5.1. ERMUSR 06-14-2016 - Laserfiche WebLink

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State Regulatory Initiatives On May 21, 2001, the Minnesota Legislature passed the Minnesota Energy Security and Reliability Act (the "Act") which was signed by the Governor into law on May 29, 2001 and became Chapter 212 of Laws of Minnesota 2001. Although the Act constituted the most extensive re-write of the State's law on energy policy in 25 years,the focus was primarily on promoting conservation and renewables rather than on creating a more effective process for securing needed transmission and generation facilities. In part,to address the issue of the need for substantial new investment in transmission, the Minnesota Legislature also passed the Omnibus Energy Bill,Laws of Minnesota 2005,Chapter 97 (the"Omnibus Energy Bill"), codified in Minnesota Statutes Chapter 216B, as amended, whose provisions took effect August 1, 2005. The following discussion of some major provisions that affect municipal utilities is a summary and is qualified in its entirety by reference to the Act and the Omnibus Energy Bill. Distributed Generation. The Omnibus Energy Bill establishes the terms and conditions that govern the interconnection and parallel operation of on-site distributed generation. The Public Utility Commission of the State of Minnesota(the"PUC")has established generic standards for utility tariffs providing for the standardized interconnection of facilities and reasonable interconnection agreements. Municipal utilities and cooperatives must adopt tariffs of their own, which must address the same issues as those addressed by the PUC. The Act requires all utilities to keep records of applications for interconnections and to annually report interconnection activity to the Commissioner of the Minnesota Department of Commerce (the"DOC"). Renewables. Renewables are generally defined as solar, wind, or hydroelectric facilities; however, the Omnibus Energy Bill allows for biogas projects to be eligible for the renewal energy production incentive and promotes the use of soy-diesel and hydrogen as energy sources. The Act, amended in 2010, allows for all utilities to offer its customers one or more options to secure electric energy from renewables or high efficiency, low emissions distributed generation such as fuel cells and micro-turbines fueled by renewable fuels. The DOC Commissioner must certify the applicable power source as renewable. Electric utilities unable to supply their customers with the renewable option must provide an explanation to the PUC. The Omnibus Energy Bill makes a number of changes designed to promote the use of renewable resources, which include expediting regulatory approval of transmission projects related to renewable generation, establishing a framework for a (non-binding) wind energy tariff for community-based energy for development projects,requiring utility participation in a wind integration study,requiring the adjustment of power purchase agreements to account for production tax payments, and requiring a study of the use of bio-diesel fuel to heat homes. The 2005 Minnesota Legislature authorized a study to determine if the State could reliably and cost-effectively integrate a Renewable Energy Standard ("RES") mandate. This study was delivered late in 2006 and the 2007 Minnesota Legislature, acting on the strength of the study results, passed into law the Net Generation Energy Act("NGEA"),Laws of Minnesota 2007,Chapter 3,which will require 25%renewable electric generation by the year 2025,with intervening steps to reach the standard. Consumer Protection. Changes were made to the list of concerns that a municipal or an electric cooperative must address before disconnecting a residential customer for non-payment during the winter heating season. The Act also requires all utilities to offer a payment agreement to residential customers for past due bills or for making up undercharges, if the undercharge is caused through no fault of the customer. If a utility has more than 3,000 customers, it must provide budget billing for residential customers. Conservation Improvement Program ("CIP"). In 2007, the State established new conservation of energy policy that sets CIP goals for all energy utilities in the State to reduce energy consumption by 1.5% per year. While not a mandate with penalties, this new law will guide the expansion of utility incentives to drive energy efficiency at the consumer level. The 1.5% is an annual target and shouldn't be viewed cumulatively. NGEA also increases mandatory CIP expenditures from 1% to 1.5% of gross revenues. CIP progress reports submitted to DOC,Division of Energy Resources,have received favorable response. -8 - 126