Sen. Tomassoni passes bill strengthening Iron Range biomass industry
ST. PAUL, Minn. – Today, the Senate passed legislation strengthening the diversification of the Iron Range’s economy and energy production services. Senator David Tomassoni (DFL-Chisholm) authored the bill directing Xcel Energy to negotiate a contract with the Laurentian Energy Authority, a wood-burning biomass facility owned by Hibbing and Virginia, and add a fuel adjustment clause to the agreement.
Since 2007, the Laurentian Energy Authority has annually provided Xcel Energy with 35 megawatts of renewable biomass. This biomass production meets Xcel’s legislatively mandated biomass requirement enacted in 1994. The Laurentian Energy Authority is one of three biomass producers contracted by Xcel; however, it is the only one who’s current agreement does not include a fuel adjustment clause.
“When Virginia and Hibbing first agreed to produce biomass for Xcel, the communities invested $90 million into the project. However, because of their contract’s fixed fuel price, the facility has had a hard time making adjustments due to changing operating costs,” said Sen. Tomassoni. “The legislation today strengthens the Laurentian Energy Authority by allowing it to adjust its prices alongside changing fuel costs instead of operating on the current 20-year price guideline.”
The Laurentian Energy Authority was created for the public utilities of Virginia and Hibbing. This joint venture, passed by the Legislature in 2005, allowed the cities’ coal burning municipal power plants to convert over to biomass production. “One of the main reasons we made the conversion was to help diversify the Iron Range’s economy and create new clean energy sources,” continued Sen. Tomassoni. “We made a conscience decision to realize that the resources fueling our economy, mining and logging, may not always be around. It was time to look at other options and the Laurentian Energy Authority was one of them.”
The initial 2005 investments saved about 150 jobs at the biomass facility and maintained an additional 47 logging jobs. Adjusting the contract between Xcel and the Laurentian Energy Authority, as today’s bill directs, will help keep the facility operating and strengthen the Iron Range economy.