As energy industry leaders meet in Texas for a final day of discussion about the future of energy, the debate is taking a more practical form further north. Minnesota Power, the state’s second-largest utility company, is struggling to gain approval for a new natural gas generating plant. The proposed $700 million gas-fired plant would be built and operated in Superior, WI, in partnership with Dairyland Power Cooperative. Even though the natural gas plant would replace two aging coal generators, it is meeting with stiff resistance from alternative energy supporters and industry groups, opposition that could adversely affect the state’s transition to cleaner energy.
Opponents of the plan include both businesses and ratepayers, who are concerned with how the new plant would impact prices and the environment. Both groups stress that the new generator is not needed. Large Power Intervenors, a coalition of 11 area industry customers who combined purchase about two-thirds of Minnesota Power’s electricity, filed testimony resisting the new plant this week. The group, which includs mining, paper, and utility companies, is pushing for a interruptible load solution, where companies would pay less for power that would occasionally be interrupted.
“Because the existence of interruptible load allows utilities to avoid building or buying generation capacity to serve these loads, it can provide a win-win-win for the utility,” writes consultant Robert R. Stephens for the group.
The industry figures have found unusual allies in area environmentalists, who see the construction of the new fossil fuel plant as a step backwards from their alternative energy goals.
“As additional power needs increase in the future, Minnesota Power should look for low-cost renewable energy sources such as increased wind, solar, and hydro power. These are becoming lower in cost compared to fossil fuels,” wrote Linda Herron, a Duluth resident with a history of protesting fossil fuel development.
Like many opponents of the new plant, she fears that investing in natural gas generation will slow the state’s transition towards wind and solar power. However, resistance to the plant may hamper Minnesota’s efforts to lower its carbon emissions. Unlike much of the country, which transitioned towards natural gas generators when the fracking boom pushed prices down, Minnesota continues to generate much of its electricity through coal-fired plants.
As a result, the state’s emissions have not fallen at the same rate as the rest of the country. A report by the government watchdog group the Center of the American Experiment earlier this year found that the $10.6 billion Minnesota spent on renewable energy subsidies had only reduced the state’s emissions 6.6 percent between 2005 and 2014. Meanwhile, the U.S. as a whole reduced emissions by 9.3 percent during the same period. Wind generation surged during the same period, but had little effect on reducing emissions.
If state regulators wanted to reduce carbon emissions effectively, they should support transitioning away from coal to fuels that are both cleaner and more cost-effective, advised Steven Hayward, a Berkley scholar who wrote the report.
“If the primary object of Minnesota’s energy policy is decarbonization, it should allow undistorted market forces to determine the mix of sources to displace coal,” Hayward said. “This may mean wind in some cases, but will probably mean more natural gas.”
If completed, the new natural gas plant would provide power to customers in both Minnesota and Wisconsin. The generator would also be only a small part of a broader portfolio of generation investment. Minnesota Power is planning to boost its alternative energy investments from 30 percent of its portfolio to 44 percent by 2025. To reach these goals, it has announced new wind and solar initiatives planning to purchase power from the 250-megawatt Nobles 2 project in southwestern Minnesota, and from a solar developer in central Minnesota.
Customers are increasingly worried that these innovations will come at a steep price. Between 1990 and 2009, the state enjoyed a price advantage compared to the rest of the country, with utility prices generally about 18 percent lower than the national average. Since 2009, this advantage has disappeared and rate prices reached above the national average for the first time in February 2017.
Despite Minnesota Power’s assurances that the new plant would not necessitate rate increases, the utility’s customers are concerned. Over the summer, the company asked the Minnesota PUC to approve a rate increase that would have raised consumer prices by around $300 over the course of the year. The increase was intended to help transition to renewable energy sources. Given Minnesota’s climate, this primarily means wind. Regulators approved a smaller increase at the end of January, though some customers saw their rates lowered as the new rate replaces a higher transitional rate.
The Minnesota PUC is continuing to study the matter of the proposed plant. For ratepayers, it may be difficult to escape either outages or higher prices. At the same time, the state is continuing to resist adopting the technological advantages that have helped other states reduce their carbon emissions.