The wind power image, at the top of the home page for the Minnesota Public Utilities Commission (PUC), sadly says it all, when it comes to their current investigation into the affordability of regulated electricity and natural gas in this state. This is because, as I have documented dozens of times here, electricity is unaffordable because of renewables.
The words that accompany the image provide little comfort either. Although the motto at the top is for the MN Government as a whole and not just the PUC, it would be nice if the latter had one that said” Safeguarding ratepayer dollars is our priority.” And their mission should be “affordable rates” for Minnesotans rather than “reasonable rates” for monopolies.
Please have your say today to the PUC by 4:30pm on energy affordability. The hard way is through eFiling your “public comments” at: https://efiling.web.commerce.state.mn.us. The easy way is by emailing them your comments at: [email protected]. Highlights from my 4.000 words of comments, submitted yesterday, follow further below the image.
Source: MN PUC
How are electric and natural gas costs affecting households, businesses, agricultural customers, and other customer groups in Minnesota?
Highlights from my response to this question include:
- Minnesota’s ranking amongst the 50 states, in terms of affordable electricity prices, went from #14 in 2001 to #30 in 2026. The worst rank for 2001-2026 being #37 in 2021.
- MN’s average electricity prices have skyrocketed 117% from 2001 to 2026, compared to just 6% growth between 1983 and 2000.
- Electricity Consumer Price Index (CPI) for the Twin Cities (MSP) skyrocketed 127% from 2001 to 2024, compared to general CPI inflation for MSP of 70% over that same period.
What aspects of utility bills, rates, or recent cost increases are creating the greatest affordability concerns?
Highlights from my response to this question include:
- The greatest concern is that electricity use has been in decline, not due to efficiency, but to unaffordability. Total use grew 26% from 1984 to 2008 then shrunk -17% by 2025.
- The MN average electricity bill expanded 33%, from $1,142 per total customer in 1984 to $1,519 in 2002, then exploded 87% to $2,834 by 2025.
- The Khazzoom-Brookes postulate states that: “Energy efficiency gains can increase energy use…by increasing the economic growth rate[.]” This is not happening here.
- Note that Average and Total = Residential + Commercial + Industrial.
Under Minnesota statutes, section 216B.16, the Minnesota Public Utilities Commission is directed to primarily rely on cost-of-service regulation in setting rates. What additional measures or metrics should be considered to evaluate whether utility service is affordable for different types of customers?
Highlights from my response to this question include:
- MN average electricity price, as per a common metric of MMBtu, soared by 118% from 2002 to 2025, whereas natural gas (NG) diminished by -8.8%.
- MN’s ratio of those two average prices per MMBtu, of electricity divided by NG, hit a low of 227% in 2006, then has since risen by 3.4x to 763% in 2025.
- MN’s electricity generation mix of both renewables and NG took off from 3% each in 2004 to 31% and 27% respectively by 2024, whilst coal and nuclear both shrunk from 65% and 25% respectively in 2004 to 20% each by 2024.
- The Levelized Cost of Energy for nuclear is 2.4x less expensive than coal, 3.1x less expensive than NG, 7.9x less expensive than wind, and 13.3x less expensive than solar.
- Nuclear is the most affordable, reliable and “clean” in total life cycle CO2. Plus wind and solar are not without environmental costs, as documented in Shattered Green Dreams.
- The unaffordability of a renewables-dominated capital base is the “elephant in the room” of electricity rate regulation rather than the “slight of hand” focus on ROE.
- The PUC recently approved a 9.6% ROE for Xcel, which is not excessive compared to 9.7% oil, 10.3% water, 11.1% cable TV, 12.4% power, 17.2% market, nor -7.4% renewables.
What actions by utilities, the Commission, the Legislature, or other entities could most effectively improve utility affordability?
Highlights from my response to this question include:
- The key short term solutions are lift the moratorium on new nuclear, impose a moratorium on retiring coal and impose a moratorium on expanding renewables.
- The key long term solutions are replace capital-biased ROR regulation with efficiency incentive regulation, as well as open up franchise monopolies to real competition.
- The University of Chicago proved that wind and solar renewables, driven by state government mandates, caused inflation of electricity prices from 2002 onwards.
What costs, benefits, and trade-offs should the Commission consider when evaluating measures intended to improve affordability?
Highlights from my response to this question include:
- The PUC should produce their own comprehensive CBA guide, along the lines of that of Australia’s Handbook of Cost Benefit Analysis, which is the international “gold standard.”
- The Aussie CBA handbook states that: “Reliable evidence is needed to quantify costs and benefits.” This is what I have provided, based on data from BLS, CAE, EIA and UofC.
- And: “Market prices, where they exist, provide a great deal of information concerning the magnitude of costs and benefits.” I have provided 16 price-related charts and data.
Are there effective approaches or policies used in other jurisdictions that could help inform Minnesota’s consideration of utility affordability? If so, what lessons should Minnesota draw from those approaches?
Highlights from my response to this question include:
- The main problem with the PUC’s rate-of-return (ROR) regulation is that it incentivizes a capital base bias for renewables. Economists call this the Averch-Johson (A-J) effect.
- CPI minus X (CPI-X) incentive regulation goes a long way to countering the A-J effect, as it focuses on capital base efficiency, and not just operating cost efficiency (i.e. opex), as well as efficient returns of capital (i.e. capex and depreciation), and not just actual and requested returns on capital (i.e. CAPM and WACC).
- As both economics and history have demonstrated time-and-time again, neither ROR regulation nor PUC regulators are as effective and efficient as free-market competition. The best case study for this was Australia’s National Competition Policy from 1995-2005.
Conclusion
Minnesota’s electricity affordability has worsened due to the meteoric rise in renewables generation, especially that of wind, and to a much lesser degree solar. However, this has been mitigated, to some extent, by the almost parallel rise in natural gas generation. But natural gas is far better suited to peak load than base load generation, whereas wind and solar are suited to supplemental generation. Coal and nuclear are best suited for base load.
Source: Harry S. Truman Library & Museum