A19-0704

This opinion is nonprecedential except as provided by
Minn. R. Civ. App. P. 136.01, subd. 1(c).

STATE OF MINNESOTA
IN COURT OF APPEALS
A19-0688
A19-0704

In the Matter of Minnesota Power’s Petition for
Approval of the EnergyForward Resource Package.

Filed August 23, 2021
Affirmed
Bjorkman, Judge

Public Utilities Commission
File No. E-015/AI-17-568

Evan J. Mulholland, Joy R. Anderson, Minnesota Center for Environmental Advocacy,
St. Paul, Minnesota (for relators Minnesota Center for Environmental Advocacy, Union of
Concerned Scientists, and Sierra Club)

Paul C. Blackburn, Honor the Earth, Callaway, Minnesota; and

Frank Bibeau, Deer River, Minnesota (for relator Honor the Earth)

Keith Ellison, Attorney General , Jason Marisam, Jeffrey Boman, Assistant Attorneys
General, St. Paul, Minnesota (for respondent Minnesota Public Utilities Commission)

Michael C, Krikava, Elizabeth M. Brama, Taft Stettinius & Hollister LLP , Minneapolis,
Minnesota; and

David R. Moeller, Minnesota Power, Duluth, Minnesota (for respondent Minnesota Power)

Christine Hottinger, Minneapolis, Minnesota (for amicus curiae Friends of the Climate)

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Considered and decided by Bjorkman, Presiding Judge; Hooten, Judge; and
Klaphake, Judge.
NONPRECEDENTIAL OPINION
BJORKMAN, Judge
On remand from the Minnesota Supreme Court, relators reiterate their challenge to
an order by respondent -commission approving respondent -utility’s affiliated -interest
agreements related to a proposed natural -gas power plant. Relators argue that substantial
evidence does not support the commission’s determinations that (1) the power plant is
needed and (2) the power plant serves the public interest better than a renewable-resource
alternative. We affirm.
FACTS
In July 2017, respondent Minnesota Power petitioned respondent Minnesota Public
Utilities Commission (the commission) for approval of its Energy Forward Resource
Package. The petition points to capacity and energy 1 needs contemplated in Minnesota
Power’s commission-approved 2015 integrated resource plan and proposes to add new
wind, solar, and natural-gas generation resources. The focus of this appeal is t he natural-
gas resource—a 525 MW natural-gas combined-cycle power plant in Superior, Wisconsin,
known as the Nemadji Trail Energy Center (NTEC) . Minnesota Power seeks to construct

 Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to
Minn. Const. art. VI, § 10.

1 Capacity and energy are related but distinct concepts. Capacity is a generator’s maximum
output, measured in megawatts (MW). Energy is the amount of electricity that a generator
produces over a period of time, measured in megawatt-hours (MWh).
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NTEC, operate it, and purchase half of its capacity and associated energy, through
agreements with its Wisconsin affiliate, South Shore Energy, LLC. Because it is a public
utility, Minnesota Power must obtain the commission’s approval of the affiliated -interest
agreements. Minn. Stat. § 216B.48, subd. 3 (2020).
The commission approved Minnesota Power’s proposed wind and solar resources
and referred the NTEC affiliated -interest agreements for a contested -case proceeding
before an administrative-law judge (ALJ). The commission required Minnesota Power to
show that NTEC is “needed and reasonable,” providing that the determination of need and
reasonableness would be based on “all relevant factors,” including (1) “[a]n updated
forecast of demand ”; (2) costs, “including socioeconomic and environmental costs”; and
(3) alternatives to some or all of NTEC’s energy and capacity. It also incorporated the
“renewable resource requirements” of the resource -planning and certificate -of-need
statutes, Minn. Stat. §§ 216B.2422, .243, subd. 3a (2020).
During the contested case, th e ALJ received thousands of pages of testimony and
documentary evidence. Minnesota Power presented evidence that it will experience a n
increasing need for capacity and energy in the mid -2020s, substantially because its coal-
fired generators are being reti red. Using the Strategist computer program, Minnesota
Power modeled hundreds of scenarios to assess the suitability of different resource
alternatives for meeting those projected needs. And it asserted that NTEC “is the best and
least cost resource optio n for meeting its future energy needs in the mid -2020s because
NTEC was chosen in the vast majority of [modeled] scenarios.” Minnesota Power also
presented evidence that its growing reliance on wind generation creates a need for
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“dispatchable capacity and flexible energy to mitigate and balance exposure to energy
markets”—a need that NTEC addresses.
The Minnesota Department of Commerce (the department) also analyzed Minnesota
Power’s projecte d capacity and energy needs and used Strategist to model resource
alternatives for meeting those needs. The department’s 300 modeled scenarios consistently
identified NTEC as the least -cost option. And the department agreed that NTEC would
provide a dispatchable resource that could mitigate exposure to price spikes.
In response, a group of “clean energy organizations” 2 challenged the inputs that
Minnesota Power and the department used in their modeling . The group took particular
aim at the inputs used with respect to when NTEC would be available as a resourc e, the
cost of wind and solar resources, and the prospects for enhancing load management3 and
energy efficiency.
The ALJ also received more than 1,500 written public comments. Most commenters
opposed NTEC, citing environmental concerns. Relator Honor th e Earth submitted
comments opposing NTEC and asserting that an environmental impact statement (EIS) was
needed before the commission could approve the NTEC affiliated-interest agreements.
The ALJ issued a report detailing and analyzing the evidence, the parties’
arguments, and the public comments . She declined to rule on the need for an EIS,

2 The group included r elators Minnesota Center for Environmental Advocacy and Sierra
Club.

3 Load management, or demand response, refers to incenti ve payments or other price
signals that influence customer usage. For example, customers may agree to reduce their
usage at times of high demand in exchange for a discounted electricity rate.
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reasoning that it was outside the scope of the contested case. But she agreed with the clean
energy organizations that Minnesot a Power’s and the department’s modeling inputs were
unreasonable. She therefore concluded that Minnesota Power failed to demonstrate that
NTEC is needed to address anticipated shortfalls in capacity, energy, or dispatchability,
and recommended that the commission not approve the affiliated-interest agreements. But
she noted that, if the commission concluded NTEC is “needed and reasonable,” she would
recommend that the commission find the affiliated-interest agreements are in the public
interest.
The parti es filed written exceptions to the ALJ’s report. In its exceptions, the
department urged the commission to reject the ALJ’s assessment that its modeling was
unreasonable. It explained that “certain individual inputs” in its modeling, such as those
for load management, could have been “improved” but would not have materially affected
the results because the results favoring NTEC did not substantially rely on those particular
inputs. It emphasized that developing a range of inputs to address the uncertaint ies of
resource planning is more important than any single input. But it also explained its reasons
for selecting the challenged inputs—it treated NTEC as available in 2025 because that is
the proposed timeline for that specific resource but also modeled a similar generic resource
in other years; it accounted for a range of load-management possibilities by using a
spectrum of demand-forecast inputs; and it accounted for a range of energy -efficiency
possibilities in a similar manner. Minnesota Power filed similar exceptions, urging that its
own analysis and that of the department demonstrate that NTEC is needed and reasonable.
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Honor the Earth filed a petition requesting that an environmental assessment
worksheet (EAW) be prepared before the commission decided whether to approve the
affiliated-interest agreements.
The commission conducted a two -day hearing on whether to order an EAW and
whether to approve the affiliated-interest agreements. It also independently examined the
record and evaluated the parties’ exceptions. In a written decision, the commission denied
the EAW petition and approved the affiliated-interest agreements with conditions.
Regarding the agreements, the commission explained that it concurred in the ALJ’s
findings “as modified” by the department’s exceptions . Specifically, the commission
found that the department’s analysis was reasonable and “sufficiently robust . . . for
purposes of determining whether the NTEC energy purchase is needed and reasonable.”
And it relied on that analysis to conclude that “NTEC, in conjunction with the [wind and
solar] elements of the Energy Forward resource package, is a cost -effective resource for
meeting Minnesota Power’s energy needs in the wake of the . . . retirement of 700 MW of
baseload coal-fired generation.” It also stated that “[e]ven if Minnesota Power experiences
no capacity needs, it will be purchasing energy from the [regional] market, and NTEC
provides a hedge against spikes in market prices and reduces overall costs by providing an
economic source of energy.”
Relators Minnesota Center for Environmental Advocacy , Union of Concerned
Scientists, and Sierra Club (collectively MCEA) and Honor the Earth filed separate
appeals, which we consolidated. Both appeals challenged the denial of the EAW petition,
and MCEA also challenged the a pproval of the affiliated -interest agreements. We
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concluded that the commission erred by denying the EAW petition and reversed the
approval of the affiliated-interest agreements on that basis. In re Minn. Power’s Petition,
938 N.W.2d 843, 853 (Minn. App. 2019). The Minnesota Supreme Court reversed our
decision and remanded for us to address MCEA’s remaining challenge —whether the
commission’s approval of the affiliated-interest agreements “was supported by substantial
evidence.” In re Minn. Power’s Petition, 958 N.W.2d 339, 350 (Minn. 2021).
DECISION
The commission’s approval of an affiliated-interest agreement is subject to judicial
review by writ of certiorari. Minn. Stat. § 216B.52, subd. 1 (20 20). We will reverse a
decision of the commission if it lacks substantial evidentiary support. Minn. Stat. § 14.69
(2020); e.g., In re Applications of Enbridge Energy, 930 N.W.2d 12, 28 (Minn. App. 2019),
review denied (Minn. Sept. 17, 2019) . But the party challenging the decision bears the
burden of proof. Minn. Power, 958 N.W.2d at 344. And it is a heavy one , because the
separation-of-powers doctrine mandates a deferential standard of review. In re Cities of
Annandale & Maple Lake NPDES/SDS Permit Issuance , 731 N.W.2d 502, 513 (Minn.
2007). Accordingly, we afford the commission’s decision “a presumption of correctness.”
Minn. Power, 958 N.W.2d at 343-44. When reviewing a decision’s evidentiary support,
we defer to the commission’s “ conclusions regarding conflicts in testimony, the weight
given to expert testimony and the inferences to be drawn from testimony.” In re Wazwaz,
943 N.W.2d 212, 216 (Minn. App. 2020) (quotation omitted), review denied (Minn. June
30, 2020). And we defer to the commission’s expertise and “special knowledge in its own
technical field.” In re Excelsior Energy, Inc. , 782 N.W.2d 282, 289 (Minn. App. 2010) .
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We will affirm the decision as substantially supported if the record as a whole contains
enough relevant evidence that a reasonable mind might accept it as adequate to support the
decision. Enbridge Energy, 930 N.W.2d at 21.
When the commission decides whether to approve an agreement between a
Minnesota utility and an affiliate , the commission ordinarily must determine whether the
agreement is “reasonable and consistent with the public interest.” Minn. Stat. § 216B.48,
subd. 3. As Minnesota Power has acknowledged, the NTEC affiliated-interest agreements
are not ordinary—they enable Minnesota Power to construct and operate a new power
plant. If Minnesota Power were doing so in Minnesota rather than Wisconsin, and directly
rather than through its affiliate, it would be required to obtain a certificate of need , Minn.
Stat. § 216B.243, subd. 2 (2020), and to justify adding the power plant to its resource plan
instead of renewable-resource alternatives, Minn. Stat. § 216B.2422, subd. 4. Recognizing
this, the commission crafted a unique standard for assessing the NTEC affiliated -interest
agreements that incorporates (1) a “need” requirement and (2) the “renewable resource
requirements” of the certificate-of-need and resource -planning statutes. MCEA does not
quarrel with this standard but challenges the commission’s decisions on both elements.
I. Substantial evidence support s the commission’s de termination that NTEC is
needed.

The commission defined need to encompass “all relevant factors,” including three
mandatory factors : (1) “[a]n updated forecast of demand ”; (2) costs, “including
socioeconomic and environmental costs”; and (3) alternatives to some or all of the energy
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and capacity from the proposed power plant. 4 Minnesota Power and the department
analyzed all three , both concluding that NTEC is needed. The commission adopted the
department’s analysis and determined that NTEC is needed as a low-cost source of energy
and that its dispatchable capacity provides a hedge against market pricing. MCEA
challenges both aspects of the commission’s determination.
A. Low-Cost Energy
MCEA principally disputes the commission’s determination that Minnesota Power
needs NTEC as an energy source . It argues that this determination is flawed because the
commission relied on the department’s analysis, which assumed—but did not establish—
the need for a resource of NTEC’s size and type in 2025, when Minnesota Power proposes
to add the power plant to its resource plan . This argument is unavailing . We look to the
entire record to determine whether substantial evidence support s the commission’s
decision. Minn. Stat. § 14.69(e); Enbridge Energy , 930 N.W.2d at 21. While the
commission chose to focus on the department’s analysis, careful review of the record as a
whole reveals ample evidence that NTEC’s energy source addresses reasonably forecasted
demand, is cost-effective, and is a better option than the alternatives.
Demand
Minnesota Power’s demand forecast demonstrates a need for new generation
resources. The company’s vice president of strategy and planning , Julie Pierce, testified

4 This standard echoes some of the criteria applicable in a certificate -of-need proceeding
under Minn. Stat. § 216B.243, subd. 3 (2020). But the certificate-of-need statute does not
apply to affiliated-interest agreements.
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that the retirement of coal resources removes 700 MW of baseload capacity and substantial
energy production from its resource portfolio. The commission noted as much in
approving Minnesota Power’s 2015 integrated resource plan, and MCEA does not dispute
this loss—only what Minnesota Power needs to do to address it. Pierce also testified that,
because the loss coincides with projected load growth, Minnesota Power anticipates a
capacity deficit of 300 MW by 2025 and growing energy needs of about 1 million MWh
annually by 2020, increas ing to 2.4 million MWh by 2031. MCEA contends that
improvements in energy efficiency and load management could substantially mitigate this
need. But the department explained that these demand-side improvements are insufficient
to remedy the shortfall bec ause Minnesota Power has “little control” over energy
efficiency, customers have limited “tolerance for interruption ,” and load management
cannot reduce energy consumption “to a significant degree.” As a result, the record
supports that Minnesota Power ne eds to add generation resources to replace the retiring
ones.
Cost Effectiveness
Record evidence also supports the commission’s finding that NTEC is a cost -
efficient replacement option. Minnesota P ower and the department used the Strategist
modeling program to compare the costs of different resource combinations and identify
cost impacts depending on various factors . They each modeled hundreds of resource
combinations to determine the cost of each combination over time. In do ing so, they
included the commission-approved environmental costs for each resource. See Minn. Stat.
§ 216B.2422, subd. 3(a) (requiring the commission to quantify environmental costs
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associated with each “method of electricity generation,” and utilities to use those values to
evaluate resource options) . Even after accounting for those environmental costs, t he
models showed NTEC is a low-cost source of energy.
Alternatives
Finally, record evidence supports the commission’s finding that NTEC is a better
option than the alternatives. In their Strategist modeling, Minnesota Power and the
department analyzed numerous alternative s for addressing forecasted demand. They
considered energy efficiency and modeled combinations of load management and various
resource additions, including NTEC; other natural -gas resources of smaller, larger, and
similar size ; storage; wind resources; and solar resources. These models consistently
identified NTEC as the least-cost option for addressing Minnesota Power’s energy needs.
MCEA contends that the department’s modeling, on which the commission relied,
is flawed. It does not challenge the department’s use of Strategist or the reliability of that
program generally; indeed, the clean energy organizations used the same program to run
eight of their own models. But MCEA emphasizes that the program’s results depend on
the inputs used and contends the department’s inputs were unreasonable with respect to
timing and non-generation alternatives. The MCEA’s argument does not persuade us for
two reasons.
First, MCEA asserts that the department merely assumed that NTEC would become
available in 2025. But as t he commission explained , that assumption w as reasonable
because 2025 is when Minnesota Power proposes to complete construction and make
NTEC available, and “there is noth ing in the record to suggest that NTEC is available in
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any other year.” The evidence also supports using 2025 as the year when NTEC will be
operational because that timing corresponds to Minnesota Power ’s increased need for
capacity and energy in the mid -2020s. And any need to consider the suitability of NTEC
in other years was addressed by the department’s inclusion in its model ing of a generic
200 MW natural-gas resource that mimicked NTEC.
Second, MCEA contends that the modeling does not sufficiently account for non-
generation alternatives like load management and energy efficiency. The commission, like
the department, recognized that the modeling could have included more such inputs. But
the commission agreed with the department that the process of assessing resource options
is “necessarily imprecise” and determined that the already wide range of load-management
and energy -efficiency options in the extant modeling presented a reasonable basis for
evaluating need. We defer to the commission’s expertise in such matters. Excelsior
Energy, 782 N.W.2d at 289.
B. Dispatchable Capacity
MCEA also points to the commis sion’s determination that NTEC provides
dispatchable capacity that serves as a hedge against market price risk , arguing that
dispatchability does not itself establish the need for NTEC. But the commission ’s
conclusion that NTEC is needed did not turn solely on dispatchability. Rather, the
commission reasoned that NTEC’s dispatchability is a relevant factor that contributes to
the conclusion that the power plant is needed.
The record supports th e commissi on’s r easoning. Pierce testified that w ind and
solar resources make up an increasingly substantial portion of Minnesota Power’s resource
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portfolio—up from 5% in 2005 to around 30% even before the EnergyForward additions.
She and Dr. Steve Rakow, the department’s public utilities analyst coordinator, both
explained that wind and solar capacity does not always translate into available energy
because those resources are unpredictable and uncontrol lable—the wind is not always
blowing, and the sun is not a lways shining . See Minn. Stat. § 216B.2422, subd. 4 (3)
(recognizing that “ the intermittent nature of renewable energy facilities ” can impact the
cost of energy). In fact, as Minnesota Power illustrated in its EnergyForward petition, the
output from those resources can ebb significantly even over the course of a single day.
When that happens, or customer demand increases, Minnesota Power must increase output
from more reliable resources, like coal or natural-gas generators, or purchase power on the
regional market. Further, Minnesota Power’s consulting expert on energy and the
environment, Stephen Brick, explained that adding more wind resources instead of NTEC
leaves the company doubly vulnerable to market pricing, both to sell surplus energy into
the market when prices are low and to buy energy from the market when prices are high.
This evidence supports the commission’s finding that NTEC provides Minnesota Power “a
hedge against spikes in market prices.” And that finding supports the determination that
NTEC is needed.
II. Substantial evidence support s the commission’s determination that NTEC
serves the public interest better than a renewable-resource alternative.

The commission incorporated two similar “renewable energy requirements” in
determining whether to approve the NTEC affiliated -interest agreements. The first
requires a utility to demonstrate that it “has explored the possibility of generating power
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by means of renewable energy sources and has demonstrated that the alternative selected
is less expensive (including environmental costs) than power generated by a renewable
energy source .” Minn. Stat. § 216B.243, subd. 3a. The second requires a utility to
demonstrate “that a renewable energy facility is not in the public interest .” Minn. Stat.
§ 216B.2422, subd. 4. In weighing public interest, the commission considers: (1) whether
the utility’s resource plan, as a whole, helps the utility achieve renewable-energy standards;
(2) “impacts on local and regional grid reliability”; (3) impacts on the utility and ratepayers
“resulting from the intermittent nature of renewable energy facilities, including but not
limited to the costs of purchasing wholes ale electricity in the market and the costs of
providing ancillary services”; and (4) “utility and ratepayer impacts resulting from reduced
exposure to fuel price volatility, changes in transmission costs, portfolio diversification,
and environmental compliance costs.” Id.
In applying these requirements to NTEC, the commission again looked to the
department’s analysis. It determined that “by comparing NTEC’s impact on overall system
costs to that of wind and solar resources, the Department’s analysis me t the renewable -
resource requirements of Minn. Stat. §§ 216B.2422 and 216B.243, subd. 3a.”
MCEA argues that this conclusion lacks sufficient detail and evidentiary support.
We disagree . While the conclusion is concise, it nonetheless communicates the
commission’s reasoning—a wind or solar alternative is not in the public interest because
the comprehensive costs for such resources are higher than those associated with NTEC.
And its decision as a whole demonstrates that it considered the relevant factors a nd
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extensive evidence adduced during the contested case and before the commission in
arriving at that conclusion.
The commission explained that the Energy Forward package, including NTEC and
the new wind and solar resources, moves Minnesota Power’s resourc e plan increasingly
toward renewable resources and away from the coal resources that are “the biggest obstacle
to Minnesota Power achieving state emission -reduction goals in the long term.” 5 The
commission also discussed the greater reliability NTEC provides, as opposed to wind or
solar alternatives, and the costs that Minnesota Power would incur if it added still more of
those intermittent resources instead of NTEC. And the commission emphasized the role
NTEC can play in supporting an overall more diverse , environmentally conscious, and
lower-cost portfolio of resources.
The record, including to a limited extent the input the commission received at its
two-day hearing,6 supports the conclusion that NTEC serves the public interest better than
renewable-resource alternatives. As discussed above, Minnesota Power and the
department offered extensive evidence and analyses showing that the transition away from

5 To ensure further movement away from coal resources, the commission condi tioned its
approval of the NTEC affiliated -interest agreements on Minnesota Power providing a
detailed plan for retiring all of its remaining coal-fired generators by 2035.

6 MCEA contends the commission erred by receiving “material new testimonial evidence”
after the contested case, pointing to Dr. Rakow’s statements at the commission’s two-day
hearing. We discern no error. Where, as here, the commission renders the final decision,
the contested-case record does not close until after the parties have presented argument to
the commission. Minn. Stat. § 14.61, subd. 2 (2020). Further, MCEA did not object to
Dr. Rakow’s statements, which, like the extensive statements of the other parties’
representatives at the hearing, merely clarified evidence already in the record.
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coal and toward intermittent renewable resources impairs reliability and could increase
reliance on energy markets, thereby increasing costs. Their analyses also demonstrated
that NTEC addresses these concerns, providing a more reliable and lower cost (including
environmental costs) source of energy than the eq uivalent renewable resources.
Accordingly, substantial evidence supports the commission’s determination that NTEC
best serves the public interest.
Affirmed.