Big Decision II for Big Stone II


The Minnesota Public Utilities Commission heard testimony Tuesday (June 3) on whether to approve 115 miles of power lines in Minnesota intended to connect a proposed second power plant in Big Stone, South Dakota, just across the border from Ortonville, MN in Big Stone County. Opponents of Big Stone II lost a decision in the South Dakota Supreme Court in January, and are trying again at the Minnesota Public Utilities Commission (PUC). While the PUC decision affects power lines and not the plant itself, the power lines are essential to the plant’s operation.

The Big Stone II facility will be coal-fired, using the cheapest energy source available, a fact that has incensed environmental and anti-global warming campaigners. While the specific arguments made on Tuesday focused on the possibility that consumers could bear a high burden of any rising costs associated with the plant, signs carried by plant opponents in the audience made it clear they were propelled by an attempt to stop a large source of carbon dioxide emissions in its tracks.

Opponents, including the Minnesota Center for Environmental Energy and the Clean Up the River Environment/Upper Minnesota River Watershed group, contended that representatives from Ottertail Power Company and its five partners in the Big Stone project have grossly understated cost estimates provided to regulators for both construction costs and likely future federal taxes on carbon dioxide output. These costs, they say, will be passed on to consumers through higher energy prices as companies seek to recoup spiraling costs.

In testimony before the Public Utilities Commission, David Schlissel of Synapse Energy Economics Consultants, one of the chief presenters for Big Stone opponents, described the cost of new coal plants as having “skyrocketed” since Ottertail made its last cost estimate on the power plant, in 2006.

Thirty planned coal plants, Schlissel said, have been canceled and “dozens” more have been put on indefinite hold because of rising cost estimates. Schlissel said the cost increases are driven by the global economy, particularly a boom in coal plant construction in India and China. One example Schlissel cited, in North Carolina and built by Duke Power Company, saw costs rise 50% during construction.

Otter Tail, Schlissel said, has also failed to account for likely federal taxes on carbon dioxide, which could come as early as next year. All three major presidential candidates support stringent proposals that regulate and price such emissions, although each plan varies in its details. Senator John McCain, Schlissel remarked, is a sponsor of one of the toughest.

When Big Stone opponents modeled these new costs, using Otter Tail’s models and data, Schlissel said, they assumed carbon could cost anywhere from $8 per ton to $30 per ton. Typical coal plants emit 3.7 million tons of carbon dioxide per year, meaning Ottertail’s estimates would generate enormous costs if future federal regulation was anything more than minimal — not a likely prospect, said Schlissel.

While Minnesota will ultimately receive about 12% of the Big Stone II plant’s expected output, new transmission lines are a significant part of the project, and are needed to carry more energy, regardless of the source, to meet Minnesota’s rising demand. Representatives from the consortium of power companies behind the Big Stone plant say the lines would be used in the future to carry electricity from wind turbines as they try to meet Minnesota’s requirement that 25% of all power sold in the state come from renewable energy resources by 2025. Furthermore, because power demand throughout the U.S. and Canada is rising dramatically, plants in other states and in Canada that used to sell electricity to Ottertail and its partners now sell most of their power to local markets, and not to Minnesota power companies. The companies behind Big Stone II argued that the new coal plant was needed to make up for this shortfall.

Big Stone II’s opponents acknowledged this in their testimony, but said that coal would not be cost-effective, as the power companies claim, and would not only directly pass on costs to consumers through higher electricity bills, but would also pass on indirect costs through a coal-fired powerplant’s contributions to global warming. Such sources of power produce by far the most Carbon Dioxide per kilowatt of energy generated, according to the Intergovernmental Panel on Climate Change, the leading international climate research group.

The Public Utilities Commission was set up in 1978 to regulate electricity, natural gas, and telephone service and infrastructure in Minnesota, in order to maintain fair rates and access to essential utilities for Minnesota consumers and businesses. Its approval is needed for any new power infrastructure built in the state.

James Sanna is a freelance writer and an intern at the TC Daily Planet.