1.1                          A bill for an act 
  1.2             relating to utilities; providing for customer-specific 
  1.3             terms in electric utility service contracts; amending 
  1.4             Minnesota Statutes 1996, sections 216B.05; and 
  1.5             216B.162, subdivisions 1, 4, and by adding 
  1.6             subdivisions. 
  1.7   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.8      Section 1.  Minnesota Statutes 1996, section 216B.05, is 
  1.9   amended to read: 
  1.10     216B.05 [FILING SCHEDULES, RULES, AND SERVICE AGREEMENTS.] 
  1.11     Subdivision 1.  [~~SCHEDULES~~ PUBLIC RATE FILINGS.] Every 
  1.12  public utility shall file with the commission schedules showing 
  1.13  all rates, tolls, tariffs and charges which it has established 
  1.14  and which are in force at the time for any service performed by 
  1.15  it within the state, or for any service in connection therewith 
  1.16  or performed by any public utility controlled or operated by it. 
  1.17     Subd. 2.  [SCHEDULES AND RULES ~~AND SERVICE~~ 
  1.18  ~~AGREEMENTS~~ FILINGS.] Every public utility shall file with and as 
  1.19  a part of the ~~schedule~~ filings under subdivision 1, all rules 
  1.20  that, in the judgment of the commission, in any manner affect 
  1.21  the service or product, or the rates charged or to be charged 
  1.22  for any service or product, ~~as well as any contracts, agreements~~ 
  1.23  ~~or arrangements~~ relating to the service or product or the rates 
  1.24  to be charged for any service or product to which the schedule 
  1.25  is applicable as the commission may by general or special order 
  1.26  direct.  
  2.1      Subd. 2a.  [ELECTRIC SERVICE CONTRACTS.] A contract for 
  2.2   electric service entered into between a public utility and one 
  2.3   of its customers, in which the public utility and the customer 
  2.4   agree to customer-specific rates, terms, or service conditions 
  2.5   not already contained in the approved schedules, tariffs, or 
  2.6   rules of the utility, must be filed for approval by the 
  2.7   commission pursuant to the commission's rules of practice.  
  2.8   Contracts between public utilities and customers that are 
  2.9   necessitated by specific statutes in this chapter must be filed 
  2.10  for approval under those statutes and any rules adopted by the 
  2.11  commission pursuant to those statutes. 
  2.12     Subd. 3.  [PUBLIC INSPECTION.] Every public utility shall 
  2.13  keep copies of the ~~schedules~~ filings under subdivisions 1, 2, 
  2.14  and 2a open to public inspection under rules as the commission 
  2.15  may prescribe.  
  2.16     Sec. 2.  Minnesota Statutes 1996, section 216B.162, 
  2.17  subdivision 1, is amended to read: 
  2.18     Subdivision 1.  [DEFINITIONS.] (a) The terms used in this 
  2.19  section have the meanings given them in this subdivision. 
  2.20     (b) "Effective competition" means a market situation in 
  2.21  which an electric utility serves a customer that: 
  2.22     (1) is located within the electric utility's assigned 
  2.23  service area determined under section 216B.39; and 
  2.24     (2) has the ability to obtain its energy requirements from 
  2.25  an energy supplier that is not regulated by the commission under 
  2.26  section 216B.16. 
  2.27     (c) "Competitive rate schedule" means a rate schedule under 
  2.28  which an electric utility may set or change the price for its 
  2.29  service to an individual customer or group of customers subject 
  2.30  to effective competition. 
  2.31     (d) "Competitive rate" means the actual rate offered by the 
  2.32  utility, and approved by the commission, to a customer subject 
  2.33  to effective competition. 
  2.34     (e) "Discretionary rate reduction" means a specific 
  2.35  reduction to an existing rate, offered voluntarily by the 
  2.36  utility to an individual customer or group of customers and 
  3.1   approved by the commission in accordance with subdivisions 9 and 
  3.2   10. 
  3.3      Sec. 3.  Minnesota Statutes 1996, section 216B.162, 
  3.4   subdivision 4, is amended to read: 
  3.5      Subd. 4.  [RATES AND TERMS OF COMPETITIVE RATE SCHEDULE.] 
  3.6   When the commission authorizes a competitive rate schedule for a 
  3.7   customer class, it shall set the terms and conditions of service 
  3.8   for that schedule, which must include: 
  3.9      (1) that the minimum rate for the schedule recover at least 
  3.10  the incremental cost of providing the service, including the 
  3.11  cost of additional capacity that is to be added while the rate 
  3.12  is in effect and any applicable on-peak or off-peak 
  3.13  differential; 
  3.14     (2) that the maximum possible rate reduction under a 
  3.15  competitive rate schedule does not exceed the difference between 
  3.16  the electric utility's applicable standard tariff and the cost 
  3.17  to the customer of the lowest cost competitive energy supply; 
  3.18     (3) ~~that the term of a contract for a customer who elects~~ 
  3.19  ~~to take service under a competitive rate must be no less than~~ 
  3.20  ~~one year and no longer than five years;~~ 
  3.21     ~~(4)~~ that the electric utility, within a general rate case, 
  3.22  be allowed to seek recovery of the difference between the 
  3.23  standard tariff and the competitive rate times the usage level 
  3.24  during the test year period; 
  3.25     ~~(5)~~ (4) a determination that a rate within a competitive 
  3.26  rate schedule meets the conditions of section 216B.03, for other 
  3.27  customers in the same customer class; 
  3.28     ~~(6)~~ (5) that the rate does not compete with district 
  3.29  heating or cooling provided by a district heating utility as 
  3.30  defined by section 216B.166, subdivision 2, paragraph (c); and 
  3.31     ~~(7)~~ (6) that the rate may not be offered to a customer in 
  3.32  which the utility has a financial interest greater than 50 
  3.33  percent. 
  3.34     Sec. 4.  Minnesota Statutes 1996, section 216B.162, is 
  3.35  amended by adding a subdivision to read: 
  3.36     Subd. 9.  [DISCRETIONARY RATE REDUCTIONS 
  4.1   PERMITTED.] Notwithstanding sections 216B.03, 216B.06, 216B.07, 
  4.2   and 216B.16, a public utility whose rates are regulated under 
  4.3   this chapter may, at its discretion, offer a reduced rate for 
  4.4   tariffed electric services to eligible customers.  The 
  4.5   commission may approve a discretionary rate reduction provided 
  4.6   that: 
  4.7      (1) the reduction is offered to customers who are located 
  4.8   within the exclusive service territory of the public utility 
  4.9   that offers discretionary rate reductions or to potential 
  4.10  customers who are not customers of a Minnesota electric utility, 
  4.11  as defined in section 216B.38, but who propose to be located 
  4.12  within the exclusive service territory of the public utility; 
  4.13     (2) the reduction applies to customers requiring electric 
  4.14  service with a connected load of at least 2,000 kilowatts; 
  4.15     (3) the reduced rate recovers at least the incremental cost 
  4.16  of providing the service, including the cost of additional 
  4.17  capacity that is to be added while the rate is in effect and any 
  4.18  applicable on-peak or off-peak differential; 
  4.19     (4) in the event the commission has approved unbundled 
  4.20  rates, the reduction is not offered for any unbundled service 
  4.21  other than generation, unless the unbundled service is available 
  4.22  to the customer from a competitive supplier; 
  4.23     (5) the reduced rate does not compete with district heating 
  4.24  or cooling services provided by a district heating utility as 
  4.25  defined by section 216B.166, subdivision 2, paragraph (c); and 
  4.26     (6) the reduced rate does not compete with a natural gas 
  4.27  service provided by a natural gas utility and regulated by the 
  4.28  commission. 
  4.29     Sec. 5.  Minnesota Statutes 1996, section 216B.162, is 
  4.30  amended by adding a subdivision to read: 
  4.31     Subd. 10.  [COMMISSION DETERMINATION.] (a) Proposals for 
  4.32  discretionary rate reductions offered by utilities must be filed 
  4.33  with the commission, with copies of the filing served upon the 
  4.34  department of public service and the office of attorney general 
  4.35  at the same time it is served upon the commission.  The 
  4.36  commission shall review the proposals according to procedures 
  5.1   developed under section 216B.05, subdivision 2a.  The commission 
  5.2   shall not approve discretionary rate reductions offered by 
  5.3   public utilities that do not have an accepted resource plan on 
  5.4   file with the commission.  The commission shall not approve 
  5.5   discretionary rate reductions unless the utility has made the 
  5.6   customer aware of all cost-effective opportunities for energy 
  5.7   efficiency improvements offered by the utility. 
  5.8      (b) Public utilities that provide service under 
  5.9   discretionary rate reductions shall not seek, through increased 
  5.10  revenue requirements or through prospective rate design changes, 
  5.11  recovery of any revenues foregone due to the discretionary rate 
  5.12  reductions, nor shall the commission grant such recovery.