CUB joins over 30 organizations, state agencies: MN PUC should eliminate gas Line Extension Allowances 

This Tuesday marked the final deadline for comments in the Minnesota Public Utility Commission’s (PUCs) first substantive discussion in the Future of Gas (FOG) proceeding. Read CUB’s earlier article to learn more about the FOG proceeding and how it got started. 

The primary question currently at issue in the proceeding relates to gas utility Line Extension Allowances (LEAs): policies that require existing gas customers pay a portion of the cost it takes to extend gas service to new customers.  

CUB joined a letter filed by more than 30 organizations at the state, regional and national level, including several cities and three state agencies—the Department of Commerce, Pollution Control Agency and Housing Finance Agency—supporting the elimination of line extension allowances. .  

Over two dozen Public Comments were filed by Minnesotans in the proceeding asking the PUC to end line allowances and stop subsidizing expansion of the gas system. 

CUB is part of Clean Heat Minnesota, a coalition of 40+ partner organizations working to ensure the state plans for an equitable transition off the gas system that prioritizes affordable access to clean energy for all Minnesotans. Many coalition members filed comments in the proceeding, presenting a diverse and wide range of voices on the matter of ending line extension allowances. 

Why should we end Line Extension Allowances? 

CUB previously wrote about the proceeding and explained the key reasons Minnesota should join the growing list of states choosing to end the outdated practice of LEAs. The natural gas system has served as a vital resource for Minnesota over the last several decades, ensuring homes are kept warm and comfortable during the winter. But the science on climate change and the negative impact it will have on Minnesota’s environment and economy clearly demands we find a way to reduce GHG emissions that come from using fossil fuels like natural gas.  

As technology improves and more homes are making the switch to dual-fuel or all-electric heating, the demand for natural gas will begin to decline, helping us decarbonize the state and hopefully avoid the worst impacts of climate change. However, this also means that the way we pay for and invest in the gas system needs to change. Currently, gas customers pay the costs of building new gas infrastructure—like new pipes to deliver natural gas—through their gas rates. These costs are paid out over the lifetime of the new asset, oftentimes 40 years or longer, and include an additional profit for the utility over that time.  

But what happens if a pipe installed today is no longer used in 40 years because we’ve reduced our reliance on the gas system? Customers are still on the hook for those investments, and with fewer people on the gas system to share in those costs, those who are still on the gas system will see their rates go up. Luckily, there are tools we can use to avoid this outcome: stopping the recovery of line extension allowances through gas customer rates is one critical component.  

Next Steps

Now that the comment period has ended the matter will go to the PUC for a hearing, likely sometime in late fall. These hearings, called agenda meetings, are usually hosted on Thursdays and are open to the public and live streamed. Click here to view the PUC’s events calendar and view hearing live streams.  

Stay tuned with CUB for updates once the PUC announces the hearing date and ultimately makes a decision.