Comments to Minnesota PUC on Xcel Distribution Capacity Procurement proposal

STATE OF MINNESOTA

BEFORE THE PUBLIC UTILITIES COMMISSION

COMMENTS OF THE R STREET INSTITUTE

The R Street Institute (R Street) submits these comments in response to the Notice of Comment Period issued by the Minnesota Public Utilities Commission (Commission or PUC) on Oct. 16, 2025. R Street appreciates the opportunity to offer its perspectives on this topic as the Commission considers approving Xcel Energy’s CapacityConnect (CC) program. The comments provided do not address all questions raised in the Commission’s Notice; however, R Street may address them in response to other initial comments filed.

Introduction

The proceeding was initiated pursuant to the Commission approving a settlement in the Xcel Energy Integrated Resource Plan (IRP) proceeding whereby Xcel would submit a proposal to implement a Distributed Capacity Procurement (DCP) proposal. The initial DCP proposal as outlined in Xcel’s IRP would allow Xcel to source, develop, install, and control certain types of distributed energy resources (DER). The Commission’s IRP Order directed Xcel to submit a more detailed version of that proposal along with additional requirements, including a deeper discussion on the purpose and use of a Distributed Energy Resources Management System (DERMS).

The initial DCP filing, now christened “CC,” is the subject of this docket. As described in more detail below, R Street recommends that the Commission reject Xcel’s filing. In the event the Commission decides it is interested in continuing the CC proposal, R Street provides several recommendations to improve it and recommends that Xcel refile the proposal after completion of Phase 1 of C*C and in response to the recommendations of R Street. At a minimum, the Commission must ensure Xcel does not exercise monopoly power at the expense of other competitive and potentially lower-cost alternatives, including by prohibiting utility ownership of Distributed Energy Resources (DER). Furthermore, Xcel’s proposal fails to describe the costs, goals, organization, or operation of this proposal adequately. Considering the substantial cost, the Commission must not delegate to Xcel the sole responsibility of carrying out such an ill-defined proposal. Lastly, R Street is concerned that the role and use of DERMS is not adequately described, nor does Xcel put DERMS in the broader context of its broader grid modernization initiatives, including the potential for a distribution system operator or how it fits in an atmosphere where its underlying grid architecture should be evolving along with technological changes.

See the full regulatory comments with citations below: