2007 Minnesota Statutes

216B.1675 PERFORMANCE REGULATION PLAN FOR GAS UTILITY SERVICE.
    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 materially 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) has adequate provisions to prevent the degradation of service quality; and
(7) 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 change. 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 customer. 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 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, 2012.
History: 1997 c 25 s 2,3; 1Sp2001 c 4 art 6 s 43; 2004 c 138 s 1-4