Benson Power could be closing by summer of 2018

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Employees of Benson Power have been told employees they plan to sell to Xcel Energy and that the plant could be closed by the summer of 2018.

By Reed Anfinson

Publisher

Swift County Monitor-News

Employees of Benson Power, LLC, were notified Tuesday that the company owners are in negotiations with Xcel Energy for sale of the plant.

With that announcement a process is being put in place that could lead to the power plant shutting down by the summer of 2018. Its shutdown would mean the loss of 45 jobs at the plant as well as up to another 100 jobs at businesses that support the operation of the biomass facility.

Benson Power generates 55 megawatts of power by burning turkey litter and wood chips to generate steam that powers the plant’s turbines.

Benson Power is currently owned by a group of East Coast investors including major insurance companies Prudential, Hartford, John Hancock, Nationwide, Beneficial, and CRT Capitol Group.

If the sale goes through, Xcel Energy would seek regulatory permission from the Minnesota Public Utilities Commission (PUC) to decommission the plant and close it. It is expected the PUC would take a minimum of four months, and possibly six months or more, to reach its decision on the decommissioning.

Xcel Energy would explain to the PUC that it wants to close the plant to save its customers a substantial amount of money by reducing the cost of energy it purchases. Biomass power can be as much as 10 times more expensive than natural gas. Its other sources of green power, solar and wind, are far cheaper and are becoming an increasing segment of Xcel Energy’s portfolio.

Xcel Energy would discuss the purchase cost of the plant along with the savings it can pass on to consumers with the PUC board. Though Xcel’s reason for buying and shutting down the plant would be public information, it is likely the dollar amounts would be considered proprietary material and not released.

If the PUC rejects Xcel Energy’s proposal to buy the power plant the deal would be off and it would have to go back to putting together a new proposal the regulatory agency might accept.

If Xcel Energy gets PUC approval, it would then file with the Midcontinent Systems Operator, Inc. (MISO) to continue with the process to close the plant. MISO manages the electrical load for 15 states, including Minnesota, and the Canadian province of Manitoba. Power plants coming onto and going off the grid have to get MISO approval.

Contracts for operation of the plant would be transferred to Xcel Energy.  Xcel would operate the plant with plant operations management firm NAES.

Employees were told they would receive severance pay and operating bonuses if they stuck with their jobs through closure in the summer of 2018.

The City of Benson has been in discussions with Xcel Energy about its taking over ownership of the plant in recent weeks. For the most part, those conversations have taken place around three topics the city has pursued, according to City Manager Rob Wolfington: It’s stranded investment in the facility – the costs it has incurred bringing the power plant to Benson and in serving its needs; the loss of real estate tax revenue it would suffer; and future economic development considerations that would assist the city in replacing the job losses should Benson Power close.

This year, Benson Power is paying nearly $760,000 in real estate taxes and represents one-quarter of the City of Benson’s real estate tax revenues:

 

Benson Power 2017 Real Estate Taxes

 

Government                                       Amount

City of Benson                                     $404,058

Swift County                                       $200,421

District 777                                         $153,700

Total                                                 $758,157

 

 

Earlier this month, the City of Benson fought to have legislation removed from bills in the state House and Senate that would have ended the biomass mandate that requires Xcel Energy to buy power from plants that use woodchips and turkey litter to produce electricity.

That proposed legislation would also have allowed Xcel Energy to negotiate for lower rates, and if it couldn’t get them, to offer to buy out the contracts. It would have opened the door to the plant being closed.

With the assistance of St. Paul lobbying firm Flaherty & Hood, and local legislators, the city was able to have the biomass language pulled from the bills. However, there still is a possibility for similar language to be introduced into the House and Senate conference committees as they finalize bill language.

Language could also be introduced in those bills that is favorable to the community.

Conference committees are finalizing language in omnibus bills that will go the Gov. Mark Dayton for his signature in the next three weeks. With adjournment set for May 22, legislators are under a tight timeline.

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