HF 560

3rd Engrossment - 87th Legislature (2011 - 2012) Posted on 02/13/2012 03:12pm

A bill for an act
relating to public administration; modifying provisions governing energy
forward pricing mechanisms for government agencies; amending Minnesota
Statutes 2010, section 16C.143; repealing Minnesota Statutes 2010, sections
383B.1588; 473.1293.

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

Section 1.

Minnesota Statutes 2010, section 16C.143, is amended to read:

16C.143 ENERGY FORWARD PRICING MECHANISMS.

Subdivision 1.

Definitions.

The following definitions apply in this section:

(1) "energy" means natural gas, heating oil, propane, diesel fuel, unleaded fuel, and
any other energy source except electricity used in state operations; and

(2) "forward pricing mechanism" means either: (i) a contract or financial instrument
that obligates a state government agency to buy or sell a specified quantity of energy
at a future date at a set price.; or (ii) an option to buy or sell the contract or financial
instrument; and

(3) "government agency" means the state, the Minnesota state colleges and
universities, the University of Minnesota, a statutory or home rule charter city, a county, a
town, a school district, a regional agency, or another political subdivision.

Subd. 2.

Authority.

Notwithstanding any other law to the contrary, the
commissioner a government agency may use forward pricing mechanisms for budget
risk reduction.

Subd. 3.

Conditions.

Forward pricing mechanism transactions must be made only
under the following conditions:

(1) The quantity of energy affected by the forward pricing mechanism must not
exceed 90 percent of the estimated energy use for the state government agency for the same
period, which shall not exceed 24 48 months from the trade date of the transaction; and.

(2) a separate account must be established for each state agency using a forward
pricing mechanism.

Subd. 4.

Written policies and procedures.

Before exercising the authority under
this section, the commissioner government agency must develop written policies and
procedures governing the use of forward pricing mechanisms.

Subd. 5.

Oversight process.

Before exercising authority under subdivision 2,
the government agency must establish an oversight process that provides for review of
the government agency's use of forward pricing mechanisms. The oversight process
must include: internal or external audit reviews in a manner prescribed by the state
auditor; annual reports to, and review by, an internal investment committee; and internal
management control.

EFFECTIVE DATE.

This section is effective July 1, 2012, and applies to forward
pricing transactions entered into on or after that date.

Sec. 2. REPEALER.

Minnesota Statutes 2010, sections 383B.1588; and 473.1293, are repealed.

EFFECTIVE DATE.

This section is effective July 1, 2012. The authority
previously granted by Minnesota Statutes, sections 383B.1588 and 473.1293, is granted
under Minnesota Statutes, section 16C.143, and the repeal of Minnesota Statutes, sections
383B.1588 and 473.1293, does not affect any forward pricing transaction entered into
before the effective date of this section.