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Energy policy in Minnesota

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Energy Policy in Minnesota
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Quick Facts
Energy Department Minnesota Department of Commerce, Division of Energy Resources
State Population 5.4 million
Per Capita Income $46,227
Energy Facts
Energy Consumption
Total Energy Consumption 1,867 trillion BTU[1][2]
Per Capita Energy Consumption 349 million BTU
Energy Spending
Total Energy Spending $24.316 million
Per Capita Energy Spending $4,547
Price of Residential Natural Gas $8.64 per thousand cubic foot
Price of Electricity 12.20 cents per kWh
Minnesota Energy Consumption
This chart depicts the Minnesota Energy Consumption as reported by the EIA for 2011. Click the image to enlarge.
     Transportation       Residential     Industrial       Commercial
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Energy policy in Minnesota depends on many circumstances, such as geography, natural energy resources, how electricity is generated, how much energy consumers use, politics and the influence of groups such as environmental and industry organizations. Decisions by policymakers, such as state and local governments, utilities and regulatory agencies, affect all citizens economically and environmentally, and are generally geared toward providing reliable, affordable energy. The cost of energy affects not only home heating and electricity bills, and thus disposable income, but also economic growth, including jobs, investment and the cost of doing business in the state.

How energy is produced and consumed also has an impact on the environment and pollution. Environmental energy policy in Minnesota, and many other states, focuses on decreasing emissions and dependence on fossil fuels by increasing energy efficiency and the use of renewable energy. Minnesota in particular puts an emphasis on increasing energy conservation through energy efficiency. As the infrastructure for producing and delivering renewable energy sources is not as advanced as it is for energy generation from traditional sources, these policies often require subsidies to make the produced energy affordable, and their effects are difficult to measure.

Energy policy involves tradeoffs between providing an affordable, consistent energy supply on the one hand, and limiting pollution and protecting the environment, on the other. How states attempt to balance these two differs between states, and often boils down to costs to consumers versus costs to the environment. This article provides general energy information about the state as the context within which energy policy is made, as well as information about major legislation and public and private groups that play a role in setting energy policy in the state.

See also: Energy Policy in the U.S. for more information on energy policy.

Energy overview

State facts

Below are quick facts about Minnesota’s energy climate.


In Minnesota:

  • fifty-three percent of electricity generated comes from coal.
  • over two-thirds of homes are heated with natural gas.
  • nuclear power accounts for 22 percent of net energy generation.
  • ranked 4th in the nation for most wind energy production in 2011.
  • electricity generated from Wind energy grew by 42 percent from 2010 to 2011.[3]

Available energy resources

Minnesota has no traditional energy resources such as oil, coal or natural gas. This lack of traditional energy resources means the state is a net energy importer, bringing in all the coal, natural gas and petroleum consumed in the state. Because of the state’s access to the Mississippi River (over one-fourth of the river flows through the state), and the port of Duluth on Lake Superior, the state is an important part of the transportation of fossil fuels.[3]

Minnesota has renewable energy resources that contributed about 20 percent of the state’s net energy generation in 2012. Southwestern Minnesota hosts many wind energy facilities. Eastern Minnesota meanwhile is home to many hydropower plants. The state is also a major player in the agricultural sector due to its fertile topsoil; the state ranks in the five in annual farm income. These resources mean that there are several biomass power plants in the state. The state’s most valuable crop, corn, is used in the state’s 22 ethanol plants, which have the capacity to produce 1,147 million gal/year of ethanol.[3]

Consumption and prices

As seen in the pie chart to the right about 25 percent of the state’s consumed energy goes to transportation. Residential users consume just above 21 percent of that total. Commercial needs account for 18 percent of the state’s energy consumption. Industry, consumes the most, 35 percent of the state’s total consumption. Industry is also the state’s largest consumer of natural gas, consuming more than one-third of the state’s total natural gas consumption. The state top manufactured goods are computers and related goods, machinery and food products. Most of the energy used in the state is in the form of petroleum, followed by natural gas and coal.[3]

Gasoline, used in transportation, accounts for 50 percent of the petroleum consumed in the state. Per capita petroleum consumption in the state is about two-thirds lower than most other states.[3] Generally the price of gasoline in the state tracks closely to the national average.[4] The state charges as 28.6 cents per gallon gas tax, making it the state with the 19th highest gas tax.[5] Minnesota requires motor fuel to be blended with 10 percent ethanol, one of a few states to have such a requirement, according to the U.S. Energy Information Administration (EIA).[3]

Comparisons tables

The table below compares Minnesota’s consumption and spending for energy, as well as prices for natural gas and electricity, and carbon emissions to those of Wisconsin, which has similar population, resources and consumption needs because of climate and geography. Also given are the U.S. averages and the state rankings. All rankings are from highest to lowest, so, for example:

  • Per capita income in Minnesota is much higher than in Wisconsin and the U.S. national average.[3]
  • Minnesota and Wisconsin are very similar in their population, energy consumption and energy spending figures.[3]
  • Minnesota has a higher per capita energy consumption level than Wisconsin and the U.S. average.[3]
  • Minnesotans spend slightly more for their energy, per capita, than those in Wisconsin.[3]
  • Minnesota has the 44th lowest natural gas prices in the nation, although Wisconsin has the nation’s second lowest natural gas price.[3]
  • Minnesota has lower electricity prices than Wisconsin, ranking six places below its neighbor.[3]
  • Minnesota is ranked with the 24th highest carbon emissions, four spots higher than neighboring Wisconsin.[3]
Consumption and Expenditures Comparisons Summary
Type MinnesotaWisconsinU.S. Figures
FigureU.S. Rank*FigureU.S. Rank*Totals
Population5.4 million215.7 million20313.9 million
Per Capita Income Average$46,22712$40,53727$42,693
Total Consumption1,867201,7892197,301 quadrillion BTU
Per Capita Consumption3491831324312 million BTU
Total Spending on Energy$24,31621$24,35620$1,394,088 million
Per Capita Spending on Energy$4,54723$4,26632$4,474
Price of Natural Gas, dollar per thousand cubic feet$8.6444$8.2749$12.48
Price of Electricity, cents per kWh12.202013.921412.31
Total Carbon Dioxide Emissions, million metric tons (2010)93.42499.2205,631
*Rank is from highest to lowest.

See also: State Energy Rankings to compare all 50 states
Consumption of Energy For Heating Homes in Minnesota
Source Minnesota 2011 USA Average 2011
Natural Gas 66.7% 49.5%
Fuel Oil 2.9% 6.5%
Electricity 16% 35.4%
Liquid Petroleum Gases (LPG) 10% 5%
Other/None 4.4% 3.6%

Production and transmission

In 2011 Minnesota produced 125.1 trillion BTU of nuclear energy, 1.51 percent of national production. Minnesota produced 159.3 trillion BTU of biofuels in 2011, 8.3 percent of the U.S. total. Minnesota also produced 144.2 BTU from what the U.S. Energy Information Administration classifies as ‘other’ renewable energies.[6]

Energy production by type in Minnesota, 2011
Type Amount Generated
(trillion BTU)
% of State % of USA
Nuclear 125.1 29.18% 1.51%
Biofuels 159.3 37.16% 8.3%
Other 144.2 33.64% 2.02%

Electricity produced and consumed in Minnesota comes primarily from coal, almost all of which is shipped from Montana and Wyoming. Coal makes up almost half of Minnesota’s net energy generation. In addition, the port of Duluth ships almost 20 million tons of coal each year.[3]

Minnesota also has two nuclear power plants, Prairie Island and Monticello, both of which are licensed to run until at least 2030. These two plants provide around 25 percent of the state’s needed electricity.[3]

Minnesota also has the largest oil refinery in a state that doesn’t produce any oil, Pine Bend Refinery. Minnesota has another oil refinery, St. Paul Park Refinery. Both refineries process oil that comes primarily from Canada into gasoline, jet fuel and other products like asphalt. Together these refineries have the capacity to process 348,500 barrels of oil a day.[3] Minnesota also produces large amounts of ethanol, with 22 ethanol producing plants with a capacity to produce 1,147 million gallons of ethanol per year. Renewable energy accounts for 25 percent of the state’s net energy generation. These resources include wind, hydropower, landfill gas, wood waste and municipal solid waste.[3]

Wind energy is also central to the state’s energy portfolio. Minnesota is in the top ten wind energy states in terms of total capacity and generation. Wind energy makes up 14 percent of the state’s total energy generation.[3]

The growth of wind energy in the state has lead to an increase in the amount of power generated by independent power producers. The amount of power generated by independent power producers doubled between 2003 and 2012 and now makes up 14 percent of the power generated in the state.[3]

There are three types of utility providers in Minnesota. Cooperatives, are member-owned and governed by a board of elected members; there are 45 cooperative utility companies in Minnesota.[7] Minnesota also has investor-owned utilities, of which there are five.[8] Finally, municipal utilities are government owned utilities run by a city. There are 125 municipal electric and 18 gas municipal gas utilities in Minnesota.[9]

Where Electricity Comes from in Minnesota[10]
Type Amount Generated (MWh) % of State** % of USA**
Petroleum-Fired 4 0.1% 0%
Natural Gas-Fired 356 8.73% 0%
Coal-Fired 1,980 48.54% 0%
Nuclear 835 20.47% 0%
Other Renewables 843 20.67% 0%
Total Net Electricity Generation 4,079 100% 0%
**Note: Because the EIA does not include all of a states' energy production in these figures, therefore the EIA totals do not equal 100 percent. Instead we have generated our own percentages.

Energy policy

Policy Issues

This text is quoted verbatim from the original source. Any inconsistencies are attributed to the original source.

The higher price of electricity in Minnesota may result from the fact that even though almost half of electricity in Minnesota comes from coal, (a low-cost source of energy); coal energy generation is heavily regulated because of its carbon emissions. Several new studies claim that in coal-dependent states like Minnesota have higher electricity prices are the result of the Renewable Portfolio Standard (RPS) that mandates a minimum amount of renewable energy (which is more expensive than coal or natural gas) be used for generating electricity.[11][12]
See also: Fracking in Minnesota

Energy policy is made, executed and influenced by many organizations, both public and private, and is codified in the laws and regulations of the state.

Minnesota has long prioritized energy efficiency programs as a way to save consumers money and promote energy conservation.[13][14] Minnesota is ranked 11th on the Energy Efficiency Scorecard produced by the American Council for an Energy-Efficient Economy, 12 places higher than neighboring Wisconsin.[15] For a full explanation of how the ACEEE calculates this ranking see the executive summary of their report here: DocumentIcon.jpg See report: [1]

In 2007 Minnesota passed legislation creating the state’s RPS. By 2025, 25 percent of the state’s energy from public utilities must come from renewables including solar, wind, hydropower, hydrogen or biomass. For any public utilities that own a nuclear plant, they must provide 30 percent renewable energy by 2025, of which 24 percent must be from wind, 1 percent from solar and the remaining 5 percent from hydropower, hydrogen or biomass. In addition public utilities must have an additional 1.5 percent of their net generation come from renewables by 2020, 1 percent of this must come from solar, and of that 10 percent must come from solar with a capacity of 20 kilowatts or less. The Minnesota Public Utilities Commission is put in charge of carrying out this mandate. This law also creates a renewable energy credit program that allows those with more than required renewable energy to sell credits to utilities that aren’t providing enough renewable energy to meet the mandate. These credits can be traded between states.[16][17] There are differing estimates about the economic impact of these mandates in terms of costs that may affect prices and jobs, as well as the impact on the environment and pollution. Thus, for example, there are many new studies of what is called the "rebound effect" which refers to the fact that "some of the theoretically estimated gain in energy efficiency will be eroded as consumers consume additional goods and services."[18][19]

Major legislation

  • Act 216B.1691, (2007) created the state’s Renewable Portfolio Standards. These rules mandate 25 percent renewable energy by 2025 for all public utilities, except Xcel Energy that must have 30 percent renewable energy by 2025.[20][21]
  • Act 239.7911, (2005) sets a goal of having 30 percent of the state’s gasoline come from biofuels by 2025. The act also creates a task force to help meet this goal.[22]
  • Act 216B.241, (2007) the Next Generation Energy Act requires the commissioner of the Minnesota Public Utilities Commission to establish goals for energy conservation. The funds for these goals come from public utilities, that are required to spend 1.5% of retail sales on conservation programs. Some of this funding will go to grants researching new technologies to help with energy conservation. The commissioner may also create requirements for public utilities to invest in energy efficiency and conservation improvements.[23][24]

Government agencies and committees

  • Within the Minnesota State Legislature there are two standing committees that deal with energy issues: the Senate Energy Policy Committee and the Senate Environment and Energy Committee.
  • The Minnesota Public Utilities Commission (PUC) regulates all public utilities in the state that provide landline telephones, electricity and natural gas. The PUC oversees the construction of all major utility projects including power plants, transmission lines, large natural gas and petroleum pipelines, and wind generation plants.[25]
  • The Minnesota Division of Energy Resources promotes energy conservation, efficiency and renewable energy development. This State Energy Program (SEP) has pushed the delivery of gasolines with ethanol, known as E85. This SEP has also provided funding to increase energy conservation in new residential buildings. This division also provides grants, loans and savings sharing agreements to promote energy conservation in the commercial and industrial sector.[26][27]

Major organizations

Energy Policy
Policypedia energy logo.PNG
Energy policy in the United States
Energy terms and definitions
Fracking in the United States
  • The Center for Energy and Environment is a non-profit providing energy efficiency programs for consumers.[28]
  • The Metropolitan Energy Policy Coalition is a group of commissions from several counties in Minnesota that are working towards and energy independent state. Organized in 1999 this groups promotes energy efficiency, conservation and the development of renewable energy.[29]
  • Fresh Energy is a local non-profit that promotes renewable energy. This non-profit was originally called Minnesotans for an Energy-Efficient Economy and was founded in 1990.[30]

In the news

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See also

External links


  1. These figures come from the EIA State Profiles and Energy Estimates, Minnesota Overview. Statistics for population and per capita income are for the year 2012; consumption and spending estimates are for 2011; and prices are for October 2013
  2. Minnesota Overview, accessed Feb. 14, 2014
  3. Cite error: Invalid <ref> tag; no text was provided for refs named facts
  4. Average&city2=Minnesota&city3=&crude=n&tme=60&units=us “Gas Buddy”, “Historical Gas Charts,” accessed February 14, 2014
  5. “Tax Foundation”, “State Gasoline Tax Rates, 2009-2013,” accessed February 14, 2013
  6. “U.S. Energy Information Agency”, “State Energy Data System, Production,” accessed February 18, 2014
  7. “Public Utilities Commission,” “Cooperatives,” accessed February 15, 2014
  8. “Public Utilities Commission”, “Investor-owned electric utilities,” accessed February 15, 2014
  9. “Public Utilities Commission”, “Municipals,” accessed February 15, 2014
  10. These figures come from the EIA State Profiles and Energy Estimates Minnesota Overview, accessed Feb. 14, 2014
  11. Energy Policy & the Environment Report, No. 10 February 2012, "THE HIGH COST OF RENEWABLE-ELECTRICITY MANDATES," by Robert Bryce, accessed Feb. 13, 2014
  12. According to a report called "The Status of Renewable Electricity Mandates in the States," by the nonpartisan Institute for Energy Research, the cost of electricity in states with RPS were on average 38 percent higher in 2010 than in states with not RPS.
  13. “ACEEE”, “Minnesota,” accessed February 15, 2014
  14. “Minnesota Department of Commerce, Division of Energy Resources”, “Energy Policy and Conservation Quadrennial Report,” accessed February 15, 2014
  15. “ACEEE”, “State Energy Efficiency Policy Database,” accessed February 13, 2014
  16. “The Office of the Reservoir of Statutes”, “216.1691 Renewable Energy Objectives,” accessed February 15, 2014
  17. “Database of State Incentives for Renewables & Efficiency”, “Minnesota,” accessed February 14, 2014
  18. “International Risk Governance Council”, “The Rebound Effect: "Implications of Consumer Behavior for Robust Energy Policies,” accessed February10, 2014]
  19. "Scientific American, "How Bad Is the Rebound from Energy Efficiency Efforts?" May 21, 2013, accessed February 10, 2014
  20. “The Office of the Reservoir of Statutes”, “216.1691 Renewable Energy Objectives,” accessed February 15, 2014
  21. “Database of State Incentives for Renewables & Efficiency”, “Minnesota,” accessed February 14, 2014
  22. “The Office of the Reservoir of Statutes”, “239.7911 Petroleum Replacement Promotion,” accessed February 15, 2014
  23. “The Office of the Reservoir of Statutes”, “216B.241 Energy Conservation Improvement,” accessed February 15, 2014
  24. “ACEEE”, “Minnesota,” accessed February 15, 2014
  25. “Public Utilities Commission”, “Home,” accessed February 15, 2014
  26. “NASEO”, “Minnesota,” accessed February 15, 2014
  27. “Minnesota Department of Commerce”, “About us,” accessed February 14, 2015
  28. “Center for Energy and Environment”, “Overview,” accessed February 15, 2014
  29. “Metropolitan Energy Policy Coalition”, “Home,” accessed February 15, 2015
  30. “Fresh Energy”, “About Us,” accessed February 15, 2014