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Minnesota regulators approve Coal Creek power line permit transfer

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North Dakota’s largest coal-fired power plant, Coal Creek Station, near Underwood.

Minnesota regulators have approved the transfer of a key permit to the incoming owner of Coal Creek Station in North Dakota, a process delayed by several months as environmentalists pushed officials to require more information surrounding the sale.

The Minnesota Public Utilities Commission on Thursday voted 5-0 to transfer the permit associated with the power line that brings electricity from the McLean County coal-fired power plant to Minnesota. An affiliate of Bismarck-based Rainbow Energy Marketing Corp., Nexus Line, will receive the permit previously held by the Great River Energy cooperative.

A different Rainbow affiliate is purchasing Coal Creek from GRE, which had planned to close the facility. The two companies intend to maintain a relationship for at least the next two decades. Although Rainbow will own the power line, GRE will continue to operate it. Initially that was meant to be for a period of 10 years, but the length of time has been extended to 20 years.

The sale is expected to close as early as May 1 and is subject to another vote by the GRE members.

News of Minnesota's approval drew praise from many Coal Creek supporters in North Dakota on Thursday, as it was seen as the last major hurdle the companies needed to clear to finalize the sale.

"This approval is a momentous step toward Rainbow Energy taking ownership of Coal Creek Station and providing a long-term future for the power plant, its workers and the communities supported by the hundreds of jobs at Coal Creek and the nearby Falkirk Mine," Gov. Doug Burgum said in a statement.

The companies have agreed to allocate 400 megawatts of capacity on the power line to GRE for wind power that would be built in North Dakota near the power plant. Coal Creek is the state's largest power-generating facility, with a 1,100-megawatt capacity.

Rainbow will allow GRE’s selected wind developer to send its electricity on the line, “essentially displacing energy from Coal Creek Station when the wind facility is delivering energy,” according to a document the companies filed with the commission this week.

Rainbow President Stacy Tschider on Thursday said the company is "deeply committed to delivering carbon neutral electrons to Minnesota by 2030."

"From day one, we believed this project to be a win-win for both North Dakota and Minnesota," he said in a statement. "Today's decision by the Minnesota PUC affirms that renewable energy and baseload power can work together to provide reliable power, jobs and a stable economy for everyone involved."

Baseload refers to a source of electricity that provides a continuous output, such as coal-fired power generated by Coal Creek.

Commissioner Joe Sullivan said he expects co-op members will hold the companies to their clean energy promises.

"It's pretty significant that you've made this commitment," he told representatives of Rainbow and GRE.

A representative of a rural and environmental advocacy group told regulators that while the companies' disclosure this week about the addition of wind power is welcome, that information was new and co-op members were not aware of it.

"If a development this significant has not yet been shared with member-owners, nor approved by co-op boards, it is not a comfort to member-owners to consider what other major decisions are being made on their behalf behind closed doors," said Erik Hatlestad, energy democracy program director with Minnesota-based Clean Up the River Environment.

The sale is one of several changes GRE is making to provide its members with cleaner energy. The Minnesota-based co-op says it has shut down two power plants and intends to more than double its renewable energy resources, as well as convert its Spiritwood Station near Jamestown to run on natural gas instead of coal. GRE also plans to install a battery storage demonstration system.

"We are on track to reduce our carbon emissions by more than 80%, while taking advantage of federal incentives for renewables to keep costs competitive," GRE Vice President and Chief Power Supply Officer Jon Brekke said in a statement.

Rainbow is planning to add technology to Coal Creek that would capture the facility’s carbon emissions and bury them underground. Such a system would be eligible for a federal tax credit and prevent the greenhouse gas from entering the atmosphere, where it contributes to climate change.

Several co-op members expressed concerns about those plans to commissioners on Thursday.

Connexus Energy member Sam Villella said he does not "have any faith in the financial viability of Rainbow's carbon capture and storage boondoggle."

"I'm worried what's going to happen when that fails," Villella said. "That exposes us as ratepayers to problems."

Critics of the emerging technology say it is unproven and expensive. Meanwhile, North Dakota leaders have embraced carbon capture in part because it's seen as a way to maintain the state's coal industry.

Rainbow is partnering with the University of North Dakota’s Energy & Environmental Research Center on its carbon capture effort. The research center recently secured a $7 million grant through the state’s new Clean Sustainable Energy Authority to help fund a feasibility study.

The carbon capture system is expected to use as much as one-third of the electricity generated at Coal Creek, freeing up space on the power line for other sources of electricity such as wind power to connect. Rainbow also anticipates a data center will open near the power plant, using up more of its electricity, the company said in a filing last year with the Minnesota commission.

Several labor unions supported the permit transfer, including the North Central States Regional Council of Carpenters, which has 12,000 members in Minnesota and 900 in North Dakota. Union members perform maintenance on facilities such as power plants, said Adam Duininck, the council's director of government affairs.

He said the successful sale of Coal Creek "is critical for our members" and could provide them with job opportunities on the carbon capture system and wind project.

GRE announced in 2020 that it planned to close Coal Creek this year because the facility faced financial challenges. The plant has struggled to compete in a market with abundant natural gas and renewable power.

Rainbow said last year that its affiliates would purchase both the power plant and transmission line from GRE. Coal Creek employs 260 people, and it supports hundreds more jobs at the adjacent Falkirk Mine.

A number of government agencies in North Dakota also are involved in sale-related permit transfers, many of which have gone through without much controversy.

The North Dakota Public Service Commission last September signed off on the permit related to the portion of the power line within North Dakota. More recently, the North Dakota Department of Environmental Quality authorized a transfer related to landfills associated with the plant, pending notification that the sale has closed.

Reach Amy R. Sisk at 701-250-8252 or amy.sisk@bismarcktribune.com.

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