As federal policy makers push for GHG regulation and transparent markets, the California experience shows what works and what doesn’t work.
Minnesota Identifies Environmental Adders
The Minnesota Public Utilities Commission has adopted a schedule of environmental costs for electric utilities evaluating and selecting resource options in all commission proceedings including resource-plan and certificate-of-need cases.
In each such case the utilities will be required to provide three cost analyses for each generation-option provided: one using the values at the low end of the range (see table), one using values at the high end of the range, and one reflecting "direct costs only" (i.e., using zero environmental externalities values).
Table. Environmental Externalities:
By Pollutant and Location.
Metropolitan Miles of
Urban Fringe Rural Minnesota
SO2 $/ton 112-189 46-110 10-25 10-25
PM101 $/ton 4,462-6,423 1,987-2,886 562-855 562-885
CO $/ton 1.06-2.27 0.76-1.34 0.21-0.41 0.21-0.41
NOx $/ton 371-978 140-266 18-102 18-102
Pb2 $/ton 3,131-3,875 1,652-1,995 402-448 402-448
CO2 $/ton .30-3.10 .30-3.10 .30-3.10 .30-3.10
1Particulate matter smaller than 10 microns.
Adopting a range of environmental costs for certain pollutants would not preclude parties from
submitting evidence on other external factors including socioeconomic costs. In arriving at the cost figures, the commission demonstrated a preference for a damage-cost approach (em i.e., methods which attempt to place an economic value on the net damage to the environment created by the energy resource.
Methods based on the cost of avoiding or controlling environmental effects at the source of emission also were cited as a reasonable approach under certain circumstances. With the exception of carbon dioxide (a "global warming" gas), the commission adopted a general focus on estimation of damage occurring in the state rather than a more regional or global basis. It also refined the quantification process to reflect the proximity of the proposed generation site to population centers as a major factor in determining environmental costs. Re Quantification of Environmental Costs, Docket No. E-999/CI-93-583, Dec. 16, 1996 (Minn.P.U.C.).
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