SF 3504

2nd Engrossment - 90th Legislature (2017 - 2018) Posted on 05/15/2018 09:07am

A bill for an act
relating to energy; establishing a carbon reduction facility designation for certain
large electric generating facilities; proposing coding for new law in Minnesota
Statutes, chapter 216B.

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

Section 1.

[216B.1697] CARBON REDUCTION FACILITIES; NUCLEAR ENERGY.

Subdivision 1.

Qualifying facilities.

An existing large electric generating power plant,
as defined in section 216B.2421, subdivision 2, clause (1), that employs nuclear technology
to generate electricity qualifies for designation as a carbon reduction facility as provided in
this section.

Subd. 2.

Proposal submission.

(a) A public utility may submit a proposal to the
commission for designation as a qualifying facility as a carbon reduction facility under this
section. The proposal must be filed within a public utility's new resource plan filing no
earlier than February 1, 2019. The commission has sole discretion to determine whether to
consider this proposal. The proposal shall include:

(1) a showing that the facility meets the requirements of subdivision 1;

(2) a proposed statement of the total expected costs, including, but not limited to, capital
investments and operation and maintenance costs associated with the operation of the facility.
The total expected costs shall cover a period not to exceed the 15-year planning period of
the public utility's new resource plan;

(3) details about all costs of the public utility approved in commission proceedings, in
current dollars, including current and expected operating costs;

(4) an evaluation of the public utility's total expected costs prepared by an independent
evaluator, whose selection shall be approved by the commission; and

(5) an analysis of how the total expected costs would impact rates.

(b) The proposal may ask the commission to establish a sliding scale rate-of-return
mechanism for the capital investments to provide an additional incentive for the public
utility to complete the projects at or under the total expected costs.

(c) The public utility submitting the proposal bears the burden of proof to demonstrate
that total expected costs are reasonable, prudent, and in the public interest.

Subd. 3.

Proposal approval.

(a) The commission may consider proposals submitted
under subdivision 2 at its sole discretion and may approve, reject, or modify a proposal to
the extent the commission determines that the proposal is consistent with the public interest.

(b) If the commission considers a proposal submitted under subdivision 2, the commission
shall allow intervention by the Department of Commerce, the Office of the Attorney General,
ratepayer advocates, the Prairie Island and Monticello communities, and other interested
parties. The public utility shall pay the costs of any nuclear expert retained by the Department
of Commerce.

(c) If the commission modifies a proposal submitted under subdivision 2, the public
utility may choose whether to accept the modifications. If the public utility does not accept
the modifications, the commission shall deem the proposal withdrawn. All costs, including,
but not limited to, capital investments and operation and maintenance costs associated with
the operation of the facility shall be reviewed in a subsequent rate case.

(d) The commission's approval of a proposal submitted under subdivision 2 shall include
approval of total expected costs for a carbon reduction facility under this section. Commission
approval of total expected costs constitutes a presumption of prudence for the total expected
costs.

(e) In future cost recovery proceedings, the commission shall presume that the public
utility's actual expenditures, not in excess of the total expected costs approved by the
commission, were prudent, provided that there is no presumption of prudence for any
expenditure made:

(1) to extend the operation of the carbon reduction facility beyond the expiration of its
operating license;

(2) to uprate the capacity of the carbon reduction facility; or

(3) to terminate operation of the carbon reduction facility before the expiration of its
operating license.

(f) The commission shall presume that an expenditure for a carbon reduction facility is
prudent under this section only if the public utility continues to operate the carbon reduction
facility on which it made the expenditure. If the public utility is issued an order to discontinue
operations of the carbon reduction facility, there is no presumption of prudence for any
expenditures made on that carbon reduction facility after the date of the order.

(g) The presumption of prudence is rebuttable upon a showing by a preponderance of
the evidence that the previously approved costs are not reasonable, prudent, and in the public
interest.

(h) Notwithstanding the provisions of paragraph (e), the commission has sole discretion
to approve any cost recovery in excess of total expected costs. The public utility bears the
burden of proof to demonstrate that an expenditure exceeding total expected costs approved
by the commission under paragraph (e) is reasonable, prudent, and in the public interest.

(i) Upon approval of a proposed designation of a facility and the total expected costs
submitted by the public utility, the public utility shall provide biennial updates to the
commission regarding its progress with respect to adhering to the approved costs. The
commission may issue orders it deems necessary to ensure that the carbon reduction facility
remains cost-effective for customers and financially viable for the public utility.