A Temporary Victory For Benson Area
A Temporary Victory for Benson Area
by Reed Anfinson
Publisher, Swift County Monitor-News
It has been an intense week for the City of Benson as it has marshaled support to fight a bill in the Minnesota Legislature that could have had a devastating economic impact on the area.
Xcel Energy and Laurentian Energy Authority (LEA) were seeking legislation that could have ended the state’s biomass mandate. That mandate is at the heart of the 22-year power purchase agreement between Benson Power, LLC, and Xcel Energy. It means that Xcel is obligated to buy the 55 megawatts of power Benson Power produces through burning a combination of turkey litter and wood chips.
Biomass was a growing source of alternative fuel back in the late 1990s and early 2000s when the local power plant was built. But over the years since, natural gas has become cheap and plentiful, and is likely to remain so for years to come. Today, the biomass power that the Benson Power plant produces is significantly more expensive than energy that is generated from burning natural gas or from green power sources such as solar or wind. Without the biomass mandate it would be difficult for Benson Power to sell its electricity on the open market at a rate that could keep it operating.
But the changes in the costs of fuel to generate power doesn’t provide a black and white story about whether Benson Power should remain open or be closed down. Xcel Energy made a long-term commitment to buy biomass power to get its deal to store spent nuclear fuel in casks on Prairie Island. Minnesota’s Legislature made a long-term commitment to the communities and businesses in the state that were willing to invest in biomass power to provide Excel with biomass-produced electricity.
Over $200 million was invested in the construction of the Fibrominn power plant in Benson, which today is known as Benson Power, LLC. The City of Benson sold a primary development location to Fibrominn for its plant. It invested in infrastructure to serve the needs of the plant.
Through the years dozens of employees working at the plant have made Benson their home. Those people have their children in our schools, shop in our stores, play important roles in our community’s life both political and social, and help make Benson a stronger community. North American Fertilizer came to Benson, investing in a new building, and started operating next to Fibrominn to process its ash into fertilizer. Other businesses and individuals have invested in making a living off of the plant.
All of these investments and attachments to our community were made on a promise made by Excel and the Minnesota Legislature that there was a long-term commitment to buy the power generated by the biomass power plant in Benson. The changing price of biomass power does not free Xcel of that commitment or the state Legislature from its obligation to stand by the biomass mandate.
If the Legislature were to overturn the biomass mandate, what faith could any investors, communities or individuals have in making investments in their communities based on a legislative mandate? What investment firms would have the faith to put their money behind economic development projects in the state when they know that both the company that promised to make the payments and the state government were willing to break their promise and commitment?
Excel Energy says its goals in pushing to end the biomass mandate is to lower the cost of power for its customers. LEA was seeking to end the biomass mandate to help it avoid a $10 million fine to the communities of Hibbing and Virginia that are its owners. But their needs don’t trump the needs of our community or the commitments made to it.
What we find particularly disturbing is the quiet, many would say underhanded, way in which Xcel, LEA and the state legislators behind removing the biomass mandate went about it. Only by chance did the City of Benson and community find out about the proposed legislation. It was only through our story about the pending legislation that could gut the biomass mandate that the logging companies on The Range in northern Minnesota found out their businesses and jobs could also be devastated.
While the legislation ending the biomass mandate might have been welcomed by the East Coat investors who now hold Benson Power’s debt, its loss would have been an significant economic hardship for our community and a blow to the families of those who work there.
At the time Fibrominn was being constructed, the Minnesota Department of Employment and Economic Development (DEED) estimated that its operation would have an $8 to $10 million impact on the economy of the area. More than a decade later that economic impact has grown and become more significant as the population of rural Minnesota continues to decline.
We compliment Benson City Manager Rob Wolfington and the Benson City Council for its fast and focused effort on fighting the legislation that would have ended the biomass mandate. If we would have hesitated the legislation could have easily moved through the Legislature and signed into law. We also compliment our state Sen. Andrew Lang and state Rep. Tim Miller for their work to ensure the bills did not get through the Legislature.
The battle isn’t over. Xcel Energy has significant motive to continue to end the biomass mandate or find a way around it. But Benson also has a role to play in the ongoing discussion about the plant’s future. The power purchase agreement is going to end in just over a decade and it is likely the power plant could be shut down at that point.
What steps do we need to take now and in the coming years to plan for the shutdown and ensure that we are prepared to deal with it? Are there discussions we should be having with Xcel Energy that would help lessen the blow of the plant’s closure, but also prove a benefit to its ratepayers? We need to look ahead to having those discussions.
The legislative battle over the biomass mandate won’t end for this session until the Legislature adjourns May 22 - but another attempt to end the biomass mandate could be back before lawmakers next year.