The MN PUC held a hearing on September 4, 2014, to address the impending investigation of social costs of pollutants under Minn. Stat. § 216B.2422 subd. 3 (known as externalities values).  First established in the late 1990s, the MN PUC re-opened the investigation in a February 2014 Order, focusing exclusively on PM2.5, SO2, NOx, and CO2.  But the MN PUC refrained from issuing a formal referral to the Office of Administrative Hearings (OAH) for contested case treatment in front of an Administrative Law Judge.  Instead, the MN PUC’s February 2014 Order directed the Minnesota Department of Commerce and Minnesota Pollution Control Agency to convene a stakeholder meeting to discuss scope.  The Minnesota government agencies organized this meeting, which was held in April, and then reported their efforts and recommendation to the MN PUC in a comment filed in June.

One of the recommendations from the Minnesota government agencies in their June Comment was to forego a full contested case review of CO2.  The Minnesota government agencies believed the MN PUC could avoid this lengthy analysis by simply adopting the Federal Social Cost of Carbon (SCC).  A number of parties, including utilities, customers, and suppliers, objected to this recommendation.

Ultimately, the MN PUC affirmed its February 2014 Order, with a slight twist.  The MN PUC referred the appropriate calculation of the externality value for CO2 to the OAH for contested case treatment for the purpose of determining whether the SCC is a reasonable and best available measure for the CO2 externality cost and, if not, what measure is better supported by the evidence.  Other terms and details will be clearly set forth in the MN PUC’s written order reflecting its September 4 decision.

The Commission’s decision on CO2, as well as the values for PM2.5, SO2, and NOx, will be the subject of intense debate over the next 12-18 months.  The final result will undoubtedly impact future MN PUC decisions on utility integrated resource plans and other resource acquisition dockets.  Stay tuned.