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EPA Clean Power Plan

EPA Clean Power Plan 111(d)

On Feb. 9, 2016, the U.S. Supreme Court granted Basin Electric Power Cooperative and several other petitioners' Motion to Stay the Environmental Protection Agency's Clean Power Plan. Granted by a vote of 5-4, this Stay halts implementation of the rule until litigation is concluded.

Oral arguments on the rule's legality are set for June 2, 2016, with the final decision likely to be made by the U.S. Supreme Court. The petition requesting the Supreme Court hear the case could be filed as early as December 2016.

This is a positive step in the right direction. The driving force in Basin Electric's decision to litigate the rule is the well-being of its member cooperatives’ end-use member-consumers—those who will be left paying for compliance with this rule. Basin and its member cooperatives are hopeful that given time, ingenuity and federal/industry partnerships, we will create a viable future for all energy sources, one that strengthens rural America, doesn't adversely impact cooperative members, and get us down the road with innovative and achievable solutions.

The D.C. Circuit Court of Appeals in Washington, D.C., had denied a Motion to Stay the Clean Power Plan on Jan. 21, 2016.

EPA’s Clean Power Plan, if not improved, will have significant impacts on Basin Electric and its membership.

Financially, the cooperatives may have to spend billions to comply. These billions of dollars would simply cover adding new generation and potentially impact the operations of existing facilities. This does not even include the expense of additional electric or gas infrastructure to support new generation.

Over the last decade, Basin Electric and its membership have taken a leadership role in the development of renewable generation by adding close to 1,000 megawatts of wind, investing more than $1 billion in natural gas resources and investing more than $1.5 billion in emissions control technology to make its already clean generation fleet even cleaner. Even more, Basin’s Dakota Gasification Company’s Great Plains Synfuels Plant is home to the world’s largest carbon capture and sequestration project—capturing more than 30 million tons of CO2.

Plagued with consequences, assumptions and complexity

  • EPA has clearly targeted coal-producing states, with a heavy focus on the Midwest, where natural resources are harnessed to help power this nation. The mission of electric cooperatives is to provide people in America’s heartland cost-effective wholesale energy. They have done so responsibly and respectfully, invested billions to keep its power plants reliable and clean, been stewards of the land and have led innovative projects when no one else was willing to take the risk and invest the money.
  • Financially, Basin estimates having to spend about $5 billion to comply. That would simply cover adding new generation and potentially impact the operations of the cooperative’s existing facilities. It does not include the expense of additional electric or gas infrastructure to support new generation, or paying several billion dollars due to stranded assets.
  • According to the National Rural Electric Cooperative Association, electric cooperatives serve 327 of the nation’s 353 “persistent poverty counties.” The unknown bill handed down by this rule will ultimately be paid by people at the end of the line. According to a recent study by National Economics Research Associates, the rule will hike electricity prices in all 47 states that are subject to the regulation. Of those 47 states, 41 states are projected to see double-digit “peak” electricity price increases and 28 states are projected to see “peak” electricity price increases greater than 20 percent. It would be reasonable and responsible that the EPA perform an economic study to determine how much this federal overreach will increase energy bills in rural America.
  • The Clean Power Plan gives us no credit for the initiatives we’ve undertaken. The electric cooperatives believe there is a better way, one where we can pursue technological innovations while protecting our rural consumers from senseless rate increases.
  • The new standards call for the development of massive amounts of wind. Relying so heavily on wind and solar energy ignores the reality that the sun does not always shine and the wind does not always blow. According to the North Dakota Public Service Commission, in a rate-based calculation, North Dakota would need 4,840 more megawatts of wind in order to meet the state goal. This would cost an estimated $8.6 billion and cover nearly 1 million acres of land (roughly the size of Burleigh County, North Dakota). There would also likely be even more siting issues due to the migratory flyway and U.S. Fish and Wildlife regulations.
  • The proposed “safety valve” outlined by the rule, which allows for increased coal-based emissions during times of energy need or crisis is nonsensical in that it suggests that coal-based units can back up wind. They are not constructed to be idled and run for short periods. That is simply not possible.
  • In absence of a viable peaking source, utilities will be forced to transition from coal to natural gas. However, replacing all coal-based facilities with natural gas is not realistic.
  • As one of the few utilities in the country experiencing growth, our region and utilities within it are uniquely impacted by this rule. As currently written, it compounds the challenge we have to meet this growth. As more natural gas is added to serve the growth in the Williston Basin region, coal would be backed down to keep emissions at bay, therefore taking away needed capacity to serve the region.
  • The North American Electricity Reliability Corporation has expressed significant reliability concerns with the rule as initially proposed. It’s initial concern that the Clean Power Program will accelerate the U.S. resource mix transition to natural gas and renewables and “transform grid-level reliability services, diversity, and flexibility,” remains real. Additionally, NERC acknowledged that coal-sourced generation will diminish and serve mainly seasonal peaking purposes (simply not feasible) significantly altering its economic viability. Lastly, much more transmission and natural gas pipeline infrastructure will be needed to support new distributed wind and gas generation needs. It seems only logical that EPA should perform a thorough grid reliability study before imposing such landscape-altering regulations.

 

  •          Clean Power Plan - Final rule reductions in carbon dioxide
  •          Clean Power Plan final rule map of United States
  •         State by state rankings of CO2 Reduction

Challenging the rule

  • The driving force behind challenging this rule is the well-being of end-use member-consumers. It’s those members who will be left paying for compliance with this rule.
  • In November 2015, utilities across the country, including Basin Electric, filed a Motion to Stay with the D.C. Circuit Court of Appeals. The Stay, a request to halt implementation of the Clean Power Plan until litigation has concluded, was denied in January 2016.
  • The ruling means states will still have to submit their initial compliance plans by Sept. 6, 2016, or ask EPA for two-year extensions. Oral arguments on the Clean Power Plan’s legality, however, are set for June 2, 2016, meaning the D.C. Circuit Court’s decision is more likely to come after the Sept. 6 submission deadline.
  • On Feb. 9, 2016, the U.S. Supreme Court granted Basin Electric and several other petitioners' Motion to Stay the EPS’s Clean Power Plan. Granted by a vote of 5-4, this Stay halts implementation of the rule until litigation is concluded. Oral arguments on the rule's legality are set for June 2, 2016, with the final decision likely to be made by the U.S. Supreme Court. The petition requesting the Supreme Court hear the case could be filed as early as December 2016.

Energy-Producing States Coalition Industry Group

In early 2014, a group of state environmental agency officials from states that have a stake in coal-based generation met in North Dakota for an Energy-Producing States Summit. This meeting provided an opportunity for those state officials to discuss the potential impacts of the EPA's proposed 111(d) regulations of the Clean Power Plan.

As a result of these conversations, an Energy-Producing States Coalition of state environmental officers formed to provide EPA with a perspective that differs considerably from that of state coalitions on the east and west coasts. In tandem to the state agency coalition, an energy-producing states group of industry representatives also formed to share perspectives regarding the impacts of the proposed CPP on industry.

Ongoing discussions among the industry representatives cover a wide variety of perspectives. The efforts of the industry group had been focused towards developing consensus on general issues that multiple states could include in their comments to EPA on the proposed CPP.

Industry representatives have been sharing information with each other as a result of the industry group of the Energy-Producing States Coalition and you will find links to shared documents below:

Joint Environmental Officials Letter to EPA
EPA Mass-based Fact Sheet
FERC Chairman LaFleur article
NERC Reliability Impacts Report
NODA released on 10.28.14
General Issue Talking Points Summary
Southwest Power Pool Analysis
Southwest Power Pool – EPA Comments
NERA Analysis from ACCCE
NERA Clean Power Plan Highlights
Reliability Council Matrix
MISO Analysis
EPRI Report – EPA Comments

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