BENSON — The legislation is now signed and approved that will lead to the closing and dismantling of the Benson Power plant.
It ends Xcel Energy's mandate to purchase electricity produced with biomass fuel at the plant. The 55-megawatt plant has used a mixture of turkey litter and wood chips to produce its power since it began operations in 2007 as FibroMinn.
As part of the legislation, Xcel Energy has agreed to compensate the city of Benson more than $20 million for its economic development efforts, according to Rob Wolfington, Benson city manager. The company will provide payments of $4 million, $6.5 million, $6.5 million and $4 million in the years 2018-2021. It also agreed to reimburse the city for its investment in infrastructure serving the plant.
Importantly, Xcel Energy also will also continue to pay property taxes on the facility for two years after its closing. The plant is one of the largest taxpaying entities in the city and Swift County. It paid a total of $928,946 in taxes to state, county, school and city entities the previous year; it provides roughly a quarter of the revenue for the city of Benson's levy.
Xcel Energy needs to complete the purchase of the plant and obtain regulatory approval to close it, both of which are expected. The company expects the plant closing will occur sometime in 2018, according to Randy Fordice, senior media relations representative.
The legislation ends the company's mandate to purchase a total of 155 megawatts of biomass-produced electricity. It's produced by the Benson plant as well as a wood-powered plant known as the Laurentian Project in northern Minnesota. The mandate was part of an agreement allowing Xcel to store spent nuclear fuel at its Prairie Island facility.
Xcel Energy sought to end the biomass mandate to keep costs low for ratepayers, according to information from the company.
"The energy generated from these facilities is the most expensive energy on our system and is more expensive than other cleaner, renewable sources,'' stated Fordice.
Biomass energy costs approximately $150 per megawatt hour. That compares to wind energy the company is adding to its system at an average cost of $15 to $25 per megawatt hour, he explained.
"We expect to save our customers nearly $700 million over the next 11 years,'' said Fordice, of the economic significance of ending the biomass mandate.
Closing Benson Power will result in the loss of 45 jobs at the plant, as well as an estimated 55 other jobs related to transporting fuel to the plant.
NAES of Issaquah, Washington, operates the plant under a contract to the investment group owning the facility. It did not respond to requests for comment. Wolfington said city officials are aware that representatives of the state as well as the company have met with employees to discuss their options.
The legislation also sets aside funding to study the economic impact of the plant's closing on the affected trucking companies and turkey growers, as well as North American Fertilizer. It uses ash from the plant in a fertilizer mix. Xcel has made it clear it intends to honor existing contracts, and there is expected to be legislation based on what the study finds to address the affected vendors, according to Wolfington.
He said Sen. Andrew Lang, R-Olivia, and Reps. Tim Miller, R-Prinsburg, and Dave Baker, R-Willmar, worked to secure the compensation for the city of Benson. Wolfington said the city is hoping to replace the power plant with another large anchor facility. It has made contact with prospective companies, he said.
The city of Benson will have the right to purchase the plant site after Xcel has dismantled the plant. Deep-set pilings will remain in the ground, which would reduce the costs for developing another large facility there, Wolfington said.
He described the city's response to the recent legislation as "bittersweet.'' The city will be losing an important taxpaying entity that provided good jobs and significant economic activity. The plant purchases nearly $200,000 in electricity, sewer and water services from the Benson Municipal Utilities.
On the other side of the coin, the $20 million for economic development puts Benson in a good position to replace the economic losses with new businesses.