PUC maintains subsidies for gas utility expansion

The Citizens Utility Board of Minnesota (CUB) is disappointed in today’s decision from the Minnesota Public Utilities Commission (PUC) allowing utilities to continue charging ratepayers to subsidize the expansion of the natural gas system.

The PUC today declined to require significant reductions to gas utility “line extension allowances.” Under line extension allowance policies, the cost of pipelines and other infrastructure to connect buildings to the gas system is free or deeply discounted to those new customers, paid for by existing utility customers. These policies have helped expand gas lines in Minnesota. Today, though, households’ gas use is declining, as is interest from new customers in adding gas service.

Despite these trends, gas companies continue to spend millions every year on expanding gas system pipes and infrastructure—and this spending is driving up Minnesotans’ gas bills. This past winter, CUB heard from many Minnesotans who, despite their best efforts to make their homes more efficient, continue to see higher and higher winter gas bills.

“Even though gas use per household is declining, monthly bills are up, and gas companies continue to expand their systems. That’s raising costs for everyone and could have long-term consequences for Minnesota ratepayers,” said CUB’s executive director, Annie Levenson-Falk. “This is a trend utilities and their regulators need to grapple with.”

The topic of line extension allowances is the first major question discussed by the PUC within its Future of Gas docket, a proceeding required by a state law passed in 2021. Under the law, the PUC must “evaluate changes to natural gas utility regulatory and policy structures needed” to reach net-zero greenhouse emissions economy-wide by 2050.

In today’s decision, the PUC largely maintained utilities’ line extension allowance policies, with some adjustments to align policies across the state’s regulated gas companies. The decision also requires additional reporting by utilities on a number of data points. Line extension allowance policies will be examined again in future utility rate cases (the proceedings initiated when a utility requests to increase rates).