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ALJ Recommendation Would Sideline Planned Wisconsin Natural Gas-Fired Plant

An administrative law judge (ALJ) has recommended that regulators deny Minnesota Power's proposal to develop the Nemadji Trail Energy Center (NTEC), a 525 MW combined-cycle natural gas-fired power plant in Superior, WI.

Last year, Minnesota Power and the Dairyland Power Cooperative unveiled plans to co-develop NTEC to support major wind and solar investments in their service territories. They proposed investing $350 million in the facility, which would be built at a shovel-ready industrial site along the Nemadji River that has access to existing natural gas pipelines.

Minnesota Power, a utility division of the publicly traded energy provider Allete Inc., would purchase 250 MW of power from the facility under a joint ownership structure with Dairyland, and would request another 250 MW of wind power capacity and 10 MW of solar power. The combined-cycle facility would complement the company's renewable resources as capacity backup and help fulfill its initiative to cut carbon emissions.

But the companies did not demonstrate that the project is needed or in the public interest, ALJ Jeanne Cochran said in a 130-page opinion issued Monday. Specifically, Cochran said a pair of assignment of rights agreements proposed between Minnesota Power and affiliate South Shore were not proven "consistent with the public interest” as Minnesota Power “has failed to demonstrate that the underlying 250 MW NTEC purchase is needed and reasonable."

Cochran recommended that the PUC deny Minnesota Power's request, and that the utility and other stakeholders "continue to work to develop a demand response rider and corresponding rider and corresponding methodology for cost recovery for submission to the commission."

Minnesota Power's long-term goal is an energy mix of two-thirds renewable energy and natural gas, and one-third "environmentally compliant" coal. The company serves 145,000 customers, 16 municipalities and large industrial consumers within a 26,000 square-mile area in northeastern Minnesota.

On Thursday, the utility said it was reviewing Cochran's report.

"Minnesota Power is committed to our EnergyForward strategy that will provide safe and reliable energy for this region while increasing the use of cost-competitive, renewable resources,” it said. “With the addition of the Nemadji Trail Energy Center, we are confident we will reach 44% renewable energy by 2025. We are proud of our track record, leading the state in implementation of renewable energy with a 30% renewable portfolio."

Minnesota Power has said it needs the resource package to meet growing power demand within its service territory. Without the gas-fired plant, the company said it would be more reliant on "fluctuating wholesale market prices when sun and wind resources aren't available."

The ALJ report is not binding. Parties may file exceptions within 20 days. The PUC is likely to make a decision this fall.

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