Several environmental groups – including the Izaak Walton League of America, Fresh Energy and Sierra Club – on Oct. 9 petitioned the Minnesota Public Utilities Commission to re-look at “externality” monetary penalties that haven’t been revised since 1996.
An externality imposes a monetary penalty on emissions from a power plant, which has the effect of making fossil-fired plants, like those fired by natural gas and coal, less competitive with non-emitting sources like wind and solar. Minnesota was an early leader in the 1990s in setting externality values, something vigorously opposed at the time by the coal-fired power industry.
“The State is poised to make important, long-term decisions about major investments in its energy future—decisions that will affect generations of Minnesotans,” said the groups in their Oct. 9 request. “It is imperative that decision makers have sound, up-to-date information about the costs and consequences of electricity resource choices. This requires the Minnesota Public Utilities Commission (‘Commission’) to reconsider the environmental cost values it adopted by order nearly two decades ago and still uses in resource decisions. Because those values are outdated and no longer scientifically defensible, it is urgent that the Commission move quickly to establish new values, especially for pollutants that impose significant costs on human health and the environment.”
They want the commission to reopen its 1994 investigation to quantify environmental costs under state statute. The purpose of this reopener would be to update the environmental cost values for three of the pollutants the commission established nearly 20 years ago – SO2, NOx and CO2 – and to establish a cost value for fine particulate matter (PM2.5), which mostly comes from coal-fired power plants.
“Scientific consensus has advanced significantly since the Commission’s original environmental cost proceeding establishes that emissions of these pollutants cause public health and environmental damage substantially higher than Minnesota’s current environmental cost values,” the environmental groups argued.
The commission in 1996 adopted a range of cost values for airborne emissions of SO2, NOx, particulate matter less than 10 microns in size (PM10), CO2, carbon monoxide (CO), and lead (Pb). The commission determined that it would not set environmental cost values for fine particulate matter or mercury (Hg). “As a consequence, resource decisions the Commission makes today are based on the externality values established for six pollutants in 1996 adjusted for inflation,” the groups said.
Any revision to these externality values would not just impact commission decisions on new power projects, but potentially those for existing power plants. For example, the environmental groups noted that there has been an attempt to introduce federal Social Cost of Carbon (SCC) figures into the commission’s ongoing review of an Xcel Energy (NYSE: XEL) Life Cycle Management report that recommends that the coal-fired Sherburne County (Sherco) Units 1 and 2 be retained for the long-term future. Environmental groups are arguing that those units should be shut and cleaner alternatives developed.
“Using the SCC in the Commission’s resource decisions would result in the Commission using an updated range of $11/ton to $55/ton (with a $36/ton central value) to quantify the damages from CO2 emissions in 2015,” the groups said. They said the current CO2 penalties range from $0.42 to $4.37/ton.