CapX 2020 in North Dakota

Filed under:Laws & Rules,News coverage — posted by admin on January 27, 2008 @ 12:09 pm

Here’s more on the reach of CapX, from the Grand Forks Herald Review, couched in “it’s for wind” propaganda:

State’s wind energy production doubles

… Of course, wind energy isn’t about to replace coal or other energy sources in the state and region any time soon…

… “For a while, utilities were reluctant to build transmission lines because of questions of how they would get their return on the investment,” Nisbet said. “That’s changing.” …

Yup, it’s changing all right, changing to give utilities instant return for transmission expenditures. And that’s because the state of Minnesota, at the encouragement of “environmental” groups contractually beholden to promoting transmission, gave them the ability to recover costs immediately if it’s “for renewable” (as was claimed in the SW MN 345kV line where ~11% at most would be coming off of Buff Ridge). Here’s the 2005 Transmission Omnibus Bill from Hell. This gave out perks like this:

Notwithstanding any other provision of this chapter, the
commission may approve a tariff mechanism for the automatic
annual adjustment of charges for the Minnesota jurisdictional
costs of new transmission facilities that have been separately
filed and reviewed and approved by the commission under section
216B.243 or are certified as a priority project or deemed to be
a priority transmission project under section 216B.2425.
(b) Upon filing by a public utility or utilities providing
transmission service, the commission may approve, reject or
modify, after notice and comment, a tariff that:
(1) allows the utility to recover on a timely basis the
costs net of revenues of facilities approved under section
216B.243 or certified or deemed to be certified under section
(2) allows a return on investment at the level approved in
the utility’s last general rate case, unless a different return
is found to be consistent with the public interest;
(3) provides a current return on construction work in
progress, provided that recovery from Minnesota retail customers
for the allowance for funds used during construction is not
sought through any other mechanism;
(4) allows for recovery of other expenses if shown to
promote a least-cost project option or is otherwise in the
public interest;
(5) allocates project costs appropriately between wholesale
and retail customers;
(6) provides a mechanism for recovery above cost, if
necessary to improve the overall economics of the project or
projects or is otherwise in the public interest; and
(7) terminates recovery once costs have been fully
recovered or have otherwise been reflected in the utility’s
general rates.
(c) A public utility may file annual rate adjustments to be
applied to customer bills paid under the tariff approved in
paragraph (b). In its filing, the public utility shall provide:
(1) a description of and context for the facilities
included for recovery;
(2) a schedule for implementation of applicable projects;
(3) the utility’s costs for these projects;
(4) a description of the utility’s efforts to ensure the
lowest costs to ratepayers for the project; and
(5) calculations to establish that the rate adjustment is
consistent with the terms of the tariff established in paragraph
(d) Upon receiving a filing for a rate adjustment pursuant
to the tariff established in paragraph (b), the commission shall
approve the annual rate adjustments provided that, after notice
and comment, the costs included for recovery through the tariff
were or are expected to be prudently incurred and achieve
transmission system improvements at the lowest feasible and
prudent cost to ratepayers.

This bill also established “Transmission Only” companies, like TRANSLink, which had been strongly opposed by former Attorney General Mike Hatch. But then the “environmental organizations” did the “TRANSLink deal” which required, among other things, promotion of transmission companies, so this legislation, pushed by Bill Grant, Izaak Walton League, and George Crocker, NAWO, gave Xcel, et al., this option that was so disfavored that Xcel withdrew it from the PUC:

Section 1. Minnesota Statutes 2004, section 216B.02, is
amended by adding a subdivision to read:
Subd. 10. [TRANSMISSION COMPANY.] “Transmission company”
means persons, corporations, or other legal entities and their
lessees, trustees, and receivers, engaged in the business of
owning, operating, maintaining, or controlling in this state
equipment or facilities for furnishing electric transmission
service in Minnesota, but does not include public utilities,
municipal electric utilities, municipal power agencies,
cooperative electric associations, or generation and
transmission cooperative power associations.


Sec. 3. Minnesota Statutes 2004, section 216B.16, is
amended by adding a subdivision to read:
utility owners of transmission facilities may, subject to Public
Utilities Commission approval, transfer operational control or
ownership of those transmission assets to a transmission company
subject to Federal Energy Regulatory Commission jurisdiction.
For transmission asset transfers by a public utility, the Public
Utilities Commission must review the request to transfer either
in the context of a general rate case under this section or by
initiating other proceedings it determines provide adequate
review of the transmission asset transfer. The Public Utilities
Commission may limit, in whole or in part, the transfer of
transmission assets or the timing of those transfers by a public
utility if it finds the limitation in the public interest. The
commission may only approve a transfer if it finds that the
transfer is consistent with the public interest.
In assessing the public interest, the commission shall
evaluate, among other things, whether the transfer:
(1) facilitates the development of transmission
infrastructure necessary to ensure reliability, encourages the
development of renewable resources, and accommodates energy
transfers within and between states;
(2) protects Minnesota ratepayers against the subsidization
of wholesale transactions through retail rates;
(3) ensures, in the case of operational control of
transmission assets, that the state retains jurisdiction over
the transferring utility for all aspects of service under
chapter 216B;
(4) impacts Minnesota retail rates; and
(5) protects Minnesota ratepayers from paying capital costs
for transmission assets that have already been recovered.
(b) A transfer of operational control or ownership of
transmission assets by a public utility under this subdivision
is subject to section 216B.50. The relationship between a
public utility transferring operational control of transmission
assets to another entity under this subdivision is subject to
the provisions of section 216B.48. If a public utility
transfers ownership of its transmission assets to a transmission
provider subject to the jurisdiction of the Federal Energy
Regulatory Commission, the Public Utilities Commission may
permit the utility to file a rate schedule providing for the
automatic adjustment of charges to recover the cost of
transmission services purchased under tariff rates approved by
the Federal Energy Regulatory Commission.
(c) A municipal utility, a municipal power agency, or a
joint venture pursuant to section 452.25 may transfer
operational control or ownership of transmission assets to a
transmission company, or make investments in a transmission
company, if the governing body of the municipal utility,
municipal power agency, or joint venture finds that the transfer
or investment is consistent with the public interest and will
facilitate the development of infrastructure necessary to ensure
[EFFECTIVE DATE.] This section is effective August 1, 2005,
and applies to petitions for approval of transfer of
transmission assets filed on or after that date and does not
apply to proceedings pending before the Public Utilities
Commission before that date.

So let’s see, is there anything else the utilities need to prepare for CapX 2020??? Oh, the “Minnesota” need criteria was gutted, changed to be “regional” so that opens the door even wider… gee, thanks…

216B.243, Subdivision 3
(3) the relationship of the proposed facility to overall
state energy needs, as described in the most recent state energy
policy and conservation report prepared under section 216C.18,
or, in the case of a high-voltage transmission line, the
relationship of the proposed line to regional energy needs, as
presented in the transmission plan submitted under section


(9) with respect to a high-voltage transmission line, the
benefits of enhanced regional reliability, access, or
deliverability to the extent these factors improve the
robustness of the transmission system or lower costs for
electric consumers in Minnesota;

Here’s a 2007 utility infrastructure rate return scheme that gives them pronto-payback:

Subdivision 1. Definitions. (a) “Electric utility” means a public utility as defined in
section 216B.02, subdivision 4, that furnishes electric service to retail customers.
(b) “Electric utility infrastructure costs” or “EUIC” means costs for electric utility
infrastructure projects that were not included in the electric utility’s rate base in its most
recent general rate case.
(c) “Electric utility infrastructure projects” means projects owned by an electric
utility that:
(1) replace or modify existing electric utility infrastructure, including utility-owned
buildings, if the replacement or modification is shown to conserve energy or use energy
more efficiently, consistent with section 216B.241, subdivision 1c; or
(2) conserve energy or use energy more efficiently by using waste heat recovery
converted into electricity as defined in section 216B.241, subdivision 1, paragraph (n).
Subd. 2. Filing. (a) The commission may approve an electric utility’s petition for
a rate schedule to recover EUIC under this section. An electric utility may petition the
commission to recover a rate of return, income taxes on the rate of return, incremental
property taxes, if any, plus incremental depreciation expense associated with EUIC.
(b) The filing is subject to the following:
(1) an electric utility may submit a filing under this section no more than once
per year; and
(2) an electric utility must file sufficient information to satisfy the commission
regarding the proposed EUIC or be subject to denial by the commission. The information
includes, but is not limited to:
(i) the location, description, and costs associated with the project;
(ii) evidence that the electric utility infrastructure project will conserve energy or use
energy more efficiently than similar utility facilities currently used by the electric utility;
(iii) the proposed schedule for implementation;
(iv) a description of the costs, and salvage value, if any, associated with the existing
infrastructure replaced or modified as a result of the project;
(v) the proposed rate design and an explanation of why the proposed rate design
is in the public interest;
(vi) the magnitude and timing of any known future electric utility projects that the
utility may seek to recover under this section;
(vii) the magnitude of EUIC in relation to the electric utility’s base revenue as
approved by the commission in the electric utility’s most recent general rate case,
exclusive of fuel cost adjustments;
(viii) the magnitude of EUIC in relation to the electric utility’s capital expenditures
since its most recent general rate case;
(ix) the amount of time since the utility last filed a general rate case and the utility’s
reasons for seeking recovery outside of a general rate case;
(x) documentation supporting the calculation of the EUIC; and
(xi) a cost and benefit analysis showing that the electric utility infrastructure project
is in the public interest.
(c) Upon approval of the proposed projects and associated EUIC rate schedule, the
utility may implement the electric utility infrastructure projects.
Subd. 3. Commission authority; orders. The commission may issue orders
necessary to implement and administer this section.

Oh, and they also limited the amount that a transmission company can be assessed for permitting proceedings, yup, good idea when CapX 2020 is coming through, the biggest project ever, and we’ve got an agency that couldn’t get it up if its life depended on it …

commission and department may charge transmission companies
their proportionate share of the expenses incurred in the review
and disposition of proceedings under sections 216B.2425,
216B.243, 216B.48, 216B.50, and 216B.79. A transmission company
is not liable for costs and expenses in a calendar year in
excess of the limitation on costs that may be assessed against
public utilities under subdivision 2. A transmission company
may object to and appeal bills of the commission and department
as provided in subdivision 4.

But hey… Crocker got C-BED out of this deal, doesn’t that make it all worthwhile? Who pays? Who benefits?

Minn. Stat. 216B.1612 Community Based Energy Development. Tariff.

And we all know whose company C-BED is, eh?

C-BED Secretary of State filings:

Community Based Energy Development – name reserved 3/9/05

Assumed Name filed same day, 3/9/05

Web site established 12/25/05 per Wayback Machine

And then there’s the 2007 C-BED perks:

Chapter 57, S.F. 2096
Chapter 136, S.F. 154

Yup, no question why we’re where we are now with not a heck of a lot to do, under the statutes, to shut this open door to CapX 2020. Thanks, guys… it’s your legacy.

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image: detail of installation by Bronwyn Lace