The Public Utilities Commission (PUC) Thursday punted on a long-anticipated decision on whether to approve a certificate of need for power lines in Minnesota to carry nearly half the electricity from the proposed 500-megawatt Big Stone II power plant in Millbank, S.D.
The five-member panel deadlocked on a 2-2 vote, and then approved an unprecedented plan to gather more information on carbon costs of the coal-fired plant and on construction costs — with a nod toward burning natural gas rather than coal.
No deadline was set for the next round of examination in what is seen as a major environmental issue that could seal the fate of the $1.5 billion plant proposed four years ago to be built on the South Dakota side of Big Stone Lake straddling Minnesota’s western border.
Otter Tail Power Company of Fergus Falls, Minn., led a consortium of utilities to build the plant.
Dan Sharp, a spokesman for Big Stone II, has said it’s doubtful the plant would be built if the PUC denies the certificate.
At Thursday’s hearing it was apparent from the start that a deadlock was likely when Commissioner Dennis O’Brien, the newest panel member, announced he wanted more study. From there, Commissioners LeRoy Koppendrayer and David Boyd indicated support for the certificate while PUC Vice Chair Phyllis Reha and Tom Pugh said they’d oppose.
It’s expected to take several months before an outside expert can be hired and formulate a report. More hearings are likely.
South Dakota regulators have already approved the plant, and all that was needed was the PUC’s certification for plant operators to build a new transmission line into Canby, Minn., and from there upgrade existing lines to Granite Falls. Another line from Ortonville to Morris would also be upgraded to carry 45 percent of the plant’s power.
Two years ago, PUC administrative law judges approved a certificate for the plant when it was much larger at 630 megawatts and included seven utilities. But the hearing process was restarted after two companies — Great River Energy and Southern Minnesota Municipal Power — backed out.
Last month, however, a two-judge panel rejected the certificate, which was earlier recommended by the Minnesota Department of Commerce.
Why the change? In a word: coal.
Emissions from burning coal have encountered disfavor in Minnesota and across the United States because climate changing greenhouse gases have been linked to carbon in the air.
Last year Gov. Tim Pawlenty signed the Next Generation Energy Act that required an aggressive reduction of carbon emissions: 15 percent below 2005 levels by 2015, 30 percent lower by 2025, and 80 percent lower by 2050.
Clearly, the state’s carbon-reduction policy has affected the PUC’s drawn-out deliberations.
But another carbon-reduction policy, this one emerging, has played a role. It’s the so-called “cap and trade” policy being pushed on a regional level by Republican Pawlenty and Wisconsin’s Gov. Jim Doyle, a Democrat, along with a half dozen other states and Ontario.
The concept is to place an allowable emissions ceiling (“cap”) on carbon and then to sell emissions credits in a market-driven auction (“trade”) that would effectively increase the cost of pollution and increase incentives for alternative generating methods. The “cap” would be ratcheted down over time, driving the cost of polluting up.
Currently, the U.S. Senate is debating a national “cap and trade” program in legislation backed by Republican Sen. John Warner of Virginia, Democrat Barbara Boxer of California and Independent Joseph Lieberman of Connecticut.
Even if Congress approves the measure, President Bush has threatened a veto. Proponents, however, are optimistic that the bill will eventually be approved because both presidential hopefuls, Republican John McCain and Democrat Barack Obama, have said they support it.
In December, the Minnesota PUC indicated its support for “cap and trade” by setting a value on the per ton cost of emitting carbon gases. The PUC range was $4 to $30.
Big Stone II proponents used $9 a ton of carbon costs in calculating the cost of emissions from the plant. However, the two-judge PUC administrative judges said that was too low.
There was another new state policy in the 2007 Next Generation Act that was at play in the decision, and that is the requirement that Minnesota generate 25 percent of its energy from renewable sources by 2025.
Xcel Energy is already required by state law to generate 30 percent of its power from renewables like wind and solar by 2020.
Opposition to a certificate of need for the plant is led by the Minnesota Center for Environmental Advocacy along with Fresh Energy, the Izaak Walt League’s Midwest Office, the Union of Concerned Scientists and Wind on the Wires.