On Energy Questions, State’s Leaders Should Listen Better

Date: 10 Nov 2009 | posted in: Energy, From the Desk of David Morris, The Public Good | 0 Facebooktwitterredditmail

How many times do the people have to be proven right before their political leaders listen to them? The recent cancellation of Big Stone II by its investors brings that question to mind.

Back in 2006, seven Minnesota utilities asked the South Dakota Public Utilities Commission for permission to build a large coal fired power plant in that state. At the same time they asked the Minnesota Public Utilities Commission for permission to build a high voltage transmission line to bring that plant’s electricity into Minnesota, where more than half of its output would be consumed.

South Dakota approved Big Stone II in 2007. In Minnesota, however, the opposition was more vigorous. Opponents pointed to a state law requiring a utility proposing a large electrical project to prove it is needed and serves a public purpose, and that no better alternatives exist.

The opponents failed to persuade Minnesota’s governor and regulators.

In late 2007, two Minnesota utilities that collectively owned about 25 percent of the proposed plant withdrew. They noted that demand was slowing. Moreover, they observed, the 2007 Legislature had passed a law that changed the context for the decision. The law required them to slow demand even more and to obtain 25 percent of their electricity from renewable energy. The Legislature had also committed to dramatically reduce Minnesota’s greenhouse gases. The utilities foresaw a carbon cap that would significantly increase the price of coal fired electricity.

The withdrawal of these utilities did give Minnesota’s governor and regulators pause. In June 2008, a Public Utilities Commission vote on the transmission line deadlocked at 2-2. The fifth member asked for an independent study, which validated the arguments of the plant’s opponents. The governor and regulators remained unconvinced. In 2009, the PUC unanimously approved the transmission line, 5-0.

But that September, Otter Tail, the plant’s major investor, pulled out. Two months later, the remaining investors did the same.

The regulators never changed their mind about the need for the plant. The investors did.

On a parallel track, in 2006, at about the same time seven utilities first proposed Big Stone II, 11 utilities proposed the largest single electrical infrastructure project in Minnesota’s history, called CapX. The $2 billion project included three high voltage transmission lines: a 250-mile line from Fargo, N.D., to Monticello, Minn.; a 200-mile line from Brookings, S.D., to Hampton, Minn., and a 150-mile line from Hampton to Rochester and on to La Crosse, Wis. Hundreds, perhaps thousands, of Minnesota homes, farms and businesses would be seized by utilities to build these lines.

The utilities insisted the transmission lines were needed to meet”increasing demand as well as to support renewable energy expansion.”

Opponents argued, as they did with the Big Stone II transmission line, that demand was not going to increase nearly as much as CapX predicted; that the lines would primarily transport coal fired electricity, not renewable energy; and that Minnesota could meet and exceed its renewable energy standard with in-state, dispersed projects that used the existing transmission network.

Every six months since the CapX project was first proposed, its member utilities have reduced their demand projections. Most recently, the projections have dropped below the worst-case scenario used to justify the new transmission lines.

Minnesota utilities have studied the capacity of the existing transmission system to integrate dispersed wind turbines. They found that more renewable electricity capacity could be added through existing lines than could be added with the construction of CapX — and at about 15 percent of the cost. And the upgrades could be accomplished in weeks or months, compared to the five to seven years it takes to install large power lines.

Minnesota’s governor and regulatory commission rejected these arguments, just as they had similar arguments in opposition to Big Stone II. In April, a few days after they approved the Big Stone II transmission line, they approved the massive CapX projects.

Opponents argued for reconsideration, armed with newer data that showed demand not only not rising, but actually falling. They said the collapse of the economy should be taken into account. The regulators rejected their appeal. Now the issue is heading for court.

It doesn’t have to be this way. Minnesota’s government could follow the law and the will of its people. It could require an intensive examination of alternatives that take into consideration changed external circumstances. It could choose strategies that maximize the benefits to Minnesotans and minimize their pain. Why is that so hard?

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David Morris

David Morris is co-founder of the Institute for Local Self-Reliance and currently ILSR's distinguished fellow. His five non-fiction books range from an analysis of Chilean development to the future of electric power to the transformation of cities and neighborhoods.  For 14 years he was a regular columnist for the Saint Paul Pioneer Press. His essays on public policy have appeared in the New York TimesWall Street Journal, Washington PostSalonAlternetCommon Dreams, and the Huffington Post.