SF 4015

as introduced - 91st Legislature (2019 - 2020) Posted on 03/06/2020 08:29am

A bill for an act
relating to public administration; modifying provisions governing energy forward
pricing mechanisms for government agencies; amending Minnesota Statutes 2018,
section 16C.143; repealing Minnesota Statutes 2018, section 383B.1588.

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

Section 1.

Minnesota Statutes 2018, 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, new text begin unleaded fuel, new text end and any
other energy source except electricity deleted text begin used in state operations deleted text end ; deleted text begin and
deleted text end

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

new text begin (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.
new text end

Subd. 2.

Authority.

Notwithstanding any other law to the contrary, deleted text begin the commissioner deleted text end new text begin
a government agency new text end 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
deleted text begin 90 percent of deleted text end the estimated energy use for the deleted text begin state deleted text end new text begin government new text end agency for the same period,
which shall not exceed deleted text begin 24 deleted text end new text begin 48 new text end months new text begin from the trade date of the transaction new text end ; and

(2) a separate account must be established for deleted text begin each deleted text end new text begin operational energy for each
government agency and for each individual new text end state agency using a forward pricing mechanism.

Subd. 4.

Written policies and procedures.

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

new text begin Subd. 5. new text end

new text begin Oversight process. new text end

new text begin 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.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2020, and applies to forward
pricing transactions entered into on or after that date.
new text end

Sec. 2. new text begin REPEALER.
new text end

new text begin Minnesota Statutes 2018, section 383B.1588, new text end new text begin is repealed.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2020. The authority previously
granted by Minnesota Statutes, section 383B.1588, is granted under Minnesota Statutes,
section 16C.143, and the repeal of Minnesota Statutes, section 383B.1588, does not affect
any forward pricing transaction entered into before the effective date of this section.
new text end

APPENDIX

Repealed Minnesota Statutes: 20-5912

383B.1588 ENERGY FORWARD PRICING MECHANISMS.

Subdivision 1.

Definitions.

The following definitions apply in this section.

(a) "Energy" means natural gas, heating oil, diesel fuel, unleaded fuel, or any other energy source, except electric, used in Hennepin County operations.

(b) "Forward pricing mechanism" means either:

(1) a contract or financial instrument that obligates Hennepin County to buy or sell a specified amount of an energy commodity at a future date and at a set price; or

(2) an option to buy or sell the contract or financial instrument.

Subd. 2.

Authority provided.

Notwithstanding any other law to the contrary, the Hennepin County Board of Commissioners may use forward pricing mechanisms for budget risk reduction.

Subd. 3.

Conditions.

(a) Forward pricing transactions made under this section must be made only under the conditions in this subdivision.

(b) The amount of energy forward priced must not exceed the estimated energy usage for Hennepin County operations for the period of time covered by the forward pricing mechanism.

(c) The holding period and expiration date for any forward pricing mechanism must not exceed 60 months from the trade date of the transaction.

(d) Separate accounts must be established for each operational energy for which forward pricing mechanisms are used under this section.

Subd. 4.

Written policies and procedures.

Before exercising authority under subdivision 2, the Hennepin County Board of Commissioners must have written policies and procedures governing the use of forward pricing mechanisms.

Subd. 5.

Oversight process.

(a) Before exercising authority under subdivision 2, the Hennepin County Board of Commissioners must establish an oversight process that provides for review of the county's use of forward pricing mechanisms.

(b) The process must include:

(1) internal or external audit reviews;

(2) annual reports to, and review by, an internal investment committee; and

(3) internal management control.