SF 3182

as introduced - 86th Legislature (2009 - 2010) Posted on 03/09/2010 03:29pm

A bill for an act
relating to energy; requiring Public Utility Commission's decisions to further
goals of state energy efficiency and renewable energy; modifying showings
required in certificate of need process; requiring a study; amending Minnesota
Statutes 2008, sections 216B.03; 216B.16, subdivision 3; 216B.243, subdivisions
3, 3a, by adding a subdivision; proposing coding for new law in Minnesota
Statutes, chapter 216B.

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

Section 1. new text begin TITLE.
new text end

new text begin Sections 2 to 8 may be cited as the Ratepayer Protection Act.
new text end

Sec. 2.

Minnesota Statutes 2008, 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. 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, new text begin 216B.1691, new text end 216B.241, deleted text begin and deleted text end 216C.05 new text begin , and
216H.02 new text end . 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.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 3.

new text begin [216B.085] STATE ENERGY GOALS.
new text end

new text begin In carrying out its duties under this chapter, the commission shall, to the maximum
reasonable extent, encourage energy efficiency, reduce use of fossil fuels, develop
renewable energy sources, and reduce emissions of greenhouse gases and shall further the
goals of sections 216B.164, 216B.1691, 216B.241, 216C.05, and 216H.02.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 4.

Minnesota Statutes 2008, section 216B.16, subdivision 3, is amended to read:

Subd. 3.

Interim rate.

(a) Notwithstanding any order of suspension of a proposed
increase in rates, the commission shall order an interim rate schedule into effect not later
than 60 days after the initial filing date. The commission shall order the interim rate
schedule ex parte without a public hearing. Notwithstanding the provisions of sections
216.25, 216B.27, and 216B.52, no interim rate schedule ordered by the commission
pursuant to this subdivision shall be subject to an application for a rehearing or an appeal
to a court until the commission has rendered its final determination.

(b) Unless the commission finds that exigent circumstances exist, the interim rate
schedule shall be calculated using the proposed test year cost of capital, rate base, and
expenses, except that it shall include: (1) a rate of return on common equity for the utility
equal to that authorized by the commission in the utility's most recent rate proceeding; (2)
rate base or expense items the same in nature and kind as those allowed by a currently
effective order of the commission in the utility's most recent rate proceeding; and (3) no
change in the existing rate design. In the case of a utility which has not been subject to a
prior commission determination, the commission shall base the interim rate schedule on
its most recent determination concerning a similar utility.

(c) If, at the time of its final determination, the commission finds that the interim
rates are in excess of the rates in the final determination, the commission shall order the
utility to refund the excess amount collected under the interim rate schedule, including
interest on it which shall be at the rate of interest determined by the commission new text begin , provided,
however, that if the commission orders final rates that are less than 75 percent of the
interim rate level authorized by the commission, it shall order interest that is ... percent
higher than the interest rate otherwise required for refunds in Minnesota Rules, chapter
7825 new text end . The utility shall commence distribution of the refund to its customers within 120
days of the final order, not subject to rehearing or appeal. If, at the time of its final
determination, the commission finds that the interim rates are less than the rates in the final
determination, the commission shall prescribe a method by which the utility will recover
the difference in revenues between the date of the final determination and the date the new
rate schedules are put into effect. In addition, when an extension is granted for settlement
discussions under subdivision 1a, the commission shall allow the utility to also recover the
difference in revenues for a length of time equal to the length of the extension.

(d) If the public utility fails to make refunds within the period of time prescribed
by the commission, the commission shall sue therefor and may recover on behalf of all
persons entitled to a refund. In addition to the amount of the refund and interest due,
the commission shall be entitled to recover reasonable attorney's fees, court costs and
estimated cost of administering the distribution of the refund to persons entitled to it. No
suit under this subdivision shall be maintained unless instituted within two years after the
end of the period of time prescribed by the commission for repayment of refunds.

(e) The commission shall not order an interim rate schedule in a general rate case
into effect as provided by this subdivision until at least four months after it has made a
final determination concerning any previously filed change of the rate schedule or the
change has otherwise become effective under subdivision 2, unless:

(1) the commission finds that a four-month delay would unreasonably burden the
utility, its customers, or its shareholders and that an earlier imposition of interim rates
is therefore necessary; or

(2) the utility files a second general rate case at least 12 months after it has filed a
previous general rate case for which the commission has extended the suspension period
under subdivision 2.

Sec. 5.

Minnesota Statutes 2008, section 216B.243, subdivision 3, is amended to read:

Subd. 3.

Showing required for construction.

No proposed large energy facility
shall be certified for construction unless the applicant can show that demand for electricity
cannot be met more cost effectively through energy conservation and load-management
measures and unless the applicant has otherwise justified its need. In assessing need,
the commission shall evaluate:

(1) the accuracy of the long-range energy demand forecasts on which the necessity
for the facility is based;

(2) the effect of existing or possible energy conservation programs under sections
216C.05 to 216C.30 and this section or other federal or state legislation on long-term
energy demand;

(3) the relationship of the proposed facility to overall state energy needs, as
described in the most recent state energy policy and conservation report prepared under
section 216C.18, or, in the case of a high-voltage transmission line, the relationship of the
proposed line to regional energy needs, as presented in the transmission plan submitted
under section 216B.2425;

(4) promotional activities that may have given rise to the demand for this facility;

(5) benefits of this facility, including its uses to protect or enhance environmental
quality, and to increase reliability of energy supply in Minnesota and the region;

(6) possible alternatives for satisfying the energy demand or transmission needs
including but not limited to potential for increased efficiency and upgrading of existing
energy generation and transmission facilities, load-management programs, and distributed
generation;

(7) the policies, rules, and regulations of other state and federal agencies and local
governments;

(8) any feasible combination of energy conservation improvements deleted text begin , required under
section 216B.241, deleted text end that can (i) replace part or all of the energy to be provided by the
proposed facility, and (ii) compete with it economically new text begin , including energy conservation
improvements that exceed those required under section 216B.241 new text end ;

(9) with respect to a high-voltage transmission line, the benefits of enhanced regional
reliability, access, or deliverability to the extent these factors improve the robustness of
the transmission system or lower costs for electric consumers in Minnesota;

(10) whether the applicant or applicants are in compliance with applicable provisions
of sections 216B.1691 and 216B.2425, subdivision 7, and have filed or will file by a
date certain an application for certificate of need under this section or for certification as
a priority electric transmission project under section 216B.2425 for any transmission
facilities or upgrades identified under section 216B.2425, subdivision 7;

(11) whether the applicant has made the demonstrations required under subdivision
3a; and

(12) if the applicant is proposing a nonrenewable generating plant, the applicant's
assessment of the risk of environmental costs and regulation on that proposed facility
over the expected useful life of the plant, including a proposed means of allocating costs
associated with that risk.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 6.

Minnesota Statutes 2008, section 216B.243, subdivision 3a, is amended to read:

Subd. 3a.

Use of renewable resource.

new text begin (a) new text end The commission may not issue a
certificate of need under this section for a large energy facility that generates electric power
by means of a nonrenewable energy source, or that transmits electric power generated
by means of a nonrenewable energy source, unless the applicant for the certificate has
demonstrated to the commission's satisfaction that it has explored the possibility of
generating power by means of renewable energy sources and has demonstrated that
the alternative selected is less expensive (including environmental costs) than power
generated by a renewable energy source. For purposes of this subdivision, "renewable
energy source" includes hydro, wind, solar, and geothermal energy and the use of trees or
other vegetation as fuel.

new text begin (b) This subdivision applies to an applicant regardless of whether the applicant or
any utility that would purchase energy from the proposed facility is subject to, has met, or
has exceeded the objectives and requirements of section 216B.1691.
new text end

Sec. 7.

Minnesota Statutes 2008, section 216B.243, is amended by adding a
subdivision to read:

new text begin Subd. 3c. new text end

new text begin Multiple applicants; required showing. new text end

new text begin For a facility that is proposed
by more than one applicant or from which more than one utility will purchase energy, each
applicant and purchasing utility must separately show compliance with subdivisions 3 and
3a with respect to that applicant's or purchaser's proposed purchases from the facility.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 8. new text begin STUDY; ALIGNING UTILITY REGULATION WITH ENERGY
POLICY.
new text end

new text begin (a) By November 1, 2011, the Public Utilities Commission shall submit a report
to the members of the senate and house of representatives committees with primary
jurisdiction over energy policy containing recommendations for aligning energy utility
regulation with the state's energy policy that gives primary emphasis to energy efficiency
and the development of renewable energy sources in meeting future energy needs, while
maintaining a sustainable business model for utilities that aggressively pursue those goals.
new text end

new text begin (b) The report, which may be done in whole or in part by contractors, must analyze
and evaluate, at a minimum, the following regulatory mechanisms:
new text end

new text begin (1) financial mechanisms that align a utility's financial interests with energy
efficiency measures and renewable energy sources as resource options, including, but
not limited to:
new text end

new text begin (i) revenue-per-customer decoupling that fully decouples a utility's sales from its
nonfuel revenues and mitigates the potential for lost profits from the underrecovery of
fixed costs due to reduced retail sales;
new text end

new text begin (ii) shared savings incentives that allow a utility to retain a predetermined share of
the net benefits realized from energy efficiency and renewable energy investments; and
new text end

new text begin (iii) rate-of-return incentives that allow higher returns on equity for investments in
energy efficiency and renewable energy; and
new text end

new text begin (2) rate design structures that provide incentives to consumers to (i) make
cost-effective energy efficiency and renewable energy investments and (ii) shift
consumption to times of the day when the costs of energy generation are lower.
new text end

new text begin Analysis of the mechanisms under clause (1) must measure the net benefits to ratepayers,
utilities, utility shareholders, and society in a way that allows them to be readily compared
to one another. The study must evaluate the efficacy of any of the mechanisms in clauses
(1) and (2) that have been adopted in other jurisdictions. The commission shall assess
public utilities $500,000 under section 216B.62 for the cost of the study. This assessment
may not be recovered from ratepayers.
new text end

new text begin (c) For the purposes of this section, "renewable energy" means energy produced by
means of wind, solar thermal, or solar photovoltaic resources.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end