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Power up? Big Stone II may yet get long-delayed approval

The Big Stone II project may yet rise from the dead and provide power to this part of Minnesota.

But not until 2014 at the earliest -- which means three years of having to buy expensive supplemental power on the open market.

The original opening date of spring 2010 was designed to avoid a power shortfall for this region, projected to begin in 2011, according to estimates by the Mid-Continent Area Power Pool.

MAPP expects usage to increase by as much as 15 percent over the next decade.

Increasing demand has whittled away the excess power reserves in the region, to the point that MAPP says power reserves will fall below the minimal level in three years.

Reserve capacity is power generation not normally in use, but that can be called upon to meet demand. It's a key part of reliable electrical supply.

The Big Stone II project involves adding a new 500-580 megawatt coal-fired power plant next to an existing plant near Milbank, S.D.

It would be the first significant baseload power plant built in the region since the mid-1980s.

Much of the power is intended for Minnesota, so the project includes upgrading and expanding a 345 kilovolt transmission line from the plant into Minnesota. The line will also carry wind-generated power from wind farms in southern Minnesota that need the additional transmission capacity.

The transmission line from Big Stone, S.D. to Granite Falls, Minn., is where the project has run into the longest delay.

In spite of a staff recommendation that the project is needed and should be approved, the Minnesota Public Utilities Commission has dragged its feet over the transmission permit, citing concerns that burning coal increases global warming.

But now there may be light at the end of the tunnel. On Sept. 11, the Minnesota PUC selected Boston Pacific Group as a neutral party to look into the Big Stone II project.

Boston Pacific is a Washington D.C.-based consulting and investment services firm specializing in electricity and natural gas businesses.

A contract was signed Sept 18, giving the firm a month to finish a report that looks at three areas:

n Probable future carbon dioxide emission costs. The state has pegged costs at a range from $4 to $30 per ton of emissions. The plant is cost-effective even at the highest range, said Big Stone II Communication Director Dan Sharp, who was in Detroit Lakes Wednesday.

n The probable cost of natural gas vs. coal for the first 15 years of the plant's operation. That's pretty much anybody's guess, Sharp said. Gas was at nearly its highest price ever in June and July, but has since dropped. It doesn't seem to track along any kind of steady line, he said.

n An estimate of the construction cost of a coal-fired plant vs. an equal amount of wind energy with natural gas backup.

In mid-October, the Boston Pacific Group will report its findings to the Minnesota PUC. In Mid-November, evidentiary hearings -- featuring the report -- will be held before an administrative law judge, giving both sides an opportunity to make their case.

In early December, the administrative law judge will submit his or her report to the Public Utilities Commission.

In mid- to late-January, the PUC is finally expected to make a decision on Big Stone's transmission application.

Sharp is cautiously optimistic that the permit will be granted. Reading between the lines, he said, it looks to him like the PUC wants to have the Boston Pacific report for use in court, since environmental groups are almost certain to appeal if the permit is granted.

He said the project will include extra land and design elements to allow for adding carbon sequestration equipment when technology becomes available.

The site will produce fewer emissions of sulfur dioxide, nitrogen oxides and mercury than now come from the existing plant -- while doubling power production. Otter Tail Power Co. is the lead developer on the project. Partners are Central Minnesota Municipal Power Agency, Heartland Consumers Power District, Missouri River Energy Services and Montana-Dakota Utilities Co.

Delays add about $8 million per month to the cost of the project, Sharp said. Ratepayers will have to pick up those higher costs in one form or another, but the project is still the least expensive option out there, he said.