Otter Tail case lays bare how Minnesota and North Dakota look at renewable energy differently

Otter Tail Energy Co. should exit a big North Dakota coal plant by 2032—at the very least so far as its Minnesota prospects are involved, state regulators dominated Might 30 throughout a contentious assembly.

Looming over the Minnesota Public Utilities Fee’s choice have been the starkly completely different vitality insurance policies of Minnesota—which is pushing laborious on clear vitality—and North Dakota, which is targeted on preserving its coal industry and a fleet of coal-fired energy crops.

At problem: Fergus Falls-based Otter Tail solely owns 35% of the ability plant, known as Coyote Station. So the plant might run at partial capability after 2031.

Otter Tail’s two largest energy mills—Coyote and one other in South Dakota—are co-owned by corporations past the purview of the PUC. About half of the utility’s prospects are also within the Dakotas.

Some PUC commissioners made clear they consider Otter Tail ought to exit high-cost Coyote Station by 2029. Otter Tail says that is not possible given the pursuits of the plant’s co-owners.

“I just find this to be a massively frustrating conversation,” PUC Commissioner Joe Sullivan mentioned at a gathering. “I sympathize with Otter Tail, you have two different jurisdictions that look at the world differently. But if (Coyote Station) were in Minnesota, we’d say, ‘Otter Tail, it’s time to pull out.'”

The Coyote Station plant, Sullivan added, is “uneconomic.”

Coyote Station, outdoors Beulah, N.D., can also be a very soiled coal plant, emitting way more sulfur dioxidenitrogen oxide and mercury than any coal plant in Minnesota. It is depreciable life runs by means of 2040.

The PUC dominated on Otter Tail’s newest long-term useful resource plan, which each Minnesota investor-owned utility should file each few years. In 2021, Otter Tail submitted a useful resource plan calling for a sale of its stake in Coyote Station by the tip of 2028.

On the time, Otter Tail mentioned the plant had turn into too expensive for patrons and would not be wanted because the utility provides extra renewable energy. However final yr, Otter Tail reversed course on the 2028 date, saying it wanted to maintain its Coyote Station stake indefinitely because of growing “uncertainties and risks.”

Nonetheless, the corporate proposed to make use of its Minnesota stake within the plant solely when the Midwest’s essential grid operator declares an emergency. Such emergencies happen throughout storms and warmth waves when energy demand all of a sudden spikes.

The Minnesota Division of Commerce typically agreed with Otter Tail’s Coyote Station plan, whereas the Minnesota Lawyer Basic’s Workplace didn’t. Each characterize prospects earlier than the PUC. A number of clean energy teams additionally opposed conserving Coyote Station open past 2028.

Beforehand, Otter Tail formally amended its proposal, saying it will exit Coyote Station by 2031—establishing an finish date for the primary time after the skepticism from the PUC and clear energy teams.

“We have limited options as to how we can extricate ourselves from the Minnesota portion of the plant,” Cary Stephenson, an Otter Tail lawyer, informed the PUC. “If we have a date that is too early, then it creates a fire sale situation.”

Some PUC members expressed reservations about Otter Tail’s plans for Coyote Station. “All of the commissioners have really deep concerns about what you brought to us,” mentioned PUC Chair Katie Sieben.

However the PUC accredited a 2031 Coyote Station exit—with a number of situations—by a 4 to 1 margin. Sullivan solid the “no” vote.

The PUC additionally accredited Otter Tail’s proposal for a liquified pure gasoline storage facility at its gas-fired Astoria energy station in South Dakota. The plant is aimed toward bettering reliability when energy demand spikes; Otter Tail declined to reveal its price.

The PUC additionally accredited a further 200 to 300 megawatts of renewable energy for Otter Tail, to be put in earlier than 2030. And the PUC informed Otter Tail to roll out 20 to 75 megawatts of battery storage by the late 2020s. Clear vitality teams had lobbied for the battery storage, not Otter Tail.

Some commissioners have been irked that Minnesota ratepayers might find yourself paying your entire price of the brand new renewables. An Otter Tail consultant informed the PUC that North Dakota regulators didn’t wish to cowl the prices of any new renewables earlier than 2030.

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