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OVERVIEW OF THE MINNESOTA PUBLIC UTILITIES COMMISSION

OVERVIEW OF THE MINNESOTA PUBLIC UTILITIES COMMISSION. Presentation to the Itasca Economic Development Corp. February 14, 2007 By LeRoy Koppendrayer, Chair Minnesota Public Utilities Commission. Minnesota – Basic Facts. 12th largest state in terms of land area: 86,393 square miles

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OVERVIEW OF THE MINNESOTA PUBLIC UTILITIES COMMISSION

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  1. OVERVIEW OF THE MINNESOTA PUBLIC UTILITIES COMMISSION Presentation to the Itasca Economic Development Corp. February 14, 2007 By LeRoy Koppendrayer, Chair Minnesota Public Utilities Commission

  2. Minnesota – Basic Facts • 12th largest state in terms of land area: 86,393 square miles • 20th largest state in terms of population; 5.1 million • Major industries • Agriculture • Forest products • Mining – taconite • Manufacturing • Tourism • Gross State Product = $224 Billion (2004)

  3. What does the Public Utilities Commission do? Regulates rates and services of three critical service industries • Electricity • Natural gas • Local telephone service (limited rate regulation) Basic mission: Safe, adequate, and reliable service at fair and reasonable rates

  4. Basic Organization of the PUC

  5. The Commission • Five Commissioners • Criteria • Appointed by the Governor, confirmed by the Minnesota Senate • Staggered six year terms

  6. The Commission – Cont’d • Removed only for cause • Not more than three from one political party • At least one from outside the Twin Cities metropolitan area

  7. Commission Conduct • Quasi-judicial & legislative responsibilities • Code of Conduct: • Meetings must be open to the public • Conflict of interest • Employment Restrictions • Ex Parte Communications

  8. Code of Conduct • Purpose: • To enhance the integrity of the decision-making process; • To enhance the stability of the regulatory process as an economic institution; • To help instill public faith in the provisioning of utility services.

  9. Funding • Assessment of utilities • Budget proposal approved by Governor; final budget approved by Legislature • Recover nearly 100% of all expenditures for General Fund • Direct and indirect charges

  10. Major Activities in Electricity • Setting Rates: General Rate Cases • Integrated Resource Planning • Major Energy Facilities • Certificate of Need • Siting and Routing • Transmission Planning • Monitoring activities of the Midwest Independent System Operator

  11. General Rate Case process • Two major decision elements: • Revenue requirement – how much of a revenue change is warranted? • Rate design – how should the requirement be split among rate classes? • Hearings • Public hearings • Evidentiary hearings before ALJ • Record goes to PUC – decision within 10 months from filing • Minnesota Statutes Section 216B.16

  12. Resource Planning process • Filed biennially by IOUs, G&T Coops; 2 municipal joint action agencies • Threshold issue: Compare expected demand growth (15 year horizon) to generation needs • Places supply and demand resources on equal footing • Allows stakeholders to participate in long-term planning • Minnesota Statutes Section 216B.2422

  13. Transmission Planning process • Filed biennially by utilities that own or operate transmission lines in Mn. • Report must include: • Reasonably foreseeable inadequacies • Alternative options for addressing inadequacies • Economic, environmental and social issues associated with each alternative • Summary of public input (public hearings required) • PUC can, as part of the transmission planning process, certify need for a line that meets Certificate of Need criteria. • Minnesota Statutes Section 216B.2425

  14. Certificate of Need process • Threshold issue: Determining whether a proposed large energy facility in the public interest; i.e., Is it needed? • Large energy facility - electricity: • Generating plant w/combined capacity of 50 MW or > • Transmission Line; 200 KV or > • Transmission line; 100 KV or > with > 10 miles in Mn., or crosses border • Any nuclear fuel processing or waste storage or disposal facility • Public and evidentiary hearings • Minnesota Statute Section 216B.243

  15. Siting and Routing process • Threshold issue: Identifying the best location for a large energy facility found to be in the public interest • Environmental review – Dept. of Commerce • Hearings: • Public • Evidentiary before ALJ • Siting (generation plant) or routing (transmission line) proceedings can be done in unison with certificate of need. • Minnesota Statute Chapters 216E & 216F

  16. Minnesota’s electricity industry Basic Statistics: • Summer peaking – 11,500 MW • Net Generation – 52 million MWH • Average Retail Price – 6.24 cents/kwh Types of providers: • Investor owned utilities (IOUs) – 5 • Municipal utilities – 125 • Distribution Cooperatives - 46

  17. Minnesota’s Electric IndustryType of providers

  18. Minnesota’s Electric IndustryGeneration by fuel source

  19. THANK YOU!!www.puc.state.mn.us

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