Minnesota Power reaches deal on coal-fired plants

Duluth-based Minnesota Power will pay a $1.4 million civil penalty, and spend $4.2 million on several environmental mitigation projects in northern Minnesota for violating the Clean Air Act, according to a settlement with the federal Environmental Protection Agency announced Wednesday.

It also requires the utility to meet stringent emission rates at its three coal-fired power plants in Cohasset, Hoyt Lakes and Schroeder, Minn., although the company has already completed or begun the majority of the work needed to install advanced pollution control technology at the plants.

The settlement, which has been in negotiation for the past six years, resolves claims that Minnesota Power violated the New Source Review provisions of the Clean Air Act by modifying its coal plants without obtaining the required permits and installing the best available pollution control technology, as the act requires.

"From a reputation standpoint, it's never easy to see your name out in the paper this way. We take a lot of pride in our environmental stewardship," said Al Rudeck, Minnesota Power's vice president of strategy and planning. "It's a bitter pill to swallow in terms of coming to settlement, but we felt it was in the best interest of our stakeholders."

Rudeck said the alleged violations stem from a disagreement with the EPA over the type of upgrades done at the utility's coal fired plants. Federal regulators saw them as major modifications that fall under the purview of the Clean Air Act; Minnesota Power viewed the work as routine maintenance.

The utility did not admit wrongdoing in the settlement, which was filed in U.S. District Court in Minneapolis and must be approved by a federal judge. Still, the settlement was hailed by environmentalists.

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"We're happy that Minnesota Power is taking these steps to bring itself into compliance with the laws that are already on the books," said Leigh Currie, an attorney with the Minnesota Center for Environmental Advocacy. "But we think Minnesota Power will have to take additional steps going forward."

A decade ago the utility relied almost completely on coal to provide cheap electric power to the region's iron mines and paper mills. Today, Minnesota Power derives 20 percent of its electricity from wind, and plans to eventually have a resource mix made up of roughly one-third coal, one-third natural gas and one-third renewables.

Last year the company announced plans to retire one of its three, smaller, less efficient coal fired generators at its Taconite Harbor plant in Schroeder along the North Shore of Lake Superior. It also plans to convert two units at the Laskin plant in Hoyt Lakes to natural gas.

The utility is also investing $350 million in pollution control upgrades at the state's second largest coal fired plant, its Boswell facility in Cohasset. When that's completed next year, the plant's emission rates "will be among some of the lowest in the country" for sulfur and nitrogen dioxide, according to the EPA.

Still up in the air is the future of the two smaller generators at Boswell. The EPA settlement calls on Minnesota Power to either refuel or retire those units, or scrub still more pollutants from the smokestacks.

"The do-nothing option at Boswell is no longer on the table," said Rudeck, of Minnesota Power. "This consent decree, along with future EPA air regulations coming, could converge on a decision to do something else there at those two units."