Minnesota agency backs retrofit/shutdown plan for Hoot Lake

The Minnesota Department of Commerce, Division of Energy Resources, is recommending that the Minnesota Public Utilities Commission approve Otter Tail Power’s plan to add pollution control equipment to its coal-fired Hoot Lake plant in 2015 to comply with the Mercury Air and Toxics Standards (MATS) and to retire the plant in 2020.

In a report filed Nov. 30 with the commission, the department said it did its own data modeling about the plant’s future, but that it agreed with the utility’s conclusion. Otter Tail Power (OTP) in an Oct. 3 Baseload Diversification Study (BDS) filing had outlined three options for Hoot Lake, including retirement in 2015 instead of emissions upgrades and the preferred option of the 2015 upgrades and the 2020 retirement.

The department noted that in its May 2011 initial comments on OTP’s resource plan, it recommended that the commission require OTP to shut down Hoot Lake by 2018 or provide a Baseload Diversification Study regarding the Hoot Lake generating station nine months from the date of the commission’s order.

Hoot Lake currently has two operating generation units. Unit #2 has a nameplate capacity of 60 MW and came on line in 1959. Unit #3 has a nameplate of 80 MW and came on line in 1964. Together they produce approximately 20% of OTP’s energy and capacity needs.

OTP estimates that it would cost $10m to upgrade the Hoot Lake plant so that it complies with the MATS rule, which requires compliance by April 2015.

The three scenarios the utility outlined for the commission are:

  • Scenario 2015 – Expedited Retirement: Retire Hoot Lake in 2015 to avoid the costs of complying with MATS and replace with natural gas generation.
  • Scenario 2020 – Expected Retirement (preferred option): Add equipment to comply with MATS by 2015 and retire the plant in 2020.
  • Scenario 2040 – Long-term Coal Operation: Refurbish the plant for long-term operation.

The department did its own modeling runs of relevant data about the plant’s future. “Based upon the modeling analysis, the Department recommends that the Commission approve OTP’s proposal to retrofit Hoot Lake in 2015 to comply with MATS, while still using coal as a fuel source, and shut down Hoot Lake in 2020,” it said. “That scenario generally was least cost regardless of the use of CO2 cost values and under many contingency scenarios. Further, this recommendation is similar to the Department’s prior recommendation to shut down Hoot Lake in 2018 as a coal-fired facility; the difference being the Company’s ability to comply with MATS and operate the plant for two additional years. Based on information available at this time, the Department’s modeling indicates that additional intermediate capacity would be the main replacement for Hoot Lake in 2020, with additional wind or peaking units in certain scenarios. However, the issue of the specific size, type, and timing of the Hoot Lake replacement units can be re-visited as needed in OTP’s next resource plan.”

The department also recommended that OTP explain in its next resource plan how the company implemented the Midwest ISO’s new “reserve on coincident peak” load and capability calculations in its Strategist modeling.

As might be expected, the Izaak Walton League of America–Midwest Office, Fresh Energy, Sierra Club and the Minnesota Center for Environmental Advocacy had a different take in their own Nov. 30 comments on the Otter Tail plan.

“We do not agree that OTP has demonstrated that its Scenario 2020 – Expected Retirement is the preferred alternative,” they said. “Millions in proposed capital investments to continue with coal at Hoot Lake – for pollution control equipment that will become worthless in less than a decade – is not a prudent course of action. For the reasons discussed in these comments, including, but not limited to, the BDS’ problematic load forecast assumptions; recent changes to regional planning reserve requirements affecting OTP’s capacity position; opportunities to implement demand response, efficiency, and renewable energy distributed generation; Environmental Intervenors recommend that the Commission direct OTP to eliminate coal-fired operation at the two Hoot Lake units by 2015.”

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.