1.1                          A bill for an act 
  1.2             relating to utilities; restructuring the regulation of 
  1.3             electricity generation; providing for transition to a 
  1.4             competitive industry; requiring restructuring plans; 
  1.5             requiring unbundling of services; providing for 
  1.6             recovery of stranded costs; requiring registration of 
  1.7             suppliers; providing civil remedies; appropriating 
  1.8             money; amending Minnesota Statutes 2000, section 
  1.9             272.027, by adding a subdivision; proposing coding for 
  1.10            new law as Minnesota Statutes, chapter 216E. 
  1.11  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.12     Section 1.  [SHORT TITLE.] 
  1.13     Chapter 216E may be referred to as the "Minnesota Retail 
  1.14  Electric Competition Act."  
  1.15     Sec. 2.  [216E.01] [DEFINITIONS.] 
  1.16     Subdivision 1.  [SCOPE.] For the purposes of this chapter, 
  1.17  the terms defined in this section have the meanings given them.  
  1.18  Unless otherwise defined in this chapter, the definitions of 
  1.19  216A, 216B, and 216C shall apply where appropriate. 
  1.20     Subd. 2.  [AFFILIATED PROVIDER.] "Affiliated provider" 
  1.21  means a competitive provider in which an electric utility has an 
  1.22  affiliated interest under section 216B.48 or is a successor in 
  1.23  interest of that utility. 
  1.24     Subd. 3.  [COMMISSION.] "Commission" means the public 
  1.25  utilities commission. 
  1.26     Subd. 4.  [COMPETITIVE PROVIDER.] "Competitive provider" 
  1.27  means a person providing power supply services, including 
  1.28  broker, or power marketer. 
  2.1      Subd. 5.  [CUSTOMER.] "Customer" means a person responsible 
  2.2   by law for payment for power supply service. 
  2.3      Subd. 6.  [DEFAULT PROVIDER.] "Default provider" means the 
  2.4   provider of power supply services to a customer that has not 
  2.5   chosen a competitive provider. 
  2.6      Subd. 7.  [DEPARTMENT.] "Department" means the department 
  2.7   of commerce. 
  2.8      Subd. 8.  [DISTRIBUTION.] "Distribution" means the delivery 
  2.9   of electricity to an end-use customer.  
  2.10     Subd. 9.  [ELECTRIC UTILITY.] "Electric utility" means a 
  2.11  public utility, as defined in section 216B.02, subdivision 4, 
  2.12  and includes every municipality and every cooperative electric 
  2.13  association that furnishes retail electric service in Minnesota. 
  2.14     Subd. 10.  [GENERATION.] "Generation" means the production 
  2.15  of electricity. 
  2.16     Subd. 11.  [LOCAL DISTRIBUTION UTILITY.] "Local 
  2.17  distribution utility" means a public utility, as defined in 
  2.18  section 216B.02, subdivision 4, including every municipal 
  2.19  utility and cooperative electric association, that distributes 
  2.20  electricity to end-use customer locations. 
  2.21     Subd. 12.  [MARKET AGGREGATOR.] "Market aggregator" means a 
  2.22  person that arranges for power supply services on behalf of 
  2.23  another customer through a power pool or directly through a 
  2.24  contract with a competitive provider. 
  2.25     Subd. 13.  [PERSON.] "Person" means an individual or a 
  2.26  private, public, governmental, or corporate entity, however 
  2.27  organized. 
  2.28     Subd. 14.  [POWER SUPPLY SERVICES.] "Power supply services" 
  2.29  means the provision of electric power supply or a related 
  2.30  service to an end-use customer.  Power supply services includes 
  2.31  a service relating to the usage, measurement, purchase, or sale 
  2.32  of electric capacity and energy, but does not include the 
  2.33  operation of generation facilities, or distribution or 
  2.34  transmission services.  Marketing, customer service and billing 
  2.35  are all power supply services.  
  2.36     Subd. 15.  [PROVIDER OF LAST RESORT.] "Provider of last 
  3.1   resort" means a firm that provides power supply services to a 
  3.2   customer who chose a competitive provider and who subsequently 
  3.3   was terminated from service or denied service. 
  3.4      Subd. 16.  [STRANDED COSTS.] "Stranded costs" means the 
  3.5   value of prudently incurred, net, nonmitigable, verifiable 
  3.6   assets and investments directly related to the generation of 
  3.7   electricity that have been included in an electric utility's 
  3.8   rates but that may not be recoverable in a competitive market.  
  3.9      Subd. 17.  [STRANDED BENEFITS.] "Stranded benefits" means 
  3.10  the value of an electric utility's assets whose market value 
  3.11  exceeds their book value in a competitive market. 
  3.12     Subd. 18.  [TRANSMISSION.] "Transmission" means the 
  3.13  movement or transfer of electricity in bulk and at higher 
  3.14  voltages over an interconnected group of lines and associated 
  3.15  equipment, between the generation facility and the distribution 
  3.16  system.  
  3.17     Sec. 3.  [216E.02] [PURPOSE.] 
  3.18     The legislature finds that it is in the public interest to 
  3.19  permit all retail electric customers to choose their supplier of 
  3.20  electric generation services in a competitive market and to 
  3.21  continue to regulate electric transmission and distribution in 
  3.22  order to provide safe and reliable electricity at the lowest 
  3.23  possible prices for all retail electric customers while 
  3.24  maintaining safety and reliability.  
  3.25     Sec. 4.  [216E.03] [RETAIL ELECTRIC COMPETITION STANDARDS.] 
  3.26     Subdivision 1.  [RETAIL COMPETITION GENERALLY.] (a) No 
  3.27  later than January 1, 2003, customers in this state shall have 
  3.28  the opportunity to choose a competitive provider for the 
  3.29  provision of power supply services at prices established by a 
  3.30  market for such services, as set forth in this chapter. 
  3.31     (b)  In exercising their choice under paragraph (a), a 
  3.32  retail customer may negotiate a bilateral contract with the 
  3.33  competitive provider of their choice. 
  3.34     Subd. 2.  [RETAIL COMPETITION ORDER.] (a) The commission 
  3.35  shall, by order, make such determinations necessary to implement 
  3.36  this act.  
  4.1      (b) From January 1, 2003 until December 31, 2005, the local 
  4.2   distribution utility shall be the default provider for customers 
  4.3   in the utility's service territory.  By June 30, 2005, the 
  4.4   commission and the governing bodies of cooperative and municipal 
  4.5   utilities shall issue rules for selecting a default provider to 
  4.6   serve in the service territory of a local distribution utility 
  4.7   that chooses not to create an affiliated provider.  On January 
  4.8   1, 2006 and thereafter, the default provider for a service 
  4.9   territory shall either be a competitive provider designated by 
  4.10  the commission or, in the case of cooperative and municipal 
  4.11  electric utilities, their respective governing bodies or the 
  4.12  relevant local distribution utility's affiliated provider, if 
  4.13  any. 
  4.14     (c) In order to ensure continuous access to electric 
  4.15  services, the commission shall establish a provider of last 
  4.16  resort for every existing service area within the state.  These 
  4.17  providers shall serve all classes of customers. 
  4.18     Subd. 3.  [ORDER CONTENTS.] The retail competition orders 
  4.19  under subdivision 2 must be consistent with this chapter, and 
  4.20  may include other provisions as the commission deems appropriate 
  4.21  and necessary to expedite the transition to full customer 
  4.22  choice.  The commission shall ensure that retail competition in 
  4.23  this state includes:  
  4.24     (1) customer protection measures, including assurance of 
  4.25  service reliability and universal access consistent with this 
  4.26  act and nonconflicting sections of chapter 216B; 
  4.27     (2) unbundling of rates consistent with section 216E.09; 
  4.28     (3) mitigation of market power, including the prevention 
  4.29  and remedy of unfair and uncompetitive practices consistent with 
  4.30  section 216E.19; 
  4.31     (4) utility affiliate relations consistent with section 
  4.32  216E.11; and 
  4.33     (5) consumer education and information consistent with 
  4.34  section 216E.17. 
  4.35     Sec. 5.  [216E.04] [RECOVERY OF STRANDED COSTS.] 
  4.36     Subdivision 1.  [GENERAL POLICY.] (a) An electric utility 
  5.1   may seek to recover from their customers up to 100 percent of 
  5.2   the stranded costs.  The commission shall determine the amount 
  5.3   and period of recovery. 
  5.4      (b) Nothing in this section is intended to provide any 
  5.5   greater opportunity for stranded cost recovery than is available 
  5.6   under applicable rule, regulation, or statute on the effective 
  5.7   date of this section. 
  5.8      (c) Stranded costs must be determined on a net basis, must 
  5.9   be verifiable, must not include distribution assets, and must be 
  5.10  reconciled to actual electricity market conditions annually.  
  5.11  Stranded costs include an offset for the market value of assets, 
  5.12  domestic or foreign, obtained or controlled by an electric 
  5.13  utility by purchase, acquisition, merger, or other means within 
  5.14  three years before the effective date of this section. 
  5.15     (d) A stranded cost charge is not recoverable for a change 
  5.16  in usage occurring in the normal course of business, including a 
  5.17  charge resulting from a change in a business cycle, termination 
  5.18  of an operation, the weather, reduced production, a change in a 
  5.19  manufacturing process, the installation or expansion of new 
  5.20  self-generation or cogeneration equipment, the performance of 
  5.21  existing self-generation or cogeneration equipment, an energy 
  5.22  conservation effort, or other similar factor. 
  5.23     Subd. 2.  [STRANDED COST RECOVERY PLANS.] (a) Each electric 
  5.24  utility shall file a stranded cost recovery plan by January 1, 
  5.25  2002.  The recovery plan must document anticipated stranded 
  5.26  costs, provide a mitigation proposal, and describe offsetting 
  5.27  increases in the market value of other assets.  No electric 
  5.28  utility may charge Minnesota customers to recover stranded costs 
  5.29  except as approved by the commission.  The commission shall 
  5.30  approve and publish a recovery plan no later than October 1, 
  5.31  2001, for each electric utility submitting a plan.  The 
  5.32  commission may only approve plans that:  
  5.33     (1) permit collection of a stranded cost recovery charge 
  5.34  from all customers for a utility's stranded costs; and 
  5.35     (2) establish the (i) amount of stranded costs through the 
  5.36  sale by public auction of the generation assets and power 
  6.1   purchase contracts for which the utility is seeking recovery; 
  6.2   and (ii) a limited recovery period designed to recover those 
  6.3   costs expeditiously.  An affiliate provider may bid to purchase 
  6.4   the assets or contracts of its affiliated utility.  
  6.5      (b) The commission shall not allow the use of any recovery 
  6.6   mechanism which it finds acts to impede the development of 
  6.7   competition, such as an entry or exit fee. 
  6.8      (c) Any stranded costs of an electric utility not recovered 
  6.9   under the utility's recovery plan approved by the commission are 
  6.10  not recoverable by the utility.  
  6.11     (d) Every electric utility has a duty to cooperate with the 
  6.12  commission in implementing this chapter, as a precondition for 
  6.13  recovery of stranded costs.  Approval of a recovery plan and 
  6.14  collection of any stranded costs by an electric utility is 
  6.15  deemed a settlement of the utility's claims to recover stranded 
  6.16  costs.  
  6.17     Subd. 3.  [STRANDED COST RECOVERY CRITERIA, 
  6.18  METHODOLOGY.] (a) An electric utility is allowed to seek to 
  6.19  recover up to 100 percent stranded costs associated with 
  6.20  required environmental mandates currently approved for cost 
  6.21  recovery and power acquisitions mandated by state or federal law.
  6.22     (b) An electric utility has the duty to prudently, 
  6.23  thoroughly, and aggressively mitigate stranded costs.  
  6.24  Mitigation measures may include but are not limited to:  
  6.25     (1) reduction of expenses; 
  6.26     (2) renegotiation of existing contracts; 
  6.27     (3) refinancing of existing debt; 
  6.28     (4) sale, write-off, or write-down of uneconomic or surplus 
  6.29  assets, including regulatory assets not directly related to the 
  6.30  provision of electric service; and 
  6.31     (5) sale of all generation assets and power purchase 
  6.32  contracts through a competitive bidding process that could 
  6.33  include a bid from an affiliate of the electric utility.  
  6.34     (c) An electric utility's stranded benefits, if any, must 
  6.35  be used to reduce the utility's stranded costs, if any.  
  6.36     (d) The commission is authorized to allow an electric 
  7.1   utility to collect a stranded cost recovery charge as part of 
  7.2   the nonbypassable surcharge under section 216E.16, subdivision 
  7.3   3, subject to the commission's determination that the charge is: 
  7.4      (1) equitable, appropriate, and balanced; 
  7.5      (2) in the public interest; and 
  7.6      (3) consistent with the intent of this chapter.  
  7.7   The burden of proof for a stranded recovery claim must be borne 
  7.8   by the electric utility making the claim. 
  7.9      (e) A retail customer is not responsible for wholesale 
  7.10  stranded costs.  An electric utility's recovery charges shall 
  7.11  not apply to a wholesale transaction that utilizes the utility's 
  7.12  systems nor to a competitive alternative that existed before the 
  7.13  effective date of this section, including but not limited to 
  7.14  self-generation and sales of nonfirm electricity.  
  7.15     Sec. 6.  [216E.05] [LOCAL DISTRIBUTION UTILITY 
  7.16  OBLIGATIONS.] 
  7.17     The local distribution utility shall continue to be 
  7.18  obligated to customers in the utility's service territory to 
  7.19  provide all regulated services to those customers and to connect 
  7.20  those customers to the utility's distribution facilities on 
  7.21  nondiscriminatory and comparable service terms and conditions.  
  7.22  These obligations include the obligation to transport the power 
  7.23  supply purchased by the customer to the location of the 
  7.24  customer's facilities.  As of January 1, 2006, a local 
  7.25  distribution utility is no longer required to provide power 
  7.26  supply services.  
  7.27     Sec. 7.  [216E.06] [RELIABILITY AND SAFETY.] 
  7.28     Subdivision 1.  [RULES.] The commission shall maintain and 
  7.29  update rules to ensure that reliable and safe electric 
  7.30  distribution services, with customer service safeguards, are 
  7.31  continued for all customers.  
  7.32     Subd. 2.  [PRESERVATION MEASURES.] Local distribution 
  7.33  utilities shall take all steps necessary to preserve the 
  7.34  integrity, safety, reliability, and quality of electric 
  7.35  distribution services in Minnesota.  
  7.36     Sec. 8.  [216E.07] [TRANSMISSION SYSTEM.] 
  8.1      (a) A transmission operator shall provide for 
  8.2   nondiscriminatory access to and use of the transmission system 
  8.3   for buyers and sellers of electricity, as prescribed by the 
  8.4   Federal Energy Regulatory Commission. 
  8.5      (b) By July 1, 2002, each electric utility that seeks to 
  8.6   provide electric services to retail customers in the state under 
  8.7   this chapter shall comply with federal requirements regarding 
  8.8   operation of its transmission assets, and shall certify its 
  8.9   compliance to the commission. 
  8.10     (c) Transmission operators must operate their transmission 
  8.11  facilities in compliance with the reliability standards set by 
  8.12  the Mid Continent Area Power Pool, or its successor 
  8.13  organization, regional transmission organization or regional 
  8.14  transmission group approved by the Federal Energy Regulatory 
  8.15  Commission to operate in this region, or the North American 
  8.16  Electricity Reliability Council or its successors. 
  8.17     (d)  Each electric utility that owns both generation and 
  8.18  transmission assets must demonstrate to the commission that its 
  8.19  transmission assets are operating independently of its 
  8.20  generating assets.  The commission shall consider ownership or 
  8.21  membership in an independent transmission entity approved by the 
  8.22  federal energy regulatory commission as proof of independence.  
  8.23     (e) Nothing in paragraphs (a) to (d) affects the rights or 
  8.24  obligations of the transmission operator to comply with the 
  8.25  Federal Power Act and the regulations adopted under that act.  
  8.26     Sec. 9.  [216E.08] [COMPETITIVE PROVIDER REGISTRATION.] 
  8.27     Subdivision 1.  [REGISTRATION REQUIRED.] An entity that 
  8.28  wants to become a competitive provider must register with, and 
  8.29  receive the approval of, the commission prior to providing 
  8.30  services as a competitive provider. 
  8.31     Subd. 2.  [RESOURCES REQUIRED.] As a condition of 
  8.32  registration, the commission shall determine that the applicant 
  8.33  has sufficient resources and measures, such as bonding, 
  8.34  insurance, or other evidence of creditworthiness, to preserve 
  8.35  the integrity, safety, reliability, and quality of electric 
  8.36  service in the state. 
  9.1      Subd. 3.  [INFORMATION REQUIRED; RENEWAL.] (a) The 
  9.2   commission shall base approval of registration on the 
  9.3   applicant's submission of evidence addressing the following 
  9.4   factors:  
  9.5      (1) the applicant's technical ability to obtain and deliver 
  9.6   power supply services; 
  9.7      (2) documentation of financial capability of the applicant 
  9.8   to provide and reliably sustain the proposed power supply 
  9.9   services; and 
  9.10     (3) a description of the form of ownership, including 
  9.11  affiliates.  
  9.12     (b) A competitive provider must renew its registration 
  9.13  annually.  The commission shall approve a renewal unless good 
  9.14  cause for rejection is shown.  
  9.15     (c) The commission's approval of a competitive provider's 
  9.16  registration may be revoked if good cause for revocation is 
  9.17  shown.  
  9.18     Subd. 4.  [REJECTION AND RESPONSE.] Within 30 days after 
  9.19  receipt, the commission may reject a proposed registration 
  9.20  application that does not contain sufficient information for the 
  9.21  commission to evaluate the proposed registration.  The 
  9.22  commission shall fully describe any deficiencies in a proposed 
  9.23  registration that is rejected for filing.  
  9.24     Subd. 5.  [RESPONSE DEADLINE.] The commission shall make 
  9.25  its determination to approve or disapprove a submittal for 
  9.26  registration within 60 days of its filing with the commission.  
  9.27     Subd. 6.  [STANDARDS.] The commission may establish 
  9.28  standards of service for competitive providers.  The 
  9.29  commission's standards shall not limit market entry nor regulate 
  9.30  competitive providers' prices.  Violation of these standards may 
  9.31  be considered good cause for revoking registration approval or 
  9.32  rejection of registration renewal.  
  9.33     Sec. 10.  [216E.09] [UNBUNDLING OF UTILITY FUNCTIONS.] 
  9.34     Subdivision 1.  [UTILITY UNBUNDLING.] (a) Each electric 
  9.35  utility must operationally and financially separate its 
  9.36  generation, transmission, distribution, and retail energy 
 10.1   services business functions by January 1, 2003.  To the extent 
 10.2   the utility provides services in all three areas, the electric 
 10.3   utility's business activities shall be separated into the 
 10.4   following units: 
 10.5      (1) a unit for operating the utility's generation assets, 
 10.6   if any; 
 10.7      (2) a unit for providing competitive power supply services; 
 10.8   and 
 10.9      (3) a unit for the provision of transmission or 
 10.10  distribution services. 
 10.11     (b) Electric utility unbundling activities shall be 
 10.12  consistent with any functional separation guidelines adopted by 
 10.13  the commission prior to the effective date of this act, or in 
 10.14  the case of cooperative and municipal electric utilities, by 
 10.15  their respective governing bodies. The commission or in the case 
 10.16  of cooperative and municipal electric utilities, their 
 10.17  respective governing bodies, shall issue an order by October 1, 
 10.18  2002, establishing the the electric utility's distribution rates 
 10.19  that are unbundled from the other functions.  Customer bills 
 10.20  after January 1, 2003, shall show the charges for all of the 
 10.21  unbundled functions.  
 10.22     (c) An electric utility may accomplish the separation 
 10.23  required above either through the creation of separate 
 10.24  functional divisions within the same company, through the 
 10.25  creation of separate affiliated or nonaffiliated companies, or 
 10.26  through the sale of assets to a third party. 
 10.27     (d) Each electric utility shall file with the commission or 
 10.28  in the case of cooperative and municipal electric utilities, 
 10.29  their respective governing bodies, a plan to implement this 
 10.30  section by January 1, 2002.  The commission or in the case of 
 10.31  cooperative and municipal electric utilities, their respective 
 10.32  governing bodies, shall adopt the utility's plan for business 
 10.33  separation required above or adopt the plan with modifications. 
 10.34     Customer metering shall remain a part of the regulated 
 10.35  distribution service until at least January 1, 2005, and is 
 10.36  subject to a determination by the commission thereafter.  
 11.1      Subd. 2.  [OWNER OR AFFILIATE FACILITY, SERVICE; MARKET 
 11.2   PRICING.] (a) Both local distribution utilities and other 
 11.3   entities may own transmission facilities.  
 11.4      (b) An affiliate of a local distribution utility may own 
 11.5   electric generation assets.  An affiliate of local distribution 
 11.6   utility may sell generation directly to a customer, provided 
 11.7   that generation assets and power supply services are 
 11.8   operationally separate from a transmission or distribution 
 11.9   affiliate, if any. 
 11.10     (c) An affiliate of a local distribution utility may offer 
 11.11  competitive power supply services.  Prices for unbundled power 
 11.12  supply services must be determined by competitive market forces 
 11.13  and not by the commission or any other regulatory body. 
 11.14     Subd. 3.  [UNBUNDLED LOCAL DISTRIBUTION UTILITY RATES.] On 
 11.15  or before July 1, 2002, each local distribution utility shall 
 11.16  file with the commission for distribution rates that are 
 11.17  unbundled from the transmission and generation functions under 
 11.18  section 216B.16.  
 11.19     Sec. 11.  [216E.10] [ACCESS TO TRANSMISSION OR DISTRIBUTION 
 11.20  FACILITY.] 
 11.21     Subdivision 1.  [ACCESS REQUIRED.] Each owner, operator, or 
 11.22  provider of a transmission or distribution facility or ancillary 
 11.23  service, including a federal, state, or local public power 
 11.24  agency, shall provide comparable and reciprocal access to the 
 11.25  facility, ancillary service, and any other service available, to 
 11.26  a buyer or seller on a nondiscriminatory and comparable basis.  
 11.27  The commission shall ensure nondiscriminatory open access to the 
 11.28  electric system for retail transactions. 
 11.29     Subd. 2.  [TRANSMISSION OR DISTRIBUTION SERVICE 
 11.30  TARIFFS.] Each electric utility or local distribution utility 
 11.31  providing transmission or distribution services shall file at 
 11.32  the Federal Energy Regulatory Commission or with the commission, 
 11.33  as appropriate, comparable and reciprocal service tariffs that 
 11.34  provide open access for competitors.  
 11.35     Subd. 3.  [COMMISSION MONITORS.] The commission shall 
 11.36  monitor jurisdictional companies providing transmission or 
 12.1   distribution services and take necessary measures to ensure that 
 12.2   no supplier has an unfair advantage in offering access to and 
 12.3   pricing those services.  
 12.4      Sec. 12.  [216E.11] [AFFILIATE RELATIONS; RULES.] 
 12.5      The commission shall continue to enforce its authority over 
 12.6   affiliate relations under section 216B.48 and may adopt 
 12.7   additional rules to ensure that a utility does not directly or 
 12.8   indirectly include in regulated rates any costs or expenses of 
 12.9   an affiliated provider or other affiliate engaged in providing 
 12.10  power supply services or any other unregulated business. 
 12.11     Any additional commission rules must: 
 12.12     (1) be competitively neutral; 
 12.13     (2) not prevent affiliated providers or other affiliates 
 12.14  from providing unregulated products or services; 
 12.15     (3) not prevent utilities and their affiliates from 
 12.16  realizing natural economics of scale; 
 12.17     (4) not prevent utility affiliates from using their 
 12.18  corporate name or logo; and 
 12.19     (5) no restrict the operations of affiliated providers 
 12.20  outside the service area of the utility with which it is 
 12.21  affiliated.  
 12.22     Municipal utilities and cooperative electric associations 
 12.23  are subject to the commission's rules with respect to affiliate 
 12.24  relations. 
 12.25     Sec. 13.  [216E.12] [MARKET AGGREGATOR.] 
 12.26     A customer may arrange for power supply services through a 
 12.27  market aggregator that complies with the requirements of this 
 12.28  section.  An entity wishing to offer services as a market 
 12.29  aggregator may only do so if the entity is: (i) arranging for 
 12.30  power supply services solely from registered competitive 
 12.31  providers in good standing; or (ii) itself a registered 
 12.32  competitive provider in good standing.  Prior to offering 
 12.33  services as a market aggregator and by January 1 of each year 
 12.34  thereafter, the entity must seek and receive the approval of the 
 12.35  commission to provide market aggregation services.  The 
 12.36  commission must approve, disapprove or request more information 
 13.1   on the petition of the entity within 20 days of receiving the 
 13.2   petition or the petition shall be deemed approved.  The 
 13.3   commission may delegate its authority under this section to the 
 13.4   executive secretary.  The commission's approval of a market 
 13.5   aggregator's petition to provide service may be revoked if good 
 13.6   cause for the revocation is shown.  
 13.7      Sec. 14.  [216E.13] [CONTRACT RIGHTS.] 
 13.8      Nothing in this chapter interferes with or supersedes the 
 13.9   rights of parties under a contract entered into before the 
 13.10  effective date of this section.  The terms of any collective 
 13.11  bargaining agreement between an electric utility and its 
 13.12  employees are unaffected by this act.  
 13.13     Sec. 15.  [216E.14] [APPLICABILITY TO OTHER LAWS.] 
 13.14     To the extent that any other statute would diminish a right 
 13.15  created or duty imposed by this chapter, the other statute is 
 13.16  superseded by this chapter, unless (1) another provision of this 
 13.17  chapter expressly provides otherwise, or (2) a provision of 
 13.18  another law expressly provides otherwise and specifically 
 13.19  identifies the contrary provision of this chapter.  
 13.20     Sec. 16.  [216E.15] [REMEDIES.] 
 13.21     Subdivision 1.  [LIABILITY.] An entity that owns or 
 13.22  operates equipment or facilities in this state to transmit or 
 13.23  distribute electricity is not liable for damages to a customer 
 13.24  if the customer's competitive provider fails to deliver the 
 13.25  service in accordance with the terms of the provider's bilateral 
 13.26  contract with the customer.  This subdivision is not intended, 
 13.27  and must not be construed, to relieve liability arising from the 
 13.28  entity's own action or failure to act. 
 13.29     Subd. 2.  [ORDER TO CEASE VIOLATION.] A customer, market 
 13.30  aggregator, or other entity provided distribution or intrastate 
 13.31  transmission service by an electric utility or local 
 13.32  distribution utility in the state has the right to obtain an 
 13.33  order from the commission compelling the electric utility or 
 13.34  local distribution utility to cease any violation of this 
 13.35  chapter and to pay all of the complaining party's costs, 
 13.36  including reasonable attorney fees.  
 14.1      Sec. 17.  [216E.16] [MINNESOTA ELECTRIC SYSTEM PUBLIC 
 14.2   BENEFITS FUND.] 
 14.3      Subdivision 1.  [FUND ESTABLISHED.] The Minnesota electric 
 14.4   system public benefits charge is established as an account in 
 14.5   the state treasury.  Earnings, such as interest, dividends, and 
 14.6   any other earnings arising from fund assets, must be credited to 
 14.7   the fund. 
 14.8      Subd. 2.  [APPROPRIATION AND EXPENDITURES.] Money in the 
 14.9   fund is appropriated to the commissioner of commerce to 
 14.10  implement this section.  Amounts appropriated under this 
 14.11  subdivision must be used by the commissioner to support public 
 14.12  purpose programs relating to: 
 14.13     (1) educating customers about the opportunities and 
 14.14  concerns presented by the implementation of retail choice, until 
 14.15  June 30, 2005; 
 14.16     (2) assisting low-income energy consumers with bill 
 14.17  payments and other types of assistance designed to ensure 
 14.18  affordability and continuity of energy services; 
 14.19     (3) subsidizing the cost of renewable energy pursuant to 
 14.20  subdivision 7, until June 30, 2010.  The commissioner shall 
 14.21  transfer funds for this purpose to the commissioner of revenue 
 14.22  to administer the renewable tax credit program under subdivision 
 14.23  7; 
 14.24     (4) retraining dislocated workers until June 30, 2005.  The 
 14.25  commissioner shall transfer funds for this purpose to the 
 14.26  commissioner of economic security; and 
 14.27     (5) covering the administrative expenses of the public 
 14.28  utilities commission and the department of commerce incurred in 
 14.29  implementing chapter 216E, until June 30, 2006. 
 14.30     Subd. 3.  [NONBYPASSABLE SURCHARGE.] (a) Not later than 
 14.31  August 1 of each year, the commissioner shall recommend to the 
 14.32  commission an adequate and appropriate surcharge to apply to 
 14.33  each local distribution utility and a budget to achieve the 
 14.34  purposes description in subdivision 2.  The commission shall 
 14.35  review the budget for reasonableness and may modify the budget 
 14.36  to the extent it is unreasonable. 
 15.1      (b) The commission shall annually establish the amount of 
 15.2   the nonbypassable, competitively neutral surcharge appropriate 
 15.3   to the various local distribution utilities, within 60 days of 
 15.4   receipt of the recommendation of the department and shall order 
 15.5   the imposition of the surcharge effective on the earliest 
 15.6   practicable date.  The base amount of the surcharge shall be 
 15.7   estimated to result in the collection of an amount that is 
 15.8   equivalent to the budget approved by the commission under 
 15.9   paragraph (a).  In addition to this base amount, the amount of 
 15.10  surcharge established for each local distribution utility shall 
 15.11  reflect: 
 15.12     (1) the amount of stranded costs recoverable under 216E.04; 
 15.13     (2) for the customers of a utility subject to section 
 15.14  216B.1645, the costs recoverable under that section; 
 15.15     (3) subject to section 116C.779, the costs of maintaining 
 15.16  the fund estabilished in that section; 
 15.17     (4) the utility's personal property replacement charge, as 
 15.18  calculated in subdivision 8; and 
 15.19     (4) the transition costs related to implementation of 
 15.20  corporate separation and retail access as described in 
 15.21  subdivision 9. 
 15.22     (c) The surcharge under this section shall be no more than 
 15.23  ... in the first year, and shall be appropriately reduced 
 15.24  thereafter to reflect the expiration of uses of the fund. 
 15.25     Subd. 4.  [COLLECTION.] (a) Except as provided in paragraph 
 15.26  (b), each local distribution utility shall collect the surcharge 
 15.27  established by the commission for that utility under subdivision 
 15.28  3 and, except as provided in paragraph (c), transfer amounts 
 15.29  collected to the commissioner of revenue in the manner 
 15.30  prescribed by that commissioner.  The commissioner of revenue 
 15.31  shall deposit the receipts in the fund established in 
 15.32  subdivision 1.  The local distribution utility shall show this 
 15.33  surcharge as a separate line item on its customers' bills. 
 15.34     (b) The utility subject to section 116C.779 shall remit the 
 15.35  funds collected under this subdivision to the commissioner of 
 15.36  revenue, less amounts necessary to reimburse the costs incurred 
 16.1   by the utility under that section.  
 16.2      (c) Each local distribution utility shall remit the funds 
 16.3   collected under this section to the commissioner of revenue, 
 16.4   less: 
 16.5      (1) the amount of personal property tax replacement funds 
 16.6   collected by the utility if any.  As provided in subdivision 8, 
 16.7   the utility shall use the personal property replacement funds it 
 16.8   collects to replace revenues lost to local governments under 
 16.9   section 22 of this act; 
 16.10     (2) the amount of stranded costs recoverable under section 
 16.11  216E.04, if any; and 
 16.12     (3) the amount of transition costs approved under 
 16.13  subdivision 9.  
 16.14     Subd. 5.  [CONSERVATION PROGRAM.] Nothing in this act 
 16.15  affects or applies to a current federal or state conservation or 
 16.16  other demand-side management program.  Nor does this chapter 
 16.17  affect or apply to the wind and biomass mandates of sections 
 16.18  216B.2423 and 216B.2424 or the recovery provisions of section 
 16.19  216B.1645. 
 16.20     Subd. 6.  [EVALUATION BY LEGISLATIVE AUDITOR.] The 
 16.21  efficiency and effectiveness of programs funded by proceeds in 
 16.22  the fund shall be reviewed by the office of the legislative 
 16.23  auditor on a biennial basis.  
 16.24     Subd. 7.  [TAX CREDITS FOR RENEWABLE DEVELOPMENT.] 
 16.25  Utilizing the proceeds transferred to the commissioner of 
 16.26  revenue under subdivision 2, clause (4), the commissioner of 
 16.27  revenue shall establish and administer a renewable tax credit 
 16.28  program to subsidize the research, development and capital 
 16.29  construction costs of renewable energy generation.  The amount 
 16.30  of the tax credit shall be: (1) technology-specific; (2) 
 16.31  calculated with the assumption that all state and federal 
 16.32  subsidies for which the renewable resource is eligible have been 
 16.33  utilized; and (3) intended to bring the market price of 
 16.34  renewable energy in line with the market price for electricity.  
 16.35  The total amount of tax credits provided under this subdivision 
 16.36  shall not exceed $....... annually.  
 17.1      Subd. 8. [PERSONAL PROPERTY TAX REPLACEMENT CHARGE.] (a) 
 17.2   Until June 30, 2012, each distribution utility that owns 
 17.3   personal property that is exempted from taxation under section 
 17.4   22 shall continue to pay local governments an amount of revenue 
 17.5   equivalent to the amount the utility would have paid as of the 
 17.6   date the exemption under section 22 went into effect, less any 
 17.7   reduction in market value.  The utility shall generate the funds 
 17.8   to pay this equivalent amount through a personal property tax 
 17.9   replacement charge added to the nonbypassable surcharge imposed 
 17.10  under section 216E.16. 
 17.11     (b) The commissioner of revenue shall annually value the 
 17.12  utility personal property exempted under section 22, and shall 
 17.13  report that value to the relevant county auditor.  This 
 17.14  valuation shall be limited to the equipment in place on the date 
 17.15  that section 22 became effective, and shall not include new or 
 17.16  replacement generation equipment added after that date.  The 
 17.17  relevant county auditors shall notify each utility of the annual 
 17.18  market valuation of the generation property. 
 17.19     Subd. 9.  [TRANSITION COSTS.] Upon application by a public 
 17.20  utility, the commission shall approve the reasonable costs 
 17.21  involved in corporate separation and the costs of implementing 
 17.22  retail access, including, but not limited to, metering, billing, 
 17.23  and energy management systems, and information technology 
 17.24  systems costs required to implement retail access.  The public 
 17.25  utility shall bear the burden of proof as to the reasonableness 
 17.26  of these costs. 
 17.27     Sec. 18.  [216E.17] [CUSTOMER EDUCATION.] 
 17.28     The commissioner of commerce shall establish a customer 
 17.29  education program to do all of the following: 
 17.30     (1) inform customers of the changes in the provision of 
 17.31  electric service, including, but not limited to, the 
 17.32  availability of competitive providers; 
 17.33     (2) inform customers of the requirements relating to 
 17.34  disclosures, explanations, or sales information for competitive 
 17.35  providers; and 
 17.36     (3) provide assistance to customers in understanding and 
 18.1   using the information to make reasonably informed choices about 
 18.2   which service to purchase and from whom to purchase it. 
 18.3      The commission shall consult with and involve local 
 18.4   distribution utilities in the design and implementation of the 
 18.5   education program.  The commission shall establish and implement 
 18.6   the program established under this section by January 1, 2002.  
 18.7   The program shall terminate on December 31, 2004.  
 18.8      Sec. 19.  [216E.18] [PRICE TO BEAT.] 
 18.9      (a) From January 1, 2003 until January 1, 2006, the default 
 18.10  provider for a service territory shall offer rates for power 
 18.11  supply services to customers in that territory equivalent to the 
 18.12  rates for such services that were offered and in effect on 
 18.13  December 31, 2002.  Those rates shall be referred to as the 
 18.14  utility's "price to beat."  Those rates shall be reduced dollar 
 18.15  for dollar to reflect any amount by which the property tax on 
 18.16  the attached generation machinery of the electric utility 
 18.17  serving the territory as of December 31, 2002 is reduced.  To 
 18.18  the extent practicable each rate class should share this 
 18.19  reduction equally. 
 18.20     (b) The utility's price to beat shall be adjusted as 
 18.21  provided in section 216B.16, subdivision 7.  
 18.22     (c) An affiliated provider shall make public its price to 
 18.23  beat in a manner that provides adequate disclosure as determined 
 18.24  by the commission. 
 18.25     Sec. 20.  [216E.19] [MARKET POWER ISSUES; GENERATION.] 
 18.26     (a) The commission shall conduct an investigation of 
 18.27  potential market power in the Minnesota electric generation 
 18.28  market in order to ensure that retail customers in Minnesota 
 18.29  will reap the full benefits of competition.  Such investigation 
 18.30  shall be completed by February 1, 2002. 
 18.31     (b) For purposes of assessing potential generation market 
 18.32  power, the relevant market shall be defined as all generation 
 18.33  operating in Minnesota that is connected to the transmission or 
 18.34  distribution system and capable of serving competitive retail 
 18.35  load in Minnesota, plus any out-of-state generation that is 
 18.36  proven to be available and capable of being imported into 
 19.1   Minnesota to serve competitive retail load. 
 19.2      (c) If, as a result of the investigation conducted under 
 19.3   paragraph (a) above, the commission finds that market power in 
 19.4   the relevant market exists, the commission shall order any 
 19.5   utility with market power to file a market power mitigation plan 
 19.6   by April 1, 2002.  These plans may include divestiture of 
 19.7   generation facilities, capacity auctions, or any other 
 19.8   appropriate remedial action.  The commission shall issue an 
 19.9   order approving or modifying the plans by August 1, 2002, and 
 19.10  all required remedial actions shall be completed by the utility 
 19.11  prior to January 1, 2003. 
 19.12     (d) After January 1, 2003, the commission is authorized to 
 19.13  conduct such further investigations and order further actions 
 19.14  necessary to mitigate any adverse market power impacts arising 
 19.15  from the ownership or control of generation facilities. 
 19.16     Sec. 21.  [216E.20] [FUEL SOURCE INFORMATION.] 
 19.17     By July 1, 2002, electric utilities shall clearly and 
 19.18  prominently identify on customers' bills or in a separate bill 
 19.19  insert, on at least a biannual basis, the percentage of its 
 19.20  total retail energy sales that come from the following 
 19.21  categories of generators:  coal, nuclear, natural gas, wind, 
 19.22  biomass, hydropower, and other.  The category of "other" must be 
 19.23  used for any sources of power whose generation category the 
 19.24  utility cannot reasonably or reliably verify. 
 19.25     Sec. 22.  Minnesota Statutes 2000, section 272.027, is 
 19.26  amended by adding a subdivision to read: 
 19.27     Subd. 4.  [PERSONAL PROPERTY USED TO GENERATE ELECTRICITY.] 
 19.28  As of January 1, 2003, personal property used to generate 
 19.29  electric power is exempt from property taxation.  This exemption 
 19.30  shall not apply to transformers, transmission lines, 
 19.31  distribution lines or any other tools, implements, and machinery 
 19.32  that is part of an electric substation, wherever located. 
 19.33     Sec. 23.  [INSTRUCTION TO REVISOR; TECHNICAL PROVISIONS.] 
 19.34     (a) In consultation with the department of commerce and the 
 19.35  public utilities commission and at their direction, the revisor 
 19.36  of statutes shall submit a bill to the legislature by January 
 20.1   15, 2002, identifying any laws affected by this chapter and 
 20.2   amending or repealing any laws necessary to make them consistent 
 20.3   with the purposes of this chapter.  
 20.4      (b) Where the term "act" or "chapter" is used in sections 1 
 20.5   to 20, it refers to sections 1 to 20.  
 20.6      Sec. 24.  [APPROPRIATION.] 
 20.7      (a) $275,000 is appropriated from the general fund to the 
 20.8   public utilities commission to implement this act and is 
 20.9   available through June 30, 2003.  
 20.10     (b) $....... is appropriated from the general fund to the 
 20.11  commissioner of commerce for fiscal year 2002 and $...... for 
 20.12  fiscal year 2003 for customer education.  These amounts shall be 
 20.13  in addition to other amounts appropriated for this purpose.  
 20.14     Sec. 25.  [EFFECTIVE DATE.] 
 20.15     This act is effective the day following final enactment.