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:
- 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.