Minn. says even without coal import ban, renewables will flourish

Source: Daniel Cusick, E&E reporter • Posted: Thursday, August 25, 2016

MINNEAPOLIS — Minnesota’s decision to accept a court ruling striking down a 9-year-old ban on coal-fired electricity imports will have little effect on the state’s transition to a clean energy economy, state leaders and environmentalists said yesterday.

Rather, the laws of economics as well as overarching regulations like the federal Clean Power Plan will help Minnesota achieve many of the same outcomes it sought under the controversial provision of the Next Generation Energy Act, officials said.

The landmark law, passed in 2007 by a Democratic-controlled Legislature and signed by then-Gov. Tim Pawlenty (R), gave Minnesota an early boost in renewable energy development, particularly wind power, and set the state on a course to mitigate or replace coal-fired power with less-polluting energy fuels and energy efficiency measures.

But the act drew strong opposition from neighboring North Dakota, which exports thousands of megawatt-hours of electricity from a handful of lignite coal plants into Minnesota every year.

North Dakota sued in 2011, saying Minnesota’s law restricting imports of electricity derived from coal violated the Commerce Clause of the U.S. Constitution. A federal judge in St. Paul agreed and in 2014 enjoined Minnesota from enforcing the ban. Minnesota appealed to the 8th U.S. Circuit Court of Appeals in St. Louis, where a three-judge panel earlier this year upheld the lower court ruling (ClimateWire, June 20).

Minnesota Gov. Mark Dayton (D) said as recently as June that officials would consider several options, including a request for an en banc hearing before the 8th Circuit or a direct appeal to the U.S. Supreme Court. But on Monday, the Minnesota Department of Commerce and the state Public Utilities Commission made clear no appeal was forthcoming. Instead, the state will focus on other policies that encourage the transition to a cleaner energy sector.

“Although we strongly disagree with the court’s ruling, Minnesota has made significant gains with strong energy and environmental initiatives other than the specific provision of the law at issue in this case,” a joint statement from the Commerce Department and PUC said.

The statement further said the coal-fired power import ban “has not played a role in Minnesota’s efforts to reduce carbon pollution,” and that since 2007 “the state has not had cause to enforce this provision, nor is it likely to in the future.”

That fact, combined with other regulatory, economic and political calculations, prompted officials not to further argue the provision’s constitutionality in court.

Instead, officials said, Minnesota “will continue to make strong progress toward a clean energy future, thanks to the success of our renewable energy standard, solar energy standard, energy efficiency standard, our integrated resource planning framework with utilities and many other forward-looking policies.”

Taking a bullet to protect other states?

Stakeholder groups who track Minnesota energy policy said the state’s decision makes sense in light of a variety of factors, both economic and regulatory, that are changing utilities’ perspectives about the best way to produce electricity.

“Our thinking is that the provision of the law that was in dispute, while critically important nine years ago, is not as critically important today,” said J. Drake Hamilton, science policy director for Fresh Energy, a St. Paul-based advocacy group.

“In Minnesota, coal plants that were serving Minnesota load a decade ago are closing right and left from economic pressure, and that pressure is best exemplified by the fact that energy efficiency and clean energy alternatives are undercutting them in terms of price,” she added. “If you look at what’s happening across the United States, and especially in Minnesota, the world has dramatically moved on from coal.”

Scott Strand, executive director of the Minnesota Center for Environmental Advocacy, agreed. He cited the growing string of coal plant retirements, both in Minnesota and across the country, as evidence that coal is waning as a primary fuel for electricity generation.

But he also noted that Minnesota officials may have been wise to accept the 8th Circuit ruling, which addresses specific provisions of Minnesota’s law, rather than potentially see the case go to the Supreme Court, where a decision in favor of North Dakota could have had broader implications.

“I think it’s fair to say there is a lot of confusion out there about the dormant commerce clause part of this argument against the Next Generation Energy Act,” Strand said. “I personally think the 8th Circuit was wrong on that. But let’s not give anybody an opportunity to come down with an opinion that could affect other states’ laws.”

Meanwhile, coal plants shutter

Such laws, including California’s Global Warming Solutions Act of 2006 and Massachusetts’ similarly named Global Warming Solutions Act of 2008, are broader than Minnesota’s energy law and require greenhouse gas emissions cuts across all sectors, not just power generation. But as in Minnesota, they call for a major shift from carbon-intensive electricity fuels like coal and oil to renewable energy resources.

While coal still accounts for a sizeable portion of Minnesota’s electricity portfolio, the state has witnessed a marked shift in utility’s resource planning decisions over the past two years in favor of renewables.

Late last month, for example, the state’s second-largest utility, Duluth-based Minnesota Power, issued a request for proposals (RFP) to build 300 megawatts of new wind energy capacity, adding to the 625 MW of wind already on its system. Minnesota Power also said it would solicit bids for 300 MW of new solar power, as well as utility-scale demand response and on-site generation projects.

The utility, which is gradually transitioning from a coal-dominated generation portfolio to one evenly split between coal, natural gas and renewables, said the new RFPs were in response to a request by the PUC that it “consider additional wind, solar and demand-side management alternatives as part of its ongoing resource evaluation process.”

At the same time, Minnesota Power plans to retire two of four coal units at its Boswell Energy Station by 2022 and will also cease operations at its Taconite Harbor Energy Center by 2020.

In another unexpected announcement this summer, Great River Energy, Minnesota’s largest electric power cooperative, said it would shutter a 50-year-old coal plant in North Dakota by 2017. The 187-MW Stanton power station was as recently as a few years ago considered a critical asset to meet GRE customer demand in Minnesota.

In a July 15 announcement, GRE said the Stanton plant “is no longer economic to operate with current low prices in the regional energy market” and that retiring the plant “was in the best interest of our member cooperatives.”