Big Stone approval has strings attached
ST. PAUL - An electric transmission project in western Minnesota can go forward - with conditions aimed at protecting ratepayers and the environment -- state regulators decided Thursday.
The Minnesota Public Utilities Commission voted unanimously to approve a large-scale power line project that would distribute electricity from the proposed Big Stone II coal-fired power plant in eastern South Dakota to several local Minnsota utlities, including Alexandria Light and Power.
While placing a number of requirements on the approval, the five commissioners were convinced there is a need for improved transmission in Minnesota and by issuing a "certificate of need" decided the utilities' project was the best alternative for ratepayers.
"We certainly know we have a need to get baseload generation to our state and region," commission Chairman David Boyd said.
But the transmission case, which has been before the commission for more than three years, may not be settled.
Environmental groups that have tried to block the project said they likely will take the case to the Minnesota Appeals Court. They contend the five utilities behind the project - led by Fergus Falls-based Otter Tail Power Co. - used outdated information and the commission ignored evidence against the project.
"The utilities did not meet their burden of proof under the statute in Minnesota to show that they need this power plant and these transmission lines," said Beth Goodpaster, an attorney representing the Minnesota Center for Environmental Advocacy and other groups opposed to the project. "They skewed the analysis in their own favor. They put in biased analysis that don't stand up."
The utilities' propose two transmission routes. One line would run from the plant near Milbank, S.D., to Morris, passing through Ortonville. A second, larger line would connect the power plant to a station in Granite Falls, running through Canby.
Big Stone II utilities had identified an alternative to the Morris line that would end in Willmar, but decided against that route.
Transmission lines send electricity from a generating source to regional stations. From there, smaller distribution lines further spread power, providing the electricity that passes through residential and commercial service lines.
Otter Tail Power and its four partners plan to build a 500-megawatt to 580-megawatt coal-burning power plant near the Minnesota-South Dakota border. The plant would generate enough electricity to supply 400,000 households in a five-state region.
The entire Big Stone II project is estimated to cost $1.6 billion, with the transmission line upgrades pegged at $225 million to $275 million. It still needs federal approval.
The Minnesota commission only has jurisdiction over the transmission portion of the project, not the power plant, but the two are linked as regulators consider the source of electricity running through the transmission lines.
Big Stone II Project Manager Mark Rolfes said the utilities must decide whether they can live with the conditions that came with the project's approval.
-- Limited what Otter Tail Power can ask its Minnesota customers to pay if the plant is charged for carbon dioxide emissions. If that charge exceeds a level set by the commission, the company would have to pay the difference.
-- Set a guideline for project construction costs that can be paid by utility customers. Utilities would be responsible for paying higher costs.
-- Required that if Big Stone II is constructed, Otter Tail Power's aging Hoot Lakes coal-fired plant in Fergus Falls must be shut down - or converted to a different fuel source - within 10 years. Otter Tail Power has said it cannot commit to retiring the facility by 2018.
The carbon-cost condition is the "most troublesome," Rolfes said, because it is unknown what utilities will have to pay for carbon emissions in the future, either through a government tax or a market-based carbon trading system.
"Nobody can really predict where that's going," Rolfes said.
Both the Big Stone II utilities and their opponents said they need to see a written summary of the conditions that came with the commission's approval.
About 150 people packed into the commission's hearing room for the decision. Utility executives and supporters sat alongside Big Stone II opponents from groups such as the Sierra Club.
Kurt Baldwin, 14, of Montevideo dressed up as a polar bear for the hearing because he said he wanted to draw attention to the environmental damage of coal plants.
"I want to see Big Stone II get denied because there has to be a better way to (generate) energy," Baldwin said.
Goodpaster, the attorney opposed to the project, said Minnesota faces an additional 4 million tons of carbon dioxide annually even as scientists advocate reducing carbon dioxide emissions.
"That means more global warming, which will further alter Minnesota's climate, pushing the state further toward the demise of its moose population, more drought and the movement of the pine forests farther north."
Local utility representatives applauded the commission's action.
The decision marked "a major step in the approval process," said General Manager Bill Schwandt of Moorhead Public Service. With nearly 15,000 residential electricity customers, Moorhead Public Service acquires some of its power from Big Stone II partner Missouri River Energy Services.
The project could mean Moorhead Public Service customers will pay less for their electricity than if the utility had to get energy from a source farther away, Schwandt said.
"It's just close to the resource," he said. "It's in our backyard, if you will."
Opponents encouraged the commission to reject Big Stone II. A state lawmaker whose western Minnesota district includes a portion of the transmission route offered a last-minute argument against the project.
Freshman Rep. Andrew Falk, DFL-Murdock, told the commission that there is significant public opposition to the project. As the commission was debating the project Thursday afternoon, Republican Gov. Tim Pawlenty gave his State of the State address which included remarks about renewable energy, Falk said.
"We have a responsibility as a state to lead by example and I think that we are going down the wrong path here," said Falk, a wind-energy advocate.