Dairyland says it has no problems with capacity shortfalls

Dairyland Power Cooperative isn’t quite ready to permanently retire three seldom-used coal units at its Alma plant, according to a May 8 integrated resource plan (IRP) filing at the Minnesota Public Utilities Commission.

In the filing, Dairyland indicates that it would prefer to keep Alma units 1-3 available for now as insurance against potential brief capacity shortfalls. The cooperative said it wants to avoid a situation where it might have to build expensive new generating units that won’t get used much.

Dairyland initially filed its IRP for the years 2011-2026 with the commission in September 2011. The commission issued an order finding Dairyland’s IRP filing to be complete in December 2011. On March 8, the state Department of Commerce, Division of Energy Resources, filed comments on the IRP. Dairyland in the May 8 filing rebutted some of the contentions made by the department.

Dairyland said it had been asked by the department to revise a Load and Capability Table previously submitted in the 2011 IRP that the commission had determined to be complete. The department did not ask Dairyland to develop and submit a new load and capability analysis, instead asking Dairyland to “provide a revised load-and-capability table” with Alma Units 1-3 and the renewable generation additions removed. To be consistent with the IRP filing, Dairyland did so using the same methodology as the data originally tendered and accepted by the commission.

Dairyland noted that its biennial forecast and resource planning process should be completed in late 2012, and that it will provide the new information to the commission in Dairyland’s annual Energy Forecasts and Statistics Report due in July 2013.

Dairyland said its plan, as laid out in the IRP, to meet short-term requirements with electricity purchases is reasonable. Whether or not a capacity deficit is shown for Dairyland in the department’s analysis does not bear on the reasonableness of Dairyland’s IRP, the power company added.

In response to the department’s information request No. 23, Dairyland described to the department how it plans to address the closure of Alma Units 1-3 this way: “If the [Alma 1-3] stations are closed, in the short term, any necessary capacity will be bought from the MISO market or through bilateral contracts. Long term, if capacity is needed (which is uncertain given the MISO shift to MISO coincident peaks), a decision will be made to either continue this practice or to add generation if it can be profitably sold into the MISO market. The decision will not be one of covering [Dairyland] load since this is not an issue within MISO. Several years of economic studies will be needed to make this economic determination.”

The department was responding to the fact that in December 2011, Dairyland said it will cease burning coal in three vintage 1950s units of the Alma plant on Dec. 31, 2011. Alma Units 1-3 are part of the 181-MW plant, located in Alma, Wis. Together, the three units have about 60 MW of generating capacity. They account for about 5% of Dairyland’s total generating capacity, but generated only 0.4% of Dairyland’s energy resources through October 2011. Effective Jan. 1, 2012, these units will only be available on an emergency basis. Alma Units 4-5 total about 120 MW of capacity and will continue to provide energy for the Dairyland system.

The department’s analysis may show a shortfall in capacity, but that shortfall is forecast to be for one or two months annually, not for an entire year, Dairyland noted in the May 8 filing at the commission. Dairyland said it does not want to construct excess, underutilized facilities that may be idle for most of the year but still must be paid for. The over-building of capacity resources may be counter-productive and increase costs to Dairyland’s members, it added.

The May 8 filing also addressed Dairyland’s plans to comply with Minnesota’s Renewable Energy Standard (RES). “Assuming that all of Dairyland’s existing renewable resources and contracts continue to be in place and provide renewable energy to its system, and that the renewable energy requirements in each state in which Dairyland serves do not change, Dairyland currently has enough renewable resources in place to not only meet all of its obligations, but exceed them in each year of the planning period by a significant margin,” it said.

“[T]he resources that Dairyland has in place now will produce a surplus beyond those that need to be retired to meet Minnesota’s RES of RECs in each year in the planning period, including the step up year in 2025,” the company added. “Dairyland’s rate paying member-owners and their representatives on the Dairyland Board of Directors have made very significant investments in renewable energy and should be commended for not only meeting the intent and specifics of the RES requirements, but, through their investment, exceeding them by a significant margin now, fourteen years prior to the Minnesota 25% by 2025 RES step. Renewable investments made by Dairyland’s member-owners and its Board has created a diverse renewable portfolio including wind, biomass, landfill gas, digester biogas and solar photovoltaic, capitalizing on the best resource mix available locally to Dairyland in geographical diverse areas of its service territory.”

Dairyland is a generation and transmission cooperative supplying energy at wholesale to 25 member cooperatives. The service territory of Dairyland’s member distribution cooperatives covers nearly one-half of the land area of Wisconsin and portions of northeastern Iowa, southeastern Minnesota and extreme northwestern Illinois. In addition, Dairyland provides power at wholesale directly to sixteen municipal systems.

Dairyland has an accredited 1,167 MW of generation within the Midwest ISO region. Dairyland’s generation includes: Alma, a 210-MW coal-fired baseload plant; John P. Madgett, a 400-MW coal-fired baseload plant; Genoa Unit 3, about a 50% share of a 380-MW coal-fired baseload unit; Weston Unit 4, about a 165-MW share of a coal-fired baseload unit; and Elk Mound Station. In addition, it has numerous diesel, landfill gas, hydro, wind, and biomass facilities smaller than 50 MW in its supply portfolio.

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.