Minnesota regulators limit free gas line extensions as advocates call for bigger changes

Minnesota utility regulators approved new limits Thursday on how far natural gas companies can extend “free” line extensions for new customers, a policy shift aimed at protecting existing ratepayers while nudging the system toward cleaner heating options.

RELATED: Minnesota regulators to decide whether gas customers should keep paying for new gas lines

In a 3–0 vote, the Minnesota Public Utilities Commission (MPUC) capped the standard amount of line that can be installed at no direct cost to a new customer at 75 feet for service lines and 80 feet for mains, unless a different maximum is later approved in a general rate case.

“For rate‑regulated natural gas utilities that include footage allowances in line extension tariffs, establish maximum distances no greater than 75 feet for service lines and 80 feet for mains as the portion of installation costs not charged to the customer, unless and until the commission approves an alternative maximum distance in a general rate case,” the preliminary notes state.

For nearly three decades, Minnesota has allowed utilities to offer a certain amount of “free footage” when connecting new homes, with the remaining costs effectively shifted onto existing customers through rates. Clean‑energy groups and consumer advocates have long argued that structure encourages more gas buildout and leaves current customers subsidizing new development.

Opponents say the commission did not go far enough

Several community and climate groups who attended Thursday’s meeting said the commission missed an opportunity to fully eliminate free‑footage allowances.

Carolyn Ham, co‑facilitator of Third Act Minnesota, said she was disappointed in the decision.

“They had an opportunity to look forward to get us closer to clean energy and less greenhouse gases. Instead they looked backward and talked about heating oil and propane when the future is electricity,” Ham said. “We, the ratepayers, are subsidizing new people coming in. We should not have to be paying them.”

Ham said the decision continues a system where existing customers, including those struggling with rising bills, help cover the cost of new gas infrastructure.

Monse Perez Barrios, a community outreach specialist with COPAL, said grassroots groups brought forward public‑health concerns that were not reflected in the final outcome.

“The overall feeling from our group is disappointment,” she said. “There was so much more evidence that was not included or addressed, especially around health and affordability. People are choosing between food, mortgage and energy. I question how this decision was made on behalf of the public.”

Perez Barrios said she believes the decision benefits utilities more than customers.

Natalie Cook, coalition manager for Clean Heat Minnesota, also criticized the vote.

“Gas utilities are able to continue to pass along the cost of expanding the gas system onto customers into the future. This is a big missed opportunity,” Cook said.

The Citizens Utility Board (CUB) of Minnesota also criticized the decision. In a statement, the group said it was disappointed that the commission will continue to allow utilities to charge existing customers to subsidize new gas system expansion.

CUB said gas use per household is declining while utilities continue to spend millions on new infrastructure, which the group argues is driving up bills for Minnesotans. “This is a trend utilities and their regulators need to grapple with,” said executive director Annie Levenson‑Falk.

What the order requires

The commission’s decision includes a series of deadlines and reporting requirements:

• Within 30 days, utilities must file updated line‑extension tariffs reflecting the new maximums.
• Within 90 days, utilities must consult with the Attorney General’s Office and file a proposal on waiving contributions in aid of construction for customers who cannot afford them.
• Beginning with 2026 sales data, utilities must file a detailed analysis if they experience three consecutive years of declining throughput or declining average residential usage.
• Utilities must draft two survey questions for new customers and builders asking which heating source they would choose if natural gas were unavailable.
• By Jan. 15, 2027, utilities offering free‑footage allowances must file or update a single‑family new‑construction ECO program that requires heat pumps instead of central air conditioners and prohibits tying rebates to specific gas appliances.

The order also lays out new guidelines for how utilities should calculate free‑footage allowances in future rate cases, including full-cost accounting, payback periods, and assumptions about declining usage.

In a statement after the meeting, Commissioner Audrey Partridge said:

“While the commission has built real momentum toward cleaner, cost‑effective heating alternatives like heat pumps and geothermal, we are not making natural gas inaccessible. Our decision today focuses on supporting customers’ transition to cleaner technologies while keeping service reliable and affordable while protecting low‑income customers, rather than restricting access and pushing Minnesotans onto unregulated fuels like propane.”

During the meeting, Partridge said the decision reflects the complexity of balancing affordability, access to heat and the state’s climate goals.

She referenced her own family’s experience during a propane shortage more than a decade ago, saying it shaped her view of why regulators must consider both long‑term emissions targets and Minnesotans’ immediate need for reliable heat in a cold‑weather state.

The preliminary notes emphasize that Thursday’s document is not the commission’s final written order, but it outlines the framework utilities must follow as Minnesota continues to evaluate the future of its natural‑gas system.