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Big Stone II plant gets ND OK to proceed

BISMARCK -- A $1.27-billion expansion of the coal-fired Big Stone electric generating plant in northeastern South Dakota is the most prudent way to meet the need for more base load electricity for North Dakota customers of Otter Tail Power Co. and Montana-Dakota Utilities, regulators said Wednesday.

The North Dakota Public Service Commission voted unanimously to approve the two companies' requests for "advance determination of prudence," which allows the company to charge customers for the expense of the plant.

Big Stone II still needs regulatory approval in Minnesota and South Dakota before it can be built.

Still, "This is an important ruling for us and for our customers," said Otter Tail spokeswoman Cris Kling.

When constructed, Big Stone II would generate 500 megawatts of power when it goes on line in mid-2013. It will burn pulverized Powder River Basin coal shipped by rail from Wyoming. The project also includes transmission lines costing $249 million.

The approval came over the objections of the Dickinson-based Dakota Resource Council, whose clean electricity task force chairman called the decision "unfortunate" and said the plant, if built "will be an albatross around the necks of North Dakota electricity customers."

Commissioner Tony Clark said the decision Wednesday boiled down to the question, "What is the best fit to fill this need (for more power)?"

He said the DRC's proposal to fill the need with wind power and natural gas-powered generation would not fit the situation. The coal-fired expansion "is really the ... cheapest cost for consumers."

Despite the decision for Big Stone II, Clark said there is no dispute that wind power and natural gas-fired generation will play a role in the big picture of area power needs. "It's not either-or," he said.

Public Service Commission President Susan Wefald noted the plant's ups and downs in the nearly two years since it was proposed to state regulators.

"We wondered if we would ever get to this point," she said.

Last September, two companies who were to be part owners of the plant withdrew from the project and the remainders asked for supplemental hearings on a smaller version of the plant.

The project also suffered a setback in May when two administrative law judges in Minnesota recommended against a transmission line project for the plant. But Kling said the Minnesota Public Utilities Commission is still expected to approve the line.

The owners in addition to Otter Tail and Montana-Dakota are Western Minnesota Municipal Power Agency, Central Minnesota Municipal Power Agency and Heartland Consumers Power District.

Dakota Resource Council and its staff director, Mark Trechok of Dickinson, had been granted intervener status in February 2007.

DRC members said it is unfortunate that a 1995 state law prohibits the PSC from considering the long-term costs of carbon dioxide emissions.

"It left the people of North Dakota unprotected against massive increases in electricity costs when Congress inevitably enacts carbon dioxide controls," said Terrence Kardong, chairman of DRC's clean electricity task force. "This law must be repealed."

But the commissioners said the new, expanded Big Stone will be cleaner than the current plant is now.

"This is not your grandfather's coal plant or your father's coal plant," Wefald said.