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Electric Utility Restructuring
Briefing Paper
Issue synopsis/League position: Policy makers at the state and federal levels are considering
ways to bring competition into the electric utility industry. In preparation for a competitive
environment,the state's investor owned utilities are seeking an exemption from the personal
property tax and have proposed a meter tax as a mechanism to replace revenues lost by local
units of government.The League's position on restructuring is that is cautious,deliberative
approach is necessary to ensure that all consumers benefit. A working group of city officials has
developed a set of"Principles for Guiding Electric Utility Restructuring in Minnesota." The
League opposes current proposals for exempting investor owned utilities from the personal
property tax. The League Board adopted a policy on"Electric Utility Taxation" on February 20,
1997.
Messages for legislators: On the overall restructuring issue,ask lawmakers to take into
consideration the actual impact on rates,to ensure equitable benefits for all consumers,to protect
low-income individuals and the elderly,to protect the environment and ensure that we continue
to invest in renewable energy sources,to ensure that safe and uninterrupted service is provided,
to ensure that cities retain the ability to manage and receive compensation for the use of public
rights-of-way,to support municipalization or municipal aggregation efforts, and to involve local
officials and consumers in the decision-making process. On the personal property tax exemption
for investor-owned utilities,ask lawmakers to oppose the current investor owned utilities'
proposal.
Pending bills/status:
H.F.628/H.F. 1119,introduced by Rep. Dan McElroy(DFL-Burnsville)and Senator Steve
Kelley (DFL-Hopkins)and referred to the House Regulated Industries and Energy committee
and the Senate Jobs,Energy, Community Development committee,would allow cities to
purchase electricity from any electric utility providing service in an assigned service area which
is located wholly or partially within the city.
H.F. 1298/S.F. 1268,introduced by Rep. Loren Jennings (DFL-Rush City)and Senator Steve
Novak(DFL-New Brighton)and referred to the House Regulated Industries and Energy
committee and the Senate Jobs, Energy and Community Development committee, would
authorize utilities to elect to charge a personal property tax replacement fee instead of including
AN EQUAL OPPORTUNITY/AFFIRMATIVE ACTION EMPLOYER
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their ad valorem personal property taxes in their electric rates. The bill would also provide an
exemption from the personal property tax for tools, implements, and machinery which arc part of
a 2, 1997. This bill was heard on
an electric generating system and initially assessed after January ,
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g
Tuesday, March 18 and will be further debated before it is voted on, Thursday, March 20 at
12:30 p.m.
H.F. 1299,introduced by Rep Loren Jennings (DFL-Rush City)and referred to the House
Regulated Industries and Energy committee,would rename the"electric energy task force" the
"legislative commission on utility competition" B and reorganize its membership. By February 15,
1998,the commission would present recommendations to the legislature regarding whether and
how to proceed in restructuring the electric industry. The bill was heard, passed with minor
amendments, and re-referred to the Environment and Natural Resources committee on Tuesday,
March 18.
and referred to the Regulated
ated
ced by Rep. Al Juhnke (DFL-Willmar) g
H.F. 1464, introdu y ep
Industries and Energy committee,would authorize municipal utilities and rural electric
cooperatives to form joint ventures for the provision of utility services.
H.F. 1525,introduced by Rep. Loren Jennings(DFL-Rush City) and referred to the Regulated
Industries and Energy committee, would require electric utilities entering into customer-specific
rates,terms, or service conditions contracts to file for approval with the Public Utilities
Commission. Discretionary rate reductions for tariffed electric services to eligible customers
would be permitted, subject to Commission approval.
S.F. 1344,introduced by Senator Kenric Scheevel (R-Preston) and referred to the Jobs, Energy,
and Community Development committee, would require the Department of Public Service to
study retail wheeling and electric utility restructuring and report to the legislature by February 1,
1998. The study would be funded by assessments to the state's electric utilities, not to exceed at
0 000. The bill would also require the Public Utilities Commission to establish
10 q
total of $ ,
procedures to review and approve tariffs for rates that would foster economic development and
retain existing industrial companies, applicable until 2002..
S.F. 1348, introduced by Senator Mark Ourada(R-Buffalo)and referred to the Jobs, Energy, and
Community Development committee,would require electric utilities to submit plans to
restructure themselves into three separate entities (providing generation,transmission, or
distribution services) by January 1, 1999 with Public Utilities Commission approval or
modification by December 31, 1999, require a retail wheeling study by the Department of Public
Service and report to the legislature by December 1, 1998, require the Public Utilities
Commission to establish a retail wheeling pilot program conducted from October 1, 1997 to
and report to the legislature by December 1, 1998,and mandate retail
e tember 30, 1998 g
Sp P
wheeling for all Minnesota customers by January 1,2001.
Prepared by: Andrea Atherton