5.2a ERMUSR 04-13-2021 - Laserfiche WebLink

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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 toresidential 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 Stateto 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. The Omnibus Energy Bill.The Omnibus Energy Bill makes several other major changes to the statutory and regulatory scheme that governs the operation of electric utilities. The Omnibus Energy Bill allows investor-owned utilities (“IOUs”), with the approval of the PUC, to include in their rates the cost of new transmission improvements without going through an expensive general rate case. This authority will provide greater incentive to IOUs to make needed improvements to their transmission systems. The Omnibus Energy Bill modifies several State approval processes involving the construction of large power plants and transmission lines. It transfers the authority for routing transmission lines and siting power plants from the Environmental Quality Board to the PUC, thereby centralizing the need certification and the siting processes in one agency. The law eliminates the limits involved in the need certification and siting processes, provides added criteria to analyze the need for transmission projects, and eliminates the deadline imposed on the PUC for need certification decisions. It is not possible to predict whether the Minnesota State Legislature or Congress will enact further legislation restructuring the electric utility industry or what the substance of any such legislation would be or what the effect might be upon the Utility. Environmental Matters The Utility’s generation operations are subject to continuing environmental regulation by the U.S. Environmental Protection Agency (the “EPA”), the Minnesota Pollution Control Agency (the “MPCA”) and other regulatory agencies and are in compliance with all regulations. Federal, state and local standards and rules which regulate the environmental impact of generation and transmission facilities used by the Utility are subject to change. These changes may arise from continuing legislative, regulatory and judicial action regarding such standards and rules. Consequently, there is no assurance that the asset in operation or contemplated will remain subject to the regulations currently in effect, will always be in compliance with future regulations, or will always be able to obtain all required - 9 - 274