Rethink coal dependency, PUC tells Great River Energy

A Minnesota agency is signaling that utilities should be more serious about limiting the use of coal to generate electricity.

In an unusual move, the Public Utilities Commission Wednesday told energy supplier Great River Energy to re-think its dependence on coal. The decision by the PUC has no immediate impact, but it is another step in a long-running transition toward the use of more renewable energy in Minnesota.

Great River Energy provides wholesale electricity to distribution cooperatives in Minnesota and Wisconsin, serving nearly 1.7 million people.

The PUC reviewed Great River Energy's resource plan. Three of the five members voted to reject it, mainly because the plan did not examine the question of whether the electric cooperative should close one or more coal plants.

PUC chair Beverly Jones Heydinger said the plan should have asked a key question:

"'Knowing what we know about the environmental costs and the potential future regulation, could we take more of the generating resources off-line that are having the environmental impact?'" Heydinger said. "And I didn't hear that in the conversation."

Instead, Heydinger said Great River Energy merely noted its existing plants are adequate to meet demand.

The decision disappointed Laureen Ross McCalib, Great River Energy's Manager of Resource Planning. She said her staff worked on the plan for a year and a half and it met all the requirements when it was presented to the commission back in November.

"To come nine months later and find the commission, or some members of the commission, may have been interested in other aspects, is kind of a surprise to me," said Ross McCalib. "And as I said we'll certainly consider their comments going forward."

The Public Utilities Commission has been pushing power companies to consider closing coal-fired plants for several years. In January, Duluth-based Minnesota Power decided to close one coal plant and re-fuel two others with natural gas by 2015. Otter Tail Power, based in Fergus Falls, said it would close a coal plant by 2020. Xcel Energy replaced two coal plants with natural gas in the 1990s; now it's studying what to do about its huge Sherco plant.

These decisions resulted from a lot of pressure from the state and environmental groups, as well as a lot of study by utilities. Now it's Great River Energy's turn, and the co-op is not finding the process easy.

The Center for Environmental Advocacy's Clean Energy Program Director Beth Goodpaster says the co-op charges high rates because it's overbuilt with old technology.

"Overbuilt in the sense that it's built coal plants that it doesn't need, can't use, can't even operate," Goodpaster said, referring to the nearly half-billion dollar Spiritwood plant west of Fargo, N.D. It was built and immediately shut down, for lack of demand.

"And it needs to diversify away from this power source in order to protect its customers from very high rates that it has to charge for unusable assets," Goodpaster said.

Two of Great River Energy's major customers also complained to the Public Utilities Commission about the power co-op. Ethanol producers Al-Corn and Green Plains said GRE has raised its rates 66 percent over the last nine years. Their attorney, David Aafedt, says although the Public Utilities Commission cannot force the co-op to change anything, he hopes its customers will.

"Perhaps the distribution co-ops based upon the direction given by the Public Utilities Commission today may have some hard questions for the resource planners and some of the other decision-makers over at GRE," Aafedt said.

The Public Utilities Commission recommends that Great River Energy improve how it forecasts demand and that it integrate environmental costs into its next resource plan, scheduled to come November 2014.

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