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Energy - New Laws 2007

Next Generation Energy Act

Sponsored by Rep. Bill Hilty (DFL-Finlayson) and Sen. Yvonne Prettner Solon (DFL-Duluth), a law represents the bulk of the governor’s “Next Generation Energy Initiative,” which aims to bolster investments in renewable power, increase energy conservation and decrease Minnesota’s contribution to global warming.

In addition, the law establishes two overall energy goals for the state: to reduce per capita use of fossil fuels by 15 percent by 2015, and to derive 25 percent of the total energy used in the state from renewable power sources by 2025. (Art. 1, Sec. 2)

HF436/SF145*/CH136



Global warming mitigation

Effective Aug. 1, 2007, the law calls for cutting the state’s greenhouse gas emissions to 15 percent below 2005 base levels by 2015, 30 percent by 2025 and 80 percent by 2050. (Art. 5, Sec. 2)

The law requires several state agencies and a wide array of stakeholders to work together to come up with a “climate change action plan” that will identify and evaluate a broad range of greenhouse gas reduction strategies, assess the potential costs and benefits of the various options, including the potential cost to consumers, and recommend a course of action to the Legislature by Feb. 1, 2008.

The plan must also make recommendations on a proposed cap-and-trade system, whereby a cap would be placed on overall greenhouse gas emissions and power companies assigned “allowances” of emissions that they could trade with one another. (Art. 5, Sec. 2)

In addition, the law prohibits the construction of any power plants that would produce a net increase in carbon emissions after Aug. 1, 2009. The law states that unless "a comprehensive state law or rule … that directly limits and substantially reduces greenhouse gas emissions" is enacted and is in effect by that date:

• no large fossil fuel-fired powerplant can be built in Minnesota;

• no utility can import electricity from a large fossil fuel-fired powerplant built in another state that was not operating on Jan. 1, 2007; and

• no Minnesota utility can purchase electricity from an outstate utility under a contract that exceeds 50 megawatts for a term of five years.

Exceptions for this prohibition include facilities that offset any CO2 emissions they emit; a new Iron Range steel or iron nugget production facility; and the Mesaba and Big Stone II plants. (Art. 5, Sec. 3)



Energy conservation

The conservation portion of the law, which takes effect July 1, 2007, aims to save Minnesotans money while reducing the environmental impacts of energy consumption. The law contains a five-part conservation and efficiency strategy:

• establishing a statewide energy conservation goal of 1.5 percent of annual retail electric and gas sales (Art. 2, Sec. 4);

• expanding and improving the state’s conservation improvement program (Art. 2, Sec. 5);

• providing research and development and technical assistance to utility companies through the Department of Commerce (Art. 2, Sec. 5);

• increasing energy efficiency in state buildings (Art. 2, Sec. 5); and

• removing financial disincentives for utility companies to promote energy conservation by “decoupling” a utility’s revenue from its changes in energy sales. (Art. 2, Sec. 6)



Community-based energy development

The law also overhauls the state’s Community-Based Energy Development statutes by making a number of changes, including:

• expanding the types of projects that qualify for the program from wind only to include all renewable energy technologies, effective July 1, 2007 (Art. 4, Sec. 1);

• increasing the financial benefits for communities that invest in renewable power by stipulating that at least 51 percent of the gross revenues from any power purchase agreement flow to owners and qualifying local entities (Art. 4, Sec. 2);

• encouraging utilities to make use of C-BED projects in meeting the state’s renewable energy standard (Art. 4, Sec. 5); and

• removing a 2.7 cents per kilowatt hour cap on the price utilities pay for energy from C-BED projects (Art. 4, Sec. 3).

Other changes made include a statewide study of dispersed generation potential, a study of wind development property agreements and the establishment of a C-BED Advisory Task Force to be appointed by the Legislative Electric Energy Task Force. (Art. 4, Secs. 17-19)

Except as noted, these provisions are all effective May 26, 2007.



Miscellaneous

Effective July 1, 2007, landlords are required to make sure residential for-rent properties are fitted with weather stripping, caulking, storm windows, and storm doors when any such measure “will result in energy procurement cost savings … that will exceed the cost of implementing that measure.” (Art. 3, Sec. 5)

Also included in the law is a study to be conducted by the Legislative Electric Energy Task Force on the potential economic and environmental costs of constructing a new nuclear power plant in the state. The study must compare those costs with the costs of constructing a coal power plant fitted with state-of-the-art carbon capture and sequestration technology. A report is due to the Legislature by March 1, 2008. This provision of the law is effective July 1, 2007. (Art. 3, Sec. 6)





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HF436/SF145*/CH136
House Chief Author: Hilty
Senate Chief Author: Prettner Solon
Effective Date(s): various

* The legislative bill marked with an asterisk denotes the file submitted to the governor.

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