Minnesota Session Laws - 1990, Regular Session

  

                         Laws of Minnesota 1990 

                        CHAPTER 593-S.F.No. 2158 
           An act relating to utilities; regulating flexible gas 
          utility rates; repealing sunset provisions relating to 
          flexible gas utility rates; appropriating money; 
          amending Minnesota Statutes 1988, section 216B.163; 
          and Laws 1987, chapter 371, section 4.  
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:  
     Section 1.  Minnesota Statutes 1988, section 216B.163, is 
amended to read: 
    216B.163 [FLEXIBLE TARIFFS.] 
    Subdivision 1.  [DEFINITIONS.] (a) For the purposes of this 
section, the terms defined in this subdivision have the meanings 
given them.  
    (b) "Effective competition" means that a customer of a gas 
utility who either receives interruptible service or whose daily 
requirement exceeds 50,000 cubic feet maintains or plans on 
acquiring the capability to switch to the same, equivalent or 
substitutable energy supplies or service, except indigenous 
biomass energy supplies composed of wood products, grain, 
biowaste, and cellulosic materials, at comparable prices from a 
supplier not regulated by the commission. 
    (c) "Flexible tariff" means a rate schedule under which a 
gas utility may set or change the price for its service to an 
individual customer or group of customers without prior approval 
of the commission within a range of prices determined by the 
commission to be just and reasonable. 
    Subd. 2.  [FLEXIBLE TARIFFS PERMITTED.] Notwithstanding any 
other provision of this chapter section 216B.03, 216B.05, 
216B.06, 216B.07, or 216B.16, the commission is authorized 
to may approve a flexible tariff for any class of customers of a 
gas utility when provision of service, including the sale or 
transportation of gas, to any customers within the class is 
subject to effective competition.  Upon application of a gas 
utility, the commission shall find that effective competition 
exists for a class of customers taking interruptible service at 
a level exceeding 199,000 cubic feet per day.  A gas utility may 
only apply a flexible tariff only to a customer that is subject 
to effective competition and a gas utility may not apply a 
flexible tariff or otherwise reduce its rates to compete with 
indigenous biomass energy supplies, or with customers of 
district heating facilities as of June 1, 1987.  Customers of a 
gas utility whose only alternative source of energy is gas from 
a supplier not regulated by the commission and who must use the 
gas utility's system to transport the gas are not subject to 
effective competition unless the customers have or can 
reasonably acquire the capability to bypass the gas utility's 
system to obtain gas from a supplier not regulated by the 
commission.  A customer subject to effective competition may 
elect to take service either under the flexible tariff or under 
the appropriate nonflexible tariff for that class of service set 
in accordance with section 216B.03, provided that a customer 
that uses an alternative energy supply or service other than 
indigenous biomass energy supplies from a supplier not regulated 
by the commission for reasons of price shall be are deemed to 
have elected to take service under the flexible tariff. 
    Subd. 2a.  [DISTRICT HEATING CUSTOMERS.] Notwithstanding 
subdivision 2, a gas utility may not apply a flexible tariff or 
otherwise reduce its rates to compete with customers of district 
heating facilities as of June 1, 1987.  This subdivision expires 
July 1, 1992.  
    Subd. 3.  [ESTABLISHING OR CHANGING A FLEXIBLE TARIFF.] The 
commission may establish a flexible tariff through a 
miscellaneous rate filing only if the filing does not seek to 
recover any revenues which the utility expects to lose by 
implementing flexible tariffs from any customers who do not take 
service under the flexible tariff, nor to change any other rates 
another rate.  If a gas utility requests authority to establish 
a flexible tariff and as part of that request seeks to 
recover any revenues which the utility expects to lose by 
implementing flexible tariffs from any customers who do not take 
service under the flexible tariff or to change any other rates 
the commission may only establish that flexible tariff within a 
general rate case for that gas utility.  The commission may only 
change the rates in a flexible tariff within a gas utility's 
general rate case.  
    Subd. 4.  [RATES AND TERMS OF SERVICE.] Whenever the 
commission authorizes a flexible tariff, it shall set the terms, 
and conditions of service for that tariff, which shall 
include including:  
    (1) that the minimum rate for the tariff, which must 
recover at least the incremental cost of providing the service; 
    (2) that there is no upward the maximum for the rate for 
the tariff; and 
    (3) a requirement that a customer who elects to take 
service under the flexible tariff remain on that tariff for a 
reasonable period of time, which shall not be less than one 
year; and.  
    (4) that any customer changing from a flexible tariff to 
the appropriate nonflexible tariff for that class pay all costs 
incurred by the utility due to that change.  
The commission may set the terms and conditions of service for a 
flexible tariff in a gas utility proceeding, a miscellaneous 
filing, or a complaint proceeding under section 216B.17.  
    Subd. 5.  [RECOVERY OF REVENUES.] In a general rate 
case which that establishes a flexible tariff for a gas utility, 
and in each general rate case of a gas utility for which a 
flexible tariff has been authorized, the commission shall 
determine a projected level of revenues and expenses from 
services under that tariff based on a single target rate for all 
sales under that tariff, which projection shall be used and use 
the projection to determine the utility's overall rates.  That 
target rate method used to establish a level of projected 
revenues shall may not limit the gas utility's ability or right 
to set rates for any a customer taking service under the 
flexible tariff. 
    Subd. 6.  [INTERIM FLEXIBLE TARIFF.] Notwithstanding 
section 216B.16, subdivision 3, if a gas utility files with the 
commission to establish or change a flexible tariff the 
commission shall permit the proposed flexible tariff to take 
effect on an interim basis no later than 30 days after filing.  
If any customers receive an increase in rates during the period 
that an interim flexible tariff is in effect, the increase is 
subject to refund as provided in section 216B.16, subdivision 
3.  The gas utility shall provide ten days written notice, or 
other notice as may be established by contract not to exceed 30 
days, to a customer before implementing an interim rate increase 
change for that customer under this section.  
    Subd. 7.  [FINAL DETERMINATION.] The commission shall make 
a final determination in a proceeding begun under this section 
for approval of a flexible tariff, other than a filing made 
within a general rate case, within 180 days of the filing by the 
gas utility. 
    Subd. 8.  [STUDY AND REPORT.] The department shall review 
the operation and effects of any rates implemented under this 
section.  The review must include, at a minimum, an evaluation 
of the impact of flexible gas rates on alternative energy 
sources, including indigenous biomass energy, and the impact on 
the utility and its customers of setting a maximum rate for the 
tariff.  The department shall submit its report to the 
legislature by January 1, 1995.  The department shall assess gas 
utilities that utilize a flexible tariff under section 1 for the 
actual cost of conducting the study, not to exceed $5,000.  Each 
utility utilizing a flexible tariff must be assessed an equal 
share of the cost.  
    Sec. 2.  Laws 1987, chapter 371, section 4, is amended to 
read:  
    Sec. 4.  [EFFECTIVE DATE.] 
    Sections 1 to 3 are effective the day following final 
enactment, and are repealed effective July 1, 1990.  
    Sec. 3.  [APPROPRIATION.] 
    $5,000 is appropriated from the general fund to the 
department of public service for the purpose of conducting the 
study required by section 1.  The money is available until 
February 1, 1995.  
    Sec. 4.  [EFFECTIVE DATES.] 
    Sections 1 and 3 are effective July 1, 1990.  Section 2 is 
effective the day following final enactment. 
    Presented to the governor April 28, 1990 
    Signed by the governor May 3, 1990, 5:43 p.m.