Thermal energy network plans requirements establishment

A bill for an act

relating to energy; establishing requirements for thermal energy network plans;

amending Minnesota Statutes 2024, section 216B.02, subdivisions 4, 6; proposing

coding for new law in Minnesota Statutes, chapter 216B.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2024, section 216B.02, subdivision 4, is amended to read:

Subd. 4.

Public utility.

"Public utility" means persons, corporations, or other legal

entities, their lessees, trustees, and receivers, now or hereafter operating, maintaining, or

controlling in this state equipment or facilities for furnishing at retail natural, manufactured,

or mixed gas
deleted text begin
or
deleted text end
new text begin
,
new text end
electric service
new text begin
, or service provided by a thermal energy network
new text end
to or for

the public or engaged in the production and retail sale thereof but does not include
new text begin
:
new text end
(1) a

municipality or a cooperative electric association, organized under the provisions of chapter

308A, producing or furnishing natural, manufactured, or mixed gas
deleted text begin
or
deleted text end
new text begin
,
new text end
electric service
new text begin
, or

thermal energy network
new text end
; (2) a retail seller of compressed natural gas used as a vehicular

fuel which purchases the gas from a public utility;
deleted text begin
or
deleted text end
(3) a retail seller of electricity used to

recharge a battery that powers an electric vehicle, as defined in section
169.011, subdivision

26a
, and that is not otherwise a public utility under this chapter
new text begin
; or (4) a retail seller of

thermal energy network service that is in service before January 1, 2026
new text end
. Except as otherwise

provided, the provisions of this chapter shall not be applicable to any sale of natural,

manufactured, or mixed gas or electricity by a public utility to another public utility for

resale. In addition, the provisions of this chapter shall not apply to a public utility whose

total natural gas business consists of supplying natural, manufactured, or mixed gas to not

more than 650 customers within a city pursuant to a franchise granted by the city, provided

a resolution of the city council requesting exemption from regulation is filed with the

commission. The city council may rescind the resolution requesting exemption at any time,

and, upon the filing of the rescinding resolution with the commission, the provisions of this

chapter shall apply to the public utility. No person shall be deemed to be a public utility if

it furnishes its services only to tenants or cooperative or condominium owners in buildings

owned, leased, or operated by such person. No person shall be deemed to be a public utility

if it furnishes service to occupants of a manufactured home or trailer park owned, leased,

or operated by such person. No person shall be deemed to be a public utility if it produces

or furnishes service to less than 25 persons.

Sec. 2.

Minnesota Statutes 2024, section 216B.02, subdivision 6, is amended to read:

Subd. 6.

Service.

"Service" means natural, manufactured, or mixed gas
deleted text begin
and
deleted text end
new text begin
,
new text end
electricity
deleted text begin
;
deleted text end
new text begin
,

or service provided by a thermal energy network. Service includes
new text end
the installation, removal,

or repair of equipment or facilities for delivering or measuring
deleted text begin
such
deleted text end
gas
deleted text begin
and
deleted text end
new text begin
,
new text end
electricity
new text begin
, or

service provided by a thermal energy network
new text end
.

Sec. 3.

new text begin

[216B.2429] THERMAL ENERGY NETWORKS.

new text end

new text begin

Subdivision 1.

new text end

new text begin

Definitions.

new text end

new text begin

(a) For purposes of this section, the following terms have

the meanings given.

new text end

new text begin

(b) "Building costs" means costs incurred by utility customers or building owners to:

(1) connect to a TEN being installed, as required by a TEN service plan; or (2) to prepare

a building for connection in the future.

new text end

new text begin

(c) "Project costs" means all costs incurred by the utility to complete a project proposed

in a TEN service plan. Project costs do not include costs for customer-owned equipment

and building costs necessary to connect to a TEN.

new text end

new text begin

(d) "Public utility" or "utility" has the meaning given in section 216B.02, subdivision

4.

new text end

new text begin

(e) "Thermal energy network," "TEN," or "project" has the meaning given in section

216B.2427, subdivision 1, paragraph (s).

new text end

new text begin

(f) "Thermal energy network service plan" or "TEN service plan" means a plan proposing

the construction of a TEN to serve existing or new utility customers that a public utility

submits to the commission.

new text end

new text begin

Subd. 2.

new text end

new text begin

Thermal energy network service plan requirements.

new text end

new text begin

A TEN service plan

must include:

new text end

new text begin

(1) a description of the project, including details on the proposed service area and

customers served;

new text end

new text begin

(2) estimated project costs;

new text end

new text begin

(3) estimated building costs;

new text end

new text begin

(4) the project's construction schedule;

new text end

new text begin

(5) a summary of the utility's consideration of priority zones under subdivision 6;

new text end

new text begin

(6) a description of the utility's efforts to offset project costs through federal, state, or

local incentives;

new text end

new text begin

(7) a description of benefits expected to materialize as a result of the project;

new text end

new text begin

(8) a description of the efforts the utility commits to take to promote strong economic

development and good jobs for local residents in the expanding thermal energy network

sector by requiring application of progressive state labor and employment policies that

ensure public utility investments and related state subsidies create unparalleled skill training

and employment opportunities for residents in and around proposed service areas by using

local prevailing wage standards and successful bona fide apprenticeship programs or project

labor agreements that incorporate prevailing wage and training standards;

new text end

new text begin

(9) if the TEN service plan proposes to serve customers currently being served by gas,

a customer transition plan that:

new text end

new text begin

(i) clearly identifies (A) the area and affected customers, and (B) an anticipated timeline

to discontinue gas service and start thermal energy service;

new text end

new text begin

(ii) offers technical assistance to affected customers who request assistance with the

transition to thermal energy service;

new text end

new text begin

(iii) includes a transition schedule for affected customers;

new text end

new text begin

(iv) describes anticipated incentives provided by the utility to customers to offset building

costs incurred to connect to the TEN;

new text end

new text begin

(v) includes a communication plan to inform customers of, at a minimum: (A) the

proposed project details, schedules and timelines, benefits, programs, and incentives available

to help cover the customer's costs incurred to retrofit the customer's buildings to enable

connection with the TEN; and (B) the projected heating and cooling costs based on

individualized customer energy use. Public education meetings for affected customers must

be held at a location and time that is determined to be convenient for the public; and

new text end

new text begin

(vi) describes the utility's efforts to protect low-income customers from inequitable

retrofitting or operational costs as a result of the project;

new text end

new text begin

(10) a plan for (i) existing gas infrastructure that becomes stranded as a result of the

project, and (ii) projected avoided operational and maintenance costs for stranded gas

infrastructure; and

new text end

new text begin

(11) other details determined by the commission.

new text end

new text begin

Subd. 3.

new text end

new text begin

Service provided by a thermal energy network.

new text end

new text begin

(a) A public utility may

comply with section 216B.04 if the public utility furnishes safe, adequate, efficient, and

reasonable thermal energy service by a TEN. A public utility must submit and have an

approved TEN service plan in order to provide service by the proposed TEN. The commission

may approve, modify, or reject a TEN service plan. The commission must provide for notice

and comment on the TEN service plan before making the commission's determination.

new text end

new text begin

(b) An approved TEN service plan must:

new text end

new text begin

(1) provide a customer waiver process that allows a customer to apply for an exemption

from transitioning off existing gas service if transition to TEN service is unduly financially

burdensome for the customer or technologically infeasible;

new text end

new text begin

(2) ensure customers are well-informed regarding the public utility's intent to discontinue

and replace gas service with service provided by the approved TEN project;

new text end

new text begin

(3) serve the state emissions reduction under section 216H.02, subdivision 1;

new text end

new text begin

(4) evaluate the cost effectiveness of the proposed TEN project. When evaluating project

cost effectiveness, the commission may and is encouraged to consider TENs in a manner

comparable to gas or electric resources. The commission must consider the lifetime project

costs, including benefits from future emissions reductions; and

new text end

new text begin

(5) identify the appropriate course of action and timeline to decommission existing gas

infrastructure as a result of an approved TEN service plan.

new text end

new text begin

(c) The commission must determine appropriate guidelines for public utilities that propose

a TEN service plan service area that includes customers of another public utility.

new text end

new text begin

Subd. 4.

new text end

new text begin

Consumer protections.

new text end

new text begin

TEN service provided by a public utility is subject to

the same laws, protections, and commission authority that apply to gas service, including

but not limited to those provisions as outlined in sections 216B.03; 216B.096; 216B.097;

216B.0975; and 216B.16, subdivisions 6, 14, and 15.

new text end

new text begin

Subd. 5.

new text end

new text begin

Cost recovery.

new text end

new text begin

Subject to the commission's approval, a public utility is eligible

to recover reasonable and prudent costs incurred to implement an approved TEN service

plan under general rate cases. A public utility is not eligible to recover costs for gas

infrastructure in areas approved to be serviced by a TEN, unless the costs are necessary to

ensure the safety of decommissioned gas infrastructure.

new text end

new text begin

Subd. 6.

new text end

new text begin

Thermal energy network priority zones.

new text end

new text begin

When assessing the location and

siting of a TEN project, a public utility must prioritize geographic areas where one or more

of the following conditions exist:

new text end

new text begin

(1) new gas infrastructure is a less prudent resource compared to a TEN;

new text end

new text begin

(2) there is no existing piped gas infrastructure;

new text end

new text begin

(3) existing gas infrastructure is nearing the infrastructure's end of useful life;

new text end

new text begin

(4) existing gas infrastructure is prone to leaks or otherwise in need of repair or

replacement;

new text end

new text begin

(5) communities within the area have expressed desire to have a TEN project installed;

new text end

new text begin

(6) the area has characteristics that are similar to the characteristics that existed for a

successful utility TEN pilot project completed through an innovation plan approved under

section 216B.2427;

new text end

new text begin

(7) includes or is within an area defined under section 116.065, subdivision 1, paragraph

(e); or

new text end

new text begin

(8) the area meets other characteristics outlined for prioritization in the thermal energy

network site suitability study completed by the commissioner under Laws 2024, chapter

127, article 42, section 51.

new text end