MINN VS. ND: BORDER WAR OVER CO2 COST

This may seem to many readers like a somewhat arcane legal triviality between Minnesota and North Dakota. But the Turkish-Kurd tension didn't get Americans' attention until it registered in the price of gas at the pump. This dispute, though hopefully not so violent, may turn out to be as important to the price of electricity.

This upper Midwest matter is one of the first clashes between those who make emissions, those who consume them and those who understand they must be priced. The fight is really over who is going to pay.

Unfortunately, the losers in this case may end up being Minnesota electricity consumers who will have to pay a premium for North Dakota emissions-spewers. The good news is that fights like this will move the US toward a national cap-and-trade system in which the coal plants will face the music and pay the piper. When that happens, New Energy will suddenly seem to be the good deal it always really has been.

Also see: STATES FIGHT OVER EMISSIONS TAX

Price On Carbon Dioxide Starts Dispute
November 6, 2007 (AP via WCCO-TV)

WHO
Minnesota Public Utilities Commission (MPUC), Industrial Commission of North Dakota (ICND)

The upper Midwest shares extensive transmission interconnections. That's a good thing. Disruptions can be smoothed out and power supplies can be shared. Ultimately, the cost of emissions cannot be a state by state matter. (click to enlarge)

WHAT
ICND is preparing to do legal battle with MPUC over the price of emissions. Minnesota's Next Generation Energy Act requires the MPUC to establish a price that will eventually be tacked onto utility bills. North Dakota, which sells coal plant-generated electricity to Minnesota residents objects to MPUC’s price, fearing it will reduce the coal plants’ revenues.

WHEN
Minnesota’s Next Generation Energy Act, a package of visionary energy reforms, was passed in 2007.

WHERE
Minnesota has the progressive laws. North Dakota has the coal plants. Consumers in western Minnesota and coal plants in eastern North Dakota are affected.

WHY
- Minnesota’s initial price for emissions is $9/ton of CO2 equivalents. Environmentalists are calling for a price of $20 to $50/ton of CO2 equiv.
- North Dakota sees this as a “coal tax.” Its legislature has set aside a half million dollars to cover legal fees as it gears up to demand the right to sell its coal-fired electricity at market price.
- Minnesotans see this move as a way to make producers and consumers deal with the cost of emissions. Doing so implicitly incentivizes emissions-free New Energies.

South Dakota is already sending electricity to Minnesota from its Big Stone coal plant and Big Stone II is planned so the principle would eventually be at issue one way or another.

QUOTES
- Karlene Fine, head, ICND: “[Minnesota’s carbon tax] would appear to be an improper extraterritorial extension of state regulatory authority into another state."
- Steve Van Dyke, spokesman, ND’s Lignite Energy Council: "If I was to draw an analogy, I would say that people in North Dakota eat cake mixes made with flour milled in Minnesota…But the North Dakota commission that regulates elevators here isn't drawing up rules to regulate Minnesota elevators just because the grain passed through some of them."
- Michael Noble, head, Minnesota’s Fresh Energy: "Minnesota's regulators, politicians and the administration have an obligation to protect consumers from any hidden price impacts that are inevitable and just around the corner…North Dakota shouldn't take it personally."