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BELW ponders future of power plant investment

By Staff | Sep 28, 2009

Paul Leland

Blue Earth Light and Water’s effort to secure a source of reliable and increased power for its 2,100 customers may be fizzling.

It’s all because Otter Tail Power recently withdrew from the controversial Big Stone II project.

With the lead utility pulling out, many believe it is less likely the $1.6 billion coal-fired power plant will be built in South Dakota, a few miles west of Ortonville.

BELW general manager Paul Leland says his company has no intentions of canceling an agreement signed in 2005 to buy electricity from Big Stone.

At least, not right now.

“At this point it’s a work in progress. The next couple of months will tell quite a bit,” he says. “It’s going to be a crucial turning point, whether we go forward.”

Because BELW’s electricity buying agreement with Wisconsin Power and Light-Alliant expires in April 2018, the local utility studied its options.

BELW and 12 other utilities of Central Minnesota Municipal Power Agency (CMMPA) decided Big Stone could meet their future power demands.

Leland says the local utility has paid $290,000 up front for permitting and development costs.

While he acknowledges they would lose the money if Big Stone is scrapped, Leland believes it was a risk that was necessary.

“If you think it’s your best option you have to pay for it now. If it doesn’t work you move along,” he says.

Leland assures customerstheir monthly utility rates will not increase if Big Stone fails.

Last month, Big Stone received final government approval to start construction in light of opposition from environmental groups.

Bob Schulte, CEO of CMMPA, says four other utilities are working hard to make the project work.

Schulte says CMMPA members have made a commitment to purchase 10 percent of the 580 megawatts of power Big Stone will produce for more than a million customers in Minnesota, the Dakotas, Montana and Iowa.

BELW’s share of the project is 2.5 megawatts and could increase to 4.5 megawatts, depending on the projected base load.

Schulte says if Big Stone is built, CMMPA would pay about $190 million of the project cost.

Leland says BELW also would be required to put in more money.

“It will be a much larger number than the $290,000. But, you realize it’s your power supply you’re paying for,” he says.

Leland believes there are other utilities that will pick up Otter Tail’s share, but if that doesn’t happen other alternatives will have to be considered.

The most likely, he says, would be natural gas-fired generator plants. That would be more expensive because the price volatility of natural gas.

Leland says renewable energy sources, such as wind power, are “great stuff” but he wonders if it is feasible because there are enough transmission lines to deliver the electricity where it is needed.