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Industry lines up against proposed power plant in Superior

Minnesota Power and Dairyland Power Cooperative have proposed a $700 million natural gas power plant, Nemadji Trail Energy Center, which would be located near the oil refinery in Superior and provide up to 550 megawatts of power. (Courtesy Minnesota Power)

Northland mining, paper and energy companies are giving a hard pass to Minnesota Power's proposed natural gas plant.

What's more, according to testimony filed on their behalf, these businesses would rather be subject to occasional blackouts and pay less for power through a scheme known as interruptible rates, if it helps keep the plant from getting built.

"Because the existence of interruptible load allows utilities to avoid building or buying generation capacity to serve these loads, it can provide a win-win-win for the utility," writes consultant Robert R. Stephens for Large Power Intervenors, a band of 11 companies that together consume two-thirds of Minnesota Power's electricity.

The group has told the Public Utilities Commission the $700 million Nemadji Trail Energy Center is not in the public interest and that Minnesota Power "has failed to prove that the approximate 250 megawatt purchase of NTEC capacity ... is the best and lowest-cost resource option available to meet its customers' projected capacity and energy needs."

The PUC is weighing whether to let Minnesota Power get electricity from the plant that it wants to build in Superior with Dairyland Power Cooperative. The utilities plan to split the cost and the 525 megawatt output.

Minnesota Power is not pitching any rate increases with its proposal, though opponents say it will be customers who ultimately pay for the new power plant.

"It carries the price of construction, plus the cost of the financing for that investment, and the cost of the fuel to run the plant," said the consumer advocate Citizens Utility Board. "The fuel cost is passed directly through to customers on monthly bills, and fuel prices are unpredictable, which adds a risk for customers over the multiple decades that a plant like this would be expected to operate."

Environmental groups are also lining up against the power plant in a rare show of solidarity with heavy industry. The Clean Energy Organizations group has written to the PUC that the plant "dampens Minnesota Power's economic incentive for customers to conserve energy or invest in additional distributed or utility-scale renewable generation."

The utility counters that the plant is needed to complement an increase in renewable power and fill in the gaps when the sun isn't shining and the wind isn't blowing. Minnesota Power is also decommissioning a number of coal-fired plants.

"The amount of supply we're taking off is a big part of this need," said Julie Pierce, Minnesota Power vice president of strategy and planning. "It's not just that we're adding renewables; we're physically removing 700 megawatts of 24-by-7 energy."

Still, the region's industrial giants are essentially saying there are better ways to provide for future power needs, such as demand response. Minnesota Power can pull a few levers and better distribute what's already available, they say, even if it means an occasional planned outage to send power elsewhere.

But businesses also want a hand on those levers, with Large Power Intervenors proposing interruptible rates that are "more attractive to potential participants, while at the same time providing reasonable prices, terms and conditions, to the benefit of participants, MP and MP's other customers."

Minnesota Power says just reallocating power won't keep the lights on for everyone.

"It really isn't enough to cover our energy needs," Pierce said. "It's around 50 percent of the year we need this plant available versus the 1 percent of time energy from large customers would be available."

The PUC is accepting comments on the natural gas power plant through March 23. Comments can be sent to consumer.puc@state.mn.us, or mailed to Minnesota Public Utilities Commission, 121 7th Place East, Suite 350, St. Paul, MN 55101. Comments should reference docket number 17-568.

Large Power Intervenors

ArcelorMittal

Blandin Paper Company

Boise Paper

Enbridge Energy

Hibbing Taconite Company

Mesabi Nugget

Sappi

USG Interiors

United States Steel

United Taconite

Verso

Brooks Johnson

Brooks is an investigative reporter and business columnist at the Duluth News Tribune.

(218) 723-5329
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