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Minnesota judge recommends against proposed Dairyland natural gas plant

July 4, 2018 /
La Crosse Tribune 

By Chris Hubbuch

Dairyland Power’s plans to build a $700 million natural gas plant in Superior could be in jeopardy after a Minnesota judge found the plant is not in the public’s best interest.

A Minnesota judge on Monday recommended that regulators deny Minnesota Power’s proposal for the 525-megawatt Nemadji Trail Energy Center, which would be jointly owned with the La Crosse-based cooperative, after determining that Minnesota Power failed to show the plant is “needed and reasonable.”

Minnesota Power needs approval from the Public Utilities Commission to build the plant, whose cost would be passed on to ratepayers there. Clean energy organizations, consumer advocates and large industry groups have opposed the plant, while business, labor and economic development groups in Superior have supported the project.

Judge Jeanne Cochran ruled Monday that Minnesota Power’s consideration of alternatives was inadequate and the company failed to demonstrate the plant’s necessity for reliability.

“There just wasn’t evidence that the plant was needed or that it would be the most cost-effective way to get energy if there was a need,” said Annie Levenson-Falk, executive director of the Citizens Utility Board of Minnesota, which represents Minnesota utility customers. “A plant shouldn’t be built unless it’s absolutely needed because the costs are going to be paid by customers.”

The judge’s recommendation is nonbinding, and the Minnesota Public Utilities Commission is expected to consider Minnesota Power’s request this fall.

The project will also require approval from the Wisconsin Public Service Commission. Dairyland is expected to file an application later this summer.

Dairyland spokeswoman Katie Thomson said the cooperative is assessing the ruling and evaluating its options. She declined to say whether Dairyland would pursue the project independently or with another partner.

“We don’t know what’s going to happen in the future,” Thomson said. “We will assess and reassess as we go along.”

Minnesota Power released a statement Tuesday saying it was reviewing the judge’s ruling and is committed to providing safe and reliable energy while increasing the use of renewables.

“With the addition of the Nemadji Trail Energy Center, we are confident we will reach 44 percent renewable energy by 2025,” the company said.

Dairyland has argued the natural gas plant will enable its move to more renewable energy sources like wind and solar because such plants can more efficiently adjust their output than traditional coal-fired generators. Though coal remains the backbone of Dairyland’s generation resources, the company has been aggressively adding renewable resources as it works to reduce coal’s share of capacity to 50 percent by 2026.

With utility-scale battery storage technology still on the horizon, power grid operators need flexible on-demand generators — known in the industry as “dispatchable resources” — to fill in when the wind isn’t blowing or the sun isn’t shining.

Aaron Klemz of the Minnesota Center for Environmental Advocacy, said there are other ways for utilities to maintain reliability while increasing the use of renewable power and added the Nemadji Trail plant would make it harder for Minnesota to meet its greenhouse gas emission targets.

“Every year the industry gets better at providing better and cheaper renewable energy,” he said. “What will it look like 20 years from now? Building a plant like this is a commitment for decades. It’s not just a commitment for tomorrow.”

Consultants for both environmental and industry groups alike concluded Minnesota Power has exaggerated its needs and that the plant would result in excess capacity. The majority of the public comments filed opposed the plant and argued Minnesota Power could meet demand through energy reduction and renewable resources.

A subsidiary of the investor-owned ALLETE, Minnesota Power is based in Duluth and serves about 145,000 customers in northeastern Minnesota. Dairyland, with $1.6 billion in generation assets, provides electricity for about 258,000 customers of 41 member cooperatives and municipal utilities in Wisconsin, Minnesota, Iowa and Illinois.

The judge’s recommendation is nonbinding, and the Minnesota Public Utilities Commission is expected to consider Minnesota Power’s request this fall.

 

Author: Ben Bratrud

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