HF 1025

as introduced - 87th Legislature (2011 - 2012) Posted on 03/10/2011 09:46am

A bill for an act
relating to utilities; requiring utility rates be based primarily on cost of service
between and among consumer classes; making clarifying and technical changes;
amending Minnesota Statutes 2010, sections 216B.03; 216B.07; 216B.16,
subdivisions 6, 15; 216B.2401; repealing Minnesota Statutes 2010, section
216B.242.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2010, section 216B.03, is amended to read:

216B.03 REASONABLE RATE.

Every rate made, demanded, or received by any public utility, or by any two or
more public utilities jointly, shall be just and reasonable. Rates shall not be unreasonably
preferential, unreasonably prejudicial, or discriminatory, but shall be sufficient, equitable,
and consistent in application to a class of consumers new text begin and among classes of consumers new text end .
To the maximum reasonable extent, the commission shall set rates to encourage energy
conservation and renewable energy use and to further the goals of sections 216B.164,
216B.241, and 216C.05. Any doubt as to reasonableness should be resolved in favor of the
consumer. For rate-making purposes a public utility may treat two or more municipalities
served by it as a single class wherever the populations are comparable in size or the
conditions of service are similar.

Sec. 2.

Minnesota Statutes 2010, section 216B.07, is amended to read:

216B.07 RATE PREFERENCE PROHIBITED.

No public utility shall, as to rates or service, make or grant any unreasonable
preference or advantage to any person new text begin or class of consumers new text end or subject any person new text begin or class
of consumers new text end to any unreasonable prejudice or disadvantage.

Sec. 3.

Minnesota Statutes 2010, section 216B.16, subdivision 6, is amended to read:

Subd. 6.

Factors considered, generally.

new text begin (a) new text end The commission, in the exercise of
its powers under this chapter to determine just and reasonable rates for new text begin a new text end public deleted text begin utilities deleted text end new text begin
utility new text end , shall give due consideration to new text begin :
new text end

new text begin (1) new text end the public need for adequate, efficient, and reasonable service deleted text begin and to deleted text end new text begin ;
new text end

new text begin (2) new text end the need of the public utility new text begin :
new text end

new text begin (i) new text end for revenue sufficient to enable it to meet the cost of furnishing the service,
including adequate provision for depreciation of its utility property used and useful in
rendering service to the public deleted text begin , deleted text end new text begin ; new text end and
new text begin new text end

new text begin (ii) new text end to earn a fair and reasonable return upon the investment in such property deleted text begin . deleted text end new text begin ;
new text end

new text begin (3) new text end in determining the rate base upon which the utility is to be allowed to earn a fair
rate of return, deleted text begin the commission shall give due consideration to deleted text end evidence new text begin :
new text end

new text begin (i) new text end of the cost of the property when first devoted to public use deleted text begin , to deleted text end new text begin ;
new text end

new text begin (ii) new text end prudent acquisition cost to the public utility less appropriate depreciation on
each deleted text begin , to deleted text end new text begin ;
new text end

new text begin (iii) new text end construction work in progress deleted text begin , to deleted text end new text begin ;
new text end

new text begin (iv) new text end offsets in the nature of capital provided by sources other than the investors deleted text begin ,
and to deleted text end new text begin ;
new text end

new text begin (v) new text end other expenses of a capital nature deleted text begin . For purposes of determining rate base, the
commission shall consider deleted text end new text begin ; and
new text end

new text begin (vi) new text end the original cost of utility property included in the base deleted text begin and shall make no deleted text end new text begin ,
without any new text end allowance for its estimated current replacement value deleted text begin . deleted text end new text begin ; and
new text end

new text begin (4) the requirement for just and reasonable rates for all classes of consumers based
on:
new text end

new text begin (i) the utility's cost of furnishing the service to each consumer class;
new text end

new text begin (ii) job and business growth and retention and development of a competitive
business environment; and
new text end

new text begin (iii) the need for substantial record evidence to support revenue allocation deviations
from cost of service.
new text end

new text begin (b) The cost of service must be the principal and primary consideration when the
commission determines revenue allocation among the various consumer classes.
new text end

Sec. 4.

Minnesota Statutes 2010, section 216B.16, subdivision 15, is amended to read:

Subd. 15.

Low-income affordability programs.

(a) The commission must consider
ability to pay as a factor in setting utility rates and may establish affordability programs for
low-income residential ratepayers in order to ensure affordable, reliable, and continuous
service to low-income utility customers. deleted text begin Affordability programs may include inverted
block rates in which lower energy prices are made available to lower usage customers. deleted text end
deleted text begin By September 1, 2007, deleted text end new text begin Income verification is required for any low-income affordability
program or subsidy. new text end A public utility serving low-income residential ratepayers who use
natural gas for heating must file an affordability program with the commission. For
purposes of this subdivision, "low-income residential ratepayers" means ratepayers
who receive energy assistance from the low-income home energy assistance program
(LIHEAP).

(b) Any affordability program the commission orders a utility to implement must:

(1) lower the percentage of income that participating low-income households devote
to energy bills;

(2) increase participating customer payments over time by increasing the frequency
of payments;

(3) decrease or eliminate participating customer arrears;

(4) lower the utility costs associated with customer account collection activities; and

(5) coordinate the program with other available low-income bill payment assistance
and conservation resources.

(c) In ordering affordability programs, the commission may require public utilities to
file program evaluations that measure the effect of the affordability program on:

(1) the percentage of income that participating households devote to energy bills;

(2) service disconnections; and

(3) frequency of customer payments, utility collection costs, arrearages, and bad
debt.

(d) The commission must issue orders necessary to implement, administer, and
evaluate affordability programs, and to allow a utility to recover program costs, including
administrative costs, on a timely basis. The commission may not allow a utility to recover
administrative costs, excluding start-up costs, in excess of five percent of total program
costs, or program evaluation costs in excess of two percent of total program costs. The
commission must permit deferred accounting, with carrying costs, for recovery of program
costs incurred during the period between general rate cases.

(e) Public utilities may use information collected or created for the purpose of
administering energy assistance to administer affordability programs.

Sec. 5.

Minnesota Statutes 2010, section 216B.2401, is amended to read:

216B.2401 ENERGY CONSERVATION POLICY GOAL.

It is the energy policy of the state of Minnesota to achieve annual energy savings
equal to 1.5 percent of annual retail energy sales of electricity and natural gas directly
through energy conservation improvement programs deleted text begin and rate design, such as inverted
block rates in which lower energy prices are made available to lower-usage residential
customers, deleted text end and indirectly through energy codes and appliance standards, programs
designed to transform the market or change consumer behavior, energy savings resulting
from efficiency improvements to the utility infrastructure and system, and other efforts to
promote energy efficiency and energy conservation.

Sec. 6. new text begin REPEALER.
new text end

new text begin Minnesota Statutes 2010, section 216B.242, new text end new text begin is repealed.
new text end