Old news, but still worth posting. In October, Xcel Energy filed a report with the Public Utilities Commission defending the cost overruns of upgrading the nuclear power plant in Monticello. Via the Star Tribune:
Xcel filed the report in response to the state Public Utilities Commission’s pledge in August to investigate the Monticello investment. The company said that even with the cost overruns, the project benefits customers — saving an estimated $174 million through the remaining 16 years of its license.
Yet that cost-benefit number relies on a “social cost” comparison between keeping the nuclear plant, which emits no greenhouse gases, vs. generating electricity from a plant that does emit them. State law says utility regulators should consider the cost of greenhouse gas emissions, though they’re not currently regulated. Without carbon-emissions savings, the Monticello upgrade would be a losing proposition, costing customers $303 million extra over its life, according to Xcel’s filing.
In interviews, Xcel executives defended the investment, saying they would make the same decision today, even though the utility world has changed since 2008, when the project began. Natural gas, now a favored fuel for power plants, is low-priced thanks to the fracking boom. And electricity demand has lagged since the recession, dampening the need for new plants.
“If we didn’t have our nuclear plants, we would be taking a big step backward in terms of our CO2 accomplishments,” said Laura McCarten, an Xcel regional vice president.
If you dig into the dockets (CI-13-754), you can find that Xcel’s modeling assumptions include a price on carbon of $21.50 per metric ton starting in 2017.
Regardless of your feelings about nuclear power, a utility stating that the externalities of carbon should be priced when making energy planning/financing decisions is significant. The use of a ‘social cost of carbon’ (SCC) metric at the federal level has (not shockingly) been the point of some contention. The Office of Management and Budget’s SCC is $35/mt in 2015 versus Xcel’s $21 in 2017.
Theoretically, we should start to see this figure or something similar used in all future energy planning decisions (Sherco, cough, cough) in Minnesota. Unless of course, Xcel was only being selective in order to justify recovering this very large expense (and spare the shareholders).
It would be an interesting exercise to apply this Minnesota SCC to land use and transportation infrastructure and planning decisions.