Generation Retirement Plans
Montana-Dakota Utilities announced in February 2019 that it intends to retire three aging coal-fired electric generation units at two locations within the next two to three years and construct a new simple-cycle natural gas combustion turbine to cost-effectively meet the needs of its 143,000 electric customers located in North Dakota, South Dakota and Montana.
The analysis done while preparing the integrated resource plan (IRP), which the company puts together every two years and files with regulatory commissions, points to the retirement of two aging coal-fired plants and the construction of the natural gas combustion turbine. Low-cost power available on the market, due to low-cost natural gas and increasing wind resources, as well as rising costs to operate these facilities, led to the decision to retire the coal plants. The retirements are expected around the end of March 2021 for Lewis & Clark Station in Sidney, Montana, and around the end of March 2022 for units 1 and 2 at Heskett Station in Mandan, North Dakota.
- Lewis & Clark went online in 1958 with a capacity of 44 MW
- Heskett 1 went online in 1954 with a capacity of 25 megawatts; Heskett 2 went online in 1963 with a capacity of 75 MW
- Fuel source for all three units is lignite coal
- Montana-Dakota intends to build a second natural gas simple cycle plant on the Heskett site to replace the coal-fired generation; the plant will be similar in size to the existing 88-megawatt simple cycle plant that went online in 2014.
Simple-cycle peaking unit under development
The company has begun the development process to construct an 88-megawatt simple-cycle peaking unit at the Heskett Station site. On Aug. 29, 2019, it submitted an advance determination of prudence request with the North Dakota Public Service Commission. See the company’s news release on the filing.
The new generation resource was selected as part of Montana-Dakota’s IRP. The company believes a second combustion turbine at Heskett will be cost-effective because the site has existing infrastructure and natural gas supply that serves an existing combustion unit that went online in 2014. The company also has two natural gas fired combustion engines at the Lewis & Clark Station site that will remain in operation. See the Electric Generation page for more information on the company’s electric generation fleet.
The company’s main objective is to provide customers with safe, reliable and low-cost service. The IRP process helps guide the company in making decisions to meet those objectives. Heskett and Lewis & Clark have met that objective for many years, but the analysis is showing those units are no longer cost competitive for our customers.
The total cost of building and operating a new simple-cycle combustion turbine, coupled with market purchases, is expected to be about half the total cost of continuing to run the Heskett and Lewis & Clark coal-fired units.
Older coal units no longer efficient
The first coal-fired unit at Heskett went online in 1954 and the second unit in 1963. They combine for 100 MW of power. Lewis & Clark went online in 1958 and provides 44 MW of power. If the company meets the proposed retirement timeline, the plants will range in age from 58-67 years old.
The units have served 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. The age of the units, low-cost competition on the market, and the ongoing cost to operate them all have contributed to the units being too expensive to operate much longer.
Integrated resource plan
Montana-Dakota has conducted an IRP for many years. The IRP is a way to consider all resource options reasonably available to meet the end-use customer’s demand for reliable and cost-effective energy, and provide a road map for Montana-Dakota’s future resources. The IRP process includes four areas: Load forecasting, demand-side analysis, supply-side analysis, and integration and risk analysis. A summary of the 2019 IRP study results is provided in the following PDF files:
MISO energy market
Montana-Dakota’s customers also have benefited from low-cost energy available on the MISO market and the long-range forecast calls for similar savings in future years. MISO, or the Midcontinent Independent System Operator, is a not-for-profit member-based organization that ensures reliable, least-cost delivery of electricity across all or parts of 15 U.S. states and one Canadian province. In cooperation with stakeholders, MISO manages approximately 65,000 miles of high-voltage transmission and 200,000 MW of power-generating resources across its footprint.
Frequently Asked Questions
Why are you closing the plants?
When will the plants close?
What is an IRP?
What other factors were used in the IRP process?
What is MISO?
Why a second simple cycle natural gas unit?
Aren’t coal-fired plants generally the most economical option?
What is the cost difference to run Heskett and Lewis & Clark versus a combustion turbine and MISO market purchases?
What is the plan for employees?
Are customers at risk for potential price spikes in the MISO market?
Why did the company make big investments in the coal plants just a short time ago if the plants were aging and not economical?
Could the plants retire sooner than the targeted dates?
Will your decision force the closure of Westmoreland coal mines?
Are your recent investments in wind the reason for these retirements?
Did you try to sell the plants / would you be willing to sell the plants?
What is the time frame for the new simple cycle plant?
Are you getting out of coal completely?
In regard to energy, the portfolio would change as follows: