1.1                          A bill for an act
  1.2             relating to public utilities; enacting the retail 
  1.3             wheeling for qualifying facilities act; providing 
  1.4             penalties; proposing coding for new law in Minnesota 
  1.5             Statutes, chapter 216B. 
  1.6   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.7      Section 1.  [SHORT TITLE.] 
  1.8      This act may be cited as the "retail wheeling for 
  1.9   qualifying facilities act." 
  1.10     Sec. 2.  [216B.70] [LEGISLATIVE FINDINGS; PURPOSE.] 
  1.11     (a) The legislature finds that: 
  1.12     (1) the business of generating, transmitting, and selling 
  1.13  electricity for ultimate distribution to consumers within the 
  1.14  state of Minnesota is affected with a public interest; 
  1.15     (2) the disparity in prices charged within Minnesota for 
  1.16  electricity creates economic dislocations and hardships, 
  1.17  including loss of jobs; 
  1.18     (3) locally based renewable energy systems means jobs and 
  1.19  income for the state and fewer of Minnesota's $7,000,000,000 
  1.20  energy expenditure exported to other states or overseas; 
  1.21     (4) although industrial cogeneration and renewable energy 
  1.22  are demanded by consumers, qualifying facilities have not been 
  1.23  allowed to compete in the marketplace; 
  1.24     (5) reasonable electricity prices, reliability, and 
  1.25  environmental protection are necessary to promote the public 
  2.1   health, safety, and welfare; 
  2.2      (6) it is the policy of the state to avoid environmental 
  2.3   and economic waste and duplication while providing the lowest 
  2.4   possible prices for electricity for consumers, consistent with a 
  2.5   determination of what is fair, just, and reasonable for electric 
  2.6   utilities generating, transmitting, and selling electricity; and 
  2.7      (7) it has the sole authority to establish laws that 
  2.8   provide for the generation, transmission, and sale of 
  2.9   electricity for end use by consumers, provided that these 
  2.10  activities occur within the boundaries of Minnesota. 
  2.11     (b) It is the purpose of the retail wheeling for qualifying 
  2.12  facilities act to provide a basis for the determination of 
  2.13  electricity price levels that relies on competition and not on 
  2.14  regulation to make the determination. 
  2.15     Sec. 3.  [216B.71] [DEFINITIONS.] 
  2.16     Subdivision 1.  [SCOPE.] The terms used in sections 216B.70 
  2.17  to 216B.82 have the meanings given them in this section. 
  2.18     Subd. 2.  [APPLICANT.] "Applicant" means a qualifying 
  2.19  facility selling or seeking to sell electricity or supplying or 
  2.20  seeking to supply electricity for the applicant's own needs, or 
  2.21  a broker that sells power only generated from qualifying 
  2.22  facilities, who applies for retail wheeling or self-wheeling 
  2.23  under the retail wheeling for qualifying facilities act.  
  2.24     Subd. 3.  [COMMISSION.] "Commission" means the Minnesota 
  2.25  public utilities commission. 
  2.26     Subd. 4.  [CONSUMER.] "Consumer" means a person purchasing 
  2.27  or seeking to purchase electricity, including industrial 
  2.28  purchasers, commercial purchasers, residential purchasing 
  2.29  alliances, a municipality, the state government or any of its 
  2.30  political subdivisions, or the federal government. 
  2.31     Subd. 5.  [ELECTRIC UTILITY.] "Electric utility" means 
  2.32  every person not engaged solely in interstate business that on 
  2.33  or after the effective date of this section owns, operates, 
  2.34  leases, or controls a plant, property, or facility for 
  2.35  generating, transmitting or distributing, selling, or furnishing 
  2.36  for public use electricity for light, heat, power, or other uses.
  3.1   "Electric utility" includes rural electric cooperatives, 
  3.2   generation and transmission cooperatives engaged in the sale of 
  3.3   electricity for resale to persons or electric utilities, 
  3.4   corporations and lessees, trustees or receivers appointed by any 
  3.5   court.  "Electric utility" does not include a municipality 
  3.6   unless the municipality has elected to be regulated as a public 
  3.7   utility under this chapter.  
  3.8      Subd. 6.  [ELECTRICITY.] "Electricity" means electric 
  3.9   energy, measured in kilowatt-hours, the cost of which is 
  3.10  expressed in mills per kilowatt-hour, or electric capacity, 
  3.11  measured in kilowatts, the cost of which is expressed in dollars 
  3.12  per kilowatt-month, or both. 
  3.13     Subd. 7.  [MUNICIPALITY.] "Municipality" means a home rule 
  3.14  charter or statutory city, town, or any municipal corporation 
  3.15  organized under the laws of the state. 
  3.16     Subd. 8.  [PERSON.] "Person" means an individual, firm, 
  3.17  partnership, or company. 
  3.18     Subd. 9.  [QUALIFYING FACILITY.] "Qualifying facility" 
  3.19  means a cogeneration or small power production facility that 
  3.20  satisfies the conditions established in Code of Federal 
  3.21  Regulations, title 18, section 292.101, paragraph (b)(1), 
  3.22  (1981); except that a garbage burner is not a qualifying 
  3.23  facility. 
  3.24     Subd. 10.  [RETAIL WHEELING.] "Retail wheeling" means 
  3.25  wheeling to an end user. 
  3.26     Subd. 11.  [RETAIL WHEELING ORDER.] "Retail wheeling order" 
  3.27  means an order issued by the commission requiring a wheeling 
  3.28  utility to provide retail wheeling or self-service wheeling over 
  3.29  and through transmission or distribution facilities located 
  3.30  inside Minnesota. 
  3.31     Subd. 12.  [SELF-SERVICE WHEELING.] "Self-service wheeling" 
  3.32  means wheeling sufficient to enable the applicant to transport 
  3.33  the applicant's own generated electricity, over which the 
  3.34  applicant exercises ownership, control, or leasehold interest to 
  3.35  delivery points that are physically separate and distinct from 
  3.36  the applicant's electricity generation or production location. 
  4.1      Subd. 13.  [WHEELING OR WHEELS.] "Wheeling" or "wheels" 
  4.2   means the use of a transmission or distribution facility of a 
  4.3   wheeling utility to transmit electricity either on a physical or 
  4.4   contract basis produced by another electric utility or applicant 
  4.5   not owned, controlled, or leased by the wheeling utility. 
  4.6      Subd. 14.  [WHEELING UTILITY.] "Wheeling utility" means an 
  4.7   electric utility that wheels electricity to a third party for an 
  4.8   applicant that it does not own, control, or lease pursuant to 
  4.9   the retail wheeling for qualifying facilities act.  
  4.10     Sec. 4.  [216B.72] [WHEELING OF ELECTRICITY MANDATORY; 
  4.11  TARIFFS.] 
  4.12     Subdivision 1.  [RETAIL AND SELF-SERVICE WHEELING 
  4.13  REQUIRED.] The commission shall require the nondiscriminatory 
  4.14  retail wheeling or self-service wheeling of electricity for the 
  4.15  applicant by any electric utility. 
  4.16     Subd. 2.  [WHEELING TARIFFS.] (a) The commission shall 
  4.17  order and establish tariffs for retail wheeling or self-service 
  4.18  wheeling over and through each electric utility's service 
  4.19  territory in Minnesota. 
  4.20     (b) The tariffs for the retail wheeling or self-service 
  4.21  wheeling of electricity established by the commission must be 
  4.22  fair, just, and reasonable.  The tariffs must be cost based for 
  4.23  all retail wheeling or self-service wheeling within each 
  4.24  electric utility's service territory in Minnesota and must 
  4.25  address pricing of both firm and nonfirm retail wheeling or 
  4.26  self-service wheeling. 
  4.27     (c) Upon the request of an applicant or by order of the 
  4.28  commission, an electric utility shall establish the terms and 
  4.29  conditions for providing retail wheeling or self-service 
  4.30  wheeling.  The terms and conditions must provide for the 
  4.31  nondiscriminatory retail wheeling or self-service wheeling of 
  4.32  electricity and must be filed with the commission as public 
  4.33  information. 
  4.34     (d) The tariffs for retail wheeling or self-service 
  4.35  wheeling of electricity must be based on and not exceed: 
  4.36     (1) the fully embedded cost of service; 
  5.1      (2) the return on investment component that was authorized 
  5.2   by the commission in the wheeling utility's last rate proceeding 
  5.3   applied only on the capital investment deemed used and useful 
  5.4   and necessary to provide retail wheeling or self-service 
  5.5   wheeling; and 
  5.6      (3) operating and maintenance expenses allocable to the 
  5.7   facilities used to provide retail wheeling or self-service 
  5.8   wheeling. 
  5.9      For purposes of clause (1), the embedded cost of service 
  5.10  must be based on the depreciated fixed costs of the capital 
  5.11  investment by the wheeling utility required to provide retail 
  5.12  wheeling or self-service wheeling and must not include the cost 
  5.13  of generating facilities.  The depreciated fixed cost must be 
  5.14  based on the ratio of the capacity demanded as expressed in 
  5.15  kilowatts to be imposed on the transmission or distribution 
  5.16  facilities of the wheeling utility to the total capacity 
  5.17  expressed in kilowatts of the transmission or distribution 
  5.18  facilities of the wheeling facility. 
  5.19     Subd. 3.  [RETURNING CONSUMER.] A consumer returning to the 
  5.20  electric utility's system shall have the same rights and 
  5.21  privileges as a new consumer. 
  5.22     Subd. 4.  [SERVICE CONTRACTS.] Service contracts entered 
  5.23  into on a nondiscriminatory basis for the retail wheeling or 
  5.24  self-service wheeling of electricity must be filed with the 
  5.25  commission and may include termination provisions, including 
  5.26  conditions of service, extended contract duration provisions, 
  5.27  liquidated damages, and specific rate schedules applicable to 
  5.28  all wheeling utilities in Minnesota. 
  5.29     Subd. 5.  [ADDITIONAL TERMS AND CONDITIONS.] The commission 
  5.30  may, at its discretion, impose terms and conditions on the 
  5.31  retail wheeling or self-service wheeling of electricity as may 
  5.32  be necessary to safeguard system integrity. 
  5.33     Sec. 5.  [216B.73] [COST RECOVERY AND INVESTMENT 
  5.34  RESTRICTIONS.] 
  5.35     Subdivision 1.  [ELECTRIC UTILITIES.] An electric utility 
  5.36  shall not impose or assess penalties to a consumer of 
  6.1   electricity: 
  6.2      (1) if the consumer returns to the electric utility to 
  6.3   obtain electricity after obtaining electricity through a retail 
  6.4   wheeling or self-service wheeling arrangement; or 
  6.5      (2) if the consumer chooses to leave the electric utility 
  6.6   and obtain electricity from another source through a retail 
  6.7   wheeling or self-service wheeling arrangement, if such 
  6.8   electricity is available. 
  6.9      Subd. 2.  [WHEELING UTILITIES.] The commission shall not 
  6.10  permit any wheeling utility to impose undue cost or burden on a 
  6.11  nonwheeling ratepayer who is not directly an economic 
  6.12  beneficiary of retail wheeling or self-service wheeling.  No 
  6.13  revenues foregone or costs incurred by applicants engaged in 
  6.14  retail wheeling or self-service wheeling may be recovered from 
  6.15  the wheeling utility's remaining nonwheeling ratepayers, 
  6.16  including costs attributable to any assets or portions of any 
  6.17  assets of the wheeling utility or electric utility idled, if 
  6.18  any, by retail wheeling or self-service wheeling arrangements 
  6.19  pursuant to the retail wheeling for qualifying facilities act.  
  6.20     Subd. 3.  [CAPITAL INVESTMENT.] In the process of 
  6.21  implementing this section, the commission shall consider 
  6.22  decertification or abandonment of electric utility capital 
  6.23  investments previously determined by the commission to be used 
  6.24  and useful for the public's convenience and necessity and any 
  6.25  other regulatory principles that result in just and reasonable 
  6.26  rates. 
  6.27     Sec. 6.  [216B.74] [IMPLEMENTATION.] 
  6.28     An electric utility or a wheeling utility shall not 
  6.29  frustrate or otherwise interfere with the implementation of the 
  6.30  retail wheeling for qualifying facilities act, in form or in 
  6.31  fact, or constrain the effects of competition engendered by this 
  6.32  act to set the price of electricity at market price levels, 
  6.33  instead of regulated price levels.  Electric utilities or 
  6.34  wheeling utilities are prohibited from using 
  6.35  commission-designated service territories or orders granting 
  6.36  certificates for public convenience and necessity to prohibit or 
  7.1   prevent retail wheeling or self-service wheeling pursuant to the 
  7.2   retail wheeling for qualifying facilities act.  
  7.3      Sec. 7.  [216B.75] [DUTIES OF COMMISSION.] 
  7.4      The commission shall: 
  7.5      (1) within 300 days of the effective date of this act, 
  7.6   adopt rules necessary to carry out the provisions of this act; 
  7.7      (2) develop and publish standardized rules, procedures, and 
  7.8   necessary forms to be used by an applicant when requesting 
  7.9   information from a potential wheeling utility or when applying 
  7.10  with the wheeling utility for retail wheeling or self-service 
  7.11  wheeling; and 
  7.12     (3) hold hearings on, determine, and publish the tariffs 
  7.13  for the retail wheeling or self-service wheeling of electricity 
  7.14  within 350 days of the effective date of this act. 
  7.15     Sec. 8.  [216B.76] [APPLICATION; REQUEST FOR INFORMATION; 
  7.16  APPEAL; PENALTY.] 
  7.17     Subdivision 1.  [REQUEST FOR INFORMATION; APPEAL.] An 
  7.18  applicant: 
  7.19     (1) may request reasonable information, as determined by 
  7.20  the commission, from a potential wheeling utility, including 
  7.21  information about the available capacity in and reliability of 
  7.22  the wheeling utility's transmission or distribution system under 
  7.23  various assumptions and scenarios; and 
  7.24     (2) may appeal to the commission if a wheeling utility 
  7.25  denies a request for retail wheeling or self-service wheeling. 
  7.26     Subd. 2.  [APPLICATION.] The application for retail 
  7.27  wheeling or self-service wheeling must be submitted to the 
  7.28  wheeling utility in a manner satisfactory to the commission and 
  7.29  contain information as required by rule of the commission.  If 
  7.30  an application for retail wheeling or self-service wheeling is 
  7.31  denied by the wheeling utility, the commission upon a request by 
  7.32  the applicant shall hold a public hearing on the fairness or 
  7.33  reasonableness of the denial.  The hearing must be held within 
  7.34  90 days of the receipt of the request from the applicant.  If 
  7.35  after a public hearing the commission determines that the denial 
  7.36  of an application for retail wheeling or self-service wheeling 
  8.1   was unfair or unreasonable, the commission shall issue a retail 
  8.2   wheeling order to become effective 30 days after the commission 
  8.3   determines whether the application for retail wheeling or 
  8.4   self-service wheeling was unfair or unreasonable.  The 
  8.5   commission shall not suspend the operation of any retail 
  8.6   wheeling order for more than 90 days. 
  8.7      Subd. 3.  [REQUIREMENT TO PROVIDE INFORMATION; PENALTY.] (a)
  8.8   All reasonable information requested pursuant to subdivision 1 
  8.9   must be provided in written form to the applicant by the 
  8.10  wheeling utility within 30 days of the wheeling utility's 
  8.11  receipt of the applicant's request for information, at no cost 
  8.12  to the applicant. 
  8.13     (b) A wheeling utility that does not provide responses to 
  8.14  reasonable information requests by the applicant within 30 days 
  8.15  of receipt of the request or that provides information that is 
  8.16  inaccurate or misleading, at the discretion of the commission 
  8.17  pursuant to this section, is subject to a fine of up to $10,000 
  8.18  per day for every day that the wheeling utility fails to respond 
  8.19  adequately to the applicant. 
  8.20     Subd. 4.  [EVIDENCE OF INABILITY TO PROVIDE WHEELING.] (a) 
  8.21  The wheeling utility bears the burden of providing by clear and 
  8.22  convincing evidence to the commission that there is: 
  8.23     (1) a lack of transmission or distribution facility 
  8.24  capacity; 
  8.25     (2) a deterioration of system reliability; or 
  8.26     (3) any other factor relating to the wheeling utility's 
  8.27  inability to provide retail wheeling or self-service wheeling. 
  8.28     (b) There is a rebuttable presumption under the retail 
  8.29  wheeling for qualifying facilities act that an electric 
  8.30  utility's transmission or distribution facility has the capacity 
  8.31  to provide for retail wheeling or self-service wheeling and a 
  8.32  rebuttable presumption that retail wheeling or self-service 
  8.33  wheeling inside Minnesota occurs when the physical or contract 
  8.34  path is wholly inside Minnesota. 
  8.35     Sec. 9.  [216B.77] [PROCEDURE FOR ADOPTING RULES.] 
  8.36     (a) The commission shall hold public hearings before the 
  9.1   adoption of rules necessary to carry out the provisions of the 
  9.2   retail wheeling for qualifying facilities act.  
  9.3      (b) At least one public hearing must be held in Saint Paul 
  9.4   and additional public hearings held at other locations around 
  9.5   the state as determined by the commission.  The commission shall 
  9.6   maintain transcripts of the proceedings.  Notice of the subject, 
  9.7   time and place of the hearing, the manner in which interested 
  9.8   persons may present their views, and the method by which copies 
  9.9   of the proposed rules may be obtained must be: 
  9.10     (1) published at least 30 days before the hearing date in 
  9.11  at least two newspapers of general circulation in the state; and 
  9.12     (2) mailed at least 30 days before the hearing date to all 
  9.13  persons who have made a written request for advance notice of 
  9.14  the hearing. 
  9.15     (c) The commission shall allow all interested persons a 
  9.16  reasonable opportunity to present evidence and submit arguments 
  9.17  during and after the public hearing. 
  9.18     (d) A person appearing or represented at the hearing, upon 
  9.19  written request, must be given written notice of the 
  9.20  commission's action on the proposed rules. 
  9.21     Sec. 10.  [216B.78] [SYSTEM INTERCONNECTION.] 
  9.22     System interconnection between an applicant and the 
  9.23  wheeling utility must be made pursuant to rules approved by the 
  9.24  commission.  The rules approved by the commission related to 
  9.25  system interconnection must not be arbitrary or capricious, 
  9.26  interfere with the implementation of the retail wheeling for 
  9.27  qualifying facilities act, or exceed the requirements of the 
  9.28  national electrical safety code. 
  9.29     Sec. 11.  [216B.79] [TRANSMISSION AND DISTRIBUTION 
  9.30  FACILITIES; COMMISSION AUTHORITY; COST.] 
  9.31     Subdivision 1.  [CONSTRUCTION OR MODIFICATION; COST 
  9.32  SHARING.] The commission shall order the construction of new 
  9.33  transmission or distribution facilities or appropriate 
  9.34  modification of existing transmission or distribution facilities 
  9.35  as is sufficient and necessary to facilitate retail wheeling or 
  9.36  self-service wheeling, provided that if the net incremental cost 
 10.1   attributable to the construction or modification creates any 
 10.2   benefit for existing ratepayers, the existing ratepayers shall 
 10.3   share with the applicant in the cost in proportion to the 
 10.4   relative benefits of the construction or modification. 
 10.5      Subd. 2.  [COST ALLOCATION.] The commission shall determine 
 10.6   the appropriate allocation of the cost of any new transmission 
 10.7   or distribution facilities taking into consideration the use, 
 10.8   purpose, and time necessary to place new transmission or 
 10.9   distribution facilities in commercial operation and available by 
 10.10  the wheeling utility for use by the applicant. 
 10.11     Sec. 12.  [216B.80] [CONSUMER'S TERMINATION NOTICE TO 
 10.12  ELECTRIC UTILITY.] 
 10.13     A consumer of an electric utility who elects to terminate 
 10.14  the purchase of electricity from the electric utility and to 
 10.15  purchase electricity through a retail wheeling or self-service 
 10.16  wheeling arrangement shall give the electric utility: 
 10.17     (1) 30 days' notice for replacement of less than one 
 10.18  megawatt of electricity; 
 10.19     (2) 120 days' notice for replacement of one megawatt or 
 10.20  more of electricity but less than five megawatts of electricity; 
 10.21  or 
 10.22     (3) 365 days' notice for replacement of five megawatts or 
 10.23  more of electricity. 
 10.24     Sec. 13.  [216B.81] [RELIANCE ON WHEELING FOR ADDITIONAL 
 10.25  ELECTRICITY.] 
 10.26     (a) When an electric utility demonstrates to the 
 10.27  commission's satisfaction and approval a need for additional 
 10.28  electricity as a means of providing for expected load growth, 
 10.29  the electric utility shall exhaust all possible remedies 
 10.30  available to it from retail wheeling or self-service wheeling 
 10.31  before making additional capital investments to satisfy the need 
 10.32  for constructing new generating or transmission facilities to 
 10.33  meet the expected load growth. 
 10.34     (b) An electric utility under the jurisdiction of the 
 10.35  commission that chooses to forego retail wheeling or 
 10.36  self-service wheeling as an alternative to make additional 
 11.1   capital investments is subject to disallowance of any cost of 
 11.2   investing in new generation or transmission facilities should 
 11.3   the commission determine that retail wheeling or self-service 
 11.4   wheeling arrangements would have, in the alternative, resulted 
 11.5   in a more prudent cost-effective method to obtain electricity. 
 11.6      Sec. 14.  [216B.82] [WHEELING TO FACILITATE ELECTRICITY 
 11.7   CONSERVATION.] 
 11.8      A wheeling utility under the jurisdiction of the commission 
 11.9   shall fully use the benefits offered from retail wheeling or 
 11.10  self-service wheeling arrangements before investing in expansion 
 11.11  of generation or transmission facilities as a means of complying 
 11.12  with or achieving the directives or goals set by the commission 
 11.13  relating to demand-side management or integrated resource 
 11.14  planning. 
 11.15     Sec. 15.  [216B.83] [CONSUMER PURCHASING ALLIANCES.] 
 11.16     The department of public service shall adopt rules and 
 11.17  recommend legislation to design an uncomplicated trading system 
 11.18  that encourages the private sector to use the transmission and 
 11.19  distribution system to transport power from all applicants to 
 11.20  all classes of consumers, including residential customers, and 
 11.21  that does not compromise the integrity of the transmission and 
 11.22  distribution system. 
 11.23     Sec. 16.  [ANTITRUST POLICIES.] 
 11.24     The department of public service shall recommend 
 11.25  legislation on antitrust policies that are intended to prevent 
 11.26  monopolies in a deregulated electric utility industry.