In re Minn. Power's Petition for Approval of EnergyForward Res. Package
| Decision Date | 23 August 2021 |
| Docket Number | A19-0704,A19-0688 |
| Court | Minnesota Court of Appeals |
| Parties | In the Matter of Minnesota Power's Petition for Approval of the EnergyForward Resource Package. |
This opinion is nonprecedential except as provided by Minn. R Civ. App. P. 136.01, subd. 1(c).
Public Utilities Commission File No. E-015/AI-17-568
Evan J. Mulholland, Joy R. Anderson, Minnesota Center for Environmental Advocacy, St. Paul, Minnesota (for relators Minnesota Center for Environmental Advocacy, Union of Concerned Scientists, and Sierra Club)
Paul C. Blackburn, Honor the Earth, Callaway, Minnesota; and Frank Bibeau, Deer River, Minnesota (for relator Honor the Earth)
Keith Ellison, Attorney General, Jason Marisam, Jeffrey Boman Assistant Attorneys General, St. Paul, Minnesota (for respondent Minnesota Public Utilities Commission)
Michael C, Krikava, Elizabeth M. Brama, Taft Stettinius & Hollister LLP, Minneapolis, Minnesota; and David R. Moeller, Minnesota Power, Duluth, Minnesota (for respondent Minnesota Power)
Christine Hottinger, Minneapolis, Minnesota (for amicus curiae Friends of the Climate)
Considered and decided by Bjorkman, Presiding Judge; Hooten, Judge; and Klaphake, Judge. [*]
On remand from the Minnesota Supreme Court, relators reiterate their challenge to an order by respondent-commission approving respondent-utility's affiliated-interest agreements related to a proposed natural-gas power plant. Relators argue that substantial evidence does not support the commission's determinations that (1) the power plant is needed and (2) the power plant serves the public interest better than a renewable-resource alternative. We affirm.
In July 2017, respondent Minnesota Power petitioned respondent Minnesota Public Utilities Commission (the commission) for approval of its EnergyForward Resource Package. The petition points to capacity and energy[1] needs contemplated in Minnesota Power's commission-approved 2015 integrated resource plan and proposes to add new wind, solar, and natural-gas generation resources. The focus of this appeal is the natural-gas resource-a 525 MW natural-gas combined-cycle power plant in Superior, Wisconsin, known as the Nemadji Trail Energy Center (NTEC). Minnesota Power seeks to construct NTEC, operate it, and purchase half of its capacity and associated energy, through agreements with its Wisconsin affiliate, South Shore Energy, LLC. Because it is a public utility, Minnesota Power must obtain the commission's approval of the affiliated-interest agreements. Minn. Stat. § 216B.48, subd. 3 (2020).
The commission approved Minnesota Power's proposed wind and solar resources and referred the NTEC affiliated-interest agreements for a contested-case proceeding before an administrative-law judge (ALJ). The commission required Minnesota Power to show that NTEC is "needed and reasonable," providing that the determination of need and reasonableness would be based on "all relevant factors," including (1) "[a]n updated forecast of demand"; (2) costs, "including socioeconomic and environmental costs"; and (3) alternatives to some or all of NTEC's energy and capacity. It also incorporated the "renewable resource requirements" of the resource-planning and certificate-of-need statutes, Minn. Stat. §§ 216B.2422, .243, subd. 3a (2020).
During the contested case, the ALJ received thousands of pages of testimony and documentary evidence. Minnesota Power presented evidence that it will experience an increasing need for capacity and energy in the mid-2020s, substantially because its coal-fired generators are being retired. Using the Strategist computer program, Minnesota Power modeled hundreds of scenarios to assess the suitability of different resource alternatives for meeting those projected needs. And it asserted that NTEC "is the best and least cost resource option for meeting its future energy needs in the mid-2020s because NTEC was chosen in the vast majority of [modeled] scenarios." Minnesota Power also presented evidence that its growing reliance on wind generation creates a need for "dispatchable capacity and flexible energy to mitigate and balance exposure to energy markets"-a need that NTEC addresses.
The Minnesota Department of Commerce (the department) also analyzed Minnesota Power's projected capacity and energy needs and used Strategist to model resource alternatives for meeting those needs. The department's 300 modeled scenarios consistently identified NTEC as the least-cost option. And the department agreed that NTEC would provide a dispatchable resource that could mitigate exposure to price spikes.
In response, a group of "clean energy organizations"[2] challenged the inputs that Minnesota Power and the department used in their modeling. The group took particular aim at the inputs used with respect to when NTEC would be available as a resource, the cost of wind and solar resources, and the prospects for enhancing load management[3] and energy efficiency.
The ALJ also received more than 1, 500 written public comments. Most commenters opposed NTEC, citing environmental concerns. Relator Honor the Earth submitted comments opposing NTEC and asserting that an environmental impact statement (EIS) was needed before the commission could approve the NTEC affiliated-interest agreements.
The ALJ issued a report detailing and analyzing the evidence, the parties' arguments, and the public comments. She declined to rule on the need for an EIS, reasoning that it was outside the scope of the contested case. But she agreed with the clean energy organizations that Minnesota Power's and the department's modeling inputs were unreasonable. She therefore concluded that Minnesota Power failed to demonstrate that NTEC is needed to address anticipated shortfalls in capacity, energy, or dispatchability, and recommended that the commission not approve the affiliated-interest agreements. But she noted that, if the commission concluded NTEC is "needed and reasonable," she would recommend that the commission find the affiliated-interest agreements are in the public interest.
The parties filed written exceptions to the ALJ's report. In its exceptions, the department urged the commission to reject the ALJ's assessment that its modeling was unreasonable. It explained that "certain individual inputs" in its modeling, such as those for load management, could have been "improved" but would not have materially affected the results because the results favoring NTEC did not substantially rely on those particular inputs. It emphasized that developing a range of inputs to address the uncertainties of resource planning is more important than any single input. But it also explained its reasons for selecting the challenged inputs-it treated NTEC as available in 2025 because that is the proposed timeline for that specific resource but also modeled a similar generic resource in other years; it accounted for a range of load-management possibilities by using a spectrum of demand-forecast inputs; and it accounted for a range of energy-efficiency possibilities in a similar manner. Minnesota Power filed similar exceptions, urging that its own analysis and that of the department demonstrate that NTEC is needed and reasonable.
Honor the Earth filed a petition requesting that an environmental assessment worksheet (EAW) be prepared before the commission decided whether to approve the affiliated-interest agreements.
The commission conducted a two-day hearing on whether to order an EAW and whether to approve the affiliated-interest agreements. It also independently examined the record and evaluated the parties' exceptions. In a written decision, the commission denied the EAW petition and approved the affiliated-interest agreements with conditions.
Regarding the agreements, the commission explained that it concurred in the ALJ's findings "as modified" by the department's exceptions. Specifically, the commission found that the department's analysis was reasonable and "sufficiently robust . . . for purposes of determining whether the NTEC energy purchase is needed and reasonable." And it relied on that analysis to conclude that "NTEC, in conjunction with the [wind and solar] elements of the EnergyForward resource package, is a cost-effective resource for meeting Minnesota Power's energy needs in the wake of the . . . retirement of 700 MW of baseload coal-fired generation." It also stated that "[e]ven if Minnesota Power experiences no capacity needs, it will be purchasing energy from the [regional] market, and NTEC provides a hedge against spikes in market prices and reduces overall costs by providing an economic source of energy."
Relators Minnesota Center for Environmental Advocacy, Union of Concerned Scientists, and Sierra Club (collectively MCEA) and Honor the Earth filed separate appeals, which we consolidated. Both appeals challenged the denial of the EAW petition, and MCEA also challenged the approval of the affiliated-interest agreements. We concluded that the commission erred by denying the EAW petition and reversed the approval of the affiliated-interest agreements on that basis. In re Minn. Power's Petition, 938 N.W.2d 843, 853 (Minn.App. 2019). The Minnesota Supreme Court reversed our decision and remanded for us to address MCEA's remaining challenge-whether the commission's approval of the affiliated-interest agreements "was supported by substantial evidence." In re Minn. Power's Petition, 958 N.W.2d 339, 350 (Minn. 2021).
The commission's approval of an affiliated-interest agreement is subject to judicial review by writ of certiorari. Minn Stat. § 216B.52, subd. 1 (2020). We will reverse a decision of the commission if it lacks substantial evidentiary support. Minn. Stat. § 14.69 (2020); ...
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