Minnesota ALJ recommends against gas-fired plant proposal

Minnesota regulators should reject a proposal by Minnesota Power to jointly build a natural gas-fired power plant with Dairyland Power Cooperative, in part because the investor-owned utility failed to show the plant was needed, according to a Minnesota administrative law judge.

At issue is a proposal to build the 525-megawatt to 550-MW Nemadji Trail power plant in Superior, Wisconsin, with Minnesota Power owning 250 MW, or 48 percent, of the plant.

Minnesota Power argued the plant was needed to help it balance its renewable resources, which the Duluth, Minnesota-based utility expects will grow to about 40 percent of its total generation by 2020, up from about 30 percent last year.

If approved, Minnesota Power, an Allete subsidiary, expects the roughly $730 million, combined-cycle plant to be operating in 2024. Minnesota Power’s share of the plant would be owned by an unregulated affiliate that would assign its rights to the utility.

Minnesota Power, which would oversee building the power plant, failed to adequately consider various alternatives to its proposal to take a roughly 250-MW stake in the power plant, according to ALJ Jeanne Cochran’s recommended decision.

“While the administrative law judge recognizes that the company cannot analyze an endless range of alternatives, a broader range of alternatives is necessary to determine whether the [Nemadji Trail] purchase is needed and reasonable,” the ALJ said in the July 2 recommended decision.

Also, in its analysis Minnesota Power didn’t give wind and solar resources enough capacity credit and underestimated the amount of energy efficiency savings and demand response it should be able to achieve, according to the ALJ.

Minnesota Power’s modeling analysis that selected the power plant as a least cost option “is not persuasive because the company used a number of unreasonable assumptions in its modeling, failed to analyze a reasonable range of resources, and placed constraints on the model that resulted in its analysis being systematically biased in favor of [Nemadji Trail] and away from alternatives,” the ALJ said.

The ALJ also found that Minnesota Power overstated its needed for ramping capability to handle its wind generation in the mid-2020s, partly because the utility failed to include two existing power plants that have ramping capability in its analysis.

The ALJ declined to weigh in on contracts between Minnesota Power and the affiliate that would own a stake in the plant and assign its rights to the utility because she already found Minnesota Power didn’t show the plant was needed.

The Minnesota PUC is expected to take up the recommendation this fall; the PUC is not bound by the ALJ’s recommendation. Dairyland Power, based in La Crosse, Wisconsin, expects to seek Wisconsin Public Service Commission approval for its role in the power plant later this summer.

A Minnesota Power spokeswoman wasn’t available to comment by press time.