In a nutshell:
– For many decades, Minnesota’s electric utilities have used Integrated Resource Plans to forecast future needs and identify the most affordable, reliable, and climate-aligned mix of energy sources. Now gas utilities will do the same.
– Minnesota’s three largest gas utilities — CenterPoint Energy, Xcel Energy, and Minnesota Energy Resources Corporation — will be required to file plans every three years.
– This process, supported by Fresh Energy and finalized by the Minnesota Public Utilities Commission in 2024, marks a major step toward smarter, fairer, and more transparent gas utility regulation.
– These plans must evaluate a full range of resources — including natural gas, energy efficiency, heat pumps, and thermal energy networks — and show how they support Minnesota’s climate goals.
When you turn up your thermostat on a cold Minnesota winter night, where does that heat come from? While some Minnesotans have switched to efficient and climate-friendly electric heat pumps, the majority are still using natural gas that flows to their homes through miles of underground pipes. Minnesota has a massive natural gas infrastructure system that gas utilities have built and maintained for decades. But until recently, those gas utilities haven’t been required to share comprehensive plans with the public about how they’re preparing for the future of that system.
That’s just changed. In October 2024, the Minnesota Public Utilities Commission finalized a new framework requiring the state’s largest gas utilities to file detailed Integrated Resource Plans (IRPs) every three years. This brings gas utilities up to the same planning standard that electric utilities have followed for decades — and it’s a big deal. For the first time, gas utilities will have to show their work: how they’re forecasting future demand and maintenance, how they’re preparing for price volatility, and, crucially, how their plans align with Minnesota’s climate targets.
Fresh Energy helped advocate for this framework alongside partners at the Minnesota Center for Environmental Advocacy, Sierra Club, and Citizens Utility Board of Minnesota — and we’ll be plugging into the details as utilities begin filing their first plans.
Gas IRPs are now another powerful tool in our work at the Minnesota Public Utilities Commission to advocate for an energy system that’s clean, affordable, and equitable.
In this post, we’ll walk through what gas IRPs are, how they came to be, and what they mean for Minnesota’s path to decarbonization.
What’s up with gas IRPs?
For decades, Minnesota’s electric utilities have used Integrated Resource Plans to forecast future needs and identify the most affordable, reliable, and climate-aligned mix of energy resources to meet them.
Now, Minnesota’s largest natural gas utilities — CenterPoint Energy, Xcel Energy, and Minnesota Energy Resources Corporation (MERC) — will be required to do the same for their natural gas planning.
This new planning framework, supported by Fresh Energy and finalized by the Minnesota Public Utilities Commission in October 2024, marks a major step toward smarter, fairer, and more transparent gas utility regulation.
The origin of gas Integrated Resource Planning
Sometimes it takes a crisis to reveal the cracks in a system. In February 2021, Winter Storm Uri sent shockwaves through the country’s energy systems. The storm disrupted gas supplies and triggered price spikes across the Midwest, leaving Minnesota consumers on the hook for hundreds of millions of dollars in unexpected costs. It was a wake-up call: our gas utilities needed better planning and oversight to protect consumers from volatile markets and prepare for an energy future that works better for all Minnesotans.
The Minnesota Public Utilities Commission responded, thanks to advocacy in part from the Citizen’s Utility Board in Minnesota, by launching a proceeding to develop a gas planning framework — essentially bringing gas utilities up to the same standard their electric counterparts have followed for decades.
The goal was to identify the resources that gas utilities need to provide reliable service, protect consumers from volatile gas markets, and prepare for a decarbonizing economy. This effort was also envisioned in the Future of Gas docket, established after passage of the Natural Gas Innovation Act (NGIA) in 2021.
Fresh Energy worked alongside Minnesota Center for Environmental Advocacy (MCEA) and Sierra Club to help design this forward-looking and equitable approach. You can read about that process and our advocacy and dig into the detailed gas IRP requirements in the Commission’s October 2024 Order.
Forecasting demand and planning the mix of resources to meet it
Under the Commission’s new framework, Minnesota’s three largest investor-owned gas utilities will now file comprehensive Integrated Resource Plans every three years, each covering a ten-year outlook and a five-year action plan:
- Xcel Energy – first IRP due July 1, 2026
- CenterPoint Energy – due July 1, 2027
- Minnesota Energy Resources Corporation (MERC) – due July 1, 2028
Each plan must determine the mix of energy resources that protects ratepayers, maintains safe and affordable service, and advances Minnesota’s climate goals. Utilities must forecast high-, medium-, and low-load scenarios, test for price volatility and supply disruptions, and evaluate a full range of supply-side and demand-side resources — including natural gas, energy efficiency, demand response, electric heat pumps, thermal energy networks, thermal storage, renewable natural gas, and hydrogen.
What makes things different than the old way of doing things is all options must be analyzed on a consistent and comparable basis, including the social cost of carbon and methane and other environmental externalities.
Now, cleaner technologies like energy efficiency, heat pumps, demand response, and community-scale heating and cooling systems will be analyzed on a level playing field with polluting alternatives. By leveling the playing field, we can create a better future for Minnesota that’s better for our health, pocketbooks, and our climate.
New requirements on emissions, climate, and lifecycle impacts
One of the most important aspects of the new gas IRP process is how thoroughly they will incorporate transparency and climate accountability. Gas utilities will have to show the full climate picture of their operations and plans, including:
- Alignment with state and local climate goals: Each IRP must include a narrative explaining how its preferred plan supports Minnesota’s statutory greenhouse gas reduction targets. The IRPs will similarly consider local climate goals. That means utilities can’t just say their plan is good for the climate — they have to demonstrate how it helps us meet our legal obligations.
- Lifecycle GHG accounting: Utilities must use lifecycle greenhouse gas (GHG) emission factors from their NGIA plans when analyzing resources to ensure lower emissions on a lifecycle basis.
- Externality values: Utilities must account for the environmental externality costs of resource options using the Commission-approved values. They must also account for the social costs of carbon and methane emissions when evaluating alternatives to capacity expansion projects. This puts a dollar value on climate impacts and ensures that climate costs aren’t placed on Minnesotans.
- Regulatory cost of carbon: IRPs will incorporate the costs to comply with any regulation of greenhouse gas emissions.
- Upstream emissions: IRPs must include information about upstream emissions (from extraction, processing, and transport). This provides a more accurate and complete emissions picture, preventing utilities from claiming their systems are “clean” while ignoring emissions that happen elsewhere.
- Methane leakage reporting: Each utility must report methane emissions from its distribution system, using available protocols until it can develop system-specific leakage estimates. Utilities must file a report within 12 months detailing costs and methods for measuring leakage.
Together, these requirements transform Minnesota’s gas planning from a process narrowly focused on supply and price into one that grapples honestly with the full cost and climate implications of our energy systems.
Smarter infrastructure decisions via Expansion Alternatives Analysis
An important aspect of Minnesota’s new gas IRP framework is the new “Expansion Alternatives Analysis.” In the past, when a gas utility wanted to expand its system — say, by building a new pipeline — the default answer was almost always “go ahead.” But that wasn’t necessarily good for customers’ bills or our climate.
Under the new requirements, each utility must now identify at least two to three major capacity expansion projects and evaluate whether non-pipeline or non-gas alternatives — like efficiency or electrification — could meet those needs more affordably or equitably. Now, we might be able to use climate-friendly technologies to meet our heating needs instead, even foregoing new gas infrastructure altogether — in a way that’s more affordable for Minnesotans, too.
Each Expansion Alternatives Analysis must include:
- Evaluation of non-pipeline or non-gas alternatives,
- Full accounting of direct costs, variable costs, and social costs of carbon and methane,
- Assessment of air quality impacts,
- Transparent criteria for ranking and eliminating options, and
- An explanation of how equity was considered in decision-making.
The process will work like this: Utilities must start by compiling a pool of up to 10 potential projects, prioritizing those above a $1 million investment threshold, and then narrow that pool to two or three projects in consultation with stakeholders. The Commission directed utilities to prioritize projects in low-income, environmental justice, or Indigenous communities, and those with high potential for learning. (The Commission decided to exclude routine maintenance or safety-related projects from these analyses.)
This is a big shift. Instead of assuming gas utilities should keep building their gas infrastructure system larger, utilities must now prove that gas expansion is in the best interest of Minnesotans and our climate.
Embedding equity and community engagement
Minnesota’s new gas planning framework recognizes that energy decisions don’t affect everyone equally. Under-resourced communities, communities of color, and Indigenous communities have historically borne disproportionate burdens from both energy costs and pollution — and they’ve often been left out of the planning process entirely.
The new requirements change that. Minnesota gas utilities must now consider equity throughout their planning process — not just as an afterthought, but as a core part of their decision-making. Each plan must include:
- A discussion of how equity was considered in developing the plan, and
- A narrative of equity impacts for each project in the five-year action plan.
Utilities must also work directly with local governments to consider and reflect local climate goals. Many Minnesota cities have set ambitious climate targets, and gas utilities’ infrastructure decisions can make or break those climate goals. By requiring collaboration, the new gas IRP process will ensure that local communities are a part of the conversation, and when possible, gas utilities are working with local governments to prioritize GHG reductions and pilot projects.
This new process is more holistic, too, because gas utilities will be coordinating with electric utilities at the Commission. As more Minnesotans switch from gas furnaces to electric heat pumps, both the gas and electric industries are affected. By creating frameworks that streamline utility regulation, Minnesota can better plan our systems in ways that protect customers and avoid stranded costs and a situation where customers who remain on the gas system end up paying higher rates because the infrastructure costs are spread across fewer people.
Robust stakeholder engagement
Good planning requires input from people with different expertise and perspectives. That’s why the new framework requires each gas utility to conduct a robust stakeholder process to inform its IRP.
At a minimum, the process must include:
- State agencies,
- Clean energy advocates like Fresh Energy,
- Consumer advocates,
- Low-income and environmental justice advocates,
- Organized labor,
- Local governments, and
- Businesses and communities directly affected by expansion projects.
Utilities must summarize how stakeholder input influenced their plans in each filing. The Commission also directed PUC staff to initiate a statewide stakeholder process to explore future rate design reforms to maintain affordable and equitable service amid electrification and declining gas demand.
How gas planning fits into Minnesota’s building energy transition
The gas IRP process doesn’t exist in a vacuum. It’s part of a broader suite of regulatory efforts to reduce emissions from Minnesota’s buildings and heating systems.
The gas IRP process complements several other forward-looking regulatory initiatives to reduce emissions from the gas distribution system:
- Future of Gas docket (21-565): Examines long-term system transition of the gas distribution system and identifies policy and regulatory changes needed to meet Minnesota’s emissions reduction goals. While gas IRPs focus on near-term planning (three-year cycles with 10-year outlooks and five-year action plans), the Future of Gas docket takes a longer view of the system transformation.
- Natural Gas Innovation Act (NGIA) plans: These plans allow utilities to pilot alternative lower-emission resources than gas, such as thermal energy networks or renewable natural gas. Gas IRPs must build on what’s learned about alternative resource options from NGIA pilots.
- Energy Conservation and Optimization (ECO) Act programs: These programs drive energy efficiency and beneficial electrification — helping Minnesotans use less energy overall and switch to electric technologies when it makes sense. Gas IRPs will coordinate with ECO programs to ensure planning reflects these demand-side resources.
- Thermal Energy Networks (TENs) Deployment Work Group (24-275): This work group is examining opportunities for gas utilities to incorporate thermal energy networks into their business models. They can provide heating and cooling without burning fossil fuels on-site, a potentially transformative alternative to traditional gas distribution.
Together, these regulatory efforts form Minnesota’s comprehensive framework for decarbonizing buildings and heating. Fresh Energy and our partners will continue to push for alignment across these efforts to deliver the cleanest, most affordable energy future possible.
Lessons in gas planning from beyond Minnesota
Minnesota isn’t the first state to use gas IRPs. We’re joining a growing list of states modernizing gas utility regulation through resource planning, recognizing the model of “just keep building more gas infrastructure” doesn’t make sense in a decarbonizing world.
Colorado, for example, requires Xcel Energy to complete gas infrastructure plans with planning horizons ranging from five to twenty years.
What’s next?
Now that the new gas IRP framework is in place, the real work begins. The next major milestone comes in July 2026, when Xcel Energy files Minnesota’s first-ever gas IRP, followed by CenterPoint in 2027, and MERC in 2028. The Commission aims to issue decisions within 18 months of each filing.
Between now and then, utilities will hold stakeholder workshops and technical discussions to shape their filings. These early conversations are crucial — they’re where questions get asked, concerns get raised, and better ideas emerge. Fresh Energy and our Clean Heat Minnesota coalition partners will be at the table for all of these discussions, advocating for plans that truly serve Minnesotans, advance climate progress, and center equity.
One important question we’ll be watching closely is what meaningful equity consideration will actually look like in practice. The framework sets the expectation that equity be considered throughout the gas IRP process, but there’s more work ahead to define what that means concretely — and how it will shape outcomes for households and neighborhoods across the state.
Gas resource planning brings oversight and long-term vision to how Minnesota’s gas utilities invest and operate. After decades of planning, utilities will now have to show their work, justify their choices, and demonstrate how their plans serve both current customers and future generations.
As our decarbonization journey continues, it’s an important time to create a roadmap for what that looks like in our natural gas system. Fresh Energy is excited to be part of this process that will help Minnesotans, our wallets, and our climate future.