Minnesota Power is proposing to jointly build a natural gas combined cycle (NGCC) power plant with Dairyland Power (a Wisconsin power company) and is asking you, the ratepayer, to pay its share of the cost. The cost is considerable, $350 million, and the fuel will have to be purchased on top of that.
So, based on the testimony submitted to the Minnesota Public Utilities Commission, how does the plant, officially known as the Nemadji Trail Energy Center, stack up against the various alternatives?
Minnesota Power testified that it ran hundreds of simulated combinations using NGCC, combustion turbines, wind energy, and solar energy in a computer program known as Strategist and that 96 percent of the time the Nemadji Trail Energy Center proposal came out as the cheapest alternative.
However, an unlikely combination of groups - Fresh Energy, Wind on the Wires, the Minnesota Center for Environmental Advocacy, Sierra Club, and the large industrial users of Minnesota Power’s electricity - shared many of the same damning conclusions, each for different reasons:
One was that Minnesota Power doesn’t need the plant. Energy efficiency and demand response has not been exploited, despite being ordered by the Public Utilities Commission.
Another was that even if Minnesota Power did need new capacity, the Strategist computer program was loaded with extraordinarily high costs for wind and solar, which no company is paying now much less seven years into the future. Inserting appropriate costs into the program resulted in the Nemadji Trail Energy Center no longer being the preferred option.
And, finally, Fresh Energy noted that Minnesota will not make its goal of an 80 percent reduction in greenhouse gas emissions if this plant is built. We have no choice now but to plunge ahead into the renewable energy future. It’s all hands on deck, and Minnesota Power has to pull its considerable weight.
So, why would a regulated, investor-owned utility like Minnesota Power ask permission to build such a useless thing?
Well, investor-owned utilities make money by buying infrastructure projects such as the Nemadji Trail Energy Center, which are depreciated over decades. The utility’s shareholders get a guaranteed rate of return on the remaining depreciation. This places a premium on having a constant stream of new infrastructure projects in the pipeline to maintain profits.
Some utilities like Xcel Energy buy wind farms, incorporate them into their rate structures, and then get their profit over time. In this way, Minnesota Power could invest in new wind and solar, making returns for shareholders and protecting customers from natural gas price swings.
Meanwhile, Minnesota Power hasn’t even acquired the wind and solar resources previously ordered by the utilities commission.
It has been noted that wind and solar can cause greenhouse-gas emissions because they are intermittent and have natural gas to back them up. However, Xcel Energy has received 430 bids to replace two Colorado coal-fired power plants. The average cost of wind with storage is now 2.1 cents per kilowatt, and the cost of solar with storage is down to 3.6 cents per kilowatt. Coal costs 3 cents per kilowatt, and natural gas costs 4.2 cents per kilowatt. Renewables are now cheap and reliable.
Meanwhile, in Washington, the Federal Energy Regulatory Commission, with four members appointed by President Donald Trump, by a 5-0 decision, supported free markets for energy and turned back a coal subsidy plan. The Climate Solutions Caucus now has 70 members in the House and is closer than ever to proposing carbon pricing. Fossil fuel is going to get more expensive.
So, please, Minnesota Power, don’t give us a white elephant to pay off. Go renewable - now.
Dr. Eric Enberg practices family medicine in West Duluth and is the group leader of the Duluth Citizens' Climate Lobby (citizensclimatelobby.org/chapters/ MN_Duluth). He also is a member of the Duluth Energy Coalition.