Dive Brief:
- Cooperative power providers are struggling with how to comply with the Clean Power Plan, and many are finding the challenge could wind up costing consumers money as they are forced to buy credits or shutter generation.
- Last month, Fitch warned compliance would be especially challenging for power cooperatives and public power utilities, especially for those in states with significant carbon reduction targets.
- The Bismarck Tribune reports utilities in North Dakota are mulling compliance strategies, but worry that replacing dirty coal generation will leave customers paying for power twice.
Dive Insight:
Several cooperative providers took part in Basin Electric Power Cooperative's annual meeting this week, discussing compliance strategies that will reduce greenhouse gas emissions while not putting undue pressure on customers.
North Dakota faces one of the most emissions stringent goals in the finalized plan, with a 44.9% emissions rate reduction, four times higher than the draft proposal.
John Novak, executive director of the National Rural Electric Cooperative Association, told the Bismarck Tribune there is concern that shuttering older and dirtier plants that still have debt on the books will leave customers paying off those facilities while also investing in new ones. "We need to keep them running to pay off that debt," Novak said.
The group is one of dozens of states, energy companies and advocacy groups challenging the Clean Power Plan in court. Most expect the case to ultimately wind up in front of the U.S. Supreme Court, and Novak predicted that would be in 2018 or 2019.
Basin Electric is opposing the rule, and said it is also supporting legislative efforts to overturn the Clean Power Plan should court challenges fail. "More than anything, we're out there letting our members know just how serious a problem this is," Basin CEO Paul Sukut told the Tribune. "More than anything what we really need is time."
Basin has an emissions rate of about 2,200 pounds of carbon/MWh, but may be able to reduce that to 1,800 pounds/MWh. That won't be enough to comply, however, and so the cooperative is still considering options.
Other power providers in the state face similar challenges. Minnkota Power cooperative officials told the Tribune they would have to "throttle back" some of the coal units that generate 71% of its electricity. The co-op estimated it will need 200-300 MWh of additional natural gas capacity and 500-600 MWh of wind to comply, in addition to reducing coal output — a significant investment for a utility with only 128,000 retail customers.
The story is much the same for Wisconsin-based Dairyland Power Cooperative, which told the Tribune it would need to add 300-400 MW of natural gas, 400-500 MW of wind, and 25-50 MW of solar to comply.
Fitch, in its analysis of CPP compliance, predicted cooperative and public power organizations would struggle, and the co-op officials expressed frustration with the regulatory push toward clean energy, two of them citing fears that Minnesota Gov. Mark Dayton may accelerate the process with stronger limits on coal generation and higher renewables mandates.
"We don't change directions easily," Kenric Scheevel, senior government relations representative for Diaryland, told the Tribune.