A preliminary artist's rendering of the plant, via BigStoneII.com

Despite a metro-area city backing out of the project, representatives for the proposed Big Stone II power-generation facility say they remain optimistic about  the plant’s future, while opponents are still insistent that the new plant will mean dirty power for the Dakotas and Minnesota.

The proposed coal-fired plant, to be located in northeast South Dakota, would generate between 500 and 580 megawatts of electricity. Five utilities are backing the project, including western Minnesota’s Otter Tail Power and the Central Minnesota Power Agency out of Blue Earth. The project is called Big Stone II because it is a major expansion of an existing facility of the same name near Milbank, S.D.

The municipal utility for Elk River, a western suburb of Minneapolis, has declined participation in the project, citing that taking part could carry considerable risk. “We have to commit a lot of money to something that’s not built,” said city utility board chair John Dietz. “They were asking us to commit $3.4 million by September for our share of the research-and-development costs. They’re going to have a go/no-go vote in September of this year, and next year we would be required to put up more money for construction.”

Dietz said that the ratepayers for the utility would be on the hook if the plant didn’t happen.

Elk River’s decision was the target of Twin Cities area activists who urged supporters to call Elk River officials asking them to turn down the project. At the recent meeting of the Elk River city council and utilities board, council members expressed no dissatisfaction with using coal-generated power, but questioned the price tag the utility would have to commit to the project. The utilities board had previously voted not to recommend the project, and the city council took no action, effectively killing Elk River’s participation.

A spokesman for the Big Stone II, Dan Sharp, said the project can continue without Elk River’s participation. “We could increase the scope of the project to 580 or 600 megawatts, if others were willing to come into the project,” he said. With the number of utilities that are on board, the project will probably be 500 megawatts.

Sharp said that all of the project’s partners are trying to secure their shares of the financing in anticipation of a September meeting of the partners, adding that construction is still slated for 2010, possibly starting as early as May.

Sharp says one factor that could be a benefit to this project would be if so-called cap-and-trade legislation becomes a reality. Then, Big Stone II would be about 20 percent more efficient than the existing facilities and would be in line to receive credits that could be traded on the open market.

The plant's proposed location, just over the Minnesota border (BigStoneII.com)

But, critics of the project contend the project will generate dangerous and antiquated coal-based power when other alternatives are becoming more viable in the region. The Northstar chapter of the Sierra Club, which counts Minnesotans in its numbers, has been active in opposing the expansion project. Northstar member Rich Felming said the project is largely past the point of any significant public input. He found it encouraging that Elk River declined to participate.

”We’re always trying to get letters to the editor in to make people aware of the hazards of this proposal,” Felming said.

In addition to his concern that the plant will create several million tons more of carbon dioxide emissions that could contribute to global warming, Felming has a more personal stake in the project: “I run a part-time business where I make fishing products, and I’m concerned about mercury emissions, the sulphur dioxides and the nitrogen dioxides are an issue also for me.”

Felming said he’s very concerned of the impact of this plant on sport fishing. The plant will withdraw cooling water from Big Stone Lake, which is co-managed by Minnesota and South Dakota authorities.

He said he also finds it odd that these utilities are overlooking a prime source of energy. The Dakotas are “the Saudi Arabia of wind power,” Felming said.

But in examining why utilities still seem wedded to coal-generated power, Felming said. “You want to do something you’re familiar with, you always want to keep going down that path.”

Felming added that groups like the Sierra Club and Clean Water Action in South Dakota will try to keep the public focused on what they say is a continued and dangerous reliance on coal for power.

Artist's rendering of Big Stone II.

A week after the Minnesota Public Utilities Commission unanimously approved transmission lines needed to build the 500 megawatt coal-fired Big Stone II power plant near the South Dakota border, the Environmental Protection Agency has opposed issuing a permit for operation of the facility. The Obama administration’s EPA, on the last day of the application review process, cited “inadequate emissions monitoring and other problems,” according to MPR. The objections could kill the project altogether; but, according to South Dakota Public Utilities Commission Chairman Dusty Johnson, they’re not the “death knell” for Big Stone II. He called it “just another bump in the road — it’s a big one — but a bump in the road that this project has seen before.” The EPA’s move, which overturns the South Dakota PUC’s ruling, “signals that the dozens of other coal plant proposals currently in permitting processes nationwide will face a new level of federal scrutiny,” according to the Sierra Club, which has long opposed the project.

Read the EPA’s decision here [pdf 1, pdf 2].

Correction: This article originally misquoted Dusty Johnson; the quote above, which states the EPA’s decision will not mean the death of the project, conveys his accurate sentiments.

Despite the pleas of citizens and activists in the hearing room, environmental issues were not deliberated by the PUC.

The Minnesota Public Utilities Commission (PUC) unanimously approved the Certificate of Need for a transmission line project necessary for the construction of the Big Stone II coal-fired power plant in Milbank, S.D.

Despite a room full of citizens, many holding signs and some dressed in animal costumes, opposed to the plant’s construction because of environmental concerns, the PUC did not deliberate the coal-fired facility itself or the environmental impacts that it may have, focusing instead on the cost of the project and its implications for utility rate payers.

The five-member PUC was to issue a final ruling last June, but newly appointed Commissioner J. Dennis O’Brien requested further review of the project, and an inquiry was approved by a vote of 3-2. Boston Pacific was hired as an independent consultant to assess carbon dioxide emission costs, construction costs and fuel prices for Big Stone II.

Dr. Steve Rakow, a rates analyst from the State Office of Energy Security testifying on the commission’s alternative option decisions, stated that because the Boston Pacific report did not concern itself with issues like mercury emissions or water usage that his findings did not take such things into consideration.

“Boston Pacific wasn’t paid to consider more than the three cost concerns,” responded Commissioner Thomas Pugh. The commission proceeded with a primary concern of ensuring ratepayers were not left to carry the burden of the $1.3 billion facility. To that end, the commission attached conditional monetary caps to the construction of the project and future carbon dioxide tax expenses. Since no carbon tax has been established by Congress, there is an open debate as to what those costs will be. Environmental groups expect that global warming concerns will result in a relatively high carbon tax, meaning Big Stone II would be less viable economically. Industry estimates the future carbon tax will be low and the plant will be more profitable.

“We appreciate the the PUC saw the need for these transmission lines and granted the requested permits,” said Mark Rolfes, Big Stone II project manager. “We’ll need to wait until the written conditions are available from the PUC to determine how they affect the project.”

Artist's rendering of the plant with Big Stone Lake, headwaters of the Minnesota River and natural border between South Dakota and Minnesota in the background. Via BigStoneII.com

The PUC also stuck to its limited purview over the project, considering only the merits of the Minnesota portion of the transmission project and not the Big Stone II plant itself. Despite the fact that Big Stone II will be constructed a short distance from the Minnesota-South Dakota border on the headwaters of the Minnesota River and that residents of Minnesota will be the recipient of 45 percent of the electricity generated by the facility, only 12 percent of the entire project fell under the jurisdiction of the PUC.

“This is a tremendous disappointment from the PUC, a milquetoast decision that means that if Big Stone II gets built, shareholders and ratepayers will have to bear the extraordinary costs of coal and carbon that Otter Tail Power did not account for, not to mention the pollution,” said Darrell Gerber with Clean Water Action. “It just doesn’t make sense.”

The opposition groups will likely exercise one of their few remaining options and bring the PUC’s decision before the Minnesota Court of Appeals.

“This is certainly not the end of the road,” remarked Cesia Kearns, organizer with the Sierra Club.

“We know that coal is a risky financial gamble — coal plants are dropping like flies around the country, and with a carbon constrained future, it’s likely Big Stone II will join the ever-growing list of abandoned projects.”

The Certificate of Need allows the five utilities involved in the Big Stone II project to construct and upgrade 112 miles of transmission lines in western Minnesota. The plant itself is not expected to be completed and online until 2015.

The proposed Big Stone II would add an additional 600 megawatts of power to the existing 450-megawatt Big Stone I plant. The new plant would be located by the existing facility on the South Dakota side of Otter Tail Lake. The lake feeds the Minnesota River, which was recently designated as the fifth most endangered river in the United States by the conservation group American Rivers, primarily because of the proposed Big Stone II plant and concerns that the massive amounts of water used by the plants would result in a drawdown of water levels.

A Pawlenty representative told MPR’s Amber Espinoza that the governor would wait until an administrative law judge has finished reviewing the case and issues a ruling.

Pawlenty has been a frequent advocate for addressing climate change, carbon emissions and energy dependence. When he was elected chair of the National Governors Association for a one-year term, Pawlenty told Stateline.org that there is “an urgent need to improve our energy policy in this country, not just better alternative energy, but climate-change issues, conservation, getting better results from our traditional energy sources and applying new technologies to old sources.”

Continued: Click “Read more”The study only specifically looks at risks associated with the Kansas project, but the Solve Climate blog says the groundbreaking report makes a strong argument against coal there or anywhere else. In Minnesota, opponents of the proposed Big Stone II coal-burner on the South Dakota border have made similar arguments against that project, and I’m sure they’re reading this report with interest.

All three major presidential candidates support legislation to cap and penalize carbon emissions. One of the proposals considered in the Innovest report was coauthored by John McCain. It’s expected Barrack Obama or Hillary Clinton would support more aggressive penalties for carbon emissions.

“The fundamental question regarding the regulatory scenario on climate change in the US is not whether legislation will be enacted, but when,” the Innovest report says. Sunflower Electric Power Corporation, in its attempts to expand capacity at its Holcomb Station power plant, “has not adequately addressed the financial risks associated with the CO2 output” and as a result it “is putting its ratepayers and owners at significant risk.”

Read More:
Carbon regulations to cost coal projects, bank says (Minnesota Monitor, Feb. 13, 2008)
Carbon Regulation Will Cost Big Stone II, But How Much? (Minnesota Monitor, Dec. 6, 2007)
Big Stone II Coal-Plant Debate Turns To Carbon Regulation (Minnesota Monitor, Nov. 13, 2007)

A group of utilities led by Otter Tail Power wants to build a 500- to 580-watt coal-fired power plant near Milbank, S.D., just west of the Minnesota border. Before they can build, Minnesota regulators need to OK a set of new transmission lines that would carry electricity to customers in western Minnesota.

The anticipated cost of carbon regulations, such as taxes or a carbon cap and trade system, is critical because Minnesota law says regulators aren’t allowed to approve new projects if the same amount of energy could be supplied for less money using conservation or renewable energy sources.

In December, a report to Minnesota regulators from Big Stone II investors said they planned on paying $9 per ton of carbon emissions, while opponents argued the real cost was likely to be much higher. Bank of America’s announcement isn’t the first to predict carbon regulations will cost companies in the $20 to $40 per ton range, but it’s likely to cause some conversation because of the source.

Read More:
Carbon Regulation Will Cost Big Stone II, But How Much? (Minnesota Monitor, Dec. 6, 2007)
Big Stone II Coal-Plant Debate Turns To Carbon Regulation (Minnesota Monitor, Nov. 13, 2007)

Environmental groups seized on the news as evidence that Big Stone II, a proposed coal-fired power plant near the Minnesota-South Dakota border, is not financially feasible to build.

“Today’s decision tells utilities global warming pollution won’t be cheap,” said Michael Noble, executive director of Fresh Energy, a St. Paul-based clean energy advocacy group.

The utilities commission, however, did not specifically address how the vote would affect Big Stone II, and a project spokeswoman said there are questions whether it will impact the plant.The Legislature directed the utilities commission this year to estimate how much added cost power plants should plan on paying in the future for releasing greenhouse gas emissions. New regulations being discussed at the state and federal level, including various carbon-cap-and-trade systems, would penalize companies with high emissions.

Based on the most likely proposals being discussed, the commission said today that the figure is likely to be between $4 and $30 per ton of carbon dioxide released. The number is important because companies that want to build new power plants in Minnesota need to prove to the state that less-polluting options couldn’t save or generate the same energy for less money.

A group of five Midwest utilities trying to build Big Stone II says the coal plant is the cheapest option. The formula they used to reach that conclusion assumes for a $9 per ton cost on carbon dioxide emissions. Opponents argued the penalty is likely to climb much higher than that, and as a result wind or other renewable energy sources are a better investment.

“When we were arguing before that the cost should be $20 a ton or $30 a ton, we were told we were crazy,” said Beth Goodpaster, lawyer for the Minnesota Center for Environmental Advocacy. “Today’s vote shows we were right. We will use this to push Big Stone II utilities to examine a reasonable range of carbon costs, something they have not done in the past.”

Kris Kling, a spokeswoman for Big Stone II, said it was her understanding as of this evening that the range voted on earlier today wouldn’t be applied retroactively to the project. “Regardless, we have modeled with $9, which is within that range,” Kling said.

Burl Haar, executive secretary for the PUC, said today’s vote established the range but it did not determine how it would be applied to specific projects, including Big Stone II. That, he said, is left for another day.

The group of utilities backing the Big Stone II power plant, slated to be built near Milbank, S.D., filed new documents with Minnesota utility regulators Tuesday. The filing includes, for the first time, cost estimates for electricity prices that assume some type of carbon tax, cap-and-trade program or other regulation will add to the cost of generating power.

An environmental lawyer representing the project’s opponents said they’re skeptical about a figure used by the utilities, though. The hypothetical cost of carbon regulation used in their report is $9 per ton of carbon dioxide emitted.

“We think $9 is a very low estimate of potential carbon costs,” said Beth Goodpaster, attorney for the Minnesota Center for Environmental Advocacy, who had only briefly reviewed the documents, which were submitted to regulators late Tuesday afternoon.

The dollar amount is critical because Minnesota utility regulators under state law aren’t allowed to approve new power plants if the same electricity demand can be met more cost-effectively with conservation measures or renewable energy sources instead.A variety of legislation is being discussed at the state and national levels that would penalize carbon emissions. The goal is to make renewable energy sources like wind and solar more competitive. Many people who follow energy issues think it’s now just a matter of time before some system of carbon regulation is in place.

Dan Sharp, spokesperson for the Big Stone II project, said the $9 figure is an estimate provided by the Minnesota Department of Commerce. Sharp did not know the details of how it was applied to the new cost estimates for Big Stone II’s electricity prices, for example, whether or how it factored inflation of carbon emission costs over the life of the power plant.

“There is a chance that Congress could impose a higher than $9-a-ton carbon cost, but it is our judgment that Congress will not,” said Ward Uggerud, vice president for Otter Tail Power Company, one of the partners, in an interview with the Sioux Falls Argus Leader.

A spokesperson for the Minnesota Department of Commerce could not be reached for comment Tuesday evening.

Goodpastor said consultants for the environmental organizations will spend the next month, among other things, studying how the carbon cost estimate was arrived at and applied to the utilities’ price calculations. Other studies have estimated the long-term cost of carbon regulation proposals as high as $30 per ton of emissions.

About the plant

The battle over Big Stone II has been going on for more than two years. The plant would be built in South Dakota but it depends on Minnesota regulators approving construction of two high-voltage power lines that would carry electricity to customers in Minnesota.

In December 2005, the Minnesota Public Utilities Commission referred the matter to an administrative law process, which is common in cases that are expected to be highly contested. After several hearings and months of deliberation, a two-judge panel in August advised the utilities commission that the project met requirements to approve the transmission lines.

After winning the favorable decision from the administrative law judges, however, two of the plant’s seven investors, Great River Energy and Southern Minnesota Municipal Power Agency, dropped out of the project. As a result, the remaining five partners could not fund the 630-megawatt plant that was proposed.

The remaining utilities include Otter Tail Power Company, Missouri River Energy Services, Montana-Dakota Utilities, Central Minnesota Municipal Power Agency and Heartland Consumers Power District.

Delays increase costs

Those utilities went back to the drawing board and submitted new plans Tuesday that call for a smaller plant. The proposal now stands for a 500- to 580-megawatt coal-fired plant. Costs for building the plant have gone up, however, due to delays. Early estimates priced the plant at $1.3 billion. Sharp said Tuesday the facility will now cost up to $1.6 billion to build and won’t be operational before summer of 2013, two years later than its original target.

Recently, the project’s partners said other parties have expressed interest in taking place of the two departed investors, which underscores the need for additional power generation in the region, they argued. The revised plans also reflect new rules from 2007 Minnesota conservation and renewable energy legislation, the utilities said in a press release Tuesday.

The plans call for equipping the plant with technologies to reduce the amount of mercury, particulates and sulfer dioxide, but what does escape will be carried almost entirely into Minnesota by the prevailing westerly winds and the Minnesota River, which flows out of nearby Big Stone Lake.

Opponents’ main concern is the amount of carbon the plant would spew into the atmosphere. The 630-megawatt plant was projected to annually release about 4.7 tons of carbon. Those emissions could wipe out many of the carbon reductions made in Minnesota through use of conservation and renewable energy.

Other groups opposing the plant include Fresh Energy, the Izaak Walton League, Union of Concerned Scientists and Wind on the Wires.

A new round of hearings before the administrative law judges is tentatively scheduled to start in January, with a vote at the Public Utilities Commission penciled for sometime in April 2008.