Aug. 21--Minnesota Power received the go-ahead Thursday to purchase two boilers from the Duluth Steam Cooperative Association.

The Minnesota Public Utilities Commission approved the utility company's petition to pay the city of Duluth $2.5 million for the boilers and then invest another $22 million in the Hibbard Energy Center that houses them.

When the work is completed, the biomass facility should be able to produce about three times as much power as it does today. The boilers will be fueled by wood biomass.

In April, regulators put the deal on hold after concerns were raised by the Minnesota attorney general's office. Ron Giteck, an assistant attorney general, contended Minnesota Power had not demonstrated there was a real need for the increased electricity that would be produced. He also said the company had not identified a method to measure the amount of energy produced from renewable sources, given plans to also burn nonrenewable materials.

As part of the agreement, the utility agreed to a set of reporting mechanisms to address these concerns, said Amy Rutledge, Minnesota Power's communications manager.

The purchase will help Minnesota Power meet the state's goal of producing

25 percent of its electricity from renewable energy sources, Al Hodnik, president of Allete Inc., Minnesota Power's parent company, said in a written statement.

"The end result will be more sustainable energy produced from biomass," he said.

The deal includes two boilers, wood-handling systems and other equipment used to produce steam for the neighboring NewPage paper mill and Minnesota Power's Hibbard Energy Center in West Duluth.

"It's a win-win on many different fronts," Duluth Mayor Don Ness said. "The sale provides $2.5 million that will be used to rebuild the city's general fund reserves. It also allows the city to divest itself of an asset that's not related to core city services. Perhaps most importantly, however, the project creates jobs and increases our tax base."

The sale of the boilers and other equipment to Minnesota Power is expected to close by the end of September.

Hibbard was originally built in 1929 as a coal-fired power plant and operated as such until 1982.

The facility was retrofitted to burn wood and coal when it returned to service in 1987.

Eventually, the plant is expected to produce 210,000 megawatt-hours of electricity from wood waste. Upgrades will occur in stages, with full implementation expected by 2013.

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