Minnesota PUC rejects enviro group complaints on Great River Energy coal capacity

The Minnesota Public Utilities Commission, in an Oct. 26 order, rejected an attempt by environmental groups to get more data on the coal-fired Spiritwood power plant of Great River Energy, and also set a delayed deadline for Great River Energy to file its next integrated resource plan.

In October 2014, Great River Energy (GRE) filed its integrated resource plan (IRP) for the years 2015‐2029, including GRE’s preferred plan for meeting its customers’ needs throughout this period (called in the order the “2014 Resource Plan”). Commenters on the plan included the Minnesota Department of Commerce (the “Department”); the Minnesota Center for Environmental Advocacy (MCEA), Fresh Energy, the Izaak Walton League of America–Midwest Office, the Sierra Club and Wind on the Wires (collectively called the “Environmental Intervenors”); and Al-Corn Clean Fuel and Heartland Corn Products, two ethanol-production cooperatives.

On Feb. 19 of this year, GRE filed a notice of changed circumstance, disclosing that it was finalizing arrangements to terminate its obligation to purchase half of the output of the Genoa Unit 3 coal-fired generator (Genoa 3). And on March 5 and April 1, GRE filed additional notices of changed circumstances, reporting that it had entered into contracts that would effectively reduce the amount of excess capacity reported in its resource plan. These changes did not prompt GRE to alter its preferred plan.

On July 10, the Environmental Intervenors filed a motion to compel GRE to disclose information about the profitability of GRE’s Spiritwood Station generator, and to make available to the public data regarding GRE’s operations and maintenance costs that GRE had designated “Trade Secret.” GRE filed its opposition to this motion on July 22.

In the Oct. 26 order the commission:

  • denied the Environmental Intervenors’ motion to compel related to the Spiritwood data;
  • accepted GRE’s 2014 resource plan; and
  • provided instructions for GRE’s future resource plans.

Great River Energy provides electricity at wholesale to 28 cooperatively owned electric utilities which in turn serve nearly 655,000 retail customers throughout Minnesota and western Wisconsin. Some of these utilities have contracted to purchase from GRE all the electricity required by their customers. Other utilities have contracted to purchase a fixed amount from GRE, and are free to seek additional supplies of electricity from other sources.

Great River Energy is already cutting back on its coal portfolio

In the 2014 resource plan, GRE selected a preferred plan that included the following components:

  • Continuing conservation and energy efficiency programs expected to save energy equal to nearly 1 percent of GRE’s energy sales in Minnesota via the efforts of GRE’s member cooperatives, with a goal of savings of 1.5 percent when combined with the increased efficiencies that GRE can obtain from improving its infrastructure.
  • Ending GRE’s long-term commitment to buy 119 MW, and half the energy output, of Dairyland Power Cooperative’s coal-powered Genoa 3 Station.
  • Accelerating depreciation for GRE’s two largest coal plants, Coal Creek Station and Stanton Station.
  • Completing an agreement with the Manitoba Hydro Electric Board of Winnipeg (Manitoba Hydro) to procure 200 MW of hydropower during summer months, starting in 2020.
  • Acquiring 600 MW of wind generation, phased in from 2026 to 2029, to comply with Minnesota’s Renewable Energy Standard.

The Environmental Intervenors moved for the commission to compel GRE to disclose the revenues generated by the 99-MW Spiritwood plant through sales to two large industrial customers: Dakota Spirit AgEnergy, a GRE-affiliated ethanol plant (Dakota Spirit), and the Cargill Malt plant. According to the Environmental Intervenors, GRE had the duty to disclose the amount of revenues it receives from its Spiritwood Station. GRE opposed the motion on three grounds.

  • First, GRE argued that the request was untimely. The Environmental Intervenors filed their initial information request after the deadline for parties to file their initial comments, and filed their motion to compel more than two months after the parties had filed their reply comments.
  • Second, GRE argued that, under the terms of the agreements it has with its customers, GRE is bound to keep the requested information confidential. In reply, the Environmental Intervenors noted that they have signed a non-disclosure agreement, agreeing not to disclose trade secret information.
  • Third, GRE argued that commission rules required parties to comply with only reasonable requests for information, and the Environmental Intervenors’ request was unreasonable.

The Environmental Intervenors argued that they sought the information to bolster their argument that GRE has excess capacity, that GRE has pursued a risky course of action in order to justify GRE’s growing operating costs, and that these facts support the conclusion that GRE should accelerate the retirement date for Stanton Station, which operates on coal. The Department stated that it did not regard Spiritwood’s profitability as relevant to the merits of retiring Stanton Station, at least for purposes of the current docket. Because the continued operation of Stanton Station enhances GRE’s flexibility without violating any current environmental standards, the Department concluded that proposals to retire the generator were premature.

“The Commission concurs with GRE and the Department that the Environmental Intervenors have failed to articulate sufficient grounds to grant their motion,” said the Oct. 26 order. “In particular, the Commission is not persuaded that granting the motion, at this late stage in the proceedings, would have a reasonable likelihood of revealing evidence that would aid in the evaluation of GRE’s resource plan. The Commission shares the Environmental Intervenors’ interest in ensuring that GRE conducts appropriate analyses of its options, including the option of retiring its coal-powered generators. But the Environmental Intervenors have not stated how knowledge of the revenues from the Spiritwood Station could alter this analysis – and certainly have not demonstrated that this information would justify altering Stanton Station’s retirement date. The issue of making GRE’s operations and maintenance cost data public is similarly unrelated to the merits of this docket.”

GRE in the resource plan reported acquiring energy from a variety of sources. In 2013 it derived:

  • 67% of its energy from coal-powered generators, down from 80% in 2005;
  • 11% from renewable sources, including generation that uses refuse-derived fuel from its Elk River Energy Recovery Station and power purchases from eight wind farms in Minnesota, North Dakota, and Iowa;
  • 13% from hydroelectric dams; and
  • 9% from natural gas and other sources.

Every scenario that GRE explored with its capacity expansion model demonstrated that GRE has more than enough generating capacity to meet anticipated customer demand through 2029 and beyond. Also, in every scenario that considered the option of retiring coal-powered generators, the model recommended that GRE discontinue operating Genoa 3. In addition, GRE agreed to enter into a contract permitting Missouri River Energy Services (MRES) and Minnesota Power to use some of GRE’s excess capacity.

Any capacity need for now is mostly about renewable energy compliance

That said, GRE’s preferred plan also proposes to acquire additional generating capacity – but in the interest of acquiring energy, not capacity as such. Specifically, GRE proposed to acquire:

  • More power from wind turbines, but not to serve unmet demand, but to acquire energy to fulfill the requirements of the Renewable Energy Objectives;
  • More power from Manitoba Hydro; and
  • More power from photovoltaic solar panels, which GRE has installed at 19 sites.

Al-Corn and Heartland argued that GRE failed to adequately analyze the option of retiring its generators. GRE denied this, noting that all but one of the scenarios GRE analyzed provided for the option of retiring generators. Moreover, these scenarios all generated plans that recommended discontinuing operations at Genoa 3 – and GRE included this option in its preferred plan.

The Environmental Intervenors noted that many of GRE’s scenarios generated plans that recommended retiring Stanton Station as well as Genoa 3. The Environmental Intervenors argued in favor of retiring this generator as well, largely on the grounds that GRE’s Spiritwood Station generated more cost than benefit for GRE. In support of this contention, the Environmental Intervenors estimated the benefits GRE derived from operating Spiritwood Station and concluded that it was less than an estimate of Spiritwood Station’s costs.

The commission said, though, that it concurs with the Department that: GRE has made appropriate use of its capacity expansion model in evaluating the option of retiring its generators; this modeling has clearly demonstrated that it is cost-effective for GRE to discontinue operations at Genoa 3; and this modeling has not unambiguously demonstrated the merits of retiring any other generator at this time. Some of GRE’s scenarios also found it cost-effective to retire Stanton Station – and some recommended retiring other generators as well. But most of the scenarios considered by GRE did not support these outcomes, the commission noted. It also said it is not persuaded that the profitability of Spiritwood could have any bearing on the merits of retiring Stanton Station.

That said, the commission noted that GRE has begun accelerating the depreciation of its oldest and largest coal-powered generators, Coal Creek Station and Stanton, to be completed by 2028. Typically a utility’s rates are designed to recover the cost of a capital asset – including the cost of decommissioning the asset and remediating the site, offset by the value of any salvage – over the asset’s useful life. In choosing to accelerate the deprecation of these generators, GRE acknowledges that it may retire its coal-powered generators earlier than previously anticipated.

The commission said it will direct GRE to explore the consequences of adopting earlier retirement dates for GRE’s coal-powered plants, including an analysis of how various retirement dates would affect rates.

GRE’s next resource plan would normally be due by Nov. 1, 2016. But in early 2017, GRE anticipates receiving a decision from North Dakota regulators regarding GRE’s plans for complying with the EPA’s Clean Power Plan, which was officially published on Oct. 23. A six-month extension may enable GRE to incorporate this information into its planning analysis.  In this case the commission finds that a variance is warranted. So the commission varied its rules and extended the filing deadline six additional months, to May 1, 2017.

Stanton is a 190-MW power plant located near Stanton, North Dakota. Great River Energy’s Spiritwood Station in North Dakota has the capacity to generate up to 99 MW of electricity for the regional energy market.

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.