One hundred eleven miles of power lines -- the core of a contentious, four-year battle over coal power -- were cleared for construction Thursday by the Minnesota Public Utilities Commission, after an all-day meeting to a packed house. The 5-0 decision dropped the last regulatory obstacle to construction of Big Stone II, a coal-fired power plant that would sit just across the border near Milbank, S.D., but needs those lines to carry nearly half its generated electricity to Minnesota customers.
Five environmental groups indicated a likely court appeal on the same grounds they have used for years fighting the plant: that coal is a major source of climate-changing carbon emissions, and that this plant violates recent state statutes giving preference to conservation and renewable energy to meet future power needs.
"Minnesota has just been condemned to an additional 4 million tons of carbon dioxide a year," said Beth Goodpaster, attorney for the Minnesota Center for Environmental Advocacy, which has argued against approvals.
But the five regional utilities collectively seeking the $1.3 billion plant were also unhappy, because of conditions the commissioners imposed along with their approval. In response to criticism that the utilities lowballed their expected expenses -- to compare favorably to other energy alternatives -- the commission took the unusual step of specifying dollar caps on the plant's construction costs and any future costs of carbon regulation, such as a tax or a cap-and-trade system. Anything above those caps could not be charged to ratepayers; instead, shareholders would have to bear them.
"While we appreciate that they saw the need for the lines, we have to decide if those are conditions we can live with," said Dan Sharp, spokesman for the Big Stone II utilities.
Fergus Falls-based Otter Tail Power, the lead utility, was also directed to close an existing coal plant, Hoot Lake, with its 145 megawatts of generation, by 2018. Otter Tail has a 20 percent stake in the 500-to-580-megawatt Big Stone II, which would come online in 2015.
The commission's unanimous approval Thursday was a shift from divided opinions expressed in a meeting last June. Then it appeared they were headed for a 2-2 call, with newcomer Dennis O'Brien the swing vote, so the commission asked for one more, independent cost analysis of the project. That report, delivered in October by East Coast-based Boston Pacific Co., concluded that most of the utilities' cost calculations were low, understating future expenses. It was that conclusion, several commissioners said on Thursday, that convinced them of the need to take steps to "manage" cost risks with the caps. The commissioners also praised emissions controls planned for Big Stone II, which would deliver substantial reductions in sulfur dioxide and mercury.
H.J. Cummins • 612-673-4671