American Experiment urges Xcel to keep their system reliable and affordable
Yesterday, American Experiment policy fellow Isaac Orr appeared in front of the Minnesota Public Utilities Commission to testify on Xcel Energy’s plan to prematurely retire their coal fleet and build thousands of megawatts of new solar panels and wind turbines.
You can watch the video and read the transcript below:
Dear esteemed members of the Minnesota Public Utilities Commission,
My name is Isaac Orr, and I am a policy fellow specializing in energy and environmental policy at Center of the American Experiment. I am testifying today on behalf of the thousands of Minnesotans who are deeply concerned about the reliability and affordability of the electric grid.
Decision points
We believe the priorities of the PUC must be reliability first, which we define as only approving power plants that can be dispatched, affordability second, and carbon-intensity must be the third and final consideration. Only then will a transition to lower-carbon sources of electricity be financially or politically sustainable.
For these reasons, we urge the commission to reject Xcel’s Alternative plan and Xcel’s proposal to build transmission tie-lines from the Sherco and King sites.
Instead, we encourage the commission to approve a modified version of Scenario 15, which utilizes the Sherco 3 and King plants until the end of their useful lifetimes and relicenses Minnesota’s entire nuclear fleet. We believe both nuclear plants should be granted 20-year relicenses, rather than 10 years.
However, American Experiment believes the PUC should not approve thousands of megawatts of new solar power or repower existing wind turbines in Scenario 15 because these resources do not meaningfully contribute to the reliability of the grid during extreme weather events, they increase the cost of maintaining a reliable electricity system, and they have short useful lifetimes that will require repowering before 2050.
Reliability is of the utmost concern
In October of 2021, the Midcontinent Independent Systems Operator (MISO) issued a troubling report warning of potential capacity shortfalls this winter during periods of low wind generation.
While we have not yet experienced winter reliability issues in MISO regions of Minnesota, it is well understood that wind turbines do not operate when temperatures dip below -22 degrees. Battery storage is also incapable of keeping the lights on in these situations.
A recent analysis by Wood Mackenzie estimated there would be only 740,000 MWh of battery storage installed globally by 2030, or just 1 percent of Minnesota’s 2019 electricity consumption.
MISO is projecting that more coal-fired power plants will close in the coming years. These closures are eroding MISO reserve margins and increasing the need for gas peaking plants, electricity imports and increasing the likelihood of initiating rolling blackouts.
Xcel’s Alternative Plan and the plans put forward by the Clean Electricity Organizations will make the grid more reliant upon intermittent renewables and imports to meet peak demand. Unfortunately, these plans will simply make the grid more fragile and susceptible to shortages. They will also increase costs.
Affordability
According to U.S. Energy Information Administration data, Minnesota electricity prices have increased 2.7 times faster than the national average since 2007. This is largely due to the passage of the Next Generation Energy Act.
Furthermore, Xcel Energy is seeking to raise rates by 21.2 percent over three years, and this increase does not begin to account for the billions of dollars that will be spent in this IRP to construct more wind turbines, solar panels, transmission lines, and battery storage facilities.
The Alternative Plan will also increase the interdependency of the natural gas and electricity system. This is problematic because natural gas prices surged during the Polar Vortex of 2021 as demand for home heating and electricity generation spiked, but supply was limited due to disrupted supplies from Texas. The result was a $300 to $400 increase in home heating bills.
Prematurely retiring Xcel’s coal fleet will only make situations like last February more likely and more costly. The PUC must understand and appreciate the vital role the coal plants play in fuel diversity and on-site fuel supply, which helps keep prices in check for electricity and home heating consumers.
Sustainability: At American Experiment, we believe that the only way to sustainably reduce emissions in the long term is to build an electric grid that is more reliable, and more affordable than the existing grid. If reliability or affordability are compromised, support for reducing emissions will evaporate.
This is why we are highly supportive of Xcel Energy’s memorandum of understanding with NuScale power, and we believe that the company should seek to build new nuclear power plants at Sherco and King sites when these plants have reached the end of their useful lifetime.
This strategy will achieve a reliable grid that generates affordable, on-demand electricity without carbon dioxide emissions for 80 years, whereas any wind turbine or solar panel built today will need to be replaced before 2050.
Building new nuclear plants will also provide a just transition for the host communities that have partnered with Xcel for the last several decades by providing high-paying jobs and property tax revenue.
For these reasons, we urge the Commission to prioritize reliability, affordability, and sustainable emissions reductions by approving Scenario 15, or requiring Xcel to revisit this discussion in another IRP in 2023.
Thank you.