Great River Energy says externality review would be ‘premature’

Great River Energy (GRE), which relies heavily on coal-fired power, told the Minnesota Public Utilities Commission on Nov. 8 that it would be “premature” to look at setting new environmental externality penalties for power generation.

GRE is responding to a recent request by environmental groups to reopen the externality program and raise externality penalties that haven’t been increased since the 1990s. An externality is a dollar value assigned to a power plant’s emissions, like its output of CO2, that is added to the cost of that facility as it is being considered by the commission. Obviously, fossil-fired capacity, like gas and particularly coal, gets a big disadvantage from that penalty, while wind and solar plants don’t.

Great River Energy is a not-for-profit generation and transmission cooperative serving the wholesale power needs of 28 member distribution cooperative members in Minnesota and western Wisconsin.

“Great River Energy respectfully recommends that the Commission decline to grant the motion of the Clean Energy Organizations (‘CEO’) to start a new proceeding to establish and update environmental values at this time,” GRE wrote. “However, in the event the Commission elects to grant the motion, Great River Energy requests that a consultant not be engaged as recommended by the CEO until the scope has been developed through an open and transparent multi-stakeholder process. We request the Commission allow for this stakeholder process. Further, we request the Commission refer the matter to the Office of Administrative Hearings for a contested case hearing and the Commission set an 18 month deadline from the date of the Commission refers the matter to the Office of Administrative Hearings before making its final decision.”

Great River Energy said that it and other Minnesota utilities currently consider environmental cost values in resource planning decisions. “The externality values determined in earlier Commission proceedings remain used and useful today,” it added. “We have not identified any new factors that suggest action should be taken immediately by the Commission. We suggest that a Commission review of Minnesota’s externality values will be appropriate and informed when decisions are made at the federal level on new air or carbon regulations.”

It pointed out that on Sept. 20, the U.S. Environmental Protection Agency released its proposed new source performance standards (NSPS) for greenhouse gas emissions (GHGs) from new fossil fuel-fired generating units. The NSPS proposal will set national limits on the amount of carbon that power plants to be built in the future will be allowed to emit. Issues raised at the federal level will have effects on multiple segments of the U.S. power industry, GRE pointed out.

Also, under President Obama’s climate action plan, EPA has been directed to issue carbon standards on modified, reconstructed and existing power plants by June 1, 2014. The goal would be to have final regulations in place for existing power plants by June 2015.

“Both the NSPS and the regulations for existing power plants will have major impacts on utilities in the state of Minnesota,” GRE argued. “The final regulations will be a major component to a discussion on externalities. Given the work that is currently being undertaken at the federal level, it is premature to start a proceeding to establish and update environmental values in the state of Minnesota.”

Environmental groups say upcoming decisions justify new penalties

On Oct. 9, the Izaak Walton League of America-Midwest Office, Fresh Energy, Sierra Club, Center for Energy and Environment, Will Steger Foundation and Minnesota Center for Environmental Advocacy filed the motion asking the commission to: establish environmental cost values for PM 2.5 emissions; establish environmental cost values for SO2 emissions; and update the current cost values for CO2 and NOx.

“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 [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.”

The American Coalition for Clean Coal Electricity (ACCCE) and the Lignite Energy Council (LEC) also jointly filed a Nov. 8 protest of any hike in the externality figures. They were particularly concerned about how this would affect lignite-fired electricity imported into Minnesota from neighboring North Dakota. They said that Minnesota is in good shape in terms of emissions of conventional pollutants, like SO2 and NOx, and that national carbon standards are not currently in place.

“ACCCE and LEC believe it is unnecessary for the Commission to initiate a proceeding to establish and update environmental values,” they argued. “If, however, the Commission chooses to initiate a proceeding, the parameters of it should be clearly established and should not extend beyond those requested by the Clean Energy Organizations.”

They added: “ACCCE and LEC believe that, if the Commission were to initiate a proceeding to establish externality values that the best method would be for parties participating in the proceeding to offer their own evidence for establishing those values. ACCCE and LEC oppose the Commission itself retaining a consultant. Were the Commission to do so, the consultant’s recommendations would in effect, become the de facto Commission determination.”

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.