Minnesota Power seeks cost passthrough on wind, hydro projects

Minnesota Power on Nov. 2 petitioned the Minnesota Public Utilities Commission for approval of its 2017 Renewable Factor, covering cost recovery of investments, expenditures and costs related to the development of the Bison Wind Energy Center and the Thomson Hydroelectric Restoration Project through the utility’s Renewable Resources Rider.

The covered projects, which were previously approved by the commission, are:

  • The Bison 1 Project is an 81.8-MW wind facility located southwest of Center, North Dakota. The Bison 1 Project was constructed in two phases. Phase 1, consisting of sixteen Siemens SWT-2.3-101 gear-driven turbines generating 36.8 MW of wind energy, became commercially operational in December 2010. Phase 2 of the project, consisting of fifteen 3.0 MW SWT-3.0-101 direct drive or “gearless” turbines generating 45 MW of wind energy, became fully operational in January 2012. In addition, a component of this project was the upgrading of the DC Line terminals to increase the DC Line capacity from 500 MW to 550 MW. The DC Line upgrade was completed in November 2013.
  • The Bison 2 Project is a 105-MW wind energy facility located in Oliver and Morton counties in central North Dakota. The project consists of 35 Siemens SWT-3.0-101 turbines and interconnects to the electric grid at the Square Butte Substation, which allows the wind energy to flow via Minnesota Power’s existing DC Line and provides a cost competitive energy and capacity resource for Minnesota Power’s customers. The project became commercially operational in December 2012.
  • The Bison 3 Project is also a 105-MW wind energy facility located in Oliver and Morton counties in central North Dakota. The project consists of 35 Siemens SWT-3.0-101 turbines and interconnects to the electric grid at the Square Butte Substation, which allows the wind energy to flow via Minnesota Power’s existing DC Line. The project became commercially operational in December 2012.
  • The Bison 4 Project is a 204.8-MW wind energy facility located in Oliver County in central North Dakota. The Bison 4 Project consists of 64 Siemens 3.2 MW SWT-3.2-113 turbines and interconnects to the electric grid at the Square Butte Substation, which allows the wind energy to flow via Minnesota Power’s existing DC Line or the AC system. The Bison 4 Project included expanding the existing Bison Substation, constructing a new Tri-County Substation, constructing 11 miles of 230-kV transmission line connecting the two substations, and integrating software to enhance voltage regulation. In addition, a component of this project was upgrading the capacity of the Center-Heskett 230-kV transmission line that runs between Center and Mandan, North Dakota, from a summer emergency rating of 438 MVA to 591 MVA. The upgrade was required to prevent the additional AC system injection by the Bison 4 Project from overloading the Center-Heskett 230-kV line for critical AC system contingencies. The upgrade of the Center-Heskett 230 kV line was competed in October 2014. The Bison 4 Project became operational in December 2014.
  • The Thomson Project is a 71-MW hydroelectric restoration project located at the Thomson Development in Minnesota Power’s St. Louis River Hydro System. The Thomson facility was severely damaged and brought offline by record rainfall and flooding in June 2012. The project was to restore the facility from the damages and upgrade Thomson to meet current safety and engineering standards. The project included reconstruction of the forebay canal, electrical restoration, mechanical and general civil rehabilitation, upgrades to the water conveyance system, and construction of additional spillway facilities at the Thomson main dam. The Thomson Project is nearly complete. In October 2014, the forebay reconstruction was completed and the forebay was subsequently refilled. Work related to the electrical restoration, mechanical and general civil rehabilitation, and upgrades to the water conveyance system has been completed. By the end of 2016, all portions of the Thomson Project will be complete except for the spill capacity projects, which are anticipated to be completed by the end of 2017, pending necessary authorization and design approvals by the Federal Energy Regulatory Commission. Minnesota Power said the Thomson Project has resulted in improved efficiency of the units resulting in an increase of generation capability from pre-reconstruction levels. The Thomson station is now capable of nearly 75 MW at peak production.

Said the petition: “Minnesota Power is pleased to announce that the total project cost for the Bison Projects were finalized at $813.3 million, or $23.4 million below the total original estimates of $836.7 million. After deducting internal costs, AFUDC on internal costs, and wholesale AFUDC, $796 million in capital expenditures are utilized for calculating the revenue requirements.”

It added: “Based on the original Petition, Minnesota Power anticipated that the Thomson Project would cost approximately $90.4 million, net of insurance proceeds. Currently the Company estimates the overall project costs will be finalized at about $91.8 million, net of insurance proceeds. In order to remain within the maximum level of capital expenditures approved in the original Petition, capital expenditures, net of insurance proceeds, were capped in the 2017 Renewable Resources Factor at $90.4 million. After deducting internal costs, AFUDC on internal costs, and wholesale AFUDC, the capital expenditures for calculating revenue requirements is $82.5 million, or roughly $1.5 million less than the amount of capital expenditures utilized for calculating revenue requirements in the original Petition.”

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.