1.    The commission may approve, reject, or modify a tariff filed under section 49-05-06, which provides for an adjustment of rates to recover jurisdictional capital costs and associated operating expenses incurred by a public utility to comply with federal environmental mandates on existing electricity generating stations. For purposes of this section, federal environmental mandates are limited to any requirements under the Clean Air Act, the Clean Water Act, or any other federal law or rule designed to protect the environment. Associated operating expenses are costs incurred by the public utility to comply with the environmental mandate. The tariff must:

a.    Allow the public utility to recover on a timely basis its investment in capital costs and associated operating expenses incurred to meet federal environmental mandates not reflected in the utility’s general rate schedule.

b.    Allow a return on the public utility’s investment made to meet federal environmental mandates at the level approved in the utility’s most recent general rate case.

c. Provide a current return on construction work in progress to meet federal environmental mandates provided the cost recovery from retail customers of the allowance for funds used during construction is not sought through any other means.

d.    Terminate cost recovery after the public utility’s costs and expenses to meet federal environmental mandates have been recovered fully or have been reflected in the utility’s general rate tariffs.

2.    Rate adjustments filed under the tariff must be accompanied by:

a.    A description and quantification of the costs and expenses incurred by the public utility to meet federal environmental mandates which are subject to recovery; b.    A schedule for implementation of the applicable projects; c.    Calculations to establish that the rate adjustment is consistent with the terms of the tariff; and

d.    An application fee in the amount of one hundred 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.

3.    Upon receipt of a rate adjustment filed under the tariff, the commission shall approve the rate adjustment to become effective unless, after notice and opportunity for hearing and comment, the commission determines the rate adjustment does not comply with the tariff or the incurred costs and expenses to meet federal environmental mandates are not reasonable and prudent. The commission shall pay the expenses of investigating a rate adjustment to meet federal environmental mandates under this section from the application fee paid by the public utility in accordance with section 49-02-02. The public utility has the burden of proving that the rate adjustment complies with the tariff and that the costs and expenses incurred to meet federal environmental mandates are reasonable and prudent.