Jul. 27--The largest power plant in South Dakota history, a proposal already under fire from environmental advocates for using coal instead of wind, would be 50 percent more expensive than previously estimated, according to utility executives.

Otter Tail Power Co. officials told Minnesota regulators last week that the price of building the coal-burning Big Stone II plant could reach $1.8 billion, up from $1.2 billion, because of higher costs for labor, steel, pollution control equipment and other factors.

At stake are the first major coal-fired power plant to be built in the region in more than two decades, and the interests of seven electric utilities -- led by Otter Tail Power -- that are partners in the project.

Higher costs would mean higher electric bills for customers, but the bigger question is whether the project itself may be delayed or even jeopardized.

Otter Tail senior vice president Ward Uggerud said that even with the higher estimate, the project would be less expensive than producing the same power from renewable energy or natural gas.

However, environmental leaders challenge those claims, and have said that the plant will emit too much mercury and other air pollutants, diminish stream flow and water quality in the Minnesota River, and consume land with its high-voltage transmission lines.

South Dakota officials approved two important permits for the power plant recently, one of them specifically against the wishes of the Minnesota Department of Natural Resources. The project still needs permits from Minnesota regulators because it includes about 85 to 125 miles of new or upgraded power lines in the state, depending upon which routes are chosen.

Because the great majority of the electricity would be sent to Minnesota, including the Twin Cities, the power lines are an essential part of the project, according to Steve Schultz, external affairs manager for the project. He said that the 600-megawatt power plant is needed because electricity demand is growing by 2.5 percent annually in the region, and coal supplies from the West are plentiful and affordable.

It would be built near Milbank, S.D., next to an existing plant a few miles from the Minnesota border. Schultz said the utilities chose a coal-fired plant also because it is a mature technology and emissions can be controlled.

"This is a piece of the puzzle," he said. "There's room for renewables and other forms of [power] generation, too."

However, environmental leaders see the plant as a huge mistake, saying the area has vast potential to develop wind-generated electricity.

Big Stone II will "soak up" the demand for power that would otherwise be met by new wind farms, said Beth Goodpaster, an attorney for the Minnesota Center for Environmental Advocacy. The center was among four groups that testified in the South Dakota case, arguing that developing wind energy would produce seven times more long-term jobs and five times more dollars for South Dakota's economy than the coal plant.

Duane Ninneman, who lives just north of Ortonville, Minn., said that it doesn't make sense to build another coal plant when Minnesota already receives almost three-quarters of its electricity from coal, and wind power has proved to be the cheapest form of new electricity in the state.

"It's not in the interests of Minnesota consumers to send their dollars to the coal fields of Wyoming and to build a technology that's really from the last century," said Ninneman, who works for a western-Minnesota group called Clean Up the River Environment.

Opponents also argue that the plant will emit mercury that will contaminate Minnesota waters and fish, and carbon dioxide that contributes to global warming. The plant is an economic risk, they said, because at some point legislators are sure to impose costs on carbon emissions -- and those costs would be passed on to consumers.

Schultz countered that carbon dioxide is not regulated now, and no one knows when or if it will be. "At some point you must move forward," he said, since additional electricity is needed in the region. "If new regulations come, we'll deal with it."

Kent Lokkesmoe, director of the waters division for the Minnesota Department of Natural Resources, asked the South Dakota Water Management Board last month to postpone a decision about a water permit for the plant until Minnesota and South Dakota officials could reach an agreement on managing the level of Big Stone Lake, a prime fishing lake on the states' border.

Lokkesmoe noted that taking too much water from Big Stone Lake could lower lake levels 6 to 12 inches, threatening the flow and water quality both in the lake and the Minnesota River.

Eric Gronlund, an engineering specialist with the South Dakota Department of Environment and Natural Resources, said there are safeguards for how much water may be withdrawn from Big Stone Lake during periods of drought.

The South Dakota Water Management Board approved the plant's water permit on July 12. Two days later, the South Dakota Public Utilities Commission approved a siting permit for the plant.

Uggerud, the Otter Tail Power executive, said the utility partners will likely meet in mid-August to discuss the latest cost estimates.

One partner with an 8 percent share of the project, Southern Minnesota Municipal Power Agency, already has heard from one of its 18 members. Austin Utilities, which has 10,000 electricity customers in southern Minnesota, has asked SMMPA to withdraw from the project even if it means facing penalty fees.

"We see an increasing cost and we're not willing to take on more and more debt," said Jerry McCarthy, Austin Utilities general manager.

Schultz said that the Big Stone II partners, led by Otter Tail Power, have held meetings to discuss the project and the power lines in six Minnesota cities: Morris, Benson, Willmar, Granite Falls, Canby and Ortonville.

He said that 5,000 Minnesotans have received mailings that power line corridors under consideration for the project are near their homes. Public hearings on the need for the power lines and their likely routes will begin in October, and ultimately will be decided by the Minnesota Public Utilities Commission.