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Minnesota PUC will hear final arguments before nixing or approving proposal

WILLMAR -- Debate over the Big Stone II power plant returns to the center stage Tuesday in St. Paul, with a plot line carried over from last June.

The Minnesota Public Utilities Commission will hear final arguments on whether to approve a certificate of need for electrical transmission lines in Minnesota for the project.

Two days later, the PUC is expected to break the tie that resulted last June and approve or deny the proposal.

At stake is whether a group of five utilities led by Otter Tail Power can build a 500-megawatt, coal-fired power plant adjacent to the Big Stone plant near Big Stone City, S.D.

The power lines are necessary for the project to go forward, according to Dan Sharp, communications director with Otter Tail Power Company.

He said the issue for the PUC on Thursday boils down to the very matter it debated last June: Does a coal-fired, base-load plant represent the least cost option to meet the region's electrical needs when compared to other alternatives?

Electrical demand is continuing to grow, making a new base-load plant needed, said Sharp. The region recently set a new winter peak in electrical demand despite the sluggish economy, he noted.

The cost of coal-generated electricity remains lower than natural gas even when the costs for a possible tax on carbon dioxide emissions are considered. The Big Stone II project is based on possible costs of $2 to $30 per ton of carbon on a plant that would produce an estimated 4.5 million tons of CO2 annually, according to Sharp. Carbon costs would have to rise to $40 a ton before other alternatives are the lower cost option, according to the company's calculations.

Natural gas prices are volatile. They have reached peaks that are well above the costs that would be experienced under a long-term contract for coal, he said.

Opponents counter by pointing to a consultant's report ordered by the PUC after its split vote. It found that Otter Tail Power had underestimated the costs of building the plant and over-estimated the costs for alternatives, including wind.

It would be more cost-effective and better for the region's economy to use a combination of wind power and natural gas peaking plants to meet future electrical needs, according to Patrick Moore with Clean Up our River Environment, Montevideo. That approach, along with greater efficiencies in how we conserve electricity and operate our transmission system, could benefit the environment while boosting the region's economy, he said.

While the PUC is expected to vote either "yes'' or ''no'' on Thursday, a "yes'' vote could come with new conditions.

The coal plant, now estimated to cost $1.8 million, could be upgraded from a "super critical'' to "ultra critical'' combustion system to provide a three to four percent improvement in efficiency, said Sharp.

The plant could also be designed so that in the future it could accommodate a system to capture carbon dioxide emissions.

Moore said CURE will be among those watching the debate unfold in St. Paul. Its involvement has largely been driven by its student members and their concerns over environmental issues, he said.

The plant's drawn down of water from Big Stone Lake, headwaters of the Minnesota River, would harm the river's aquatic life, he said. Its carbon dioxide and mercury emissions pose environmental problems that go well beyond the region, he said.

Others from the region who will be watching the debate are municipal utilities. The Central Minnesota Municipal Power Agency is among the partners in the Big Stone II project. The Willmar Municipal Utilities, a CMMPA member, is contracted to purchase 30-megawatts of electricity from the plant.

If the plant gets a green light next week, Sharp said an additional year of engineering design work would be needed. The earliest a groundbreaking could occur would be 2010, he said.