Minnesota utility’s long-term plan calls for more renewables, less coal

Source: By Frank Jossi, Midwest Energy News • Posted: Thursday, March 23, 2017

Clean energy groups won a victory last week after Minnesota regulators approved a long-range plan by Otter Tail Power Company that will double its investment in wind power and close a coal plant within the next five years.

Otter Tail’s updated 15-year “integrated resource plan” included suggestions from the groups Fresh Energy (which publishes Midwest Energy News), Wind on the WiresMinnesota Center For Environmental Advocacy and Sierra Club.

The plan calls for a portfolio with 400 megawatts (MW) of wind and 30 MW of solar; an ambitious energy efficiency goal; and the closing of the 140 MW Hoot Lake coal-fired plant in Fergus Falls by 2021.

The utility — which serves customers in western Minnesota and the Dakotas — will generate more than 30 percent of its energy needs from renewables by 2031 under the plan.

“It adds 200 more megawatts of wind energy than Otter Tail had proposed initially, we were very pleased with that,” said Leigh Currie, attorney for the Minnesota Center For Environmental Advocacy.

The energy efficiency goal went from 1.5 percent of retail energy sales — as mandated by state law — to 1.6 percent, which works out to the 46.8 gigawatt hours per year for Otter Tail as required by the PUC, Currie said.

The Minnesota Department of Commerce recently gave several pipeline companies that are Otter Tail customers an exemption from Minnesota’s Conservation Improvement Program. Administered by utilities, the program helps businesses and residential customers reduce energy use and take advantage of rebates and other incentives.

By having a numerical goal, rather than one based on a percentage, “it doesn’t matter which customers are in or out over the next few years,” Currie said.

Overall, the energy mix Otter Tail proposes “is the least-cost plan,” said Beth Soholt, executive director of Wind on the Wires.

Otter Tail will also build 30 MW of solar to comply with state law that requires utilities to produce 1.5 percent of their energy from the sun by 2020. While the move was applauded by clean energy groups, the state law was the reason for the solar investment, Soholt said.

One area where clean energy groups did not succeed was in forcing the utility to demonstrate the need for a 250 MW natural gas peaking plant it plans to build in either North or South Dakota in 2021.

Currie said the utility “did not meet its burden” in making the case for the natural gas plant before the PUC approved it.

However, Otter Tail will have to prove in future PUC rate cases that a natural gas peaking plant is the best option for meeting future energy needs in order to recover costs to build it.

The retirement of Hoot Lake is also significant, added Soholt. “People have been looking at closing that for a long time and it’s good to see a date put on it,” she said. “I know advocates are happy about that.”

The state requires utilities to submit integrated resource plans with 15-year horizons and requires submissions from utilities every two years.

Otter Tail, the smallest of the state’s investor-owned utilities, services 131,000 customers in Minnesota, North Dakota and a small portion of South Dakota. A little less than half of its customers are located in Minnesota.