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Status of Electricity Deregulation in Ninth District States

December 2000

January 1, 2001


Ron Wirtz Editor, fedgazette
Status of Electricity Deregulation in Ninth District States

December 2000


A September 2000 report by the Minnesota Department of Commerce recommends changes in the state's power industry but not full retail competition. The report—which is the basis for a proposal to the Legislature's 2001 session—proposes tax structure changes to promote the building of new power plants, mandated statewide energy planning, increased energy conservation and competition on the wholesale level.


Legislation adopted in April 1997 allows large industrial consumers retail access by July 1998, and all consumers by July 2002. Rates were frozen for two years, beginning July 1998. In October 2000, following a summer of high price volatility, the Public Service Commission proposed that full retail competition be delayed until July 2004.

North Dakota

A joint Legislative Study Committee on Restructuring was created in March 1997 to examine tax issues related to electricity restructuring, but the committee has made no legislative recommendations and no major proposals are anticipated in the 2001 session.

South Dakota

In 1999 the state's largest utility agreed to freeze its rates for five years, until 2005, continuing a five-year freeze begun in 1995. Current law allows retail choice for new, large customers. No restructuring proposal is anticipated in the 2001 Legislature. According to the chair of South Dakota's Public Utilities Commission, "with the experience in California and the other states which have deregulated, the objection to deregulation in South Dakota is stronger than in the past. No entity in South Dakota sees any benefit to deregulation."


In April 1998 legislation is adopted to improve reliability by establishing a competitive merchant plant generating industry and creating a regional transmission organization (RTO); utilities are required to join RTO and to create 50 megawatts of power from renewable sources. In October 1999 further legislation addressed conservation projects and low-income assistance programs, created a nonprofit company to own and operate the transmission system and lifted restrictions on utility investments in nonutility businesses.


Legislation passed in June 2000 mandates retail choice for consumers by January 2002. Most residential consumers receive a 5 percent rate reduction and rate freeze through 2003. Rate caps in effect for business consumers as well. Bill includes stranded cost recovery measures, debt refinancing, low income and energy efficiency fund, mercury emissions study and slamming protection.

Source: Energy Information Administration, U.S. Department of Energy and state agencies.

Related articles:

fedgazette, March 2001
Micropower: The next big thing?


Ron Wirtz
Editor, fedgazette

Ron Wirtz is a Minneapolis Fed regional outreach director. Ron tracks current business conditions, with a focus on employment and wages, construction, real estate, consumer spending, and tourism. In this role, he networks with businesses in the Bank’s six-state region and gives frequent speeches on economic conditions. Follow him on Twitter @RonWirtz.