Minnesota utility regulators on Thursday delayed approving the controversial sale of Great River Energy's 436-mile transmission line that originates in North Dakota, requiring the buyer to provide financial commitments in case the line is abandoned.
Maple Grove-based Great River plans to sell the power line and its massive coal-fired power plant in North Dakota to affiliates of Bismarck-based Rainbow Energy Marketing in a roughly $225 million deal. The line, which Great River will continue operating, runs from the plant to the Twin Cities.
The transfer of the power line from Great River, Minnesota's second largest electricity provider, requires approval by the Minnesota Public Utilities Commission; the coal plant sale is not under the PUC's jurisdiction.
In a 4-1 vote, the PUC is requiring Rainbow to provide more information, particularly a decommissioning plan for the transmission line — and proof of the resources to fund it.
"The central question I have is that is the new company — a subsidiary of a subsidiary — capable of carrying on with this agreement?" PUC Commissioner John Tuma said at Thursday's meeting.
Under the deal, the power line will be owned by Nexus Line, a newly created subsidiary of Rainbow Energy Marketing, which is itself part of Bismarck-based United Energy Corp.
"I am confident that this line will operate for years," Tuma said. But Tuma, a veteran utility regulator, noted that he had not heard of Rainbow Energy until this deal. "No offense, but I don't know who you are."
Rainbow, an energy trader, has been marketing electricity throughout the United States for over 25 years, and has managed, but not owned, power plants. The PUC's decision Thursday will postpone any final approval of the deal by a few months.
Nexus Line's attorney told the PUC the company has "significant concerns" if the deal is delayed several months. But Great River said in a statement it still expects the sale to be done by year's end.
Great River announced in May 2020 it would close Coal Creek, the largest coal-fired power plant in North Dakota, part of a pivot to more wind and natural gas generation. The company said Coal Creek had become such a money loser that it couldn't be sold for even $1.
But the state of North Dakota rallied to save Coal Creek, part of its economically important coal mining and power production industry. After the state stepped in, Great River got over 20 bids for Coal Creek and the transmission line, selling them both for about $225 million — the power line's book value.
Rainbow's plans to run the coal plant hinge on adopting carbon capture technology, an expensive and largely unproven technology aimed at storing greenhouse gas emissions underground.
Great River is a nonprofit wholesale electricity-generating cooperative composed of 28 retail power co-ops. The largest of the co-ops, Connexus Energy, was the only member to vote against the Rainbow deal, with one other abstaining.
Still, many customer-members of the 28 retail co-ops have pelted the PUC with complaints about the power line sale. Overall, the PUC has been inundated by 800-900 public complaints about the power line sale.
Many of them concern an alleged lack of transparency around the deal, as well as the fact that the coal plant will continue to operate. Others said the high-voltage direct current (HVDC) power line — a key component of the regional electrical grid — is worth considerably more than it was sold for.
"Many people I have spoken to had little knowledge of the line transfer, who Rainbow is and the risks involved," John Ihle, a member of Pelican Rapids-based Lake Region Co-op, told the PUC Thursday. "The deal and the communication were handled poorly. It's just not how a cooperative is supposed to work."
PUC Commissioner Joe Sullivan said he sympathized with such complaints, but he noted that the PUC has very limited jurisdiction over power co-ops under Minnesota law.
"They are effectively regulated and controlled by their members," Sullivan said. "The venue [for complaints] is your board rooms."
Sullivan was the sole vote against delaying approval of the deal after a Rainbow executive said the company will put up resources needed for any decommissioning plan.
Priti Patel, Great River's chief transmission officer, told the PUC that the big co-op hewed to its governance principles. "We have been open and transparent throughout this entire process."
Great River's 24-person board is made up of senior leaders of its 28 member retail co-ops, she said, and all of them were well-informed of the deal. Each retail co-op was also given a 77-page power point presentation on the deal, she said.
