Community-Based Energy Development (C-BED)
In 2005, the Department of Commerce, with support and approval of the Governor's office, proposed legislation to encourage the development of locally-owned wind energy projects. The department was successful in passing the legislation with the help of renewable energy activists, electric utilities, the business community and others. We place a high priority on successful implementation of the statute.
Good-faith effort required
The C-BED legislation requires electric utilities to consider community-based renewable energy projects, when seeking to add renewable generation to their supply mix. Although utilities are not mandated to sign up C-BED projects, the statute requires the Minnesota Public Utilities Commission (PUC) to review and evaluate the efforts and activities of a utility to purchase energy from C-BED projects, every two years when evaluating the utility's Resource Plan.
In addition, the legislation made compliance with the state's Renewable Energy Objective (REO) a criterion for a utility to receive permission for other infrastructure investments a utility intends to make. If a utility does not make a good faith effort to enroll C-BED projects in its supply portfolio or otherwise fails to meet the REO, the PUC may deny the utility permission to build other utility infrastructure.
Front-ended loaded tariff required
The 2005 legislation also requires utilities to develop and offer C-BED tariffs. Under a C-BED tariff, the utility offers developers a "front-ended loaded rate" for the energy from a community-based energy project. The front-end loaded rate means that the developer can receive a higher rate in the early years of a renewable energy contract, during the years when the developer must service the debt on the project, in exchange for a lower rate in the later years of a contract. This financing tool is intended to allow C-BED projects to overcome financing barriers. In exchange, the C-BED developer must provide security to ensure that ratepayers receive the benefit of the project over the time period of the renewable energy contract.
The decision to offer a C-BED tariff to a developer, and the rate that's offered, rests entirely within the utility's discretion. A utility's REO obligation to make a good faith effort to enroll C-BED projects in its supply mix relates to C-BED projects generally, not C-BED tariffed projects.
View a summary of the number of C-BED projects in negotiation and under contract starting January 2007.