1.1                          A bill for an act 
  1.2             relating to utilities; requiring comprehensive study 
  1.3             of electric industry restructuring; proposing coding 
  1.4             for new law in Minnesota Statutes, chapter 216C. 
  1.5   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.6      Section 1.  [216C.052] [LEGISLATIVE ELECTRIC ENERGY TASK 
  1.7   FORCE; ELECTRIC INDUSTRY RESTRUCTURING.] 
  1.8      Subdivision 1. [GENERAL PROVISIONS.] (a) Pursuant to Laws 
  1.9   1997, chapter 191, article 1, section 11, the legislative 
  1.10  electric energy task force must review and analyze issues 
  1.11  relating to the restructuring of the electric industry.  At a 
  1.12  minimum, the task force must study the potential benefits and 
  1.13  costs of restructuring on: 
  1.14     (1) rural, low-income, residential, small business, and 
  1.15  commercial and industrial energy consumers, including the 
  1.16  ability of these consumers to participate in and benefit from a 
  1.17  restructured industry; 
  1.18     (2) the overall state's economy, as well as the economy of 
  1.19  regions within the state, and the cost of doing business in the 
  1.20  state; 
  1.21     (3) the reliability and safety of the electricity system, 
  1.22  including system planning and operation; 
  1.23     (4) the state's environment, including the cost-effective 
  1.24  promotion of conservation and renewable energy; and 
  1.25     (5) public, private and cooperative utilities, and 
  2.1   alternative energy suppliers, including the development of 
  2.2   competitively neutral markets. 
  2.3      (b) In addition to these general provisions, the task force 
  2.4   must address the specific issues outlined in subdivisions 3 to 
  2.5   11. 
  2.6      (c) In conducting its review and analysis of restructuring 
  2.7   issues, the task force must solicit information from, and 
  2.8   consult with all affected and interested parties, including, but 
  2.9   not limited to, representatives of:  rural energy consumers; 
  2.10  low-income energy consumers; commercial energy consumers; 
  2.11  industrial energy consumers; small business energy consumers; 
  2.12  investor-owned utilities; cooperative electric associations; 
  2.13  municipal utilities; organized labor; local units of government; 
  2.14  environmentalists; renewable energy developers and providers; 
  2.15  natural gas distribution utilities; community action agencies; 
  2.16  the mid-continent area power pool; the department of public 
  2.17  service; the public utilities commission; and the office of the 
  2.18  attorney general. 
  2.19     Subd. 2.  [PERIODIC UPDATES.] By January 15 of each year, 
  2.20  the task force must provide the legislature with an update on 
  2.21  the progress of its review and analysis of restructuring issues 
  2.22  under this section, including legislative recommendations as the 
  2.23  task force deems appropriate. 
  2.24     Subd. 3.  [BULK POWER SYSTEM RELIABILITY, INFRASTRUCTURE, 
  2.25  AND REGULATION.] In its review and analysis of electric industry 
  2.26  restructuring, the task force must solicit information on the 
  2.27  following issues relating to bulk system reliability, 
  2.28  infrastructure, and regulation: 
  2.29     (1) When will the bulk power system be capable of reliably 
  2.30  supporting the volume of power transactions that would result 
  2.31  from implementation of retail competition? 
  2.32     (2) What modifications to the bulk power system and its 
  2.33  management are necessary to ensure that retail competition in 
  2.34  the state's electric industry does not diminish the reliability 
  2.35  of electric service, and what is the estimated cost of those 
  2.36  modifications? 
  3.1      (3) What options and alternatives can customers and power 
  3.2   suppliers in the state and in the region use to ensure the 
  3.3   independent operation and competitively neutral management of 
  3.4   the bulk power grid, and what are the advantages and 
  3.5   disadvantages associated with each option or alternative? 
  3.6      (4) What market infrastructure developments are necessary 
  3.7   or useful in supporting trade and competition in a reliable 
  3.8   electricity market, and what are the advantages and 
  3.9   disadvantages associated with each approach? 
  3.10     (5) What are the regulatory and legal means the state could 
  3.11  use to ensure the low cost, competitively neutral, and fair 
  3.12  utilization of the bulk power system and any market 
  3.13  infrastructure created or sanctioned by the state, and how 
  3.14  should the state address issues of overlapping state, federal, 
  3.15  and international jurisdictions in a regional electricity market?
  3.16     Subd. 4.  [RELIABILITY, SAFETY, AND MAINTENANCE.] In its 
  3.17  review of electric industry restructuring, the task force must 
  3.18  analyze the following issues relating to distribution 
  3.19  reliability, safety, and maintenance in a competitive 
  3.20  electricity market: 
  3.21     (1) What safety standards should be used to ensure 
  3.22  reliability, safety, and efficient operation of the distribution 
  3.23  system? 
  3.24     (2) What options are available to identify and establish 
  3.25  the respective rights and responsibilities of distribution 
  3.26  utilities, consumers, and competitive power suppliers regarding 
  3.27  electricity reliability and continuity of service? 
  3.28     (3) What alternatives can be used, or standards developed, 
  3.29  to address issues relating to the provision of billing, 
  3.30  metering, and customer service? 
  3.31     (4) What regional alliances need to be taken into 
  3.32  consideration to ensure reliability, safety, and efficient 
  3.33  operation of the distribution system? 
  3.34     Subd. 5.  [ENERGY PRICES AND PRICE PROTECTION 
  3.35  MECHANISMS.] In its review and analysis of electric industry 
  3.36  restructuring, the task force must develop: 
  4.1      (1) a reliable quantification of the potential net benefits 
  4.2   of the implementation of retail competition in the state, as 
  4.3   well as an evaluation and analysis as to how costs and benefits 
  4.4   might be distributed, and might be expected to change over time; 
  4.5      (2) a comparison and evaluation of alternative mechanisms 
  4.6   to protect consumers from unwarranted potential price increases 
  4.7   that may be attributable to electric industry deregulation 
  4.8   during a transition to a competitive energy market; and 
  4.9      (3) a comparison and evaluation of various means to ensure 
  4.10  that prices offered by competitors are nondiscriminatory and 
  4.11  that all customer classes benefit from competition. 
  4.12     Subd. 6.  [UNIVERSAL SERVICE.] In its review and analysis 
  4.13  of electric industry restructuring, the task force must analyze 
  4.14  issues relating to the provision of universal energy service in 
  4.15  the state, with special emphasis on ensuring affordable service 
  4.16  for rural and low-income energy consumers, and develop: 
  4.17     (1) a needs assessment of the number of low-income 
  4.18  individuals and households at or below 150 percent of the 
  4.19  federal poverty guidelines and the average energy burden of 
  4.20  these individuals and households, expressed as the percentage of 
  4.21  overall income dedicated to the payment of energy costs; 
  4.22     (2) an evaluation of alternative, nonbypassable, 
  4.23  competitively neutral funding mechanisms to finance programs to 
  4.24  reduce the energy burden of low-income customers; 
  4.25     (3) alternatives regarding program design, administration, 
  4.26  outreach, and participation goals for bill payment and energy 
  4.27  conservation assistance; 
  4.28     (4) an evaluation of alternatives for ensuring affordable 
  4.29  service for individuals who do not or cannot choose an alternate 
  4.30  energy supplier, including default supplier and provider of last 
  4.31  resort options; and 
  4.32     (5) an evaluation of options to ensure that rural energy 
  4.33  consumers continue to receive affordable, high-quality energy 
  4.34  service and participate in any benefits attributable to 
  4.35  increased competition. 
  4.36     Subd. 7.  [INFORMATION DISCLOSURE AND CONSUMER PROTECTION.] 
  5.1   In its review and analysis of electric industry restructuring, 
  5.2   the task force must analyze issues relating to information 
  5.3   disclosure and consumer protection and develop: 
  5.4      (1) an evaluation of alternative standards and means of 
  5.5   providing all consumers with information sufficient to support 
  5.6   an informed choice of electricity provider in a competitive 
  5.7   environment regarding:  (i) price, terms, and conditions of 
  5.8   service; and (ii) environmental information; and 
  5.9      (2) recommendations regarding consumer protection standards 
  5.10  and practices sufficient to prevent consumer fraud and abuse 
  5.11  while supporting effective competition. 
  5.12     Subd. 8.  [RENEWABLE ENERGY, EFFICIENCY, AND ENVIRONMENTAL 
  5.13  SUSTAINABILITY.] (a) In its review and analysis of electric 
  5.14  industry restructuring, the task force must analyze issues of 
  5.15  renewable energy, efficiency, and environmental sustainability, 
  5.16  and develop an assessment of alternatives the state could take, 
  5.17  whether alone or as part of a regional compact, or as part of a 
  5.18  national mandate, to encourage energy efficiency, renewable 
  5.19  energy development, and decreased pollution in the context of a 
  5.20  competitive electric industry.  In assessing alternatives for 
  5.21  renewable energy development, the task force must consider 
  5.22  questions relating to potential renewable energy portfolio 
  5.23  requirements, system benefits charges, or green marketing of 
  5.24  electricity.  The task force's analysis must also include an 
  5.25  assessment of alternative energy's effect on business and the 
  5.26  state's economy, and how renewable requirements can be 
  5.27  implemented in a competitively neutral manner. 
  5.28     (b) In conducting the analysis under this subdivision, the 
  5.29  task force may convene a working group which includes the 
  5.30  department of public service, utility representatives, the 
  5.31  public utilities commission, community action agency 
  5.32  representatives, and other energy efficiency advocates and 
  5.33  service providers to investigate the energy conservation 
  5.34  improvement program under section 216B.241, and to develop 
  5.35  recommendations regarding how energy efficiency and related 
  5.36  services could best be provided in a more competitive 
  6.1   electricity market.  The task force must give particular 
  6.2   attention to assessing the success of these projects on meeting 
  6.3   the goals of section 216B.241. 
  6.4      Subd. 9.  [UNBUNDLED RATES.] In its review and analysis of 
  6.5   electric industry restructuring, the task force must analyze 
  6.6   issues relating to the unbundling of energy rates, and may 
  6.7   convene a working group of private, public, and cooperative 
  6.8   utilities; national and regional energy marketers; consumers and 
  6.9   their advocates; and other interested parties to develop a 
  6.10  timeline and recommended procedures for separating the charges 
  6.11  for electric generation services, including electric energy and 
  6.12  capacity, from the charges for distribution services, 
  6.13  transmission services, and other services on customers' bills.  
  6.14     Subd. 10.  [COMPETITIVE PARITY.] In its review and analysis 
  6.15  of electric industry restructuring, the task force must conduct 
  6.16  an analysis of those laws and regulations that could prevent 
  6.17  Minnesota utilities from competing fairly in a competitive 
  6.18  electricity market, and must make recommendations as to how 
  6.19  those requirements could be fulfilled in a competitively neutral 
  6.20  manner. 
  6.21     Subd. 11.  [STRANDED COSTS.] In its review and analysis of 
  6.22  electric industry restructuring, the task force must analyze 
  6.23  issues relating to stranded costs and develop: 
  6.24     (1) a sensitivity analysis of the magnitude and duration of 
  6.25  net stranded costs, and include in its analysis the potential 
  6.26  for stranded benefits or negative stranded costs that may result 
  6.27  from market prices that are higher than regulated prices; 
  6.28     (2) information as to whether and how net stranded cost 
  6.29  recovery by utilities could affect competition, consumers, 
  6.30  utilities, and utility investors; 
  6.31     (3) a comparison and evaluation of potential difficulties 
  6.32  stranded costs could create for private, public, and cooperative 
  6.33  utilities, and alternative means to ensure that customers 
  6.34  receive at least as much assurance of negative stranded cost 
  6.35  recovery as utility owners would of stranded cost recovery; 
  6.36     (4) recommendations on alternatives for the mitigation and 
  7.1   elimination of stranded costs and on mechanisms for recovery of 
  7.2   net stranded costs; 
  7.3      (5) an analysis of the advantages and disadvantages of 
  7.4   prior versus periodic evaluation, determination, and assessment 
  7.5   of stranded costs; and 
  7.6      (6) an analysis of the advantages and disadvantages of 
  7.7   securitization and other means of requiring customers to pay for 
  7.8   utility stranded costs.