Minn. to update cost of external factors on energy

  • Associated Press
  • January 26, 2014 - 6:09 PM

BECKER, Minn. — State officials plan to update the way they consider environmental and health effects when determining the overall cost of energy production, a move that could help guide decisions ranging from the fate of aging power plants to using cleaner sources of energy.

The state Public Utilities Commission has agreed to update the way it considers costs, the St. Cloud Times reported ( ). That could mean taking into account issues such as climate change, infant mortality and emergency room visits.

"What this would do is to cause Minnesota to take a hard look before investments are made in power plants so that ... we have a sense of what those ultimate costs would be, and we'll make fewer bad decisions," said J. Drake Hamilton, science policy director with the nonprofit Fresh Energy.

The efforts date back to 1993, when Minnesota passed a landmark law requiring the PUC to consider external costs when weighing various energy options. The aim was to create a level playing field between sources of electricity that emit a lot of pollution and those that don't, said Beth Goodpaster, an attorney with the nonprofit Minnesota Center for Environmental Advocacy.

"That way, a dirty resource would not be able to say, 'We're cheap,' because they would have to actually include all the costs associated with it," she said.

Coal plants, for example, emit sulfur dioxide and nitrogen oxides, pollutants that contribute to smog and affect human health. They also release carbon dioxide, a greenhouse gas linked to global warming.

While Minnesota's law was revolutionary, the values didn't list all pollutants and haven't been updated since 1996.

To get a better handle on expenses, the environmental groups asked University of Minnesota economics professor Stephen Polasky to analyze the health and environmental costs of generating electricity. He calculated the external costs of producing electricity from coal at $2.2 billion — significantly higher than the $58 million to $257 million calculated using the current PUC values.

Xcel Energy, Minnesota's largest utility, doesn't oppose the PUC's decision to update the external costs, said Jim Alders, Xcel's regulatory strategy consultant. However, the utility doesn't completely agree with Polasky's conclusion that the external costs are significantly higher.

Alders cautioned that updating the values will be a lengthy, complicated process that involves plenty of debate.

"We're at the front end of an investigation where no one's really done their homework," he said.

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