Jan 22 - McClatchy-Tribune Regional News - Jonathan Rivoli The Bismarck Tribune, N.D.

When deciding whether a new power plant is in the public interest, to what extent should the government consider the pollution it will produce?

The answer in North Dakota is not at all.

Under a law passed by the Legislature in 1995 and signed by former Gov. Ed Schafer, it is illegal for the state Public Service Commission to consider environmental damage as part of the cost of producing power. The law specifically forbids the commission from assigning a monetary cost to environmental damage or considering "the alleged costs of complying with future environmental laws or regulations that have not yet been fully enacted."

Supported by the coal industry and the PSC, the law emerged from a spat with Minnesota regulators and a fear that unquantifiable environmental costs would make their way into North Dakotans' electricity bills in the form of guesses.

"What that law was designed to do, is say we need to deal with what we know now," said Steve Van Dyke, communications director for the Lignite Energy Council.

PSC lead counsel William Binek argued in 1995 that it was a direct assault on the state's coal industry.

"The primary focus of the proponents of this artificial cost, is the elimination of coal as a fuel to be used for the generation of electricity," he said at a legislative hearing, according to meeting minutes.

Minnesota soon repealed its law requiring the consideration of environmental costs.

But 13 years later, the law still constrains regulators in their decisions and may make it more difficult for the state to work with its neighbors to mitigate growing concern over CO2 emissions and global warming. A revival of Minnesota's environmental requirement in December means the law also has set North Dakota up for a repeat confrontation with its neighbor on this issue.

PSC Commissioner Tony Clark said the law has not been directly applied to any cases since it passed because no utility has applied to build a new coal-fired power plant since 1995.

But with increasing electricity needs and talk of expansion across the entire energy complex, Clark said a practical application of it may come sooner than later.

If the utility seeks to serve both North Dakota and Minnesota -- as many large ones do -- it will face regulators in one state that forbid the consideration of environmental costs and regulators in another that require the consideration of those same costs. If it proposed to build a coal plant, Minnesota regulators could disapprove because an alternative energy source is cheaper when considering environmental costs. If it proposed an alternative -- such as natural gas or wind -- North Dakota regulators could disapprove because the cheaper coal plant would be considered best for ratepayers when environmental factors aren't included.

"It is going to be a very difficult multi-state issue to deal with," Clark said.

The new Minnesota requirement doesn't go into effect until 2012 and is vague on what carbon should cost, setting the value in a range of $4 to $30 per ton.

On Jan. 8, the North Dakota Industrial Commission voted to protest the action in the hopes of buying time to work things out with Minnesota. Attorney General Wayne Stenehjem is planning a trip to Minnesota to try to work out the details with state officials there.