1.1                          A bill for an act 
  1.2             relating to utilities; modifying conservation 
  1.3             improvement program provisions; amending Minnesota 
  1.4             Statutes 1998, sections 216B.16, subdivision 6b; and 
  1.5             216B.241, subdivisions 1a, 1b, and 2b. 
  1.6   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.7      Section 1.  Minnesota Statutes 1998, section 216B.16, 
  1.8   subdivision 6b, is amended to read: 
  1.9      Subd. 6b.  [ENERGY CONSERVATION IMPROVEMENT.] (a) Except as 
  1.10  otherwise provided in this subdivision, all investments and 
  1.11  expenses of a public utility as defined in section 216B.241, 
  1.12  subdivision 1, paragraph (d), incurred in connection with energy 
  1.13  conservation improvements shall be recognized and included by 
  1.14  the commission in the determination of just and reasonable rates 
  1.15  as if the investments and expenses were directly made or 
  1.16  incurred by the utility in furnishing utility service. 
  1.17     (b) After December 31, 1999, investments and expenses for 
  1.18  energy conservation improvements shall not be included by the 
  1.19  commission in the determination of just and reasonable rates for 
  1.20  those retail customer classes of the utility that are comprised 
  1.21  of customers with connected loads of 10,000 kilowatts or more at 
  1.22  one or more locations for each public utility.  However, no 
  1.23  public utility shall be prevented from recovering the full cost 
  1.24  of energy conservation improvements from all customer classes 
  1.25  that, at the time the investments or expenses were made, were in 
  2.1   compliance with the requirements of section 216B.241, 
  2.2   subdivision 1a.  
  2.3      (c) The commission may permit a public utility to file rate 
  2.4   schedules providing for annual recovery of the costs of energy 
  2.5   conservation improvements.  These rate schedules may be 
  2.6   applicable to one or more classes of retail customers as 
  2.7   necessary to reflect the differing minimum spending requirements 
  2.8   of section 216B.241, subdivision 1a, paragraph (b).  After 
  2.9   December 31, 1999, the commission shall allow a public utility, 
  2.10  without requiring a general rate filing under this section, to 
  2.11  reduce the rates applicable to customer classes comprised of 
  2.12  customers with connected loads of 10,000 kilowatts or more at 
  2.13  one or more locations for each public utility by an amount that 
  2.14  reflects the elimination of energy conservation improvement 
  2.15  investments or expenditures no longer required by section 
  2.16  216B.241.  If the commission has set rates based on the use of a 
  2.17  "tracker account," this rate reduction may occur in a series of 
  2.18  steps to reflect the gradual elimination of the tracker account 
  2.19  balance.  
  2.20     (d) After December 31, 1999, a retail customer in a public 
  2.21  utility customer class with a connected load of 10,000 kilowatts 
  2.22  or more at one or more locations for each public utility may 
  2.23  elect to agree with its utility to continue to have the public 
  2.24  utility make energy conservation improvement investments or 
  2.25  expenditures on its behalf.  However, the utility shall be 
  2.26  entitled to apply and collect a surcharge to the billings to 
  2.27  this customer sufficient to recoup, over a period of not more 
  2.28  than three years, the conservation improvement investments or 
  2.29  expenditures plus the public utility's approved rate of return. 
  2.30     Sec. 2.  Minnesota Statutes 1998, section 216B.241, 
  2.31  subdivision 1a, is amended to read: 
  2.32     Subd. 1a.  [INVESTMENT, EXPENDITURE, AND CONTRIBUTION; 
  2.33  REGULATED UTILITIES PUBLIC UTILITY.] (a) For purposes of this 
  2.34  subdivision and subdivision 2, "public utility" has the meaning 
  2.35  given it in section 216B.02, subdivision 4.  Each public utility 
  2.36  shall spend and invest for energy conservation improvements 
  3.1   under this subdivision and subdivision 2 the following amounts: 
  3.2      (1) for a utility that furnishes gas service, .5 percent of 
  3.3   its gross operating revenues from service provided in the state; 
  3.4      (2) for a utility that furnishes electric service, 1.5 
  3.5   percent of its gross operating revenues from service provided in 
  3.6   the state; and 
  3.7      (3) for a utility that furnishes electric service and that 
  3.8   operates a nuclear-powered electric generating plant within the 
  3.9   state, two percent of its gross operating revenues from service 
  3.10  provided in the state. 
  3.11     (b) For the purposes of paragraph (a), revenues from retail 
  3.12  electric service customers with a connected load of more than 
  3.13  10,000 kilowatts at one or more locations for each public 
  3.14  utility must not be counted.  The commissioner may require 
  3.15  investments or spending greater than the amounts required under 
  3.16  this subdivision for a public utility whose most recent advance 
  3.17  forecast required under section 216B.2422 or 216C.17 projects a 
  3.18  peak demand deficit of 100 megawatts or greater within five 
  3.19  years under mid-range forecast assumptions.  A public utility 
  3.20  may appeal a decision of the commissioner under this paragraph 
  3.21  to the commission under subdivision 2.  In reviewing a decision 
  3.22  of the commissioner under this paragraph, the commission shall 
  3.23  rescind the decision if it finds that the required investments 
  3.24  or spending will: 
  3.25     (1) not result in cost-effective programs; or 
  3.26     (2) otherwise not be in the public interest. 
  3.27     (c) Each utility shall determine what portion of the amount 
  3.28  it sets aside for conservation improvement will be used for 
  3.29  conservation improvements under subdivision 2 and what portion 
  3.30  it will contribute to the energy and conservation account 
  3.31  established in subdivision 2a.  Contributions must be remitted 
  3.32  to the commissioner of public service by February 1 of each year.
  3.33  Nothing in this subdivision prohibits a public utility from 
  3.34  spending or investing for energy conservation improvement more 
  3.35  than required in this subdivision. 
  3.36     Sec. 3.  Minnesota Statutes 1998, section 216B.241, 
  4.1   subdivision 1b, is amended to read: 
  4.2      Subd. 1b.  [CONSERVATION IMPROVEMENTS; COOPERATIVES; 
  4.3   MUNICIPALITIES IMPROVEMENT BY COOPERATIVE ASSOCIATION OR 
  4.4   MUNICIPALITY.] (a) This subdivision applies to: 
  4.5      (1) a cooperative electric association that generates and 
  4.6   transmits electricity to associations that provide electricity 
  4.7   at retail including a cooperative electric association not 
  4.8   located in this state that serves associations or others in the 
  4.9   state; 
  4.10     (2) a municipality that provides electric service to retail 
  4.11  customers; and 
  4.12     (3) a municipality with gross operating revenues in excess 
  4.13  of $5,000,000 from sales of natural gas to retail customers.  
  4.14     (b) Each cooperative electric association and municipality 
  4.15  subject to this subdivision shall spend and invest for energy 
  4.16  conservation improvements under this subdivision the following 
  4.17  amounts: 
  4.18     (1) for a municipality, .5 0.5 percent of its gross 
  4.19  operating revenues from the sale of gas and one percent of its 
  4.20  gross operating revenues from the sale of electricity to 
  4.21  customers with a connected load of less than 10,000 kilowatts 
  4.22  not purchased from a public utility governed by subdivision 1a 
  4.23  or a cooperative electric association governed by this 
  4.24  subdivision; and 
  4.25     (2) for a cooperative electric association, 1.5 percent of 
  4.26  its gross operating revenues from service provided in the 
  4.27  state to customers with a connected load of less than 10,000 
  4.28  kilowatts. 
  4.29     (c) Each municipality and cooperative association subject 
  4.30  to this subdivision shall identify and implement energy 
  4.31  conservation improvement spending and investments that are 
  4.32  appropriate for the municipality or association.  Load 
  4.33  management may be used to meet the requirements of this 
  4.34  subdivision if it reduces the demand for or increases the 
  4.35  efficiency of electric services.  A generation and transmission 
  4.36  cooperative electric association may include as spending and 
  5.1   investment required under this subdivision conservation 
  5.2   improvement spending and investment by cooperative electric 
  5.3   associations that provide electric service at retail to 
  5.4   consumers and that are served by the generation and transmission 
  5.5   association.  By February 1 of each year, each municipality or 
  5.6   cooperative shall report to the commissioner its energy 
  5.7   conservation improvement spending and investments with a brief 
  5.8   analysis of effectiveness in reducing consumption of electricity 
  5.9   or gas.  The commissioner shall review each report and make 
  5.10  recommendations, where appropriate, to the municipality or 
  5.11  association to increase the effectiveness of conservation 
  5.12  improvement activities.  The commissioner shall also review each 
  5.13  report for whether a portion of the money spent on residential 
  5.14  conservation improvement programs is devoted to programs that 
  5.15  directly address the needs of renters and low-income persons 
  5.16  unless an insufficient number of appropriate programs are 
  5.17  available.  For the purposes of this subdivision and subdivision 
  5.18  2, "low-income" means an income of less than 185 percent of the 
  5.19  federal poverty level. 
  5.20     (d) As part of its spending for conservation improvement, a 
  5.21  municipality or association may contribute to the energy and 
  5.22  conservation account.  Any amount contributed must be remitted 
  5.23  to the commissioner of public service by February 1 of each year.
  5.24     Sec. 4.  Minnesota Statutes 1998, section 216B.241, 
  5.25  subdivision 2b, is amended to read: 
  5.26     Subd. 2b.  [RECOVERY OF EXPENSES FOR FEES, TAXES, PERMITS.] 
  5.27  The commission shall allow a utility to recover expenses 
  5.28  resulting from a conservation improvement program required by 
  5.29  the department and contributions to the energy and conservation 
  5.30  account, unless the recovery would be inconsistent with a 
  5.31  financial incentive proposal approved by the commission.  In 
  5.32  addition, a utility may file annually, or the public utilities 
  5.33  commission may require the utility to file, and the commission 
  5.34  may approve, rate schedules containing provisions for the 
  5.35  automatic adjustment of charges for utility service in direct 
  5.36  relation to changes in the expenses of the utility for real and 
  6.1   personal property taxes, fees, and permits, the amounts of which 
  6.2   the utility cannot control.  A public utility is eligible to 
  6.3   file for adjustment for real and personal property taxes, fees, 
  6.4   and permits under this subdivision only if, in the year previous 
  6.5   to the year in which it files for adjustment, it has spent or 
  6.6   invested at least 1.75 percent of its gross revenues from 
  6.7   provision of electric service to customers with a connected load 
  6.8   of less than 10,000 kilowatts and .6 0.6 percent of its gross 
  6.9   revenues from provision of gas service for that year for energy 
  6.10  conservation improvements under this section.