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Minnesota Quitting Coal 9 Percent Slower Than The National Average, Despite Electricity Prices Rising 30 Percent Faster

Many Minnesotans like to believe that Minnesota is a “green” state. However, data from the U.S. Energy Information Administration (EIA) shows that Minnesota has reduced its’s coal consumption by a slower rate than the nation as a whole from 2001 to 2018. Despite reducing it’s coal consumption by a smaller margin than the national average, Minnesota has seen it’s electricity prices increase 30 percent faster than the national average.

In essence, Minnesota’s energy policy has been a massively-expensive failure, and proposals to shut down the remainder of the state’s coal plants and replace them with a combination of wind, solar, and natural gas will cause electricity prices to skyrocket even more.

The graph below is from EIA, and it shows that Minnesota has reduced it’s coal consumption by 25 percent since 2001. However, the nation as a whole reduced its coal consumption by nearly 34 percent, meaning Minnesota lags the national average by about 9 percent.

Despite the fact that the rest of the country has reduced its use of coal more than Minnesota, our electricity prices have increased much faster than the national average. EIA data show big increases in electricity prices in Minnesota since 2007, when then-Governor Tim Pawlenty signed the Next Generation Energy Act into law, which mandated 25 percent of Minnesota’s electricity come from renewable energy sources by 2025.

Before the NGEA, Minnesota lawmakers required Xcel Energy to build wind turbines as part of a 2005 deal to continue operating their fleet of nuclear power plants. Since that time, our electricity prices have increased nearly 30 percent faster than the national average, as you can see in the graph below.

This means Minnesota families and businesses have seen their electricity prices increase much faster than the national average for results that have been significantly worse, to date.

Why have other states been able to reduce their coal consumption at a much lower cost than Minnesota? Low-cost natural gas. For example, thanks to hydraulic fracturing, Pennsylvania became the second-largest natural gas producing state in the country. This has resulted in a 50 percent reduction in coal consumption, double the rate of coal reduction as we’ve seen in Minnesota.

Not only has Pennsylvania doubled Minnesota’s reduction in coal consumption, they have done so at a fraction of the cost. Since 2005, Pennsylvania has seen their electricity prices increase by only 18.5 percent, which is 41.4 percent less than the price hikes we’ve seen in Minnesota.

Minnesota has seen it’s electricity prices increase far faster than the national average because politicians and utility companies are trying to replace reliable, affordable coal-fired power plants in Minnesota with weather-dependent resources like wind and solar, which will require billions of dollars of expensive transmission lines to accommodate, as well as large quantities of natural gas fired electricity.

What’s to Come in the Future?

Renewable energy advocates would likely take issue with the analysis presented thus far by stating that Minnesota’s coal reductions will likely be above average due to Xcel Energy’s plan to prematurely retire it’s coal fired power plants over the next decade. If Xcel is allowed to shut down these affordable, reliable sources of electricity, this claim will likely be true, but it will come at a great cost.

My colleague Mitch Rolling wrote an article explaining that Xcel’s plan to shutter their coal plants and replace them with a combination of wind, solar, and natural gas will cost its customers $46 billion through 2050, and cause electricity prices to rise by about 30 percent relative to today’s prices. This means the average Minnesota household with Xcel Energy as their utility company will pay nearly $1,200 per year, every year through 2050.

Despite the enormous costs associated with Xcel’s plan, it would avert just 0.0003 degrees Celcius of future global warming by 2100, an amount far too small to measure.

Minnesota’s rush to renewables has resulted in skyrocketing electricity prices for lackluster results. Repeating this mistake will continue to harm Minnesota families and businesses by making it more expensive to keep the lights on.

Instead of closing down our coal-fired power plants before the end of their useful lifetimes, Minnesota utilities should continue to use these affordable, reliable plants open until they it no longer makes economic sense to keep fixing them. Then, a transition to reliable-low carbon sources of electricity like nuclear and hydro power will yield the greatest reduction in carbon dioxide for the lowest cost.

 

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