________________________________ Burl W.

Haar, Executive Secretary

STATE OF MINNESOTA PUBLIC UTILITIES COMMISSION

NOTICE OF COMMENT PERIOD ON COST IMPACT REPORTS
Issued: November 6, 2013 In the Matter of Utility Renewable Energy Cost Impact Reports Required by Minnesota Statutes Section 216B.1691, Subd.2e. PUC Docket Number/s: OAH Docket Number: Comment Period: E-999/CI-11-852 N/A

Initial comment period closes December 20, 2013 at 4:30pm. Reply comment period closes January 27, 2014 at 4:30pm.

Topic/s Open for Comment: Attachment I: Staffs proposed general guiding principles for electric utilities renewable energy cost impact reports necessary to comply with Minn. Stat. 216B.1691 Subd. 2e. including related questions; and, Attachment II: Staffs proposed format for a uniform reporting system. Alternative proposals are allowed as described on page 2 of this notice.

Project Background: In 2011, legislation was signed into law requiring electric utilities subject to Minn. Stat. 216B.1691 RENEWABLE ENERGY OBJECTIVES to file reports with the Commission estimating the rate impact of activitiesnecessary to comply with this section. 1 Sixteen (16) utilities filed the required report in Docket E999/CI-11-852. In 2013, additional legislative amendment requires that the Commission, in consultation with the Department of Commerce, shall determine a uniform reporting system to ensure that individual utility reports are consistent and comparable, and shall, by order, require each electric utility subject to this section to use that reporting system. Updates to reports must be filed in resource plans specific to each electric utility under section 216B.2422. This Notice solicits comments on Staffs proposed general guiding principles and uniform reporting system as introduced and illustrated in Attachments 1 and 2 to this Notice.
1

Minnesota Laws 2011, Chapter 97, Section 15, amends Minn. Stat. 216B.1691 by adding a Subdivision 2e. NOTE: Originally enacted in 2001, 216B.1691 was amended in 2007, in part, to specify increased percentages of retail electric sales to be generated by qualifying renewable technologies. The 2007 renewable energy standards percentage requirements are distinct from the 2001 good-faith renewable energy objectives (REO): see, Subd. 2. Eligible energy objectives [REO]; Subd. 2a. Eligible energy technology standard [RES].
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Alternative proposal provision: If parties wish to propose an alternative uniform reporting system, it must be in a document of no more than five pages and is due at the same time that initial comments are due on the staff proposal. The alternative proposal must provide the rational for the method chosen, using back-up pages for the details, which will not count against the five page limit. If alternative proposals include a spreadsheet appendix or other calculation tool(s), these must be unlocked and include instructions for use. Moreover, parties submitting alternative proposals must illustrate how it would address Staffs proposed general guiding principles currently open for comment. Parties may address alternative proposals (if any) in reply comments, specifically noting the proposal addressed; i.e., Staffs or alternative submitted by (name of party). Submit Public Comments: E-mail to PublicComments.PUC@state.mn.us. Persons without e-mail access may send by U.S. mail to Burl Haar, Executive Secretary, Minnesota Public Utilities Commission, 121 7th Place East, Suite 350, St. Paul MN 55101-2147. Please include the Commissions docket number in all communications. Filing Requirements: Utilities, telecommunications carriers, official parties, and state agencies are required to file documents using the Commissions electronic filing system (eFiling). All parties, participants and interested persons are encouraged to use eFiling: www.puc.state.mn.us, select eFiling, and follow the prompts. Full Case Record: All documents filed in this docket are available on the Commissions website at www.puc.state.mn.us, select Search eDockets, enter the year (2011) and the docket number (852), select Search. Subscribe to the Docket: Receive notification when new documents are filed in this docket at www.puc.state.mn.us, select Subscribe to a Docket, and follow the prompts. Questions about this docket or Commission process and procedure? Contact Commission staff, Mary Jo Stueve, at 651-201-2243 or Michelle Rebholz at 651-201-2206. Change your mailing preferences: E-mail docketing.puc@state.mn.us or call 651-201-2204. This document can be made available in alternative formats (e.g., large print or audio) by calling 651-296-0406 (voice). Persons with hearing loss or speech disabilities may call us through their preferred Telecommunications Relay Service.

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ATTACHMENT I: Legislation and Staffs Proposed Guiding Principles INTRODUCTION As specified below, Minn. Stat. 216B.1691 Subd.2e. requires a uniform reporting system for electric utilities to estimate rate impact of standard compliance with the States renewable energy laws. 216B.1691 RENEWABLE ENERGY OBJECTIVES Subd. 2e. Rate impact of standard compliance; report. Each electric utility must submit to the commission and the legislative committees with primary jurisdiction over energy policy a report containing an estimation of the rate impact of activities of the electric utility necessary to comply with this section. In consultation with the Department of Commerce, the commission shall determine a uniform reporting system to ensure that individual utility reports are consistent and comparable, and shall, by order, require each electric utility subject to this section to use that reporting system. The rate impact estimate must be for wholesale rates and, if the electric utility makes retail sales, the estimate shall also be for the impact on the electric utility's retail rates. Those activities include, without limitation, energy purchases, generation facility acquisition and construction, and transmission improvements. An initial report must be submitted within 150 days of May 28, 2011. After the initial report, a report must be updated and submitted as part of each integrated resource plan or plan modification filed by the electric utility under section 216B.2422. The reporting obligation of an electric utility under this subdivision expires December 31, 2025, for an electric utility subject to subdivision 2a, paragraph (a), and December 31, 2020, for an electric utility subject to subdivision 2a, paragraph (b). Staff proposes four (4) general guiding principles: 1) Foster transparency, by using publicly available (or aggregated) information; 2) Support consistency, coordination and non-burdensome administration, by utilizing utilities integrated resource planning, electric transmission planning, financial statements, FERC filings, tariffs and other already produced reports, documents or models including the biennial compliance reports required under Minn. Stat. 216B.1691, Subd. 3 (a); 2 annual qualifying facilities reports (e.g., Docket 13-09). 3) Provide realistic representation of baseline, actual (to date) and future expected costs for achieving and maintaining standard compliance, by using clearly identified and validly supported inputs, with limitations specifically noted; 4) Enable comparison across utilities, by using similar methodologies with easy to understand illustrations including narrative explanations of estimated rate impact of standard compliance for wholesale and retail rates, as applicable.
2

See ORDER FINDING UTILITIES IN COMPLIANCE WITH MINN. STAT. 216B.1691 AND MODIFYING BIENNIAL REPORTING PROCEDURES, issued May 28, 2013 pp. 6-8.
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ATTACHMENT II: Staffs proposed format for uniform reporting system Staff proposes the following format to develop a uniform reporting system. Table 1 Rate Impact Estimation to Comply with Minn. Stat. 216B.1691
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 A Minn. Stat. 216B.1691 Expenditures by category ($million) Subd.2. eligible energy objectives. (REO) Subd. 2a. eligible energy technology standard.(RES) Subd.2f. solar energy standard. (SES)

Placeholder

Total eligible renewable procurement expenditures ($million) (B+C+D) Non-renewable generation revenue requirement: (i) wholesale (ii) retail

($million) Renewable procurement expenditures as % of nonrenewable generation revenue requirement (annual) = (E/F) Supply-side expenditure without 216B.1691

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As illustrated in Table 1 on the previous page, each row is identified A H sequentially. For your comments and responses to questions below, please identify each row by corresponding letter to Table 1 respectively. If you have alternative metrics or proposals not currently illustrated in Table 1 please provide inputs in similar row with letter format for ease of comparison in reply comments. In your response, include consideration of and reference to the proposed general guiding principles. Reference letters (A-H) from Table 1 - questions soliciting comment, proposed alternatives (if any). As noted above, consider the proposed general guiding principles in formulating your responses. A) Staff proposes a start date of 2005 out through 15 years from each utilitys next filed IRP. Does this provide a reasonable and useful format to capture a starting point (benchmark) as well as forecast of cost impacts to comply with the statute? B) Should REO expenditures be included in the renewable energy rate impact analysis, why or why not? Are all REO eligible projects online and operating, or, are some in development? Staff assumes that this row eventually phases out without any additional cost apart from those already incurred. Is that a correct assumption? C) The statute lists required reporting cost activities to include (without limitation) renewable energy purchases, generation facility acquisition and construction, and transmission improvements. Staff assumes these categories, often referred to as RES in total to include utility-owned generation, power purchases agreements, market purchases and renewable energy credits (REC). Should expenditures for RES be calculated separately from those for REO and eventual SES? Why or why not? D) Are expenditures for REO, RES (SES in the future) separately accounted for and calculated by the utility? Would there be different treatment as to cost inclusion for on-line projects versus those in development or executed contracts for historical REO, RES (eventual SES) projects? Should both levelized and annualized costs be provided in order to show short-term impact on rates vs. expected long-term effects? E) Would it be more useful, as well as ease the administrative burden, to differentiate renewable energy (RE) expenditures in rows such as RE Costs Online, RE Costs In Development, RE Net Short and Total RE Costs as opposed to rows B E identified in Table 1; why or why not? What source(s) will the utility use to report renewable energy expenditures, regardless of category? Examples: FERC uniform system of account (FERC Form 1); REO-RES biennial reports; company financial statements. Please be specific and refer to the general guiding principles in your response.

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F) List the best available source from which to report and calculate, non-renewable generation revenue requirement. Going forward, what would be the pros and cons of using the utilities latest approved rate case? For historical purposes (2005 baseline) would it be the closest to that years approved rate case revenue requirement? In both cases, Staff assumes the utility is capable of distinguishing revenue requirements into the following categories: generation, distribution and transmission. G) There are many ways one could report, estimate, measure and compare, across utilities, the expected cost to comply with Minn. Stat. 216B.1691. Please provide your comments, alternatives (if any) on whether the proposed uniform reporting system is reasonable and whether it meets the statute requirements (note strengths and shortcomings as applicable). H) As one alternative, row H offers the but for the renewable mandate consideration for comparison purposes. Should supply-side expenditures include solely a gas-only proxy/alternative? Some states use cost of new entry (CONE) for comparison purposes. Some use avoided cost in addition to looking at the utilitys system average with relation to the costs of meeting renewable energy mandates. What would be the advantages or disadvantages of including any of these metrics for comparison purposes? Should a row be included to input both annual peak and off-peak market prices (public sourced)? Please explain why or why not.

PHONE 651-296-7124 TOLL FREE 800-657-3782 FAX 651-297-7073 CONSUMER.PUC@STATE.MN.US 121 7TH PLACE EAST SUITE 350 SAINT PAUL, MINNESOTA 55101-2147 WWW.PUC.STATE.MN.US