Minnesota PUC to look at life extensions for Laskin, 18 hydro facilities

The Minnesota Public Utilities Commission at its Dec. 11 meeting will look at the issue of life extensions for depreciation purposes that Minnesota Power asked for on April 15 under its 2014 Remaining Life and Production Plant Depreciation Study related to the coal-fired Laskin Energy Center and all of its hydroelectric facilities.

Minnesota Power proposed a life extension through 2030 for the Laskin Energy Center, said the commission staff in a Dec. 3 briefing memo for the commission to use at the Dec. 11 session. The request is based on Minnesota Power’s plans to convert units 1 and 2 of the Laskin facility from coal to natural gas peaking facilities by the end of 2015. Minnesota Power believes a gas peaking generation facility has a useful life of fifteen years and is requesting a life extension through 2030.

The utility is planning a 5,900-foot gas pipeline built from a Northern Natural Gas pipeline to the 110-MW Laskin Energy Center in Hoyt Lakes, Minn., as part of this coal-to-gas conversion project.

Laskin Energy Center unit 1 and 2 are considered sister boilers, similar in design and intended operation. Both units provide baseload and peaking energy. Laskin is treated as one unit and has one remaining life for depreciation purposes. Ongoing investment in Laskin has maintained the units in good overall condition. The vast majority of the existing assets are expected to be utilized after the conversion to gas. The assets to be retired will be determined by the company after detailed analysis.

The commission approved the company’s plan to convert Laskin from a coal-fired unit providing baseload and peaking energy to a natural gas-fired peaking unit by the end of 2015 at a cost of $14m in the company’s most recent Integrated Resource Plan (IRP) case. Minnesota Power is requesting the life extension for Laskin based on the commission’s approval of the project in the IRP and based on its $4m expenditure to date on the project.

The state Department of Commerce agreed with the company that the project will result in a life extension for Laskin and that the company’s 15 year life estimate is reasonable, though conservative. The department disagreed with the company as to when the proposed life extension should take place. The department stated its preference for a life extension resulting from the refueling project to be granted when the refueling project is placed in service, or is close to being placed in service.

Minnesota Power has also proposed life extensions for all 18 of its hydroelectric facilities based on current and planned capital investments. The company proposed to set the remaining lives of all of its hydroelectric facilities to 50 years, or through 2063. Currently, these remaining lives are set to coincide with the expiration of FERC licenses, which expire at various dates extending from 2021 through 2036.

Minnesota Power stated that its proposed hydro life extensions are based largely on significant capita linvestments the company has made in its hydroelectric facilities, due primarily to the historic rainfall event in 2012. The company stated an additional reason it is requesting the life extensions is based on current and planned capital investments in its hydroelectric system which based on current engineering estimates will extend the operating life of the units through at least 2063.

Due to the historic rainfall in 2012, the company has begun a $90m project to repair and improve the Thomson hydroelectric station. About $30m of this project is expected to be placed in service by the end of 2014.

The Department of Commerce agreed that it is appropriate to set remaining lives for Minnesota Power’s hydroelectric facilities that extend beyond the current expiration dates of the facilities’ FERC licenses. 

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.