Minn. Approves Incentive Gas-purchasing Plan

Fortnightly Magazine - September 1 1996
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The Minnesota Public Utilities Commission (PUC) has approved a performance-based gas-purchasing plan for Minnegasco, a natural gas local distribution company (LDC).

The incentive plan contains two benchmarks for measuring the utility's gas-purchasing performance: 1) a market-based benchmark with demand and commodity components, and 2) a comparison benchmark consisting of a volume-weighted, average, total annual gas cost per million British thermal units for the state's three largest LDCs (after Minnegasco itself). The plan also contains a "symmetrical" sharing mechanism that treats costs and savings equally in determining benefits to ratepayers and shareholders under the plan. The PUC found that the plan, as modified pursuant to a settlement agreement reached in the case, satisfied the requirements of a new state law governing such mechanisms. It noted that the approved plan, the first submitted under the new statute, should provide valuable information on how to benefit shareholders and ratepayers while encouraging the LDC to increase efficiency and lower its costs. Re Minnegasco, Docket No. G-008/M-95-465, May 21, 1996 (Minn.P.U.C.).

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