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Big Stone partners kill expansion

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Rosemount, 55024

Rosemount Minnesota P.O. Box 192 / 312 Oak St. 55024

The remaining partners in a South Dakota coal-fired power plant that was to provide electricity to Upper Midwestern states announced Monday they were killing the project.

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Big Stone II participants were Central Minnesota Municipal Power Agency, Heartland Consumers Power District, Missouri River Energy Services and Montana-Dakota Utilities Co.

Otter Tail Power Co., coordinator of the project, dropped out this summer.

Environmentalists who fought the plant were happy with Monday's announcement.

"This represents the end of our four-year battle to defeat the plant we proved was unneeded, environmentally bad and not the least-cost option for the customers," said Chuck Laszewski of the Minnesota Center for Environmental Advocacy.

The announcement follows almost five years of planning and permitting efforts to expand the existing Big Stone power plant near Milbank, S.D., and build electrical lines needed to distribute power throughout the region.

The power plant would have provided 500 megawatts to 600 megawatts of power for customers of the participating utilities.

When Otter Tail Power dropped out, its officials cited the economic downturn, uncertainty over federal climate legislation and existing federal environmental regulation. All those factors, Otter Tail Power leaders said, resulted in challenging credit and equity markets that made proceeding with Big Stone II "untenable" for Otter Tail's customers and shareholders.

That decision played a key role in the latest development.

"On Sept. 11, Otter Tail Power Co., announced that it was withdrawing from the project," said Missouri River Energy Services CEO Tom Heller in a news release issued Monday. "At the same time, the remaining participants announced that they would need to get commitments from at least one additional utility or it was unlikely the project could proceed. No other utility was able to make that commitment within the established timeframe, so we have elected to wind down the project."

Montana-Dakota President and CEO Dave Goodin said that, while it's disappointing that Big Stone II will not be built, the utility has an adequate electric supply for the near-term.

"We have a purchased power agreement through 2015 that was to bridge us to Big Stone II going online; we still have that agreement in place," Goodin said. "We will now look at other supply options that are reliable and cost-beneficial for our customers. We have plans to expand our wind production by 30 megawatts in 2010 and will review other generation options."

Participants include Missouri River Energy Services, which supplies Alexandria (Minn.) Light and Power with most of its power.

ALP was a supporter of the Big Stone II project, which, according to ALP General Manager Al Crowser, would have helped meet the increasing demand for electricity and stabilized future electricity rates.

"I'm disappointed (by the project's demise) but I understand with all the pressures that it would be difficult to proceed," Crowser said. "We'll just have to go and find something different. ...I still feel that coal is the most cost-effective resource we have."

ALP's usage rates jumped 10 percent last year because of a combination of increased operating costs and rising energy demands that put more pressure on an ever-tightening supply.

The Big Stone II project, at one time estimated to cost $1.6 billion, was a controversial one from the start and not only for its cost.

Environmental groups claimed that a new coal plant would only create more pollution by releasing pollutants such as carbon dioxide, sulfur dioxide, nitrous oxide and mercury into the air. They said that Minnesota should focus on boosting production of cleaner renewable energy sources, such as wind and solar.

Big Stone II supporters, however, said that even with the likely possibility of federal legislation regarding carbon emissions, an analysis showed Big Stone II to be the least-cost option for providing base-load power to customers.

"We are disappointed that Big Stone II will not be constructed after having received all its permits. After almost five years of work on the project, we were still unable to move forward, so it is time to move on," Heller said. "Each participant will address its future needs in a way that it deems most appropriate. MRES is exploring several options to meet the need that would have been filled by Big Stone II."

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