Montana’s electric cooperatives will likely share in a $5 billion bill to comply with the federal Clean Power Plan, officials say.
The $5 billion is what Basin Electric Power Cooperative estimates it will need to cut greenhouse gases from its coal-fired power plants, while also adding wind farms and gas-fired generators as replacement energy sources.
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“These billions of dollars would simply cover adding new generation and potentially impact the operations of our existing facilities," said Mary Miller, Basin Electric communications director. "This does not even include the expense of additional electric or gas infrastructure.”
North Dakota-based Basin Electric is collectively owned by 138 rural electric cooperatives, including 14 in Montana stretching across the state from Kalispell to Sidney. Those cooperatives easily have more than 100,000 ratepayers, mostly households. One shareholder, Yellowstone Valley Electric Cooperative, has 19,000 customers in the Billings region.
The Clean Power Plan is the Environmental Protection Agency’s 15-year roadmap for cutting carbon dioxide, a greenhouse gas that contributes to climate change. Beginning in 2020, the nation’s existing power plants will have to begin cutting carbon dioxide pollution. Some power plants will be upgraded with new pollution controls, while others beyond affordable improvement will be shuttered.
States are required to submit compliance plans to the EPA by September. Extensions may be granted, but federal plans could also be issued in states were plans aren’t submitted.
Basin Electric’s situation is complicated, said Gary Wiens of the Montana Electric Cooperatives’ Association. Basin has power generating facilities in six different states. Each state needs its own strategy for complying with the Clean Power Plan.
“We know it will mean some kind of a cost increase, but we don’t know the numbers yet,” Wiens said this week.
Coal power is about half of Basin’s supply. The cooperative also has 1,000 megawatts of wind, and gas-fired power plants, including one near Culbertson.
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In recent years, Basin has invested $1.4 Billion in windfarms and gas plants, said Brandon Wittman, CEO of Yellowstone Valley Electric Cooperative. A Basin subsidiary, the Dakota Gasification Company, runs the Great Plains Synfuels Plant, which is the world’s largest carbon capture and sequestration project — capturing more than 30 million tons of carbon dioxide.
A federal production tax credit on wind-generated power made the wind turbines a logical step, Wittman said. He said he’s frustrated that the Great Plains carbon capture facility won’t be counted by EPA in Basin’s compliance column because it already exists. Credits under the Clean Power Plan are only being considered for new projects to cut carbon dioxide.
Another $1.4 billion has been spent on upgrading Basin’s coal facilities.
If Basin had to upgrade tomorrow, Wittman said Yellowstone Electric Cooperative customers would see a 50 percent rate increase in their utility bills. He considers tougher carbon pollution standards inevitable, but said Basin can’t comply fast enough.
“We need a more negotiated approach,” Wittman said. “You can’t take down all the coal power in the country, which is essentially what this is going to do.”
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Not all coal power plants will be shuttered, Basin’s Mary Miller clarified Tuesday. Basin's newest coal-fired power plant, the Dry Fork Station in Gillette, Wyo., came online in 2011. That coal power plant and others in Basin’s quiver, aren’t vulnerable to shut down, though some facilities are.
Miller said it’s ironic that Basin’s coal-fired power plants are now scrutinized, considering it was the federal government that pushed Basin into coal 40 years ago when there were national concerns about a future natural gas shortage. The nation is now flush with natural gas because of the hydraulic fracturing of horizontal oil and gas wells.
“The bulk of our generation was built during the Fuel Use Act of 1978, when we were prohibited from building natural gas base-load facilities,” Miller said. “Despite our investing billions of dollars to maintain and make these units some of the cleanest in the country, now the EPA is essentially telling us to do the opposite — shut down coal and build wind, which needs to be backed up by peaking generation — gas.”
Basin is working with states to comply with the Clean Power Plan, Miller said. However, it is also suing EPA over the legality of the Clean Power Plan.