Otter Tail Power pushes to retain coal in integrated resource plan

The Minnesota Public Utilities Commission will be looking at its Dec. 20 meeting at whether to approve the coal-dominated integrated resource plan from Otter Tail Power that covers 2011‐2025 planning period and was initially filed in June 2010.

The results of the company’s forecasts demonstrate a need for the company to add resources before 2013, commission staff said in a Dec. 13 pre-meeting report to the commission. Otter Tail used the expansion planning model Strategist to develop its least cost resource plan, which added a wind resource in 2012, annual market purchases of 75‐150 MW through 2025, and gas peaking units escalating from 40 MW through 273 MW, beginning in 2014.

Otter Tail also expects to make environmental upgrades on its Big Stone and Hoot Lake facilities and plant upgrades at its Hoot Lake, Lake Preston, and Jamestown facilities. The Minnesota Department of Commerce, the Minnesota Chamber of Commerce and several environmental groups known as the Joint Intervenors filed comments on Otter Tail’s resource plan. The Joint Intervenors are Izaak Walton of America, Fresh Energy, the Sierra Club and the Minnesota Center for Environmental Advocacy.

Most of Otter Tail’s generation is coal‐fired, as is the generation in the broader MISO region in which the company operates, and most of the company’s resource plan is comprised of upgrades at existing facilities and market purchases of power. The intervening parties and the company disagreed regarding externality assumptions — specifically related to CO2 — fuel costs, wind additions beyond the company’s renewable energy statutory obligations, and whether to retrofit, retire, or repower the coal facilities. Furthermore, Otter Tail does not expect to meet the 1.5% statewide energy conservation goal, staff noted.

Since 2010, Otter Tail has contracted two consulting firms, Burns & McDonnell and Navigant Consulting, to conduct a retrofit and repower study for the Hoot Lake plant and a demand‐side management potential study, respectively. To complement the two studies, intervening parties suggested the commission require the company to perform additional analysis on the coal‐fired units and the impacts of upcoming U.S. Environmental Protection Agency rules.

Otter Tail is an investor‐owned utility that serves 129,256 customers in Minnesota, North Dakota and South Dakota. Otter Tail owns about 798 MW of generation capability,about 66% of which comes from three coal‐fired plants. The Big Stone coal plant in Milbank, S.D., has a nameplate capacity of 475 MW and Otter Tail has a 53.9% ownership share. Coyote, located near Beulah, N.D., has a nameplate capacity of 414 MW and Otter Tail has a 35% ownership share. Hoot Lake, located near Fergus Falls, Minn., has a nameplate capacity of 129 MW and Otter Tail owns 100% of the plant.

The preferred resource plan includes; a Big Stone Air Quality Control System as an economic option to continue operation of Big Stone; three aeroderivative simple cycle, natural gas‐fired combustion turbines to provide about 213 MW of accredited capacity in three stages between 2014 and 2018; starting in 2013, annual 75 MW blocks of bilateral capacity purchases – escalating to 100 MW in 2014 and 150 MW in years 2015 and 2016; a 50-MW wind addition in 2012; upgrades at the Jamestown and Lake Preston oil‐fired peaking plants, which amounts to 60 MW of accredited capacity; and in 2019, an environmental upgrade at Hoot Lake units 2-3.

Parties to the case have recommended various changes to the resource plan. For example, the Department of Commerce recommends: the addition of 50 to 100 MW of wind in the 2011‐2013 timeframe; the addition of an intermediate unit of 100 to 150 MW in the 2015 to 2017 timeframe instead of the company’s proposal of a 90 MW peaking unit in 2017; and require Otter Tail to shut down Hoot Lake by 2018, or provide a Baseload Diversification Study regarding the Hoot Lake plant nine months from the date of the commission’s order.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.