Minnesota Session Laws - 1995, Regular Session

                             CHAPTER 17-H.F.No. 435 
                  An act relating to public utilities; authorizing 
                  performance-based gas purchasing regulation for gas 
                  utilities; amending Minnesota Statutes 1994, section 
                  216B.16, 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.  [216B.167] [PERFORMANCE-BASED GAS PURCHASING 
        REGULATION FOR GAS UTILITIES.] 
           Subdivision 1.  [PERFORMANCE-BASED GAS PURCHASING PLANS.] A 
        public utility that furnishes natural gas may petition the 
        commission for approval of a performance-based gas purchasing 
        plan under this section.  The commission may approve a plan if 
        it finds that: 
           (1) the plan provides incentives for the utility to achieve 
        lower natural gas costs than would have been achieved in the 
        absence of the plan, as measured by the benchmarks established 
        in clause (3), by linking financial rewards and penalties to 
        natural gas costs; 
           (2) the potential benefits of the plan apply, at a minimum, 
        to each customer class purchasing firm natural gas service from 
        the utility; 
           (3) the plan establishes one or more benchmarks against 
        which actual natural gas costs will be measured and the 
        benchmarks reflect relevant market conditions and represent 
        reasonable and achievable natural gas costs in Minnesota for the 
        term of the plan; and 
           (4) the plan provides that the utility cannot curtail or 
        interrupt service to any customer class purchasing firm natural 
        gas service during the term of the plan except for causes 
        outside the reasonable control of the utility or causes not 
        directly related to the gas purchasing practices of the utility. 
           Subd. 2.  [SHARING MECHANISM.] A plan must include a 
        mechanism through which the utility shares with its customers 
        the difference between actual natural gas costs and the plan's 
        benchmark costs during the term of the plan.  A plan must 
        provide details of the sharing mechanism and may include an 
        allowed level of costs above and below the benchmark before any 
        sharing is to take place.  The commission must determine an 
        appropriate percentage of the difference between the benchmark 
        and actual natural gas costs to be shared between customers and 
        the utility.  The sharing mechanism shall be implemented 
        annually under section 216B.16, subdivision 7a.  Financial 
        rewards or penalties under the plan shall not be considered in 
        the determination of the utility's revenue requirements in a 
        general rate case pursuant to section 216B.16. 
           Subd. 3.  [RELIABILITY OF SERVICE.] A plan must allow for 
        the imposition of penalties if the standard for reliability of 
        service established in subdivision 1, clause (4), is not met. 
           Subd. 4.  [PLAN EVALUATION.] A plan must include an 
        evaluation process and mechanism that is reasonable and capable 
        of supporting a full review of the utility's performance under 
        the plan.  The commission shall evaluate the various customer 
        and utility impacts of a plan based on this evaluation process 
        and mechanism, including the impact on customer bills over time, 
        the impact on utility revenues, and the effectiveness of the 
        plan in meeting the purposes contained in subdivision 1.  The 
        evaluation must occur within a reasonable time following the end 
        of the plan. 
           Subd. 5.  [ANNUAL REPORTING.] The utility shall provide an 
        annual report to the commission documenting its performance in 
        meeting the requirements of the plan.  Upon review of this 
        report, the commission shall determine and approve rewards or 
        penalties as provided in the plan. 
           Subd. 6.  [ADOPTION.] A plan may be filed and approved 
        within a miscellaneous tariff filing pursuant to section 
        216B.16.  The commission may approve, reject, or modify the plan 
        in a manner which meets the requirements of this section.  An 
        approved plan is effective for a period of not less than two 
        years unless: 
           (1) the plan is withdrawn by the utility within 30 days of 
        a final appealable order approving the plan; or 
           (2) the commission, after notice and hearing, rescinds or 
        amends its order approving the plan. 
           Subd. 7.  [GENERAL EVALUATION.] The commission must 
        evaluate the effectiveness of all plans approved under this 
        section and submit its findings to the legislature by January 1, 
        1999. 
           Subd. 8.  [EXPIRATION.] This section expires January 1, 
        2000.  All plans must expire no later than December 31, 1999. 
           Sec. 2.  Minnesota Statutes 1994, section 216B.16, is 
        amended by adding a subdivision to read: 
           Subd. 7a.  [PERFORMANCE-BASED GAS PURCHASING 
        ADJUSTMENTS.] The commission may permit a public utility to file 
        rate schedules providing for annual adjustments reflecting 
        rewards or penalties provided for in performance-based gas 
        purchasing plans approved by the commission under section 
        216B.167. 
           Sec. 3.  [EFFECTIVE DATE.] 
           Sections 1 and 2 are effective the day following final 
        enactment. 
           Presented to the governor March 24, 1995 
           Signed by the governor March 27, 1995, 2:21 p.m.