by the account is in progress.
6.28       (r) (i) Final reports, any mid-project status reports, and renewable development account
6.29       financial reports must be posted online on a public website designated by the commissioner
6.30       of commerce.
6.31       (s) (j) All final reports must acknowledge that the project was made possible in whole
6.32       or part by the Minnesota renewable development account, noting that the account is financed
6.33       by the public utility's ratepayers.
7.1          (t) (k) Of the amount in the renewable development account, priority must be given to
7.2          making the payments required under section 216C.417.
7.3          (u) (l) Construction projects receiving funds from this account are subject to the
7.4          requirement to pay the prevailing wage rate, as defined in section 177.42 and the requirements
7.5          and enforcement provisions in sections 177.27, 177.30, 177.32, 177.41 to 177.435, and
7.6          177.45.

7.7          Sec. 4. Minnesota Statutes 2024, section 116C.779, is amended by adding a subdivision
7.8          to read:
7.9                          Subd. 4.Costs to transport spent nuclear fuel. Each year, the public utility that owns
7.10       the Prairie Island nuclear generating plant must withhold from the money transferred to the
7.11       renewable development account under subdivision 1, paragraphs (b) and (c), the amount
7.12       necessary to pay for the costs to transport spent nuclear fuel, including the spent nuclear
7.13       fuel stored in casks under sections 116C.77 and 116C.771, from the Prairie Island nuclear
7.14       generating plant to the Monticello nuclear generating plant.

7.15       Sec. 5. REPEALER.
 7.16      Minnesota Statutes 2024, sections 116C.779, subdivision 2; and 216C.41, are repealed.

APPENDIX

Repealed Minnesota Statutes: 25-05137

116C.779 FUNDING FOR RENEWABLE DEVELOPMENT.Subd. 2.Renewable energy production incentive.

(a) Until January 1, 2021, $10,900,000 annually must be allocated from available funds in the account to fund renewable energy production incentives. $9,400,000 of this annual amount is for incentives for electricity generated by wind energy conversion systems that are eligible for the incentives under section 216C.41 or Laws 2005, chapter 40.

(b) The balance of this amount, up to $1,500,000 annually, may be used for production incentives for on-farm biogas recovery facilities and hydroelectric facilities that are eligible for the incentive under section 216C.41 or for production incentives for other renewables, to be provided in the same manner as under section 216C.41.

(c) Any portion of the $10,900,000 not expended in any calendar year for the incentive is available for other spending purposes under subdivision 1. This subdivision does not create an obligation to contribute funds to the account.

(d) The Department of Commerce shall determine eligibility of projects under section 216C.41 for the purposes of this subdivision. At least quarterly, the Department of Commerce shall notify the public utility of the name and address of each eligible project owner and the amount due to each project under section 216C.41. The public utility shall make payments within 15 working days after receipt of notification of payments due.

216C.41 RENEWABLE ENERGY PRODUCTION INCENTIVE.Subdivision 1.Definitions.

(a) The definitions in this subdivision apply to this section.

(b) "Qualified hydroelectric facility" means a hydroelectric generating facility in this state that:

(1) is located at the site of a dam, if the dam was in existence as of March 31, 1994; and

(2) begins generating electricity after July 1, 1994, or generates electricity after substantial refurbishing of a facility that begins after July 1, 2001.

(c) "Qualified wind energy conversion facility" means a wind energy conversion system in this state that:

(1) produces two megawatts or less of electricity as measured by nameplate rating and begins generating electricity after December 31, 1996, and before July 1, 1999;

(2) begins generating electricity after June 30, 1999, produces two megawatts or less of electricity as measured by nameplate rating, and is:

(i) owned by a resident of Minnesota or an entity that is organized under the laws of this state, is not prohibited from owning agricultural land under section 500.24, and owns the land where the facility is sited;

(ii) owned by a Minnesota small business as defined in section 645.445;

(iii) owned by a Minnesota nonprofit organization;

(iv) owned by a tribal council if the facility is located within the boundaries of the reservation;

(v) owned by a Minnesota municipal utility or a Minnesota cooperative electric association; or

(vi) owned by a Minnesota political subdivision or local government, including, but not limited to, a county, statutory or home rule charter city, town, school district, or any other local or regional governmental organization such as a board, commission, or association; or

(3) begins generating electricity after June 30, 1999, produces seven megawatts or less of electricity as measured by nameplate rating, and:

(i) is owned by a cooperative organized under chapter 308A other than a Minnesota cooperative electric association; and

(ii) all shares and membership in the cooperative are held by an entity that is not prohibited from owning agricultural land under section 500.24.

(d) "Qualified on-farm biogas recovery facility" means an anaerobic digester system that:

(1) is located at the site of an agricultural operation; and

(2) is owned by an entity that is not prohibited from owning agricultural land under section 500.24 and that owns or rents the land where the facility is located.

(e) "Anaerobic digester system" means a system of components that processes animal waste based on the absence of oxygen and produces gas used to generate electricity.

Subd. 2.Incentive payment; appropriation.

(a) Incentive payments must be made according to this section to (1) a qualified on-farm biogas recovery facility, (2) the owner or operator of a qualified hydropower facility or qualified wind energy conversion facility for electric energy generated and sold by the facility, (3) a publicly owned hydropower facility for electric energy that is generated by the facility and used by the owner of the facility outside the facility, or (4) the owner of a publicly owned dam that is in need of substantial repair, for electric energy that is generated by a hydropower facility at the dam and the annual incentive payments will be used to fund the structural repairs and replacement of structural components of the dam, or to retire debt incurred to fund those repairs.

(b) Payment may only be made upon receipt by the commissioner of commerce of an incentive payment application that establishes that the applicant is eligible to receive an incentive payment and that satisfies other requirements the commissioner deems necessary. The application must be in a form and submitted at a time the commissioner establishes.

(c) There is annually appropriated from the renewable development account under section 116C.779 to the commissioner of commerce sums sufficient to make the payments required under this section, in addition to the amounts funded by the renewable development account as specified in subdivision 5a.

Subd. 3.Eligibility window.

Payments may be made under this section only for:

(a) electricity generated from:

(1) a qualified hydroelectric facility that is operational and generating electricity before December 31, 2011;

(2) a qualified wind energy conversion facility that is operational and generating electricity before January 1, 2008; or

(3) a qualified on-farm biogas recovery facility from July 1, 2001, through December 31, 2017; and

(b) gas generated from a qualified on-farm biogas recovery facility from July 1, 2007, through December 31, 2017.

Subd. 4.Payment period.

(a) A facility may receive payments under this section for a ten-year period. No payment under this section may be made for electricity generated:

(1) by a qualified hydroelectric facility after December 31, 2021;

(2) by a qualified wind energy conversion facility after December 31, 2018; or

(3) by a qualified on-farm biogas recovery facility after December 31, 2017.

(b) The payment period begins and runs consecutively from the date the facility begins generating electricity or, in the case of refurbishment of a hydropower facility, after substantial repairs to the hydropower facility dam funded by the incentive payments are initiated.

Subd. 5.Amount of payment; wind facilities limit.

(a) An incentive payment is based on the number of kilowatt-hours of electricity generated. The amount of the payment is:

(1) for a facility described under subdivision 2, paragraph (a), clause (4), 1.0 cent per kilowatt-hour; and

(2) for all other facilities, 1.5 cents per kilowatt-hour.

For electricity generated by qualified wind energy conversion facilities, the incentive payment under this section is limited to no more than 200 megawatts of nameplate capacity.

(b) For wind energy conversion systems installed and contracted for after January 1, 2002, the total size of a wind energy conversion system under this section must be determined according to this paragraph. Unless the systems are interconnected with different distribution systems, the nameplate capacity of one wind energy conversion system must be combined with the nameplate capacity of any other wind energy conversion system that is:

(1) located within five miles of the wind energy conversion system;

(2) constructed within the same calendar year as the wind energy conversion system; and

(3) under common ownership.

In the case of a dispute, the commissioner of commerce shall determine the total size of the system, and shall draw all reasonable inferences in favor of combining the systems.

(c) In making a determination under paragraph (b), the commissioner of commerce may determine that two wind energy conversion systems are under common ownership when the underlying ownership structure contains similar persons or entities, even if the ownership shares differ between the two systems. Wind energy conversion systems are not under common ownership solely because the same person or entity provided equity financing for the systems.

Subd. 5a.Renewable development account.

The Department of Commerce shall authorize payment of the renewable energy production incentive to wind energy conversion systems that are eligible under this section or Laws 2005, chapter 40, to on-farm biogas recovery facilities, and to hydroelectric facilities. Payment of the incentive shall be made from the renewable energy development account as provided under section 116C.779, subdivision 2.

Subd. 6.Ownership; financing; cure.

(a) For the purposes of subdivision 1, paragraph (c), clause (2), a wind energy conversion facility qualifies if it is owned at least 51 percent by one or more of any combination of the entities listed in that clause.

(b) A subsequent owner of a qualified facility may continue to receive the incentive payment for the duration of the original payment period if the subsequent owner qualifies for the incentive under subdivision 1.

(c) Nothing in this section may be construed to deny incentive payment to an otherwise qualified facility that has obtained debt or equity financing for construction or operation as long as the ownership requirements of subdivision 1 and this subdivision are met. If, during the incentive payment period for a qualified facility, the owner of the facility is in default of a lending agreement and the lender takes possession of and operates the facility and makes reasonable efforts to transfer ownership of the facility to an entity other than the lender, the lender may continue to receive the incentive payment for electricity generated and sold by the facility for a period not to exceed 18 months. A lender who takes possession of a facility shall notify the commissioner immediately on taking possession and, at least quarterly, document efforts to transfer ownership of the facility.

(d) If, during the incentive payment period, a qualified facility loses the right to receive the incentive because of changes in ownership, the facility may regain the right to receive the incentive upon cure of the ownership structure that resulted in the loss of eligibility and may reapply for the incentive, but in no case may the payment period be extended beyond the original ten-year limit.

(e) A subsequent or requalifying owner under paragraph (b) or (d) retains the facility's original priority order for incentive payments as long as the ownership structure requalifies within two years from the date the facility became unqualified or two years from the date a lender takes possession.

Subd. 7.Eligibility process.

(a) A qualifying project is eligible for the incentive on the date the commissioner receives:

(1) an application for payment of the incentive;

(2) one of the following:

(i) a copy of a signed power purchase agreement;

(ii) a copy of a binding agreement other than a power purchase agreement to sell electricity generated by the project to a third person; or

(iii) if the project developer or owner will sell electricity to its own members or customers, a copy of the purchase order for equipment to construct the project with a delivery date and a copy of a signed receipt for a nonrefundable deposit; and

(3) any other information the commissioner deems necessary to determine whether the proposed project qualifies for the incentive under this section.

(b) The commissioner shall determine whether a project qualifies for the incentive and respond in writing to the applicant approving or denying the application within 15 working days of receipt of the information required in paragraph (a). A project that is not operational within 18 months of receipt of a letter of approval is no longer approved for the incentive. The commissioner shall notify an applicant of potential loss of approval not less than 60 days prior to the end of the 18-month period. Eligibility for a project that loses approval may be reestablished as of the date the commissioner receives a new completed application.