NSP agrees to pay city nearly $23 million in compensation for losing power plant

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Fibrominn, now Benson Power, LLC, under construction in 2006. The plant would shut in the summer of 2018 if NSP/Xcel Energy buys it from investors.

By Reed Anfinson

Publisher

Swift County Monitor-News

Monday night the Benson City Council unanimously agreed to back Northern States Power’s (NSP) efforts to buy and likely close the Benson Power, LLC, electric generation plant in exchange for compensation that could total more than $23 million.

NSP is the parent corporation of Xcel Energy.

A substantial portion of that compensation could come in the form of $20 million for economic development efforts in the city to help it replace the jobs and economic vitality it would lose if the plant were closed. There would be four payments made to the city between 2018 and 2021.

Back when it was being planned and built in the early 2000s, Minnesota’s Department of Employment and Economic Development (DEED) estimated the plant would provide an annual economic boost to the area of $8 to $10 million.

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

With that announcement the effort to potentially shut down Benson Power by the summer of 2018 has taken another step forward. 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 produces 55 megawatts of electricity by burning 500,000 tons of turkey litter and woodchips. Back in 1994, NSP agreed to produce 125 megawatts in exchange for being allowed to store spent nuclear fuel casks on Prairie Island...

Economic development compensation

“Benson hereby agrees to support the Legislation and the PUC approval,” the Letter of Agreement between NSP (NSP) and the City of Benson approved by the council Monday night states. “Benson and NSP will work cooperatively to:

(a) advocate for the Legislation;  

(b) seek legislative changes allowing Renewable  Development Funds in the amount of up to $19.9 million to be redirected to assist Benson for the purposes of economic development; and

(c) advocate for Public Utilities Commission (PUC) approval.”

However, to have access to the Renewable Development Funds (RDF,) NSP needs Legislative approval.

The RDF was also created as part of the Prairie Island nuclear storage cask deal. It requires NSP to set aside funds each year for development of renewable energy technology, stimulate research into renewable energy, and enhance the infrastructure for delivering renewable energy.

In 2016, NSP put $25.6 million into the fund. Since it was started in 1994, the RDF has generated $301.35 million.

An amendment to the state’s biomass mandate was presented to a House-Senate conference committee late Monday night that would allow the purchase and closure of Benson Power. However, it also provides for payments to the city for economic development over four years.

“… the public utility subject to this section shall enter into a contract with the city in which the poultry litter plant is located to provide grants to the city for the purposes of economic development on the following schedule:

$4 million for fiscal year 2018;

$6.5 million for fiscal year 2019

$6.5 million for fiscal year 2020

$3 million in 2021.

Those four payments total $20 million and would be paid out of the RDF. This amount differs by $100,000 from the language that is part of the Letter of Agreement.

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