Rochester's city utility decided it would be cheaper to buy electricity than to upgrade its decades-old generating station.
The oldest operating coal-fired power plant in Minnesota soon will generate its last watt of electricity.
Rochester Public Utilities' board of directors voted Tuesday to retire its Silver Lake plant, adjacent to the city's downtown.
The smallest and oldest generator at the plant began supplying power to the southern Minnesota city in 1948, just three years after the end of World War II. Three larger units -- all coal burners -- were added between 1953 and 1969.
"This is clearly an economic decision," Jerry Williams, president of the city-owned utility's board, said of the vote to decommission the plant in 2015. "Basically, we can go out on the open market and purchase electricity ... at a lot less cost."
Rochester is the state's first major electric utility to decide the fate of its aging coal-fired generators amid the recent federal push to implement long-delayed regulations under the U.S. Clean Air Act. Other utilities, including Minnesota Power, Otter Tail Power Co. and Xcel Energy Inc., face similar decisions as rules for mercury and other emissions loom.
A consultant for Rochester Public Utilities concluded that the Silver Lake plant would need $90 million in environmental upgrades.
"It's not surprising and not inconsistent with what utilities around the country are deciding to do with smaller, older coal-fired power plants," said William Grant, deputy commissioner of the state Commerce Department and head of its energy division, which intervenes in utility cases. "They are determining that those facilities are so inefficient they are no longer economical to run, and continuing to do so would be detrimental to their customers."
The plant employs 54 workers, and utility officials said it's uncertain how many will be needed after the plant is retired. The plant still will operate from time to time until 2015, but in the past year each unit has generated power on the equivalent of only two to four days. The utility also has hydropower and other generators, but no other coal units.
Silver Lake Unit 1 is Minnesota's oldest operating coal-burning generator, according to a U.S. Environmental Protection Agency database. All four Silver Lake units also have the capability to burn natural gas but have relied on coal at least part of the time in recent years, said the utility's general manager, Larry Koshire.
Williams, the board president, said the Silver Lake plant has never been found in violation of air pollution regulations. In December, the EPA warned Rochester Public Utilities that it may be in violation of regulations that required pollution-control upgrades when units underwent other modifications in years past. Utility officials and an EPA spokeswoman in Washington said the outcome of that case is under discussion.
"The EPA is aggressively targeting coal-fired electrical generating units" not only with new rules that affect the whole industry but with targeted enforcement against utilities that are suspected of violating existing regulations, said the report by Rochester's consultant, Burns & McDonnell Engineering Co. of Kansas City.
Plant isn't indispensable
The utility has already shown it can do without the plant, relying on cheaper power from other producers that can be purchased off the regional power grid. The plant is obligated to operate until late 2015 because of contracts to supply steam to Mayo Clinic and to generate electricity when needed by a regional power association.
"Many utilities are able to take advantage of this pricing condition and acquire energy from the market much more economically than they could from operating generating assets they own," the report said.
J. Drake Hamilton, science policy director for Fresh Energy, a clean-energy policy group in St. Paul, said that even though the decision to retire the plant is an economic one, it will have important health benefits in the city that is home to the Mayo Clinic.
"You have a very old coal-fired plant in a town that prides itself, appropriately, on being a health care leader," she said. "Coal is one of the most significant sources of air pollution, including fine particle matter that harms people by causing, in some cases, heart attacks, respiratory illness and asthma."
David Shaffer • 612-673-7090