SMMPA has power generation options

Last month's withdrawal from the Big Stone II power plant project creates a future problem for Southern Minnesota Municipal Power Agency:

How will the Rochester-based agency generate at least another 49.4 megawatts (million watts) of everyday electricity that would have come from the South Dakota power plant?

Fortunately, the dilemma is not imminent. Big Stone II's electricity was not scheduled to start flowing to SMMPA until at least mid-2012. But in the power business, that's not a long horizon.

What SMMPA needs is "baseline," or constantly available, generation. The agency is projecting growth.

While it is pursuing wind power as a renewable resource -- most recently with a large deal last week -- that source is strictly supplemental, SMMPA spokesman Dan Hayes says. Wind-generated power is available when the wind blows, so it is not always online to ship. SMMPA needs to have enough power available 24/7 to supply its 18 city-owned utility companies and their customers.

SMMPA's bedrock bank of power comes from its 41 percent stake in the Sherco 3 power plant, one of three parts of the 2,400-megawatt Sherco station near Becker, Minn. In January, Xcel Energy, which operates and owns most of the complex, announced plans to expand the huge plant by another 140 megawatts of capacity, as well as upgrade its air pollution controls. SMMPA's share of the new output would be about 25 megawatts; the upgrade would start producing electricity about the same time as Big Stone II.

But there are other possibilities for baseline electricity, and SMMPA's chief operating officer, Dave Geschwind, says agency managers now are evaluating them more closely. Some possibilities on SMMPA's plate are:

• Adding a 49-megawatt turbine running on natural gas somewhere in SMMPA's system. A combined cycle turbine, which generates electricity both from initial combustion and, secondly, from waste heat, also could be considered.

• Some type of deal to take electricity from a pulverized coal power plant -- considered more environmentally friendly than most other coal-based fuels -- being built in Waterloo, Iowa. The developer, LS Power, has approached the agency, SMMPA members learned at a May meeting.

• Purchase of hydroelectricity from Manitoba Hydro in Canada. SMMPA already is a customer. The agency has booked 30 megawatts of the Manitoba hydropower through a 5-year contract beginning in 2008. That electricity was the interim source planned until the Big Stone II came online.

• An agreement with financial firm Morgan Stanley to purchase power over the long-term. SMMPA already has received a quote for a future purchase.

Of course, SMMPA also could consider buying electricity directly from other generating companies, either over the long-term or short-term contracts, Geschwind says. But power coming directly from Big Stone II won't be part of that mix.

Otherwise, "There's a lot of things that are back on the table for consideration" the SMMPA executive says.