Legalectric

Otter Tail Power has withdrawn from Big Stone II.  Odd way to put it because Big Stone II IS Otter Tail Power.  OTP was the big one left in the game and now they’re gone.

Otter Tail Power has withdrawn from the Big Stone II coal plant.  Really?!?!?

Pinch me, I must be dreaming…

Here’s their post about it on their BSII site – love the euphemisims:

Big Stone II announces participant changes

Otter Tail Power Company withdraws; Project pursues new participants

(Fargo, ND – September 11, 2009)—The participating utilities announced today the withdrawal of Otter Tail Power Company from the Big Stone II Project, a planned 500-to-600-megawatt coal-fired power plant located near Milbank, South Dakota, and its associated transmission. The remaining participants emphasized that Big Stone II will go forward if sufficient participants can be found to join the project.

Tom Heller, CEO of Missouri River Energy Services, which has the project’s largest share, stated that Big Stone II is still the least-cost, environmentally sound baseload power plant for the remaining project participants. “Big Stone II is a fully permitted project that will provide participants’ customers with least-cost generation for decades. It will improve the emissions profile of the existing Big Stone Plant, and the transmission facilities will be sized to serve the region’s burgeoning wind energy development,” he said.

While Heller conveyed the project’s regret that Otter Tail had to withdraw, he said other potential new participants have expressed interest in joining the project and exploratory discussions are underway.

The current Big Stone II Project participants are Central Minnesota Municipal Power Agency, Heartland Consumers Power District, Missouri River Energy Services and Montana-Dakota Utilities Co.

In the first blurb to come over the wire, below, there’s one phrase that stands out:

have resulted in challenging credit
and equity markets that make proceeding with Big Stone II at this time
untenable for Otter Tail’s customers and shareholders.

I knew that financing was not happening and dependent on a big cash infusion from Bill Gates. Financing anything now is pert near impossible, hence the big cost allocation dust up for CapX lately, and Big Stone II was no exception.  Who on earth, who in their right mind, would invest in a coal plant today?  That falls squarely in the “HOW STUPID CAN WE BE” category, no doubt about it.

I‘ll post more as it turns up.  From Marketwatch:

Otter Tail Power Company Announces Withdrawal From Big Stone II

FERGUS
FALLS, Minn., Sep 11, 2009 (GlobeNewswire via COMTEX) — Otter Tail
Power Company today announced its withdrawal — both as a participating
utility and as the project’s lead developer — from Big Stone II, a
500-to-600-megawatt coal-fired power plant proposed for near Milbank,
South Dakota, with related transmission upgrades in South Dakota and
Minnesota.

According
to Otter Tail Power Company President and CEO Chuck MacFarlane, the
broad economic downturn coupled with a high level of uncertainty
associated with proposed federal climate legislation and existing
federal environmental regulation have resulted in challenging credit
and equity markets that make proceeding with Big Stone II at this time
untenable for Otter Tail’s customers and shareholders.

MacFarlane
explained that Big Stone II contractual agreements require a commitment
to proceed after the project receives all major permits, creating a
financial obligation on each party that agrees to go forward. “Each Big
Stone II participant is in a different position in terms of means and
impact of raising capital and mechanisms for recovering those costs
from customers,” he said. “Given the legislative and regulatory
uncertainties and current economic conditions, Otter Tail Power Company
is unwilling to create a binding financial obligation of approximately
$400 million for its share of the project at this time.”

Big
Stone II had been scheduled to be on line in 2011, and now the plant
would not begin operating until late 2015 at the earliest. MacFarlane
said that the company no longer could delay the project to obtain
greater clarity on — and to mitigate — risks unique to Otter Tail.
Accordingly, Otter Tail chose to withdraw and allow the others to
proceed. “We believe the project is important for the region, both in
terms of adding baseload power and enhancing regional reliability,”
MacFarlane said.

While
Otter Tail Power Company has invested more than $300 million in wind
energy generation during the last three years, MacFarlane added that
dispatchable generation remains an important need for Otter Tail Power
Company’s customers. As a result, over the next three to six months,
Otter Tail Power Company will continue to evaluate other options to
meet its customers’ need for reliable electricity.

MacFarlane
also expressed his company’s gratitude for the backing shown for the
project. “Our company appreciates the support that customers,
regulators, labor, business leaders, and political leadership have
shown the project. We especially thank South Dakota elected officials
and communities within the plant’s vicinity for their commitment,” he
said.

Yeah, he’s got pie on his face, all right… or is it egg…

Alan would put the headline as “PUC HELPS BILL GATES BUILD COAL PLANTS!”

Anyway, the meeting is Tuesday, TOMORROW… and, well, not Bill Gates directly, but his Cascade Investments.   They’re on the PUC agenda tomorrow.   Cascade Investments is providing the $$$ to Otter Tail Power build the Big Stone II coal plant, and without Cascade Investments, the Big Stone II coal plant doesn’t get built.

Here’s the Comment that I just sent in:

Overland Comment on Standstill Agmt – 09-656

Otter Tail Power and Cascade Investments are on the agenda at the PUC, item #5, where they’re asking for approval of a “Standstill Agreement” that would allow them to operate in a way prohibited by state law:

TOMORROW’S PUC AGENDA

PUC Staff Briefing Papers – 8/25/09

Cascade Investments (Bill Gates) is a major investor in Otter Tail Power.  You’d think he’d get that building coal plants is not a good investment these days, but nooooooo, there he goes!  Over 10% of Otter Tail Power and wanting more, apparently!  But wait, Minnesota law limits how investors with over 10% interest and corporations can act:

Minn. Stat. 302A.673

And here’s where it gets interesting.  OES Staff asked what they’re contemplating that would not be possible under Minn. Stat. 302A.673, and they say “business loans.”  But as staff noted, business loans are fine, that’s not an issue, it’s more stock that is an issue!  Yet despite this non-responsive response, Staff recommends the PUC approve OTP’s and Cascade’s agreement.  SAY WHAT??

Otter Tail Power Filing & Standstill Agreement

OES Comment 1

Otter Tail Power Reply

OES Comment 2

PUC Meeting Notice

So tell me, why should OTP get special treatment?  This was an issue that the OES Staff noted was not common, had not even been reviewed before!!!

1)NOTICE SUCKED – look at the service list for OTP’s filing, and PUC Notice

2) OTP is asking for special treatment

3) OES asked questions about why and OTP did not answer them satisfactorily

4)What’s the impact on ratepayers?  On shareholders? (not that PUC can, or should, have any concern about that!)

5) OTP has burden

6) OTP  hasn’t met it

7) Petition should be denied

Makes sense to me…