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Gas a costly option with coal available

By Ward Uggerud

In late April, the United States Department of Energy released a white paper that should horrify every energy regulator and policymaker, homeowner and business. Issued by DOE's National Energy Technology Laboratory, it describes how abandoning coal in favor of natural gas for electricity production threatens not only pocketbooks, but national security as well.

The report doesn't mince words: " . . the dash to gas will be exacerbated. . . increasing dependence on foreign energy sources and sending natural gas and power prices skyward across the country."

In other words, our crisis at the gas pump will become commonplace each month in utility bills.

Why? Because opposition to coal-fired power plants is reducing reserve generating margins and causing utilities to turn to their only viable option - natural gas. The NETL paper says declining domestic production, declining Canadian imports and opposition to liquefied natural gas terminals have caused natural gas prices to triple in the last six years.

The report is sobering, but not new. The Big Stone II utilities have known for many years that - absent a new coal-fired facility - their only option is natural gas generators. Incidentally, the price of natural gas today is more than 50 percent higher than last winter. Natural gas utilities in our region are shutting off customers in high numbers for not paying last winter's bills. Do we want to add to that misery by driving electric bills sky-high too?

Make no mistake, we must provide our customers with the lowest cost, most reliable electricity possible. We do not want our customers exposed to electricity prices behaving as crude oil and gasoline prices. Yet that is what we fear may happen. And, as appealing as simply relying on yet additional amounts of renewable generation may be, it is a simple fact that renewable resources are intermittent. Increasing our reliance on intermittent resources - if not carefully integrated with our existing system - can increase our dependence on natural gas.

On June 5, the Minnesota Public Utilities Commission decided to defer a vote on our application for a transmission certificate of need. The new transmission facilities are needed to convey power from the Big Stone site as well as from numerous wind energy projects.

A "Yes" vote by the PUC will put us a step closer to supplying our customers' growing energy needs with least-cost, Big Stone II power. I am confident that when the PUC considers Big Stone II - especially in light of the concerns brought out in the NETL report - the wisdom of building a modern, efficient coal-fired plant will be unmistakable.

Ward Uggerud is Senior Vice President of Otter Tail Power Co.