§ 49-06-02 — Value of property for ratemaking purposes - Determination

The value of the property of a public utility, as determined by the commission for ratemaking
purposes, is the money honestly and prudently invested therein by the utility including
construction work in progress for new facilities that use lignite mined in this state to generate
electricity, as well as additions or modifications to existing lignite facilities, less accrued
depreciation. The commission shall allow a public utility for those new or existing facilities
utilizing lignite mined in this state as its primary fuel:
1. To recover its research and development costs incurred to develop lignite more
cleanly, efficiently, or economically, including carbon dioxide capture and sequestration
utilization and a reasonable rate of return on capital expenditures;
2. To recover its incremental costs of complying with federal environmental laws,
including a reasonable rate of return on capital expenditures. The commission may
allow these costs to be recovered by an environmental surcharge that may be added
to existing rates;
3. To recover all costs resulting from a coal severance tax pursuant to chapter 57-61 and
all costs resulting from a coal conversion tax pursuant to chapter 57-60. The
commission shall allow the inclusion of these costs in the base rates and the inclusion
in the automatic adjustment clause of any of these costs not in base rates; and
4. To recover costs in rates, including a financial incentive set at a reasonable rate for
power purchase agreements of a dispatchable on-demand generating unit, plant, or
facility deemed to protect grid reliability.