Due largely to the competition from the low price of natural gas used to produce electricity and the high cost to purchase coal, Minnesota Power has decided to idle its coalfired Taconite Harbor power plant in the fall of 2016.
“We met with the employees this morning [Thursday, July 9] to let them know,” said Minnesota Power Vice President of Strategy and Planning Al Rudeck. “It was a tough day.
“We will assist the 42 employees in finding new positions within the company,” said Rudeck, adding, “This closure is in no way a reflection of workers at the plant. They have done a great job.
“This is a reflection of the market. The economy really hasn’t rebounded since 2007 and there is a lot of power in the market right now. We have to do the right thing for our customers. Unfortunately, we have seen this trending this way for at least the last five years. There used to be peaks and valleys in the natural gas market price but they have stabilized and have been staying low, and we see that trend continuing,” Rudeck said.
The impact of losing those good paying jobs to the county will be great. Minnesota Power pays between $2 to $3 million annually in wages, “But that isn’t counting the wages we pay to seven or eight electrical contractors or other contractors we hire throughout the year,” Rudeck said.
The company will send a human resources team to Taconite Harbor not long before the plant closes. They will meet individually with employees and discuss options. Under Minnesota Power’s collective bargaining agreement, said Rudeck, some workers will be offered severance pay and retirement incentives if they are near retirement, while most, if not all will be offered jobs elsewhere.
“Due to a lot of retirement and increases in production in our other plants, we will be able to offer most if not all of these employees positions within the company. The opportunities for them will be great. Still, some may not want to leave. The North Shore is a beautiful place and many people have their homes and families there, and we understand that,” Rudeck said.
Minnesota Power recently shut down unit 3 at Taconite Harbor in an effort to reduce emissions and reduce its cost to operate. When units 1 and 2 are shuttered the company will lose a total of 225 megawatts.
However, Minnesota Power is in the midst of adding wind, solar, and hydro power plus 200 to 300 megawatts of natural gas generation to its portfolio, and that will make up for the loss at Taconite Harbor.
These new additions, said Minnesota Power CEO Al Hodnik, “are Minnesota Power’s way of answering the nation’s call to reduce carbon and mitigate climate change. The cost of building and fueling natural gas generation has dropped significantly in recent years and along with other key steps in our plan, we can reduce cost risks for customers by adding this least-cost resource.”
All of these steps fit with Minnesota Power’s EnergyFoward Plan introduced in 2013 to diversify its energy supply to one-third renewable resources, one-third coal, and one-third natural gas.
Even though the plant will close, Minnesota Power plans to keep its corporate presence in the area, said Rudeck.
“We will work with the North Shore community through this transition,” said Rudeck. “We have a Community Investment Committee that will meet with the community to find a way to re-purpose the plant. There may be options for the plant to be converted to a wood products center or even to be used as a data center. We have valuable assets at the site that include a port, a rail line and other infrastructure at the facility that may lead to future economic development and business growth opportunities.”
When the plant stops producing electricity it will be kept in “dry storage” so if it needs to be opened in a crunch it can be restarted and generate power, said Rudeck. “No matter what, we planned to close in 2020 because we couldn’t get the cost rates down for shipments of coal by rail or by boat.”
The decision to idle rather than close the plant will allow Minnesota Power to restart and produce electric power to maintain grid reliability if the demand for electricity should rise.
“We have done this successfully in the past at other plants and called back or brought employees back to their home plant who know how to restart the units,” said Rudeck. “And if that happens, we will operate it in compliance with our emissions standards. We aren’t closing because we are out of compliance with Environmental Protection Agency or Minnesota Pollution Control standards for emissions, although some in the media are spinning it that way.”
“No matter what,” Rudeck said, “We are committed to the North Shore community and our assets there. Whether we convert the plant or use the port or the dock in some way, we are committed to find something that fits the area and the community. We look forward to meeting with the public and getting their ideas and vision for Taconite Harbor as we move forward.”
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