Minnesota PUC to look at externality petition on Dec. 19

The Minnesota Public Utilities Commission at its Dec. 19 meeting is due to address the contentious issue of whether environmental “externality” penalties should be increased, which would disadvantage fossil-fired power plants in commission cases.

On Oct. 9, environmental groups including the Izaak Walton League and the Sierra Club filed a petition to reopen the commission’s environmental externalities docket. They asked the commission to update three values (SO2, NOx, and CO2) and establish values for a new pollutant (PM 2.5).

The environmental groups argued that the pollutants emitted by the generation of electricity from fossil fuels have significant adverse impacts on the environment and human health. They, among other things, requests that the commission retain a consultant at the beginning of the docket to provide greater focus for parties and more efficient record development. They also requested that the commission adopt the federal Social Cost of Carbon (SCC), stating that Minnesota-specific modeling is unnecessary to establish damage costs for global carbon pollution impacts. The petitioners also requested that this docket be completed within one year.

In a Dec. 11 memo, commission staff laid out the issues for the commission to review at its Dec. 19 meeting.

The externalities statute, first enacted in 1993, required the commission to establish a range of “environmental costs” associated with electricity generation to be used, in conjunction with other external factors, when evaluating and selecting resource options in all proceedings before the commission. The statute does not provide a definition of “environmental costs” nor does it identify which pollutants should have a cost attached to them.

The commission originally established values for SO2, PM10, CO, NOx, Pb, and CO2. The reason given for applying these values to facilities inside or within 200 miles of Minnesota’s borders were due to precipitation studies. The commission noted that carbon dioxide’s effect is global but determined it would not apply the carbon values in the 1993 docket globally for consistency purposes. SO2 values were initially established but are now at zero due to a federal cap and trade system.

In 2000, the commission was asked to update the externality values. It decided to do so by using the Gross National Product Price Deflator Index. Since that decision, the values have been updated annually to reflect inflation, with the environmental groups now saying that these values should be much higher to better reflect real-world impacts of these pollutants.

Seven commenters supported the motion and nine opposed it. Alliant Energy filed a letter but did not express an opinion.

Staff believes there are five general options the commission can take:

  • grant the motion as filed;
  • reject the motion;
  • defer a decision on re-opening the docket and receive more information;
  • grant the motion to reopen but modify the procedural treatment requested; and
  • grant the motion to reopen but modify certain substantive requests in the motion.

Memo lays out the pros and cons of taking action on this petition

Staff said the pros of increasing the existing externality values and adding a new one include:

  • science and technology have changed since 1996, and, although the commission previously rejected a request to reopen the docket, the time has come for updating the values;
  • the values have increased importance because they may be used as part of the Value of Solar and Community Solar Garden rates;
  • transparency, which these values would provide, is important in resource acquisition dockets, such as resource plans and certificate of need proceedings;
  • there are more pollutants which do not have externality values. In addition to updating existing values, it would be fruitful to have a discussion on whether additional values should be established.

The factors for rejecting the motion include:

  • the “real costs of pollution” have been accounted for, in laws that have been passed after the environmental externalities law. Rewenable energy statutes, mercury reduction statutes, and EPA rules have all been passed with the acknowledgement that resource decisions must be changed in the future;
  • many costs that would have been externality values in 1996 have now been internalized, so there is no guarantee that values would increase if the commission re-opened the docket. In fact, as some parties note, the values could go down;
  • with respect to carbon dioxide, the externality values statute does not mandate that the commission adopt a carbon value;
  • Xcel Energy and others point out that updating a carbon value in the externalities docket would be duplicative and cause confusion as to which range should be applied in resource plans. The commission has already required its CO2 value from 2007 legislation to be used in the base cases of utility resource plans. Thus, the planning tool that the externalities values fulfill is already being done through the carbon value.
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.