Volume 08-5 ~ April 12, 2008
Carbon Capture and Sequestration Studies
Committee Approves PUC Commissioners
The Senate Finance Committee this week acted on SF 2818, sending it to the final committee – the Rules Committee – before potential passage to the Senate Floor. The House bill, HF 3195, is also in its last committee, the House Ways and Means awaiting action. As mentioned last week, both bills no longer contain the six “principles” aimed at the negotiations of the Governors Midwestern Greenhouse Gas Accord. Instead, the bills now focus on a legislative advisory role in the Accord proceedings, on various reports to the Legislature, and on economic impact and revenue spending studies. The bills also state that no cap and trade program can go into effect until it is approved by the Legislature. The noncontroversial bills do have relatively minor differences that will need to be reconciled.
The economic impact and revenue studies required in the Green Solutions Act come at a cost of $500,000 and are paid through last year’s assessment on Xcel Energy – an extra premium for having nuclear power plants. As described in the Finance Committee, the studies’ cost does not come from the state general fund, so no problem. Right? Well, the committee chair, Senate Dick Cohen, DFL-St. Paul, was not quite sure. Seems like a lot of money for two studies, he said, and just because it does not come from the general fund does not mean it is free money – somebody is paying the tab. These are not his words exactly, but Senator Cohen said something like “what we need is an appropriation to study the appropriations for studies.” That’s what we like to hear when this session seems to be open season for imposing utility assessments.
The Senate Tax Committee heard Great River Energy’s request for a personal property exemption for its Elk River natural gas peaking plant. GRE’s Rick Lancaster presented testimony in favor of Senator Mike Jungbauer’s bill, SF 3546. The labor union also testified in favor of the proposal. In light of previous comments about not using natural gas for power plants and no more tax exemptions, the hearing went fast and smooth, and the bill will be held for possible inclusion in a larger tax bill. The House companion bill, HF 3883 by Rep. Tom Hackbarth, was heard in March and is also being held for possible inclusion in the House omnibus tax bill.
The Senate Energy Committee wanted to gain information and insight into transmission issues, especially transmission to get wind power to market. Ten organizations presented testimony, including CapX, MISO, Xcel, Outland Renewable Energy, Interstate Transmission Company, Wind on the Wires, George Crocker, and the Office of Energy Security. CapX assured the committee that it is on track with projects and planning and that utilities will meet the 2012 renewable energy standard requirement of 12% (18% for Xcel). A major complaint of wind developers is getting in the very long transmission waiting line – the MISO queue. MISO stated the current interconnection process does not work well and needs to be revised, which it is currently working on.
Outland Renewable Energy wants to develop 1,500 MW of wind and to build a 150-mile private transmission line from the Buffalo Ridge area to get that wind power to the western metro – called the “Minnesota Independence Line”. Wind energy needs more transmission capacity, says Outland, and it needs it quickly, and this private line is the answer. Committee members and other testifiers expressed both pros and cons to this idea.
George Crocker advocates for more distributed generation, and thus less need for more transmission. The OES, meanwhile, has other ideas for the next legislative session, including renewable energy zones and corridors for fast regulatory action, a SmartGrid, low voltage transmission upgrades for DG, right-of-way use (?), and more study on post-2016 transmission needs and on regional constraints.
Many of the senators and staff were not in the legislature or were not on that committee in 2005, when transmission was one of the primary issues of the session. Of course, the one key change since then is the 25% RES by 2025 compared to the 10% REO by 2015. So, this was a good time to conduct an informational hearing and bring them up to speed on where we have been, where we are, and where we plan to go.
Carbon Capture and Sequestration Studies
The 2007 Legislature ordered the University of Minnesota and the Minnesota Geological Survey to assess the potential capacity for terrestrial and geological carbon capture and storage. The Senate Energy Committee, in a studious mode this week, heard the reports. In short, not much CCS capacity here. Some land use (terrestrial) changes could offset annual CO2 emissions in the range of 3 to 6 million metric tons by 2025. This appears to translate into 2 to 4% from the 2005 CO2 emissions baseline used by the Minnesota Climate Change Advisory Group (MCCAG). Compare this to the MCCAG estimate of 133 million metric tons of CO2 by 2025 by the renewable energy standard (RES) and 134 MMt by the CIPs program. The key recommendation by the U. of M. is to preserve the existing large stocks in peat lands and forests.
The Minnesota Geological Survey and the U. of M. had a long, detailed report, but a very short conclusion: There seems to be a high probability that you cannot bury it in my back yard. The Mid-continent Rift System, running northeast from Kansas through Lake Superior, does not contain “suitable geological conditions” (the type of rocks or layers) for CO2 storage. How about a pipeline to North Dakota?
Committee Approves PUC Commissioners
Busy folks this week, the Senate Energy Committee recommended that the full Senate approve Governor Pawlenty’s recent appointments to the Public Utilities Commission. Commissioner Phyllis Reha started with the PUC in 2001 and this term will carry her to January 2013. The commissioner is an attorney and former administrative law judge who made many decisions on service territory compensation cases. Commissioner David Boyd is filling a vacancy until January 2009. He is on leave as chair of the chemistry department at the University of St. Thomas. Commissioner Dennis O’Brien was in private law practice for many years and most recently served as the Minnesota Director of Strategic Planning. His term runs through January 2014.
Finally, PUC Chair LeRoy Koppendrayer has been threatening to retire for the past few years, but now he is actually going to do it, as of June 27. We will enjoy and appreciate his knowledge and common sense approach to utility regulation for the next two months. The former legislator will be missed as much from the PUC as he was from the Legislature – that’s a lot.
We see and hear lots of weird and sometimes funny things in this job. How about this one: This bill is so important that we cannot let things that are more important interfere with it.