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Key: (1) language to be deleted (2) new language


                         Laws of Minnesota 1990 

                        CHAPTER 370-H.F.No. 951 
           An act relating to utilities; providing for the 
          establishment of pilot area development rates for 
          certain electric utility customers; providing for the 
          establishment of competitive electric utility rates 
          for certain customers subject to effective 
          competition; authorizing public utilities commission 
          to require utility to initiate rate proceeding under 
          limited circumstances; amending Minnesota Statutes 
          1988, sections 216B.045, subdivision 5; and 216B.17, 
          subdivisions 3, 6, and by adding a subdivision; 
          proposing coding for new law in Minnesota Statutes, 
          chapter 216B. 
    Section 1.  Minnesota Statutes 1988, section 216B.045, 
subdivision 5, is amended to read: 
    Subd. 5.  [COMPLAINTS.] Any customer of an intrastate 
pipeline, any person seeking to become a customer of an 
intrastate pipeline, the department, or the commission on its 
own motion, may bring a complaint regarding the rates, 
contracts, terms, conditions, and types of service provided or 
proposed to be provided through an intrastate pipeline, 
including a complaint that a service which can reasonably be 
demanded is not offered by the owner or operator of the 
intrastate pipeline.  If a complaint involves the question of 
whether or not an intrastate pipeline has capacity available, 
the commission shall after hearing make a determination of the 
available capacity but shall not impair the owner or operator of 
the intrastate pipeline contractual obligation to provide firm 
transportation service.  If a complaint concerns the use of 
available capacity by one or more customers of an intrastate 
pipeline, the commission shall after hearing determine the 
reasonable use of the available capacity by the customers.  The 
commission shall not require an owner or operator of an 
intrastate pipeline to expand its available capacity but may 
require the owner or operator to maintain a reasonable quality 
of service.  The commission may dismiss any complaint without a 
hearing if in its opinion a hearing is not in the public 
interest.  Complaints brought under this subdivision shall be 
governed by section 216B.17, subdivisions 2 to 7.  
     Sec. 2.  [216B.161] [AREA DEVELOPMENT RATE PLAN.] 
    Subdivision 1.  [DEFINITIONS.] (a) For purposes of this 
section, the following terms have the meanings given them in 
this subdivision. 
    (b) "Area development rate" means a rate schedule 
established by a utility that provides customers within an area 
development zone service under a base utility rate schedule, 
except that monthly demand charges may be reduced from the base 
rate as agreed upon by the utility and the customer consistent 
with this section. 
    (c) "Area development zone" means a contiguous or 
noncontiguous area designated by an authority or municipality 
for development or redevelopment and within which one of the 
following conditions exists: 
    (1) obsolete buildings not suitable for improvement or 
conversion or other identified hazards to the health, safety, 
and general well-being of the community; 
    (2) buildings in need of substantial rehabilitation or in 
substandard condition; or 
    (3) low values and damaged investments. 
    (d) "Authority" means a rural development financing 
authority established under sections 469.142 to 469.150; a 
housing and redevelopment authority established under sections 
469.001 to 469.047; a port authority established under sections 
469.048 to 469.068; an economic development authority 
established under sections 469.090 to 469.108; a redevelopment 
agency as defined in sections 469.152 to 469.165; a municipality 
that is administering a development district created under 
sections 469.124 to 469.134 or any special law; a municipality 
that undertakes a project under sections 469.152 to 469.165, 
except a town located outside the metropolitan area as defined 
in section 473.121, subdivision 2, or with a population of 5,000 
persons or less; or a municipality that exercises the powers of 
a port authority under any general or special law.  
    (e) "Municipality" means a city, however organized, and, 
with respect to a project undertaken under sections 469.152 to 
469.165, "municipality" has the meaning given in sections 
469.152 to 469.165, and, with respect to a project undertaken 
under sections 469.142 to 469.151 or a county or multicounty 
project undertaken under sections 469.004 to 469.008, also 
includes any county. 
    Subd. 2.  [PILOT RATE PLAN PROGRAM.] The commission shall 
order at least one public utility to establish a pilot program 
that offers an area development rate.  The program must be 
designed to assist industrial revitalization projects located 
within the service area of the participating utility. 
    Subd. 3.  [TERMS AND CONDITIONS OF THE RATE.] An area 
development rate offered under this section must: 
    (1) be offered for a period of more than two years but no 
more than five years; 
    (2) be offered as a supplement to other development 
incentives offered by the municipality in which the rate is 
    (3) be available only to new or expanding manufacturing or 
wholesale trade customers; 
    (4) be designed to recover at least the incremental cost of 
providing service to the participating customers; 
    (5) be offered in a fixed number of area development zones; 
    (6) include a provision that the utility provide 
participating customers with an energy audit and inform those 
customers of all existing energy conservation programs available 
from the utility. 
Recovery of costs under clause (4) may be made only from the 
class of customers to which the rate is offered and not from 
residential customers. 
    Subd. 4.  [EVALUATION.] The commission shall evaluate the 
impact and effectiveness of the area development plan or plans 
established under this section.  The evaluation must include 
analysis of information submitted by the utility regarding the 
plan.  Within 60 days after the expiration of a plan, the 
commission shall determine whether the area development rates 
should be continued, modified, or eliminated.  The commission 
shall submit its findings to the legislature by January 1, 1995. 
    Subdivision 1.  [DEFINITIONS.] (a) The terms used in this 
section have the meanings given them in this subdivision. 
    (b) "Effective competition" means a market situation in 
which an electric utility serves a customer that: 
    (1) is located within the electric utility's assigned 
service area determined under section 216B.39; and 
    (2) has the ability to obtain its energy requirements from 
an energy supplier that is not regulated by the commission under 
section 216B.16. 
    (c) "Competitive rate schedule" means a rate schedule under 
which an electric utility may set or change the price for its 
service to an individual customer or group of customers subject 
to effective competition. 
    (d) "Competitive rate" means the actual rate offered by the 
utility, and approved by the commission, to a customer subject 
to effective competition. 
PERMITTED.] Notwithstanding section 216B.03, 216B.05, 216B.06, 
216B.07, or 216B.16, the commission shall approve a competitive 
rate schedule when: 
    (1) the provision of service to a customer or a class of 
customers is subject to effective competition; and 
    (2) the schedule applies only to customers requiring 
electric service with a connected load of at least 2,000 
    The commission may approve a competitive rate schedule that 
applies to customers subject to effective competition and 
requiring electric service with a connected load less than 2,000 
    The commission shall make a final determination in a 
proceeding begun under this section within 90 days of a 
miscellaneous rate filing by the electric utility. 
SCHEDULE.] The commission shall establish or change a 
competitive rate schedule through a miscellaneous or general 
rate filing by the utility. 
When the commission authorizes a competitive rate schedule for a 
customer class, it shall set the terms and conditions of service 
for that schedule, which must include: 
    (1) that the minimum rate for the schedule recover at least 
the incremental cost of providing the service, including the 
cost of additional capacity that is to be added while the rate 
is in effect and any applicable on-peak or off-peak 
    (2) that the maximum possible rate reduction under a 
competitive rate schedule does not exceed the difference between 
the electric utility's applicable standard tariff and the cost 
to the customer of the lowest cost competitive energy supply; 
    (3) that the term of a contract for a customer who elects 
to take service under a competitive rate must be no less than 
one year and no longer than five years; 
    (4) that the electric utility, within a general rate case, 
be allowed to seek recovery of the difference between the 
standard tariff and the competitive rate times the usage level 
during the test year period; 
    (5) a determination that a rate within a competitive rate 
schedule meets the conditions of section 216B.03, for other 
customers in the same customer class; 
    (6) that the rate does not compete with district heating or 
cooling provided by a district heating utility as defined by 
section 216B.166, subdivision 2, paragraph (c); and 
    (7) that the rate may not be offered to a customer in which 
the utility has a financial interest greater than 50 percent. 
    Subd. 5.  [COMPETITIVE RATE OFFERED.] Within its own 
assigned service territory, the utility, at its discretion and 
using its best judgment at the time, may offer a competitive 
rate to a customer subject to effective competition. 
    Subd. 6.  [INTERIM COMPETITIVE RATE.] Notwithstanding 
section 216B.16, subdivision 3, a proposed competitive rate 
takes effect on an interim basis after filing the proposed rate 
with the commission and on the date established by the electric 
utility.  While an interim competitive rate is in effect, the 
difference between rates under the competitive rate and rates 
under the standard tariff for that class are not subject to 
recovery or refund.  If the commission does not approve the 
competitive rate, the electric utility may seek to recover the 
difference in revenues between the interim competitive rate and 
the standard tariff from the customer that was offered the 
competitive rate. 
    Subd. 7.  [COMMISSION APPROVAL.] Except as provided under 
subdivision 6, competitive rates offered by electric utilities 
under this section must be filed with the commission and must be 
approved, modified, or rejected by the commission within 90 
days.  The utility's filing must include statements of fact 
demonstrating that the proposed rates meet the standards of this 
subdivision.  The filing must be served on the department of 
public service and the office of the attorney general at the 
same time as it is served on the commission.  In reviewing a 
specific rate proposal, the commission shall determine: 
    (1) that the rate meets the terms and conditions in 
subdivision 4, unless the commission determines that waiver of 
one or more terms and conditions would be in the public 
    (2) that the consumer can obtain its energy requirements 
from an energy supplier not rate-regulated by the commission 
under section 216B.16; 
    (3) that the customer is not likely to take service from 
the electric utility seeking to offer the competitive rate if 
the customer was charged the electric utility's standard 
tariffed rate; and 
    (4) that it is in the best interest of all other customers 
to offer the competitive rate to the customer subject to 
effective competition. 
    If the commission approves the competitive rate, it becomes 
effective as agreed to by the electric utility and the 
customer.  If the competitive rate is modified by the 
commission, the commission shall issue an order modifying the 
competitive rate subject to the approval of the electric utility 
and the customer.  Each party has ten days in which to reject 
the proposed modification.  If no party rejects the proposed 
modification, the commissioner's order becomes final.  If either 
party rejects the commission's proposed modification, the 
electric utility, on its behalf or on the behalf of the 
customer, may submit to the commission a modified version of the 
commission's proposal.  The commission shall accept or reject 
the modified version within 30 days.  If the commission rejects 
the competitive rate, it shall issue an order indicating the 
reasons for the rejection. 
    Subd. 8.  [ENERGY EFFICIENCY MEASURES.] If the commission 
approves a competitive rate or the parties agree to a modified 
rate, the commission may require the electric utility to provide 
the customer with an energy audit and assist in implementing 
cost-effective energy efficiency improvements to assure that the 
customer's use of electricity is efficient.  An investment in 
cost-effective energy conservation improvements required under 
this section must be treated as an energy conservation 
improvement program and included in the department's 
determination of significant investments under section 
216B.241.  The utility shall recover energy conservation 
improvement expenses in a rate proceeding under section 216B.16 
or 216B.17 in the same manner as the commission authorizes for 
the recovery of conservation expenditures made under section 
    Subd. 9.  [STUDY AND REPORTING.] The department of public 
service shall review the operation and effects of any rates 
implemented under this section.  The review must include, but is 
not limited to, an analysis of the electric utilities changing 
capacity requirements due to approved competitive rates and a 
comprehensive evaluation of the impact of competitive electric 
rates on cogeneration and small power production in the state. 
The department shall submit its findings to the legislature by 
January 1, 1995. 
     Sec. 4.  Minnesota Statutes 1988, section 216B.17, 
subdivision 3, is amended to read: 
    Subd. 3.  The commission shall give the public utility and 
the complainant, ten days notice of the time and place when and 
where the hearing will be held and such the matters to be 
considered and determined.  Both the public utility and 
complainant shall be are entitled to be heard and to be 
represented by counsel.  A hearing under this section is not a 
contested case under chapter 14. 
    Sec. 5.  Minnesota Statutes 1988, section 216B.17, is 
amended by adding a subdivision to read: 
    Subd. 8.  If after making an investigation under 
subdivision 1 and holding a hearing under this section, the 
commission finds that all significant factual issues raised have 
not been resolved to its satisfaction: 
    (1) for investigations concerning the reasonableness of 
rates of a public utility, if the commission is unable to 
resolve the complaint with the utility, the commission may order 
the utility to initiate a rate proceeding under section 216B.16, 
provided, however, that the utility must be allowed at least 120 
days after the date of the commission's order to initiate the 
proceeding; and 
    (2) for investigations of other matters, the commission 
shall order that a contested case proceeding be conducted under 
chapter 14. 
    Sec. 6.  Minnesota Statutes 1988, section 216B.17, 
subdivision 6, is amended to read: 
    Subd. 6.  The commission shall have the power to hear, 
determine and adjust complaints made against any municipally 
owned gas or electric utility with respect to rates and services 
upon petition of ten percent of the nonresident consumers of the 
municipally owned utility or 25 such nonresident consumers 
whichever is less.  The hearing of the complaints shall be 
governed by subdivisions 1 to 5 this section. 
    Sec. 7.  [REPEALER.] 
      Sections 2 and 3 are repealed July 1, 1995. 
    Sec. 8.  [EFFECTIVE DATE.] 
    Sections 1 to 6 are effective the day following final 
    Presented to the governor March 28, 1990 
    Signed by the governor March 29, 1990, 9:46 p.m.

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Revisor of Statutes