Regulators OK natural-gas plant in northern Wisconsin (UPDATE)

Wisconsin regulators approved plans on Thursday for a $700 million power plant on the shores of Lake Superior, but a number of obstacles remain before the project.

The Wisconsin Public Service Commission voted 2-1 on Thursday to approve a permit for the Nemadji Trail Energy Center in Superior. The plant will be jointly owned by La Crosse-based Dairyland Power Cooperative and Duluth, Minnesota-based Minnesota Power. Plans call for the plant to use natural gas to produce 625 megawatts’ worth of power.

The utilities argue that the plant will help them move away from coal-fired power generation. But environmental groups insist the companies should find cheaper and cleaner options than a plant that will produce millions of tons of heat-trapping gases. The Sierra Club said the plant will be “an environmental and economic disaster.” Jon Drewsen, a spokesman for Madison-based environmental group Clean Wisconsin, said the group’s legal team is still weighing its options following the PSC’s decision.

“We are pleased with today’s decision following the extensive review process,” Rob Palmberg, a Dairyland vice president, said in a statement. “Because of its ability to provide reliable back-up to intermittent sources of power, Nemadji Trail is a critical part of our resource diversification strategy.”

Wisconsin PSC Chairwoman Rebecca Valcq voted against the project, citing the possibility of environmental damage. In contrast, Commissioners Mike Huebsch and Ellen Nowak, who were both appointed by former Republican Gov. Scott Walker, came out in favor of the project, saying the DNR would ensure the environment is protected.

Minnesota Power, of Duluth, and Dairyland Power Cooperative, of La Crosse, would own the plant and spread the $700 million cost of building it among 145,000 utility ratepayers in northern Minnesota and in Dairyland’s service territory, which stretches into four states. The utilities say the project would create 260 construction jobs and hope to have the plant completed in 2025.

The International Union of Operating Engineers Local 49, a union representing 14,000 workers in Minnesota, North Dakota and South Dakota, filed a letter with the PSC in support of the project.

But despite approval from Wisconsin regulators, the plant is still faced with headwinds.

Hurdles ahead

Although Wisconsin’s PSC approved the project on Thursday, a court challenge has delayed it in Minnesota.

In late December, a Minnesota appeals court sided with environmental groups who had sued that state’s Public Utilities Commission over the agency’s decision not to consider the effects of the project on the environment.

Aaron Klemz, a spokesman for the Minnesota Center for Environmental Advocacy, which brought the appeals case, said the decision likely amounts to a substantial delay in the project’s approval. When Minnesota’s PUC advanced the project in October 2018, it voted not to order the sort of full environmental review that critics had been calling for, finding such an analysis wasn’t needed because the plant would be built in Wisconsin.

But before that decision, an administrative law judge had sided with skeptics in finding that the utilities had “failed to demonstrate” that the Nemadji project was consistent with the public interest, and that the utilities could meet energy demand more cheaply with renewable energy. Natural-gas plants produce only about half as much carbon dioxide as coal-fired plants, but mining and transporting natural gas can release far more potent heat-trapping gases.

Klemz said the appeals court ruling most likely means Minnesota will need to do a full environmental analysis of the project before it can move forward.

“This is a substantial step they skipped,” Klemz said. “This would be one of the largest emitters of greenhouse gas in the upper Midwest if it’s built.”

Minnesota Power, however, said it plans to ask the Minnesota Supreme Court to review the appeals court’s decision in a statement on Thursday. Amy Rutledge, a spokeswoman for the utility, said Minnesota Power plans to file a challenge to the Supreme Court in the next week.

Water access concerns

Beyond the project’s hurdles in Minnesota, the plant needs to earn permits from the Wisconsin Department of Natural Resources, the city of Superior and the U.S. Army Corps of Engineers. The DNR is to hold a public hearing on an air-quality permit for the project next week.

Earning DNR approvals could prove particularly thorny. In a review of the project released in October, the agency found that the site of the plant wouldn’t have adequate access to groundwater and would permanently affect wetlands nearby.

Plans for the Nemadji project call for five high-capacity wells that would draw 5.4 million gallons of water from the ground each day.

A DNR hydrologist, however, told the Public Service Commission in October that there’s not a “sustainable source” of groundwater at the proposed site, one that would meet the needs of the Nemadji trail project. The utilities dispute the finding.

Matt Earley, Wisconsin state representative for the Sierra Club’s beyond coal campaign, said the DNR’s water access concerns are a significant wrinkle in the project plans.

“I think it speaks to their expertise that they are expressing their concerns,” Earley said. “We think that the plant overall will be an environmental disaster.”