North Dakota’s Public Service Commission has issued a certificate of public convenience and necessity for an MDU Resources (NYSE: MDU) unit to build a new 88-MW natural gas facility alongside an existing coal plant.
The PSC issued both the certificate of public need and “advanced determination of prudence” April 11 for the 88-MW gas turbine that Montana-Dakota Utilities plans to build by spring 2015 at its existing Heskett station, PSC Chairman Tony Clark told GenerationHub on April 17.
Officially, the PSC action makes final a settlement agreement that had been drafted in January, Clark said. The company must still come back before the commission for an additional order before it can actually start construction, Clark said.
The total cost of the project, including the allowance for funds used during construction (AFUDC), is estimated to be $85.6m, with North Dakota’s allocated share listed at approximately $58.2m.
The project includes a simple cycle combustion turbine which will be used primarily as a capacity and peaking power resource. The project also includes infrastructure necessary to interconnect the generator to the transmission system, and about 24 miles of 10-inch-wide natural gas pipeline to provide fuel for the turbine. The new pipe will connect the new Heskett power unit, near Mandan, N.D., with the Northern Border Pipeline.
Several studies, permits and agreements still need to be completed during 2012 and early 2013. Construction should start in 2013, according to the PSC order. The company must file status updates every six months with the PSC.
In addition to reducing the size of an anticipated generation deficit in 2015, the new Heskett combustion turbine should help the MDU utility avoid transmission charges that it would otherwise be forced to pay to the Western Area Power Administration (WAPA) in 2015, according to the PSC order.
The utility is seeing some power contracts expire in 2015. When that occurs, Montana-Dakota is expected to face a deficit of about 150 MW – which represents about 25% of the capacity that Montana-Dakota will need to service peak customer load, according to the order.
The MDU utility is also expected to issue a request for proposals for generation and capacity later this year, according to the PSC order.
A few years ago, MDU Resources and neighboring power companies had sought to build a second coal-fired project at the Big Stone station on the South Dakota-Minnesota border. That project, which met with much organized opposition, was to have come online in 2015, noted an MDU spokesperson.
Today partners in the existing Big Stone coal plant, including MDU and Otter Tail (NASDAQ: OTTR) are seeking approvals from state commissions in the upper Midwest to retrofit that station with new environmental controls.