Ringham: Todd, some critics of Big Stone II suggest that it's taking us backward in our energy policy. How do you answer them?
Guerrero: Those critics are wrong. Big Stone II is proposed to be one of the cleanest, most-efficient baseload power plants ever built in the country. The owners have committed to offset 100 percent of greenhouse-gas emissions associated with the plant's service to Minnesota consumers (only 45 percent), consistent with Minnesota's new greenhouse-gas legislation, all while more than doubling the energy output from the site.
Noble: Building a risky and old-fashioned coal plant like Big Stone II in today's economic and policy climate is folly. This proposed plant will produce more global-warming pollutants than all the cars in South Dakota. If the carbon market that Sens. [John] McCain and [Barack] Obama both support opens at $20 per ton, Big Stone's commercial customers have an unexpected $100 million annual liability. These carbon liabilities will hugely escalate as economy-wide emissions are ratcheted down, and the truth is that there is no plan to offset these costs.
Guerrero: It is easy to be a critic. All credible reports show our region nose-diving into a regional power pool where electric demand far outstrips supply. These are the industry's gusset-plate inspection reports. The region hasn't built baseload generation -- i.e., the stuff that runs 24/7 and powers our economy -- in more than 20 years.
And while $140-a-barrel oil gets the front page, America uses just 15 percent more of it today than in the energy crisis from the early 1970s. Electricity consumption, on the other hand, is up 115 percent. Just wait until we plug in all of our cars, a goal we all support. The reality is that the region's options for baseload generation are limited. Wind, while a superb renewable resource, is intermittent. New nuclear power is illegal in Minnesota. There is no more hydro, and biomass for power production will remain a niche. That leaves natural gas. If the Big Stone owners are forced to build a natural gas plant instead of coal, at today's natural gas prices, the annual penalty to consumers would be more than $300 million.
Noble: Mr. Guerrero knows that talking about gusset-plate inspections and hundreds of millions of dollars each year for natural gas are bogeymen. No responsible voice is talking about the electric system crashing, and no one is talking about round-the-clock baseload natural gas plants.
Under Minnesota law, if anyone wants to build a coal plant, or a transmission line to serve a new one, he must prove that it's the best option. Mr. Guerrero and his clients have not. Despite his litany here of why nothing but coal will work, that argument did not prevail when it mattered -- in front of two judges who spent months reviewing a mountain of evidence.
According to their ruling, Big Stone partners certainly had not shown that the plant was needed, and that for whatever small need might actually exist, they had not proven that efficiency and renewables wouldn't work, and wouldn't be cheaper.
Guerrero: Skyrocketing electric power prices as a result of the "dash to gas" a bogeyman? Read for yourself at www.netl.doe.gov/energy-analyses/pubs/NatGasPowerIndWhite
paper.pdf, where the Department of Energy concludes that opposition to coal will double natural gas consumption for power generation, increase dependence on foreign energy sources and send natural gas and power prices skyward. Or, check out the rate increases being spurred across the country because of natural gas. This isn't rocket science. Unfortunately, opposition to new coal will only result in our continuing to drive our older, less-efficient plants rather than replace them with new efficient models. The same administrative law judges -- who provide only a recommendation -- found the exact opposite just seven months earlier. The only thing that has changed is that the energy crisis we find ourselves in has gotten worse.
Noble: Minnesota faces a steady decline in the demand for coal electricity, according to an independent analysis done for Gov. Tim Pawlenty's global-warming advisory group. It's no "dash to gas" that's causing it. The main reason Minnesota needs less coal, not more, are new 2007 laws requiring huge increases in energy-efficiency and renewable-energy investments. With eight other governors of the Midwest Governors Association in our electric region also now committed to reach 30 percent renewable electricity and attain more energy-efficiency than that, the region doesn't need more coal, either.
Guerrero: The new Renewable Energy Standard and energy conservation goal will indeed help reduce carbon emissions. But the Big Stone II owners already took those impacts into account. They still need more baseload generation.
And while we know what the administration's task force has said about reducing emissions, we also know what the administration has said about attracting new economic development in places like the Iron Range. Are new steel mills supposed to run on conservation and renewables alone? We all agree on the need for more renewables and conservation. But they will not replace the need for new baseload generation, and nobody suggests otherwise.
Noble: What the two judges found from the extensive public record is that Ottertail Power and the small towns in Minnesota that would own Big Stone II do not have the need for that power. At the most, their need is about a quarter of what's proposed, only 1/100 of the state electric system, and 1/1000 of the regional system. Another indicator that Big Stone II is a bad bet: Two utilities walked away last summer, saying it was too expensive and too risky.
Guerrero: Even the consultants hired by the environmental consortium opposed to the project showed that if BSII isn't built, only a massive amount of natural gas can replace it. We know that the consortium supports higher energy prices across the board to force behavioral changes. But the Big Stone II owners don't believe it necessary to impose billions of dollars of added costs on consumers to do what is right.
Noble: Here's some simple math. Minnesota emits 140 million tons of carbon dioxide, and 95 percent of legislators and a Republican governor agreed that we should at a minimum reduce that by 15 percent, or 20 million tons, just two years after Big Stone would kick in.
This is what's at the heart of the Big Stone case. The winning argument has not been that building new coal plants is an absolutely ridiculous idea now that we know that the Arctic Ocean has a 50/50 chance of being free of all ice in the summer of 2012. No, the winning argument is that all well-informed and reasonable people now agree that deep reductions in global-warming emissions are inevitable and will be achieved with a market price on carbon permits. The PUC is shopping for a new independent expert to help understand what an economic shock that could be for consumers unlucky enough to have Big Stone utilities for their local power company.
Guerrero: Unlucky enough to be customers of utilities that have provided some of the country's lowest rates and most reliable service for almost a century? The entire reason for pursuing this project is based on these utilities' concern for their customers' businesses and livelihoods. They could have pursued a much easier regulatory path -- building a natural gas plant, where the consortium [oppositional groups] wouldn't have raised a whisper about potential cost impacts to customers.
Noble: It's not just Big Stone opponents who think new coal plants are foolhardy -- Xcel Energy, Minnesota Power and Great River Energy have all said there are no plain-vanilla coal plants in their plans. Solving our energy problems will require innovation, and Americans agree overwhelmingly that utilities are right to focus on existing technologies like commercial and industrial efficiency, wind power and cogeneration in the short term, while they work toward the next generation of new technologies. While we work on meeting near-term needs while solving global warming, we'll be moving toward large-scale deployment of advanced batteries, solar, electric and even coal without carbon emissions.
The PUC has rightfully taken its time to look closely at Big Stone II, but in the end will do the right thing and say "find a better way."