MDU Will Close Coal Units in Montana, North Dakota

A subsidiary of MDU Resources Group on February 19 said it plans to close three of its coal-fired units at power plants in Montana and North Dakota. Montana-Dakota Utilities said it would partly replace the lost generation with a new simple-cycle gas-fired unit at the North Dakota site.

The company on Tuesday said a biannual review of its operations, done as part of the preparation for its latest integrated resource plan (IRP), shows it would be more cost-effective for the utility to retire the coal units and build a new gas plant. It said low-cost natural gas, and increasing wind power resources, are more financially viable than continuing to operate the coal plants, whose operational costs continue to rise.

Montana-Dakota Utilities in a news release said it expects to retire the 44-MW coal-fired Lewis & Clark Station in Sidney, Montana by year-end 2020. It plans to retire coal-fired Units 1 and 2 at the 100-MW Heskett Station in Mandan, North Dakota, by year-end 2021. The utility said the closure dates could be impacted by a bankruptcy proceeding involving Westmoreland Coal, the company’s coal supplier, a situation that could impact many coal-fired units in the Western U.S.

The utility said it has begun developing an 88-MW gas-fired peaking unit at the Heskett Station site. The site has infrastructure and natural gas supply that serves an existing 88-MW gas-fired unit at the site that came online in 2014. The company in 2015 added 19 MW of gas-fired generation capacity from two internal combustion engines at the Lewis & Clark plant.

“Our main objective is to provide our customers with safe, reliable and low-cost service,” said Nicole Kivisto, president and CEO of Montana-Dakota, in a statement. “The IRP process helps guide us in making decisions to meet those objectives. Heskett and Lewis & Clark have met that objective for many years, but our analysis is showing those units are no longer cost competitive for our customers.”

The utility said its analysis shows the total cost of building and operating a new simple-cycle combustion turbine, along with its cost for gas feedstock, would be about half the cost of continuing to operate the three coal-fired units.

The first coal-fired unit at Heskett began operating in 1954. It has a 25-MW generation capacity. The second unit, with 75 MW of capacity, came online in 1963. The coal-fired unit at the Lewis & Clark Station began operating in 1958.

“The plants have served our customers well, providing low-cost energy for many years, operating roughly twice as long as expected when they were constructed in the mid-1950s and early 1960s,” Kivisto said. “The age of the plants, low-cost competition on the market, and the ongoing cost to operate the plants all have contributed to the plants being too expensive to operate much longer.”

Montana-Dakota in its news release said 77 people are employed at the coal plants scheduled to be retired. It said that after the coal units are closed, about 10 workers will be needed to operate the two gas-fired combustion turbine units at Heskett, and the two gas-fired reciprocating internal combustion engines at Lewis & Clark.

Darrell Proctor is a POWER associate editor (@DarrellProctor1, @POWERmagazine).