Minnesota to start imposing CO2 penalty in 2017

Even though it is something of a moot point due to the lack of federal CO2-control legislation, the Minnesota Public Utilities Commission in a Nov. 2 order decided to start applying in 2017 values for tons of CO2 emissions from power plants, particularly coal-fired power plants.

In October 2009, the commission issued an order estimating that utilities would incur costs for complying with anticipated regulation of CO2 of between $9 and $34 per ton of CO2. On July 19, the Minnesota Pollution Control Agency and Minnesota Department of Commerce filed their annual recommendations for revising the estimates, as required under Minnesota statute. The state agencies recommended maintaining the current estimates, but did not include a recommendation regarding the year the cost range should begin to be applied.

By Aug 30, the parties that had filed comments regarding the state agencies’ 2012 annual recommendation included: Otter Tail Power; Minnesota Large Industrial Group; Minnesota Power; Xcel Energy; Interstate Power and Light; Dairyland Power Cooperative; the Minnesota Chamber of Commerce; Industrial Commission of North Dakota; Lignite Energy Council; Izaak Walton League of America–Midwest Office; Fresh Energy; and the Minnesota Center for Environmental Advocacy.

The state agencies recommended that the commission retain the current estimate of the range of likely costs of CO2 regulation at between $9 and $34 per ton of CO2 emitted. The agencies suggested that a conservative approach would warrant an effective date sooner than 2020, and recommended that the commission establish an initial effective year of 2013 to ensure that potential CO2 regulation costs are considered in utility planning processes.

The utility commenters generally supported the recommendation of the state agencies to retain the current estimate of the range of likely costs for CO2 in 2012 and 2013, as did the environmental organizations. The utility commenters were also largely in agreement that the commission should postpone the effective date on which utilities should begin including the CO2 costs in their resource planning from 2012 until 2020 or later. The utilities reasoned that any type of comprehensive federal CO2 regulation, whether cap-and-trade or a tax, likely will be delayed significantly beyond 2012.

The commission said it recognizes that using a reasonable starting date for carbon cost assumptions is important to maintaining the integrity of resource planning. “Recognizing, however, that there is currently no proposed federal legislation being considered, it would appear that the earliest possible time frame in which such regulation could be enacted would be 2013 or thereafter,” it added. “Further, it would be highly unlikely for Congress to actually impose any such new carbon regulation costs on utilities for a period of some years after implementation of a new regulatory scheme. Accordingly, the Commission will set 2017 as the year in which utilities should begin applying the range of CO2 values set in this proceeding in their resource planning.”

The commission maintained its estimate of the range of likely costs of CO2 regulation at $9-$34 per ton of CO2 for 2012 and 2013.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.