Minnesota Public Utilities Commission Staff Briefing Papers

Transcription

1 Minnesota Public Utilities Commission Staff Briefing Papers Meeting Date: October 28, *Agenda Item # 2A Company: Docket No. Electric Utilities Subject to Minn. Stat. 216B.1691 E999/CI In the Matter of Commission Investigation into Compliance with the Renewable Energy Objective/Renewable Energy Statute, Minn. Stat. 216B.1691 Issue: Staff: What clarifications should the Commission make on REO-RES reporting procedures and requirements? Michelle Rebholz Susan Mackenzie Relevant Documents Office of Energy Security-Comments...August 15, 2008 Xcel Energy-Comments...August 15, 2008 Dairyland Power Cooperative-Comments...August 15, 2008 Great River Energy-Comments...August 15, 2008 Otter Tail Power Company-Comments...August 15, 2008 Minnesota Power-Comments...August 15, 2008 East River Power Cooperative, Inc.-Comments...August 15, 2008 Interstate Power and Light Company-Comments...August 15, 2008 Basin Electric Power Cooperative-Comments...August 15, 2008 Xcel Energy-Reply Comments...August 25, 2008 The attached materials are work papers of the Commission Staff. They are intended for use by the Public Utilities Commission and are based upon information already in the record unless noted otherwise. This document can be made available in alternative formats (i.e. large print or audio tape) by calling (voice). Citizens with hearing or speech disabilities may call us through Minnesota Relay at or by dialing 711.

2 Staff Briefing Papers for Docket No. E999/CI on October 28, 2008 Page 1 Statement of the Issue What clarifications should the Commission make on REO-RES reporting procedures and requirements? Background On July 18, 2008, staff released a NOTICE SEEKING COMMENTS ON ELECTRIC UTILITY REO/RES REPORTING PROCEDURES AND REQUIREMENTS. 1 The Notice requested comments on a number of subjects related to the Renewable Energy Objective/Renewable Energy Statute (REO/RES) requirements in Minn. Stat. 216B.1691, and specifically Minn. Stat. 216B.1691 subd. 3(a) s requirement regarding REO/RES reports filed with the Commission. The Notice explained that some utilities which appear to be subject to the statute have not filed the REO/RES reports required by Minn. Stat. 216B.1691, subd. 3(a) or have filed REO/RES information that was not identified by the company as an REO/RES report. In addition, changes during the 2007 legislative session to the REO/RES statute may have changed which utilities were subject to the statute and has changed the Commission s role to require the Commission to regularly investigate compliance with REO/RES obligations. The Notice listed several questions for parties to respond to. Introduction Staff believes that issuing clarifications on Issues 1-4 as discussed below will enhance efficiency, provide for consistency among utilities where needed, and ensure more meaningful information in and review of REO-RES reports consistent with the statute. Currently, there has been staff (and likely parties ) time expended in tracking various REO-RES report due dates, identifying which filings are REO-RES reports, and in attempting to determine the Commission s newly revised role as a result of 2007 legislation. Clarifying the content requirements for REO-RES reports will ensure that all such reports provide both the numerical data and narrative necessary to analyze the reports consistent with the statute. The coordination of these REO-RES reports with information already filed with the OES, both in content and timing, will allow both agencies to fulfill their complementary roles in tracking REO-RES compliance by ensuring utilities file one set of data with both agencies at the same time. Parties Positions and Staff Comment Staff has organized parties comments by the questions presented to parties in the Notice. Initial Comments Issue 1: Utilities Subject to Minn. Stat. 216B.1691 (REO/RES Statute) Staff presented in the Notice a list of utilities staff believes are now subject to the REO/RES statute, and asked whether the list was correct. The following list was presented in the Notice: 1 The term utility, as it is used in these briefing papers, is the term as defined in Minn. Stat. 216B.1691, subd. 1(b), which includes not only public utilities rate-regulated by the Commission, but generation and transmission cooperatives, municipal power agencies, and power districts.

3 Staff Briefing Papers for Docket No. E999/CI on October 28, 2008 Page 2 Covered entities under Minn. Stat. 216B.1691 who do not file resource plans under Minn. Stat. 216B.2422: Northwest Wiconsin Electric Company, L&O Cooperative, East River Electric Power Cooperative, Inc., Central Minnesota Municipal Power Agency, and Heartland Consumers Power District. Covered entities who file resource plans: Xcel Energy, Minnesota Power, Interstate Power & Light, Otter Tail Power, Great River Energy, Dairyland Power Cooperative, Basic Electric Power Cooperative, Minnkota Power Cooperative/Northern Municipal Power Agency, Missouri River Energy Services/Western Minnesota Municipal Power Agency, Southern Minnesota Municipal Power Agency, and Minnesota Municipal Power Agency. Issue 1a Most commenters only addressed whether they were listed correctly on this list. It was noted that Heartland, who was tentatively included on staff s proposed list as a utility covered by the statute, had previously been excluded by the Commission because the company:...was not a covered entity because it was not a public utility or a municipal power agency under Minnesota law. No one challenged this claim, and the Commission concurs. Heartland will not be subject to the renewable energy objectives of Minn. Stat. 216B Staff comment: Issue 1a With the 2007 legislative changes to the REO/RES statute, it is useful to make clarifications now about which companies are subject to REO/RES obligations. Generally, most commenters agree as to who is covered by the statute, although questions have been raised as to whether Heartland is covered by the statute. While the Commission previously found Heartland to not be subject to the statute in a 2004 Order, the 2007 changes to Minn. Stat. 216B.1691 appear to now include Heartland. Previously, the REO/RES statute only applied to public utilities providing electric service, generation and transmission cooperative electric associations, or municipal power agencies. However, Senate File No. 4, signed by the governor in February 2007, amended the REO/RES statute to additionally apply to power districts: Minn. Stat. 216B.1691, subd. 1(b): "Electric utility" means a public utility providing electric service, a generation and transmission cooperative electric association, or a municipal power agency, or a power district. Staff believes Heartland is now subject to the REO/RES statute, and the Commission should so clarify in its Order. 2 OES comments at 2, quoting Initial Order Detailing Criteria and Standards for Determining Compliance with Minn. Stat. 216B.1691 and Requiring Customer Notification by Certain Cooperative Municipal and Investor-Owned Distribution Utilities, Docket No. E999/CI , In the Matter of Detailing Criteria and Standards for Measuring an Electric Utility s Good Faith Efforts in Meeting the Renewable Energy Objectives under Minn. Stat. 216B.1691, Issued June 1, 2004.

4 Staff Briefing Papers for Docket No. E999/CI on October 28, 2008 Page 3 Issue 1b The OES raised a second administrative issue regarding L&O Electric Cooperative ( L&O ) and East River Electric Cooperative, Inc ( East River ). The OES did not dispute that both cooperatives are subject to the REO/RES statute and its requirements, but noted that the two cooperatives have generally reported their REO/RES compliance with Basin; the OES further stated that since Basin has filed its first resource plan in Minnesota, these two cooperatives should be covered through Basin and do not need to be listed independently from Basin. Basin commented on this second administrative issue as well but did not reach the same conclusion as the OES. Basin stated that since it is the supplemental power supplier to East River and L&O, it would make sense that Basin could, in its own REO/RES filing, address all of its Minnesota serving members (including East River and L&O), but that the current REO/RES provisions do not appear to provide for this approach. In addition, Basin stated that it informed the Commission through its resource plan filing 3 that East River and L&O would file their own separate reports detailing their REO/RES activity. Staff comment: Issue 1b Basin raised the issue of whether it could file REO-RES reports on behalf of East River and L&O. Commenters agree that both companies are subject to the REO/RES statutes; therefore, both companies should be filing reports with...the commission every two years on their progress in complying with the REO/RES standards. 4 Basin states that in its July 2008 resource plan filing, it did not include reporting for East River and L&O. Basin states in its comments that current REO/RES procedures may not allow for Basin to report on behalf of East River and L&O, although it would otherwise be logical for Basin to do so since it is the supplemental power supplier for the two cooperatives. The portion of the REO/RES statute relating to a company s reporting obligations does not appear to prohibit two or more companies from filing joint REO/RES reports. The relevant portion of the statute states in part, Each electric utility shall report on its plans, activities, and progress with regard to the objectives and standards of this section in its filings under section 216B.2422 or in a separate report submitted to the commission every two years, whichever is more frequent, demonstrating to the commission the utility s effort to comply with this section. This portion of the REO/RES statute appears to only require the following: 1) that each entity subject to this statute file a report on its REO/RES progress at least every two years; 2) that the report either be filed in a resource plan or separately from a resource plan; and 3) that the report be submitted to the Commission. This portion of the statute does not appear to prevent two or more companies subject to the statute to file a joint report if a joint report is logical. Staff believes it would be appropriate for the Commission to clarify that two or more companies 3 Docket No. ET6125/RP Minn. Stat. 216B.1691, subd. 3(a).

5 Staff Briefing Papers for Docket No. E999/CI on October 28, 2008 Page 4 may file a joint report under Minn. Stat. 216B.1691, subd. 3(a), as long as the names of the companies for which the report applies are clearly identified at the beginning of the document so that the Commission can correctly docket the filing. 5 (Utilities that file a joint report should also track the report to ensure that it is appropriately docketed.) Staff comment: Issue 1c: Whether covered utilities have been filing reports as required by statute A third item related to issue 1 is being raised by staff. Issue 1 relates to identifying which companies are subject to the REO/RES statute; as the OES points out, this is not the first time in which the Commission has done so. In its June 1, 2004 Order, the Commission at that time identified which companies were subject to the REO statute in effect at that time. The Commission at that time found that all of the companies on the list staff developed here, except for Heartland, were covered by the REO statute. Since the Commission s June 1, 2004 Order, it is not clear that all companies that were found to be subject to the REO statute filed REO reports with the Commission as required by Minn. Stat. 216B.1691, subd. 3(a). Staff sees no REO/RES reports filed with the Commission from Northwest Wisconsin Electric Company ( Northwest Wisconsin ), L&O, East River, Central Minnesota Municipal Power Agency (CMMPA), or Heartland. Heartland was not subject to the REO/RES statute until 2007, so it is reasonable that the company has not yet filed an REO/RES report, but the other four companies were put on notice in the Commission s June 1, 2004 Order that they should have been filing biennial reports with the Commission, as required by Minn. Stat. 216B.1691, subd. 3(a). It appears that the companies may have provided the OES with some REO/RES information for the OES 2007 legislative report, but that information does not appear to have been filed with the Commission for review indeed, the OES 2007 legislative report confirms that these companies REO compliance has not been reviewed by the Commission. 6 Staff suggests that, as part of the Commission s mandate to investigate compliance with the REO/RES statute, the Commission require East River, L&O, CMMPA, and Northwest Wisconsin to file an REO report immediately. Issue 2: Content Requirements for REO/RES Plans The Notice Requesting Comments in this docket asked commenters whether the Commission should set out more detailed content requirements for plans than the general requirements set out in Minn. Stat. 216B.1691, subd. 3(a). The Notice also asked commenters to consider both the needs of the Commission for investigating compliance and the needs of the OES for compiling its biennial reports to the legislature. In addition, because some entities subject to the REO/RES statutes do not have to file resource plans, the Notice asked whether the content of 5 In the case of East River and L&O, Basin is the supplemental power supplier. Any joint filing by East River, L&O, and Basin would also have to specify more complete power supply information for East River and L&O. 6 _Energy_Objective_2007_ _REO%20Report2007.pdf; see pages 20, 24, and 28 of 31.

6 Staff Briefing Papers for Docket No. E999/CI on October 28, 2008 Page 5 the reports filed separately from a resource plan should be different from those filed with a resource plan. Commenters generally stated that the content requirements listed in the REO/RES statute are sufficient. Some commenters clarified what they believe the reports should include but did not recommend that the Commission explicitly state in an Order what the content requirements should be. 7 Two commenters provided recommendations on what content requirements may be useful. Basin observed that the timing of information in the REO/RES reports is not specified; it suggested that an REO/RES report should include information for the two calendar years prior (for example, if an REO/RES report is filed with a resource plan in July 2008, then the REO/RES report should discuss calendar years 2006 and 2007). Xcel stated that a basic level of information should be filed by all utilities, such as the retail sales in Mwh and the Mwh of renewable generation. Xcel also stated that the OES information requests in recent resource plan and certificate of need dockets are a good starting point, but noted that content may more appropriately be addressed on an individual utility basis. One commenter recommended that the Commission consider the detail with which it expects utilities to report. OTP stated that proposed or potential projects will generally involve highly sensitive and proprietary information, and most developers do not want any potential information to be reported. OTP would expect to report any information on potential projects to be lumped together, without identifying location or magnitude by project. 8 Commenters generally stated that the content requirements should not be different for an REO- RES report filed separately from a resource plan. Staff comment: Issue 2 The REO/RES statute sets out four general items to be included in an REO/RES report: (1) the status of the utility's renewable energy mix relative to the objective and standards; (2) efforts taken to meet the objective and standards; (3) any obstacles encountered or anticipated in meeting the objective or standards; and (4) potential solutions to the obstacles. These four content requirements are described only generally, but commenters generally did not express concern that the Commission provide additional clarification on what these four content requirements mean. Staff has observed differences in the content of various utilities REO-RES reports filed with 7 See, for example, OtterTail s comments at 3, stating that reports should include: projected annual renewable energy requirements, projected annual renewable energy supply, estimated additional renewable energy requirements, a high level discussion of renewable energy activities with generic discussion of the number of potential projects under discussion and total expected amount of energy from the potential projects; and any obstacles that have been encountered with potential solutions to those obstacles. 8 OTP comments, p. 3.

7 Staff Briefing Papers for Docket No. E999/CI on October 28, 2008 Page 6 the Commission. Xcel s most recent REO-RES report was 111 pages; Minnkota s was 1 page. 9 While some differences in the length and content of such reports are appropriate in light of the circumstances of each individual utility, that should be balanced with consistency. The Commission has already once set out certain information utilities must file in REO-RES reports. In its June 1, 2004 Order, Ordering Paragraph 11, the Commission mandated that utilities file certain forward looking information in their biennial REO-RES reports. 10 A copy of Ordering paragraph 11 is attached to these briefing papers. While some utilities have likely included this information in their REO-RES reports, some reports do not appear to have offered this level of detail. The Commission has not reconsidered or rescinded this part of its June 1, 2004 Order, and Staff suggests that it may be useful to reiterate that these forward looking items should continue to be included in REO-RES reports. In addition, as further elaborated in Issue 3c, staff suggests that it would be useful to establish content requirements for the purpose of clarity, efficiency, and to clarify the Commission s newly added role from the 2007 legislation to regularly investigate utilities compliance with the REO-RES statute. Every two years, the OES compiles information and files a legislative report on utilities progress in meeting the REO-RES statute. As of 2007, the Commission is now charged with investigating utilities compliance with the REO-RES statute. It is a logical and efficient solution to clarify that the same information utilities file with the OES every two years be filed with the Commission as part of their REO-RES reports. The OES explains that determining compliance generally requires knowing the utility s Minnesota retail sales in Mwh and obtaining information on the renewable generation at a utility s various renewable facilities and PPAs along with information on whether any of the renewable generation is specifically allocated to other state RPS requirements or green pricing programs. Staff suggests that the Commission clarify that this specific information, plus all information utilities provide to the OES for its legislative report (in addition to the information already required in the Commission s June 1, 2004 Order) be the information required in an REO-RES report. Staff also believes Basin raises a question that could be clarified: whether the REO/RES report should describe a company s planned compliance for future years or include only previous years compliance with the statute. An REO/RES report that describes future years plans may contain information that could change; however, a report that only describes past compliance does not give the Commission an opportunity to know if it may in the future need to modify a renewable energy standard or otherwise make a decision regarding a company s future renewable energy plans Xcel s REO-RES report is assigned to Docket No. E002/M ; Minnkota s is ET6/M Initial Order Detailing Criteria and Standards for Determining Compliance with Minn. Stat. 216B.1691 and Requiring Customer Notification by Certain Cooperative Municipal and Investor-Owned Distribution Utilities, Docket No. E999/CI , In the Matter of Detailing Criteria and Standards for Measuring an Electric Utility s Good Faith Efforts in Meeting the Renewable Energy Objectives under Minn. Stat. 216B.1691, Issued June 1, The REC compliance report described in briefing papers for agenda item 2B on today s agenda is more of a backward looking, mechanical report, whereas an REO-RES report will also

8 Staff Briefing Papers for Docket No. E999/CI on October 28, 2008 Page 7 The content requirements of the REO/RES statute appear to require both past compliance and future planned compliance. For example, Minn. Stat. 216B.1691, subd. 3(a)(3) requires a description of obstacles encountered or anticipated in meeting the renewable standards. While the term encountered refers to past experience in complying with REO/RES obligations, the term anticipated presumes forward looking plans should be described in complying with REO/RES obligations. Similarly, the requirement in Minn. Stat. 216B.1691, subd. 3(a)(2) that a utility describe its efforts taken to meet the REO/RES is broad enough to include efforts to comply with the REO/RES in past years as well as efforts taken to ensure compliance going forward. Staff has randomly reviewed REO-RES reports from utilities and observed that the reports generally do include some forward looking information. 12 Staff sees no reason for the Commission to declare at this time that REO-RES reports should exclude project-specific details, as OTP suggests. Staff has no opinion on whether projectspecific details need to be in an REO-RES report, but the Commission may at times want the opportunity to request this information. If OTP s concern is that project-specific details are proprietary, they can request that the data be classified as trade secret. The notice of comments also asked whether the content of REO-RES reports filed separately from a resource plan should be different from the information included in an REO-RES report filed with a resource plan. Staff included this question in the notice of comments because a REO-RES report filed with a resource plan can be evaluated in light of the additional information filed with the resource plan, and therefore may be reviewed differently than an REO-RES report filed separately from a resource plan. However, no commenters recommended any different content requirements for REO-RES reports filed with versus without resource plans. Issue 3: Explicit Identifications and Findings for REO-RES Reports Staff also asked in the notice of comments: a) how should a utility identify the required REO- RES report within the overall resource plan document; b) if the Commission should make explicit approvals of REO-RES compliance; c) whether the Commission should set out the deadlines for the next REO-RES due date. Issue 3a: How should an REO-RES report be labeled The OES stated that typically, a REO-RES report is a separate section or chapter in a resource plan filing, and is identified as such. The OES recommends that this practice continues. OTP, contain forward looking information and a more meaningful narrative on compliance. 12 Past Commission Orders have observed that utilities file information on their planned compliance going forward. See, for example, ORDER ACCEPTING RESOURCE PLAN, ACCEPTING SETTLEMENT AS AMENDED, SETTING REPORTING REQUIREMENTS, FINDING COMPLIANCE WITH 216b.1691, VARYING FILING DEADLINE, AND REQUIRING COOPERATION WITH STAKEHOLDERS, Issued May 19, 2006, Docket No. E015/RP , where the Commission observed that the utility s REO-RES report appeared to show that it would be on track to meet the REO objective at least through See also Xcel s current REO- RES report, in Docket No. E002/M

9 Staff Briefing Papers for Docket No. E999/CI on October 28, 2008 Page 8 Dairyland, IPL, and Basin agreed that the plan should be filed as a discrete section of the resource plan (when filed with a resource plan). Dairyland also suggested that the REO-RES report contain sections corresponding to the information required by the statute. Other commenters suggested on the title that could or should be given to the report. GRE stated that any method that clearly identifies the purpose of the filing should be adequate, such as Renewable Energy Objectives and Standards Report. MP stated that it labeled its most recent report as Minnesota s Renewable Energy Objectives/Standards: MP s planned response. East River recommended reports be labeled Compliance Report: Minn. Stat. 216B.1691, subd. 3(a). Staff comment: Issue 3a Issue 3a is largely an administrative issue with little controversy. Staff raised the question in the notice of comments because at times, utilities have made filings containing REO-RES information, but which are not labeled in a manner that tells the Commission whether the filing is intended to be an REO-RES filing under the applicable statute. This ambiguity expends staff time in tracking REO-RES reports. In addition, properly labelling a REO-RES report as such makes it easier for stakeholders and other parties to identify the document, so they have a full opportunity to participate in a proceeding on the utility s REO-RES compliance. Staff believes a modified version of East River s recommended title of REO-RES Compliance Report: Minn. Stat. 216B.1691, subd. 3a is the clearest for purposes of identifying the report. While staff prefers this label, in the interest of not being too inflexible staff believes that GRE s or MP s suggested titles also assist in identifying a document as an REO-RES report. Therefore, staff suggests that the Commission indicate its preferred label in its Order but not mandate that label. In addition, staff appreciates Dairyland s recommendation that an REO- RES report contain sections corresponding to the four categories of information required by the statute and recommends that the Commission indicate its preference for this format. Issue 3b: Whether the Commission Should Make Explicit Findings on REO-RES reports The OES reviewed eight (8) recent Commission Orders in resource plan dockets and found in each of them an explicit Commission finding on the utility s good faith effort to comply with the REO. The OES recommends that the Commission continue making explicit findings of compliance with REO-RES statutes. GRE agreed that the Commission should make a finding on the utility s compliance efforts. It pointed out that under Certificate of Need proceedings under Minn. Stat. 216B.243, subdivision 3(10) requires that the Commission consider whether the applicant is in compliance with the REO-RES statute (Minn. Stat. 216B.1691). Dairyland also agreed that the Commission should make an explicit finding, with the understanding that eventually compliance with the RES will be verified via M-RETS. Xcel also recommended that making an explicit finding regarding REO-RES compliance is appropriate; however, the Commission should remain flexible in its approach. It is difficult to anticipate the circumstances surrounding future REO-RES plans. In contrast, OTP, MP, East River, and Basin felt that the Commission need not make an explicit finding approving an REO-RES report. OTP questioned what explicit approval would mean:

10 Staff Briefing Papers for Docket No. E999/CI on October 28, 2008 Page 9 Otter Tail believes that the Commission does not need to make such a separate explicit finding. Would it be logical for the Commission to approve a resource plan, but not the REO/RES plan? In a resource plan filing, the REO/RES report is a part of the overall resource plan and not a separate stand-alone resource plan. One needs to ask what such an explicit REO/RES plan approval would mean. Would explicit approval mean that the utility does not need to get PPA or investment approval under Minn. Stat. 216B.1645, eliminate the need for a separate Certificate of Need proceeding under Minn. Stat. 216B.243, or suffice for some other regulatory requirement? If not, there really doesn t appear to be any real benefit to having a separate explicit approval. One other issue here is that a Company s plans with respect to its REO/RES compliance can change dramatically in a short period of time. Experience has shown that many non-utility owned renewable energy projects fail to be constructed for a variety of reasons. These reasons are typically out of the control of the utility. The result is that plans can change rapidly, over a few months. If the Commission intends to weigh in with an explicit REO/RES plan approval, the Commission must also decide what process and procedures need to take place when a Company s REO/RES plan is forced to change in-between resource plan filings. MP agreed that explicit approval is unnecessary, noting that the REO-RES statute does not require explicit approval. 13 Basin and East River recommended that no explicit approval is necessary. Basin, alternatively, recommended that the Commission should examine the REO/RES report in context of the entire resource plan. If a finding was made, then the finding should be done in all reporting contexts. Staff comment: Issue 3b Staff agrees with the comments of OES, GRE, Dairyland, and Xcel that continuing to make explicit findings on REO-RES reports is the appropriate course of action. As the OES points out, this has been the Commission s past and current practice. Explicit approval is also important for the reason GRE notes; compliance with the REO-RES statute is a factor in Certificate of Need dockets. Making an explicit finding serves a purpose both for these dockets but also in memorializing for the benefit of the Commission, the utility, and stakeholders that the utility has been in compliance with the statute and has plans to continue to be in compliance. 14 Since the REO-RES statute says that the Commission must regularly investigate 13 MP comments, p Staff anticipates that a finding of compliance would include both compliance going back (such as an Order finding compliance with the statute for the previous years) plus a finding that going forward, the company has presented information demonstrating that it has an adequate plan in place to meet future objectives and/or standards outlined by statute.

11 Staff Briefing Papers for Docket No. E999/CI on October 28, 2008 Page 10 whether a utility is in compliance with the statute 15, it logically follows that the Commission should be issuing Orders stating whether it found a utility in compliance with the statute. None of the commenters that oppose explicit approval explain why the Commission s current practice of granting explicit approval has caused problems, nor have they explained how the Commission would otherwise fulfill its statutory mandate to regularly investigate a utility s compliance with the statute. However, commenters have also raised helpful questions in determining what the approval of an REO-RES report means. The approval of an REO-RES report is based upon the information a utility files at the time it makes that filing. Circumstances may have changed since the filing and approval of that report. In the context of a Certificate of Need docket, the approval of an REO-RES report would not necessarily foreclose participants from raising the issue of REO- RES compliance if the utility s REO-RES plans or compliance have changed. In terms of dockets other than Certificate of Need dockets, approval of an REO-RES plan would not mandate that the docket be treated in a specific manner unless required by law. It is staff s understanding that, based upon past practice, the OES will review the reports filed by covered utilities and pursue any additional information necessary to confirm a utility s compliance with the statute. Staff requests that the OES continue to provide this helpful review. 16 Issue 3c: Whether the Commission Should Identify a Due Date for REO-RES Reports The notice of comments issued by staff also asked commenters whether the Commission should specify when a utility s next REO-RES report is due. Although the statute has specified a deadline of every two years...[or] more frequent, in recent dockets it has come to light that some utilities have missed this deadline. The OES suggests that an annual compliance filing be implemented. Alternatively, the OES suggests that since the agency compiles a biennial legislative report, the OES could submit its document along with a summary of each utility s compliance for a finding. The OES observes that such a proceeding would ensure ongoing oversight of utilities compliance, would eliminate the need to separately order proceedings for each utility that does not submit a resource plan, and would allow utilities to alter their resource plan submissions as needed without disrupting REO-RES compliance. However, the OES observes that one disadvantage is that it could require a proceeding that may be unnecessary for utilities with a resource plan before the Commission. OTP, MP, IPL, and Basin recommended that the Commission need not set the next due date for a utility s REO-RES report. Dairyland and East River recommended that the Commission set due dates. GRE agreed, noting that setting the next due date would eliminate ambiguity. Xcel suggested that the Commission decide whether to set the next due date on a case-by-case 15 Minn. Stat..216B.1691, subd Any other stakeholders are of course welcome to provide their own reviews of a utility s REO-RES report.

12 Staff Briefing Papers for Docket No. E999/CI on October 28, 2008 Page 11 basis. Staff comment: Issue 3c The ultimate due date for a utility to file its REO-RES reports is already set by statute: every two years, or more frequently. At times, the Commission has specified when a utility s next REO-RES report is due in an Order, particularly if the Commission finds it necessary for a utility to provide an update on a certain compliance item. At times, it has not. The result is that each utility has a different deadline for its REO-RES report, some explicitly listed in a Commission Order, some not. Staff has spent time tracking these deadlines and ensuring that utilities file their reports on time. Staff recommends that establishing a single due date for all utilities to file their REO-RES reports would reduce the amount of time staff spends on tracking these reports. The OES suggests that an annual compliance filing of May 1 st or September 1 st would be an efficient way to accomplish various goals. In the alternative, all utilities also provide information to the OES for its legislative report at the same time, and the OES suggests that it could submit its legislative report along with a summary of each utility s compliance to the Commission for a finding. 17 Reviewing all utilities REO-RES compliance (whether through an annual compliance filing or as part of the OES biennial legislative report process) at the same time may allow the Commission to compare each utilities progress, and as noted by the OES, would ensure ongoing oversight of all utilities compliance, would eliminate all of the separate proceedings, and would allow utilities to alter their resource plan compliance without disrupting REO-RES compliance. Staff appreciates the OES recommendation of either an annual filing requirement or the OES alternative of a filing process coordinated with the biennial legislative report, and suggests that the Commission adopt the OES alternative of coordinating a filing process timed with the OES legislative report. The REO-RES statute, as amended in 2007, now requires the Commission to investigate utilities compliance with the statute, and has required the OES to report on utilities progress in meeting the statute. Since the OES must compile its report every two years, and utilities must file information with the Commission at least every two years, coordinating both deadlines is administratively simple.coordinating these processes would increase efficiency, reduce staff time spent in tracking each utility s due date, and would accomplish the additional goals outlined by the OES in its comments. 18 Staff suggests the Commission mandate that utilities file their REO-RES reports (using the content requirements listed in Issue 2) with the Commission at the same time that information is filed with the OES for its legislative report, 17 Staff observes that the REO-RES statute requires the utility to submit its report to the Commission. Minn. Stat. 216B.1691, subd. 3a. Subd. 3b also states that the OES is to compile the REO-RES information filed with the Commission in preparing its report to the legislature. Staff interprets this portion of the OES recommendation to mean that utilities would file their reports with the Commission, the OES would compile and review that information, and then the OES would submit its legislative report to the Commission for a finding. 18 If the Commission does not set a single due date for utilities, staff alternatively suggests that utilities be required to list on the first page of their REO-RES report the docket number assigned to their previous REO-RES report.

13 Staff Briefing Papers for Docket No. E999/CI on October 28, 2008 Page 12 and in no event after November 15 th of the year in which the OES is compiling information for its report. After reviewing the biennial reports, the Commission could always choose to require an annual update from a utility if it believes a more frequent update is necessary given the utility s specific circumstances. 19 Because November 15 th is rapidly approaching this year, staff suggests that for this year, utilities file the data they have filed with the OES by November 15 th, and any other information the Commission requires in an REO-RES report that cannot be filed by November 15 th should be filed by January 15 th, Utilities with pending resource plans may incorporate this information into the REO-RES reports by reference. Issue 4: Additional Processes for REO-RES Reports Filed Outside of Resource Plans Initially, staff asked four questions of commenters regarding how to treat reports filed outside of resource plans. Three of these four questions mirrored the questions asked regarding reports filed with resource plans and have already been addressed in issues 2 and 3. The remaining question in Issue 4 is whether an REO-RES report filed outside of a resource plan should be considered a miscellaneous tariff filing under Minn. Rules part , subp. 11. GRE stated that an REO-RES report filed outside a resource plan does fit within the definition of a miscellaneous tariff filing, which is defined by that rule to include a request or notice that does not require determination of the utility s revenue requirement. Dairyland stated that a report should not be classified as such because it would trigger additional administrative burdens, including content and notice requirements, a comment period, third party right of intervention, and potentially a contested case hearing. OTP stated that an REO-RES report does not fit any of the definitions contained within Minn. Rules part , subp. 11 MP stated it is agreeable to filing an REO-RES report as a miscellaneous tariff filing under the Rule. East River stated it should not be considered a miscellaneous tariff filing. IPL and Basin did not express an opinion. Xcel noted that if the filing is treated as a miscellaneous tariff filing, the Commission s Rules set out an initial 30 day comment period, which may not be an adequate amount of time for review and response. The OES did not express a specific opinion but suggested that the Commission determine the procedure it wishes to use to track REO-RES compliance, and set out a filing date for these companies to file. Issue 4: Staff comment 19 The possibility that the Commission may direct an annual update for certain utilities does not relieve the burden on the utility to make any necessary filings if it reasonably believes it may not meet a renewable energy obligation or standard in the future.. If a utility is not on track to meet the RES for a given year, the utility bears the responsibility of making the appropriate filing with the Commission in a sufficient amount of time before that RES benchmark takes effect so that the Commission can determine whether it will delay or modify that standard.

14 Staff Briefing Papers for Docket No. E999/CI on October 28, 2008 Page 13 Staff s reading of Minn. Rules part , subp. 11 is the same as GRE s. The rule includes many different specific categories of filings (none of which apply to an REO-RES report) but then includes a request or notice that does not require determination of the utility s revenue requirement. This last category would include REO-RES reports. Staff acknowledges Dairyland s observation that classifying an REO-RES report within this rule would entail notice and comment period requirements and other procedures. However, all filings made with the Commission are subject to notice to and comment by stakeholders. The vast majority of REO-RES reports have been filed within resource plans and have been subject to these types of procedures. Staff believes that REO-RES reports filed outside of resource plans do fit within the definition provided by the rule and that the Commission should so clarify. If commenters have concerns that the initial 30 day comment period is insufficient for review and comment, the Commission could provide a longer initial comment period for these reports, such as 60 days. In the alternative, the standard 30 day comment period can be retained and commenters can request extensions for the comment period (which are routinely granted for filings classified as miscellaneous tariff filings). Staff observes that if the Commission adopts the OES recommendation to specify either annual REO-RES filings by utilities or filings coinciding with the biennial legislative report, all or nearly all of these reports would be filed separately from resource plans. Staff Analysis: Issues 1-4 The issues raised in these briefing papers involve several different pieces of administrative issues that have come up in various dockets and in non-docketed matters and would benefit from some clarification by the Commission. Taken as a whole, issuing clarifications on the above-mentioned issues will: 1) clarify which utilities are covered by the REO-RES statute as a result of 2007 legislation (Issue 1); 2) clarify what information at a minimum should be included in an REO-RES report, in a manner that coordinates the same data being filed with the OES and Commission (Issue 2); 3) provides guidance to utilities on how to appropriately identify REO-RES reports for the benefit of the Commission and stakeholders (Issue 3a); 4) clarify the Commission s practice with respect to making findings on REO-RES reports so that the Commission s role in investigating compliance is clear to utilities; 5) establish a due date for REO-RES reports that complements due dates related to the OES legislative report; and 6) clarifies how an REO-RES report filed outside of a resource plan is treated under Minnesota Rules. Staff s intent, through its recommendations, is to establish administrative guidance for all parties involved in REO-RES reports so that expectations are clear as REO-RES compliance continues to be reviewed going forward, and welcomes additional input from parties at the agenda meeting. Decision Alternatives Issue 1: 1a: 1) Find that Heartland Consumers Power District is now subject to Minn. Stat. 216B.1691, due to 2007 legislative changes. 2) Find that Heartland Consumers Power District continues not to be covered by Minn. Stat. 216B.1691.

15 Staff Briefing Papers for Docket No. E999/CI on October 28, 2008 Page 14 1b: 1) clarify that two or more companies subject to Minn. Stat. 216B.1691 may file joint reports, as long as the filing clearly specifies that the report is for more than one company and clearly identifies which companies it covers. 2) clarify that two or more companies subject to Minn. Stat. 216B.1691 may not file joint reports. 1c: 1) order Northwest Wisconsin Electric Company, L&O Cooperative, Central Minnesota Municipal Power Agency, and East River Cooperative, Inc. to file an REO-RES report immediately.; OR 2) do not order Northwest Wisconsin Electric Company, L&O Cooperative,Central Minnesota Municipal Power Agency, and East River Cooperative, Inc. to file an REO-RES report immediately. Issue 2: a) clarify that REO-RES reports shall include sufficient information to allow the Commission to fully investigate compliance with Minn. Stat. 216B.1691, including but not limited to: 1) the information required by the Commission s June 1, 2004 Order in this docket (as listed on the Attachment to these briefing papers); 2) all of the data utilities provide to the OES for its biennial legislative report; 3) the utility s Minnesota retail sales in Mwh (for each of the compliance years in question), information on the renewable generation at a utility s various renewable facilities and PPAs, and information on whether any of the renewable generation is specifically allocated to other state RPS requirements or green pricing programs, if not already provided; and 4) generally, historical compliance information as well as forward looking information. b) do not make any clarifications. c) make other clarifications. Issue 3: 3a: 1) clarify that REO-RES Compliance Report: Minn. Stat. 216B.1691, subd. 3a is the preferred title for an REO-RES report submitted to the Commission, and that the report format should include sections that match the four categories of information specified in the statute. 2) do not make any clarification. 3b: 1) clarify that the Commission s practice will be to continue to make explicit findings of compliance on REO-RES reports. As part of this practice, the Commission requests that the OES and any stakeholders analyze these reports and obtain additional information necessary to confirm compliance with the REO-RES statute. 2) do not make any such clarification. 3c: 1) Order that utilities subject to Minn. Stat. 216B.1691 shall file REO-RES reports with the

16 Staff Briefing Papers for Docket No. E999/CI on October 28, 2008 Page 15 Commission annually, on: a) May 1 st ; b) September 1 st (OES preference) 2) Order that utilities subject to Minn. Stat. 216B.1691 shall file REO-RES reports at the same time they file their information with the OES for the OES biennial legislative report (but in no event later than November 15 th of that year), the purpose of which to be coordinated with the OES biennial legislative report, so that all utilities REO-RES compliance will be reviewed at the same time every two years. For 2008, utilities shall file the data they filed with OES for its legislative report by November 15 th, and may file the additional content mandated by the Commission by January 15 th, ) Do not set any deadlines for the filing of REO-RES reports. Instead, require utilities to include on the first page of their REO-RES reports to list the date their last REO-RES report was filed and the docket number assigned to that filing. Issue 4: a) Clarify that an REO-RES report filed outside of a resource plan is subject to Minn. Rules part , subp. 11. b) Do not make any such clarification. Staff recommendation Staff recommends Options 1a(1), 1b(1), 1c(1), 2(a), 3a(1), 3b(1), 3c(2), and 4(a).

17 Staff Briefing Papers for Docket No. E999/CI on October 28, 2008 Page 16 Attachment 1 REO-RES Statute, Minn. Stat. 216B B.1691 RENEWABLE ENERGY OBJECTIVES. Subdivision 1. Definitions. (a) Unless otherwise specified in law, "eligible energy technology" means an energy technology that generates electricity from the following renewable energy sources: (1) solar; (2) wind; (3) hydroelectric with a capacity of less than 100 megawatts; (4) hydrogen, provided that after January 1, 2010, the hydrogen must be generated from the resources listed in this clause; or (5) biomass, which includes, without limitation, landfill gas, an anaerobic digester system, and an energy recovery facility used to capture the heat value of mixed municipal solid waste or refuse-derived fuel from mixed municipal solid waste as a primary fuel. (b) "Electric utility" means a public utility providing electric service, a generation and transmission cooperative electric association, a municipal power agency, or a power district. (c) "Total retail electric sales" means the kilowatt-hours of electricity sold in a year by an electric utility to retail customers of the electric utility or to a distribution utility for distribution to the retail customers of the distribution utility. Subd. 2. Eligible energy objectives. Each electric utility shall make a good faith effort to generate or procure sufficient electricity generated by an eligible energy technology to provide its retail consumers, or the retail customers of a distribution utility to which the electric utility provides wholesale electric service, so that commencing in 2005, at least one percent of the electric utility's total retail electric sales to retail customers in Minnesota is generated by eligible energy technologies and seven percent of the electric utility's total retail electric sales to retail customers in Minnesota by 2010 is generated by eligible energy technologies. Subd. 2a. Eligible energy technology standard. (a) Except as provided in paragraph (b), each electric utility shall generate or procure sufficient electricity generated by an eligible energy technology to provide its retail customers in Minnesota, or the retail customers of a distribution utility to which the electric utility provides wholesale electric service, so that at least the following standard percentages of the electric utility's total retail electric sales to retail customers in Minnesota are generated by eligible energy technologies by the end of the year indicated: 1.(1) percent (2) 2016 (3) percent 20 percent