1.1                          A bill for an act 
  1.2             relating to utilities; requiring legislative electric 
  1.3             energy task force to establish technical advisory 
  1.4             committee on electric restructuring; requiring 
  1.5             advisory committee to issue reports; establishing 
  1.6             duties for public utilities commission and department 
  1.7             of public service. 
  1.8   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.9      Section 1.  [LEGISLATIVE ELECTRIC ENERGY TASK FORCE; 
  1.10  ELECTRIC RESTRUCTURING TECHNICAL ASSISTANCE.] 
  1.11     Subdivision 1.  [ESTABLISHMENT OF TECHNICAL ADVISORY 
  1.12  COMMITTEE.] The legislature finds that, in addition to the 
  1.13  considerable legislative resources committed to the study of 
  1.14  electric industry restructuring through the electric energy task 
  1.15  force and the energy subcommittees of the house and senate 
  1.16  standing policy committees, the legislature is in need of 
  1.17  technical assistance on electric industry deregulation issues.  
  1.18  Therefore, the legislative electric energy task force shall 
  1.19  establish through the joint action of its chairs a technical 
  1.20  advisory committee to assist the legislature in analyzing these 
  1.21  issues.  Unless terminated earlier by the task force, the 
  1.22  technical advisory committee expires January 31, 2000. 
  1.23     Subd. 2.  [MEMBERSHIP OF TECHNICAL ADVISORY COMMITTEE.] The 
  1.24  chairs of the legislative electric energy task force shall 
  1.25  appoint 15 members to the advisory committee that: 
  1.26     (1) reflect the broad array of interests affected by 
  2.1   electric industry restructuring; 
  2.2      (2) include a representative of low-income energy 
  2.3   consumers; a representative of commercial energy consumers; a 
  2.4   representative of industrial energy consumers; a representative 
  2.5   of an investor-owned utility serving primarily urban areas; a 
  2.6   representative of an investor-owned utility serving primarily 
  2.7   rural areas; a representative of a cooperative utility; a 
  2.8   representative of a municipal utility; a representative of a 
  2.9   small business; a representative of organized labor; a 
  2.10  representative of a host community; a representative of an 
  2.11  environmental advocacy group; and a representative of renewable 
  2.12  energy developers and advocates; 
  2.13     (3) have technical expertise in one or more of the 
  2.14  following areas:  energy marketing; energy efficiency; energy 
  2.15  procurement and purchasing; utility regulation; electricity 
  2.16  production; market economics; electric system operation and 
  2.17  reliability; and the provision of universal electric service, 
  2.18  especially to low-income or rural consumers; and 
  2.19     (4) include the chair of the public utilities commission or 
  2.20  the chair's designee, a representative of the department of 
  2.21  public service, and a representative of the office of the 
  2.22  attorney general. 
  2.23     In addition to these 15 members, the chairs of the task 
  2.24  force shall serve as ex officio members of the advisory 
  2.25  committee. 
  2.26     Subd. 3.  [DUTIES OF TECHNICAL ADVISORY COMMITTEE.] (a) The 
  2.27  advisory committee shall examine, consult with experts, analyze, 
  2.28  and report on the policy and technical issues described in 
  2.29  section 2.  The reports of the advisory committee must be based 
  2.30  on professional expertise in utility operations, economics, 
  2.31  regulatory law, and public policy and shall endeavor to provide 
  2.32  the legislative electric energy task force with objective and 
  2.33  balanced information.  
  2.34     (b) In fulfilling its duties under this section, the 
  2.35  advisory committee may establish subgroups or subcommittees 
  2.36  which may seek the advice, recommendations, and expertise of 
  3.1   parties not members of the advisory committee including, among 
  3.2   others, individuals or groups representing industry, academic, 
  3.3   and consumer interests. 
  3.4      Subd. 4.  [DUTIES OF PUBLIC UTILITIES COMMISSION.] The 
  3.5   public utilities commission shall provide technical and 
  3.6   administrative staff and assistance to the advisory committee 
  3.7   and shall provide the advisory committee with initial technical 
  3.8   analyses of the issues described in section 3. 
  3.9      Subd. 5.  [DUTIES OF DEPARTMENT OF PUBLIC SERVICE.] The 
  3.10  commissioner of the department of public service, or the 
  3.11  commissioner's designee, shall chair the advisory committee.  
  3.12  The department of public service shall provide technical 
  3.13  assistance to the advisory committee, shall provide the advisory 
  3.14  committee with an initial technical analysis of the issue 
  3.15  described in section 4, and shall conduct technical analyses as 
  3.16  directed by the advisory committee. 
  3.17     Sec. 2.  [SPECIFIC RESTRUCTURING ISSUES; TECHNICAL ADVISORY 
  3.18  COMMITTEE ON ELECTRIC RESTRUCTURING.] 
  3.19     Subdivision 1.  [BULK POWER SYSTEM RELIABILITY, 
  3.20  INFRASTRUCTURE, AND REGULATION.] By January 1, 1999, the 
  3.21  technical advisory committee shall solicit information and 
  3.22  report to the legislative electric energy task force on the 
  3.23  following issues relating to bulk system reliability, 
  3.24  infrastructure, and regulation: 
  3.25     (1) When will the bulk power system be capable of reliably 
  3.26  supporting the volume of power transactions that would result 
  3.27  from implementation of retail competition? 
  3.28     (2) What modifications to the bulk power system and its 
  3.29  management are necessary to ensure that retail competition in 
  3.30  the state's electric industry does not diminish the reliability 
  3.31  of electric service, and what is the estimated cost of those 
  3.32  modifications? 
  3.33     (3) What options and alternatives can customers and power 
  3.34  suppliers in the state and in the region use to ensure the 
  3.35  independent operation and competitively neutral management of 
  3.36  the bulk power grid, and what are the advantages and 
  4.1   disadvantages associated with each option or alternative? 
  4.2      (4) What market infrastructure developments are necessary 
  4.3   or useful in supporting trade and competition in a reliable 
  4.4   electricity market, and what are the advantages and 
  4.5   disadvantages associated with each approach? 
  4.6      (5) What are the regulatory and legal means the state could 
  4.7   use to ensure the low cost, competitively neutral, and fair 
  4.8   utilization of the bulk power system and any market 
  4.9   infrastructure created or sanctioned by the state, and how 
  4.10  should the state address issues of overlapping state, federal, 
  4.11  and international jurisdictions in a regional electricity market?
  4.12     Subd. 2.  [RELIABILITY, SAFETY, AND MAINTENANCE.] By 
  4.13  January 1, 1999, the technical advisory committee shall analyze 
  4.14  and report to the legislative electric energy task force on the 
  4.15  following issues relating to distribution reliability, safety, 
  4.16  and maintenance in a competitive electric market: 
  4.17     (1) What safety standards should be used to ensure 
  4.18  reliability, safety, and efficient operation of the distribution 
  4.19  system? 
  4.20     (2) What options are available to identify and establish 
  4.21  the respective rights and responsibilities of distribution 
  4.22  utilities, consumers, and competitive power suppliers regarding 
  4.23  electric reliability and continuity of service? 
  4.24     (3) What alternatives can be used, or standards developed, 
  4.25  to address issues relating to the provision of billing, 
  4.26  metering, and customer service? 
  4.27     (4) What regional alliances need to be taken into 
  4.28  consideration to ensure reliability, safety, and efficient 
  4.29  operation of the distribution system? 
  4.30     Subd. 3.  [ENERGY PRICES AND PRICE PROTECTION 
  4.31  MECHANISMS.] By January 1, 1999, the technical advisory 
  4.32  committee shall provide the legislative electric energy task 
  4.33  force with: 
  4.34     (1) a reliable quantification of the potential net benefits 
  4.35  of the implementation of retail competition in the state, as 
  4.36  well as an evaluation and analysis as to how costs and benefits 
  5.1   might be distributed, and might be expected to change over time; 
  5.2      (2) a comparison and evaluation of alternative mechanisms 
  5.3   to protect consumers from unwarranted potential price increases 
  5.4   that may be attributable to electric deregulation during a 
  5.5   transition to a competitive energy market; and 
  5.6      (3) a comparison and evaluation of various means to ensure 
  5.7   that prices offered by competitors are nondiscriminatory and 
  5.8   that all customer classes benefit from competition. 
  5.9      Subd. 4.  [UNIVERSAL SERVICE.] By January 1, 1999, the 
  5.10  technical advisory committee shall analyze issues relating to 
  5.11  the provision of universal energy service in the state, with 
  5.12  special emphasis on ensuring affordable service for rural and 
  5.13  low-income energy consumers, and shall provide the legislative 
  5.14  electric energy task force with: 
  5.15     (1) a needs assessment of the number of low-income 
  5.16  individuals and households at or below 150 percent of the 
  5.17  federal poverty guidelines and the average energy burden of 
  5.18  these individuals and households, expressed as the percentage of 
  5.19  overall income dedicated to the payment of energy costs; 
  5.20     (2) an evaluation of alternative nonbypassable 
  5.21  competitively neutral funding mechanisms to finance programs to 
  5.22  reduce the energy burden of low-income customers; 
  5.23     (3) alternatives regarding program design, administration, 
  5.24  outreach, and participation goals for bill payment and energy 
  5.25  conservation assistance; 
  5.26     (4) an evaluation of alternatives for ensuring affordable 
  5.27  service for individuals who do not or cannot choose an alternate 
  5.28  energy supplier, including default supplier and provider of last 
  5.29  resort options; and 
  5.30     (5) an evaluation of options to ensure that rural energy 
  5.31  consumers continue to receive affordable high-quality energy 
  5.32  service and participate in any benefits attributable to 
  5.33  increased competition. 
  5.34     Subd. 5.  [OTHER RESTRUCTURING ISSUES.] The task force 
  5.35  shall establish additional priorities or assign additional 
  5.36  issues for the advisory committee to analyze, including: 
  6.1      (1) the potential for competition in Minnesota to result in 
  6.2   net stranded costs; the magnitude and incidence of those costs; 
  6.3   and alternatives for cost recovery; 
  6.4      (2) issues relating to the need for consumers to be 
  6.5   informed about competitive options and protected from deceptive 
  6.6   business practices; 
  6.7      (3) issues relating to renewable energy development, energy 
  6.8   efficiency, and environmental sustainability, including 
  6.9   questions relating to potential renewable energy portfolio 
  6.10  requirements, system benefits charges, or green marketing of 
  6.11  electricity; 
  6.12     (4) issues relating to access to the retail marketplace by 
  6.13  competitors and methods to prevent the exercise of market power; 
  6.14     (5) issues relating to employment impacts on utility 
  6.15  workers resulting from electric industry competition; and 
  6.16     (6) any other issues the task force deems important or 
  6.17  necessary to assist the legislature in analyzing the effects of 
  6.18  electric industry restructuring in Minnesota. 
  6.19     Sec. 3.  [SPECIFIC RESTRUCTURING ISSUES; PUBLIC UTILITIES 
  6.20  COMMISSION.] 
  6.21     Subdivision 1.  [INFORMATION DISCLOSURE AND CONSUMER 
  6.22  PROTECTION.] By November 1, 1998, the public utilities 
  6.23  commission shall conduct an initial technical analysis of issues 
  6.24  relating to information disclosure and consumer protection and 
  6.25  provide the technical advisory committee with: 
  6.26     (1) an evaluation of alternative standards and means of 
  6.27  providing all consumers with information sufficient to support 
  6.28  an informed choice of electric provider in a competitive 
  6.29  environment regarding:  (i) price, terms, and conditions of 
  6.30  service; and (ii) environmental information; and 
  6.31     (2) recommendations regarding consumer protection standards 
  6.32  and practices sufficient to prevent consumer fraud and abuse 
  6.33  while supporting effective competition. 
  6.34     Subd. 2.  [RENEWABLE ENERGY, EFFICIENCY, AND ENVIRONMENTAL 
  6.35  SUSTAINABILITY.] (a) By November 1, 1998, the public utilities 
  6.36  commission shall conduct an initial technical analysis on the 
  7.1   issues of renewable energy, efficiency, and environmental 
  7.2   sustainability, and provide the technical advisory committee 
  7.3   with an assessment of alternatives the state could take, whether 
  7.4   alone or as part of a regional compact, or as part of a national 
  7.5   mandate, to encourage energy efficiency, renewable energy 
  7.6   development, and decreased pollution in the context of a 
  7.7   competitive electric industry.  In assessing alternatives for 
  7.8   renewable energy development, the commission shall consider 
  7.9   questions relating to potential renewable energy portfolio 
  7.10  requirements, system benefits charges, or green marketing of 
  7.11  electricity.  The commission's analysis shall also include an 
  7.12  assessment of alternative energy's effect on business and the 
  7.13  state's economy, and how renewable requirements can be 
  7.14  implemented in a competitively neutral manner. 
  7.15     (b) In conducting the initial technical analysis under this 
  7.16  subdivision, the public utilities commission shall convene a 
  7.17  working group which includes the department of public service, 
  7.18  utility representatives, community action agency 
  7.19  representatives, and other energy efficiency advocates and 
  7.20  service providers to investigate the energy conservation 
  7.21  improvement program under Minnesota Statutes, section 216B.241, 
  7.22  and to provide recommendations to the technical advisory 
  7.23  committee regarding how energy efficiency and related services 
  7.24  could best be provided in a more competitive electricity market. 
  7.25  The commission shall give particular attention to assessing the 
  7.26  success of these projects on meeting the goals of Minnesota 
  7.27  Statutes, section 216B.241. 
  7.28     Subd. 3.  [UNBUNDLED RATES.] The public utilities 
  7.29  commission shall convene a working group of private, public, and 
  7.30  cooperative utilities; national and regional energy marketers; 
  7.31  consumers and their advocates; and other interested parties to 
  7.32  develop a timeline and recommended procedures for separating the 
  7.33  charges for electric generation services, including electric 
  7.34  energy and capacity, from the charges for distribution services, 
  7.35  transmission services, and other services on customers' bills.  
  7.36  The commission shall report the progress of this working group 
  8.1   to the legislative electric energy task force by January 15, 
  8.2   1999. 
  8.3      Subd. 4.  [COMPETITIVE PARITY.] By November 1, 1998, the 
  8.4   public utilities commission shall conduct an analysis of those 
  8.5   laws and regulations that could prevent Minnesota utilities from 
  8.6   competing fairly in a competitive electric market, and shall 
  8.7   make recommendations as to how those requirements could be 
  8.8   fulfilled in a competitively neutral manner. 
  8.9      Sec. 4.  [SPECIFIC RESTRUCTURING DUTIES; DEPARTMENT OF 
  8.10  PUBLIC SERVICE.] 
  8.11     By November 1, 1998, the department of public service shall 
  8.12  conduct an initial technical analysis of issues relating to 
  8.13  stranded costs and shall provide the technical advisory 
  8.14  committee with: 
  8.15     (1) a sensitivity analysis of the magnitude and duration of 
  8.16  net stranded costs, and include in its analysis the potential 
  8.17  for stranded benefits or negative stranded costs that may result 
  8.18  from market prices that are higher than regulated prices; 
  8.19     (2) a report on whether and how net stranded cost recovery 
  8.20  by utilities could affect competition, consumers, utilities, and 
  8.21  utility investors; 
  8.22     (3) a comparison and evaluation of potential difficulties 
  8.23  stranded costs could create for private, public, and cooperative 
  8.24  utilities, and alternative means to ensure that customers 
  8.25  receive at least as much assurance of negative stranded cost 
  8.26  recovery as utility owners would of stranded cost recovery; 
  8.27     (4) recommendations on alternatives for the mitigation and 
  8.28  elimination of stranded costs and on mechanisms for recovery of 
  8.29  net stranded costs; 
  8.30     (5) an analysis of the advantages and disadvantages of 
  8.31  prior versus periodic evaluation, determination, and assessment 
  8.32  of stranded costs; and 
  8.33     (6) an analysis of the advantages and disadvantages of 
  8.34  securitization and other means of requiring customers to pay for 
  8.35  utility stranded costs. 
  8.36     Sec. 5.  [COST ALLOCATION.] 
  9.1      The public utilities commission shall require that all 
  9.2   public and municipal utilities providing electric service, all 
  9.3   cooperative electric associations, and all other energy 
  9.4   providers participating in activities under sections 1 to 3, pay 
  9.5   the expenses of the technical advisory committee, the public 
  9.6   utilities commission, and the department of public service under 
  9.7   this act.  The department of public service and the public 
  9.8   utilities commission shall ascertain the expenses and the 
  9.9   department shall render a bill for those expenses to the parties 
  9.10  at the conclusion of the activities under this act.  The 
  9.11  department is authorized to submit billings to parties at 
  9.12  intervals selected by the department during the course of these 
  9.13  activities.  Entities providing more than one type of energy 
  9.14  shall only be billed as a single entity. 
  9.15     Sec. 6.  [EFFECTIVE DATE.] 
  9.16     Sections 1 to 5 are effective on the day following final 
  9.17  enactment.