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                            CHAPTER 380-H.F.No. 3654 
                  An act relating to utilities; modifying the membership 
                  of the legislative electric energy task force; 
                  requiring comprehensive study of electric industry 
                  restructuring; requiring establishment of technical 
                  advisory work groups; authorizing task force to use 
                  its assessment authority to fund work group 
                  activities; requiring reports; amending Minnesota 
                  Statutes 1997 Supplement, section 216C.051, 
                  subdivision 2.  
        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
           Section 1.  Minnesota Statutes 1997 Supplement, section 
        216C.051, subdivision 2, is amended to read: 
           Subd. 2.  [ESTABLISHMENT.] (a) There is established a 
        legislative electric energy task force to study future electric 
        energy sources and costs and to make recommendations for 
        legislation for an environmentally and economically sustainable 
        and advantageous electric energy supply. 
           (b) The task force consists of: 
           (1) ten members of the house of representatives including 
        the chairs of the environment and natural resources and 
        regulated industries and energy committees and six eight members 
        to be appointed by the speaker of the house, four of whom must 
        be from the minority caucus; and 
           (2) ten members of the senate including the chairs of the 
        environment and natural resources and jobs, energy, and 
        community development committees and six eight members to be 
        appointed by the subcommittee on committees, four of whom must 
        be from the minority caucus. 
           (c) The task force may employ staff, contract for 
        consulting services, and may reimburse the expenses of persons 
        requested to assist it in its duties other than state employees 
        or employees of electric utilities.  The director of the 
        legislative coordinating commission shall assist the task force 
        in administrative matters.  The task force shall elect cochairs, 
        one member of the house and one member of the senate from among 
        the committee chairs named to the committee.  The task force 
        members from the house shall elect the house cochair, and the 
        task force members from the senate shall elect the senate 
        cochair. 
           Sec. 2.  [LEGISLATIVE ELECTRIC ENERGY TASK FORCE; SPECIFIC 
        RESTRUCTURING ISSUES.] 
           Subdivision 1.  [BULK POWER SYSTEM RELIABILITY, 
        INFRASTRUCTURE, AND REGULATION.] The legislative electric energy 
        task force shall solicit and analyze information on the 
        following issues relating to bulk power system reliability, 
        infrastructure, and regulation: 
           (1) When will the bulk power system be capable of reliably 
        supporting the volume of power transactions that would result 
        from implementation of retail competition? 
           (2) What modifications to the bulk power system and its 
        management are necessary to ensure that retail competition in 
        the state's electric industry does not diminish the reliability 
        of electric service, and what is the estimated cost of those 
        modifications? 
           (3) What options and alternatives can customers and power 
        suppliers in the state and in the region use to ensure the 
        independent operation and competitively neutral management of 
        the bulk power grid, and what are the advantages and 
        disadvantages associated with each option or alternative? 
           (4) What market infrastructure developments are necessary 
        or useful in supporting trade and competition in a reliable 
        electricity market, and what are the advantages and 
        disadvantages associated with each approach? 
           (5) What are the regulatory and legal means the state could 
        use to ensure the low cost, competitively neutral, and fair 
        utilization of the bulk power system and any market 
        infrastructure created or sanctioned by the state, and how 
        should the state address issues of overlapping state, federal, 
        and international jurisdictions in a regional electricity market?
           Subd. 2.  [DISTRIBUTION RELIABILITY, SAFETY, AND 
        MAINTENANCE.] The legislative electric energy task force shall 
        analyze the following issues relating to distribution 
        reliability, safety, and maintenance in a competitive 
        electricity market: 
           (1) What safety standards should be used to ensure 
        reliability, safety, and efficient operation of the distribution 
        system? 
           (2) What options are available to identify and establish 
        the respective rights and responsibilities of distribution 
        utilities, consumers, and competitive power suppliers regarding 
        electricity reliability and continuity of service? 
           (3) What alternatives can be used, or standards developed, 
        to address issues relating to the provision of billing, 
        metering, and customer service? 
           Subd. 3.  [ENERGY PRICES AND PRICE PROTECTION 
        MECHANISMS.] The legislative electric energy task force shall: 
           (1) solicit and analyze information of the potential 
        benefits and costs of the implementation of retail competition 
        in the state, as well as an evaluation and analysis as to how 
        costs and benefits might be distributed, and might be expected 
        to change over time; 
           (2) develop a comparison and evaluation of alternative 
        mechanisms to protect consumers from unwarranted potential price 
        increases that may be attributable to electric industry 
        deregulation during a transition to a competitive energy market; 
        and 
           (3) develop a comparison and evaluation of various means to 
        ensure that prices offered by competitors are nondiscriminatory 
        and that all customer classes benefit from competition. 
           Subd. 4.  [UNIVERSAL SERVICE.] The legislative electric 
        energy task force shall analyze issues relating to the provision 
        of universal energy service in the state, with special emphasis 
        on ensuring affordable service for rural and low-income energy 
        consumers, and develop: 
           (1) a needs assessment of the number of low-income 
        individuals and households at or below 150 percent of the 
        federal poverty guidelines and the average energy burden of 
        these individuals and households, expressed as the percentage of 
        overall income dedicated to the payment of energy costs; 
           (2) an evaluation of alternative, nonbypassable, 
        competitively neutral funding mechanisms to finance programs to 
        reduce the energy burden of low-income customers; 
           (3) alternatives regarding program design, administration, 
        outreach, and participation goals for bill payment and energy 
        conservation assistance; 
           (4) an evaluation of alternatives for ensuring affordable 
        service for individuals who do not or cannot choose an alternate 
        energy supplier, including default supplier and provider of last 
        resort options; and 
           (5) an evaluation of options to ensure that rural energy 
        consumers continue to receive affordable, high-quality energy 
        service and participate in any benefits attributable to 
        increased competition. 
           Subd. 5.  [INFORMATION DISCLOSURE AND CONSUMER PROTECTION.] 
        The legislative electric energy task force shall analyze issues 
        relating to information disclosure and consumer protection and 
        develop: 
           (1) an evaluation of alternative standards and means of 
        providing all consumers with information sufficient to support 
        an informed choice of electricity provider in a competitive 
        environment regarding:  (i) price, terms, and conditions of 
        service; and (ii) environmental information; and 
           (2) recommendations regarding consumer protection standards 
        and practices sufficient to prevent consumer fraud and abuse 
        while supporting effective competition. 
           Subd. 6.  [RENEWABLE ENERGY, EFFICIENCY, AND ENVIRONMENTAL 
        SUSTAINABILITY.] (a) The legislative electric energy task force 
        shall analyze issues of renewable energy, efficiency, and 
        environmental sustainability, and develop an assessment of 
        alternatives the state could take, whether alone or as part of a 
        regional compact, or as part of a national mandate, to encourage 
        energy efficiency, renewable energy development, and decreased 
        pollution in the context of a competitive electric industry.  In 
        assessing alternatives for renewable energy development, the 
        task force must consider questions relating to potential 
        renewable energy portfolio requirements, system benefits 
        charges, or green marketing of electricity.  The task force's 
        analysis must also include an assessment of alternative energy's 
        effect on business and the state's economy, and how renewable 
        requirements can be implemented in a competitively neutral 
        manner. 
           (b) In conducting the analysis under this subdivision, the 
        task force shall convene a work group under section 3 that 
        includes the department of public service, utility 
        representatives, the public utilities commission, community 
        action agency representatives, and other energy efficiency 
        advocates and service providers to investigate the energy 
        conservation improvement program under Minnesota Statutes, 
        section 216B.241, and to develop recommendations regarding how 
        energy efficiency and related services could best be provided in 
        a more competitive electricity market.  The task force must give 
        particular attention to assessing the success of these projects 
        on meeting the goals of Minnesota Statutes, section 216B.241. 
           Subd. 7.  [UNBUNDLED RATES.] The legislative electric 
        energy task force shall analyze issues relating to the 
        unbundling of energy rates, and shall convene a work group under 
        section 3 that includes private, public, and cooperative 
        utilities; national and regional energy marketers; consumers and 
        their advocates; and other interested parties to develop a 
        timeline and recommended procedures for separating the charges 
        for electric generation services, including electric energy and 
        capacity, from the charges for distribution services, 
        transmission services, and other services on customers' bills.  
           Subd. 8.  [COMPETITIVE PARITY.] The legislative electric 
        energy task force shall conduct an analysis of laws and 
        regulations that could prevent Minnesota utilities from 
        competing fairly in a competitive electricity market, and must 
        make recommendations as to how those requirements could be 
        fulfilled in a competitively neutral manner.  In addition, the 
        task force shall analyze issues relating to access to the retail 
        marketplace by competitors and methods to prevent the exercise 
        of market power and to limit the effects of anticompetitive 
        behavior. 
           Subd. 9.  [STRANDED COSTS.] The legislative electric energy 
        task force shall analyze issues relating to stranded costs and 
        develop: 
           (1) a sensitivity analysis of the magnitude and duration of 
        net stranded costs, and include in its analysis the potential 
        for stranded benefits or negative stranded costs that may result 
        from market prices that are higher than regulated prices; 
           (2) information as to whether and how net stranded cost 
        recovery by utilities could affect competition, consumers, 
        utilities, and utility investors; 
           (3) a comparison and evaluation of potential difficulties 
        stranded costs could create for private, public, and cooperative 
        utilities, and alternative means to ensure that customers 
        receive at least as much assurance of negative stranded cost 
        recovery as utility owners would of stranded cost recovery; 
           (4) recommendations on alternatives for the mitigation and 
        elimination of stranded costs and on mechanisms for recovery of 
        net stranded costs; 
           (5) an analysis of the advantages and disadvantages of 
        prior versus periodic evaluation, determination, and assessment 
        of stranded costs; and 
           (6) an analysis of the advantages and disadvantages of 
        securitization and other means of requiring customers to pay for 
        utility stranded costs. 
           Subd. 10.  [PERIODIC UPDATES.] By January 15 of each year, 
        the task force must provide the legislature with an update on 
        the progress of its review and analysis of restructuring issues 
        under this section, including legislative recommendations as the 
        task force deems appropriate. 
           Subd. 11.  [CONSULTATION WITH AFFECTED PARTIES.] In 
        conducting its review and analysis of restructuring issues, the 
        task force must solicit information from and consult with all 
        affected and interested parties, including, but not limited to, 
        representatives of:  rural energy consumers; low-income energy 
        consumers; commercial energy consumers; industrial energy 
        consumers; small business energy consumers; investor-owned 
        utilities; cooperative electric associations; municipal 
        utilities; organized labor; local units of government; 
        environmentalists; renewable energy developers and providers; 
        natural gas distribution utilities; community action agencies; 
        the mid-continent area power pool; the department of public 
        service; the public utilities commission; and the office of the 
        attorney general. 
           Sec. 3.  [LEGISLATIVE ELECTRIC ENERGY TASK FORCE; ELECTRIC 
        RESTRUCTURING TECHNICAL ASSISTANCE.] 
           Subdivision 1.  [ESTABLISHMENT OF TECHNICAL ADVISORY WORK 
        GROUPS.] The legislative electric energy task force shall 
        convene technical advisory work groups to assist the legislature 
        in analyzing the specific issues listed in section 2.  Unless 
        terminated earlier by the task force, these technical advisory 
        work groups expire January 31, 2000. 
           Subd. 2.  [MEMBERSHIP OF TECHNICAL ADVISORY WORK 
        GROUP.] (a) Each advisory work group convened under this section 
        shall consist of members that satisfy both of the following 
        criteria: 
           (1) have technical expertise in one or more of the 
        following areas:  energy marketing; energy efficiency; energy 
        procurement and purchasing; utility regulation; electricity 
        production; market economics; electric system operation and 
        reliability; and the provision of universal electric service, 
        especially to low-income or rural consumers; and 
           (2) reflect the broad array of interests affected by the 
        electric industry restructuring issue under review. 
           (b) The task force shall invite representatives of the 
        public utilities commission, the department of public service, 
        and the office of the attorney general to participate in each 
        technical advisory work group convened under this section, and 
        in an effort to avoid or minimize duplication of effort, shall 
        request from these state entities information and existing 
        studies relevant to the issue or issues that are the subject of 
        the technical advisory work group.  
           Sec. 4.  [REPORTS.] 
           During the 1998 legislative interim, the legislative 
        electric energy task force shall convene technical advisory work 
        groups under section 3 on at least the following issues:  (1) 
        bulk power system reliability, infrastructure, and regulation 
        issues described in section 2, subdivision 1, clauses (1) and 
        (2); (2) distribution reliability, safety, and maintenance 
        issues described in section 2, subdivision 2; (3) energy prices 
        and price protection mechanisms issues described in section 2, 
        subdivision 3; and (4) universal service issues described in 
        section 2, subdivision 4.  
           No later than November 30, 1998, task force staff shall 
        prepare and provide to the task force reports on the activities 
        and findings of these technical advisory work groups.  The task 
        force shall use these reports in preparing its report to the 
        legislature due January 15, 1999. 
           Sec. 5.  [TASK FORCE ASSESSMENT AUTHORITY.] 
           (a) The legislative electric energy task force is 
        authorized to utilize its assessment authority under Minnesota 
        Statutes 1997 Supplement, section 216C.051, subdivision 6, to 
        fund activities of technical advisory work groups under this act.
           (b) If the commissioner of public service finds that a more 
        equitable allocation of expenses would result, the department of 
        public service, as an alternative to the traditional assessment 
        procedure, may allocate technical advisory work group expenses 
        among all public and municipal utilities providing electric 
        service in the state, all cooperative electric associations 
        operating in Minnesota, and all other energy providers 
        participating in technical advisory committee activities under 
        this act, and may require each of those entities to pay their 
        allocated portion of those expenses. 
           (c) The task force shall periodically certify the expenses 
        of the technical advisory work groups to the department of 
        public service.  The department may render a bill to the 
        entities listed in paragraph (b).  Utilities and energy 
        providers providing more than one type of energy shall only be 
        billed as a single entity.  Generation and transmission 
        cooperative electric associations whose member distribution 
        cooperatives are billed for technical advisory work group 
        expenses under this section shall not be billed separately.  As 
        required under Minnesota Statutes, section 216C.051, subdivision 
        6, amounts assessed and collected under this section are 
        appropriated to the director of the legislative coordinating 
        commission and are available until expended. 
           (d) For the purposes of this section, "other energy 
        providers" includes natural gas distribution utilities, power 
        marketers, power brokers, aggregators, and any other entity 
        engaged in the marketing, selling, distribution, or transmission 
        of energy at wholesale or retail, whether operating in or out of 
        the state. 
           Sec. 6.  [EFFECTIVE DATE.] 
           Sections 1 to 5 are effective the day following final 
        enactment. 
           Presented to the governor April 9, 1998 
           Signed by the governor April 9, 1998, 6:40 p.m.