2nd Engrossment - 87th Legislature (2011 - 2012) Posted on 02/01/2012 12:30pm
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:
Minnesota Statutes 2010, section 16C.143, is amended to read:
The following definitions apply in this section:
(1) "energy" means natural gas, heating oil, propane, diesel fuel,new text begin unleaded fuel,new text end and
any other energy source deleted text begin except electricity used in state operationsdeleted text end ; deleted text begin and
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(2) "forward pricing mechanism" meansnew text begin either: (i)new text end a contract or financial instrument
that obligates a deleted text begin statedeleted text end new text begin governmentnew text end agency to buy or sell a specified quantity of energy
at a future date at a set pricedeleted text begin .deleted text end new text begin ; or (ii) an option to buy or sell the contract or financial
instrument; and
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(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.
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Notwithstanding any other law to the contrary, deleted text begin the
commissionerdeleted text end new text begin a government agencynew text end may use forward pricing mechanisms for budget
risk reduction.
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Forward pricing mechanism transactions must be made only
under the following conditions:
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deleted text begin (1)deleted text end The quantity of energy affected by the forward pricing mechanism must not
exceed deleted text begin 90 percent ofdeleted text end the estimated energy use for the deleted text begin statedeleted text end new text begin governmentnew text end agency for the same
period, which shall not exceed deleted text begin 24deleted text end new text begin 48new text end monthsnew text begin from the trade date of the transactionnew text end deleted text begin ; anddeleted text end new text begin .
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(2) a separate account must be established for each state agency using a forward
pricing mechanism.
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Before exercising the authority under
this section, the deleted text begin commissionerdeleted text end new text begin government agency new text end must develop written policies and
procedures governing the use of forward pricing mechanisms.
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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; annual reports to, and review by, an internal
investment committee; and internal management control.
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This section is effective July 1, 2012, and applies to forward
pricing transactions entered into on or after that date.
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Minnesota Statutes 2010, sections 383B.1588; and 473.1293,
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are repealed.
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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.
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