MN PUC maintains 34 million in subsidies for gas line extensions

Advocates from many partner organizations called upon the Minnesota Public Utilities Commission (PUC) to end the costly practice of gas line extension allowances, following the lead of other states.

These allowances allow utilities to profit by charging existing Minnesota customers an estimated $34 million every year to extend gas pipes to add new customers while also delivering a return to shareholders on top of that. 

Doing away with that policy would open the door to reimagine and build a more affordable clean energy future where we are not hooked on the volatile cost of fossil fuels and growing utility charges. 

Organizations that are part of the statewide Clean Heat Minnesota coalition (which includes more than 40 partners) spent countless hours over the past year doing the work of hosting in-person educational comment writing workshops. That resulted in many Minnesotans filing comments urging Minnesota regulators to end the outdated policy of gas utility line extension allowances for new customers and to slow the expansion of the gas system amid declining residential gas use.

But at their June 4th meeting the PUC moved to maintain the line extension allowance policy for gas utilities, despite the coalition’s efforts. In fact, members of the Clean Heat Minnesota coalition were not called upon by the PUC to speak at the hearing according to this press release.

See coverage of this story from coalition partners: 

• Press Releases - Clean Heat Minnesota
• Utility regulator delays action to cut $34 million in gas utility charges for Minnesota customers | Sierra Club 
• PUC maintains subsidies for gas utility expansion | Citizens Utility Board 

What is the consequence?

Utilities will still be allowed to profit by charging existing Minnesota customers to extend gas pipes to add new customers while also delivering a return to shareholders on top of that as part of their rate base. Remember, utility rates come from a cost-plus model that guarantees their returns and incentivizes ever greater infrastructure spending.

Specific gas utility line extension allowances can still be debated and disputed. But it will take place in a rate-case-by-rate case-manner that will demand more time and resources from stakeholders engaged in the process. The PUC also arguably created more work for itself. It’s a work-plus model securing their continued relevance, perhaps.

The main consequence is that utilities will have a path to continue to profit by forcing customers to continue to pay millions in unnecessary costs and hold the financial risks of expanding a polluting & expensive gas system that is incompatible with a sustainable future for our children.

 One key member of the Clean Heat Coalition, COPAL (Communities Organizing Latine Power and Action), has received an overwhelming number of calls from families struggling to afford rising utility costs. They pitched no longer forcing existing utility customers to cover the cost of new gas infrastructure as a way to provide cost relief. Despite efforts at home energy improvements, monthly bills go up as a result of gas companies continuing to expand their systems.

Across 2024 and 2025, nearly 60,000 Minnesota households were disconnected from gas service for unpaid bills, and Minnesotans currently owe more than $150 million in overdue utility bills. (Sierra Club)

Coverage of this story from KSTP framed it somewhat differently. They say that the PUC decision was a step in the right direction, and that it was the advocates who think it didn’t go far enough in terms of clean energy, lowering greenhouse gases and addressing public‑health concerns.

“Minnesota regulators limit free gas line extensions as advocates call for bigger changes - KSTP.com 5 Eyewitness News”

In this article the PUC decision was characterized as approving “new limits” on how far natural gas companies can extend line extensions for new customers, and how that is “nudging the system toward cleaner heating options” while “protecting existing ratepayers.”

The reason why the topic of line extension allowances arose in the first place is because of the PUC’s “Future of Gas” docket, which is a proceeding required by a state law passed in 2021. Under that statute, the PUC must “evaluate changes to natural gas utility regulatory and policy structures needed” to reach net-zero greenhouse emissions economy-wide by 2050.

 Meanwhile in Colorado, we are excited to see an example of a PUC taking, for a change, the side of cheaper clean energy and denying a utility request to build out new gas infrastructure…

Citing Cleaner, Cheaper Alternatives, Colorado Regulators Deny Xcel Energy’s $2.9 Billion Gas System Plan - CleanTechnica