Big Stone II plant inches toward final approval

Five power companies will decide this fall whether to move forward on a proposed $1.6 billion coal-fired power plant that would serve more than a million customers in Minnesota, the Dakotas, Montana and Iowa.

Minnesota-based Otter Tail Power Co. is leading the effort to build the plant in the northeastern corner of South Dakota that would generate up to 580 megawatts of power. The new plant would sit next to the 450-megawatt Big Stone Plant, which began operating in 1975.

Otter Tail and its partners -- Central Minnesota Municipal Power Agency, Heartland Consumers Power District, Missouri River Energy Services and Montana-Dakota Utilities Co. -- are each responsible for raising money for their share of the Big Stone II project, said Otter Tail spokeswoman Cris Kling.

Because two of the partners are investor-owned utilities and three are three municipally owned, the requirements and options differ greatly.

"In order to vote to proceed this fall, each entity will have to have a pretty good idea of how the financing will play out for them," Kling said.

The project has gained the approval it needs from federal and state regulatory agencies.

The Environmental Protection Agency has now signed off on a review of the environmental impacts of the project, after initially raising objections to it in January. The agency noted that developers have made several improvements to the project to mitigate its environmental impact.

The South Dakota Board of Minerals and Environment has approved Big Stone II's air quality permits, and the Minnesota Public Utilities Commission approved transmission lines that would be built across that state to carry the electricity from Big Stone II.

But the plant still faces opposition from environmental groups that are challenging the Minnesota PUC's approval of the transmission lines.

The groups say the plant will release conventional air pollutants and be a major contributor of global warming pollution, but their legal opposition centers on whether the commission erred in approving Big Stone II's certificate of need.

The Minnesota Center for Environmental Advocacy, Fresh Energy, the Izaak Walton League of America, the Union of Concerned Scientists and Wind on the Wires argue in their appeal that the utilities failed to show Big Stone II is necessary to meet future demand, and that the plant would be the most cost-effective way to serve that need.

Beth Goodpaster, an attorney representing the groups, said the parties are preparing briefings in advance of oral arguments she expects will happen sometime this fall.

Minnesota's regulatory approval did carry some stipulations.

Big Stone II plans to use super critical pulverized coal technology, but the commission asked the utilities to study ultra super critical pulverized coal technology, which has slightly higher efficiency potential but uses higher pressures and temperatures.

The utilities also have been asked to update the plant's cost estimate, revise the participation agreements and look into how carbon capture could be retrofitted if that technology advances.

Kling said Big Stone II is working on pre-engineering and construction plans to meet its target of beginning construction in the third quarter of 2010 and going online by late 2015.

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