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Willmar MUC must decide soon on amount of energy to purchase from Big Stone II plant

WILLMAR -- The Willmar Municipal Utilities Commission must decide by Jan. 1 how much energy it wants to buy from the proposed Big Stone II power plant in eastern South Dakota.

The commission has asked for 9 megawatts from the coal-fired plant proposed near Milbank, S.D. But studies by one of the five power plant partners indicate Willmar could economically buy up to 34 megawatts.

Willmar has the opportunity to buy more megawatts because two of the original seven Big Stone II partners pulled out of the project, said Bob Schulte, interim chief executive officer of Central Minnesota Municipal Power Agency (CMMPA).

The original partners proposed power subscriptions of 600 megawatts from Big Stone II. But Southern Minnesota Municipal Power Agency and Great River Energy pulled out, leaving a combined 170 megawatts on the table.

Willmar and others cities interested in Big Stone II are being given the first chance to increase their subscriptions, according to Schulte. He said participants can "stand pat,'' or increase or decrease their subscription.

Any remaining power that's not subscribed will be offered to new participants. Schulte said other candidates seeking participation in Big Stone II have requests totaling 800 megawatts.

However, Schulte said the current owners are only interested in a 500-megawatt plant, with an option to increase to 580 megawatts.

Schulte said the Jan. 1 date is significant for Willmar because the owners will meet Jan. 3 to decide on the project's size, how much power the current owners want and how much power is available to new participants. The project has received a site permit from South Dakota, and the owners are seeking a certificate of need for transmission line upgrades from Minnesota Public Utilities Commission. A Minnesota PUC decision is expected April 10, he said.

The plant start-up date has been delayed by two years until 2013 due to unanticipated delays in the regulatory process, according to Schulte.

He said his agency recommended Willmar increase its Big Stone II participation from 9 to 29.7 megawatts. He said Willmar's investment in the plant would be $3 million per megawatt, for a total investment of about $90 million over 30 to 40 years.

"The cost will be less than the current market price at the time,'' he said. "Energy prices are going up, but we're doing this to control the increase in prices better than not doing anything. There isn't an option to do nothing.''

Schulte said the cost takes into account a combination of renewable energy sources and compliance with energy conservation regulations.

During discussion, Dave Baker offered a motion, seconded by Doug Lindblad, to increase Willmar's participation to 30 megawatts. However, the motion was tabled after Commissioner Mike Burgett suggested two questions should be answered first.

Commissioners wanted to know the number of years the power contract would run. Also, they wanted to know if Willmar's contribution of about $21,000 per month in Big Stone II planning costs -- which might triple -- will be reimbursed after the plant opens.

"We just want to make sure that if we're going to spend $60,000 a month and if we know we're going to get it back, that's one thing. If we're not going to get it back, at least we ought to know that going in,'' said Bob Bonawitz, commission president.

In other business, the commission approved a new two-year contract with Westmoreland Coal Sales Company to buy about 50,000 tons of coal per year for the Willmar power plant from the Rosebud mine at Colstrip, Mont. Cost is up 4 percent from the previous contract.