Have your say (again) by today!

Public comments are due today by 4:30pm to the MN Public Utilities Commission (PUC) regarding their investigation into electricity and natural gas affordability in Minnesota.

Public comments can be submitted to the MN PUC at [email protected] or via the online form. The PUC’s energy affordability website can be found here and the docket here.

The remainder of this article is a CliffsNotes® summary version of my second submission of 20 pages and 4,453 words. My first submission of this inquiry was 23 pages and 4,064 words.

Question #1 re riders & clauses
Question #2 re interim rates
Question #3 re capital & returns
Question #4 re cost control
Question #5 re regulatory reform
Addendum of charts

Question #1

Riders, fuel clauses, and incentive to manage costs.

The “Renewable Energy Standards (RES) Statute,” as reinforced by the “RES Rider” and “Transmission Cost Recovery (TCR) Rider,” are the prime sources of electricity unaffordability in this state in the 21st century (is is also the case for many other states with RPS):

KSTP / SurveyUSA (September 2026) found inflation most important issue in Minnesota.
Pew Research Center (April 2026) found renewables are expensive for most Americans.
University of Chicago (July 2024) proved renewables caused electricity rates inflation.
S&P Global Energy (October 2026) showed capital spending on renewables drove this.
EPRI (June 2026) proved data centers caused some electricity rates deflation.

Question #2

Interim rates and affordability.

There is a legislative “burden of proof” (BoP) which should be clarified, and supplemented, by a legislative or regulatory “standard of proof” (SoP) as follows:

low SoP (i.e. civil case “a preponderance of the evidence”) for matters with no significant affordability impacts, such as administrative or procedural matters;
medium SoP (i.e. civil case “clear and convincing evidence”) for general rates cases, especially for multi-year revenue and rate increases;
high SoP (i.e. criminal case “beyond a reasonable doubt”) for interim rate increases and other short-term ones, such as proving a reasonable threat of bankruptcy or blackouts.

Question #3

Return on equity, capital structure, and the cost of capital.

Return on equity (ROE), capital structure and the cost of capital are important, but are overemphasized relative to the capital base that ROE is applied to. That is, the massive capital denominator should get more attention than the much smaller returns numerator. Especially given:

Aii (July 2026) found approved ROE fell from about 11% in 2000 to about 9.5% in 2026.
S&P (October 2026) found 10.48% average for vertically integrated electric rate cases.
NYU (January 2026) found market ROE of 17.6% as well as 95 industry ROEs including: 12.4% for Power; 10.42% for Utility; -2.51% for Coal; and -7.36% for Renewables.
Harvard (June 2012) showed WACC needs to be project specific not just company level.
Forbes (April 2023) highlighted inflation is not properly accounted for in WACC/CAPM.
Mises Institute (August 2022) reminded risk-free rate in particular needs to account for inflation, with risk and time value of money being properly captured in WACC/CAPM.

Question #4

Rate design as a cost-control tool, not just an allocation tool.

The PUC’s rate-of-return or cost-plus approach to regulation of revenues/rates has long been recognized, since at least the 1962 Averch-Johnson (A-J) Effect, to strongly incentivize capital base over-spending. This has been examined and confirmed many times including by:

Renewable “Baptists” and public utility “Bootleggers” have taken advantage of the A-J bias to great effect in the 21st century, and they did so using the ultimate “public interest” cover story of needing to continually over-spend on wind and solar capital to “save the planet.” (See the Addendum of charts after Question #5 below.)

Question #5

Priorities for regulatory reform.

Sound economics and real history have shown time and time again, in this country and around the world, that the best regulator of electricity, or any other, prices is competition:

Failing that, the second best option, for the MN government and PUC, is true incentive regulation. Practical and transparent examples of this can be found at both Australian federal and state levels as follows:

Addendum

Minnesota energy unaffordability is summarized in the following dot points narrative and accompanying charts:

Wind and solar renewables are still, as of 2024, vastly more costly than nuclear, coal or natural gas reliables (see Chart 1 below).
Wind has been the dominant renewable in MN in the 21st century, especially since 2004, with solar a distant second even in the 2020s (see Chart 2 below).
MN renewables went from an afterthought, prior to the 21st century, to the top generation source nowadays, along with natural gas not far behind (see Chart 3 below).
The growth of MN renewables in the 21st century has far outpaced that of the rest of the midwest (MW) region and the country (US) as a whole (see Chart 4 below).
Twin Cities (MSP) electricity CPI inflation has thus, also far outpaced that of the MW and US in the 21st century (see Chart 5 below).
MSP electricity CPI inflation has outpaced MSP general CPI inflation throughout the 21st century, as well as overtaking it in the 2010s and 2020s (see Chart 6 below).
MN electricity rates have inflated by well over 100% in the 21st century for residential, commercial, industrial and total combined customer classes (see Chart 7 below).
MN’s state rankings on these four electricity rates have sunk throughout the 21st century, from almost top 10 for commercial in 2002, to almost bottom 10 for industrial 2022 (see Chart 8 below).
These heavily inflating MN electricity rates have translated into skyrocketing electricity bills, on average for the three main customer classes combined (see Chart 9 below).
MN electricity bills inflation is being driven up by increased rates and not by increased uses, noting { Bills = Revenues / Customers } and { Revenues = Rates x Uses } (see Chart 10 below).
MN electricity uses peaked in 2008 and has sunk since, and given the Jevons paradox and Khazzoom-Brookes postulate, this strongly suggests not electricity cost efficiency but electricity price inflation (see Chart 11 below).
This is very much reinforced by comparing MN electricity price inflation to MN natural gas price deflation between 2002 and 2025 (see Chart 12 below).
This is also reinforced by comparing MN electricity revenues to MN natural gas revenues, the former of which are being pushed up by rates not uses, which in turn are being pushed up by renewables capex not equity returns (see Charts 13 and 14 below).