House file 292986: lawmakers hear testimony on requiring utilities to use virtual power plants to cut system peaks
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Summary
Representative Kraft's bill would require utilities to reduce system peak using third-party procured virtual power plants (VPPs), targeting 5% peak reduction by 2028 and 10% by 2032; the Department of Commerce and energy advocates testified in favor while Xcel Energy urged a less-prescriptive regulatory path.
Representative Kraft moved House File 292986 to be laid over for possible inclusion and outlined a bill aimed at reducing utility system peaks by deploying virtual power plants (VPPs) that aggregate distributed energy resources. Under the proposal, public utilities would be required to reduce system peak by 5% by 2028 and 10% by 2032, procure resources through a neutral third-party RFP and incorporate VPP plans into integrated resource plan (IRP) filings with an off-ramp for technical or financial infeasibility.
Assistant Commissioner Sydney Lieb of the Minnesota Department of Commerce testified in support, describing VPPs as aggregation systems that can rapidly turn existing distributed generation, storage and demand response into grid-scale resources that reduce peak exposure and wholesale market costs. Lieb told the committee that recent MISO market reforms have increased the value of peak-mitigation resources and cited high peak auction prices as context for the bill's urgency. The department also recommended consumer-protection measures, including standard contract terms, disclosure forms, opt-out processes and clear dispatch/notice rules.
Energy advocates including Patty O'Keefe of VoteSolar, Bobby King of Solar United Neighbors and Jessica Fishman (Kite Rocket) testified that VPPs are an already-deployed tool in other states that can reduce reliance on costly peaker plants, lower system costs and improve resilience. Bobby King presented a Brattle Group-based analysis applied to Xcel territory estimating $663.5 million in savings by 2030 if VPPs meet 10% of peak demand in that area.
Jim Pearson of Xcel Energy responded to members' questions by urging a less-prescriptive legislative approach that allows utilities and the Public Utilities Commission (PUC) to develop proposals via public regulatory processes. Pearson said details matter and cautioned that not every VPP design is cost effective; he urged careful proof in PUC filings. Representative Kraft said the bill targets the distribution portion of the grid (back-of-meter customer aggregation) rather than front-of-meter utility-owned batteries, and argued that legislative targets are appropriate given monopoly utility incentives to build infrastructure.
Committee members explored trade-offs between legislative mandates and regulatory flexibility, raised questions about the interaction with regional wholesale markets (MISO), and discussed practical issues such as measurement, potential impacts on distribution reliability and the role of third parties versus utility-owned resources. Several members noted precedent for legislative push in past energy policy changes and emphasized the need for public oversight.
After testimony and extensive Q&A, the committee laid HF292986 over for possible inclusion. The transcript records robust stakeholder support from the Department of Commerce and multiple clean-energy organizations and a cautious, detail-driven response from an investor-owned utility representative.
Next steps cited in the hearing: continued stakeholder engagement and regulatory coordination if the bill advances.
