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Supreme Court hears oral arguments on proposed natural gas power plant in Superior

The court is considering whether Minnesota regulators should have considered the Wisconsin project's environmental impact.

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Parties involved in the Nemadji Trail Energy Center case give oral arguments virtually to the Minnesota Supreme Court on Oct. 6, 2020. (Jimmy Lovrien/jlovrien@duluthnews.com)

The question of whether Minnesota regulators should have conducted an environmental review for Minnesota Power’s proposed $700 million natural gas power plant in Superior went in front the Minnesota Supreme Court on Tuesday.

In oral arguments held virtually Tuesday morning, the Duluth-based utility and the Minnesota Public Utilities Commission urged the court to reverse a December 2019 Court of Appeals decision that said the PUC erred when it declined to consider impacts from Minnesota Power's proposed Nemadji Trail Energy Center on natural resources. The lower court’s decision reversed the PUC's October 2018 approval of the project and sent it back to commission for further review.

A coalition of environmental groups urged the Supreme Court to uphold the lower court’s ruling, arguing the project is subject to review under the Minnesota Environmental Policy Act because it would be built by a regulated Minnesota company for Minnesota customers and is so close to the state line — just 2 miles away from the border on a plot of land between Enbridge Energy's Superior terminal and the Nemadji River.

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“This is a very straightforward decision. When a Minnesota utility comes to the PUC and seeks approval that’s necessary for it to construct and operate a new power plant — a plant that will harm Minnesotans, Minnesota’s environment and will be ultimately paid for by Minnesota and Minnesota ratepayers — (the Minnesota Environmental Policy Act) applies,” Minnesota Center for Environmental Advocacy attorney Evan Mulholland said.

Minnesota Power is planning to build the 525-625 megawatt power plant with La Crosse-based Dairyland Power Cooperative. It said it will supplement its growing wind and solar portfolio and provide reliable energy “when the sun isn’t shining and the wind isn’t blowing” as the company moves away from its coal-fired plants.

While the plant is proposed for Wisconsin, and received Wisconsin regulators' approval in January , it also had to move through Minnesota’s PUC because the power it would generate will be delivered to Minnesota Power's customers in Minnesota.

Minnesota Power maintains the Court of Appeals decision overstates the PUC’s regulatory role.

“We completely agree they regulate our financial arrangements, our rates, other things,” Minnesota Power attorney David Moeller said. “But the commission’s authority stops at the border. It doesn’t have jurisdiction by the Legislature, as far as construction and operation of specific sites beyond the border.”

But environmentalists want the company to completely move away from any kind of fossil fuel, not replace coal with a different one like natural gas, which gives off less carbon dioxide but releases methane, another potent greenhouse gas.

Nemadji Trail Energy Center
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 Husky refinery in Superior and provide 525-625 megawatts of power. (Photo courtesy of Minnesota Power)

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Sending the project back to the PUC for an environmental review would put the process in front of and include the public, Muholland said, noting the amount of carbon expected to be released by the plant remains a trade secret.

Jason Marisam, a PUC attorney, said the commission already considered environmental impacts.

“The commission’s job is to balance a lot of things. We all want reliable energy, and we also want to protect the environment, and so that’s really what the commission is looking at and the commission — no question, no disputing — looked at environmental externalities, looked at climate change,” Marisam said.

Asked if Minnesota Power would still be able to build the plant if the court were to rule against the company, Moeller said it would if Dairyland or South Shore Energy, its subsidiary in Wisconsin, built it.

“We would look for alternatives … Dairyland could build it, as we noted in our brief, South Shore could build it, we can have a third party build it as well,” Moeller said. “Our preference would be to have Minnesota Power build it and operate it, which is why we put the agreements in front of the (PUC), but it doesn’t have to be that way to go forward.”

But Mulholland countered and said it was unlikely Dairyland and South Shore could do it without Minnesota Power’s ratepayers.

“There’s no evidence in the record that South Shore would be able to do this without Minnesota Power’s backing, Minnesota Power’s financial guarantee, and really, its ability to get to the ratepayers to finance this project,” Mulholland said.

Minnesota Power is hoping to bring the plant online by 2025.

Jimmy Lovrien covers energy, mining and the 8th Congressional District for the Duluth News Tribune. He can be reached at jlovrien@duluthnews.com or 218-723-5332.
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