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Dairyland’s proposed NG plant gets pushback from Minnesota

February 21, 2018 /
La Crosse Tribune

By Chris Hubbuch

Minnesota consumer and environmental groups are pushing back against Dairyland Power’s proposal to build a $700 million natural gas power plant in Superior.

The Citizens Utility Board of Minnesota, which represents utility customers, released survey results Wednesday that said more than three quarters of Minnesota Power’s customers oppose the utility’s plans for the 525-megawatt Nemadji Trail Energy Center, which would be jointly owned by the La Crosse-based cooperative.

Meanwhile, groups representing large industries and clean energy advocates agree that Minnesota Power hasn’t justified the need for the plant and hasn’t considered cheaper alternatives.

“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,” CUB executive director Annie Levenson-Falk said in a news release. “Right now, it looks like there are more cost-effective options.”

Amy Rutledge, Minnesota Power manager of corporate communications, said the utility thinks the plant is the most economical way to meet its goal of reducing reliance on coal.

“We think there’s a need,” she said. “It will be up to us to demonstrate that to our Minnesota regulators.”

Under the terms of a proposal announced in June, Dairyland Power would construct the plant in partnership with Minnesota Power. The utilities would share equally in the power and generating capacity.

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.

Dairyland spokeswoman Katie Thomson said the questions and concerns are “part of the democratic process.”

“It’s good public discussion,” she said.

In a November poll of more than 550 randomly selected Minnesota Power customers conducted by the CUB, 77 percent said they were opposed to their utility building a new plant when told if built, “the electricity you use could cost you significantly more each year.”

The same survey found 74 percent of customers were unfamiliar with the proposal.

Opposition from industry and green groups

Minnesota regulators are considering whether Minnesota Power’s proposal is necessary and reasonable based on forecast demand, cost and alternatives. Only Wisconsin-based entities can own power plants in the state, so Minnesota Power is proposing to create a spin-off company, which requires approval of the PUC.

Dairyland CEO Barb Nick said the project would help support nearly 200 megawatts of renewable resources Dairyland has added to its portfolio since 2016. Minnesota Power makes similar arguments in its application.

New natural gas-fired generators are designed for quick startup and can efficiently respond to fluctuations in demand, making them a good complement to solar and wind, which have no fuel costs but don’t necessarily generate power when it’s needed. When the wind dies down or clouds cover the sun, operators can call on natural gas plants to fill in.

But Minnesota Power doesn’t need a gas plant to balance renewable energy, according to Michael Jacobs, an energy analyst for the Union of Concerned Scientists who filed comments on behalf of clean-energy organizations.

Both utilities have plenty of “dispatchable resources” to support their renewable investments, said Leigh Currie, an attorney with the Minnesota Center for Environmental Advocacy, which is representing the Sierra Club, Wind on the Wires and Fresh Energy in the case.

“It would be a different question if we were asking a utility to go 100 percent renewable and they said we need some gas,” Currie said. “That’s not the case with Dairyland and Minnesota Power.”

Michael Gorman, a consultant for a coalition of mines, paper mills and pipeline company Enbridge, who collectively purchase about two-thirds of the utility’s electricity, came to a similar conclusion.

Consultants for both industry and green groups argue Minnesota Power has exaggerated its capacity needs and that even the company’s own projections show the Nemadji Trail project would result in excess capacity.

“We think this resource is needed,” Rutledge said. “We don’t think we can compromise reliability.”

An analyst for the Minnesota Department of Commerce raised questions about the bidding process, which he said make it impossible to tell whether the cost of the plant is in the public interest.

Clean-energy advocates also argue the proposal would discourage energy conservation and investments in renewable generation while sinking money into a fossil-fuel plant with a 40-year lifespan.

“We’re concerned that’s the wrong place to continue investing our resources,” Currie said. “We’re interested in building a cleaner grid of the future.”

At the national level, electricity producers have been retiring coal plants in favor of lower-cost natural gas, which emits fewer pollutants and greenhouse gases. But environmental groups say this plant isn’t needed to replace any coal-fired generation.

“It’s not a replacement for coal, it’s a way to meet new growth,” Currie said. “The analysis should be how should the system meet the overall needs … that’s the analysis they haven’t done.”

A judge will hear public testimony Wednesday in Duluth and is expected to make a recommendation to the Public Utilities Commission this summer.

The plant will also require approval from the Wisconsin Public Service Commission. Thomson said Dairyland plans to submit an application this summer.

Rutledge said the partnership with Dairyland provided an economy of scale that Minnesota Power couldn’t have achieved on its own.

Thomson wouldn’t say whether Dairyland could continue to pursue the project should Minnesota Power fail to get approval.

“I really can’t speculate,” she said. “Dairyland and Minnesota Power are great partners.”

Author: Ben Bratrud

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