Utility wants to hold off on shutting down old coal plants

Jun 18 - McClatchy-Tribune Regional News - David Shaffer Star Tribune, Minneapolis

Minnesota Power, an electric utility that serves the state's iron mining industry, said Monday that the state Commerce Department's recommendation to shut down at least three of its coal-burning power plants requires more study of its effects on rates and reliability.

The Duluth-based utility filed additional comments about its future resource needs and issued a press release warning of the consequences of shutting down three, and possibly a fourth, coal units that are each more than 50 years old.

"[T]o shut down units without a thorough and systematic analysis could put customers at unnecessary risk of higher rates and potential service reliability impacts and have a negative socio-economic effect on host communities," Minnesota Power said in a statement.

Earlier this month, the Commerce Department's Energy Resources Division, which intervenes on utility matters, recommended that state regulators require Minnesota Power to shut down its Laskin units 1 and 2, in Aurora, Minn., and Taconite Harbor unit 3 in Schroeder, Minn., by 2016.

The state agency also said that unless circumstances change, Minnesota Power should shut down its 53-year-old Boswell unit 1 in Cohasset, Minn., by 2020. It also said the utility should update the economics of removing Boswell unit 1 and 2 in its current resource plan.

Environmental groups also have urged closing the coal power plants, though some large industrial users, including taconite mines, have urged the state Public Utilities Commission to disregard that advice. Industrial users, in a filing last week, also questioned whether regulators have the legal authority to order a utility to shut down a generation source.

Minnesota Power, which has 144,000 customers in northern and central Minnesota, submitted comments about its Baseload Diversification Study, which the PUC required as part of its long-range planning. The study, filed by the utility in February, looked at the future of small, old coal power plants that need costly environmental upgrades because of their age.

On Monday, the company said that "weighing the decisions of installing further environmental controls against closing down units while factoring in the costs of replacing generation, future fuel prices and increased industrial energy loads takes detailed long-range planning."

"We've already decided that wind, water and wood renewables and natural gas will play a greater role in our energy mix and already have reduced some coal resources, but before we decide exactly what further changes may look like, we need more insight than what was provided by this Study," Al Rudeck, Minnesota Power's vice president of strategy and planning, said in a statement. "Safety, reliability, affordability and the availability of different types of electric power generation are all important parts of that decision."

Minnesota Power said its generation was 95 percent coal-based in 2005, but will drop to 74 percent coal next year, with a greater non-coal percentage projected to come. In recent years Minnesota Power has invested about $500 million in wind energy, biomass and hydropower improvements, the company said.

David Shaffer -- 612-673-7090