Xcel's success in jamming through legislation to build and own a huge natural gas plant without ever having to show it is economical or needed is a major disappointment to MCEA. This legislation undercuts the Public Utilities Commission, the one body in state government specifically responsible for protecting ratepayers, consumers, and the public as these once-in-a-generation decisions are made.
The renewable energy industry is one of the leading economic growth industries in Minnesota. Clean energy jobs in Minnesota grew 78 percent between 2000 and 2014, compared to the state’s total employment growth of only 11 percent. Prices of wind and solar energy have fallen dramatically in recent years. Xcel and the Legislature have now locked in a $1 billion investment in natural gas, a form of energy that will only get more expensive over time, without any evidence the investment is actually needed or the lowest cost for ratepayers.
The most recent projections show Xcel’s system will need additional power in 2026. There is no need to make a rash $1 billion decision now, with no way to know how much power will be needed in a decade or what types of generation will be the cheapest. This is a legislative giveaway to boost a corporate bottom line, done at the expense of ratepayers.
We certainly hope this will not become a precedent for future utility infrastructure decisions. MCEA, along with many other stakeholders, participated in good faith in extensive proceedings at the Commission that resulted in Xcel Energy’s most recent Resource Plan being approved. As a result, Xcel was invited to apply for a certificate of need for new generation. The process that protects ratepayers was working, and this legislation undermined it.
Xcel Energy is a monopoly. As a result, its customers rely on the oversight of the Public Utilities Commission to keep the company in check. This legislation bypasses the important role of the PUC and puts customers on the hook for a $1 billion natural gas plant that may be unnecessary. While we look forward to standing alongside the Governor to support the Public Utilities Commission’s ability to protect ratepayers and in support of the proposed increase in the renewable energy standard, today’s decision is truly disappointing.
WRITTEN BY: Kevin Lee, MCEA Staff Attorney
I admit it: I drove to work today in a vehicle powered by fossil fuels. Here in Minnesota, that means it was probably powered by gasoline refined from the tar sands deposits of Alberta. But my Subaru’s days are numbered, because when the Chevy Bolt and its 200+ mile range become available in Minnesota this summer, a Bolt will take its place in our garage.
Luckily, we are not alone. Electric vehicles have finally arrived en masse, and the world is taking notice. The costs of EV batteries are plummeting, and Ford Motor Company now predicts that EVs will outnumber internal combustion engine vehicles within 15 years. This is of course fantastic news for the climate. Even in the relatively coal-heavy electric grid of Minnesota, EVs produce between 61% and 95% less greenhouse gas than a comparable gasoline-fueled vehicle.
The vast majority of those crude oil products are destined for use in the transportation sector, so the need for new pipelines is inextricably linked to the demand for gasoline and diesel fuels for transportation.
MCEA believes that demand for crude oil will only go down as EVs become commonplace. Already, demand for gasoline in Minnesota is down almost 30% from the 1990s, and EV adoption is just getting started. Building a new pipeline now, with a 30-50 year lifespan, strikes us an investment in a technology that is on its way out.
But some state legislators, it would seem, are interested in none of this. A recently introduced bill, House File 1151, would exempt pipelines from the ‘certificate of need’ requirement. Currently, a company that wants to build a large energy facility such as a power plant or a pipeline must demonstrate to the state Public Utilities Commission that the project is in the state’s best interests and is based on accurate energy forecasts. As the name implies, the requirement is designed to ensure that we don’t build large projects that we don’t need.
This bill would eliminate that requirement for pipelines, allowing a pipeline company to build pipelines regardless of whether their forecasts for gasoline use are accurate or not. This is a terrible way of deciding our energy future in Minnesota. If passed, the bill would almost completely remove public oversight of pipeline proposals, making sure that industry – not the public - controls our fossil fuel future. Thankfully, some legislators have recognized the folly of delegating critical energy decisions to industry and are working hard to stop this bill in its tracks. As this bill advances through the legislature, MCEA will be on hand to help those legislators fight for energy decisions that are based on sound information, not just industry’s wishful thinking.
On Thursday, February 2, 2017, MCEA Clean Energy Program Director Leigh Currie testified in front of the Minnesota Senate Energy Committee. Below is a transcript of the testimony she gave, which outlines our concerns about the hasty replacement of Xcel's coal plants, Sherco 1 & 2, with natural gas.
WRITTEN BY: Leigh Currie, MCEA Clean Energy Program Director
"Mr. Chairman, members of the committee, my name is Leigh Currie, I am a staff attorney at the Minnesota Center for Environmental Advocacy and I primarily practice at the Public Utilities Commission [PUC]. I represent several Clean Energy Organizations at the PUC including Fresh Energy, Sierra Club, Wind on the Wires, and MCEA. With me today is Allen Gleckner from Fresh Energy, also available to answer questions from the committee. MCEA and the clean energy groups I represent oppose the Senate File 85. We have two primary concerns with this bill. The first is the precedent that it sets, and the second is that it prioritizes shareholders over the public interest of the State of Minnesota.
This bill is bad precedent. Xcel Energy is a monopoly. We have a system in place to ensure that the public interest is protected from monopolies. The system includes checks and balances. The PUC can only act within the authority delegated to it by the Legislature. Within its authority, the PUC can exercise its judgment based on the record built before it. If there were an argument that the PUC acted outside of its authority or abused its discretion, there is a mechanism to challenge that within the judicial branch. But that is not the argument being made today. Nobody is making that argument. Instead, Xcel is asking you to do the PUC’s job for it.
Just three months ago, I sat in front of the Commission with Xcel Energy arguing about its resource plan and I listened to Xcel Energy ask the PUC to please allow it to move forward with a certificate-of-need process. Exercising its discretion, the PUC did what it always does when it determines there is a need for a new resource—whether it’s wind, solar, natural gas, an unspecified fuel type—it authorizes the utility to either go forward and issue an RFP or apply for a certificate of need. In this case, the PUC did what Xcel asked it to do and authorized Xcel to go forward with the certificate of need. The PUC and Xcel both understood that a certificate-of-need proceeding is required by state law and that there was sufficient time to determine the exact parameters of the plant. The PUC in this process considered two years’ worth of record development and arguments from the parties and determined that there were gaps in information, there was out-of-date information including the demand forecast, and there was inaccurate information in the record. And it determined that there was time to finalize the exact parameters—the precise nature—of this gas plant through the state-required certificate-of-need process. What the PUC did in this proceeding is exactly what the law states it must do and what Xcel asked it to do.
Allowing Xcel to opt out of this system of checks and balances because it might not get exact parameters of the plant that it asked for once the right information is in front of the PUC, is sending the wrong message. This bill, unlike the [Metropolitan Emissions Reduction Project] MERP statute, does not create a statutory framework in order to achieve a policy goal. The MERP statute was a framework in order to achieve emission reductions. Those projects had to be vetted and approved by the PUC. That’s not what’s happening here. There is no identified goal here. This is simply a bypass lane around the PUC for a one-time, $1 billion project. It’s nothing more.
The second concern is that the project itself—the $1 billion, one-time investment—prioritizes shareholders over ratepayers. The way this bill is written—even as amended—to approve the billion-dollar project puts shareholder interests ahead of the public. If this bill were actually about jobs or regulatory certainty then you would see language in the bill about jobs. But it’s not about jobs. It’s about a $1 billion, one-time project. There would be no need to bypass the PUC or a certificate of need in order to have a gas plant on site at Becker and have the certainty and the jobs that the community deserves and is looking for.
If this bill does pass, you’ve locked in a $1 billion investment that is not needed for 10 years. In the IRP process it was clear that Xcel’s system is currently over capacity. The first coal unit at Sherco shutting down in 2023 does not trigger the need to build anything. It’s the second unit shutting down in 2026 that triggers a need for something to be built. The reason the bill in front of you doesn’t simply guarantee a gas plant or simply guarantee jobs at the end of a certificate of need, which is legislation that could be in front of you if those were the real concerns, is because the size of the plant is key to Xcel. The reason the size of this plant is so important is because the size of the plant equals the size of the investment and the size of the investment equals the size of the return. And that goes to shareholders at the expense of ratepayers.
As you’ve heard Xcel, and others, agree, this bill (even as amended) gives Xcel the sole discretion to build a 786 MW gas plant that it proposed in the last IRP. Or, in its sole discretion, Xcel could propose a different size in a future IRP. Xcel claims that its ratepayers will be protected because it has to go through a rate case. But the risk seems to be minimal that a plant authorized by the Legislature would be deemed to be unreasonable by the PUC. So I don’t think there’s a balancing of the risk and I think it prioritizes shareholders over the public interest.
So my clients and I are here to ask you today to respect the system that has been built and that we have in place to protect the public against the interests of the shareholders of a monopoly. This bill doesn’t do that. Thank you for your time, and I’m happy to answer any questions."
This blog was written by a visiting student in December 2016, after the announcement of the Army Corps of Engineers’ decision to do an environmental review on the Dakota Access Pipeline. Since then the Corps has opened a public comment period on the environmental review, and President Trump has issued an executive order encouraging agencies to rapidly review High Priority Infrastructure Projects. This executive order seeks to “streamline and expedite, in a manner consistent with law, environmental reviews and approvals for all infrastructure projects”— which is consistent with the law discussed in this blog, NEPA. Recent developments in the Dakota Access case could lead to litigation, but it’s too early to tell whether the government still intends to uphold the law and its commitment to do an environmental review.
WRITTEN BY: Sam Blackburn, Former MCEA Extern
The decision of the Army Corps of Engineers not to approve an easement for the portion of the Dakota Access Pipeline passing through Standing Rock is a great victory for proponents of both native rights and environmental protection. As a result of this decision, pipeline construction will be delayed, potentially for years while the Army Corps conducts further environmental review. Though much of the credit for this achievement belonged to the protesters braving adversity, the opportunity for the Army Corps’ decision comes from the National Environmental Policy Act (NEPA). While NEPA was created to improve government transparency and increase public involvement, its process of environmental review has allowed for some of the most important environmental protection successes in recent memory.
NEPA requires that every federal agency must consider the environmental, social, and economic effects of their proposed actions. This includes impact on cultural heritage protected by the National Historic Preservation Act, particularly relevant at Standing Rock. Through the process of permitting, corporate and industrial actions (such as building an oil pipeline) become subject to environmental review. Initially, during the environmental assessment process, the Army Corps of Engineers deemed DAPL would have no significant environmental impacts. After considering the concerns raised by protesters at Standing Rock, however, the Army Corps decided that further environmental review was required. This typically leads to preparing a full Environmental Impact Statement (EIS), which is a more detailed analysis which could put off construction for years.
The outcome at Standing Rock shows just how powerful environmental review can be. NEPA mandates environmental review for any project with significant impact, and the public has the ability to bring claims of impact to be considered. To facilitate this, there are several periods of required public commentary once environmental review has started. Even after an EIS has been completed, the public can still bring a case to court arguing that certain environmental impacts haven’t been considered or are more significant than the EIS admits.
In northern Minnesota, Enbridge was concerned enough about undergoing the public scrutiny of environmental review that when it was ordered to do an EIS, it pulled the plug on the entire project. Enbridge Energy sought a first-stage permit for its pipeline without undergoing environmental review. MCEA challenged the state agency's decision that an EIS wasn't necessary in court, arguing that the law required a review before any approval, and won the case. Rather than engage in the resulting environmental review, construction of Sandpiper was abandoned.
Though the process of environmental review has enabled the recent successes by the public against the Sandpiper and Dakota Access pipelines, the fight is far from over. Enbridge has an additional project in the works for Minnesota, a replacement and extension of the Line 3 pipeline. While the initial public commentary period has concluded, and an Environmental Impact Statement is being prepared for the pipeline, there will be another opportunity for the public to get involved and speak up against Line 3 during the public comment period for the draft EIS, which will take place in 2017. Environmental review is only powerful if the public takes the opportunity to make their voice heard and so we must speak up and ensure that the harmful environmental impacts of these pipelines are not ignored.