SF 4281
Introduction - 94th Legislature (2025 - 2026)
Posted on 03/10/2026 09:45 a.m.
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A bill for an act
relating to energy; establishing requirements for thermal energy network plans;
amending Minnesota Statutes 2024, section 216B.02, subdivisions 4, 6; proposing
coding for new law in Minnesota Statutes, chapter 216B.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
Section 1.
Minnesota Statutes 2024, section 216B.02, subdivision 4, is amended to read:
Subd. 4.
Public utility.
"Public utility" means persons, corporations, or other legal
entities, their lessees, trustees, and receivers, now or hereafter operating, maintaining, or
controlling in this state equipment or facilities for furnishing at retail natural, manufactured,
or mixed gas deleted text begin ordeleted text end new text begin ,new text end electric servicenew text begin , or service provided by a thermal energy networknew text end to or for
the public or engaged in the production and retail sale thereof but does not includenew text begin :new text end (1) a
municipality or a cooperative electric association, organized under the provisions of chapter
308A, producing or furnishing natural, manufactured, or mixed gas deleted text begin ordeleted text end new text begin ,new text end electric servicenew text begin , or
thermal energy networknew text end ; (2) a retail seller of compressed natural gas used as a vehicular
fuel which purchases the gas from a public utility; deleted text begin ordeleted text end (3) a retail seller of electricity used to
recharge a battery that powers an electric vehicle, as defined in section 169.011, subdivision
26a, and that is not otherwise a public utility under this chapternew text begin ; or (4) a retail seller of
thermal energy network service that is in service before January 1, 2026new text end . Except as otherwise
provided, the provisions of this chapter shall not be applicable to any sale of natural,
manufactured, or mixed gas or electricity by a public utility to another public utility for
resale. In addition, the provisions of this chapter shall not apply to a public utility whose
total natural gas business consists of supplying natural, manufactured, or mixed gas to not
more than 650 customers within a city pursuant to a franchise granted by the city, provided
a resolution of the city council requesting exemption from regulation is filed with the
commission. The city council may rescind the resolution requesting exemption at any time,
and, upon the filing of the rescinding resolution with the commission, the provisions of this
chapter shall apply to the public utility. No person shall be deemed to be a public utility if
it furnishes its services only to tenants or cooperative or condominium owners in buildings
owned, leased, or operated by such person. No person shall be deemed to be a public utility
if it furnishes service to occupants of a manufactured home or trailer park owned, leased,
or operated by such person. No person shall be deemed to be a public utility if it produces
or furnishes service to less than 25 persons.
Sec. 2.
Minnesota Statutes 2024, section 216B.02, subdivision 6, is amended to read:
Subd. 6.
Service.
"Service" means natural, manufactured, or mixed gas deleted text begin anddeleted text end new text begin ,new text end electricitydeleted text begin ;deleted text end new text begin ,
or service provided by a thermal energy network. Service includesnew text end the installation, removal,
or repair of equipment or facilities for delivering or measuring deleted text begin suchdeleted text end gas deleted text begin anddeleted text end new text begin ,new text end electricitynew text begin , or
service provided by a thermal energy networknew text end .
Sec. 3.
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[216B.2429] THERMAL ENERGY NETWORKS.
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new text begin Subdivision 1. new text end
new text begin Definitions. new text end
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(a) For purposes of this section, the following terms have
the meanings given.
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(b) "Building costs" means costs incurred by utility customers or building owners to:
(1) connect to a TEN being installed, as required by a TEN service plan; or (2) to prepare
a building for connection in the future.
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(c) "Project costs" means all costs incurred by the utility to complete a project proposed
in a TEN service plan. Project costs do not include costs for customer-owned equipment
and building costs necessary to connect to a TEN.
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(d) "Public utility" or "utility" has the meaning given in section 216B.02, subdivision
4.
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(e) "Thermal energy network," "TEN," or "project" has the meaning given in section
216B.2427, subdivision 1, paragraph (s).
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(f) "Thermal energy network service plan" or "TEN service plan" means a plan proposing
the construction of a TEN to serve existing or new utility customers that a public utility
submits to the commission.
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new text begin Subd. 2. new text end
new text begin Thermal energy network service plan requirements. new text end
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A TEN service plan
must include:
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(1) a description of the project, including details on the proposed service area and
customers served;
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(2) estimated project costs;
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(3) estimated building costs;
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(4) the project's construction schedule;
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(5) a summary of the utility's consideration of priority zones under subdivision 6;
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(6) a description of the utility's efforts to offset project costs through federal, state, or
local incentives;
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(7) a description of benefits expected to materialize as a result of the project;
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(8) a description of the efforts the utility commits to take to promote strong economic
development and good jobs for local residents in the expanding thermal energy network
sector by requiring application of progressive state labor and employment policies that
ensure public utility investments and related state subsidies create unparalleled skill training
and employment opportunities for residents in and around proposed service areas by using
local prevailing wage standards and successful bona fide apprenticeship programs or project
labor agreements that incorporate prevailing wage and training standards;
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(9) if the TEN service plan proposes to serve customers currently being served by gas,
a customer transition plan that:
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(i) clearly identifies (A) the area and affected customers, and (B) an anticipated timeline
to discontinue gas service and start thermal energy service;
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(ii) offers technical assistance to affected customers who request assistance with the
transition to thermal energy service;
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(iii) includes a transition schedule for affected customers;
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(iv) describes anticipated incentives provided by the utility to customers to offset building
costs incurred to connect to the TEN;
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(v) includes a communication plan to inform customers of, at a minimum: (A) the
proposed project details, schedules and timelines, benefits, programs, and incentives available
to help cover the customer's costs incurred to retrofit the customer's buildings to enable
connection with the TEN; and (B) the projected heating and cooling costs based on
individualized customer energy use. Public education meetings for affected customers must
be held at a location and time that is determined to be convenient for the public; and
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(vi) describes the utility's efforts to protect low-income customers from inequitable
retrofitting or operational costs as a result of the project;
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(10) a plan for (i) existing gas infrastructure that becomes stranded as a result of the
project, and (ii) projected avoided operational and maintenance costs for stranded gas
infrastructure; and
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(11) other details determined by the commission.
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new text begin Subd. 3. new text end
new text begin Service provided by a thermal energy network. new text end
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(a) A public utility may
comply with section 216B.04 if the public utility furnishes safe, adequate, efficient, and
reasonable thermal energy service by a TEN. A public utility must submit and have an
approved TEN service plan in order to provide service by the proposed TEN. The commission
may approve, modify, or reject a TEN service plan. The commission must provide for notice
and comment on the TEN service plan before making the commission's determination.
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(b) An approved TEN service plan must:
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(1) provide a customer waiver process that allows a customer to apply for an exemption
from transitioning off existing gas service if transition to TEN service is unduly financially
burdensome for the customer or technologically infeasible;
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(2) ensure customers are well-informed regarding the public utility's intent to discontinue
and replace gas service with service provided by the approved TEN project;
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(3) serve the state emissions reduction under section 216H.02, subdivision 1;
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(4) evaluate the cost effectiveness of the proposed TEN project. When evaluating project
cost effectiveness, the commission may and is encouraged to consider TENs in a manner
comparable to gas or electric resources. The commission must consider the lifetime project
costs, including benefits from future emissions reductions; and
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(5) identify the appropriate course of action and timeline to decommission existing gas
infrastructure as a result of an approved TEN service plan.
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(c) The commission must determine appropriate guidelines for public utilities that propose
a TEN service plan service area that includes customers of another public utility.
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new text begin Subd. 4. new text end
new text begin Consumer protections. new text end
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TEN service provided by a public utility is subject to
the same laws, protections, and commission authority that apply to gas service, including
but not limited to those provisions as outlined in sections 216B.03; 216B.096; 216B.097;
216B.0975; and 216B.16, subdivisions 6, 14, and 15.
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new text begin Subd. 5. new text end
new text begin Cost recovery. new text end
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Subject to the commission's approval, a public utility is eligible
to recover reasonable and prudent costs incurred to implement an approved TEN service
plan under general rate cases. A public utility is not eligible to recover costs for gas
infrastructure in areas approved to be serviced by a TEN, unless the costs are necessary to
ensure the safety of decommissioned gas infrastructure.
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new text begin Subd. 6. new text end
new text begin Thermal energy network priority zones. new text end
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When assessing the location and
siting of a TEN project, a public utility must prioritize geographic areas where one or more
of the following conditions exist:
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(1) new gas infrastructure is a less prudent resource compared to a TEN;
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(2) there is no existing piped gas infrastructure;
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(3) existing gas infrastructure is nearing the infrastructure's end of useful life;
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(4) existing gas infrastructure is prone to leaks or otherwise in need of repair or
replacement;
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(5) communities within the area have expressed desire to have a TEN project installed;
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(6) the area has characteristics that are similar to the characteristics that existed for a
successful utility TEN pilot project completed through an innovation plan approved under
section 216B.2427;
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(7) includes or is within an area defined under section 116.065, subdivision 1, paragraph
(e); or
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(8) the area meets other characteristics outlined for prioritization in the thermal energy
network site suitability study completed by the commissioner under Laws 2024, chapter
127, article 42, section 51.
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