The upcoming Minnesota Public Utilities Commission hearings on new coal plants are considered to be a national test on whether state regulators will allow utilities to build new coal plants in the face of financial risks to ratepayers and investors arising from increased global warming pollution.
At issue is whether the Commission will approve construction of transmission lines associated with the Big Stone II coal plant, proposed to be built across the border in South Dakota but mainly intended to serve Minnesota consumers. The project cannot be built unless the seven utilities seeking to build it prove to the Commission that it is more cost-effective than efficiency investments or renewable energy technologies like wind power.
Thus far, the Big Stone II utilities, like many utilities in the nation, have ignored the substantial financial risks associated with greatly increasing global warming emissions.
Testimony by the Union of Concerned Scientists and other environmental NGOs shows the cost of Big Stone II could increase by 27-33 percent, or $95 million per year on average, when mid-range costs of expected federal carbon dioxide regulations are included.
“Utilities are betting billions of dollars of ratepayer money on the reckless assumption that Big Stone II would be allowed to pollute for free for the several decades it would operate,” said Steve Clemmer, Clean Energy Research Director for UCS. “Building a major new source of global warming pollution like Big Stone II isn’t just an environmental mistake, it’s a financial mistake.”
The Big Stone II proceeding is thought to be the first time in the nation that state regulators have had to decide whether a proposed coal plant is cost effective after plant opponents have presented a thorough analysis of the likely financial impact of global warming laws on the plant. If the Minnesota Commission finds that the plant is not cost-effective given likely future climate laws, it could have a major impact on many of the over 150 other coal plants proposed in other states.
According to the testimony, conventional coal plants like Big Stone II will be the first target of federal global warming laws, and rightly so. Coal plants are America’s top source of heat-trapping CO2, emitting more than all cars, trucks, buses, planes, and trains combined. Big Stone II alone would emit roughly as much global warming pollution as 700,000 cars, but unlike cars, it will operate for decades.
The testimony also shows that the utilities significantly underestimated the potential for energy efficiency, wind power, and other cleaner alternatives that could cost-effectively displace the need for the proposed coal plant.
Indeed, a state-commissioned report in North Carolina may undercut Duke Energy Corp.’s proposed 2 800 MW Cliffside coal plants – it projects the state can cover as much as half its expected growth in demand for power- at a lower cost – by using renewable sources and conservation.
Duke claims that conservation and renewable energy are too uncertain to rely on as key power sources.
The report says that while new coal plants would provide electicity at 6-7 cents per kilowatt-hour (8-9 cents including transmission costs), conservation technologies would cost the equivalent of 3 cents per kilowatt hour, landfill gas would cost 5 cents per kilowatt hour (7 cents with transmission costs), solar hot water heaters would cost 8 cents, and Wind and methane from hog wastes would cost about the same amount as a coal operation.
In Kansas, Sunflower Electric Power Corp. plans to build three 700 MW coal plants to meet increasing demand.
The massive proposal, under review by the Kansas Department of Health and Environment, has drawn fire for its global warming impacts, instead of turning to the area’s abundant wind assets.
Sunflower officials say going with the fossil fuel is a “no-brainer,” because it’s legal, plentiful and cheap. They note plans to build an algae reactor to dilute up to 40 percent of the carbon dioxide.
They say wind isn’t as reliable as coal, and would be prohibitively expensive to build an equivalent amount of energy resource.
NGOs counter that a combination of conservation, natural gas and wind could meet energy demand.
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