Who will provide the remaining 75 percent?
Response to Neal St. Anthony Column, Minneapolis Star Tribune
Thursday, September 20, 2007
Neal St. Anthony's "On Business" column on September 20, which suggests that the recent departure of two utilities from the Big Stone II Project foretells an end to the use of coal for power generation in this region, simply misses the business perspective of his subject. His column was misleading and completely overlooked critical implications for Minnesotans' standard of living and economic well being.
He is complimentary of Big Stone II for holding site emissions at or below current levels and for reaching an innovative agreement with the Minnesota Department of Commerce to provide offsets for carbon dioxide emissions - all while more than doubling the site's electricity production.
But, Mr. St. Anthony missed the point that, while new Minnesota legislation now requires 25 percent of electric energy be provided by renewable sources by 2025, it begs the question: Who will provide the remaining 75 percent?
Certainly, additional energy conservation will provide a portion of that need, and the Big Stone II Project owners are committed to additional conservation efforts. Conserving is a customer decision - should we forego constructing a needed power plant based on our assumption that our customers are willing to conserve? Are Americans capable of conserving when we continue to find new uses of electricity (such as ethanol plants, flat screen televisions and water parks) that cancel out the benefits of conservation?
Natural gas is often touted as a substitute for coal in baseload (around-the-clock) generation. But, in spite of its cleanliness, natural gas prices are highly volatile. Are our consumers and the state's economy ready for the monthly price swings that are common to natural gas bills? Should we commit additional quantities of natural gas to electricity production when it means competing with heating homes? Is it wise to increase the need for natural gas imports from unfriendly nations like Venezuela? All fair business questions that Mr. St. Anthony missed.
The original seven Big Stone II Project owners had previously each analyzed their own customer and business situations, and concluded that participation in Big Stone II made sense for them. Now, typical of evolving business conditions in all industries, two of those owners have decided not to continue their participation for their own unique business reasons. The decisions had nothing to do with the use of coal.
To conclude, I believe had Mr. St. Anthony wished to approach Big Stone II from a business perspective he might have explored:
- How does the Minnesota Chamber of Commerce view the need for reliable electric power?
- How will the state meet a projected 2011 reserve generation capacity shortfall?
- What happens to the price of electricity when companies are forced to buy power during peak demand periods? What will that do to consumers' pocketbooks? Our competitiveness in the marketplace?
- What message does questionable reliability and/or high power costs send to potential new businesses interested in locating in Minnesota ?
- What does the absence of Big Stone II do to the prospect of future wind development?
Maybe those questions are fodder for another column on another day . . .
Ward Uggerud
Senior Vice President
Otter Tail Power Company
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