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In re Application of Minnesota Power for Authority to Increase Rates for Electric Service

Court of Appeals of Minnesota

May 6, 2019

In the Matter of the Application of Minnesota Power for Authority to Increase Rates for Electric Service in the State of Minnesota.

          Minnesota Public Utilities Commission File No. E-015/GR-16-664

          Andrew P. Moratzka, Marc A. Al, Riley A. Conlin, Stoel Rives, L.L.P., Minneapolis, Minnesota (for relators Large Power Intervenors)

          Keith Ellison, Attorney General, Lisa Crum, Jeffrey K. Boman, Assistant Attorneys General, St. Paul, Minnesota (for respondent Minnesota Public Utilities Commission)

          Keith Ellison, Attorney General, Ian Dobson, Assistant Attorney General, St. Paul, Minnesota (for respondent Office of the Minnesota Attorney General-Residential Utilities and Antitrust Division)

          Elizabeth M. Brama, Valerie T. Herring, Kodi J. Verhalen, Briggs and Morgan, P.A., Minneapolis, Minnesota; and David R. Moeller, Duluth, Minnesota (for respondent Minnesota Power)

          Considered and decided by Bjorkman, Presiding Judge; Connolly, Judge; and Florey, Judge.

         SYLLABUS

         The decision of the Minnesota Public Utilities Commission to account for, in a docket outside a general-rate case, additional sales revenue associated with providing electric service to energy-intensive trade-exposed (EITE) customers under an EITE rate schedule, is reasonable and in conformity with the plain language of Minn. Stat. § 216B.1696 (2018).

          OPINION

          FLOREY, JUDGE

         In this certiorari appeal, relators Large Power Intervenors (the LPIs)[1] challenge a final order in rate proceedings initiated by respondent Minnesota Power. The LPIs argue that the Minnesota Public Utilities Commission (the commission) violated the plain language of Minn. Stat. § 216B.1696 by excluding approximately $15.5 million of additional sales revenue from Minnesota Power's 2016 general-rate case. The commission had determined, in a different docket which is not the subject of this appeal, that the amount would be refunded to Minnesota Power's non-EITE customers in order to comply with section 216B.1696. Because the commission's decision to account for the additional sales revenue in the EITE docket, rather than in the general-rate case, was reasonable and in conformity with the plain language of section 216B.1696, we affirm.

         FACTS

         I. Factual and Procedural Background

         In 2015, the legislature passed Minn. Stat. § 216B.1696 (the EITE statute), which sets forth a public policy favoring competitive rates for EITE customers:[2]

It is the energy policy of the state of Minnesota to ensure competitive electric rates for energy-intensive trade-exposed customers. To achieve this objective, an investor-owned electric utility that has at least 50, 000 retail electric customers, but no more than 200, 000 retail electric customers, shall have the ability to propose various EITE rate options within their service territory under an EITE rate schedule that include, but are not limited to, fixed-rates, market-based rates, and rates to encourage utilization of new clean energy technology.

Minn. Stat. § 216B.1696, subd. 2(a).

         The statute directs the commission to approve a qualifying utility's proposed EITE rate schedule "upon a finding of net benefit to the utility or the state." Id., subd. 2(b). An EITE rate schedule allows the utility to offer EITE customers credits that reduce the rate that they pay for electricity. This is important because it has allowed those customers to operate facilities that were otherwise cost-prohibitive.

         The utility must then track in a separate account "the difference in revenue between what would have been collected under the electric utility's standard tariff and the EITE rate schedule." Minn. Stat. § 216B.1696, subd. 2(d). "In its next general rate case or through an EITE cost recovery rate rider between general rate cases, the commission shall allow the utility to recover any costs, including reduced revenues, or refund any savings, including increased revenues, associated with providing service to a customer under an EITE rate schedule." Id. But, a utility may not "recover any costs" from, or "refund any savings" to, any EITE customer or low-income residential ratepayers. Id.

         A. EITE Docket

         On June 30, 2016, Minnesota Power filed a petition, under Minn. Stat. § 216B.1696, to establish a competitive rate for EITE customers. Minnesota Power proposed an EITE rate schedule that would provide a usage-based "Energy Charge Credit" to EITE customers who met certain conditions, and it proposed to recoup the cost of the credit through a surcharge on non-EITE, non-exempt customers. Minnesota Power predicted that the credit would spur increased electricity purchases by EITE customers, satisfying the statute's requirement that any EITE rate schedule approved by the commission produce a "net benefit" to the utility or the state. Minn. Stat. § 216B.1696, subd. 2(b).

         On December 21, 2016, the commission approved Minnesota Power's proposed EITE rate schedule, but ordered Minnesota Power to file a rate-design proposal detailing how to recover the cost, or refund additional revenues, associated with implementing the EITE rate. The commission also ordered Minnesota Power to establish a tracker account to measure "the difference in revenue between what would have been collected under the electric utility's applicable standard tariff and the EITE rate schedule." The commission's December order provided that it "shall become effective immediately." Neither the LPIs nor Minnesota Power applied for rehearing within the time period allowed (20 days) under Minn. Stat. § 216B.27, subd. 1 (2018).[3]

         On December 30, 2016, Minnesota Power made a compliance filing that included its cost-recovery proposal, several rate-design alternatives, and a revised communications plan. The matter came before the commission on March 9, 2017, and on April 20, 2017, the commission issued its order.

         In the April 20, 2017 order, the commission:

• authorized Minnesota Power to collect a surcharge from non-EITE customers to recover the cost of providing credits to EITE customers;
• required Minnesota Power to distribute the EITE surcharge as a uniform per-kWh charge applicable to all customer classes;[4]
• directed Minnesota Power to refund to non-EITE customers any revenue increases resulting from increased sales to customers taking service under the EITE rate schedule;[5]
• required Minnesota Power to report back on its efforts to identify customers who may be exempt, based on income, from paying the EITE surcharge; and
• specified the form and content of the notice that Minnesota Power must provide to non-EITE customers prior to collecting the surcharge.

         The commission ordered Minnesota Power to submit a compliance filing within 30 days "setting forth the surcharge and refund mechanisms in detail, including the baseline gross revenue for 2016 and the methodology for determining net revenue increases." The order provided that it shall become effective immediately. ...


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