Minnesota PUC puts off decision to scrap aging coal power plants

  • Article by: DAVID SHAFFER , Star Tribune
  • Updated: August 9, 2012 - 11:33 PM
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Minnesota Power, which owns this plant in Schroeder, Minn., wants the state to do more study before deciding whether to pull the plug on plants like this one in northeastern Minnesota.

Photo: David Brewster, Star Tribune

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State regulators decided to wait until next year before ruling whether three aging, coal-burning power generators should be retired.

The Minnesota Public Utilities Commission (PUC) voted unanimously Thursday to require Minnesota Power to submit more information by next March about the impact of closing the three units, which are 45 to 59 years old.

The state Commerce Department, which intervenes in utility cases, had sought an order to shut down by 2017 both units at the Laskin Energy Center in Hoyt Lakes and one of three units at Taconite Harbor Energy Center in Schroeder. The state agency said it would be cheaper to replace the coal units with power generated from natural gas or wind.

"Minnesota Power's ratepayers are going to pay $65 million more over the planning period [through 2024] if those plants continue to run," said Kate O'Connell, the department's manager of energy planning, citing the agency's analysis.

It was the first time the utilities commission had been asked to shut down power plants over the objection of the owner. Although more financial details were shared with the commission, its five members ultimately couldn't agree on whether the information was adequate.

In a surprise vote, three of five commission members indicated that they believe the plants are no longer economical. The nonbinding motion favored by one Republican appointee and two Democrats warned Minnesota Power that the company, not ratepayers, may be responsible for costs at the plants after 2016 -- a regulatory step that would effectively shut them down.

'A message of skepticism'

"It is sending a message of skepticism about continuing to operate these aging coal plants," said Beth Goodpaster, an attorney for environmental groups that have urged shutting down the three units.

Minnesota Power, which is based in Duluth, sells the bulk of its power to mining and industrial customers on the Iron Range. It has resisted closing the plants, but offered to do more study. The company didn't publicly release all of its financial reasoning, declaring as "trade secret data" such things as the estimated cost of air-pollution upgrades.

Across the nation, coal-burning utilities are facing the same cost questions as they consider investing in pollution-control upgrades to meet long-delayed regulations under the U.S. Clean Air Act and other laws. Coal-burning power plants release mercury and other pollutants that have been tied to developmental disorders and respiratory illnesses.

On Tuesday, Rochester Public Utilities decided to retire its only coal-burning power plant rather than spend $90 million on better pollution controls. Otter Tail Power Co., based in Fergus Falls, and Xcel Energy Inc. in Minneapolis also have plants confronting the issue.

Minnesota Power gets 85 percent of its power from burning coal but lately has been adding wind power. The utility initially contended that it didn't need to retire any coal plants before 2024, though executives now say the question should be decided next year.

Under the PUC order, the company must conduct additional studies, including economic effects, and submit a multi-year plan for its future power needs. Two of the utility's other older coal plants, at its Boswell Energy Center in Cohasset, also will be reviewed.

Minnesota Power executives were mostly pleased with the PUC decision.

"The commission agreed the company needed more time," said Al Rudeck, the utility's vice president of strategy and planning. "It's a win for prudent planning and moving forward in a balanced way."

David Shaffer • 612-673-7090

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