NEWS RELEASE

State provides further guidance for utilities on Carbon Free Standard

St. Paul, Minn. – On Thursday, the Minnesota Public Utilities Commission (Commission) made key regulatory decisions to help guide Minnesota electric utilities in their implementation of the Carbon Free Standard. The law requires Minnesota electric utilities to procure 100% of their electricity supply from carbon-free resources by 2040.

The Commission heard from more than 60 groups and received hundreds of comments from the public on topics related to the implementation of the Carbon Free Standard, such as which production methods should count towards a utility’s compliance with the new standard.

The Commission unanimously adopted the recommendations of the Minnesota Department of Commerce and the Minnesota Pollution Control Agency. Governor Tim Walz signed the law into effect in 2023, and the law directed the Commission to make key regulatory decisions related to Minnesota utilities’ compliance with the statutory directives.

“The Commission appreciates the engagement of countless Minnesotans on how to implement this landmark law, the Carbon Free Standard,” said Chair Katie Sieben. “The Carbon Free Standard puts the state on a path to a decarbonized electric sector, and the decisions we made are consistent with the vision of the Carbon Free Law. My colleagues and I remain steadfast in our commitment to make efficient and logical regulatory decisions so our state’s electric sector can continue to decarbonize and provide reliable and affordable electricity.”

Commission decisions included:

• Additional proceedings to develop a lifecycle analysis framework for complex fuels such as biomass, renewable natural gas, and solid waste.
• Consideration of carbon capture and its sequestration in carbon-free calculations for partial compliance.
• Establishing a process and further record development for utilities on how to apply partial credit for certain energy technologies outlined in the law.
• Defining “environmental justice areas” to be either the census tract or Tribal boundary. This is relevant when considering utility reporting, any needed standard modifications, and local impacts of generation resources.

This is the second of four proceedings on the Carbon-Free Standard to clarify details for implementation. The third proceeding will discuss compliance standards, and the last hearing will consider potential off-ramps for utilities should they be unable to achieve the standard's benchmarks. Because of Thursday’s Commission decision on the need to conduct a science-based life cycle analysis, an additional proceeding will occur, with a December 31, 2025, deadline.

Background

The carbon-free electricity standard was passed into law in 2023. The bill establishes a standard for utilities to supply Minnesota customers with electricity generated or procured from carbon-free resources, beginning at an amount equal to 80% of retail sales for public utility customers in Minnesota in 2030 and increasing every five years to reach 100% for all electric utilities by 2040. The bill also requires that, by 2035, an amount equal to at least 55% of an electric utility’s total retail electric sales to customers in Minnesota must be generated or procured from eligible energy technologies.

Electrical utilities in Minnesota have already made significant strides toward carbon-free energy, with a decline in carbon emissions of 54% from 2005 to 2020. The new law gives utilities the planning time and flexibility they need to reach the 100% goal while maintaining reliable and affordable electricity for Minnesotans.

About

The Minnesota Public Utilities Commission regulates three cornerstone service industries in Minnesota's economy: electricity, natural gas and telephone. The Commission’s mission is to create and maintain a regulatory environment that ensures safe, adequate, and efficient utility services at fair, reasonable rates consistent with State telecommunications and energy policies. It does so by providing independent, consistent, professional, and comprehensive oversight and regulation of utility service providers. Learn more at mn.gov/puc.

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