LEGISLATIVE OVERVIEW

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LEGISLATIVE OVERVIEW

• REMA Engineering Operations Conf.
• September 24, 2009

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2009 Legislative Session

• Focus was on the 6.4 billion budget deficit.
• The big budget deficit was a Bad News/Good News
  situation for the electric industry.
• Economic downturn hurts everyone.
• Budget crisis took up almost all of legislators
  time and made them leery of doing anything that
  would make the situation worse.

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Carbon Legislation

• No serious carbon legislation was considered or
  even introduced.
• Willingness to let federal government deal with
  the issue.
• Energy committees focused mainly on spending the
  federal stimulus funds.
• Concern about jobs and cost are growing.

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Good News on CIP

• Legislators and staff at the Office of Energy
  Security (OES) are looking for ways to improve
  CIP.
• A proposal allowing utilities to bank
  conservation credits passed
• Working with co-ops and other utilities on ways
  to meet the standards, including
• Ways to include education programs and measure
  their success
• Re-assessing previous decision to not include
  load management

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Key Legislation

• Omnibus Energy Policy Bill
• Actually turned out pretty good for co-ops
• File standard contract for small wind projects
• Increase HVTL eminent domain appraisal fee
• Bank CIP savings in excess of 1.5 for 3-5 yrs
• Request OES to exceed 5 CIP for qualified solar
  projects, up to 10 to meet demand
• PUC OES annual report on transmission needed
  for reliability
• .

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Key Legislation

• Avoided the worst proposals
• Establish 800 MW CBED carve out and market
  rates
• Establish feed-in tariffs for wind and solar
• Repeal all utility eminent domain exemptions
• Increase all utility property taxes and decrease
  or eliminate exemptions
• Allow cities to impose new kwh franchise fee
• Unfortunately, repeal of the nuclear plant
  moratorium was defeated

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Key Legislation

• Omnibus Energy Finance Bill
• Again, final outcome was pretty good, considering
  the budget environment.
• DNR add supplemental application fee to process
  state water and land crossing license.
• OES assess all energy utilities for energy
  planning and conservation activities.
• PCA establish greenhouse gas emissions reporting
  system.
• Create a Minnesota Green Enterprise Assistance
  Project.

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Key Legislation

• Federal Stimulus Bill
• Energy efficiency programs
• Weatherization 131.9 million
• Grants to local governments and school districts
• Renewable energy programs
• Rebates for small renewables 5.0 M
• Grants to local governments and school districts
• Commercial and industrial energy projects

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Key Legislation

• Taxes
• Final tax bill was vetoed. However, despite
  attempts to target utilities, none of them made
  it into the final bill.
• Proposals included an increase in the class rate
  for utilities, removal of property tax
  exemptions, elimination of sales tax exemption on
  home heating, new franchise fees and city or
  county taxes based on Kwh sales.

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2010 Legislative Outlook

• Even year session, with bonding as the focus.
• Budget outlook still bleak.
• Because of size of State deficit, still worry
  about carbon impact fee or electricity
  surcharge
• Or, as we saw in 2009, increase utility property
  taxes and delete or restrict current utility
  property and sales tax exemptions
• Meeting renewable energy mandate oppose mini-RES
  proposals

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2010 Legislative Outlook

• Cap and Trade or Carbon Tax (or fee) remain a
  concern.
• Budget situation will make new revenue sources
  attractive.
• Outcome of federal efforts unclear. Strongest
  proponents of Cap Trade are not likely to be
  satisfied and will push for stronger state or
  regional program.
• Utilities will contribute 40 of the states GHG
  reduction goal by 2025
• Renewable energy standard about 20
• Conservation programs about 20

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2010 Legislative Outlook

• Governors Midwestern Greenhouse Gas Accord still
  in play for 2010
• MN Climate Change Advisory Group report and
  related issues coal and nuclear moratorium
• CAPX 2020 Eminent domain exemptions will again
  be challenged and new proposals are likely.
• Grassroots support and involvement needed more
  than ever.

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PUC and SRSQ

• Co-ops under SRSQ law (MS 216B.029) states co-op
  SRSQ standards should be as consistent as
  possible with PUC rule, but not under PUC rule
  (MR 7826)
• Law and rule at www.revisor.leg.state.mn.us .
• PUC reviews IOU reports annually. Co-op boards
  should be doing the same
• NESC, IEEE, ANSI, OSHA/MDLI
• SAIDI, SAIFI, CAIDI
• Service quality standards calls and response,
  disconnections, complaints, etc. Technical and
  administrative feasibility.

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PUC and SRSQ

• How high do you go toward unachievable
  perfection? Are outage levels to be maintained
  or steadily improved?
• How best balance overall reliability with
  corresponding cost? Develop prototype
  reliability cost matrix.
• Example of EPRI on SAIDI National SAIDI average
  100 minutes top quartile 70 minutes. Goal
  for 2009
• Xcel Metro West 117.2 Xcel Southeast
  90.92
• Minnesota Power 119.31
• OTP Bemidji 48.25 OTP Fergus Falls 74.00
• IPL Winnebago 59.81 IPL Albert Lea 80.30

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PUC and SRSQ

• Calculate outage data (both planned and
  unplanned) using two methods and explain
  difference Storm normalized using IEEE 2.5 Beta
  method and non-storm normalized.
• Begin power quality data collection, including
  MAIFI Momentary Average Interruption Frequency
  Index.
• Begin generic proceeding for all electric
  utilities on power voltage quality.
• See www.puc.state.mn.us. Then Search Dockets.
  Scroll down to Basic Search type in 09-343.

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THE END -- THANK YOU

• Comments?
• Questions?
• Detailed 2009 MREA Legislative Report at
  http//www.mrea.org/legislativecenter/downloads/20
  09_MREA_Legislative_Summary.pdf.