ND Expects to Face Challenges Adapting to EPA Rules Requiring Reduced Power Plant Carbon Emissions

FARGO, N.D. – North Dakota faces the prospect of having to significantly expand its electricity generation at the same time the nation’s utilities are grappling with looming regulations to restrict coal-fired sources.

Utility representatives and regulators Wednesday expressed concerns about maintaining the reliability of the electricity supply as power reserves dwindle and a wave of coal plant retirements looms.

The crunch is apt to be most severe over the next five or six years as utilities prepare to meet new Environmental Protection Agency regulations calling for a 30 percent reduction in power plant carbon emissions from 2005 levels by 2030.

A key problem, experts and utility executives told the North Dakota Public Service Commission meeting in Fargo, is the high degree of uncertainty in predicting the impacts on power reliability from the carbon reduction targets.

“This is the most challenging time I can think of in our industry,” said Gerry Cauley, who heads the North American Electric Reliability Corp., which oversees reliability of the U.S. bulk electricity system.

The carbon regulations are forcing utilities to “completely flip” the sources of their power in a “massive change out” in the shift from coal to other fuels.

“Everyone wants us to do all of that and keep prices law,” Cauley said.

Because utilities and regulators cannot predict the impact of carbon regulations on power reliability, it would be irresponsible to implement the rules, he said.

“You can’t make stuff up,” said Cauley, a 35-year power system veteran. “This is a great unknown, and we don’t do unknowns.”

The Red River Valley came uncomfortably close to a “rolling blackout” when an ice storm struck in November 2005, knocking out several major power lines, utility executives said.

Cass County Electric Cooperative drafted an order, never carried out, directing its control center to shut down part of its system in the midst of a winter storm, said Brad Schmidt, the co-op’s vice president of engineering and operations.

“Thousands of people would have been without power involuntarily,” Schmidt said. “Thank God that order never saw the light of day and we went on.”

Last winter, the “polar vortex” sent temperatures plunging, causing concerns in January that some parts of the country could experience power shortages.

Randy Christmann, Public Service Commission member, said North Dakota hasn’t really been tested by temperature extremes in recent decades. He noted that in 1935 North Dakota shivered with a low of 60 below and five months later Steele sweltered in a high temperature of 121 degrees.

“I wonder if we could handle it in 2014, much less 2016,” when the system’s margin of reserve electricity supply is expected to drop, Christmann said. “It really concerns me.”

Tony Clark, a former member of the North Dakota Public Service Commission who now serves on the Federal Energy Regulatory Commission, said the balance between affordable and reliable power is becoming much more difficult to attain.

He recited a raft of forces that threaten the reliability of the electricity supply, citing risks as diverse as terrorist attacks on power substations, cyberattacks by hackers to electromagnetic pulses by solar flares.

Now, on top of those challenges, state regulators and utilities are struggling to prepare for the new carbon regulations to limit greenhouse gases, with some slated to take effect in 2020, Clark said.

“That’s when the really big consumer costs come in,” he added. He hopes the EPA will allow a “safety valve,” such as a time extension for implementation of regulations.

North Dakota, a major energy exporter, derives 68 percent of its electricity from coal, almost double the national average of 37 percent, according to federal figures.

The challenges from the carbon limits are made more difficult in North Dakota because of the ballooning demand for electricity due to the oil boom, Public Service Commission members said.

Estimates of the state’s increased demand for electricity range from 2,000 megawatts to 3,000 megawatts by 2025, said PSC member Julie Fedorchak. She estimated the capacity of the state’s fleet of coal-fired plants is around 4,000 megawatts.

“So we’re looking at replacing half to three-fourths of that fleet,” she said.

If the EPA’s proposed carbon rules are implemented, the Big Stone power plant, which serves Otter Tail Power and Montana Dakota Utility customers, could be shuttered by 2025, company executives told the North Dakota Public Service Commission.

Tammy Eberle, MDU’s director of regulatory affairs, called the proposed carbon restrictions “unworkable” and said the utility would be forced to find higher-cost power elsewhere for its customers if Big Stone is shut down – after millions have been spent on pollution controls.

The EPA rules are slated to become final next June. The public comment period on the proposed rules closes Oct. 16.

See more here.