In recent years Minnesota has taken big steps towards decarbonization with the adoption of the Climate Action Framework and accompanying legislation that includes economy-wide goals of reducing emissions by 50% by 2030 (from 2005 levels) and achieving net-zero by 2050. This goal comes alongside incredibly successful legislative sessions in both 2023 and 2024 that saw new incentive programs for electrification and statewide initiatives around the deployment of thermal energy networks.
Now the state is starting to move in another arena: the Minnesota Public Utilities Commission (Commission), the government agency responsible for the regulation of Minnesota’s investor-owned gas utilities and the systems they own and operate.
The Gas Integrated Resource Planning Docket
One crucial proceeding that recently moved through the Commission is the gas integrated resource planning (IRP) docket (23-117). This docket, initiated by the Commission after Minnesota ratepayers experienced tremendous spikes in their gas rates during Winter Storm Uri in 2021, requires gas utilities to submit forward-looking plans outlining projected demand for gas in their service territories from both current and new customers.
Before these utilities could begin developing these plans, however, the Commission needed to engage both them and other stakeholders to determine exactly what needed to be included in these plans.
After more than a year of stakeholder discussion, comment solicitations, and hearings, final requirements were voted on by the Commission at a September 12, 2024 hearing. Though the scope of these requirements includes many plan details related to meeting projected wholesale gas demand upstream, there are a few specific requirements that will have meaningful impacts for decarbonization and low-income, indigenous, and environmental justice communities. Some of these requirements include:
- Alternatives to gas system expansion
In each utility’s IRP they are required to select 2-3 planned gas system expansion projects and conduct an Expansion Alternative Analysis (EAA) to assess if an alternative resource, such as electrification, efficiency, or a thermal energy network, would be a more appropriate solution than system expansion. These EEAs are required to consider non-natural gas alternatives, emissions reductions including the social cost of carbon, and air quality. Further, in response to a recommendation put forward by BDC, these EAAs are required to be prioritized in low-income, indigenous, and environmental justice communities.
- Requirements to Explain Equity
In addition to being required to prioritize EAAs into environmental justice communities, utilities are required to include a narrative description of how equity was considered in their plans and their EEA project selection. Though this description is the first of its kind, it is not an assurance that utilities will engage in best practices for embedding equity into their plans.
- Ties to Minnesota’s Net-Zero Goals
Utilities are required in their IRPs to consider the State’s economy-wide greenhouse gas reduction goal. Further, they are required to report in their plans the emissions from both their upstream and gas distribution system operations – giving the state valuable data about the impacts of the gas system, and where there are opportunities to achieve further emissions reductions.
- Requirements to Engage Diverse Stakeholders
Utilities are required to engage with a wide array of named stakeholders in their plans including “relevant state agencies, clean energy advocates, consumer advocates, low-income and environmental justice advocates, organized labor, local governments, and business, and communities directly impacted or served by [EAAs] projects” and include a narrative description summarizing this engagement in their plans.
What’s Next?
The adoption of requirements by the Commission for IRPs marks a crucial next step in the State’s investigation into the gas system and its future. Though it began in July 2021, the Future of Gas (FOG) docket, Minnesota’s investigation into policy structure changes necessary to meet the State’s greenhouse gas reduction goals, has been on pause while the Commission worked through the requirement-setting process for IRPs. Now that these requirements are determined, the Commission and stakeholders will once again turn their attention to this important FOG docket whose outcome will have tremendous impact on the trajectory of gas system investments long into Minnesota’s future.