1.1                          A bill for an act 
  1.2             relating to utilities; modifying the purpose of 
  1.3             performance-based regulation plans; deleting certain 
  1.4             criteria used to review and approve these plans; 
  1.5             changing the date of a required report on the 
  1.6             effectiveness of these plans; removing the expiration 
  1.7             date for provisions relating to these plans; amending 
  1.8             Minnesota Statutes 2002, section 216B.1675, 
  1.9             subdivisions 1, 3, 13; Laws 1997, chapter 25, section 
  1.10            3. 
  1.11  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.12     Section 1.  Minnesota Statutes 2002, section 216B.1675, 
  1.13  subdivision 1, is amended to read: 
  1.14     Subdivision 1.  [PURPOSE.] Performance-based regulation 
  1.15  plans for public utilities offering natural gas services are 
  1.16  authorized in order to provide quality service at rates that can 
  1.17  reasonably and reliably be expected to be materially lower than 
  1.18  rates would be under current regulation and to reduce the cost 
  1.19  of regulation.  Performance-based regulation plans are intended 
  1.20  to provide the utility with increased earnings for efficient 
  1.21  performance and decreased earnings for inefficient performance. 
  1.22     Sec. 2.  Minnesota Statutes 2002, section 216B.1675, 
  1.23  subdivision 3, is amended to read: 
  1.24     Subd. 3.  [PLAN CONTENTS.] The commission may approve a 
  1.25  performance regulation plan for natural gas distribution 
  1.26  services upon finding that the plan: 
  1.27     (1) contains a benchmark or measure of gas distribution 
  1.28  costs that is a reasonable and reliable predictor of the 
  2.1   utility's rates for gas distribution service under 
  2.2   cost-of-service regulation; 
  2.3      (2) ensures that rates for gas distribution services to 
  2.4   customers under the plan will be materially lower than the rates 
  2.5   would be under cost-of-service regulation as predicted by the 
  2.6   benchmark in clause (1); 
  2.7      (3) links the utility's earnings to its performance by 
  2.8   permitting higher utility earnings than under cost-of-service 
  2.9   regulation only when the utility's performance is more efficient 
  2.10  than the benchmark; 
  2.11     (4) can be reasonably and reliably expected to offer lower 
  2.12  administrative costs than would otherwise be experienced under 
  2.13  cost-of-service regulation; 
  2.14     (5) contains a reasonable limit on utility earnings; 
  2.15     (6) is compatible with the development of increased 
  2.16  competition in the natural gas industry; 
  2.17     (7) has adequate provisions to prevent the degradation of 
  2.18  service quality; and 
  2.19     (8) (7) provides for gathering of relevant data and 
  2.20  evaluation of the plan's effect on rates, service quality, 
  2.21  utility earnings, competition in providing natural gas, and 
  2.22  regulatory costs. 
  2.23     Sec. 3.  Minnesota Statutes 2002, section 216B.1675, 
  2.24  subdivision 13, is amended to read: 
  2.25     Subd. 13.  [GENERAL EVALUATION.] The commission shall 
  2.26  evaluate the effectiveness of all plans approved under this 
  2.27  section and submit its findings to the legislature by January 1, 
  2.28  2005 2012. 
  2.29     Sec. 4.  Laws 1997, chapter 25, section 3, is amended to 
  2.30  read: 
  2.31     Sec. 3.  [EFFECTIVE DATE; EXPIRATION.] 
  2.32     Sections 1 and 2 are effective on August 1, 1997, and 
  2.33  expire January 1, 2006.