Consultanting firm says Big Stone II will cost more than utiltiies say
According to a Minneapolis Star Tribune story, Big Stone II took a big hit Wednesday when independent experts said the utilities behind the proposed South Dakota power plant did their math wrong.
In a report, sought by the Minnesota Public Utilities Commission (PUC), Boston Pacific Co. concluded that in three fundamental projections -- emissions, construction and fuel -- the utilities regularly underestimated costs for the proposed coal-fired plant and overestimated costs for possible energy alternatives.
In general we believe the range ... used in the applicants' analyses were not appropriate," said the report of the Washington, D.C., energy consulting firm. "Put another way, they were out of line with current 'best practices.'"
In the Star Tribune story by H.J. Cummins, wnvironmental groups opposed to the plant applauded the report's conclusions.
"We're pleased that yet another set of independent eyes have looked at the record, and largely agreed with the points that we have been making all along," said Beth Goodpaster, who represents several of the groups, including the Minnesota Center for Environmental Advocacy and the Midwest Izaak Walton League.
The five Big Stone utilities -- led by the Otter Tail Corp. of Fergus Falls -- said their reading shows them not far from the report's preferred numbers in areas such as construction and fuel costs. They take issue with its suggestion that a future carbon tax could go as high as $60 a ton.
"We don't believe Congress would ever pass a cap-and-trade or tax at that high a figure," said Big Stone II spokesman Dan Sharp.
Minnesota energy regulators got pulled into the controversy over the power plant, which would go up just across the border in South Dakota, because the utilities need permission to build power lines into Minnesota, where about half their sales would be.
The utilities argue that they need the plant to meet growing energy demand. Opponents want clean-energy alternatives because coal-fired plants are major sources of pollutants such as carbon dioxide.
The Minnesota PUC ordered the report in June. It had been expected to make a decision about the permit after four years of debate but four commissioners appeared split, with the fifth, newcomer Dennis O'Brien, expressing frustration about the two sides' conflicting cost projections.
Boston Pacific analyzed three of the projections: An expected federal tax on carbon dioxide and its effect on the cost of coal-produced energy; the accuracy of the utilities' plant construction costs; and a comparison between the cost of coal energy compared to natural gas.
The consultants decided that the utilities' projected carbon tax costs started low and failed to factor in inflation. They said the construction cost projections were below the consultants' own low-end figures, and any higher costs would fall on ratepayers. Also, they criticized the utilities for not testing their coal price projections against a wider range of possible natural gas prices, given the fuel's historical volatility.