Community-Based Energy Development (C-BED) Tariff

Program Overview

Implementing Sector State
Category Regulatory Policy
State Minnesota
Incentive Type Other Policy
Web Site https://mn.gov/commerce/industries/energy/wind-energy/
Start Date 05/25/2005
Eligible Renewable/Other Technologies Solar Thermal Electric, Solar Photovoltaics, Wind (All), Biomass, Hydrogen, Municipal Solid Waste, Landfill Gas, Hydroelectric (Small)
Applicable Sectors Commercial, Industrial, Local Government, Nonprofit, Municipal Utilities, Residential, Cooperative Utilities, Schools, Agricultural, Multifamily Residential, Institutional

Summary

Under the Community-Based Energy Development (C-BED) Tariff, originally enacted through state legislation in 2005 and subsequently amended, each public utility in Minnesota is required to file with the state Public Utilities Commission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.

The C-BED tariff rate must be higher in the first 10 years of the agreement than the last 10 years. The intent of this structure is to provide renewable energy projects with better cash flow during the first 10 years, making 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 over the 20-year term of the contracts.

Minnesota political subdivisions and local governments may participate in C-BED projects in a variety of ways, including outright ownership, but are prohibited from acquiring property for such projects through eminent domain. 
 
Legislation enacted in 2009 (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 5 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.

Utilities are required to consider C-BED projects, but they are not required to sign C-BED contracts. C-BED tariffs can be used to satisfy the state’s Renewable Energy Standard. 

In order for a project to be considered community-based and eligible for C-BED tariffs:

  • 51% of the revenues from the power purchase agreement must flow to Minnesota-based owners and other qualifying local entities.
  • No single wind project investor can own more than 15 percent of a project consisting of two or more wind turbine, except for local governments which may be the sole owners of community-based projects.
  • The project must have a resolution of support adopted by the county board of each county in which the project is to be located, or in the case of a project located within the boundaries of a reservation, the tribal council for that reservation.
  • All owners of property traversed by transmission lines serving the project must be given the opportunity to invest.

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.

Authorities

Name Minn. Stat. § 216B.1612
Date Enacted 05/25/2005
Effective Date 07/01/2005

Contact

Energy Information
Organization:
Minnesota Department of Commerce
Address:
85 7th Place East
St. Paul, MN 55101-2198
Phone:
(800) 657-3710
E-Mail:
energy.info@state.mn.us