Minn. regulators reject Xcel's purchase of Mankato natural gas plant

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The King plant will retire in 2028 and Sherco 3 in 2030.
Xcel Energy will retire their last two coal-fired power generating stations. The Allen S. King station will retire in 2028 and the Sherco 3 station will be retired in 2030.
William Lager | MPR News file

The Minnesota Public Utilities Commission on Friday rejected Xcel Energy’s purchase of a natural gas power plant in Mankato, Minn., saying it wasn’t in the public’s interest.

Xcel had wanted to purchase the Mankato Energy Center, saying it would help with the utility’s planned early retirement of coal plants in the state. 

But the Minnesota Department of Commerce, Xcel’s large industrial customers, the Citizens Utility Board of Minnesota and others raised questions about the cost of the plant and said it could hurt Xcel's utility customers. 

Still, other groups backed Xcel’s plan, including several clean energy groups and the Laborers’ International Union of North America. 

They had argued having the gas plant in Xcel's control would give both the utility and Minnesota more flexibility in the transition away from the fossil fuels contributing to climate change.

"Any decision about it has input from people,” said Kevin Lee, an attorney for the Minnesota Center for Environmental Advocacy. “That's decisions like retirement dates, things like operational control. I can imagine a scenario in 2040 or 2045 or 2050 where you keep the gas plant, but maybe you only use it one or two days a year."

Instead, he said, the Mankato Energy Center will be owned by someone else and could keep burning natural gas long into the future. 

Kevin Pranis of the Laborers’ International Union of North America said having Xcel in control of the plant might provide opportunities for union workers leaving jobs at retired coal plants. 

“Minnesota is going to be going through a really challenging transition,” he said. “This was an important asset that would have facilitated that.”

But Citizens Utility Board executive director Annie Levenson-Falk said the PUC’s decision protects Xcel’s customers. 

“This purchase was not in customers’ interest. For Xcel to spend $650 million of ratepayer dollars to purchase the plant would present too much cost and too much risk,” she said.