A Minnesota administrative judge on Thursday backed a $489 million plan to retrofit the 36-year-old coal-fired Big Stone power plant in South Dakota with an air quality control system (AQCS) rather than scrap the plant.

The 495-MW plant northwest of Big Stone City in Grant County, one of the largest coal-fired plants in the Upper Midwest, was built in 1975 and continues to operate as a baseload facility with load-following capabilities. The plant is jointly owned by three utilities: Otter Tail (53.9%), NorthWestern Energy (23.4%), and Montana-Dakota Utilities Co. (22.7%).

But environmental groups—including the Izaak Walton League of America, Fresh Energy, Sierra Club, and Minnesota Center for Environmental Advocacy—had argued that the AQCS would be too expensive and not effective enough. They pushed for replacing the plant with natural gas–fired generation and renewable energy like wind power.

Otter Trail, the plant’s majority owner, has said that its largest plant served all of its “customers around the clock, and without the opportunity to install this air-quality control system we run the risk of losing that resource."

On Thursday, after reviewing cost estimates, Administrative Law Judge Eric L. Lipman ruled that “the AQCS project and continued operation of the Big Stone Plant is the least cost option over a wide range of sensitivity analyses, including future potential environmental costs.” He concluded that “the replacement of the Big Stone Plant with any form of new generation to produce electrical power would result in significantly higher costs for Otter Tail and its ratepayers.” The AQCS project at Big Stone is “reasonable and prudent” he ruled.

The judge’s decision is not the final word, noted the Minnesota Star Tribune. It is, however, the first "advance determination of prudence" for any power plant project, “a regulatory step authorized by a 2010 Minnesota law to assess whether major pollution-control projects are worth doing,” the newspaper reported. Otter Trail’s case will now be reviewed by the Minnesota Public Utilities Commission and regulators in two other states.

Sources: POWERnews, Minnesota Office of Administrative Hearings, Star Tribune