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Utility official optimistic about Big Stone II project

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news Willmar, 56201
Willmar Minnesota 2208 Trott Ave. SW / P.O. Box 839 56201

WILLMAR -- The four remaining partners in the proposed Big Stone II project hope to replace Otter Tail Power Company of Fergus Falls after Otter Tail withdrew from the project in September as a partner, lead developer and plant operator.

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If the partners are successful in recruiting a larger utility company to replace Otter Tail, Big Stone II will proceed, says Bob Schulte, chief executive officer for Central Minnesota Municipal Power Agency of Blue Earth, one of the remaining partners.

Schulte presented a status report on Big Stone II to the Willmar Municipal Utilities Commission on Monday. Willmar hopes to buy power from Big Stone II. Willmar is not a member of Central Minnesota, but is paying fees to have the agency work on Willmar's behalf on the Big Stone II project, said Bruce Gomm, Willmar Utilities general manager.

Schulte said Montana-Dakota Utilities of Bismarck, N.D., one of the four participants, is temporarily the lead developer and project coordinator.

Schulte said Otter Tail's departure was a disappointment for them as well as for the remaining partners. All partners participated in a final vote to proceed, with four voting yes and Otter Tail voting no.

"They couldn't finance their share of the plant,'' said Schulte.

The other participants besides CMMPA and Montana-Dakota are Missouri River Energy Services of Sioux Falls, S.D., and Heartland Consumer Power District of Madison, S.D.

Second, the project is recruiting a new participant. Due to a confidentiality agreement, Schulte could not identify the prospect.

"We have a very good one we're working with. They have yet to decide whether to be in,'' said Schulte. "If we get them in, we have a very, very good chance of being very successful through the regulatory proceedings we have going forward. If they decide out, then the project will probably wind up. We'll probably know that within the next month to six weeks,''

Schulte said the company has a "very big need'' for energy, said its customers are nearby and is interested in building a plant. He said the company is "very smart'' about the opportunities and challenges of coal.

"If they're in, full speed ahead,'' he said. "This may, by Minnesota law, be the last base-load plant built for quite a while. They know that. If you're going to proceed, now's the time to do it. It's their decision, not mine.''

Originally, seven utility companies announced in July 2005 their intent to build a 600-megawatt, coal-fired power plant called Big Stone II next to the smaller Big Stone I, a 450-megawatt coal-fired plant operated by Otter Lake near Big Stone Lake, S.D.

The project would serve more than 1 million Upper Midwest customers. It was first estimated to cost $1 billion and included construction of Minnesota transmission lines. The partners had hoped to finish the permitting process by the fall of 2006 and begin producing power in 2011.

Since that time, three partners have dropped out, the permitting process took longer than expected, the estimated cost has increased to about $2 billion, and the partners are aiming for a 550-megawatt plant. They hope to begin construction next spring and have the plant producing power in early 2016.

Willmar is planning to buy 30 megawatts of power from Big Stone II to replace the same amount of power Willmar is now buying from Great River Energy under a contract that expires in 2015.

If Big Stone II is not operating by the time the GRE contract expires, Willmar will buy power on the open market. Gomm said Willmar will be requesting proposals from power suppliers to fill the short-term power gap.

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