Minnesota Session Laws - 1997, Regular Session

                             CHAPTER 25-H.F.No. 281 
                  An act relating to utilities; providing performance 
                  regulation plans for gas utility services; amending 
                  Minnesota Statutes 1996, 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.  Minnesota Statutes 1996, section 216B.16, is 
        amended by adding a subdivision to read: 
           Subd. 16.  [PERFORMANCE REGULATION PLAN TARIFFS.] A public 
        utility providing natural gas services that has a performance 
        regulation plan approved pursuant to section 216B.1675 shall 
        file tariff provisions incorporating the provisions of that 
        plan.  Changes in the cost recovery of natural gas supplies must 
        not be included within the plan. 
           Sec. 2.  [216B.1675] [PERFORMANCE REGULATION PLAN FOR GAS 
        UTILITY SERVICES.] 
           Subdivision 1.  [PURPOSE.] Performance-based regulation 
        plans for public utilities offering natural gas services are 
        authorized in order to provide quality service at rates that can 
        reasonably and reliably be expected to be lower than rates would 
        be under current regulation and to reduce the cost of 
        regulation.  Performance-based regulation plans are intended to 
        provide the utility with increased earnings for efficient 
        performance and decreased earnings for inefficient performance. 
           Subd. 2.  [PETITION.] A public utility that furnishes 
        natural gas service may petition and file with the commission 
        for its approval a performance regulation plan pursuant to this 
        section.  The plan applies to the utility's rates for providing 
        natural gas distribution service, excluding the portion of the 
        rates recovering the cost of natural gas supplies.  If adopted, 
        the plan must apply to all of the utility's customers, except 
        that nothing in this section requires the utility to adjust the 
        rates collected from customers receiving service under tariffs 
        authorized by sections 216B.16, subdivision 15, and 216B.163.  A 
        petition may be filed: 
           (1) as part of a general rate filing pursuant to section 
        216B.16, in which case the time provided for the commission to 
        suspend rates and make a final determination shall be extended 
        by two months; or 
           (2) as a miscellaneous tariff filing pursuant to section 
        216B.16, in which case the commission shall, within 120 days of 
        the date of the filing, determine whether the utility's current 
        rates are reasonable based on financial information for the most 
        recent calendar year, amended to reflect appropriate regulatory 
        adjustments.  If the commission cannot resolve all material 
        issues concerning the reasonableness of the utility's current 
        rates to its satisfaction, it shall dismiss the filing.  If the 
        filing is not dismissed, the commission shall issue its decision 
        on the plan within ten months from the date of the filing.  The 
        rates at the beginning of the plan shall be the same as the 
        rates on file with the commission prior to the filing. 
           Subd. 3.  [PLAN CONTENTS.] The commission may approve a 
        performance regulation plan for natural gas distribution 
        services upon finding that the plan: 
           (1) contains a benchmark or measure of gas distribution 
        costs that is a reasonable and reliable predictor of the 
        utility's rates for gas distribution service under 
        cost-of-service regulation; 
           (2) ensures that rates for gas distribution services to 
        customers under the plan will be materially lower than the rates 
        would be under cost-of-service regulation as predicted by the 
        benchmark in clause (1); 
           (3) links the utility's earnings to its performance by 
        permitting higher utility earnings than under cost-of-service 
        regulation only when the utility's performance is more efficient 
        than the benchmark; 
           (4) can be reasonably and reliably expected to offer lower 
        administrative costs than would otherwise be experienced under 
        cost-of-service regulation; 
           (5) contains a reasonable limit on utility earnings; 
           (6) is compatible with the development of increased 
        competition in the natural gas industry; 
           (7) has adequate provisions to prevent the degradation of 
        service quality; and 
           (8) provides for gathering of relevant data and evaluation 
        of the plan's effect on rates, service quality, utility 
        earnings, competition in providing natural gas, and regulatory 
        costs. 
           Subd. 4.  [RATE CHANGES DURING A PLAN.] The initial rate 
        adjustment under the plan may not be implemented for a minimum 
        of 18 months following the final determination by the commission 
        on the plan.  The plan shall provide a methodology and 
        procedures for changing rates thereafter not more frequently 
        than on an annual basis.  The commission may allow the utility 
        to change rates to reflect material changes in cost due to 
        compliance with government mandates provided that the cost is 
        one that the commission would otherwise allow to be recovered in 
        rates.  Increases or decreases in revenues under the plan shall 
        be applied on an equal percentage basis to each customer class, 
        excluding the portion of the rate recovering the cost of natural 
        gas supplies.  Miscellaneous rate changes may be approved 
        outside the operation of the plan. 
           Subd. 5.  [ACCEPTANCE OF PETITION FOR FULL REVIEW.] 
        Interested parties have, unless the commission otherwise orders, 
        45 days from the date a petition containing a proposed plan is 
        filed to submit comments on whether the plan, as proposed, 
        addresses each of the requirements of this section sufficiently 
        to merit further consideration.  If the commission does not 
        dismiss the petition proposing a plan as insufficient within 120 
        days from the date of the filing, the petition shall be deemed 
        accepted for filing.  A petition accepted for filing shall not 
        be presumed accepted for final adoption. 
           Subd. 6.  [PLAN ADMINISTRATION.] A plan must require the 
        filing of information needed to administer the plan. 
           Subd. 7.  [NOTICE TO CUSTOMERS.] The petitioning utility 
        must provide notice of the proposed plan to its customers and to 
        the governing body of each municipality and county in the area 
        affected, along with a summary description of the plan 
        provisions and a notice of the dates, times, and locations of 
        any public meetings scheduled by the commission. 
           Subd. 8.  [PLAN REVIEW; HEARING; DISCOVERY.] In reviewing a 
        proposed plan, the commission shall: 
           (1) conduct public meetings that it considers appropriate; 
        and 
           (2) grant discovery, as appropriate. 
           Subd. 9.  [COMMISSION FINDINGS.] The commission shall issue 
        findings concerning the appropriateness of the proposed plan.  
        The commission may approve, reject, or modify the plan in a 
        manner which meets the requirements of this section.  An 
        approved or modified plan becomes effective unless the plan is 
        withdrawn by the utility within 30 days of a final appealable 
        order.  If the utility withdraws an approved or modified plan, 
        all of the administrative costs related to the plan that are 
        charged by the commission or the department of public service to 
        the utility may not be recovered from ratepayers in current or 
        subsequent rates.  A utility that withdraws an approved or 
        modified plan may not file another plan under this section for a 
        period of one year following the withdrawal of the plan. 
           Subd. 10.  [PLAN TERM; RENEWAL.] The plan shall specify its 
        term, which shall not be less than three years.  Not less than 
        six months before the completion of the term of an approved 
        plan, the commission shall, at the request of the utility, 
        commence a review of the plan to determine whether to renew the 
        plan for an additional term.  The commission may approve, 
        reject, or modify the renewal plan in a manner that meets the 
        requirements of this section.  A plan approved or modified under 
        this subdivision becomes effective unless the plan is withdrawn 
        by the utility within 30 days of a final appealable order. 
           Subd. 11.  [PLAN TERMINATION.] On its own motion or upon 
        the petition of any party other than the utility, the commission 
        may initiate an investigation to determine whether to terminate 
        the plan.  The commission shall issue findings on the 
        investigation within 120 days.  If the commission finds that the 
        plan has failed to meet the requirements of this section and is 
        inconsistent with the public interest, it shall terminate the 
        plan and may order the utility to initiate any proceedings 
        necessary to correct the failure of the plan, including but not 
        limited to, filing a general rate proceeding under section 
        216B.16.  The utility must be allowed at least 120 days after 
        the date of the commission's order to initiate the general rate 
        proceeding. 
           Subd. 12.  [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 and 
        service quality, over time, the impact on utility revenues, and 
        the effectiveness of the plan in meeting the purposes of this 
        section.  The evaluation must occur within a reasonable time 
        following the end of the plan. 
           Subd. 13.  [GENERAL EVALUATION.] The commission shall 
        evaluate the effectiveness of all plans approved under this 
        section and submit its findings to the legislature by January 1, 
        2005. 
           Sec. 3.  [EFFECTIVE DATE; EXPIRATION.] 
           Sections 1 and 2 are effective on August 1, 1997, and 
        expire January 1, 2006. 
           Presented to the governor April 7, 1997 
           Signed by the governor April 8, 1997, 10:28 a.m.