§ 49-05-16 — Advance determination of prudence

In this section, unless the context otherwise requires, resource addition means construction,
modification, purchase, or lease of an energy conversion facility, renewable energy facility,
demand response system, transmission facility, or a contract to acquire energy, capacity, or
demand response for the purpose of providing electric service. A public utility that intends to
make a resource addition may file an application with the commission for an advance
determination of prudence regarding the resource addition. The commission shall pay the
expenses associated with investigating the application made by the public utility for prudence of
a resource addition from the application fee paid by the public utility in accordance with section
49-02-02.
1. The commission may issue an order approving the prudence of a resource addition if:
a. The public utility files with its application a projection of costs to the date of the
anticipated commercial operation of the resource addition;
b. The public utility files with its application a fee in the amount of one hundred
seventy-five thousand dollars. Upon request of the commission and with the
approval of the emergency commission, the applicant shall pay such additional
fees as are reasonably necessary for completion of the application process by the
commission. The commission may waive or reduce the fee.

c. The commission provides notice and holds a hearing, if appropriate, in
accordance with section 49-02-02; and
d. The commission determines that the resource addition is prudent. For facilities
located or to be located in this state the commission, in determining whether the
resource addition is prudent, shall consider the benefits of having the resource
addition located in this state.
2. The commission order must be rendered no later than seven months after the public
utility files its application requesting a prudence determination of a resource addition.
3. A resource addition approved by the commission is subject to reporting requirements
until commercial operation of the resource addition. The public utility shall provide
periodic reports, as directed by the commission, which must include a description of
the status of the resource addition and any changes in material circumstances
affecting the resource addition.
4. The commission's order determining prudence of the resource addition is binding for
ratemaking purposes.
5. Following an initial commission order, the commission may, upon notice and hearing, if
appropriate, in accordance with section 49-02-02 determine that continuation of a
resource addition is no longer prudent or that its prior order should be modified.
Expenses incurred in processing the case must be paid from the fee, including any
previously made refund thereof, filed with the prudence determination application for
the resource addition.
6. The public utility may recover in its rates, and in a timely manner consistent with the
public utility's financial obligations, the amounts the public utility reasonably incurred or
obligated on a prudent resource addition, including accrued allowance for funds used
during construction, even though the resource addition may never be fully operational
or used by the public utility to serve its customers. The cost amortization period for a
discontinued resource addition may not exceed five years from the date
commencement of the recovery is approved by the commission. No return on amounts
incurred or obligated by the public utility may be authorized for the period after the
resource addition is discontinued. The public utility may request an order from the
commission for deferred accounting treatment for costs incurred for a discontinued
resource addition.
7. There is a rebuttable presumption that a resource addition located in the state is
prudent.