DEED: Benson Power closing positive for state, but some businesses hit hard

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Benson Power is likely to be shut down this late spring or summer by Xcel Energy resulting in the loss of 45 jobs at the plant. The closing will also have a deep financial impact on suppliers of services and goods.

By Reed Anfinson
Publisher
Swift County Monitor-News

 

When Minnesota’s Legislature passed the law last spring allowing for the shutdown of Benson Power, LLC, it also directed the Minnesota Department of Employment and Economic Development to study the consequences of its closing.

The Legislature set aside $150,000 for the study and directed DEED’s commissioner “to examine the economic impact of the closure of a biomass facility located in the city of Benson that uses poultry litter to generate electricity.”

“In conducting the study, the commissioner must analyze the impact of the closure of the biomass facility on employment and income in the local economy, including impacts on ancillary providers of goods and services to the biomass facility,” the Legislature directed DEED.

The report, due by Feb. 15, was released Feb. 2. Despite recognizing the negative impact on the local economy, the report concludes that it will have a “slightly positive net economic impact” for the state as a whole.

Benson Power produces 50 megawatts of electricity burning a mixture of turkey litter and wood chips. Xcel Energy’s plan to buy the plant and shut it down, saving its customers hundreds of millions of dollars in energy costs, has been approved by the Minnesota Public Utilities Commission (PUC) as well as the Legislature.

Benson Power, originally known as Fibrominn, employs 45 people directly at the plant at the city’s western edge. It also accounts for 100 or more jobs in businesses that support its operation from trucking of wood chips and turkey litter, to loggers, to processing of its ash into fertilizer, to those providing other goods and services.

When it was proposed for construction in the early 2000s, DEED estimated Fibrominn’s local economic impact at $8 to $10 million.

Under an agreement Xcel Energy had with the biomass plant, it was obligated to buy its power through 2028 as part of a deal it signed in 2006. However, in recent years wind and solar have become far cheaper “green” ways of producing power than burning biomass. As a result, Benson power’s electricity can cost seven to 10 times as much.

Those high costs to its customers led Xcel to pursue a course to eventually shutting the plant down that led through the Legislature and PUC. The East Coast insurance company investor owners of the plant have agreed to sell the plant to Excel. Current plans have the power plant closing down sometime this spring or summer.

Compensation to the City of Benson for the loss of the power plant was built into the bill that passed the Legislature last year. It will be paid $20 million over four years, starting with a $4 million payment due by June 30, to pursue new economic development opportunities. Benson Power will also pay the real estate taxes on the facility for two years after the plant is demolished and the site returned to a bare lot....

Greater impact on Benson area not studied

“In conducting the study, the commissioner must analyze the impact of the closure of the biomass facility on employment and income in the local economy…” the legislative directive to DEED says. However, it appears DEED limited its study of the local impact on the loss to just the 45 direct jobs at Benson Power.

What the impact to the school district, main street Benson and other businesses in Swift County, and the real estate market are have not taken into account. Families with children in the community have moved away taking children worth $7,000 to $8,000 each in state school funding away. The incomes earned by the employees will no longer be spent at local businesses. Services provided by local business to the plant will no longer be needed.

The demand for apartments and houses will fall with the lost employees....

 

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Pictured: Benson Power is likely to be shut down this late spring or summer by Xcel Energy resulting in the loss of 45 jobs at the plant. The closing will also have a deep financial impact on suppliers of services and goods.

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