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Judge recommends against Minnesota Power’s proposed Superior plant

July 3, 2018 /
Business North

A Minnesota administrative law judge has decided Minnesota Power has not shown it needs to make 250 megawatts of new electricity available from a proposed generation plant in Superior.

As a result,Judge Jeanne M. Cochran recommends the Minnesota Public Utilities Commission (PUC) deny a plan for the Duluth-based utility to construct and co-own the Nemadji Trail Energy Center (NTEC) gas-powered plant.

“We will be reviewing the details of the administrative law judge’s report and recommendations over the next week. The ALJ’s recommendation is contrary to what the Minnesota Department of Commerce recommended in May that the MPUC approve the agreements,” the company said in a prepared statement Tuesday.

The plant was proposed in June 2017 by Minnesota Power Co., a division of ALLETE Inc., and Dairyland Power Cooperative., will invest millions to construct a natural gas-powered electricity generating plant in Superior. It was to begin operating in 2024.

“This approximately $350 million investment will further balance Minnesota Power’s energy mix while contributing meaningful growth for ALLETE’s shareholders,” ALLETE Chairman, President and CEO Al Hodnik said in prepared comments 13 months ago.

Technically, NTEC will be jointly owned by Dairyland and a new division of ALLETE Inc. called South Shore Energy LLC.  Minnesota Power will not have an ownership interest in NTEC because Wisconsin statutes only allow Wisconsin entities to obtain a Wisconsin license, permit or franchise to own or operate a generation facility.

A public hearing was held in Duluth on Feb. 28. More than 1,500 written public comments were received by the March 23 deadline and responses were submitted until May 22.

A substantial majority of the company’s electric load is created by 13 large industrial customers, according to the state of Minnesota documents.

Many of the people who commented, the administrative law judge said, contend that the purchase is not needed to meet electricity needs. These commenters maintained that Minnesota Power could meet demand by increasing energy efficiency and investing in renewable energy alternatives, such as wind and solar.

“People in the region are concerned about their finances, and they don’t want their energy bills to go up to pay for a power plant unless it’s absolutely necessary,” said Annie Levenson-Falk, Executive Director of the Citizens Utility Board of Minnesota, a nonprofit consumer advocate. “It looks like Judge Cochran agrees that there are more cost-effective options.”

Many also objected to the fact that the gas to run the generators will be derived  from hydraulic fracturing. These commenters contended that fracking damages the environment by contributing to water and air pollution.

At ALLETE’s annual meeting, Hodnik suggested the gas-powered generators are needed at times when energy from sun or wind is not available.

The report added: “While most persons filing public comments expressed opposition to the NTEC proposal, comments of support for the proposed NTEC gas plant and power purchase were filed by businesses, organized labor, and economic development interests. These commenters maintained that gas is a clean burning resource and a better alternative than coal. They insisted that the proposed purchase will diversify the Company’s energy options and will be a necessary generation resource when alternatives such as wind and solar facilities are not generating electricity. Many of these commenters also extolled the number of jobs that will result from the construction and operation of the plant as well as the estimated $1 million in annual tax revenue.”

Among the issues to arise were Minnesota Power’s overall assumptions about electricity demand by large industrial customers. The report noted Mesabi Metallics and Magnetation Plants 2 and 4 are not currently operating and Blandin plans to permanently close its Paper Mill 5 in Grand Rapids. The forecast does assume the PolyMet mine, which will consume approximately 45 megawatts, will be fully operational by 2020.

Several large Minnesota Power industrial customers also questioned the need for additional power including ArcelorMittal USA (Minorca Mine); Blandin Paper Co.; Boise Paper, a Packaging Corporation of America company; Gerdau Ameristeel US Inc.; Hibbing Taconite Company; Mesabi Nugget; Sappi Cloquet, LLC; USG Interiors, LLC; United States Steel Corp. (Keetac and Minntac Mines); United Taconite, LLC; and Verso Corporation. They suggested Minnesota Power had failed to consider other alternatives that were potentially less expensive such as demand-response measures and customer-ownedgeneration.

Minnesota Power revised its demand forecast during the period of consideration. Its energy sales increase was estimated at 0.9 percent per year compound annual growth rate from 2017 to 2030 versus the 1.1 percent rate originally included.

“The ALJ got it right: Minnesota Power’s proposed gas plant is not in the public interest. The company does not need this plant, and could better serve consumers by instead investing in clean, renewable energy and energy efficiency. We urge Minnesota Power to withdraw its wasteful proposal and instead focus on a common-sense clean energy future that protects customers, our health, our climate, and our environment.” said Jessica Tritsch, senior campaign representative, Sierra Club Beyond Coal Campaign

In its Tuesday statement, the utility said: “Minnesota Power is committed to our EnergyForward strategy that will provide safe and reliable energy for this region while increasing the use of cost-competitive, renewable resources. With the addition of the Nemadji Trail Energy Center, we are confident we will reach 44 percent renewable energy by 2025. We are proud of our track record- leading the state in implementation of renewable energy with a 30 percent renewable portfolio.”

Author: Ben Bratrud

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