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State agency, attorney general differ on Minnesota Power's future

In comments made to state regulator, the Department of Commerce and Office of Attorney General Keith Ellison had vastly different suggestions for the Duluth-based utility's transition away from coal.

Boswell Energy Center
The Boswell Energy Center in Cohasset.
Bob King / 2009 file / Duluth News Tribune
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DULUTH — A state agency suggests Minnesota Power retire its coal plants even earlier than planned and replace them with natural gas plants, while the state’s attorney general wants the Duluth-based utility company to back out of its planned natural gas plant, arguing it’s not needed anymore and not in the public’s interest to build.

The comments were filed last week as part of Minnesota Power’s integrated resource plan being considered by the Minnesota Public Utilities Commission, or PUC. The plan outlines the next 15 years of expected energy demands and sources.

As it stands now, Minnesota Power is planning to retire its coal-fired 335-megawatt Unit 3 at its Boswell Energy Center in Cohasset by 2030 and convert the power plant’s 468-megawatt Unit 4 to be coal-free by 2035.

To make up the difference, it’s adding 400 more megawatts of wind and solar by 2035 and transitioning to fuels that produce less carbon.

But by 2050, all energy produced by the company will be “100% carbon-free,” the company said in plans announced last year . The company surpassed 50% renewable energy in 2019.

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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.

But the retirement of its coal plants in eight and 13 years isn’t fast enough for the Minnesota Department of Commerce’s Division of Energy Resources.

In comments filed with the PUC on April 29, the department said the company should retire its remaining coal plants five years earlier than proposed — Boswell 3 in 2025 and Boswell 4 in 2030 — and add more wind resources sooner, too.

“Based upon the overall results, the Department recommends the Commission modify (Minnesota Power’s) proposed resource plan to approve the retirement dates of the FastExit scenario for the Boswell units,” the department wrote. “The Department also recommends the Commission order (Minnesota Power) to begin a resource acquisition process for up to 300 MW of new wind resources, to be on-line in the 2024 to 2025 time frame.”

The department said modeling showed the “FastExit” option was the “least cost scenario” it tested.

To keep costs low, however, the modeling also suggests Minnesota Power add two more large gas plants in addition to the Nemadji Trail Energy Center already planned for Superior.

“These outcomes indicate that under the FastExit scenario, the model strongly prefers to add multiple natural gas plants,” the department wrote. “This may contribute to the lower cost of this scenario.”

Amy Rutledge, a Minnesota Power spokesperson, said that while it would be possible to retire Boswell even earlier than planned, “moving faster to phase out our Boswell facility is not in the best interests of our customers, employees and communities in terms of both reliability and affordability.”

Like the Department of Commerce, the Office of the Attorney General Keith Ellison said in comments last week that Minnesota Power will not need as much energy in the future as it predicted.

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But instead of recommending more gas plants, the attorney general said Minnesota Power should back out of the Nemadji Trail Energy Center, or NTEC, altogether. Minnesota Power has a 20% ownership stake in the plant and will invest $140 million to build the $700 million plant with partners Basin Electric Power Cooperative and Dairyland Power Cooperative.

Nemadji Trail Energy Center
Minnesota Power, Dairyland Power Cooperative and Basin Electric Power Cooperative have proposed a $700 million natural-gas power plant, Nemadji Trail Energy Center, which would be located near the refinery in Superior and provide 525-625 megawatts of power.
Contributed / Minnesota Power

According to the attorney general, Minnesota Power in 2017 overestimated the amount of energy it would need through 2031. Based on current demand forecasts, the attorney general said the company would have a capacity surplus during the summers if NTEC is built

Meanwhile, if NTEC wasn’t built, the attorney general said, there would be “very small capacity deficits in most years” between 6 and 36 megawatts instead of the 500 megawatt deficit in 2031 Minnesota Power predicted if NTEC wasn’t built.

So, the attorney general said, “Though NTEC may have appeared to be a prudent investment at the time the Commission approved its affiliated-interest agreements, the assumptions underlying Minnesota Power’s 2017 analysis were faulty: What appeared to be a significant energy and capacity need has proven to be illusory, and it is now clear that NTEC would increase both costs and risks for customers.

“In short, NTEC is not in the public interest and its costs should not be recovered from Minnesota Power’s customers. Fortunately, the (Public Utilities Commission) clearly has the legal authority to stop the Company from making this unnecessary and costly mistake.”

In response, Rutledge said the company remains committed to NTEC because it will help provide reliable energy when renewable energy isn’t available.

“This asset fills that 24/7 energy supply role in ways other assets cannot ... as we move away from coal the features of NTEC help allow for more renewable deployment as NTEC is the right size and fit to fill these needs,” Rutledge said. “Our energy demand and supply is dynamic and changing — we don’t plan for just one year, but rather a 15 year outlook.”

Environmental groups issue health study

A coalition of environmental groups continued to oppose NTEC, arguing in their comments that the plant was not needed and would contribute to climate change.

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Additionally, the coalition — the Minnesota Center for Environmental Advocacy, Sierra Club, Fresh Energy and Clean Grid Alliance — commissioned Physicians, Scientists and Engineers for Healthy Energy to conduct a health equity study.

The study claims Minnesota Power’s coal and biomass power plants have contributed to a number of deaths each year by causing respiratory symptoms, hospital admissions and heart attacks.

The study said Boswell 3, Boswell 4 and Milton R. Young coal-fired power plants contributed to nine deaths last year, while the Hibbard Renewable Energy Center in Duluth, which burns biomass and some coal, contributed to six deaths last year.

“We do not agree with the application of this type of analysis,” Rutledge, of Minnesota Power, said. “We have made significant investments in our power plants to ensure they are among the cleanest in the nation and exceed state and federal environmental guidelines.”

Comments of support

The company’s plan also had comments of support, like from the Lakes and Operating Engineers Local 49 and North Central States Regional Council of Carpenters.

“The timeline for retirement and conversion of these facilities provides an opportunity for the community and their workers to plan and prepare for the transition,” the unions said in a joint letter. “As one of the most geographically isolated coal plant communities in Minnesota, this timeline is crucial for getting the transition right. It also helps ensure grid reliability in the region as we see an increase of electrification of our transportation and building sectors.”

The Large Power Intervenors — a coalition of Northeastern Minnesota paper companies, taconite plants and other industries that are Minnesota Power's largest customers — were also supportive, but urged the PUC to require the company “demonstrate the specific proposal is cost effective” when it seeks approval of wind and solar projects.

Additionally, the city of Cohasset, home to Boswell, said it supports Minnesota Power, but urged the PUC to require the company to detail its economic development and pollution remediation efforts at the site.

“The City is also broadly supportive of Minnesota Power’s goals to pursue ambitious carbon-free generation goals while continuing to serve our region with affordable, reliable energy,” Mayor Greg Hagy wrote. “That said, as the Commission is aware, this transition will have deep and permanent impacts on our community.”

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The commitment, published at the end of three days of talks, was weaker than a previous draft of the final communique seen by Reuters, which had included a target to end unabated coal power generation by 2030. Sources familiar with the discussions said Japan and the United States had both indicated they could not support that date.

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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