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Gas Facility Duplication Review

The Minnesota Public Utilities Commission has issued a ruling explaining its criteria and adopting standards of review with respect to duplication of natural gas facilities where utilities are competing for an established customer. The investigation arose out of a complaint brought by Minnesota Energy Resource Corporation (MERC) against Northern States Power Company (Xcel) over Xcel’s plan to extend natural gas service to a new Minnesota Vikings football team complex in Eagan Minnesota. MERC had claimed that the complex could be served by its existing gas infrastructure and that Xcel’s planned service extension was inconsistent with state policy disfavoring the unnecessary duplication of facilities. MERC had also alleged that Xcel had offered the Vikings a promotional incentive in violation of Minnesota law. The commission dismissed MERC’s complaint but also concluded that a review of the appropriate parameters of gas-utility competition could provide useful guidance if and when similar disputes arise in the future. The Commission said while there is room for improvement, it is not persuaded that the circumstances warrant overhauling the current, case-by-case process. However, to improve the existing review process, the commission decided that it should clarify the criteria on which it relies in determining whether duplication of natural gas facilities is “necessary.” As a result it is now commission policy that in order to establish that its duplication of existing facilities is necessary, a utility must show that (1) customers cannot obtain the natural gas service they need from the utility with the existing facilities; or (2) such duplication furthers the public interest based on:

• the needs of the customers who would be served by the utility extending service;
• the incremental capital expenditures associated with duplicating the existing facilities compared to any incremental capital expenditures needed to expand the existing facilities to service the customers in question;
• any safety concerns associated with constructing and operating the duplicative facilities; and
• Any other factors showing that the duplication would advance the public’s interest in adequate, reliable and economical access to natural gas service.

The commission also found that the offering of promotional incentives—tariffed or untariffed—by regulated utilities is inconsistent with the state’s public utility laws governing rate filings and review and existing prohibitions against disparate treatment of similarly treated consumers. It concluded that it will prohibit their use on a prospective basis. Re Competition Among Natural Gas Utilities Involving Duplication of Facilities and Use of Promotional Incentives and Other Payments, Docket No. G-999/CI-17-499, Sept. 19, 2018 (Minn.P.U.C.).

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