How oil helped save North Dakota’s largest coal-fired power plant
A program of the Bank of North Dakota provided $150 million of Legacy Fund money to help buy a power transmission line that was critical in saving Coal Creek Station.
BISMARCK — Oil money helped save North Dakota’s largest coal-fired power plant and the 650 jobs that keep the plant operating and supplied with lignite fuel.
The purchase of 1,151-megawatt Coal Creek Station near Underwood in May 2022 enabled the plant to keep operating as Rainbow Energy Center .
The Legacy Fund, which receives 30% of North Dakota’s oil and gas revenues, was instrumental in buying power transmission lines that officials said was a key component in buying the plant from Minnesota-based Great River Energy.
In 2021, Great River Energy announced plans to close the plant.
A Bank of North Dakota lending program financed by the Legacy Fund provided $150 million that matched a $150 million bond issue by the North Dakota Transmission Authority as part of the complex financial package that enabled the purchase.
Rep. Mike Nathe, R-Bismarck, a leading proponent of using the $8.5 billion Legacy Fund to invest inside North Dakota, said the financing it provided to save Coal Creek Station and 650 associated jobs is a shining example of what the fund can do.
“That deal was about ready to blow up at the last second,” but funding from the Legacy Fund proved pivotal, Nathe said. The ability to tap the Legacy Fund for investments in North Dakota was enabled by legislation Nathe sponsored in 2021.
“If nothing else happened that would have been worth it alone,” he said, referring to investments made possible by the Legacy Fund, created in 2010.
Todd Steinwand, president and chief executive officer of the Bank of North Dakota, agreed that the $150 million loan enabled by the Legacy Fund was critical in saving what now is called Rainbow Energy Center.
“It was very instrumental in putting that deal together,” he said. The Bank of North Dakota’s Match program is designed for large financial deals involving investment-grade businesses.
So far, a total of $478 million from the Legacy Fund has been available to the Match program, Steinwand said. About $160 million in loans are pending and should be made final in the next six to 12 months, leaving $129 million still available, he said.
Under the program, the Bank of North Dakota can access up to 10% of the principal of the Legacy Fund for bond investments and to buy certificates of deposit that provide market returns for the fund.
Many large banks and financial institutions no longer invest in fossil fuel projects because of climate change concerns, a void the Bank of North Dakota was able to fill with the infusion of Legacy Fund dollars.
Stacy Tschider, president of Bismarck-based Rainbow Energy Center and Nexus Line, the company that owns the transmission line, said in a statement that the companies’ aim was “about preserving a way of life and helping these communities continue to thrive.
“Without the help and support of the Bank of North Dakota, we would never have been able to push this over the finish line,” Tschider said.
The State Investment Board has allocated another $250 million so far from the Legacy Fund to investing in the state, through investment funds as well as through equity stakes in early-stage companies.
Of the initial $100 million, $62.5 million has been invested in five investment funds, which will invest some of their own funds for investments in companies that are based in or operate in North Dakota. The balance of the initial allocation is expected to be invested within three to four years.