PUC ruling clears the way for closing Benson Power

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By Reed Anfinson
Publisher
Swift County Monitor-News

 

The Minnesota Public Utilities Commission (PUC) rejected the appeal petitions of suppliers to Benson Power, LLC, in a 4-0 ruling issued last Thursday in St. Paul.

That rejection begins the final phase of a year-long process that started in the Minnesota Legislature last March as Xcel Energy sought to end the state’s biomass mandate, buy Benson Power, and shut it down.

With the PUC deciding against hearing the appeals, its final decision will be published in about two weeks. Three days after publication, it is expected that Xcel will close on the purchase of the plant from its East Coast insurance company owners. The purchase date could be as soon as April 16.

Once under Xcel ownership, the plant will be shut down, and plans put in place for its demolition.

Jennie-O Turkey Store, Beaver Creek Transport, and Benson-based North American Fertilizer sought to have the PUC’s November decision to allow Xcel to end its Power Purchase Agreement (PPA) with Benson Power and purchase the plant delayed.

That delay, they argued, would allow them to pay for assets they had acquired to serve the plant and find other sources for their products. Suppliers had argued that their investments were based on the PPA, which they thought guaranteed a long-term payback for the investments they had made.

Xcel was required to buy Benson Power’s biomass-produced electricity into 2028 under the PPA. But with the state Legislature agreeing to end the biomass mandate, the stage was set for ending the Power Purchase Agreement.

Xcel Energy’s efforts were strongly opposed by the City of Benson, which had made significant investments in bringing the biomass power plant to the community in the late 1990s and early 2000s. The plant also employed 45 people with another 100 or more employed in support of its operation.

In the early 2000s, the Minnesota Department of Employment and Economic Development (DEED) had estimated the plant would have an annual $8-$10 million impact on the community.

With the help of state Rep. Tim Miller, District 17A-Prinsburg, and Sen. Andrew Lang, District 17-Olivia, Xcel’s legislation stalled. That gave time for City of Benson representatives to sit down with Xcel and negotiate an agreement that allowed its plans to move forward.

It agreed to the negotiations for two reasons. It was felt that Xcel’s arguments that ending the biomass mandate would save its ratepayers nearly $750 million over the next 11 years would gain growing support in the Legislature, if not in 2017, then in 2018. While Xcel’s efforts involved Benson Power, they also dealt with Laurentian Energy Authority in Hibbing and Virginia, which supported Xcel’s efforts.

Benson’s leaders also knew that Benson Power had gone into receivership once and could again, possibly leaving the community with an empty plant and nothing to compensate for the loss.

The savings Xcel planned to see through closing Benson Power, gave the City of Benson a negotiating position to work out a deal for its support in supporting legislation to end the biomass mandate last year.

A meeting with Xcel executives in Minneapolis last spring led to a two-part agreement, one with the company and another that was written into the legislation ending the biomass mandate. The legislation says the City of Benson will be paid $20 million for economic development efforts with the first $4 million payment due by June 30 this year. Two $6.5 million payments are scheduled to come in 2019 and 2020, with a final $3 million payment in 2021....

 

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