Strategies for meeting federal coal power carbon dioxide emissions standards may hinge on carbon credits and stifling power plant output, according to industry officials.
Several electric cooperatives participated in Basin Electric Power Cooperative's annual meeting in Bismarck Wednesday in an effort to address questions about the U.S. Environmental Protection Agency's Clean Power Plan, which requires North Dakota power companies to cut carbon emissions by 45 percent.
"It will transform how power is generated, transferred and used," said John Novak, executive director of the National Rural Electric Cooperative Association.
Without changes, Novak predicts some power plants will be forced to close with debt still remaining, requiring customers to pay for power twice — once to pay off the old generation and again to pay for the new.
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"We need to keep them running to pay off that debt," he said.
NRECA has filed suit with 24 states against the Clean Power Plan, and Novak expects it to appear before the U.S. Supreme Court in 2018 or 2019.
Litigation seems to be the best approach because Congressional action would require the ability to overturn a presidential veto, according to Novak, who said undoing an existing rule would be very difficult for the next president.
Novak also said NRECA is working on a study of how much it will cost cooperatives nationwide to comply with the Clean Power Plan.
Basin
Basin Electrics strategy is beat the rule, meet the rule or change the rule with legislation if legal efforts fail, said Dale Niezwaag, senior legislative representative for Basin Electric Power Cooperative.
With 26 states opposing the rule, Basin thinks it could have a chance in Congress, according to Niezwaag.
Basin generated 13 percent of the power it provided in 2014 with renewable energy. Three percent of generation came from natural gas and 80 percent came from coal, Niezwaag said.
At Basin's plants, the emissions rate is 2,200 pounds of carbon per megawatt hour. With the latest technology, the company thinks it can get down to 1,800 pounds per megawatt hour.
The question then becomes how best to make up the rest of the required reduction.
States making compliance plans can choose to reduce their emission rate or the mass of emissions they produce. Niezwaag said rate based could be better for a growing utility such as Basin but meeting requirements would also mean being able to purchase credits from other utilities in other states.
Credits can't be traded between mass-based and rate-based states. The problem is only three or four states are considering rate-based goals, Niezwaag said. He expects Basin will need 1,121 megawatts of credits to keep its coal generation running.
Without credits, Basin would need wind and coal generation to be at a 1:1 ration and 2.5 times its current transmission capacity to be able to transmit power from wind, Niezwaag said.
That would mean 4,500 more megawatts of wind power. Basin has installed 800 megawatts since 2001.
And if Basin wants to put up a natural gas plant, it would still have to dial back its coal production, Niezwaag said.
"More than anything, we're out there letting our members know just how serious a problem this is," said Basin CEO Paul Sukut. "More than anything what we really need is time."
And Sukut says he is hopeful Basin's members will be supportive in helping the cooperative get that time.
Minnkota
In addition to its Milton R. Young Station coal plant, Minnkota Power Cooperative has hydro power from the Garrison Dam and several wind farms, said Stacey Dahl, manager of external affairs.
The company generates 71 percent of electricity sold from coal, 11 percent from hydro and 13 percent from wind.
"Minnkota would have to invest more if a plan was rate based," Dahl said.
In addition to 200 to 300 megawatt hours of natural gas and 500 to 600 megawatt hours more of wind, the company would likely have to reduce Young Station's output.
"We'd have to throttle back those units," Dahl said.
And while the additional wind and natural gas may not sound like much, "for a utility our size, it becomes quite significant," she said.
Dahl said Minnkota is not optimistic about getting help from Minnesota, where most of its power is sold. Minnesota Gov. Mark Dayton has said Minnesota should eliminate all coal power use and existing coal plants in the state are scheduled to shut down.
Dairyland
"We don't change directions easily," said Kenric Scheevel, senior government relations representative for Dairyland Power Cooperative in La Crosse, Wisc.
Dairylad has managed to go from seven coal units, one natural gas plant, one hydro power plant and one wind farm in 2000 to three coal plants, two hydro power plants, 12 wind projects, 10 area solar projects, 25 megawatts of solar generation, landfill units, wood waste biomass generation and more in 2015.
Scheevel said the Clean Power Plan would force acceleration of those types of changes.
"It's not going to be easy," he said.
Dairyland expects there will be a need for 300 to 400 more megawatts of natural gas, 400 to 500 more megawatts of wind and 25 to 50 more megawatts of solar.
Dairyland, which sells some power in Minnesota, is also worried Gov. Dayton will try to get a 40 percent renewable energy standard through the Minnesota state government.
(Reach Jessica Holdman at 701-250-8261 or jessica.holdman@bismarcktribune.com)