A Minnesota administrative judge has concluded that Minnesota Power failed to demonstrate a need for its proposed $700 million gas-fired power plant in Superior, Wis., a potentially significant blow to the Duluth-based utility.

Minnesota Power and La Crosse, Wis.-based Dairyland Power Cooperative created a joint venture and announced the new plant a year ago. It would generate at least 525 megawatts of electricity, with Minnesota Power taking about 250 megawatts. (A megawatt is 1 million watts.)

Minnesota Power didn't demonstrate that its 250-megawatt share "is the best and least-cost alternative to meet its customers' capacity and energy needs as claimed by the company," Jeanne Cochran, an administrative law judge, wrote in an opinion released Monday.

The company didn't adequately consider other options, including more renewable energy, she concluded.

Administrative law judges are appointed to contested cases before the Minnesota Public Utilities Commission (PUC). Their rulings are nonbinding recommendations, but they carry weight before the PUC.

In a statement, the company said it will be "reviewing" Cochran's decision, adding that it has been a Minnesota leader in implementing renewable energy.

Minnesota Power is the state's second-largest investor-owned utility with 145,000 customers in northeastern and central Minnesota.

The Superior plant is part of its attempt to diversify away from coal-generation toward more gas-fired power and renewable energy, particularly wind and hydropower. Gas-fired power plants emit about half as much carbon dioxide as coal generators.

The Superior power plant is opposed by environmental and clean-energy groups, as well as by the company's large industrial customers including taconite plants and paper mills. The clean-energy groups include the Minnesota Center for Environmental Advocacy (MCEA), the Sierra Club, Fresh Energy and Wind on the Wires.

Cochran's decision "makes it clear that an expensive natural gas plant isn't needed and there are better and cheaper ways to provide reliable electricity for Minnesota Power customers," Leigh Currie, MCEA's energy program director, said in a statement.

Cochran faulted the supply-and-demand models used by Minnesota Power to justify its need for the new power plant. She agreed with both clean-energy organizations and large industrial-power users that the company's long-term models were "biased" in favor of the new plant.

The company failed to adequately consider a "reasonable range of alternatives" to the Superior plant, including other gas-fired power and renewable-energy options, as well as greater energy-efficiency initiatives, Cochran wrote.

She also disagreed with the Minnesota Department of Commerce, which represents the public interest before the PUC.

The Commerce Department found that Minnesota Power's supply-demand analysis essentially supported plans for the Superior plant.

The Commerce Department's own modeling concluded that the 250-megawatt addition proposed by Minnesota Power was the "least-cost" expansion plan. Cochran found that the department's analysis "unreasonably constrained" options to the new plant and was therefore "biased" toward it.

Mike Hughlett • 612-673-7003