Co-ops sue Minnesota for coal-based energy limit

Two electrical cooperatives with ties to South Dakota are plaintiffs in a federal lawsuit challenging provisions of Minnesota's renewable energy standard.

Earlier this month, Missouri River Energy Services, a Sioux Falls-based cooperative that sells wholesale electricity to 61 municipalities in four states, and Basin Electric Cooperative, which generates and sells power to much of South Dakota, joined the state of North Dakota and coal groups in suing Minnesota over a state law that restricts new coal-fired generation in Minnesota, including coal-fired power imported from other states.

The goal of the four-year-old law is to stem growth of heat-trapping carbon emissions that contribute to climate change.

The plaintiffs say the law is merely a "symbolic gesture" toward global warming and unconstitutionally restricts interstate commerce. More to the point, they say, it will shackle one of the top industries in North Dakota, which is home to the world's largest deposit of lignite coal.

"The (law) has had and will continue to have a chilling effect on the development of new large energy facilities," the complaint says.

The state of Minnesota rejected those arguments in its answer this week, citing the 11^th Amendment protecting state sovereignty. It also said the law does not discriminate against power produced in other states, since new coal generation also is banned inside Minnesota.

A handful of energy projects were exempted under the law, among them Big Stone II in Milbank, which sputtered in 2007 for lack of investment before it was built.

Dusty Johnson, chief of staff to Gov. Dennis Daugaard and a former Public Utilities Commission chairman, said the Minnesota law "erects walls around their state" and artificially drives up energy costs.

Johnson testified in favor of Big Stone II before the Minnesota PUC and said the commerce clause argument makes sense.

"It's a little hard to argue that the movement of electrons from Milbank to Minneapolis, whether green or brown, is anything other than interstate commerce," he said.

Missouri River Energy Services has a dozen municipal customers in South Dakota, twice that in Minnesota. About half of the electricity it sells is generated by burning coal, and a regional restrictions on coal generation could push up member rates, company spokesman Bill Radio said.

"We plan an energy portfolio that gets blended together to meet all of our members' needs," he said. "If we can't include coal as part of our Minnesota members, we can't include it for any of our members."

But Matt McLarty, a policy advocate at the Sioux Falls clean-energy group Environmental Law and Policy Center, said the lawsuit amounts to "coal companies suing a state to make them take their product."

"The people of Minnesota decided that they wanted a more balanced energy portfolio," he said. "It speaks volumes that they don't want coal."