State Agency: Big Stone Proponents Underestimated Costs

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by Staff, Minnesota Center for Environmental Advocacy and Fresh Energy. • The Big Stone II proponents underestimated their costs at every turn and overestimated the costs of alternatives, a new analysis done for the Minnesota Public Utilities Commission stated Wednesday.

The report by Boston Pacific largely supported the risks and threats to ratepayers identified by the five energy and environmental groups who have opposed construction of the 580 megawatt coal-fired plant just across Big Stone Lake in South Dakota.

Boston Pacific’s report found that Big Stone II’s utility company partnership underestimated the costs of building Big Stone II and underestimated the cost of carbon dioxide regulations. Those findings are consistent with the position that the Minnesota Center for Environmental Advocacy, Fresh Energy, Izaak Walton League of America, Union of Concerned Scientists and Wind on the Wires have held for nearly three years. The utilities also overestimated the cost of an alternative to a coal-fired plant and got the cost of buying coal and natural gas right for the year 2012 but should have used other costs for succeeding years.

“For the second time, an independent analysis has largely agreed with us,” said Beth Goodpaster, an MCEA lawyer who also represents the other four energy and environment groups. “In May, the two administrative law judges agreed with us, and now the consultant hired by the commission has said this plant is worse than the utilities have painted it. We certainly hope the public utilities commissioners will now follow these very good analyses and reject the Big Stone Project.”

The analysts at Boston Pacific forcefully stated their findings about the numbers used by the five utilities, led by Otter Tail Power Co. of Fergus Falls. “In general, we believe the range of emissions, construction and fuel inputs used in the applicants analysis were not appropriate: put another way, they were out of line with current ‘best practices’ resource selection methodologies,” the report states.

Boston Pacific studied the cost of coal as a fuel, the cost of constructing a new coal-fired power plant, and the present and future costs of carbon dioxide as it will be regulated. Each of these costs affect the price to the electricity producer at the plant and the ratepayer at home. To take one example, the utilities pegged the cost of carbon dioxide regulation at $9/ton, but the analyst recommended prices ranging up to $60 per ton.

“The Commission-selected independent analysts agreed with our interveners’ analysis that the utilities have not taken a responsible look at the risks and likely future costs of constructing the plant or paying for future fuel, and the costs that would fall on ratepayers for building a project that emits millions of tons of greenhouse gases just as our nation is on the brink of cutting global warming pollution to protect our climate,” said J. Drake Hamilton, Science Policy Director at Fresh Energy.

The intervening groups have testified that energy efficiency, conservation, and renewable resources would be cheaper, cleaner, and more effective to meet not only future demands in baseload power but also to meet Minnesota’s Renewable Energy Standard. Minnesota must, by law, consume 25% of its power from renewable sources such as wind by the year 2025. Building the Big Stone II power plant, the groups have said, would be a step backward in meeting that goal or the Governor’s Climate Change Advisory Group recommendations to curb global warming pollution in the state.

“The energy and environment groups in the case commend the commission for delaying the project to find its true cost,” said Bill Grant, Midwest Office Director of the Izaak Walton League.

The Minnesota PUC has the final say on the permit to build transmission lines into Minnesota to serve the plant. Without those, the applicants have said they could not build the plant. The utilities commission is expected to make a final ruling in January.