1.1                          A bill for an act 
  1.2             relating to utilities; requiring legislative electric 
  1.3             energy task force to establish technical advisory 
  1.4             committee on electric restructuring; requiring 
  1.5             advisory committee to issue reports; establishing 
  1.6             duties for public utilities commission and department 
  1.7             of public service. 
  1.8   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.9      Section 1.  [LEGISLATIVE ELECTRIC ENERGY TASK FORCE; 
  1.10  ELECTRIC RESTRUCTURING TECHNICAL ASSISTANCE.] 
  1.11     Subdivision 1.  [ESTABLISHMENT OF TECHNICAL ADVISORY 
  1.12  COMMITTEE.] The legislature finds that, in addition to the 
  1.13  considerable legislative resources committed to the study of 
  1.14  electric industry restructuring through the electric energy task 
  1.15  force and the energy subcommittees of the house and senate 
  1.16  standing policy committees, the legislature is in need of 
  1.17  technical assistance on electric industry deregulation issues.  
  1.18  Therefore, the legislative electric energy task force shall 
  1.19  establish by May 15, 1998, a technical advisory committee to 
  1.20  assist the legislature in analyzing these issues.  Unless 
  1.21  terminated earlier by the task force, the technical advisory 
  1.22  committee expires January 31, 2000. 
  1.23     Subd. 2.  [MEMBERSHIP OF TECHNICAL ADVISORY COMMITTEE.] The 
  1.24  chairs of the legislative electric energy task force shall 
  1.25  appoint 13 members to the advisory committee that: 
  1.26     (1) reflect the broad array of interests affected by 
  2.1   electric industry restructuring; 
  2.2      (2) have technical expertise in one or more of the 
  2.3   following areas:  energy marketing; energy efficiency; energy 
  2.4   procurement and purchasing; utility regulation; electricity 
  2.5   production; market economics; electric system operation and 
  2.6   reliability; and the provision of universal electric service, 
  2.7   especially to low-income or rural consumers; and 
  2.8      (3) include the chair of the public utilities commission or 
  2.9   the chair's designee, a representative of the department of 
  2.10  public service, and a representative of the office of the 
  2.11  attorney general. 
  2.12     In addition to these 13 members, the chairs of the task 
  2.13  force shall serve as ex officio members of the advisory 
  2.14  committee. 
  2.15     Subd. 3.  [DUTIES OF TECHNICAL ADVISORY COMMITTEE.] The 
  2.16  advisory committee shall examine, consult with experts, analyze, 
  2.17  and report on the policy and technical issues described in 
  2.18  section 2.  The reports of the advisory committee must be based 
  2.19  on professional expertise in utility operations, economics, 
  2.20  regulatory law, and public policy and shall endeavor to provide 
  2.21  the legislative electric energy task force with objective and 
  2.22  balanced information.  
  2.23     Subd. 4.  [DUTIES OF PUBLIC UTILITIES COMMISSION.] The 
  2.24  chair of the public utilities commission, or the chair's 
  2.25  designee, shall chair the advisory committee.  The public 
  2.26  utilities commission shall provide technical and administrative 
  2.27  staff and assistance to the advisory committee and shall provide 
  2.28  the advisory committee with initial technical analyses of the 
  2.29  issues described in section 3. 
  2.30     Subd. 5.  [DUTIES OF DEPARTMENT OF PUBLIC SERVICE.] The 
  2.31  department of public service shall provide technical assistance 
  2.32  to the advisory committee, shall provide the advisory committee 
  2.33  with an initial technical analysis of the issue described in 
  2.34  section 4, and shall conduct technical analyses as directed by 
  2.35  the advisory committee. 
  2.36     Subd. 6.  [GUIDANCE FOR ADMINISTRATIVE AGENCIES.] The 
  3.1   legislature finds that the issue of customer choice of electric 
  3.2   energy supplier is one of profound economic, environmental, and 
  3.3   social consequence to the citizens of the state and, therefore, 
  3.4   is one that requires determination by the legislature rather 
  3.5   than by an administrative agency.  Therefore, the legislature 
  3.6   directs that the department of public service and the public 
  3.7   utilities commission not implement any plan, order, or other 
  3.8   directive that would implement, or have the effect of 
  3.9   potentially committing the state to the implementation of, 
  3.10  customer choice of electric energy supplier without express 
  3.11  direction from the legislature. 
  3.12     Sec. 2.  [SPECIFIC RESTRUCTURING ISSUES; TECHNICAL ADVISORY 
  3.13  COMMITTEE ON ELECTRIC RESTRUCTURING.] 
  3.14     Subdivision 1.  [BULK POWER SYSTEM RELIABILITY, 
  3.15  INFRASTRUCTURE, AND REGULATION.] By November 1, 1998, the 
  3.16  technical advisory committee shall analyze and report to the 
  3.17  legislative electric energy task force on the following issues 
  3.18  relating to bulk system reliability, infrastructure, and 
  3.19  regulation: 
  3.20     (1) When will the bulk power system be capable of reliably 
  3.21  supporting the volume of power transactions that would result 
  3.22  from implementation of retail competition? 
  3.23     (2) What modifications to the bulk power system and its 
  3.24  management are necessary to ensure that retail competition in 
  3.25  the state's electric industry does not diminish the reliability 
  3.26  of electric service, and what is the estimated cost of those 
  3.27  modifications? 
  3.28     (3) What options and alternatives can customers and power 
  3.29  suppliers in the state and in the region use to ensure the 
  3.30  independent operation and competitively neutral management of 
  3.31  the bulk power grid, and what are the advantages and 
  3.32  disadvantages associated with each option or alternative? 
  3.33     (4) What market infrastructure developments are necessary 
  3.34  or useful in supporting trade and competition in a reliable 
  3.35  electricity market, and what are the advantages and 
  3.36  disadvantages associated with each approach? 
  4.1      (5) What are the regulatory and legal means the state could 
  4.2   use to ensure the low cost, competitively neutral, and fair 
  4.3   utilization of the bulk power system and any market 
  4.4   infrastructure created or sanctioned by the state, and how 
  4.5   should the state address issues of overlapping state, federal, 
  4.6   and international jurisdictions in a regional electricity market?
  4.7      Subd. 2.  [DISTRIBUTION RELIABILITY, SAFETY, AND 
  4.8   MAINTENANCE.] By November 1, 1998, the technical advisory 
  4.9   committee shall analyze and report to the legislative electric 
  4.10  energy task force on the following issues relating to 
  4.11  distribution reliability, safety, and maintenance in a 
  4.12  competitive electric market: 
  4.13     (1) What safety standards should be used to ensure 
  4.14  reliability, safety, and efficient operation of the distribution 
  4.15  system? 
  4.16     (2) What options are available to identify and establish 
  4.17  the respective rights and responsibilities of distribution 
  4.18  utilities, consumers, and competitive power suppliers regarding 
  4.19  electric reliability and continuity of service? 
  4.20     (3) What alternatives can be used, or standards developed, 
  4.21  to address issues relating to the provision of billing, 
  4.22  metering, and customer service? 
  4.23     Subd. 3.  [PRICE PROTECTION MECHANISMS.] By November 1, 
  4.24  1998, the technical advisory committee shall analyze the 
  4.25  development of price protection mechanisms and provide the 
  4.26  legislative electric energy task force with: 
  4.27     (1) a comparison and evaluation of alternative mechanisms 
  4.28  to protect consumers from potential price increases that may be 
  4.29  attributable to electric deregulation; and 
  4.30     (2) a comparison and evaluation of various means to ensure 
  4.31  that prices offered by competitors are nondiscriminatory and 
  4.32  result in lower prices for all customers. 
  4.33     Subd. 4.  [OTHER RESTRUCTURING ISSUES.] The task force may 
  4.34  establish additional priorities or assign additional issues for 
  4.35  the advisory committee to analyze, including, for example: 
  4.36     (1) the potential for competition in Minnesota to result in 
  5.1   net stranded costs; the magnitude and incidence of those costs; 
  5.2   and alternatives for ratepayers, taxpayers, and shareholders to 
  5.3   share those costs; 
  5.4      (2) issues relating to the need for consumers to be 
  5.5   informed about competitive options and protected from deceptive 
  5.6   business practices; 
  5.7      (3) issues relating to renewable energy development, energy 
  5.8   efficiency, and environmental sustainability; 
  5.9      (4) issues relating to access to the retail marketplace by 
  5.10  competitors and methods to prevent the exercise of market power; 
  5.11     (5) issues relating to the provision of universal energy 
  5.12  service in the state, with special emphasis on ensuring 
  5.13  affordable service for rural and low-income consumers; and 
  5.14     (6) a reliable quantification of the potential net benefits 
  5.15  of the implementation of retail competition in the state, an 
  5.16  estimate as to how costs and benefits might be distributed, and 
  5.17  how those costs and benefits might be expected to change over 
  5.18  time. 
  5.19     Sec. 3.  [SPECIFIC RESTRUCTURING ISSUES; PUBLIC UTILITIES 
  5.20  COMMISSION.] 
  5.21     Subdivision 1.  [INFORMATION DISCLOSURE AND CONSUMER 
  5.22  PROTECTION.] By September 1, 1998, the public utilities 
  5.23  commission shall conduct an initial technical analysis of issues 
  5.24  relating to information disclosure and consumer protection and 
  5.25  provide the technical advisory committee with: 
  5.26     (1) an evaluation of alternative standards and means of 
  5.27  providing all consumers with information sufficient to support 
  5.28  an informed choice of electric provider in a competitive 
  5.29  environment regarding:  (i) price, terms, and conditions of 
  5.30  service; and (ii) environmental information; and 
  5.31     (2) recommendations regarding consumer protection standards 
  5.32  and practices sufficient to prevent consumer fraud and abuse 
  5.33  while supporting effective competition. 
  5.34     Subd. 2.  [RENEWABLE ENERGY, EFFICIENCY, AND ENVIRONMENTAL 
  5.35  SUSTAINABILITY.] By September 1, 1998, the public utilities 
  5.36  commission shall conduct an initial technical analysis on the 
  6.1   issues of renewable energy, efficiency, and environmental 
  6.2   sustainability, and provide the technical advisory committee 
  6.3   with an assessment of alternatives the state could take, whether 
  6.4   alone or as part of a regional compact, or as part of a national 
  6.5   mandate, to encourage energy efficiency, renewable energy 
  6.6   development, and decreased pollution in the context of a 
  6.7   competitive electric industry. 
  6.8      Subd. 3.  [UNBUNDLED RATES.] The public utilities 
  6.9   commission shall convene a working group of private, public, and 
  6.10  cooperative utilities; national and regional energy marketers; 
  6.11  consumers and their advocates; and other interested parties to 
  6.12  develop a timeline and recommended procedures for separating the 
  6.13  charges for electric generation services, including electric 
  6.14  energy and capacity, from the charges for distribution services, 
  6.15  transmission services, and other services on customers' bills.  
  6.16  The commission shall report the progress of this working group 
  6.17  to the legislative electric energy task force by January 15, 
  6.18  1999. 
  6.19     Sec. 4.  [SPECIFIC RESTRUCTURING DUTIES; DEPARTMENT OF 
  6.20  PUBLIC SERVICE.] 
  6.21     Subdivision 1.  [ANALYSIS OF NET STRANDED COSTS.] By 
  6.22  September 1, 1998, the department of public service shall 
  6.23  conduct an initial technical analysis of issues relating to 
  6.24  stranded costs and shall provide the technical advisory 
  6.25  committee with: 
  6.26     (1) a sensitivity analysis of the magnitude and duration of 
  6.27  net stranded costs, and include in its analysis the potential 
  6.28  for stranded benefits or negative stranded costs that may result 
  6.29  from market prices that are higher than regulated prices; 
  6.30     (2) a report on whether and how net stranded cost recovery 
  6.31  by utilities could harm competition and reduce the benefits of 
  6.32  competition to consumers, and on whether and how denial of 
  6.33  recovery would harm utilities and utility investors; 
  6.34     (3) a comparison and evaluation of potential difficulties 
  6.35  stranded costs could create for private, public, and cooperative 
  6.36  utilities, and alternative means to ensure that customers 
  7.1   receive at least as much assurance of negative stranded cost 
  7.2   recovery as utility owners would of stranded cost recovery; 
  7.3      (4) recommendations on alternatives for the mitigation and 
  7.4   elimination of stranded costs, on any conditions that could be 
  7.5   imposed on utilities in return for full or partial stranded cost 
  7.6   recovery, and on levels and mechanisms for recovery of net 
  7.7   stranded costs; 
  7.8      (5) an analysis of the advantages and disadvantages of 
  7.9   prior versus periodic evaluation, determination, and assessment 
  7.10  of stranded costs; and 
  7.11     (6) an analysis of the advantages and disadvantages of 
  7.12  securitization and other means of requiring customers to pay for 
  7.13  utility stranded costs. 
  7.14     Sec. 5.  [EFFECTIVE DATE.] 
  7.15     Sections 1 to 4 are effective on the day following final 
  7.16  enactment.