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Big Stone II costs debated

ST. PAUL -- Energy experts and utility officials disagree over the potential cost of a proposed coal-fueled power plant and related transmission line improvements.

Officials from five utilities seeking regulatory approval for the Big Stone II project said Thursday they have used conservative cost estimates.

Opponents of the coal-fueled plant said there are market uncertainties that could be significant enough to warrant halting the project.

"I happen to believe that there's a train wreck down the road for companies that build coal plants," said David Schlissel, an energy consultant and key expert for Big Stone II opponents.

The differences were highlighted during the second day of an administrative law hearing in St. Paul. A two-judge panel is taking testimony before deciding whether to recommend that the Minnesota Public Utilities Commission allow the project to move forward. The hearing is to conclude today.

The five utilities led by Fergus Falls-based Otter Tail Power Co. plan to build a 500-megawatt or 580-megawatt coal-fired power plant near Big Stone City in eastern South Dakota. The $1.6 billion project would include $250 million worth of related electric transmission line projects in Minnesota, North Dakota and South Dakota.

Otter Tail Power is joined in the project by Central Minnesota Municipal Power Agency, Heartland Consumers Power District, Missouri River Energy Services and Montana-Dakota Utilities Co.

The Public Utilities Commission will decide whether to grant the utilities a certificate of need for planned upgrades on two electric transmission lines in western Minnesota. The utilities want to double the load capacity on a 115-kilovolt line extending from near the planned Big Stone II plant to Granite Falls. The second line, from Big Stone City to Morris, would be tripled from its existing 115-kilovolt capacity.

Environmental and wind-energy groups opposing Big Stone II claim the five utilities are not reasonably considering alternative ways to meet growing energy demands. They also argued in testimony Thursday that the utility companies have downplayed the potential impact of energy conservation efforts and renewable energy incentives.

Schlissel said his review of the utilities' proposal left him to conclude they used biased information that favored their plan.

"It appears that they are trying to get a predetermined result," said Schlissel, a senior consultant with Massachusetts-based Synapse Energy Economics.

Under cross-examination by Big Stone II attorney Todd Guerrero, Schlissel acknowledged that the utilities could not rely solely on renewable energy sources - such as wind, biomass or hydro-electric - as alternatives to the coal plant.

Ward Uggerud, Otter Tail Power's senior vice president, said the firms have used conservative cost estimates that are in line with other similar coal-plant projects.

Beth Goodpaster, lead attorney for the opponents, said their concerns with Big Stone II include that clean-energy options are being overlooked and that growing costs for the Big Stone II project could be shifted to utility ratepayers.

"It's customers who are going to foot the bill in the end," she said.

The hearing also touched on whether two utility companies that want to purchase energy from the Big Stone II plant could instead enter into joint ownership of a natural gas-powered plant to be used when energy demands peak.

JP Schumacher, a senior economist with Missouri River Energy Services, said a coal plant is less costly to operate because natural gas must be purchased on a fluctuating energy market. That would force the utilities to try to determine when to purchase natural gas and when it is cost-effective to run that type of plant.

"There are a lot of potential disagreements on how to use the unit," Schumacher said.