SF 1348

Introduction - 80th Legislature (1997 - 1998)

Posted on 12/15/2009 12:00 a.m.

  1.1                          A bill for an act 
  1.2             relating to utilities; modifying regulation of 
  1.3             electric utilities; restructuring organization and 
  1.4             pricing for electric utility services; promoting 
  1.5             competition in electric utility industry; establishing 
  1.6             a pilot program for competitive retail wheeling; 
  1.7             establishing an account; requiring a study; amending 
  1.8             Minnesota Statutes 1996, section 216B.01; proposing 
  1.9             coding for new law in Minnesota Statutes, chapter 216B.
  1.10  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.11     Section 1.  Minnesota Statutes 1996, section 216B.01, is 
  1.12  amended to read: 
  1.13     216B.01 [LEGISLATIVE FINDING.] 
  1.14     It is hereby declared to be in the public interest that 
  1.15  public utilities be regulated as hereinafter provided in order 
  1.16  to provide the retail consumers of natural gas and electric 
  1.17  service in this state with adequate and reliable services at 
  1.18  reasonable rates, consistent with the financial and economic 
  1.19  requirements of public utilities and their need to construct 
  1.20  facilities to provide such services or to otherwise obtain 
  1.21  energy supplies, to avoid unnecessary duplication of facilities 
  1.22  which increase the cost of service to the consumer and to 
  1.23  minimize disputes between public utilities which may result in 
  1.24  inconvenience or diminish efficiency in service to the 
  1.25  consumers.  Because municipal utilities are presently 
  1.26  effectively regulated by the residents of the municipalities 
  1.27  which own and operate them, and cooperative electric 
  2.1   associations are presently effectively regulated and controlled 
  2.2   by the membership under the provisions of chapter 308A, it is 
  2.3   deemed unnecessary to subject such utilities to regulation under 
  2.4   this chapter except as specifically provided herein. 
  2.5      Further, in recognition that technological changes in the 
  2.6   electric utility industry have made electric generation 
  2.7   competition possible and that the Energy Policy Act of 1992 has 
  2.8   promoted increased electric generation competition at the 
  2.9   wholesale level, the legislature finds that it is in the public 
  2.10  interest to improve the efficiency of the state's electric 
  2.11  utility industry to promote greater competition among 
  2.12  electricity suppliers by allowing customers to choose their 
  2.13  generation sources while reducing pollution associated with the 
  2.14  generation of electricity, creating incentives for greater 
  2.15  consumption of electricity generated through the use of 
  2.16  renewable energy resources, continuing energy efficiency 
  2.17  policies, and ensuring the affordability of and access to 
  2.18  electricity for low-income customers. 
  2.19     Sec. 2.  [216B.011] [SEGMENTATION OF UTILITY FUNCTIONS.] 
  2.20     Subdivision 1.  [UTILITY RESTRUCTURING.] Before January 1, 
  2.21  1999, a public utility, as defined in section 216B.02, engaged 
  2.22  in providing electric service, shall file with the commission a 
  2.23  plan for restructuring its organization into three separate 
  2.24  entities.  Each entity must be engaged solely in providing 
  2.25  either generation, transmission, or distribution services.  The 
  2.26  plan must clearly describe how a public utility's new structure 
  2.27  will promote a transition to a competitive market for electric 
  2.28  generation by January 1, 2002.  
  2.29     Subd. 2.  [COMMISSION REVIEW.] Before December 31, 1999, 
  2.30  the commission shall approve or modify all electric public 
  2.31  utility restructuring plans.  All electric public utilities will 
  2.32  have one year from the date of the commission's order to 
  2.33  implement the restructuring plans outlined in the order. 
  2.34     Sec. 3.  [216B.0115] [PUBLIC UTILITY DEFINED.] 
  2.35     For the purposes of sections 216B.012, 216B.013, 216B.015, 
  2.36  216B.016, and 216B.017, "public utility" includes a municipal or 
  3.1   cooperative electric association, organized under chapter 308A, 
  3.2   producing or furnishing electric service.  
  3.3      Sec. 4.  [216B.012] [RETAIL ACCESS FOR ALL CONSUMERS.] 
  3.4      Subdivision 1.  [STANDARDS GENERALLY.] Beginning on January 
  3.5   1, 2002, public utilities shall provide retail access for all 
  3.6   consumers in Minnesota, including residential and small 
  3.7   commercial consumers, under rates, terms, and conditions that 
  3.8   are just, reasonable, and not unduly discriminatory and that 
  3.9   permit the recovery by the facility owner or operator of all 
  3.10  costs incurred in connection with the recovery of transmission 
  3.11  and distribution services.  The distribution and transmission 
  3.12  services provided must be at least equal in quality to those 
  3.13  provided by the public utility to itself or to any affiliate of 
  3.14  the utility.  
  3.15     Subd. 2.  [PRICING.] Beginning on January 1, 2002, the 
  3.16  commission shall facilitate retail access for all consumers by 
  3.17  requiring all public utilities to provide separate prices for 
  3.18  generation, transmission, and distribution services.  
  3.19     Subd. 3.  [COMMISSION AUTHORITY.] Beginning on January 1, 
  3.20  2002, the commission will no longer regulate the prices of 
  3.21  electric generation services, except in the case when a customer 
  3.22  elects to obtain generation services from the public utility, 
  3.23  either through active choice or as provided in section 216B.013, 
  3.24  subdivision 2.  
  3.25     Sec. 5.  [216B.013] [UNIVERSAL SERVICE.] 
  3.26     Subdivision 1.  [POLICY GENERALLY.] The supply and delivery 
  3.27  of electricity must be assured to all Minnesota retail electric 
  3.28  end-users.  This policy of universal service to Minnesota 
  3.29  customers must include both access and affordability. 
  3.30     Subd 2.  [ACCESS.] All Minnesota electric end-users shall 
  3.31  have access to electric delivery and supply.  The following 
  3.32  provisions will ensure that all customers continue to have 
  3.33  access:  
  3.34     (a) Each utility providing electric service is required to 
  3.35  deliver electricity to all customers within its service 
  3.36  territory.  
  4.1      (b) A purchaser of electricity may do either of the 
  4.2   following:  
  4.3      (1) request that its public utility arrange for the 
  4.4   electricity supply and any transmission and ancillary services 
  4.5   required to transport the electricity from the point of 
  4.6   generation to the public utility's distribution facilities; or 
  4.7      (2) make other arrangements for electricity supply or 
  4.8   transmission or ancillary services.  
  4.9      (c) Failure by any customer in any class or subclass of 
  4.10  customers to make other arrangements for electricity supply, 
  4.11  transmission services, or ancillary services as authorized under 
  4.12  subdivision 3, paragraph (a), is deemed to constitute a request 
  4.13  to its public utility to arrange for the supply or services.  
  4.14     Sec. 6.  [216B.014] [TRANSITION TO COMPETITION.] 
  4.15     Subdivision 1.  [PUBLIC UTILITY DEFINED.] For the purposes 
  4.16  of this section, "public utility" has the same meaning as 
  4.17  section 216B.02, subdivision 4.  
  4.18     Subd. 2.  [PERFORMANCE-BASED REGULATION.] Before January 1, 
  4.19  2002, the commission may implement performance-based regulation 
  4.20  programs for all public utilities providing electric service.  
  4.21     Subd. 3.  [PRICE CONTRACT WITH INDIVIDUAL CUSTOMERS.] (a) A 
  4.22  public utility providing electric service may negotiate 
  4.23  contracts with individual customers whose load requirements 
  4.24  exceed 2,000 kilowatts.  The price for electricity in these 
  4.25  contracts can be less than the price that would be paid under 
  4.26  existing tariffed rates.  The price paid for electricity under 
  4.27  these contracts must exceed the public utility's incremental 
  4.28  cost of providing electric service.  The commission shall not 
  4.29  allow recovery of any revenues lost by pricing electricity below 
  4.30  existing tariffed rates in any proceeding, including its 
  4.31  procedures for calculating and collecting stranded costs as 
  4.32  provided in section 216B.015.  
  4.33     (b) Contracts meeting the requirements of this subdivision 
  4.34  are deemed to meet the requirements of section 216B.03.  
  4.35     Sec. 7.  [216B.015] [STRANDED COST RECOVERY.] 
  4.36     The commission shall implement procedures for measuring and 
  5.1   collecting costs incurred by public utilities providing electric 
  5.2   service that are stranded due to the implementation of retail 
  5.3   access on January 1, 2002.  The commission's procedures must not 
  5.4   include calculation of any costs incurred beyond January 1, 
  5.5   2007.  The commission may authorize collection of stranded costs 
  5.6   through a nonbypassable access charge. 
  5.7      Sec. 8.  [RETAIL COMPETITION PILOT PROGRAM.] 
  5.8      The commission shall establish a pilot program, under terms 
  5.9   and conditions the commission deems appropriate, for the purpose 
  5.10  of determining the implications of retail competition in the 
  5.11  electric industry, provided that the commission determines that 
  5.12  the program is fair, lawful, constitutional, and in the public 
  5.13  good.  This pilot program is open to all franchise areas and to 
  5.14  all classes of customers.  The pilot program must be conducted 
  5.15  during the period of October 1, 1997, to September 30, 1998.  
  5.16  The commission shall provide a report on the results of the 
  5.17  pilot program to the state legislature by December 1, 1998. 
  5.18     Sec. 9.  [RETAIL WHEELING AND RESTRUCTURING STUDY.] 
  5.19     Subdivision 1.  [STUDY.] The department of public service 
  5.20  is directed to review and study the issues of retail wheeling 
  5.21  and potential restructuring of the electric utility industry in 
  5.22  the state and provide its report with recommendations to the 
  5.23  state legislature by December 1, 1998.  In conducting this 
  5.24  study, the department is responsible for: 
  5.25     (1) soliciting information and viewpoints of all affected 
  5.26  and involved parties, which include but are not limited to: 
  5.27     (i) the public utilities commission; 
  5.28     (ii) investor-owned utilities, rural electric cooperatives, 
  5.29  and municipal electric utilities; 
  5.30     (iii) large business electricity consumers; 
  5.31     (iv) small business electricity consumers; 
  5.32     (v) residential consumers; 
  5.33     (vi) environmental interest groups; 
  5.34     (vii) general members of the public; and 
  5.35     (viii) state legislators. 
  5.36     (2) retaining expert consultants or services selected by 
  6.1   the department as necessary to assist in gathering, 
  6.2   interpreting, and summarizing information for presentation to 
  6.3   the state legislature and to the citizens of the state; 
  6.4      (3) reviewing regulatory pricing methodologies for 
  6.5   unbundled transmission and distribution services; 
  6.6      (4) reviewing ways to mitigate cross subsidization among 
  6.7   classes of consumers; 
  6.8      (5) reviewing the environmental and conservation-related 
  6.9   effects of retail wheeling; and 
  6.10     (6) reviewing the reliability of retail wheeling and the 
  6.11  impact of retail wheeling on electric service quality, 
  6.12  reliability, and adequacy including possible impacts on rural 
  6.13  electric cooperatives and municipal electric utilities. 
  6.14     Subd. 2.  [ACCOUNT ESTABLISHED.] The department shall 
  6.15  establish an account, which must not exceed $100,000 in the 
  6.16  state treasury.  The account consists of $100,000 from 
  6.17  assessments against the state's electric utilities made by the 
  6.18  public utilities commission pursuant to the methodology defined 
  6.19  in Minnesota Statutes, section 216B.62.  Money in the fund must 
  6.20  be used to pay the costs incurred pursuant to subdivision 1.