Utility Resources & Rates
The Department of Commerce’s Energy Regulation and Planning
The Energy Regulation and Planning unit (ERP) advocates for a reliable, low cost energy system that minimizes risks for Minnesota's utility consumers and the environment now and into the future.
Abiding by Minnesota Statutes, Rules and prior Orders, ERP:
- Investigates and analyzes utility filings before Minnesota’s utility decision-making body, the Minnesota Public Utilities Commission (Commission), to advocate on behalf of ratepayers for just and reasonable rates and reliable energy service with low environmental impacts;
- advocates for just and reasonable rates and reliable service before the Federal Energy Regulatory Commission (FERC), and regional organizations such as the Midcontinent Independent System Operator (MISO); and
- prepares various required reports to the Minnesota Legislature on issues such as transmission and renewable energy.
Just and Reasonable Rates
Investor-owned utilities need Commission approval to change rates (rates for cooperative and municipal utilities are regulated by processes described in Minnesota statutes §§216B.01, 216B.025, and 216B.026).
Utility rates change either through a general rate case or a rate rider. A rate case is a proceeding where there is a “snap-shot in time” of all cost aspects of providing service to a utility’s retail customers, including:
- Financial elements (including balance sheet, income statement, and specific adjustments for any such item);
- Cost of capital;
- Sales forecasts;
- Rate design (which involves allocating costs to various customer classes setting rates for each class, and changes in services);
- Utility tariffs, which are contracts that govern service to ratepayers.
Setting rates through a rate case is a balanced approach of allowing the utility to recover reasonable costs while giving utilities an incentive to minimize costs after the rates have been set.
Various statutes allow utilities to change rates between rate cases for costs of specific projects, such as new electric transmission or renewable facilities. Such rate riders do not provide a comprehensive view of a utility’s costs and revenues (such as possible decreases in operation and maintenance expenses that were set in the prior rate case). Riders are generally intended to give utilities incentives to build specific facilities.
Resource Planning – Electric Utilities
Electric utilities file proposed long-term plans for how they will provide reliable service in the future. These plans, which consider both supply resources (generation) and demand resources (energy conservation and load management), are called integrated resource plans.
ERP advocates before the Commission for utilities to acquire reliable, affordable, and environmentally sustainable electric utility resources that minimize risks associated with an uncertain future. These plans act as a general guide for future resource acquisitions.
ERP examines utility integrated resource plans to ensure that the utilities have enough resources to provide reliable service, and reasonably consider all costs, including expected risks over the long-term plan, social impacts, and pollution costs (“externalities”).
Resource Acquisition – Electric Utilities
When utilities propose to acquire actual resources, either to add to total resources or replace existing resources, ERP examines the acquisition process and the specific proposal to ensure that utilities are obtaining a reasonable deal for ratepayers, again considering the overall goals of cost, reliability, risk, and environmental impacts, based on then-current information.
Resource Planning and Acquisition – Natural Gas Utilities
Unlike electric utilities, resource planning and acquisition for natural gas utilities occurs in the same filing. Natural gas utilities annually propose portfolios of natural gas resources to serve Minnesota ratepayers. ERP investigates whether the proposals are expected to provide reliable natural gas service at reasonable costs and advocates before the Commission correspondingly.