Minnesota Public Utilities Commission Issues Order Establishing a Range for the Regulatory Costs of CO2
St. Paul, Minnesota — The Minnesota Public Utilities Commission (Commission) issued an order today establishing a cost range to evaluate how CO2 regulatory costs will impact the cost of utility electrical generation investments. The order will guide how utilities analyze the regulatory and environmental costs associated with CO2 when considering whether to invest in new electrical generation assets.
“This decision clarifies how utilities should analyze the costs of CO2 emissions when determining whether a specific generation asset is a prudent investment,” said Commissioner Joe Sullivan. “This analysis will give the Commission a more complete picture to look at when determining if building a new generation facility is going to be cost effective for ratepayers.”
Regulatory costs are the amount that utilities are expected to incur complying with future regulations related to CO2 emissions. The Commission order establishes the regulatory cost rate at $5 to $25 per ton of CO2 effective in 2025.
The order also clarifies how utilities are to analyze the regulatory costs in conjunction with the environmental costs of greenhouse gases like CO2. The order specifically sets out minimum scenarios that utilities must analyze when determining the impact of regulatory and environmental costs.
The Commission is directed by statute to determine the prudence of allowing utilities to invest in new electric generation resources. Part of the analysis the Commission is required to incorporate is an estimate of the range of costs that future CO2 limitations will likely impose on electrical power generation. Minnesota’s statute also requires the Commission to update and revise its estimate periodically. The Commission has been updating the CO2 regulatory cost values since 2007.
The Commission previously defined environmental costs in its January 2018 Order Updating Environmental Costs. In 2025, environmental cost value for CO2 range is between $10.07 and $46.96 per net short ton. This environmental cost range reflects societal costs of emissions.
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
Please contact Will Seuffert, 651-201-2217 or will.seuffert@state.mn.us if you have any questions.
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