Published January 10, 2023
CUB is pleased to have played an important role in a new regulatory development: Minnesota will now require its three largest natural gas utilities to file integrated resource plans (IRPs)! This blog post provides an overview of how this requirement arose and why it matters.
On September 15, 2022, Minnesota’s four largest natural gas utilities—CenterPoint Energy, Xcel Energy, Minnesota Energy Resources (MERC), and Great Plains Natural Gas Co.— filed reports with the Minnesota Public Utilities Commission (PUC) identifying new and revised strategies for protecting customers from extraordinary pricing events in the future. The requirement to file these reports arose out of the Minnesota Public Utility Commission’s (PUC) investigation into hundreds of millions of dollars in extraordinary costs the utilities incurred during Winter Storm Uri in February 2021. Despite the PUC’s intervention, most of these Winter Storm Uri-related costs are now being passed through to the utilities’ customers via monthly surcharges added to customers’ natural gas bills.
In response to the utilities’ September 15, 2022 filings, CUB (along with the Minnesota Department of Commerce, the Office of the Attorney General, and the Center for Energy and Environment) also filed comments replying to the utilities’ proposals and making additional recommendations. CUB devoted a large portion of our comments to recommending that Minnesota’s natural gas utilities be required to file integrated resource plans. We also highlighted examples of other states that require integrated resource planning for gas utilities and proposed a general framework for the type of information that should be included in a gas IRP.
At a hearing held on December 8, 2022, the Commission voted unanimously to adopt CUB’s recommendation, meaning the PUC will now require CenterPoint, Xcel, and MERC to file integrated resource plans in the future. Because Great Plains is a relatively small utility compared to the other three, the Commission excused Great Plains from this requirement for now. The PUC also committed to opening a new docket to gather comments on the proposed content and procedural requirements for gas IRPs. The Commission will use CUB’s proposed IRP framework as a starting point for that process. We are thrilled with this result; we view the PUC’s actions as a major step forward in Minnesota’s regulation of natural gas utilities. This kind of transparent, longer-term planning is crucial to decisions related to ratepayer investments in utility infrastructure and the future trajectory of natural gas utilities.
What is integrated resource planning?
An IRP is a roadmap that public utilities use to analyze and model various strategies for meeting demand over the next 15-year time horizon. Ideally, the IRP planning process allows utilities to publicly identify, with input and comments from interested stakeholders, the strategy that allows the utility to meet those demands in the most efficient and cost-effective way possible. The PUC ultimately approves an IRP, with modifications based on input throughout a public process. To be most effective, IRPs must be filed on a regular basis and be continuously adjusted to meet shifting consumer needs and the constantly evolving economic, environmental, technological, and regulatory factors that influence energy use, production, and transmission.
An IRP won’t prevent another price spike, but robust public planning puts the utility, the PUC, and the community in a better position to mitigate future price impacts on customers. An IRP will also help inform which resource, or resources, would best serve the needs of the utility to meet future energy needs.
Isn’t integrated resource planning already happening in Minnesota?
Minnesota law has long required regulated electric utilities to file IRPs. (This past year the PUC approved, with modifications, the latest IRPs filed by Xcel’s electric utility and by Minnesota Power.) However, this requirement has not previously been extended to natural gas utilities. In fact, only a few states currently require natural gas utilities to file integrated resource plans. With this new development, Minnesota will join such states as Idaho, Oregon, and Washington in requiring gas utilities to file IRPs.
What comes next?
The PUC Order requiring future gas IRP filings has not yet been published. Once it is published, we expect the PUC’s Executive Secretary to open a new docket to collect comments and feedback on the content and procedural elements of gas IRP filings. Ultimately, that comment process will evolve to create more certainty on when gas IRPs will be filed. There will likely be opportunities for public engagement throughout that process. We encourage you to follow CUB’s blog for updates—we will let you know how this exciting new development progresses!
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