The Minnesota Public Utilities Commission (PUC) unanimously approved the Certificate of Need for a transmission line project necessary for the construction of the Big Stone II coal-fired power plant in Milbank, S.D.
Despite a room full of citizens, many holding signs and some dressed in animal costumes, opposed to the plant’s construction because of environmental concerns, the PUC did not deliberate the coal-fired facility itself or the environmental impacts that it may have, focusing instead on the cost of the project and its implications for utility rate payers.
The five-member PUC was to issue a final ruling last June, but newly appointed Commissioner J. Dennis O’Brien requested further review of the project, and an inquiry was approved by a vote of 3-2. Boston Pacific was hired as an independent consultant to assess carbon dioxide emission costs, construction costs and fuel prices for Big Stone II.
Dr. Steve Rakow, a rates analyst from the State Office of Energy Security testifying on the commission’s alternative option decisions, stated that because the Boston Pacific report did not concern itself with issues like mercury emissions or water usage that his findings did not take such things into consideration.
“Boston Pacific wasn’t paid to consider more than the three cost concerns,” responded Commissioner Thomas Pugh. The commission proceeded with a primary concern of ensuring ratepayers were not left to carry the burden of the $1.3 billion facility. To that end, the commission attached conditional monetary caps to the construction of the project and future carbon dioxide tax expenses. Since no carbon tax has been established by Congress, there is an open debate as to what those costs will be. Environmental groups expect that global warming concerns will result in a relatively high carbon tax, meaning Big Stone II would be less viable economically. Industry estimates the future carbon tax will be low and the plant will be more profitable.
“We appreciate the the PUC saw the need for these transmission lines and granted the requested permits,” said Mark Rolfes, Big Stone II project manager. “We’ll need to wait until the written conditions are available from the PUC to determine how they affect the project.”
The PUC also stuck to its limited purview over the project, considering only the merits of the Minnesota portion of the transmission project and not the Big Stone II plant itself. Despite the fact that Big Stone II will be constructed a short distance from the Minnesota-South Dakota border on the headwaters of the Minnesota River and that residents of Minnesota will be the recipient of 45 percent of the electricity generated by the facility, only 12 percent of the entire project fell under the jurisdiction of the PUC.
“This is a tremendous disappointment from the PUC, a milquetoast decision that means that if Big Stone II gets built, shareholders and ratepayers will have to bear the extraordinary costs of coal and carbon that Otter Tail Power did not account for, not to mention the pollution,” said Darrell Gerber with Clean Water Action. “It just doesn’t make sense.”
The opposition groups will likely exercise one of their few remaining options and bring the PUC’s decision before the Minnesota Court of Appeals.
“This is certainly not the end of the road,” remarked Cesia Kearns, organizer with the Sierra Club.
“We know that coal is a risky financial gamble — coal plants are dropping like flies around the country, and with a carbon constrained future, it’s likely Big Stone II will join the ever-growing list of abandoned projects.”
The Certificate of Need allows the five utilities involved in the Big Stone II project to construct and upgrade 112 miles of transmission lines in western Minnesota. The plant itself is not expected to be completed and online until 2015.