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Trump’s ACE Rule Can Help Minnesota Miners and Manufacturers, Will The Utilities Let It?

Yesterday the Trump administration finalized the Affordable Clean Energy (ACE) rule, which is designed to improve efficiency at coal-fired power plants. As a result, these plants would produce more electricity while at the same time burning less coal. These efficiency improvements would reduce emissions and result in lower costs for consumers.

In fact, American Experiment’s recent report Doubling Down on Failure, is unique because it is the only report in the country, that I am aware of, to calculate the potential economic benefits of the ACE rule on a state’s economy. Our research found that upgrading Minnesota’s coal plants to meet this standard would save Minnesotans $7.5 billion through 2050 compared to today’s prices. This means our electric rates would actually be about four percent lower than they are today, saving the average Minnesota household approximately $112 per year.

Costs for each scenario are denoted by the bar graph. The blue bars are the “Renewable” scenario, the red, “Short-Term Nuclear,” green: “Long-Term Nuclear,” and purple: the “ACE” scenario.

This may seem like relatively small potatoes to some, but if we look at the ACE rule savings compared to the alternative of spending $80.2 billion on wind and solar, the ACE rule saves the state approximately $88 billion through 2050, the equivalent of nearly $1,300 per household per year. Furthermore, electricity prices would be 44 percent higher in the high-renewable scenario than they would in the ACE scenario, and this has a massive impact on the manufacturing and mining industries in our state.

Manufacturing and mining are enormous consumers of electricity. In fact, industrial electricity use accounts for 25 percent of electricity sales nationally, but this figure is much larger in Minnesota, where 33 percent of the total energy consumed (including imports of hydroelectric and coal-fired power from Canada and North Dakota) is used for industrial purposes.

In fact, U.S Steel’s MinnTac iron mining operation in Mountain Iron uses more electricity and natural gas alone than the entire city of Minneapolis, according to an article in MinnPost.

This is why the ACE rule would be such an improvement over our current state of affairs. Minnesota’s economy is heavily dependent upon mining and manufacturing, but we are making ourselves less competitive in the global marketplace by increasing the cost of electricity at a time when China and India are building more power plants than exist in the entire United States.

Having access to the reliable, affordable energy provided by our existing coal plants is crucial for giving our industries a fighting chance against countries with fewer protections for workers or the environment. Unilaterally foregoing the benefits of our affordable energy could result in more idled mines and fewer factories running full steam ahead. Unfortunately, foregoing this opportunity is exactly what Xcel Energy wants to do.

Xcel has proposed to shut down its coal-fired power plants by 2030, ten years before they were previously scheduled to close. This is incredibly bad energy policy because these coal plants, the Sherco plants and A.S. King, provide some of the lowest-cost electricity in the state, and it is likely these plants would be able to produce electricity for even lower cost as they continue to depreciate.

Rather than closing down affordable, reliable electricity generated by our existing coal fleet, Xcel Energy should embrace the ACE rule and allow the Minnesota families and businesses who paid for these plants a chance to reap the benefits of these investments in the form of lower electricity rates.

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