Rising Electricity Prices Threaten Mining Jobs, the Iron Range

Minnesota’s soaring electricity prices could become an albatross around the neck of mining companies in Northern Minnesota, which is bad news for communities that depend on the good jobs provided by the mining industry.

Mining companies use an enormous quantity of electricity in their operations for crushing, milling, and processing ores into more marketable materials. In fact, energy bills routinely constitute 30 to 45 percent of the costs incurred by iron-mining firms.

It will only become more expensive for mining companies to do business in the state if the Minnesota Public Utilities Commission (PUC) listens to the recommendation of Administrative Law Judge Jeanne Cochran, who recommended that the agency deny a petition for a gas-fired power plant Minnesota Power wants to build and focus on adding expensive renewable energy, instead.

Building a new natural gas plant is problematic, too, because the $700 million cost of building the new plant will ultimately be passed on to consumers. This is one reason why the Large Power Intervenors, a group of 11 industrial companies that account for two thirds of the electricity sales of Minnesota Power, have opposed the new gas plant, as well.

The Duluth News Tribune reports:

“These businesses would rather be subject to occasional blackouts and pay less for power through a scheme known as interruptible rates, if it helps keep the plant from getting built.”

This simply means these businesses would rather be paid to experience temporary blackouts at their operations than pay the increased cost of electricity around the clock, year round. This means our energy policies are incentivizing companies to shut down, rather than run full steam ahead.

All of this posturing about whether natural gas or renewables are the best choice for Minnesota businesses and families misses the more important point: Minnesota once had an abundance of affordable electricity, but electricity prices have soared, increasing 26 percent faster than the national average, since 2007 when then-governor Tim Pawlenty signed the Next Generation Energy Action (NGEA) into law.

Instead of having affordable electricity generated by coal-fired power plants 24 hours per day, 365 days per year, we are paying businesses to shut down their operations.

Minnesota needs a change in energy policy, and fast. Otherwise, large electricity consumers like iron mines will suffer the consequences.