by Scott Handy, President/CEO – Cass County Electric Cooperative
Editorial from the February issue of Highline Notes
I’ve been writing these monthly editorials for 14 years now, plus a few even before then. It dawned on me recently that the one after this one will be my last. While I’ve enjoyed sharing my opinions (and more recently some candid family photos) with you, it’s not always easy coming up with a topic. Once chosen, it’s also not always easy to limit – or expand – the topic so the column comes out right around 600 words.
Many of you have stopped me when I’m out and about, usually at Fleet Farm, and mentioned that you read my column in the last issue and enjoyed it. I appreciate hearing that, but it’s a little uncomfortable accepting a compliment for something that is really just my job. Maybe that’s the Norwegian Lutheran in me. Sometimes I get emails or written notes from members who take exception to something in a recent column, usually when I write about what I believe to be unfair or unwise environmental regulations.
Admittedly, it’s a balancing act to share the urgency of potentially financially burdensome regulations when I know that a significant proportion of our members are very much in favor of additional regulation. Some members, including some members of my executive team here, wish I would take a much harder and aggressive line on that topic. While trying to find that editorial balance, allow me to share some thoughts on what is without doubt the biggest environmental regulatory challenge we face today: the Clean Power Plan.
You can find thousands of pages of detail on the plan on the internet (including the 1,600 page plan itself) so I will only give a thumbnail description of it here. The Clean Power Plan requires electric utilities to reduce carbon dioxide emissions by 32 percent from 2005 levels by 2030, with intermediate steps between now and then. Each state has a different goal, and North Dakota’s goal went from an 11 percent reduction in the proposed rule to a crushing 45 percent reduction in the final rule.
A 45 percent reduction is actually pretty simple to do. All we’d need to do is abandon our lignite coal generation and replace it with natural gas and wind generation. No big technical problem. Our industry knows how to build and run natural gas generation and wind generation, and here in North Dakota we already have years of experience with incorporating variable wind generation into a far less variable system load profile.
Well then, what’s the catch? Why don’t we just do that? One good reason might be that through our wholesale power supplier – which, by the way, we own – we have just finished investing an additional $425 million in meeting other recent EPA emissions reduction requirements. That money was borrowed, and an additional mortgage was placed on those assets. We as members are on the hook for repaying that mortgage and will be for many more years. Another good reason is that any new generation built would also be financed with a mortgage, which would also have to be paid back by us as members, and at the same time as we’re still paying back the mortgages on the coal plants. Paying back multiple mortgages at the same time has an obvious and huge impact on rates, and not in a direction that would be very popular.
Well then, why did we build those coal plants in the first place, instead of natural gas plants? Because, at the time the additional generation was needed, coal generation was the only generation our own federal government would allow. Natural gas was specifically forbidden as a generation fuel under the 1978 Fuel Use Act and remained so for ten years. In essence, the very same government that once allowed only coal generation will now prohibit it.
What about the 357 megawatts of wind generation Minnkota Power has already put in place, making up nearly a third of our generating capacity – doesn’t that help us meet the Clean Power Plan requirements? Nope. It was installed prior to 2013, so according to the Clean Power Plan it doesn’t count.
Whether you believe it’s important to curtail carbon dioxide emissions or not, perhaps you can see why we are very frustrated with the requirements of the Clean Power Plan and why we feel members should be very concerned about it. Working through our power supply system, our national association and our Congressional delegation, we are actively involved in overturning or modifying the Clean Power Plan. Many of you have filed comments with the EPA and members of Congress and we’ll be asking you to do that again. The limited amount of space available here, even though I’ve pushed this column up to 800 words, is inadequate to convey the frustration we have. Stay tuned for much more on this…
I promise my final column next month will be more upbeat.