Your Utility Bill and Minnesota’s Energy Future

Every household depends on energy, but understanding what drives utility bills and what we can do when those costs become unaffordable can be complicated. From the energy we use to heat and cool our homes to the efficiency of our buildings, many factors can affect how much Minnesotans pay each month. For households already facing high energy bills, a sudden cost increase or an unexpected bill can quickly become a challenge.

“Qué Onda Minnesota,” a podcast from COPAL (Communities Organizing Latine Power and Action) and hosted by Monse Perez Barrios, sat down with Natalie Cook, coalition manager at Clean Heat Minnesota, Carmen Carruthers, outreach director at the Citizens Utility Board of Minnesota, a nonprofit consumer advocacy organization, and Cameron Kadlubowski of Ecolibrium3, a Duluth-based nonprofit providing residential energy-efficiency services. Together, they explained the basics of utility bills and energy burden, resources for households struggling with energy costs, and ways Minnesotans can make their homes more efficient and affordable. The conversation also covered Minnesota’s “Cold Weather Rule” and what households should know as they prepare for winter.

Whether you’re trying to understand your utility bill, looking for ways to lower your household’s energy costs, or simply want to learn more about how Minnesota’s energy system affects families, this conversation offers practical insights into energy affordability, home efficiency, and planning for a more affordable energy future.

Check out some of their conversation below, edited for length and clarity.

What factors have the highest impact on your monthly utility bills?

Carmen Carruthers: Utility rates can vary significantly across Minnesota depending on the type of utility serving your home. We have three different types of utilities: investor-owned utilities, municipal utilities, and member-owned cooperatives. Our utility bills are comprised of two big parts: fixed costs and variable costs. One of the biggest fixed costs is the basic service charge, which can vary dramatically depending on where you live.

For example, People’s Cooperative near Rochester has a basic service charge of $61.50 before you even turn on a light, compared to about $6 for Xcel customers in the metro. The difference is largely because rural utilities have fewer customers spread across longer distances, meaning fewer people are sharing the cost of maintaining that infrastructure.

Can utility companies come to the Minnesota Public Utilities Commission (PUC) and ask for a rate increase every year?

Natalie Cook: It is generally up to those companies how often they file a rate case. In practice, we see some utilities on a pretty clear schedule, while others, if you look back over the last 10 or 15 years, file with more or less frequency. Really, it’s up to the utility when they want to file and when they feel like they want to make that case.

Then it’s a really intensive process. The utility comes and makes its case, and folks like CUB and other organizations can intervene and really dig into the details. The public gets to have a say as well. We often see a lot of public comments on a rate case. People get to write to the PUC and be on the record saying how the proposed increase will impact them, their lives, their budgets, and their bills, as well as what they want to see the rate be instead.

At the very end of a long process, the PUC — five commissioners appointed by the governor to six-year terms—will decide whether they agree with the utility or think the rate should be different, and then set that rate.

What does energy burden look like to you?

Cameron Kadlubowski: As Carmen mentioned, 6% of your gross annual income is usually the threshold for whether your energy costs are considered affordable. You can think of this similarly to the housing affordability threshold, where about 30% of your income is considered affordable. It’s the same sort of thing with 6% for energy.

In our region, we’ve done some data analysis and found that around 32% of Duluth households are above that 6% annual income threshold. So, about a third of our households are paying more for energy than what’s considered affordable.

When we do our work, we track how much households are paying right now, help them make improvements, and see how low we can get that number. Additionally, those dealing with higher energy burdens are often facing compounding challenges. If you have a lower income, you’re already more likely to have a higher energy burden, and you’re also more likely to live in older, less efficient housing or have less efficient appliances.

These factors can create a perfect storm where people who are already struggling are put in the worst possible scenarios, causing their energy burdens to skyrocket. A lot of the work that we do is focused on tackling those energy burdens.

Interested in learning more?

Stream the full podcast episode below. You can also learn more about and subscribe to “Qué Onda Minnesota” here.