Big Stone II “Independent Consultant” report

October 23rd, 2008

There’s a lot going on these days, and sorry about this delay, here’s the long awaited “independent conslutant” report on Big Stone:

Boston Pacific Final Report 10-21-08

The STrib’s article:

Consultants say utilities lowballed construction cost estimates

By H.J. CUMMINS, Star Tribune

October 22, 2008

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.'”

Environmental 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.

Lots to read, but it looks like some choice tables showing estimated CO2 costs and construction costs (the per kW costs in the table seem very low and it doesn’t seem that the projected costs of Mesaba were in the mix). More later after I read it… right… when…

Posted by Carol A. Overland
Filed in Other
1 Comment »

One Response to “Big Stone II “Independent Consultant” report”

  1. Alan Muller Says:
    October 23rd, 2008 at 7:17 pm

    Thanks, Carol.

    The discussion of CO2 costs is concise and interesting.

    And this is not good news for the BS II folks.

    Alan

Leave a Reply