Otter Tail Power plans to keep its coal-fired plant in Fergus Falls operating through mid-2020 before building a gas-fired plant.
The Minnesota Public Utilities Commission ordered the company to study the costs of retiring the 53-year-old Hoot Lake plant.
Brian Draxten, the resource planning director for Otter Tail Power, says the company considered closing it sooner. But he says operating Hoot Lake with new mercury emissions controls is the most cost-effective solution.
Draxten says customers will already see a 14 to 15 percent rate increase mid-decade because of environmental upgrades to another plant.
"Our plan," he said, "while getting to the same result in the end, by 2020, allows us to push off those large expenditures several years and smooth out the rate shock that customers will experience."
But Jessica Tatro of the Sierra Club says Otter Tail is missing an opportunity to expand its wind power capacity.
"Continued investment in fossil fuels ignores both the opportunities that are there for clean renewable energy and energy conservation and broad public support and investments in these energy sources," Tatro said.
Draxten says the company will meet Minnesota's 25 percent renewable fuel requirement by 2025.