SF 817

1st Engrossment - 87th Legislature (2011 - 2012) Posted on 03/21/2012 11:58am

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,
subdivision 15, by adding a subdivision; 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, is amended by adding a subdivision
to read:

new text begin Subd. 6e. new text end

new text begin Revenue allocation among consumer classes. new text end

new text begin Cost of service shall
be the primary consideration in the commission's determination of revenue allocation
among consumer classes. Factors other than cost of service, including impact on business
development and job growth, may also be considered and evaluated by the commission in
determining revenue allocations. Factors used in determining revenue allocation must
be supported by record evidence.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment
and applies to filings for rate changes filed on and after that date.
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 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 and rate design, deleted text begin 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