PUC’s Big Stone II decision smudges new law to reduce carbon emissions

When the Minnesota Public Utilities Commission (PUC) last week approved transmission lines to enable building the $1.3 billion, coal-fired Big Stone II power plant, it poured tons of soot on state’s new law to reduce carbon emissions linked to climate change.   
 
“The PUC ignored the (2007 Next Generation) law and the Legislature,” said Beth Goodpaster, an attorney with the Minnesota Center for Environmental Advocacy (MCEA), a key intervener in the years-long Big Stone case. “The law requires carbon emissions to go down, and with this decision carbon emissions will go up.”
 
According to Dan Sharp, a spokesman for the five-utility consortium that will build the 580-megawatt (mw) Big Stone II plant near Milbank S.D., on Minnesota’s western border, about 4.5 million tons of carbon will be dumped annually into the atmosphere each year, much of it carried into Minnesota by prevailing westerly winds.

The carbon from Big Stone is equivalent to adding 600,000 cars to the road, according to the Sierra Club‘s Cesia Kearns.  
 
Construction to begin next year
Sharp said plant construction would begin in 2010 and be completed about four or five years later, probably early 2015. That is, if the five-utility consortium led by Ottertail Power Co. of Fergus Falls, Minn., accepts PUC conditions for the permit to build or upgrade 112 miles of transmission lines to carry half of Big Stone II’s power to Minnesota consumers. 
 
Among other things, the PUC said that Ottertail’s aging coal-burning Hoot Lake boilers, which  together produce 138 megawatts of power near Fergus Falls, must shut down by 2018; also, the PUC placed restrictive caps on construction costs and future costs of carbon emissions, moves to protect ratepayers from excessive costs. 
 
However, two things are likely: Big Stone’s owners will accept the PUC’s conditions, and environmental advocates will seek to block the permits in court.  MCEA’s Goodpaster said as much immediately after the PUC vote was taken. Sharp said he expects that a lawsuit will be filed once the PUC’s appeal process ends in about a month; regardless, he added that construction plans would proceed. 
 
Some were surprised by decision
The PUC decision caught some by surprise. Last June, the five-member panel split 2-2 on whether to grant a certificate of need for the transmission lines. This came after years of administrative hearings and recommendations by two separate law judges that the need certificate not be approved. 
 
At that June meeting, PUC Commissioner J. Dennis O’Brien abstained from voting and called for still more study. That study, by Boston Pacific, said the Big Stone II consortium had underestimated construction costs and overstated costs of alternatives, giving opponents reason to expect the need certificate would be denied. 
 
Instead, all five PUC commissioners voted to approve the certificate, and gave a green light to building the region’s first major coal-burning plant since Xcel’s Sherco III near Monticello, Minn., was completed in 1987. 
 
Little concern expressed regarding new law
During its deliberations, the commissioners voiced scant concern that Big Stone’s added carbon emissions would run counter to the state’s new law. Instead, the PUC focused on questions of power need and reliability. 
 
While commissioners were unavailable for comment, PUC Executive Secretary Burl Haar insisted that the vote considered the full record, which he said includes consideration of carbon emissions. Opponents strongly disagree that the carbon-reduction law figured into the PUC decision. That, and the fact that the two administrative law judges said the utilities established a need for only a third of the power, are likely points in a legal challenge.
 
Regulators in South Dakota have already been sued by the Sierra Club over emissions of carbon and other pollutants from Big Stone.
 
J. Drake Hamilton of St. Paul-based Fresh Energy put the PUC decision and the carbon emissions issue in perspective. 
 
First, she said, the Next Generation law calls for the state to reduce carbon emissions by 15 percent below 2005 levels by 2015, by 30 percent by 2025, and 80 percent by 2050. The law was approved by a lopsided, bipartisan vote in the Legislature and eagerly signed by Gov. Tim Pawlenty.    
 
Advisory group explored ways to reach mandates
The governor’s Minnesota Climate Change Advisory Group (MCCAG) spent a year identifying ways that the legal mandates could be met. Hamilton said MCCAG set 2005 carbon levels in Minnesota at 157 million tons. 
 
The first mandated reduction of 15 percent by 2015 is about 24 million tons, would have to come before Big Stone II survives all legal challenges and is built.  A focus of environment and energy committees in the 2009 Legislature will be on how those first reductions will be met.   
 
The next reduction of 30 percent below 2005, or about 47 million tons, would be aggravated by Big Stone’s additional 4.5 million tons. Hamilton said this would mean that an additional — and very costly — amount of carbon reduction would have to be obtained elsewhere. 
 
In reality, the amount of carbon reduction that’s needed to meet the 2025 level is considerably higher. It is projected that absent other reductions, carbon emissions by 2025 would increase to about 200 million tons, while the 30 percent reduction translates to a need to get levels back to 110 million tons, or about half the projected amounts.   
 
And the political sparring that has occurred over the first, and easiest, carbon reductions portend even larger political battles in the future. 
 
Indicator of difficulties
An indication of how difficult the decisions will be came about a year ago after Pawlenty, as chair of the National Governor’s Association, crisscrossed the country calling for “bold” initiatives to reduce carbon emissions. Among other highly publicized actions, Pawlenty joined Wisconsin Gov. Jim Doyle, a Democrat, in setting up a regional carbon-reduction plan that embraced the “cap and trade” plan to reduce carbon through free market trade that would add to the cost of pollution. 
 
But when Pawlenty was publicly skewered by conservative columnist Michael Novak and local radio conservative talker Jason Lewis, the governor toned down his green rhetoric and backed off support for recommendations from his own MCCAG. Last February, for example, when his Commerce Department and Pollution Control Agency came up with what was to be the administration’s plan to reduce carbon, almost immediately legislators and environmental advocates roundly condemned the governor’s recommendations as wildly out of step with his own advisory group. 
 
Despite repeated assurances by Commerce that the recommendations would be improved, most of 2009 saw continued stonewalling on sending up the administration’s revised report. And while newcomer Bill Glahn, head of the newly-created Office of Energy Security, said the report was sent up to the Legislature last Friday, his office declined to make the report available.  
 
Meanwhile, the Legislature is moving to establish a newly authorized Energy Commission, whose task will include marshalling carbon-reduction legislation. Both chairs of legislative energy committees, Rep. Bill Hilty of Finlayson and Sen. Yvonne Prettner-Solon of Duluth, have vowed to aggressively push a range of bills.