5.2a ERMUSR 04-13-2021 - Laserfiche WebLink

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The 2005 Act required the creation of an electric reliability organization that has authority to establish and enforce mandatory reliability standards on a nation-wide basis. The electric reliability organization is subject to FERC’s oversight. FERC approved the North American Electric Reliability Council (“NERC”) as the electric reliability organization and has approved nation-wide reliability standards. FERC has also approved NERC’s delegation of certain functions to regional reliability organizations, including the Midwest Reliability Organization (“MRO”). The standards that are administered by NERC and the MRO apply to all users, owners, and operators of the bulk power system including the Utility. The 2005 Act requires the Department of Energy to designate national interest electric transmission corridors, where constraints or congestion adversely affect consumers. FERC may authorize the siting of transmission facilities within those corridors if the states have failed to act. The courts held that FERC may act when a state, rather than failing to act, has denied an application for siting. It is anticipated that FERC will continue to assert broad authority to authorize the siting of transmission facilities and that Congress might act expressly to expend FERC’s authority. The 2005 Act requires price transparency and prohibits market manipulationfor all wholesale markets. The requirements apply to all entities that participate in those markets, including the Utility. Retail Electric Service Territories The State of Minnesota (the “State”) presently prohibits other electric utilities from serving areas within a municipality which are presently receiving retail electric service from a municipal utility. The State permits municipal utilities to expand their retail electric services to additional areas located within the municipalities’ boundaries, including areas added by way of annexation. When municipal utilities expand their retail electric service territory, they are required to pay compensation to anyother displaced electric utility. The compensation due to such displaced utilities is determined by the courts, utility regulatory commissions, or by mutual agreement between the two parties. 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 theState’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 Billestablishes 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 energysources. 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, - 8 - 273