Carbon regulation will cost Big Stone II, but how much?

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Utilities trying to build new power plants should plan on paying a premium to burn fossil fuels, the Minnesota Public Utilities Commission (PUC) said in a vote Thursday.

Environmental groups seized on the news as evidence that Big Stone II, a proposed coal-fired power plant near the Minnesota-South Dakota border, is not financially feasible to build.

“Today’s decision tells utilities global warming pollution won’t be cheap,” said Michael Noble, executive director of Fresh Energy, a St. Paul-based clean energy advocacy group.

The utilities commission, however, did not specifically address how the vote would affect Big Stone II, and a project spokeswoman said there are questions whether it will impact the plant.
Dan Haugen :: Carbon Regulation Will Cost Big Stone II, But How Much?
The Legislature directed the utilities commission this year to estimate how much added cost power plants should plan on paying in the future for releasing greenhouse gas emissions. New regulations being discussed at the state and federal level, including various carbon-cap-and-trade systems, would penalize companies with high emissions.

Based on the most likely proposals being discussed, the commission said today that the figure is likely to be between $4 and $30 per ton of carbon dioxide released. The number is important because companies that want to build new power plants in Minnesota need to prove to the state that less-polluting options couldn’t save or generate the same energy for less money.

A group of five Midwest utilities trying to build Big Stone II says the coal plant is the cheapest option. The formula they used to reach that conclusion assumes for a $9 per ton cost on carbon dioxide emissions. Opponents argued the penalty is likely to climb much higher than that, and as a result wind or other renewable energy sources are a better investment.

“When we were arguing before that the cost should be $20 a ton or $30 a ton, we were told we were crazy,” said Beth Goodpaster, lawyer for the Minnesota Center for Environmental Advocacy. “Today’s vote shows we were right. We will use this to push Big Stone II utilities to examine a reasonable range of carbon costs, something they have not done in the past.”

Kris Kling, a spokeswoman for Big Stone II, said it was her understanding as of this evening that the range voted on earlier today wouldn’t be applied retroactively to the project. “Regardless, we have modeled with $9, which is within that range,” Kling said.

Burl Haar, executive secretary for the PUC, said today’s vote established the range but it did not determine how it would be applied to specific projects, including Big Stone II. That, he said, is left for another day.

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