Overview: The Minnesota Public Utilities Commission (PUC) has been studying the restructuring and unbundling of retail natural gas sales for several years. In April 1995, Minnegasco, the largest local distribution company in the State with 52 percent of the residential business, filed a proposal that included a plan to aggregate small customers who could then choose their natural gas supplier. The PUC rejected that proposal because of unaddressed concerns such as who, if anyone, would be the supplier of last resort, whether system reliability would be affected, and the amount and recovery method for stranded costs. The PUC convened a study group in October 1997 to investigate restructuring issues and in August 1998 directed the group to develop a statewide natural gas unbundling plan within a year. In May 1999, the PUC closed the natural gas unbundling investigation (docket number G-999/CI-99-687) to free the regulatory and energy participants to develop a comprehensive gas and electric utility restructuring/unbundling plan in time for consideration by the 2001 legislature. In September 2000, the Minnesota Department of Commerce noted that it was not in the public interest to restructure gas or electric utility regulation substantially at this time, but rather to place emphasis on energy reliability. New energy legislation passed in 2001 did not address natural gas unbundling, but instead focused on energy conservation, efficiency measures, and reliability.

According to the PUC, no further work has been done to develop retail gas unbundling programs in Minnesota. The fixed-bill programs being offered by the State's two largest gas utilities were suspended by the PUC in July 2007, following a complaint by the Minnesota Office of Attorney General that participating customers had paid substantially more than customers under standard rate plans. The suspension will remain in effect until the PUC "is satisfied that it is in the public interest to resume offering these programs." Neither utility plans to resume offering a fixed-bill program in the foreseeable future.

Legislation enacted in 2007 requires the PUC to establish criteria and standards for decoupling, in which a utility’s revenue would be separate from its energy sales, and allows one or more utilities to participate in a pilot program to assess the merits of decoupling. The PUC contracted with the Regulatory Assistance Project (RAP) to coordinate a stakeholder input process, and held a series of meetings and workshops in the spring of 2008 as part of its mandate to establish criteria and standards for decoupling. The RAP report Revenue Decoupling, Standards and Criteria, completed in June 2008, analyzed the key issues surrounding decoupling and recommended minimum standards and evaluation criteria. Subsequent to receipt of the RAP report, the PUC solicited and received comments on the report from interested parties. It is expected that the issue of setting general decoupling criteria and standards will be brought before the PUC in April 2009.