Under the Community-Based Energy Development (C-BED) Tariff, each public utility in Minnesota is required to file with the state Public Utilities Commission (PUC) to create a 20-year power purchase agreement (PPA) for community-owned renewable energy projects. The original legislation was enacted in 2005 but has been amended several times subsequently. Utilities were required to submit revised tariffs for the 2007 amendments by December 1, 2007.
Municipal and cooperative utilities were required to file a tariff 90 days after the first PUC order approval of a tariff for a public utility. The tariff rate must be higher in the first 10 years of the agreement than the last ten years. The intent of this structure is to provide renewable energy projects with better cash flow during the first ten years. This makes it easier to achieve financing and pay project debt. The lower rate in the second half of the project ensures declining power costs for the utility and ratepayers over the 20-year term of the contracts.
Under the original C-BED legislation, the tariff rate was capped at a net present value of 2.7 cents per kilowatt-hour calculated over the life of the PPA (using the relevant utility’s normal discount rate). This cap was eliminated in 2007. A 2008 amendment allows Minnesota political subdivisions and local governments to participate in C-BED projects in a variety of ways -- including outright ownership -- but prohibits them from acquiring property for such projects through eminent domain. Further 2009 legislation (S.F. 550, Sec. 10
) requires all utilities to file standard contracts with the PUC for the purchase of electricity from projects with a rated capacity of five megawatts (MW) or less. The contracts are required to be "similar in all material respects" to the standard contracts Xcel Energy is required to use for wind projects of 2 MW or less under the utility's mandated Renewable Energy Set Aside
C-BED tariffs can be used to satisfy the state's Renewable Energy Standard. Utilities are required to consider C-BED projects, but they are not required to sign C-BED contracts.
In order for a project to be considered community-based and eligible for C-BED tariffs:
In November 2005, Minnesota established a goal of developing an additional 800 MW of community-owned wind projects by 2010. This is in addition to the roughly 200 MW which already existed at that time and which resulted to a large degree from the MN Renewable Energy Production Incentive
(now closed to new wind applicants). As of September 2011, a total of 266.30 MW of C-BED projects had been completed, with an additional 114 MW under contract and .24 MW in negotiations. Please see the Minnesota Department of Commerce, Division of Energy Resources (DOCDER) C-BED Project Report
for additional details and updated statistics.