Minnesota Power plans to idle Taconite coal plant

OREANDA-NEWS. July 13, 2015. Minnesota Power plans to idle and eventually retire its Taconite Harbor coal-fired power plant as part of an effort to decarbonize its generation fleet that includes adding up to 1,275MW of natural gas-fired and renewable capacity by 2025.

The utility, which serves 144,000 customers in northeastern Minnesota, is advancing a long-term goal to procure 66pc of its electricity supply from natural-gas fired and renewable capacity, while lowering coal-fired generation to 33pc, down from what the company expects will be 50pc in 2025, according to its most recent integrated resources plan.

"This is our way of answering the nation's call to reduce carbon and mitigate climate change. The cost of building and fueling natural gas generation has dropped significantly in recent years," Minnesota Power chief executive Alan Hodnik said.

The utility said it will indefinitely suspend operations at Units 1 and 2, totaling 150MW, of its Taconite Harbor coal plant in the third quarter of 2016, with plans for a complete retirement in 2020. The company retired a third 75MW unit at the plant in May.

By only suspending operations at Taconite Harbor, Minnesota Power retains the option to restart the units in response to high power demand. The plant in Schroeder, Minnesota, last year burned 837,000 short tons (759,000 metric tonnes) of Wyoming and Montana coal from Arch Coal, Cloud Peak Energy and Peabody Energy, according to Energy Information Admiration fuel receipts.

The plant previously faced opposition from environmental groups, which accused Minnesota Power of failing to comply with state and federal mercury emission regulations. The company opted to upgrade segments of its 1,070MW Boswell Energy Center coal-fired facility to comply, but decided against such measures at Taconite.

In turn, the company plans to build and operate as much as 300MW of new natural-gas fired capacity by 2025. It also will get 350MW of hydroelectric capacity supplied by Manitoba Hydro, due on line in 2020. The company has secured rights to generation from 625MW of wind capacity, following investments in the Bison wind installations in North Dakota.

Under Minnesota's renewable portfolio standard, utilities are required to procure up to 26.5pc of their retail sales from renewable resources by 2025, with Xcel Energy separately required to meet a 31.5pc target.

Minnesota Power, a subsidiary of Allete, says its move is part of an economic and regulatory shift to less carbon-intensive resources, particularly as result of the US Environmental Protection Agency's proposed Clean Power Plan to regulate CO2 from existing power plants, due to be finalized next month.

Under the EPA plan, Minnesota would be required to meet a 873lb/MWh CO2 rate by 2030, about 41pc lower than its 2012 rate of 1,470lb/MWh.