North Dakota PSC chair: EPA’s Clean Power Plan a costly intrusion on state authority

North Dakota Public Service Commission (PSC) Chairman Julie Fedorchak on Oct. 14 reported that more than 16% of the retail electricity sold in North Dakota in 2014 was from renewable sources.

North Dakotans consumed a total of 16 million megawatt hours (MWh) in 2014, of which 2.6 million MWh were renewables-based. North Dakota generated a total of 36 million MWh of electricity in 2014 including 27 million MWh of coal-fired energy and 8.8 million MWh of renewable energy including 6.3 million MWh of wind energy.

The statistics were part of the PSC’s report to the Legislature’s interim committee on Energy Development and Transmission.

“These statistics show that with 36 million megawatt hours of electricity generated and 16 million consumed in state, North Dakota exported 20 million megawatt hours of electricity,” Fedorchak said. “Our own energy needs are growing, but we continue to be a huge generator and exporter of electricity to people throughout the Midwest who rely on North Dakota’s clean, reliable, low cost energy.”

Fedorchak also noted that CO2 emissions in North Dakota have dropped by more than 15% since 2002. “Our experience proves that, given appropriate goals and incentives, the power sector will incorporate renewable technologies without impacting reliability, with modest cost impacts and while allowing a real path forward for all fuel types including coal,” Fedorchak said. “This is the approach Congress and the EPA should continue taking – policies that provide incentives and support innovation. Instead, the Clean Power Plan (CPP) provides a very different, heavy-handed regulatory approach.”

The PSC filed comments regarding EPA’s proposed rule cautioning that the plan is uneconomic, uses unrealistic assumptions, and violates the Federal Power Act that gives the states decision-making authority over their power supply. Under the final rule issued Aug. 3, North Dakota’s reduction mandate quadrupled from the proposed rule.

Fedorchak outlined three broad concerns about the Clean Power Plan for the committee:

  • The plan invades state authority – The Federal Power Act gives North Dakota exclusive authority to regulate the retail electricity market. In North Dakota, the PSC works with investor-owned utilities to determine the appropriate generation mix to meet forecasted load at the lowest reasonable cost. The rule invades this authority and preempts the state from implementing its own renewable energy goals and from maintaining overall management and cost controls.
  • The plan raises significant electric reliability concerns – While the state is still trying to understand EPA assumptions behind North Dakota’s mandated reductions, any path toward compliance by 2022, which is an interim deadline under the final version of the plan, points to significant coal retirements. Since nearly 80% of electricity sold in North Dakota comes from coal-fired generation facilities that customers are still paying for, this timeframe is a real concern. The impacts of retirements on reliability have not been modeled and companies haven’t begun the five-plus year planning process to replace these facilities. The state’s coal-fired generation is from plants supplied with locally-mined lignite.
  • The plan threatens to substantially raise consumer rates – In order to continue operating North Dakota power plants at their current capacity, North Dakota utility customers would need to purchase $375 million of CO2 credits every year based on the $30/ton cost estimated by the EPA in its plan. In a rate-based calculation, North Dakota would need 4,840 more megawatts of wind in order to meet its mandated goal. This would cost an estimated $8.6 billion and would cover nearly one million acres of land. In addition to new investment, North Dakota residents and businesses will be responsible for paying remaining costs for useful existing facilities forced to retire prematurely. Customers will also pay the cost of infrastructure needed to serve new generation facilities including transmission lines and pipelines to fuel natural gas-fired combined-cycle power plants.

“The EPA’s Clean Power Plan results in a less than 1 percent reduction in total global carbon dioxide emissions,” Fedorchak said. “These modest environmental benefits do not justify the far-reaching negative effects including significantly higher energy prices, threats to electric reliability and significant damage to North Dakota’s coal industry and the 20,000 people it employs.”

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.