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Minnesota Power must repay customers $4.5 million for steam pipe rupture at coal-fired plant

A Department of Commerce report found the company “failed to follow ‘good utility practice’ in maintaining and repairing its coal fired power plant.”

Boswell Energy Center
The Boswell Energy Center in Cohasset.
Bob King / 2009 file / Duluth News Tribune

DULUTH — State regulators ordered Minnesota Power to repay customers the $4.5 million it incurred during a 2019 steam pipe rupture and seven-week outage at one of its coal-fired units in Cohasset.

On Thursday, the Minnesota Public Utilities Commission adopted recommendations made by an administrative law judge who said the company should repay customers for the outage costs plus interest because the steam pipes at Boswell Energy Center’s Unit 4 were only inspected every 10 years instead of every five years, which is the industry standard.

Judge Barbara Case wrote in her August report that Minnesota Power “was inconsistent with good utility practice,” echoing an earlier Department of Commerce report that found the company “failed to follow ‘good utility practice’ in maintaining and repairing its coal fired power plant.”

On Feb. 6, 2019, a seam weld on a hot reheat line failed in Unit 4, leaving a 2-foot-long crack “resulting in high-pressure steam release, which necessitated immediate action to begin shutting down Boswell Unit No. 4,” Case wrote.

The unit remained shut down until March 27, 2019, as Minnesota Power found and repaired six other areas and replaced three sections of pipe, Case wrote.

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The company’s 10-year inspection schedule should have been shortened to five years, which is industry standard, Case wrote.

“Minnesota Power should have inspected the hot reheat line more frequently based on the line’s age and potential for catastrophic failure,” Case said.

The company had defended its 10-year inspection program because the area was considered a “low-stress area.” The last inspection prior to the rupture was in 2010, nine years before the incident, and “no actionable defects were discovered at that time,” Case wrote.

“Minnesota Power asserts that it is rare, cost-prohibitive and time consuming to perform a complete inspection of the entire (High Energy Piping) HEP system during a single planned outage,” Case wrote.

Minnesota Power attorney David Moeller defended the company’s inspection schedule during Thursday’s meeting.

“Good utility practice should encompass a range of reasonable behaviors,” Moeller said. “Compliance is not dictated by following only the strictest industry standards.”

But commissioner John Tuma said he didn’t buy the arguments made by the company.

“Clearly there was a violation here and you should have known better, and you should have done something with the weld,” Tuma said. “And I think that was well-established and well-proved.”

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In a statement to the News Tribune, Minnesota spokesperson Amy Rutledge said the company tries to prevent outages and will continue to look at industry practices to improve its operations.

“Minnesota Power has a strong history of consistently following good utility practices. The disagreement here is more about how the definition of good utility practices applies to (Minnesota Power’s) practices, other utilities and consulting with industry experts,” Rutledge said. “The safety of our employees and the reliability of assets is at the core of our mission of providing safe, reliable and affordable power to our customers. And maintaining our operations to prevent outages is a critical component of that.”

A timing on the refund is not yet known, but Rutledge said the average residential customer using 750 kilowatts would see a $4-$5 one-time credit on a monthly bill.

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