Big Stone II decision delayed
By Scott Wente
St. Paul Capitol Bureau
ST.PAUL - State utility regulators postponed a decision on an electric transmission project in western Minnesota and want expert opinion on the proposed lines and related Big Stone II coal-fired power plant.
The Minnesota Public Utilities Commission voted 3-2 Thursday to further study the proposed power lines and the controversial South Dakota coal plant that would generate the electricity.
Commissioners only are considering whether to grant a request by five utilities led by Fergus Falls-based Otter Tail Power Company to build transmission lines from the proposed plant in eastern South Dakota to Morris and Granite Falls in western Minnesota.
The utilities argue there is a growing demand for more electricity and new technology would make the coal plant better for the environment than previous-generation coal plants. Environmental groups are seeking to block construction of the plant by challenging the transmission lines needed to distribute the power. They claim the utilities are underestimating the cost to consumers.
Two commission members were ready Thursday to grant the utilities their certificate of need, but the remaining three said more information is needed. That work is expected to take at least three months.
Commissioner J. Dennis O'Brien, who is new to the panel, wants an independent expert to study the potential costs to build the plant and to emit carbon, should government start regulating carbon emission. He also wants an estimate of future natural gas prices; Big Stone II proponents say a natural gas plant is their next most affordable option if the coal project is blocked.
O'Brien said the commission needs to base its decision on more than just computer modeling done by the utilities and the environmental groups. He predicted the Big Stone II case will end up in the courts regardless of the commission's final action.
Citing concerns over costs to consumers, commissioners Tom Pugh and Phyllis Rhea backed O'Brien's plan. Rhea said the Big Stone II utilities had not convinced her to support the power line request.
"To say that this plant is the only option to meet need, I think we can't do it on this record," she said.
The commission even was split on the value of further research. The panel's chairman said utility customers suffer the longer the case is left unresolved and that more review does not guarantee new information.
"Every day we do that the rate payer is the one that gets the shaft," said Commissioner LeRoy Koppendrayer, who is retiring from the panel this month. "It's going to be expensive, we know that."
"When do we stop analyzing and when do we start building?" he added.
Big Stone II hearings this week came after administrative judges recommended the transmission project be rejected. The commission had sent the case to that two-judge panel after two companies backed out of the Big Stone II project.
Fergus Falls-based Otter Tail Power Company is joined in the project by Montana-Dakota Utilities Company, Missouri River Energy Services, Heartland Consumers Power District and Central Minnesota Municipal Power Agency.
While the commission only has jurisdiction over the power lines, some commissioners said the transmission project is inextricably linked to the controversial coal plant. They said Minnesota law requires that the source of electricity be considered in transmission cases.
After a process that has taken more than two years, the utilities wanted the commission's approval, but said a few more months of study will not kill the project.
"I believe that there was enough information to make a decision," Big Stone II attorney Todd Guerrero said.
However, Guerrero said that extensive delays could add costs to the project.
"Costs ultimately are going to fall on the consumer," he said.
The utilities expect the transmission project to cost $250 million; the entire Big Stone II project is predicted to be $1.6 billion.
Environmental groups opposed to Big Stone II said additional expert opinion will not change the facts. They claim a coal plant and the related transmission lines are not in the best interests of consumers and are not what state lawmakers envision as the future of Minnesota energy.
"The commission kind of punted on a decision that's been in front of them for three years," said Bill Grant of the Izaak Walton League. "The record is what it is - it's flawed. Bringing in their own expert isn't going to solve that problem."
Municipal utilities that rely on power from the five Big Stone II partners are watching the Public Utilities Commission closely.
Bill Schwandt, general manager of Moorhead Public Service, said further analysis will not hurt the project. Moorhead plans to get electricity from Big Stone II through Missouri River Energy.
"A little more information is fine," Schwandt said.
Communities are anticipating the need for more baseload electricity and Big Stone II is an important part of the equation, he said.