Minnesota PUC approves cleaner version of Minnesota Power resource plan

Minnesota Power said June 10 that an approval by the Minnesota Public Utilities Commission the prior day of the utility’s latest resource plan was an affirmation of its “EnergyForward” clean-energy program, while the Sierra Club said the commission actually charted a cleaner-energy path than the utility had first asked for.

“The commission’s approval affirms Minnesota Power is on the right path to a cleaner energy future while ensuring customers get the reliable energy they need at a price they can afford,” said Al Hodnik, president, chairman and CEO of ALLETE. “EnergyForward is about balancing reliability, affordability and sustainability, and is clearly positioning Minnesota Power to meet the state’s carbon reduction target of 30 percent by 2025. All of these efforts are helping to responsibly answer the nation’s call to transform its energy landscape.”

The resource plan assessed possible environmental and economic influences on energy supply and demand while weighing the economic benefits and risks of various options to serve customers. Among the commission-approved components of the plan:

  • Economic idling of the company’s coal-fired Taconite Harbor Energy Center this fall and ceasing coal operations there in 2020. By idling the facility Minnesota Power will retain flexibility to address reliability needs for customers and the region if necessary.
  • Expanding renewables through delivery of 383 MW of carbon-free hydropower from Manitoba Hydro via the company’s planned 500-kV Great Northern Transmission Line.
  • Advancing solar generation additions.
  • Expanding energy efficiency savings goals—the commission commended Minnesota Power’s strong conservation program performance and affirmed its proposal to treat energy efficiency as a resource addition. Minnesota Power said it has remained a state leader in customer-based energy conservation. Under its Conservation Improvement Program, Minnesota Power has far exceeded the state’s 1.5% energy savings goal each of the past five years.
  • Along with adding more renewables to its system and diversifying its energy mix, Minnesota Power has made significant commission-approved investments to its largest and most efficient coal-fired facilities, Boswell Units 3 and 4, to reduce mercury, NOx and SO2 emissions and increase efficiencies, with mercury emissions down about 90%.

Minnesota Power also is subject to Minnesota’s Renewable Energy Standard (RES), which requires 25% of its retail electric sales to be generated by eligible energy technologies by 2025. By 2015, Minnesota Power had surpassed the RES with about 26% of its retail and wholesale electric sales from Minnesota-eligible renewable energy sources. The commission affirmed as part of its current resource plan Minnesota Power’s path to meet the state’s 1.5% Solar Energy Standard by 2020.

As part of the IRP action taken by the commission, the company said it will continue to consider increasing its current renewable portfolio that includes 500 MW of wind by issuing requests for proposals (RFPs) for 100 MW-300 MW of additional wind, solar additions beyond the state requirements and additional demand-side management resources.

In other related action June 9, Minnesota Power noted that the commission adjusted the retirement of two small coal units at the company’s Boswell Energy Center from 2024 to by 2022.

Sierra Club says commission took some extra steps on clean energy 

The Sierra Club on June 9 celebrated the fact that on the same day the Minnesota PUC voted unanimously to approve Minnesota Powers 15 year resource plan with additional coal retirements and investments in wind, solar and energy savings. The club said the PUC approved Minnesota Power’s plan with modifications including:

  • Retiring Boswell 1 and 2 coal units no later than 2022;
  • Confirming Taconite Harbor 1 and 2 coal units economically idled in 2016 with annual reports on impact to ratepayers and a plan to cease coal operations by 2020;
  • Initiate competitive bidding for 100 MW-300 MW of wind energy by the end of 2017;
  • Finding up to 100 MW of additional solar by 2022 is likely an economic resource for Minnesota Power;
  • Signifying energy efficiency as a resource – setting annual average savings goal at 76.5 GWh, proposing a demand response competitive bidding process this year, and investigating potential for energy efficiency competitive bidding process; and
  • Not presuming natural gas replacement for coal units and including a full analysis of replacement options in the next IRP; including renewables, energy efficiency, distributed generation and demand response.

Minnesota Power’s originally filed 15-year energy plan did not achieve the level of renewables increases or coal reductions that were in the best interest of Minnesota Power’s customers and in line with the company’s EnergyForward plan, the club said. Clean energy organizations and large energy users agreed that Minnesota Power and the PUC should proceed with caution in requiring new natural gas plants. The PUC decision is based on economic analysis by the Department of Commerce that demonstrated that wind, solar and energy savings are better for customers than continued coal operation.

“This decision by the PUC sets Minnesota Power on a path to do much better. The reality is, fossil fuels are costly to our health and our well-being. We are hopeful that Minnesota Power will rise to the challenge and meet customers’ demand for more wind, solar and energy savings,” said Leigh Currie, MN Center for Environmental Advocacy attorney representing Sierra Club, Fresh Energy, and Wind on the Wires.

Minnesota Power filed its plan with no additional build out of wind energy, which is questionable because the federal tax incentives for wind and solar were renewed in December, the club said. Wind is beating out coal and natural gas as the cheapest way to generate electricity, yet unlike other utilities across the country, Minnesota Power was not taking advantage of an opportunity that would benefit them and their consumer base, the club said. The PUC ordered Minnesota Power to initiate a request for proposals of 100 MW-300 MW of wind energy by 2017.

The club said Minnesota Power proposed modest, but important steps forward with the phase out of coal at Taconite Harbor 1 and 2 by 2020 (and as early as this year) and Boswell 1 and 2 in the mid-2020s. Recent air modeling demonstrates that even with the company’s recent pollution upgrades, Taconite Harbor still might not be able to comply with clean air standards, the club said. The PUC found that Minnesota Power has not demonstrated at this time that the $30 million investment in additional pollution controls at Boswell 1 and 2 is reasonable, the club added.

Minnesota Power’s coal units are:

  • Boswell 1 and 2, 132 MW;
  • Boswell 3, 346 MW;
  • Boswell 4, 446 MW (Minnesota Power’s share);
  • Milton R. Young 2, 90 MW;
  • Taconite Harbor 1 and 2, 139 MW.

Commission staff points out issues in briefing memo

Said a briefing memo from PUC staff filed ahead of the June 9 commission meeting: “Much of MP’s generation is coal-fired, although diminishingly so due to the retirement of its Taconite Harbor Energy Center (THEC) Unit 3 and refueling of Laskin Energy Center (LEC). MP’s largest generating facility is the Boswell Energy Center (BEC), located in Cohasset, Minnesota, which is more than 1,000 MW in size and consists of four generating units. The coal to natural gas conversion at Laskin was completed in 2015.” 

As an outcome of the utility’ s 2013 resource planning proceeding, the commission approved MP’s proposal to: retire its coal-fired, 75-MW Taconite Harbor Unit 3; and convert its coal-fired 110-MW Laskin Energy Center to a natural gas-fired peaking facility.

In addition to its owned coal units, Minnesota Power has also received coal-fired generation through a long-term purchase agreement from Square Butte Cooperative’s Milton R. Young 2 (Young 2) lignite coal generating station in North Dakota. In MP’s 2010 IRP, the company outlined its plans to phase out the coal-fired energy delivery contract with Young 2 in conjunction with its renewable expansion plan, by purchasing the Square Butte direct-current transmission line (DC Line) to deliver wind energy. Through its acquisition of the DC Line, MP has stepped down its position in Young 2 and developed its Bison Wind Energy Center, delivering approximately 500 MW of wind across the freed-up transmission capacity. MP will phase out its energy from Young 2 completely by 2026. By removing Laskin Energy Center and Taconite Harbor Unit 3 from its system (as coal-fired units) and reducing its position in Young 2, in total, MP has reduced its position in coal-fired capacity by nearly 500 MW since its 2010 IRP, the staff memo noted.

For the 2015 resource plan, MP proposed its “Preferred Plan,” which further reduces its coal-fired energy position by transitioning its Taconite Harbor 1 and 2 and Boswell 1 and 2 away from coal. “However, MP’s ultimate plans for the replacement energy and capacity from those units are not entirely certain,” said the staff memo. “Questions still remain about MP’s long-term replacement plans for THEC 1 & 2 and BEC 1 & 2, beyond temporary wholesale transactions; thus, MP’s coal transition plan is the most contentious area of dispute among the parties.”

The memo added: “In the five-year action plan, MP proposes to ‘idle’ THEC Units 1 & 2 in October 2016, before ceasing coal-fired generation at those units by 2020. MP explores alternatives at THEC post-2020, but does not give a concrete re-purposing plan. At Boswell, MP proposes to upgrade the facility to reduce sulfur dioxide (SO2) emissions in 2018 and cease using coal at Units 1 & 2 for electric generation in 2024; however, MP proposes to revisit the long-term viability of BEC 1 & 2 in the next resource plan.

“A core element of MP’s long-term vision is to retain Boswell Energy Center as its lone coal-fired baseload generating facility for dispatchable thermal electricity. Despite the teetering results of the economic analysis in the resource plan—in which some scenarios favor retiring Boswell Units 1 & 2, some favor refueling it, and others favor continuing their operation—MP is strongly committed to keeping Boswell Energy Center a singular, coal-fired facility to deliver energy over the long-term, much longer in fact than the span of the current planning period. In doing so, MP plans to incrementally step-down the rest of its coal-fired generation and expand its position in natural gas generation by acquiring a new natural gas combined cycle unit and, possibly, repurposing Taconite Harbor Energy Center to maintain local reliability.”

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.