Basin Electric points out issues with EPA’s CO2 plan

Basin Electric Power Cooperative – July 31, 2014

On July 30, Basin Electric engaged in Washington, D.C., and Denver, CO, listening sessions on the Environmental Protection Agency’s (EPA) proposed rule for existing power plants.

Utilities, environmental groups and other parties were each given five minutes to speak on the agency’s proposed rules for Section 111(d) of the Clean Air Act, which addresses greenhouse gas standards for existing fossil fuel-based power plants and petroleum refineries.

Following June’s proposed rule, EPA is scheduled to publish a final rule in June 2015, with states required to provide a plan to meet the agency’s expectations by June 2016.

Representatives from Basin Electric said there was much consensus with other states presenting at the sessions, and the cooperative’s goals are aimed at serving a growing electrical load within the membership.

Steve Tomac, Basin Electric senior legislative representative, and Chris VandeVenter, Basin Electric legislative representative, discussed the following topics regarding Section 111(d) in both sessions:

  •  A 60-day extension of the comment period;
  •  Ambiguities in the rule;
  •  Renewable energy credits; and
  •  Skewed projections tied with the cooperative’s Deer Creek Station in South Dakota.

Basin Electric asks for 60-day extension

The comment period for EPA’s proposed 111(d) rule is set to end Oct. 16, but Basin Electric and other utilities hope for a 60-day extension to give ample discussion time for a host of topics.

“I think there are a number of issues that are outstanding on this that probably deserve more consideration,” Tomac said. He presented in Denver.

VandeVenter added there are still a lot of unanswered questions with Section 111(d), and to properly assign tasks when analyzing the rule, Basin Electric needs an appropriate timetable following feedback from this week’s listening sessions.

Ambiguities in the rule

What EPA failed to recognize in its Section 111(d) proposal is growth states and utilities’ tendencies to operate in multiple states, Tomac said.

“We need to be able to increase our generation as we move forward,” Tomac said, regarding the rule’s high intensity level for states like North Dakota.

VandeVenter added that if Basin Electric is going to be expected to reduce generation for every new megawatt of new generation it puts on, it doesn’t help the cooperative meet the needs of its membership in the growing North Dakota area.

EPA didn’t anticipate growth states like North Dakota, and Basin Electric – with members in nine states – is essentially being penalized as an energy exporter through Section 111(d).

“EPA looked at it from a static point of view,” Tomac said. “The challenge we have across the Basin footprint is that we essentially have a postage stamp rate at the wholesale level.”

Renewable energy credits

One of the questions VandeVenter has following this week’s listening sessions involves renewable technicalities.

“Does the wind follow the load, or does it stay in the state it’s generated?” he said, adding the proposed rule skews the numbers on carbon intensity.

VandeVenter said North Dakota is well on its way to building enough wind in the state that would help Basin Electric reach proposed goals. However, there is a specific indication in the rule: out-of-state utilities that have built wind farms in North Dakota will take that renewable attribute to their consuming state.

“Those megawatt-hours would not be able to be used by the state of North Dakota to average down to meet the target set by 111(d),” he said.

Skewed projections for Deer Creek Station

When EPA analyzed Basin Electric’s Deer Creek Station in Brookings County, SD, it used 2012 as the base year. However, the plant only ran for 90 hours that year, representing 1 percent of the production capacity.

“It really skews South Dakota’s numbers. It lowers their intensity requirement by quite a bit,” Tomac said. “It makes for a harder target to reach, so we’re asking EPA to recalculate and reconsider those numbers as if Deer Creek was under construction for 2012, which it was for most of the year.”

Also, there are regional transmission organization (RTO) distinctions to be made. While Basin Electric is joining Southwest Power Pool (SPP) in South Dakota, other utilities, such as Otter Tail Power Company, operate within Midcontinent Independent System Operator (MISO).

Next steps

An issue Basin Electric hopes to discuss with EPA further is the agency’s failure to recognize CO2sequestration efforts at the Great Plains Synfuels Plant near Beulah, ND.

“We at least want to make sure EPA is aware this plant is really a shining star in innovation, and Gina McCarthy (EPA administrator) said so when she visited the plant early this year,” VandeVenter said.