Power plant decision next week impacts Alexandria
After years of delays and debating, state regulators may clear the air next week on a pending Western Minnesota electric transmission project related to the Big Stone II coal-fired power plant.
The Minnesota Public Utilities Commission on Thursday plans to decide whether to approve a proposal by five utilities led by Fergus Falls-based Otter Tail Power Company to build high-power transmission lines from the would-be plant in eastern South Dakota to the Minnesota cities of Morris and Granite Falls.
An expansion of the existing Big Stone I facility that is expected to boost the plant's capacity to between 500 and 580 megawatts, Big Stone II is estimated to cost $1.6 billion, with an additional $250 million needed to cover the cost of 110 miles of transmission lines.
Plant proponents say the region desperately needs more power, and an improved infrastructure capable of transporting more of it.
Minnesota's demand for electricity has surged in recent years, Big Stone backers argue, and that trend shows no signs of slowing.
That goes double for the Alexandria area, said Al Crowser, general manager of Alexandria Light and Power.
Crowser said the nonprofit municipal energy cooperative expects local demand for electricity to spike by as much as 8 percent in 2009.
ALP receives most of its power from Sioux Falls-based provider Missouri River Energy Services, a participant in the proposed Big Stone project.
"Our purpose is to provide reliable, low-cost energy to our customers in an environmentally responsible manner," Crowser said. "The most effective and reliable way is through coal."
Crowser said ALP's usage rates jumped 10 percent last year due to a combination of increased operating costs and rising energy demand putting more pressure on an ever tightening supply.
He said customers can expect another 10 percent rate bump this year, and ALP is currently predicting a possible 10 percent increase in 2010.
The problem, according to Crowser, is that no large-scale, base-load power plant - one that operates continuously - has been built in the region in nearly 30 years because none has been approved.
Instead, utilities - including Missouri River - have mostly put up smaller natural gas-fired plants, he said, which are cheaper to build but costlier to run than coal, and are only meant to be used during peak demand times.
They're not cutting it, Crowser said, because in addition to not meeting demand, natural gas plants both increase the utilities' operating expenses and drive up the cost of the gas itself.
"It is poor public policy to use natural gas for electric generation when it is competing [with its demand] as a heating source," he said. "On one hand, our customers pay more for electricity, and, on the other hand, they pay more for natural gas if they have natural gas furnaces."
Crowser said he believes a new coal plant, such as Big Stone, would help stabilize future electricity rates.
The environmental groups objecting to the proposed plant disagree, claiming the utilities are underestimating its cost to consumers, especially if the government begins regulating carbon emissions, an energy topic talked about frequently during last year's presidential campaign.
Big Stone opponents also question whether upgraded transmission lines are truly needed, given how the size and nature of the project have changed.
They say a new coal plant will only create more pollution by releasing chemicals, such as carbon dioxide, sulfur dioxide, nitrous oxide and mercury into the atmosphere, and Minnesota should focus on boosting production of cleaner renewable energy sources, such as wind and solar.
Bill Radio, Missouri River's public relations director, said the utility has properly analyzed the cost of a new coal plant, and taken into account any potential extra expenses should carbon be taxed or regulated.
Even at a charge of $30 per ton of carbon emitted, he said, Big Stone is the cheapest energy option.
The environmentalists said that estimate isn't high enough, and a figure around $60 per ton was more realistic.
Radio said coal is an important short-term solution to the area's quickly growing energy needs.
"All the technologies that [scientists] are working on, we are very hopeful that they work, and we're anxious to participate in them," he said, "but they're not here [yet], and we're out of power, we meaning the region.
"We really need a balanced approach on this thing," Radio said. "The new technology, whether it's carbon sequestration or energy storage or whatever, we need a bridge to get there."
That's why Missouri River, which is currently almost all coal, plans for more than 50 percent of its energy growth between now and 2020 to come from gas, wind and energy efficiency, Radio said.
"It will be at least as much of the growth as Big Stone will be," he said.
Radio said the utility has several wind farms in the works, but it needs a base-load plant like Big Stone to justify the cost of building the transmission lines that would carry the wind projects' electricity.
"These delays [with Big Stone] have actually been holding up wind development in western Minnesota," he said.
Currently, the technology isn't reliable enough to pay for itself, Radio said.
He said the bottom line is that to meet Minnesota's energy needs right now, Big Stone is the way to go.
Jeff Fassett, president and owner of Alexandria-based IEM Energy Consultants, isn't so sure.
An engineer experienced in power plant operations and maintenance, Fassett said more energy is definitely needed locally and statewide, as capacity hasn't kept pace with growth in recent years.
Coal is the best way to meet that need, he said, but "I think Big Stone II is the wrong plant in the wrong place."
The proposed facility is simply too expensive, Fassett said, with estimated costs that are 40 percent to 50 percent higher than two comparable plants in Iowa.
As an add-on to an existing coal plant, Big Stone II should be a little cheaper than a brand-new plant, he said, but it's not.
"I don't know why their project cost is so high," Fassett said. "I would need to understand why the costs are where they're at before I could recommend [the project].
"Yes we need a plant, but at that cost it doesn't make sense."