56-577 - Schedule for transition to retail competition; Commission authority; exemptions; pilot programs.
§ 56-577. Schedule for transition to retail competition; Commissionauthority; exemptions; pilot programs.
A. Retail competition for the purchase and sale of electric energy shall besubject to the following provisions:
1. Each incumbent electric utility owning, operating, controlling, or havingan entitlement to transmission capacity shall join or establish a regionaltransmission entity, which entity may be an independent system operator, towhich such utility shall transfer the management and control of itstransmission system, subject to the provisions of § 56-579.
2. The generation of electric energy shall be subject to regulation asspecified in this chapter.
3. From January 1, 2004, until the expiration or termination of capped rates,all retail customers of electric energy within the Commonwealth, regardlessof customer class, shall be permitted to purchase electric energy from anysupplier of electric energy licensed to sell retail electric energy withinthe Commonwealth. After the expiration or termination of capped rates, andsubject to the provisions of subdivisions 4 and 5, only individual retailcustomers of electric energy within the Commonwealth, regardless of customerclass, whose demand during the most recent calendar year exceeded fivemegawatts but did not exceed one percent of the customer's incumbent electricutility's peak load during the most recent calendar year unless such customerhad noncoincident peak demand in excess of 90 megawatts in calendar year 2006or any year thereafter, shall be permitted to purchase electric energy fromany supplier of electric energy licensed to sell retail electric energywithin the Commonwealth, except for any incumbent electric utility other thanthe incumbent electric utility serving the exclusive service territory inwhich such a customer is located, subject to the following conditions:
a. If such customer does not purchase electric energy from licensed suppliersafter that date, such customer shall purchase electric energy from itsincumbent electric utility.
b. Except as provided in subdivision 4, the demands of individual retailcustomers may not be aggregated or combined for the purpose of meeting thedemand limitations of this provision, any other provision of this chapter tothe contrary notwithstanding. For the purposes of this section, eachnoncontiguous site will nevertheless constitute an individual retail customereven though one or more such sites may be under common ownership of a singleperson.
c. If such customer does purchase electric energy from licensed suppliersafter the expiration or termination of capped rates, it shall not thereafterbe entitled to purchase electric energy from the incumbent electric utilitywithout giving five years' advance written notice of such intention to suchutility, except where such customer demonstrates to the Commission, afternotice and opportunity for hearing, through clear and convincing evidencethat its supplier has failed to perform, or has anticipatorily breached itsduty to perform, or otherwise is about to fail to perform, through no faultof the customer, and that such customer is unable to obtain service atreasonable rates from an alternative supplier. If, as a result of suchproceeding, the Commission finds it in the public interest to grant anexemption from the five-year notice requirement, such customer may thereafterpurchase electric energy at the costs of such utility, as determined by theCommission pursuant to subdivision 3 d hereof, for the remainder of thefive-year notice period, after which point the customer may purchase electricenergy from the utility under rates, terms and conditions determined pursuantto § 56-585.1. However, such customer shall be allowed to individuallypurchase electric energy from the utility under rates, terms, and conditionsdetermined pursuant to § 56-585.1 if, upon application by such customer, theCommission finds that neither such customer's incumbent electric utility norretail customers of such utility that do not choose to obtain electric energyfrom alternate suppliers will be adversely affected in a manner contrary tothe public interest by granting such petition. In making such determination,the Commission shall take into consideration, without limitation, the impactand effect of any and all other previously approved petitions of like typewith respect to such incumbent electric utility. Any customer that returns topurchase electric energy from its incumbent electric utility, before or afterexpiration of the five-year notice period, shall be subject to minimum stayperiods equal to those prescribed by the Commission pursuant to subdivision C1.
d. The costs of serving a customer that has received an exemption from thefive-year notice requirement under subdivision 3 c hereof shall be themarket-based costs of the utility, including (i) the actual expenses ofprocuring such electric energy from the market, (ii) additionaladministrative and transaction costs associated with procuring such energy,including, but not limited to, costs of transmission, transmission linelosses, and ancillary services, and (iii) a reasonable margin as determinedpursuant to the provisions of subdivision A 2 of § 56-585.1. The methodologyestablished by the Commission for determining such costs shall ensure thatneither utilities nor other retail customers are adversely affected in amanner contrary to the public interest.
4. After the expiration or termination of capped rates, two or moreindividual nonresidential retail customers of electric energy within theCommonwealth, whose individual demand during the most recent calendar yeardid not exceed five megawatts, may petition the Commission for permission toaggregate or combine their demands, for the purpose of meeting the demandlimitations of subdivision 3, so as to become qualified to purchase electricenergy from any supplier of electric energy licensed to sell retail electricenergy within the Commonwealth under the conditions specified in subdivision3. The Commission may, after notice and opportunity for hearing, approve suchpetition if it finds that:
a. Neither such customers' incumbent electric utility nor retail customers ofsuch utility that do not choose to obtain electric energy from alternatesuppliers will be adversely affected in a manner contrary to the publicinterest by granting such petition. In making such determination, theCommission shall take into consideration, without limitation, the impact andeffect of any and all other previously approved petitions of like type withrespect to such incumbent electric utility; and
b. Approval of such petition is consistent with the public interest.
If such petition is approved, all customers whose load has been aggregated orcombined shall thereafter be subject in all respects to the provisions ofsubdivision 3 and shall be treated as a single, individual customer for thepurposes of said subdivision. In addition, the Commission shall imposereasonable periodic monitoring and reporting obligations on such customers todemonstrate that they continue, as a group, to meet the demand limitations ofsubdivision 3. If the Commission finds, after notice and opportunity forhearing, that such group of customers no longer meets the above demandlimitations, the Commission may revoke its previous approval of the petition,or take such other actions as may be consistent with the public interest.
5. After the expiration or termination of capped rates, individual retailcustomers of electric energy within the Commonwealth, regardless of customerclass, shall be permitted:
a. To purchase electric energy provided 100 percent from renewable energyfrom any supplier of electric energy licensed to sell retail electric energywithin the Commonwealth, other than any incumbent electric utility that isnot the incumbent electric utility serving the exclusive service territory inwhich such a customer is located, if the incumbent electric utility servingthe exclusive service territory does not offer an approved tariff forelectric energy provided 100 percent from renewable energy; and
b. To continue purchasing renewable energy pursuant to the terms of a powerpurchase agreement in effect on the date there is filed with the Commission atariff for the incumbent electric utility that serves the exclusive serviceterritory in which the customer is located to offer electric energy provided100 percent from renewable energy, for the duration of such agreement.
6. A tariff for one or more classes of residential customers filed with theCommission for approval by a cooperative on or after July 1, 2010, shall bedeemed to offer a tariff for electric energy provided 100 percent fromrenewable energy if it provides undifferentiated electric energy and thecooperative retires a quantity of renewable energy certificates equal to 100percent of the electric energy provided pursuant to such tariff. A tariff forone or more classes of nonresidential customers filed with the Commission forapproval by a cooperative on or after July 1, 2012, shall be deemed to offera tariff for electric energy provided 100 percent from renewable energy if itprovides undifferentiated electric energy and the cooperative retires aquantity of renewable energy certificates equal to 100 percent of theelectric energy provided pursuant to such tariff. For purposes of thissection, "renewable energy certificate" means, with respect tocooperatives, a tradable commodity or instrument issued by a regionaltransmission entity or affiliate or successor thereof in the United Statesthat validates the generation of electricity from renewable energy sources orthat is certified under a generally recognized renewable energy certificatestandard. One renewable energy certificate equals 1,000 kWh or one MWh ofelectricity generated from renewable energy. A cooperative offering electricenergy provided 100 percent from renewable energy pursuant to thissubdivision that involves the retirement of renewable energy certificatesshall disclose to its retail customers who express an interest in purchasingenergy pursuant to such tariff (i) that the renewable energy is comprised ofthe retirement of renewable energy certificates, (ii) the identity of theentity providing the renewable energy certificates, and (iii) the sources ofrenewable energy being offered.
B. The Commission shall promulgate such rules and regulations as may benecessary to implement the provisions of this section.
C. 1. By January 1, 2002, the Commission shall promulgate regulationsestablishing whether and, if so, for what minimum periods, customers whorequest service from an incumbent electric utility pursuant to subsection Dof § 56-582 or a default service provider, after a period of receivingservice from other suppliers of electric energy, shall be required to usesuch service from such incumbent electric utility or default serviceprovider, as determined to be in the public interest by the Commission.
2. Subject to (i) the availability of capped rate service under § 56-582, and(ii) the transfer of the management and control of an incumbent electricutility's transmission assets to a regional transmission entity afterapproval of such transfer by the Commission under § 56-579, retail customersof such utility (a) purchasing such energy from licensed suppliers and (b)otherwise subject to minimum stay periods prescribed by the Commissionpursuant to subdivision 1, shall nevertheless be exempt from any such minimumstay obligations by agreeing to purchase electric energy at the market-basedcosts of such utility or default providers after a period of obtainingelectric energy from another supplier. Such costs shall include (i) theactual expenses of procuring such electric energy from the market, (ii)additional administrative and transaction costs associated with procuringsuch energy, including, but not limited to, costs of transmission,transmission line losses, and ancillary services, and (iii) a reasonablemargin. The methodology of ascertaining such costs shall be determined andapproved by the Commission after notice and opportunity for hearing and afterreview of any plan filed by such utility to procure electric energy to servesuch customers. The methodology established by the Commission for determiningsuch costs shall be consistent with the goals of (a) promoting thedevelopment of effective competition and economic development within theCommonwealth as provided in subsection A of § 56-596, and (b) ensuring thatneither incumbent utilities nor retail customers that do not choose to obtainelectric energy from alternate suppliers are adversely affected.
3. Notwithstanding the provisions of subsection D of § 56-582 and subsectionC of § 56-585, however, any such customers exempted from any applicableminimum stay periods as provided in subdivision 2 shall not be entitled topurchase retail electric energy thereafter from their incumbent electricutilities, or from any distributor required to provide default service undersubsection B of § 56-585, at the capped rates established under § 56-582,unless such customers agree to satisfy any minimum stay period thenapplicable while obtaining retail electric energy at capped rates.
4. The Commission shall promulgate such rules and regulations as may benecessary to implement the provisions of this subsection, which rules andregulations shall include provisions specifying the commencement date of suchminimum stay exemption program.
(1999, c. 411; 2001, c. 748; 2003, cc. 795, 990; 2004, c. 827; 2007, cc. 888,933; 2010, cc. 326, 397.)