Purpose

• The bill creates a new requirement in Minnesota law for energy demand forecasting to be included in applications for a Certificate of Need (CN) before the Public Utilities Commission (PUC) for petroleum pipelines. It focuses on pipelines that transport crude oil, motor fuel, or other refined petroleum products, and adds detailed forecasting expectations to guide approval decisions.

Key Definitions (selected)

• Application: The CN filing for a pipeline that transports crude oil, motor fuel, or other refined petroleum products.
• Contiguous states: Iowa, North Dakota, South Dakota, and Wisconsin.
• Demand: The quantity of motor fuel or other refined petroleum products that Minnesota and contiguous states’ consumers are willing and able to purchase.
• Electric vehicle (EV): As defined in state law.
• Forecast period: The 15-year span after the year the CN is filed.
• Fuel efficiency: How far a vehicle can travel on one gallon of motor fuel.
• Motor fuel: A petroleum-derived liquid used to power motor vehicles (excluding certain substances defined elsewhere).
• Motor vehicle: As defined in state law.
• Other refined petroleum product: Any product produced from crude oil other than motor fuel.
• Refinery: A facility that processes crude oil into motor fuel and other refined products.
• Remote work: Working from a location other than the usual place of employment one or more days per week.
• Calendar day: A measure of refinery capacity that accounts for typical operating conditions, including maintenance downtime.

Applicability

• Applies to any applicant seeking a CN for a pipeline that transports crude oil, motor fuel, or other refined petroleum products.

Main Provisions: Demand Forecasts for Motor Fuel

• Each CN application must include separate annual motor fuel demand forecasts for:
  • Minnesota, and
  • Contiguous states (Iowa, North Dakota, South Dakota, Wisconsin), for every year in the 15-year forecast period.
• Forecasts must be derived from multiple factors, with separate year-by-year forecasts, including:
  • Population.
  • Vehicle miles traveled (VMT), considering trends in remote work, mass transit ridership, and VMT reduction targets in Minnesota’s statewide multimodal transportation plan.
  • Fuel intensity and efficiency of motor vehicles using motor fuel.
  • Penetration rates of electric vehicles (EVs), considering federal and state incentives for vehicles and charging stations.
  • Specific capacity expansion plans proposed by a refinery designated to receive crude oil from the proposed pipeline.
  • World crude oil prices and crude oil prices from the proposed pipeline’s supply sources.
  • The impact of price changes on demand by consumers.
• The applicant must specify underlying assumptions for these factors, including a narrative describing how changes could affect the forecast, focusing on:
  • Crude oil prices in the United States, Canada, and globally.
  • Changes in crude oil transportation infrastructure out of Western Canada and into or out of Minnesota and contiguous states.

Main Provisions: Demand Forecasts for Other Refined Petroleum Products

• Each CN application must also include separate annual demand forecasts for other refined petroleum products for:
  • Minnesota, and
  • Contiguous states.
• These forecasts must be derived from the factors that influence demand for each product.

Forecast Period and Related Details

• The forecast period is 15 consecutive years following the year the application is filed.
• Requests demand data for both motor fuel and other refined petroleum products for Minnesota and the contiguous states.

Significant Changes to Existing Law

• Introduces a mandatory, formal energy demand forecasting requirement for CN applications involving petroleum pipelines.
• Expands the information the PUC must evaluate by requiring:
  • Detailed, year-by-year forecasts for motor fuel and other refined products.
  • Consideration of trends such as remote work, EV adoption, and refinery capacity plans.
  • Explicit narrative and methodology outlining assumptions and how changes could impact outcomes (including global oil price dynamics and regional infrastructure changes).

Potential Implications

• Could make CN reviews more data-driven and long-range, potentially affecting pipeline project viability based on projected demand and price scenarios.
• Integrates transportation policy trends (remote work, EVs, transit) and refinery planning into pipeline approval decisions.

Summary of Process Change

• The PUC will review CN applications with enhanced demand forecasts, ensuring future energy demand and price dynamics are considered in decisions about building pipelines that transport crude oil or refined products.

Relevant Terms - certificate of need, CN - Public Utilities Commission (PUC) - petroleum pipeline - crude oil - motor fuel - other refined petroleum product - demand forecasts - forecast period - calendar day (refinery capacity) - consumer - population - vehicle miles traveled (VMT) - remote work - mass transit ridership - fuel efficiency - electric vehicle (EV) - refinery - capacity expansion plans - world crude oil prices - Western Canada - contiguous states