Path is cleared for Xcel to purchase Benson Power

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Two potential roadblocks to Xcel Energy purchasing Benson Power, LLC, were overcome in the past week clearing the way for its eventual shutdown.

A Cass County lawsuit brought by the Associated Contract Loggers & Truckers of Minnesota seeking a temporary injunction on the closure of Benson Power was dismissed. Second, the Minnesota Public Utilities Commission published its order allowing Xcel to end the power purchase agreement with Benson Power, buy the plant, and close it.

Loggers and truckers had filed for the injunction stating that Xcel Energy knew that biomass was a more expensive source of power than other sources when it signed the contract to buy about 125 megawatts of green power in exchange for storing nuclear waste casks on Prairie Island. The “biomass mandate” deal was reached with the Legislature in 1994 and amended in 1996.

Xcel then signed a contract to purchase Benson Power’s 55 megawatts of electricity, produced by wood chips and turkey litter, into 2028. It also had an agreement with Laurentian Energy Authority (LEA) in Hibbing and Virginia to buy power into 2026.

Based on these long-term power purchase agreements signed with Xcel, logging and trucking companies made substantial capital investments to provide the fuel that would power the plants.

In recent years, solar and wind power have been a growing component of Xcel Energy’s power portfolio creating electricity at costs far cheaper than burning biomass. So much cheaper that the company expects to save a net $345 million over the next 11 years for its ratepayers by shutting down Benson Power.

That savings comes after it pays $106 million to buy the plant from its East Coast insurance company owners, pay the City of Benson and area community more than $22 million in compensation, and pay millions to demolish the plant returning the site to a bare lot.

In 2017, the Minnesota Legislature passed a law undoing the biomass mandate and paving the way for ending the power purchase agreement requirements. With no mandate to buy biomass power, Xcel could negotiate rates with Benson Power and LEA, and choose not to buy the power if the costs were too high. Considering the high cost of the biomass power, the end of the biomass mandate in effect freed Xcel Energy from buying electricity from Benson Power and LEA. LEA was looking to convert its plant to cheaper natural gas....

 

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