PUC puts Minnesota Power on notice: Coal plants too risky for customers

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On Thursday the Minnesota Public Utilities Commission (PUC) decided to delay a decision on the future of Minnesota Power’s oldest coal-fired power plants for at least a year, following months of public input and official filings. The PUC also sent a clear message that continuing to operate these plants past 2016 is not in the public interest based on economic cost.

Despite overwhelming evidence and broad public support for replacing these aging coal plants with cheaper, cleaner power sources, the PUC failed to decide today to take action to keep costs down for Minnesota Power’s customers. Instead, the PUC voted 5-0 to require the northeastern Minnesota power company to accelerate its next Integrated Resource Planning filing to March 1, 2013, and to include in that filing a proposal to address the viability of Laskin Energy Center and Taconite Harbor 3. The PUC also voted to condense the comment period for that filing, in order to reach a resource plan conclusion in a shorter timeframe, possibly by next summer.

In a move to hold Minnesota Power accountable and put the company on notice of the need to pull back from coal, the Commission did vote 3-2 to support the motion to protect customers if these aging plants continue operating: “On the basis of the facts as we now understand them it’s our intention that the costs of operating Laskin 1 and 2 and Taconite Harbor 3 after 2016 may be borne by the Company and not the ratepayers.”

“Although we were disappointed with the delay, the Commission sent a clear message to Minnesota Power that continuing to operate old, inefficient and dirty coal plants puts Minnesota customers at risk. Now we need a clear plan from Minnesota Power to replace these coal plants with clean energy,” said Jessica Tatro, organizing representative with Sierra Club’s Beyond Coal to Clean Energy Campaign.

Prior to this hearing, the PUC had required Minnesota Power to prepare a “continue-to-operate and a shut down cost analysis” for two old, coal-fired power facilities (Laskin and Taconite Harbor), including specific plans for shutting down those plants in the near future. The Minnesota Department of Commerce (DOC) recommended in early 2011 that Minnesota Power conduct this study, based on the DOC’s analysis demonstrating that retiring one or more baseload coal facilities would be the lowest cost alternative for customers. DOC was also concerned that Minnesota Power, with an electricity generation portfolio that was heavy on old coal units, had not examined any future in which any coal units were retired.

Scott Strand, executive director at the Minnesota Center for Environmental Advocacy, summarized, “Minnesota Power is not special. It is an electric utility like any other business that must change with the times, modernize, and get more efficient to be competitive.”

The facilities under discussion include 110 megawatts at the Laskin plant near Hoyt Lakes (built in 1953) and 75 megawatts at the Taconite Harbor plant in Schroeder (built in 1967). Both the Minnesota Department of Commerce and conservation and environmental organizations stated that there is enough economic justification before the Commission to find that the aging coal units at Laskin 1 and 2 and Taconite Harbor 3 are no longer cost-effective to operate and that keeping them running is too expensive for customers—both economically and in terms of health and environmental impacts.

Over 300 Minnesota Power customers like James Hietala, a Duluth resident and electrical engineer, submitted comments calling on the PUC to require Minnesota Power to develop a plan and timeline to retire their coal plants and replace them, to the extent possible, with clean energy and energy efficiency. He says of today’s decision, “After over 50 years of operation, the time has arrived for retiring these plants. A clear plan for clean energy can’t wait; the health and economy of Northeastern Minnesota depends on it.”

“The PUC’s delay means that Minnesota Power customers will not see timely reductions in exposure to the extremely damaging pollution from burning so much coal,” said Fresh Energy science policy director J. Drake Hamilton. Bishop Thomas Aitkin, who leads the Northeastern Minnesota Synod of the ELCA, said, “Knowing this transition will take time means that it is all the more important to start planning now for our clean energy future. Plants built 60 years ago are now dinosaurs in light of today’s technological advances and will require both the wisdom and will to put that wisdom to use to protect human health. Our church supports an orderly transition to cleaner energy.”

The Commission has required a similar cost-comparison study for some coal plants in the portfolios of Otter Tail Power and Interstate Power and Light. Those studies are expected to be filed for PUC consideration by the end of 2012.

The PUC also specified that Minnesota Power—in its March 1, 2013 resource plan filing—must examine scenarios for adding 200 megawatts of wind capacity as well as scenarios for adding 400 to 600 megawatts of natural gas capacity in the 2014 to 2016 timeframe.

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