Cohasset proposes $300 million power plant

A Texas company wants to build a natural gas peaking plant in Cohasset, MN, similar to this one seen in Florida. (Daniel Oines, Flickr CC)

A Texas company wants to build a natural gas peaking plant in Cohasset, MN, similar to this one seen in Florida. (Daniel Oines, Flickr CC)

UPDATE: New information offers more clarity to this story. Cohasset City Administrator Max Peters said that the city backed the Navosota project as a matter of routine for potential buyers for lots in its industrial park. Though there are other bidders for this project in the Upper Midwest, this is the only one looking at Cohasset. He would not confirm who Navasota was building the project for, but as Business North points out Minnesota Power is putting out bids for a similarly-sized natural gas power plant in its long range energy plan.

In other words, we have every reason to believe that this is not a competing company, but in fact part of Minnesota Power’s plan to reduce its carbon footprint over time. Navasota is, as described, a company that shepherds projects through early stage planning, development and permitting. Usually they then sell the final product to a utility company.

Peters said the current understanding is that the land will be sold for $15,000/acre. They will then seek a 50 percent tax abatement for five years.

***This is the original piece first published Nov. 30:***

Cohasset has been a power plant town for as long as most folks in this corner of Northern Minnesota can remember. For 60 years, that’s where Minnesota Power has operated the Clay Boswell plant, a 1,065-megawatt coal-fired energy center about six miles west of Grand Rapids.

Boswell produces base load power for the grid, but is also one of the principle sources of power for mines and industrial customers across the Iron Range. Over the past decade, Minnesota Power has committed hundreds of millions of dollars to environmental upgrades at Clay Boswell.

That’s why many a head was scratched this Sunday when the Grand Rapids Herald-Review reported on last week’s meeting of the Cohasset City Council. The council backed a $300 million project for what they’re calling the Itasca Energy Center, part of the city’s industrial park. The project is a natural gas-fired peaking plant proposed by a Texas company called Navasota Energy.

The story recounts the city proclamation’s superlatives and lofty goals. More than 350 construction workers could be employed in building the new plant. Yet the plant itself would only require 20 full time employees. Mayor Greg Hagy’s letter explained that there’d be unspecified spin-off jobs too, of course, due to something called the “economic multiplier effect.”

This is where I would point out that a peaking plant like this is essentially a giant jet engine set to run when base load power is in high demand.

Navasota seems to be a company that starts projects, navigates them through financial and regulatory challenges, and then sells the finished project to existing power companies. So, will this peaking plant become an independent competitor to Minnesota Power? Or will it just end up being sold to Minnesota Power?

I’d also like to know what the prospects of financing a $300 million project in Northern Minnesota right now? If built, what would the effect be on the coal-powered units at Boswell? It could easily be argued that there is an environmental benefit from converting power generation from coal to natural gas, but certainly not an argument that doing so would maintain the same level of employment in Cohasset.

The Cohasset letter mentions working with Itasca County on a “tax abatement plan” for the project. What does that mean? The Cohasset council held a closed session before last week’s meeting to discuss the sale of property in the industrial park to a potential tenant. Is that the same project?

And why is a company that seems wholly focused on operating plants in Texas suddenly proposing a plant here in Northern Minnesota? Don’t get me wrong, Texas investment is welcome here. But this seems an unusual move.

Public sector bumbling on power plants has burned Northern Minnesota before, in fact very recently. Let’s not repeat any mistakes.

In any event, the mere prospect of a new project was all the Cohasset council needed to OK the letter of support. The vote of support was unanimous, except for Councilor Dennis Blankenship who is still somehow allowed to attend meetings via Skype from Palm Springs, California. His connection went out, so he was not part of the proceeding.

The mayor says they will find out by February if Navasota is planning to locate in Cohasset.

Navasota, by the way, is the name of several things in Texas, including a town that was declared the “Texas Capital of the Blues.” “Navasota” means “Muddy Water” in the local native language, though documentation of this claim is dubious.

Once again, why write a novel when the facts come in with such literary quality?

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