Subdivision 1.Definitions.

(a) For the purposes of this section, the terms defined in this subdivision have the meanings given them.

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(b) “Effective competition” means that a customer of a gas utility who either receives interruptible service or whose daily requirement exceeds 50,000 cubic feet maintains or plans on acquiring the capability to switch to the same, equivalent or substitutable energy supplies or service, except indigenous biomass energy supplies composed of wood products, grain, biowaste, and cellulosic materials, at comparable prices from a supplier not regulated by the commission.

(c) “Flexible tariff” means a rate schedule under which a gas utility may set or change the price for its service to an individual customer or group of customers without prior approval of the commission within a range of prices determined by the commission to be just and reasonable.

Subd. 2.Flexible tariff permitted.

Notwithstanding section 216B.03, 216B.05, 216B.06, 216B.07, or 216B.16, the commission may approve a flexible tariff for any class of customers of a gas utility when provision of service, including the sale or transportation of gas, to any customers within the class is subject to effective competition. Upon application of a gas utility, the commission shall find that effective competition exists for a class of customers taking interruptible service at a level exceeding 199,000 cubic feet per day. A gas utility may apply a flexible tariff only to a customer that is subject to effective competition and a gas utility may not apply a flexible tariff or otherwise reduce its rates to compete with indigenous biomass energy supplies. Customers of a gas utility whose only alternative source of energy is gas from a supplier not regulated by the commission and who must use the gas utility’s system to transport the gas are not subject to effective competition unless the customers have or can reasonably acquire the capability to bypass the gas utility’s system to obtain gas from a supplier not regulated by the commission. A customer subject to effective competition may elect to take service either under the flexible tariff or under the appropriate nonflexible tariff for that class of service set in accordance with section 216B.03, provided that a customer that uses an alternative energy supply or service from a supplier not regulated by the commission for reasons of price are deemed to have elected to take service under the flexible tariff.

Subd. 2a.

[Expired]

Subd. 3.Establishing or changing flexible tariff.

The commission may establish a flexible tariff through a miscellaneous rate filing only if the filing does not seek to recover revenues the utility expects to lose by implementing flexible tariffs from customers who do not take service under the flexible tariff, nor to change another rate. If a gas utility requests authority to establish a flexible tariff and as part of that request seeks to recover revenues the utility expects to lose by implementing flexible tariffs from customers who do not take service under the flexible tariff or to change other rates, the commission may only establish that flexible tariff within a general rate case for that gas utility.

Subd. 4.Rates and terms of service.

Whenever the commission authorizes a flexible tariff, it shall set the terms, and conditions of service for that tariff, including:

(1) the minimum rate for the tariff, which must recover at least the incremental cost of providing the service;

(2) the maximum rate for the tariff; and

(3) a requirement that a customer who elects to take service under the flexible tariff remain on that tariff for a reasonable period of time.

The commission may set the terms and conditions of service for a flexible tariff in a gas utility proceeding, a miscellaneous filing, or a complaint proceeding under section 216B.17.

Subd. 5.Recovery of revenues.

In a general rate case that establishes a flexible tariff for a gas utility, and in each general rate case of a gas utility for which a flexible tariff has been authorized, the commission shall determine a projected level of revenues and expenses from services under that tariff and use the projection to determine the utility’s overall rates. That method used to establish a level of projected revenues may not limit the gas utility’s ability or right to set rates for a customer taking service under the flexible tariff.

Subd. 6.Interim flexible tariff.

Notwithstanding section 216B.16, subdivision 3, if a gas utility files with the commission to establish or change a flexible tariff the commission shall permit the proposed flexible tariff to take effect on an interim basis no later than 30 days after filing. If any customers receive an increase in rates during the period that an interim flexible tariff is in effect, the increase is subject to refund as provided in section 216B.16, subdivision 3. The gas utility shall provide ten days’ written notice, or other notice as may be established by contract not to exceed 30 days, to a customer before implementing an interim rate change for that customer under this section.

Subd. 7.Final determination.

The commission shall make a final determination in a proceeding begun under this section for approval of a flexible tariff, other than a filing made within a general rate case, within 180 days of the filing by the gas utility.

Subd. 8.

MS 2002 [Obsolete]