Minnesota Power moving toward first big gas plant

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Minnesota Power moving toward first big gas plant

December 6, 2015

DULUTH, Minn. -- Minnesota Power is moving forward with plans to build a major natural gas-fired power plant, accepting bids through January from multiple companies in an ongoing push to move away from coal.

The utility is expected to negotiate with multiple bidders in 2016 for the plant which could be built anywhere in the Upper Midwest -- not necessarily in northern Minnesota, but within the Midwest electric grid system, company officials said.

Specifications require the proposals to be between 200 and 400 megawatts, and the facility -- essentially a large gas turbine that would fire to create electricity when demand requires -- will cost from $300 million to $400 million to build, said Al Rudeck, Minnesota Power's vice president of strategy and planning.


"We're site-agnostic; it really doesn't matter. What we are looking for is affordability and deliverability," Rudeck said.

In addition to considering outside bids, the Duluth-based utility expects to consider building the plant on its own.

"Whatever is best for our customers," Rudeck said.

It will be Minnesota Power's largest move into natural gas as a fuel, but it won't come fast.

After settling on who will build the facility and where, a proposal could be submitted to the Minnesota Public Utilities Commission for approval in 2017 or 2018, Rudeck said. Minnesota Power wants the plant operating sometime between 2022 and 2024.


"It's a very long process," Rudeck said, from engineering through environmental permitting and financing.

Minnesota Power has not yet had formal negotiations with any of the bidders. They include a Texas-based company that has talked with local officials in Cohasset about building a gas plant there. Navasota Energy of Magnolia, Texas, is proposing a $300 million plant at the Cohasset Industrial Park.

But Rudeck said Minnesota Power has no relationship with that firm and that Navasota's Cohasset proposal would have no advantage over other bidders in the selection process.

Minnesota Power officials say it would make no sense for any company to build a $300 million plant on speculation they would be awarded the utility's bid or get regulatory approval.

Coal cuts continue


Minnesota Power included the new gas plant proposal in its 15-year resource plan submitted to the PUC in September. It's the formal process to adopt its "Energy Forward" plan to produce  one-third of its electricity from renewable sources, one-third from coal and one-third from natural gas by 2025. That's after being nearly 95 percent coal-fired as recently as 2005.

The company is nearly at its goal for renewables, approaching 30 percent thanks to wind farms and hydroelectric power. And the utility is starting to decommission coal generators, taking the last coal capacity offline at Taconite Harbor in 2016 and phasing down coal-generated electricity purchased from Square Butte, N.D.

Minnesota Power is new to the natural gas game, eyeing the fuel only as it has become cheaper to buy in recent years. Compared to coal, gas produces less carbon dioxide, the greenhouse gas blamed for climate change.

It's just this kind of transition away from coal that is being debated at the ongoing climate talks in Paris.

Minnesota Power's first venture into gas was at its Laskin Energy Center in Hoyt Lakes, Minn., where a new 100-megawatt peaking plant was turned on this year. It replaces coal at the site and is fired up whenever regional demand requires.

SOURCE:  Grand Forks Herald

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