NEW YORK, Nov 3 (Reuters) - MDU Resources Group Inc (MDU.N) said late Monday it would not build the planned 500-to-600-megawatt Big Stone II coal-fired power project near Milbank, South Dakota.
MDU said in a release the project required additional participants to move forward but none have committed.
In September, Otter Tail Corp (OTTR.O), Big Stone II’s lead developer, withdrew from the project due to the economic downturn and the high level of uncertainty associated with proposed federal climate legislation.
The federal government was working on legislation to limit carbon dioxide and other greenhouse gas emissions -- likely by putting a price on emitting those emissions -- in an effort to stop global warming from potentially damaging the planet.
The burning of coal to generate power produces about twice as much CO2 as natural gas.
The Big Stone II project was estimated to cost about $1.6 billion, not including needed transmission upgrades, according to a spokesman at MDU.
He noted some transmission was already in place as there was an existing 470 MW coal-fired Unit 1 at Big Stone, which entered service in 1975 and burns coal railed in from the Powder River Basin in Wyoming.
Big Stone is located in Grant County in South Dakota about 200 miles west of Minneapolis, near the South Dakota-Minnesota border.
Unit 2 was to enter service in the 2015-2016 timeframe, the spokesman noted.
Montana-Dakota Utilities Co, a subsidiary or MDU, said it was “disappointing that Big Stone II will not be built,” but noted the utility had adequate electric supplies for the near term.
“We have a purchased power agreement through 2015 that was to bridge us to Big Stone II going online; we still have that agreement in place,” Dave Goodin, president and CEO of Montana-Dakota, said in the release.
“We will now look at other supply options that are reliable and cost-beneficial for our customers. We have plans to expand our wind production by 30 megawatts in 2010 and will review other generation options,” Goodin said.
The spokesman noted the area had a lot of wind potential but needed more base load power. Base load generation runs around the clock and usually includes coal, nuclear and combined cycle natural gas.
The other Big Stone II participants were Central Minnesota Municipal Power Agency, Heartland Consumers Power District and Missouri River Energy Services.
MDU, of Bismarck, North Dakota, is a diversified energy company with electric and natural gas utility distributions in North Dakota, Montana, South Dakota, Wyoming, Minnesota, Washington and Oregon. (Reporting by Scott DiSavino; Editing by Walter Bagley)