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New Ulm dodged a coal bullet

December 7, 2012
The Journal

To the editor:

Concerning Canadian Pacific Railway's decision to "mothball" the plan to extend its Dakota, Minnesota & Eastern Railroad line 280 miles from Rapid City, SD, to Gillette, WY, and the surrounding Powder River Basin, both the Associated Press story and your editorial failed to mention the true deciding factor.

This was the Feb. 26, 2007, decision by Federal Railroad Administrator Joseph H. Boardman to deny DM&E's application for a $2.3 billion (originally, $4 billion) federally-guaranteed loan, finding it to be an unacceptable risk to federal taxpayers. That this denial came during the business-friendly Administration of President George W. Bush speaks even more poorly as to the soundness of the DM&E plan.

This FRA denial is apparently the "regulatory red tape" referred to in your editorial.

As the decision pertained to New Ulm, the Long-Term Power Committee had voted 10-0 on Apr. 25, 2006, to retrofit Boiler No. 4 to again burn coal, the coal to come by way of the 280-mile extension to the Powder River Basin. New Ulm's gamble was that the DM&E loan application would be approved by the FRA, meaning that the Wyoming coal could be delivered to New Ulm's doorstep at $20/ton.

But the FRA denial meant that the Wyoming coal would now have to move through North Dakota, thereby doubling the price for New Ulm to $40/ton. Nevertheless, the Public Utilities Commission pressed ahead with its Boiler No. 4 plan.

Once the PUC had finally submitted its permit application to the Minnesota Pollution Control Agency, a group known as New Ulm Citizens for Clean Energy was formed at a Jun. 29, 2010, meeting at the New Ulm Public Library. This group, with the help of the North Star Chapter of the Sierra Club, then began to voice opposition to the Boiler No. 4 plan on environmental as well as economic grounds.

But what finally derailed the Boiler No. 4 plan consisted not of environmental concerns, but rather the introduction of fracking. This new technology led to a precipitous drop in the price of natural gas, thereby making coal no longer economically feasible as the fuel of choice for Boiler No. 4. Faced with this new economic reality, the PUC "indefinitely suspended" its Boiler No. 4 plan on Sept. 27, 2011, and thereby saved New Ulm ratepayers from a $28 million boondoggle. While this plan is still "on the table", one can only hope that the PUC's suspension will someday become permanent.

Returning to the original DM&E plan, this was simply another case of a private business seeking to feed at the public trough. Its successor, the Canadian Pacific, has likewise been unable to secure funding for the 280-mile extension. Accordingly, the real winner in all of this is the American taxpayer.

Randall E. Kroening

New Ulm Citizens

for Clean Energy

New Ulm



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