1.1                          A bill for an act 
  1.2             relating to utilities; providing for performance 
  1.3             regulation plans for gas utility services; amending 
  1.4             Minnesota Statutes 1996, section 216B.16, by adding a 
  1.5             subdivision; proposing coding for new law in Minnesota 
  1.6             Statutes, chapter 216B. 
  1.7   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.8      Section 1.  Minnesota Statutes 1996, section 216B.16, is 
  1.9   amended by adding a subdivision to read: 
  1.10     Subd. 16.  [PERFORMANCE REGULATION PLAN TARIFFS.] A public 
  1.11  utility providing natural gas services shall file tariff 
  1.12  provisions incorporating the provisions of an approved 
  1.13  performance regulation plan adopted pursuant to section 
  1.14  216B.1675.  Changes in the cost recovery of natural gas supplies 
  1.15  must not be included within the plan unless the plan also 
  1.16  satisfies the requirements of section 216B.167. 
  1.17     Sec. 2.  [216B.1675] [PERFORMANCE REGULATION PLAN FOR GAS 
  1.18  UTILITY SERVICES.] 
  1.19     Subdivision 1.  [PURPOSE.] The purpose of a performance 
  1.20  regulation plan is to provide incentives to a public utility 
  1.21  offering natural gas service (1) to provide service at rates 
  1.22  that are expected to be lower than under current regulation, 
  1.23  while maintaining or improving service quality, by linking the 
  1.24  utility's earnings to its performance and (2) to reduce the cost 
  1.25  and time of regulation. 
  1.26     Subd. 2.  [DEFINITIONS.] For the purposes of this section, 
  2.1   the following terms have the meanings given them in this 
  2.2   subdivision: 
  2.3      (a) "Price, cost, or revenue indexing" means a method to 
  2.4   change rates to reflect changes in a price, cost, or revenue 
  2.5   index specified in the plan. 
  2.6      (b) "Ranges of authorized return" means a 
  2.7   commission-approved range of rate of return on investment.  
  2.8   Earnings within the range are deemed reasonable. 
  2.9      (c) "Specific quality or cost standards" means a benchmark, 
  2.10  range, index, or other standard that may be used to compare a 
  2.11  utility's performance against a quality or cost standard 
  2.12  contained in the plan, and to change rates based on that 
  2.13  comparison. 
  2.14     Subd. 3.  [PETITION.] A public utility that furnishes 
  2.15  natural gas service may petition and file with the commission 
  2.16  for its approval a performance regulation plan pursuant to this 
  2.17  section.  If adopted, the plan must apply to all of the 
  2.18  utility's customers, except those receiving service under 
  2.19  section 216B.163.  A petition may be filed: 
  2.20     (1) as part of a general rate filing pursuant to section 
  2.21  216B.16; or 
  2.22     (2) as a miscellaneous tariff filing pursuant to section 
  2.23  216B.16, in which the commission shall determine whether the 
  2.24  utility's current rates are reasonable or whether changes should 
  2.25  be made before the plan is implemented or phased in during the 
  2.26  course of the plan.  The commission shall determine the 
  2.27  reasonableness of the utility's current rates based on financial 
  2.28  information for the most recent calendar year, amended to 
  2.29  reflect appropriate regulatory adjustments. 
  2.30     Subd. 4.  [PLAN CONTENTS.] The commission may approve a 
  2.31  performance regulation plan that includes: 
  2.32     (1) demonstrable customer benefits including, but not 
  2.33  limited to: 
  2.34     (i) rates under the plan, which would be expected to be 
  2.35  lower than under current rate regulation; 
  2.36     (ii) service quality under the plan, which will be 
  3.1   maintained or improved; 
  3.2      (iii) the costs and time associated with general rate 
  3.3   cases, which would be replaced with a less costly and less 
  3.4   time-consuming process for setting rates; 
  3.5      (iv) the authority of the commission to retain its 
  3.6   authority to investigate matters and to terminate the plan if it 
  3.7   determines the plan is not providing the benefits intended by 
  3.8   this section, which, if the plan is terminated, would result in 
  3.9   the utility becoming subject to rate regulation otherwise in 
  3.10  effect at the time, unless the utility files for and receives 
  3.11  approval of a replacement performance regulation plan; 
  3.12     (v) applying increases or decreases in revenue requirements 
  3.13  under the plan on an equal percentage basis to each customer 
  3.14  class, excluding the portion of the rate recovering the cost of 
  3.15  natural gas supplies; 
  3.16     (vi) linking the utility's earnings to its performance; and 
  3.17     (vii) making all customers, except those receiving service 
  3.18  under section 216B.163, eligible to receive the benefits of the 
  3.19  plan; and 
  3.20     (2) a methodology and procedures for changing rates on an 
  3.21  annual basis during the term of the plan.  The methodology may 
  3.22  include one or more of the following:  the use of price, cost, 
  3.23  or revenue indexing; ranges of authorized return; or specific 
  3.24  service quality or cost standards.  The commission shall allow 
  3.25  the utility to change rates to reflect material changes in cost 
  3.26  due to compliance with government mandates that the utility 
  3.27  cannot avoid. 
  3.28     Subd. 5.  [ANNUAL REPORT.] A plan must include a 
  3.29  requirement to annually file the information needed to 
  3.30  administer the plan. 
  3.31     Subd. 6.  [NOTICE TO CUSTOMERS.] The commission may require 
  3.32  the petitioning utility to provide notice of the proposed plan 
  3.33  to its customers, along with a summary description of the plan 
  3.34  provisions and a notice of the dates, times, and locations of 
  3.35  any public meetings scheduled by the commission. 
  3.36     Subd. 7.  [PLAN REVIEW, HEARING, DISCOVERY.] In reviewing a 
  4.1   proposed plan, the commission may (1) conduct public meetings 
  4.2   that it considers appropriate and (2) grant discovery, as 
  4.3   appropriate. 
  4.4      Subd. 8.  [COMMISSION FINDINGS.] The commission shall issue 
  4.5   findings of fact and conclusions concerning the appropriateness 
  4.6   of the proposed plan.  The commission may approve, reject, or 
  4.7   modify the plan in a manner that meets the requirements of this 
  4.8   section.  An approved or modified plan becomes effective unless 
  4.9   the plan is withdrawn by the utility within 30 days of a final 
  4.10  appealable order.  The commission shall issue its decision on a 
  4.11  plan within the standard time provided by statute if filed as 
  4.12  part of a general rate filing or within six months after 
  4.13  receiving the petition to approve the plan if filed as a 
  4.14  miscellaneous tariff filing unless the commission orders an 
  4.15  extension of the six-month period for good cause. 
  4.16     Subd. 9.  [PLAN TERM; RENEWAL.] The plan shall specify its 
  4.17  term, which shall not be less than three years.  Not less than 
  4.18  six months before the completion of the term of an approved 
  4.19  plan, the commission shall, at the request of the utility, 
  4.20  commence a review of the plan to determine whether to renew the 
  4.21  plan for an additional term.  The commission may approve, 
  4.22  reject, or modify the renewal plan in a manner that meets the 
  4.23  requirements of this section.  A plan approved or modified under 
  4.24  this subdivision becomes effective unless the plan is withdrawn 
  4.25  by the utility within 30 days of a final appealable order. 
  4.26     Subd. 10.  [GENERAL EVALUATION.] The commission shall 
  4.27  evaluate the effectiveness of all plans approved under this 
  4.28  section and submit its findings to the legislature by January 1, 
  4.29  2004. 
  4.30     Sec. 3.  [EFFECTIVE DATE; EXPIRATION.] 
  4.31     Sections 1 and 2 are effective August 1, 1997, and expire 
  4.32  January 1, 2005.