One of the key functions of the Minnesota Public Utilities Commission (Commission) is to set rates charged by regulated electric and natural gas utility companies.
Automatic adjustments, which are either fuel clause adjustments (FCA) for electric utilities or purchased gas adjustments (PGA) for natural gas utilities, allow utilities to change rates between rate cases as the cost of fuel or natural gas fluctuates. This is different from rate cases where rates are set and do not change until the Minnesota Public Utilities Commission decides a subsequent rate case. Typically, these rates change monthly.
The Commission has the statutory authority to regulate rates for all public utilities in Minnesota except municipally owned utilities and member-regulated cooperatives. However, a cooperative electric association may elect to become subject to rate regulation by the Commission pursuant to Minnesota Statutes sections 216B.03 to 216B.23.
The Commission reviews the AAA reports or Annual FCA reports submitted by Commission-regulated utility companies; approving, rejecting, or modify the proposals.
A portion of the power, natural gas supply costs are recovered through a base amount that is included in base rates. The costs that exceed the base amount included are recovered through an automatic adjustment surcharge that tend to fluctuate and may vary from month to month. These costs are reconciled every year to recover actual fuel and purchased power costs. Historically, that process was known as an Annual Automatic Adjustment (AAA) report. This is still true for Commission regulated natural gas utilities however, for Minnesota Power, Otter Tail Power, and Xcel Energy the Commission instituted an FCA reform process which began January 1, 2020. The new process no longer allows the three electric utilities to vary their energy costs on a month-to-month basis but rather requires them to submit annual FCA filings which decides how much energy costs they are allowed to collect over a twelve-month period.
Every year the natural gas utilities file by September 1 annual automatic adjustment reports and annual purchased gas adjustment true-up filings for the preceding July 1 through June 30 fiscal gas year.
Automatic rate adjustments are covered under Minnesota Rules parts 7825.2390 through 7825.2920. Every year the Commission reviews the automatic adjustment of charges reported in the natural gas and electric utilities’ annual automatic adjustment (AAA) reports and the natural gas utilities’ annual true-up filings. The Commission’s review is closely tied to the Department’s review of these filings.
Under Minn. R. 7825.2390 through 7825.2920, rate-regulated gas and electric utilities may adjust their rates between general rate cases to reflect fluctuations in the prices they pay for gas or electricity purchased for delivery to ratepayers, or for fuel purchased to generate electricity for ratepayers. These adjustments are called automatic adjustments, since they normally take effect without prior Commission approval.
The rules require utilities to make detailed filings supporting each automatic adjustment. They also require utilities to make comprehensive annual filings reporting on all automatic adjustments made during the twelve-month period between July 1 of the previous year and June 30 of the reporting year. And they require gas utilities to determine, by customer class, discrepancies between gas costs actually incurred and gas costs collected, and to file a proposed plan to true-up this difference over the coming twelve-month billing cycle.
1. What is a AAA filing? Natural gas utilities are allowed to vary their purchased gas costs on a month-to-month basis Automatic rate adjustments are covered under Minnesota Rules parts 7825.2390 through 7825.2920. Every year the Commission reviews the automatic adjustment of charges reported in the natural gas and electric utilities’ annual automatic adjustment (AAA) reports and the natural gas utilities’ annual true-up filings.
2. What is the Purchased Gas Adjustment? The Purchased Gas Adjustment (PGA), also known as the Gas Cost Adjustment (GCA), is a mechanism that permits jurisdictional natural gas distribution utilities to regularly adjust the price of natural gas supplied to consumers to reflect the utility’s cost of purchasing that gas and transporting it via pipeline to their system.
3. Why is the PGA necessary? By federal law, the wholesale price of natural gas is unregulated and fluctuates with market conditions. The PGA enables utilities to adjust on a regular basis the amount they charge their customers to reflect the actual cost of the gas used by those customers. Without the PGA, natural gas distribution companies would have to adjust their base rates much more frequently and those adjustments would be much greater.
4. Do utilities earn a profit on the PGA? No. The PGA or FCA serves strictly as a mechanism for reflecting the costs of natural gas and pipeline transportation costs on a dollar-for-dollar basis.
5. What is an annual FCA filing? An annual FCA filing is a request by either Minnesota Power, Otter Tail Power Company, or Xcel Energy who request Commission approval to recover a set amount of energy costs during a 12-month period. Because of the FCA reform process these utility’s do not have the right to pass through energy costs to their customers prior to Commission approval.
6. How can I learn more about AAA or Annual FCA filings? Previous Commission decisions are a good place to learn about how riders have been addressed and can be accessed via edockets. The docket numbers for the various utilities are shown in the tables above.
7. How do I use edockets to get additional information on past filings? See all documents filed in this docket via the Commission’s website at mn.gov/puc, select Search eDockets, under “Docket Type” select “Auto Fuel Adj” to obtain all adjustments to electric rates and natural gas rates.
8. How can I participate? Individuals or groups who wish to provide input in a proceeding without being formal intervenors may do so by submitting comments to the Commission. Such participation does not require the assistance of legal counsel but is generally limited to making position statements on the issues. Although statements become part of the record that the Commission reviews in making its decision, those who make statements do not ordinarily have the right to submit evidence or appeal Commission decisions in court.
Online: Visit mn.gov/puc, select Comment and follow the prompts
Email: consumer.puc@state.mn.us
U.S. Mail: Consumer Affairs Office, Minnesota Public Utilities Commission, 121 7th Place East, Suite 350, Saint Paul, MN 55101
9. What recourse does a party have if they do not agree with the Commission decision? After the Commission issues a final order on a utility’s application, parties have the right to request reconsideration from the Commission. This is a request to have the Commission reconsider either parts or all of its final order. The request for reconsideration must occur within 20 days of the date the Commission’s order was issued. The Commission must take up the reconsideration request within 60 days or it is deemed denied. Parties also have the right to appeal the decision to the Minnesota Court of Appeals. This also must occur no later than 30 days after the final order was issued.
Need Help?
Contact Jorge Alonso, Supervisor Financial Analysis
jorge.alonso@state.mn.us or 651-201-2258
