A huge win for Minnesota on April 15 – a judge, after over a year of expert testimony, legal briefs, and public hearings, recommended to the Minnesota Public Utilities Commission (PUC) that it adopt the federal “social cost of carbon” as the binding external cost of carbon dioxide emissions for all electric utility decision making. That means that the PUC (and the utilities that need the PUC to approve their spending plans) will have to include those very negative external costs in their calculations. As a result, fossil forms of electricity generation will be much more difficult to justify on economic terms.
Fresh Energy developed the policy and law that requires Minnesota regulators to consider externalities costs when making electricity investment decisions way back in 1993. But the costs values have not been updated in 19 years. So in 2013, Fresh Energy successfully petitioned the PUC to update these cost values, and was joined by multiple partners and two state agencies in urging the PUC to use the federal social cost of carbon as the best estimate of the damages caused by burning fossil fuels for electricity. The PUC agreed to our petition, and now the assigned judge has recommended the PUC adopt the Federal Social Cost of Carbon (valued between $11 and $57 per ton of CO2 for 2016) instead of Minnesota’s current damage estimates (between $.44 and $4.53 per ton of CO2). We expect the PUC to make a decision on CO2 values this summer.