State regulators were in Duluth on Thursday weighing Minnesota Power's proposed $700 million natural-gas plant in Superior.

Supporters and opponents of the proposed Nemadji Trail Energy Center packed into the Duluth City Council Chambers as the five-member Public Utilities Commission questioned company and state officials about the project's need and public interest - requirements the project must meet for the PUC to sign off on it.

Duluth-based Minnesota Power wants to build the 550-megawatt plant with La Crosse-based Dairyland Power Cooperative on a plot of land between Enbridge Energy's Superior terminal and the Nemadji River.

Although the PUC was expected to make a decision Thursday, a last-minute filing by the Minnesota Environmental Quality Board on Tuesday asked the PUC to consider an additional environmental review after Honor the Earth, a Native-American-led environmental group, called for the review in an Oct. 8 petition.

PUC commissioners spent Thursday's hearing examining the data used to determine the plant's need, but are expected to consider the environmental review at an Oct. 28 meeting.

Minnesota Power argues the natural-gas plant would help supplement its push to more renewable energy as it could provide energy when demand is high but energy generated by solar and wind is low.

"If NTEC is approved by the commission and moves forward, Minnesota Power would have 7 percent of its system as gas and we would add a true dispatchable resource to our mix," David Moeller, senior attorney at Allete, Minnesota Power's parent company, said in his opening statements Thursday morning.

When paired with the company's growing solar and wind electricity sources, the company maintains the plant would help provide energy "when the wind isn't blowing and sun isn't shining."

"That sound byte is not supported by the record," Leigh Currie, an attorney with the Minnesota Center for Environmental Advocacy, said during her opening statement

Opponents of the project argue that while natural-gas burns cleaner than other fossil fuels like coal, it is not a clean alternative, especially when considering all the methane released in the extraction process.

Minnesota Power said the project should help them reach a 44 percent renewable energy goal by 2025. The company says it is at 30 percent.

Currie, who was representing clean energy organizations, including the Sierra Club, said the PUC should adopt findings of Administrative Law Judge Jeanne M. Cochran.

In July, Cochran said the project is not needed or in the public interest, and should be rejected by the PUC.

"Minnesota Power has failed to establish that approval of these affiliated interest agreements is consistent with the public interest because it has failed to demonstrate that the underlying 250 (megawatt) NTEC purchase is needed and reasonable," Cochran wrote in her non-binding recommendation.

Cost

Critics of the project argue the construction of the $700 million project - split 50-50 with Dairyland Power Cooperative - would fall on the backs of customers with higher rates.

If the plant was built today, it would increase rates by 2 percent, company officials told the Duluth News Tribune this week. For an average monthly Minnesota Power bill of $87, that's about $1.74.

But for 11 Northland mining, paper and energy companies, which consume two-thirds of Minnesota Power's electricity, a potential rate increase is cause for concern - electricity costs can be the companies' largest variable cost, said Sarah Johnson-Philips, the attorney representing the companies.

Commissioner Katie Sieben asked Johnson Philips what impact that 2 percent figure might have on those companies.

"That's significant," said Johnson Philips, adding that it could mean a $350 million jump in electricity costs for the companies she represents.

"That is the heart of why we are involved in this proceeding," she said.