Judges deliver major setback to Big Stone II project

A proposed new coal plant near the Minnesota-South Dakota border was dealt a major setback Friday when two Minnesota administrative law judges recommended against construction of its power lines in western Minnesota. The transmission lines are necessary if the $1.6 billion Big Stone II plant is to be built near Milbank, S.D., just a few miles from Minnesota's border.

The officials concluded that the five regional power companies in a partnership to build the coal-fired plant had not proved the transmission lines were needed and had failed to show that less expensive conservation measures and renewable energy such as wind could not meet any demand for additional electricity.

The project, announced in 2004, has spurred one of the larger environmental debates in the state in recent years because of mounting public concerns about global warming and energy policy.

Utility officials have stressed the need for additional electricity and a more reliable network of power lines, while environmental and conservation groups have claimed that burning coal contributes to climate change and carbon emissions will impose costs in the future. Two of the original utility partners dropped out of the project in September.

Dan Sharp, communications director for Big Stone II, noted that the report is only a recommendation and that the utilities will take their case to the Minnesota Public Utilities Commission in a few weeks. That five-member panel has the final say about whether to grant a certificate of need for the project's power lines and whether to issue permits for their routes. The commission is scheduled to hear final arguments and to rule on the matter next month.

"We're really perplexed by this," said Sharp, referring to the recommendation. "We really don't know what to make of it."

Challengers delighted

Janette Brimmer, legal affairs director for the Minnesota Center for Environmental Advocacy, said that her organization and four other groups that opposed the project were delighted with the recommendation. "This is a huge watershed decision for Minnesota's energy use, moving from the old era to the new," said Brimmer. "It really is representative of the new way of thinking that we're starting to see across the country."

Brimmer said that coal-fired plants that will last for the next 40 years or more should not be built for economic and environmental reasons. Financial lenders and utilities in other states are asking tougher questions about the economics of coal-fired plants, she said, noting that more than two dozen have been canceled since 2006 and that regulators in five states have voted down coal-burning proposals in the past year.

"The days of polluting for free are numbered," said Barbara Freese, a clean energy consultant for the Union of Concerned Scientists. "Soon utilities will have to pay to pollute, and when you accurately account for that cost, coal plants aren't a sound investment."

Alternative more expensive?

Sharp said that Otter Tail Power Co., the lead developer of the project, and its partner utilities believe that a highly efficient coal-burning plant is the best choice for their ratepayers in the near term. "The most likely alternative [to Big Stone II] is to build a natural gas generation plant, which would be horribly expensive," Sharp said. The five utility partners provide electricity to about a million people in several states, he said, but about 45 percent of the new plant's power would be consumed in Minnesota.

Sharp said that the new plant and improvements to the existing plant would more than double the electricity produced at the site without increasing pollutants such as sulfur dioxide, mercury and nitrogen oxides.

The administrative law judges recognized the worthiness of those environmental improvements and noted that transmission lines are needed "to some degree" in the area, but said that the utilities had proved a need for at most 160 megawatts of electricity rather than the 500 megawatts or more that the new plant would provide.

More important, they said that the utilities had significantly underestimated pollution costs that they are likely to face in the near future once global warming laws impose financial costs on carbon dioxide emissions. The utilities also failed to meet Minnesota requirements "to demonstrate that they have explored the possibility of obtaining power from renewable energy sources," the judges wrote, "and that Big Stone II is less expensive (considering environmental costs) than power generated by renewable energy sources."

The other utilities participating in the project include the Central Minnesota Municipal Power Agency, Heartland Consumers Power District, Missouri River Energy Services and Montana-Dakota Utilities Co. Great River Energy and the Southern Minnesota Municipal Power Agency withdrew from the partnership last year.

Tom Meersman • 612-673-7388