Minnesota Power to convert Hoyt Lakes coal plant to gas

Jan 30 - John Myers Duluth News Tribune

Minnesota Power announced today it will convert its coal-fired power plant in Hoyt Lakes to natural gas and shut down one of three coal units at its Taconite Harbor plant on the North Shore as the utility continues a slow move away from carbon-causing coal.

The company said it would spend $15 million in 2015 to convert the 110-megawatt Laskin coal plant in Hoyt Lakes to cleaner-burning natural gas, which produces much less carbon and mercury than coal. The plant would be the first gas-fired generator for the Duluth-based utility.

The company also said it will retire one of three coal-burning units at Taconite Harbor but keep the other two units burning coal because they already have been upgraded with pollution control devices for mercury and other emissions.

And the company will add $350 million in pollution control technology at its Boswell 4 unit in Cohasset to meet current and forthcoming pollution regulations, keeping that unit open for the foreseeable future.

Company officials made the announcement as part of what they are called a major "energy resource strategy" called "EnergyForward." The announcement also reiterated the utility's plans to buy hydroelectric power from Manitoba and move that electricity through a new power line to Duluth by 2020.

The announcement also noted the utility's addition last year of even more wind turbines in North Dakota where it now generates 400 megawatts of wind energy for its northern Minnesota customers.

The moves will push Minnesota Power, which produced 95 percent of electricity from coal less than a decade ago, to more than 20 percent from non-coal sources, a critical step in the face of expected climate-change legislation to reduce coal-caused carbon

"Our plan builds on the tremendous progress we've made to achieve a more balanced and sustainable energy mix in a cost-competitive manner," Al Hodnik, chairman of Allete, Minnesota Power's parent company, said in a statement.

The company also hinted at development of a second large natural-gas-fired power plant sometime after 2020 to feed the proposed development of copper mining and expansion of taconite mining across the region, although no details were offered.

Company officials said the goal by the '20s is to produce about one-third of the utility's electrify from natural gas, one-third by coal and one-third from renewable sources such as wind and hydro.

"We really see this as positioning ourselves for a more sustainable energy future, including dealing with carbon" regulations that may be forthcoming from the federal government, Amy Rutledge, manager of corporate communications for Minnesota Power, told the News Tribune.

The announcement is a relief for Hoyt Lakes, which appeared in danger of losing Minnesota Power as a resident, along with more than 40 jobs, if the coal plant shut down without a replacement. While the gas plant won't offer as many jobs, the plan keeps the utility in town as a major employer, economic development partner and property tax payer, said Mayor Mark Skelton.

"It's great news for the city of Hoyt Lakes," Skelton said. "Minnesota Power is a great partner for us and a great employer for some of our residents. We did not want to see them leave town."

Al Rudek, vice president of strategy and planning for the utility, said no layoffs are expected at Laskin or Taconite Harbor and that any change in workforce hopefully would be achieved through attrition.

The announcement comes one month before Minnesota Power is required to present a strategy to the Minnesota Public Utilities Commission on how it will continue to move away from coal as an energy source while also keeping rates down for the 144,000 homes, 16 municipal utilities and multiple industries that buy its electricity. The PUC ordered the "Baseload Diversification Study" in 2011 and gave Minnesota Power until March 1 of this year to submit its final report.

The order said the study must consider "a continue-to-operate and a shut-down cost analysis" for the Laskin coal-burning plant in Hoyt Lakes and the Taconite Harbor coal plant through 2024. The study must include "specific plans for shutting down the Laskin and Taconite Harbor units in the near future."

The PUC's order also demanded "a more detailed analysis of the configuration, time and cost-effectiveness" of a large natural gas generation unit that could serve as the utility's major expansion of electrical generation for decades to come.

Today's announcement appears to move Minnesota Power closer to the PUC's goals and was praised by at least one environmental group that had been pressing the utility to shutter its oldest coal plants to reduce carbon emissions blamed for spurring a warmer climate. Laskin was built in 1953, and Taconite Harbor in 1967.

"Fresh Energy applauds the long overdue plan and timeline from Minnesota Power to begin to replace some of the company's oldest, dirtiest power plants with cleaner energy." J. Drake Hamilton, science policy director for Minnesota-based Fresh Energy, told the News Tribune. "After 50 years of operating these coal plants, the time has come for the company to modernize and get more efficient."

But Hamilton said the utility also needs to take additional steps to reduce carbon faster to meet Minnesota's statewide carbon reduction goals and said there also are problems with coal ash storage at Taconite Harbor.

"We're concerned about them investing more of their ratepayers' money in an old energy source that may not be around very long," Hamilton said. "The state's goal is to reduce carbon emissions by at least 30 percent by 2025, and there's no way to do that without phasing out more old coal plants."

In May, the Minnesota Department of Commerce reached the same conclusion as environmental groups, though for different reasons. The state agency's Division of Energy Resources said its review of the issue concluded that the PUC should demand Minnesota Power shut down its Laskin 1 and 2 plants in Hoyt Lakes and Taconite Harbor 3 plant on the North Shore "no later than 2016. Further, the commission should require MP to shut down its Boswell 1 and 2 coal-fired generating plants by 2020 unless circumstances change in the near future."

The Commerce Department looked more at the old plants' effects on consumers and industries that pay monthly electric bills. The conclusion, including by Minnesota Power's internal study, was that the cost of upgrading the old plants to expected pollution-control regulations in the future might be too high, and that the environment and ratepayers would be better off if Minnesota Power switched to other sources of electricity, namely natural gas.

http://www.duluthnewstribune.com/ 

http://www.energycentral.com/functional/news/news_detail.cfm?did=27419602