CenterPoint Energy Inc. could make Minnesota a bigger player in the U.S. renewable natural gas market as the Houston-based multiutility presses forward with efforts to reduce greenhouse gas emissions.
Its Centerpoint Energy Minnesota Gas subsidiary has proposed a plan that would encourage more Gopher State production of renewable natural gas, or RNG, by allowing producers to ship biogas through CenterPoint's distribution system. Meanwhile, a company-backed bill that would create a framework for alternative fuel sales to Minnesota gas customers is advancing through the state legislature.
The revamped approach got underway in February, six months after the Minnesota Public Utilities Commission, or PUC, rejected CenterPoint's pilot project to make RNG available to ratepayers. Since then, CenterPoint has introduced a new carbon policy that includes reducing its gas customers' emissions by 20% to 30% from 2005 levels by 2040.
"For us, it really is about addressing customer emissions," Scott Doyle, CenterPoint's executive vice president for natural gas distribution, said in a May 17 interview. "As politics change and as opinions change and as demographics change, our desire is to be prepared for that change and work with communities and deliver the service that they desire."
RNG is methane waste captured from sources like dairy farms and landfills and processed into pipeline-quality gas. The methane would otherwise escape into the atmosphere, so making use of it helps utilities offset their planet-warming emissions.
Petition encourages RNG production
The new initiatives aim to address issues that the PUC raised with CenterPoint's initial pilot project, including opposition to importing RNG into Minnesota rather than developing in-state capacity.
"[The commissioners] didn't want this to just be purely financial transactions — they wanted it to help the economy of the state," Doyle said. But while there is plenty of potential for RNG production in Minnesota, there is little existing supply, he added.
CenterPoint presented a solution in an April 23 petition to the PUC to allow an RNG interconnection service and tariff for potential biogas producers. The plan would allow producers to flow RNG into CenterPoint's Minnesota distribution system, where it would travel to interstate transmission lines for export or along distribution mains to CenterPoint's utility customers.
The company said it has received more than a dozen inquiries from RNG producers and project developers about utilizing its system. The petition lays out a process in which CenterPoint would first determine whether there is enough pipeline capacity to accommodate the supplies and then conduct a more detailed feasibility study.
Landfills and farmers are the two producer classes most likely to generate enough RNG to meaningfully scale up supplies, Doyle said.
CenterPoint said some potential producers may be too far from its system to make interconnection feasible. The company would charge RNG suppliers more than other customer classes because it anticipates higher up-front and ongoing interconnection costs for biogas providers, including to monitor RNG supply quality. It proposed a $7,500 monthly basic charge and a receipt charge of 15 cents per delivered therm.
Plans to get RNG to ratepayers
The company projected most of the initial RNG supply would likely flow to vehicle fuel producers, which can claim credits through the federal Renewable Fuel Standard and Low Carbon Fuel Standard. However, once CenterPoint identifies in-state suppliers and establishes interconnects, it intends to file with the PUC for a green tariff to sell RNG to Minnesota utility customers who opt to purchase it as part of their natural gas supply.
CenterPoint surveys have shown Minnesotans are interested in supporting RNG, but Doyle acknowledged the size of the surcharge will play a role in the success of any future program.
"As the price goes up, people are less willing, and so there's going to be some of those economics coming into play as we work through it," he said.
Meanwhile, bipartisan legislation proposed by CenterPoint to encourage the use of alternative fuels in Minnesota has moved swiftly through the state legislature. The Minnesota Senate passed SF 3013, the Natural Gas Innovation Act, on May 12.
The bill would establish a process for an alternative resource plan so utilities could seek permission and cost recovery from the PUC to introduce RNG and hydrogen gas into their distribution systems for sale to ratepayers. The bill would also require the Minnesota Department of Commerce to study the potential for in-state RNG supply and power-to-hydrogen projects.