Xcel, clean energy groups to regulators: Assign a cost to carbon emissions

As state regulators consider how utilities generate electricity in the future, they should assume a much higher social cost of emitting carbon dioxide than is used today, Xcel Energy and a coalition of clean energy and health advocates argued Friday.

The Minnesota Public Utilities Commission is expected to decide next week whether the state should adopt the federal social cost of carbon, which ranges from $12 to $62 per metric ton for the year 2020. And even those values may be too low, said Kevin Lee, an attorney for a group of health professionals.

"The one thing that we do know about these cost estimates is that they are almost certainly an underestimate of the real health impacts of climate change," Lee said, noting that climate change exacerbates conditions like heart disease and respiratory illness and has aided the spread of Lyme disease and Zika virus.

An attorney for Great River Energy, Otter Tail Power and Minnesota Power — utilities that are more coal dependent — argued the social cost of carbon for Minnesota should be lower than the range proposed.

The PUC "should not aim on the high side without understanding the consequences" for utilities and their customers, attorney Andrew Brown said.

The state began requiring utilities and regulators to factor in the environmental and health costs of pollutants when making decisions about electricity generation back in the 1990s. The case over whether Minnesota should update the values began several years ago, when environmental groups argued the Public Utilities Commission was using outdated figures.

A lot has changed in those years. Peabody Energy, a coal company, had intervened in the case and argued that Minnesota would benefit from climate change. On Friday, Peabody was a no-show at the hearing, having recently emerged from Chapter 11 bankruptcy. And Xcel Energy has further distanced itself from other utilities in the state, putting forth plans to reduce carbon emissions 60 percent by 2030. Nicholas Martin, who represented Xcel at the hearing, said the utility expects even more aggressive reductions in its next round of planning.

"We think bold action is needed, and we're taking bold action to reduce carbon emissions," Martin said, urging the PUC not to delay a decision.

He said the decision would give utilities certainty as they plan for the future "and allow us to all go about the business of reducing carbon emissions aggressively and affordably."

Attorneys representing the largest energy users, such as manufacturing facilities, rejected the models used to calculate the federal social cost of carbon as too speculative. They also questioned the logic of forcing Minnesotans to pay for carbon emissions when much of the rest of the world is not held to the same standard.

"It is not reasonable, we submit, to charge Minnesotans with worldwide costs," said Marc Al, an attorney for the industrial customers.

But Leigh Currie, an attorney for the Minnesota Center for Environmental Advocacy, said the economics of renewable energy have changed dramatically, meaning there will be more instances in the future where renewable energy beats fossil fuel forms of electricity generation on cost even without accounting for the societal costs of pollution.

"Whether the social cost of carbon is the best available measure," she said, "and whether it's reasonable, is unequivocally yes."