Heartland faces challenges from EPA

By Chuck Clement, Staff Reporter, Madison Daily Leader
The following article appeared on the front page of the August 29, 2014 issue of the Madison Daily Leader:

Heartland faces challenges from EPA

Emissions goals pose challenges; electric rate increases likely

The provider of about half of the electricity used by Madison’s electric utility customers has concerns about reaching the carbon-dioxide emissions reductions proposed by the EPA earlier this summer.

John Knofczynski, engineering manager at Heartland Consumers Power District, offered a presentation on Thursday to fellow members of the municipal Electric Advisory Committee that outlined the challenges one of Madison’s electricity suppliers faces if the current federal proposals remain the same.

Knofczynski warned that the current options for meeting a 35-percent reduction of South Dakota’s carbon dioxide emissions would mean a major restructuring of HCPD’s electricity supply and most likely higher costs to consumers.

Knofczynski said the EPA had an overall goal to reduce carbon-dioxide emissions across the nation by 30 percent less than 2012 levels. The EPA wants to reach that goal by 2030, but federal officials also have interim target levels that they want the states to reach by 2020.

The EPA has proposed that the states use four building blocks in the reduction plans: heat-rate improvements at existing power plants; substituting coal-based electricity with natural gas combined-cycle electricity generation; substituting renewable electricity generation; and demand-side (consumer) energy efficiency measures.

Knofczynski said that South Dakota only has one natural gas generation plant currently available, the Deer Creek Station owned by Basin Electric Power Cooperative. He said the Deer Creek Station would need to operate at more than a 70-percent capacity factor to offset generation losses from the coal-fired Big Stone Power Plant.

He also said under current EPA policies, electricity providers will not receive any credit for supporting renewable energy production that was active before the carbon-dioxide reduction policies go into effect.

Knofczynski told the advisory committee members that the EPA’s building blocks offered little in practical solutions to South Dakota consumers.

In his presentation, Knofczynski listed Heartland’s three primary electric power resources:

  • Whelan Energy Center Unit 2 near Hastings, Neb., which has a 225-megawatt (MW) output from its coal-fired generation plant. HCPD has 35-percent ownership equaling 82 MW; however EPA officials gave Nebraska a 26-percent reduction target.
  • Laramie River Station near Wheatland, Wyo., a three-unit, 1,710-MW coal-fired plant in which HCPD has a 3-percent share equaling 51 MW. Wyoming has a 19-percent reduction target, but Laramie Station is also currently managing a regional haze mandate made by federal officials.
  • Wessington Springs Wind Energy Center in South Dakota, consisting of 34 wind turbines providing 51 MW in total capacity. Heartland has purchased the full output from the wind farm since it went into service in February 2009.

Persons can send public comments by mail, e-mail or fax with the deadline on Oct. 16. All comments need to include the federal government’s docket ID No. EPA-HQ-OAR-2013-0602 in the message’s subject line.

The comments are mailed to Environmental Protection Agency; EPA Docket Center (EPA/DC), Mailcode 28221T, Attn. Docket ID OAR-2013-0602; 1200 Pennsylvania Ave. N.W., Washington, D.C. 20460.

Persons can e-mail comments to A-and-R-Docket@epa.gov or fax them to 202-566-9744.

Basin Electric board approves joining Southwest Power Pool

On July 16, Basin Electric Power Cooperative’s board of directors authorized the cooperative to join a regional transmission organization (RTO) – the Southwest Power Pool (SPP), subject to FERC approval of necessary documents. The decision reflects years of focused evaluation with Basin Electric’s members and its Integrated System (IS) partners, Western Area Power Administration and Heartland Consumers Power District.

Joining an RTO means Basin Electric and its members will have access to the market when Basin Electric’s system requires power or has surplus power to sell.

The board’s decision follows critical decisions by SPP and the boards of Basin Electric’s IS partners. On June 9, SPP’s board approved tariff changes making it possible for the Integrated System partners to join the RTO. Heartland’s board approved SPP membership July 8 and Western’s administrator approved SPP membership July 9.

Membership in SPP will not happen right away. Basin Electric staff will continue to work with its members, Western and Heartland to integrate into SPP by Oct. 1, 2015.

Membership in SPP was among three options Basin Electric and its partners collectively considered. The other options were standing alone outside its neighboring RTOs or membership in the Midcontinent Independent System Operator (MISO).

“Standing alone posed challenges for us all when we needed access to markets in times of surplus or deficit power supplies,” says Paul Sukut, Basin Electric CEO and general manager. “We determined we cannot remain an island within our nation’s energy infrastructure. These limitations directed our focus to RTO membership.

“Ultimately, we needed to balance the needs of our members – from cost, transmission, market, philosophical and geographic standpoints. SPP satisfied those criteria,” Sukut said.

About Basin Electric Power Cooperative

Basin Electric is a consumer-owned, regional cooperative headquartered in Bismarck, N.D. It generates and transmits electricity to 137 member rural electric systems in nine states: Colorado, Iowa, Minnesota, Montana, Nebraska, New Mexico, North Dakota, South Dakota, and Wyoming. These member systems distribute electricity to about 2.8 million consumers.

About the IS

The IS is the backbone of the high-voltage transmission grid in the Upper Great Plains region of eastern Montana, North Dakota and South Dakota. This jointly developed transmission system evolved from the 1962 Joint Transmission System (JTS) agreement of the Bureau of Reclamation with Basin Electric and 103 cooperative and municipal preference customers in this region.

Heartland approves membership into Southwest Power Pool

Heartland Consumers Power District is one step closer to full integration into a Regional Transmission Organization (RTO). The Heartland board of directors recently approved a resolution authorizing execution of a membership agreement with Southwest Power Pool (SPP).

“Joining an RTO is a major shift in the way Heartland has traditionally operated, but we firmly believe our customers will benefit,” said Heartland CEO Russell Olson. “We look forward to working with the SPP staff and members as we continue the transition.”

Heartland delivers power to its customers over the Integrated System (IS), a high-voltage transmission system that covers a seven-state area and consists of over 9,500 miles of line. Under the terms of the membership agreement, functional control and operational authority of Heartland’s transmission facilities and service within the IS will be turned over to the SPP, and generation resources and customer load will be included within the SPP Integrated Marketplace. Heartland’s participation is contingent upon Federal Energy Regulatory Commission acceptance and approval of the agreement without modifications.

Heartland shares ownership of the IS with Basin Electric Power Cooperative (Basin) and Western Area Power Administration – Upper Great Plains (Western). The three organizations began evaluating a move into an RTO in late 2011 in order to increase access to other power markets and to reduce operating constraints. After an extensive research and assessment period, SPP was determined to be the best business decision to reduce costs and maximize opportunity.

Basin’s board took action in April to negotiate terms and conditions of joining SPP, and approval of the membership agreement is expected this month. Western Administrator Mark Gabriel approved and directed full membership of the Upper Great Plains Region with SPP July 9.

Founded in 1941, SPP is a group of 76 members in Arkansas, Kansas, Louisiana, Mississippi, Missouri, Nebraska, New Mexico, Oklahoma, and Texas that serve more than 15 million customers. Membership is comprised of investor-owned utilities, municipal systems, generation and transmission cooperatives, state authorities, wholesale generators, power marketers, and independent transmission companies. SPP’s footprint includes 48,930 miles of transmission lines and 370,000 square miles of service territory. As a Regional Transmission Organization, SPP ensures reliable supplies of power, adequate transmission infrastructure, and competitive wholesale electricity prices.

SPP Board approves changes to facilitate Integrated System membership

Southwest Power Pool, Inc. (SPP) announced yesterday board approval of changes to accommodate the Integrated System’s (IS) membership in SPP. Heartland Consumers Power District (Heartland), Basin Electric Power Cooperative (Basin) and Western Area Power Administration – Upper Great Plains (Western) jointly own the IS, the backbone of the high-voltage transmission grid in the Upper Great Plains region of eastern Montana, North Dakota and South Dakota. The board’s decision is an important first step towards the IS’ full integration into an regional transmission organization.

“These tariff changes will enable all the IS entities to join an RTO,” said SPP CEO Carl Monroe. “We are pleased that our culture and value to our members can provide benefits to our customers.”

Heartland, Basin and Western have been discussing the possibility of joining an RTO since late 2011 to increase options for buying and selling power. Following assessments and research, it was determined SPP was the best option to maximize opportunity.

In April, Basin’s board gave the cooperative’s management authorization to support Western in their federal process to join SPP and to negotiate terms and conditions of joining with SPP as a transmission owning member.

UGP Regional Manager Robert Harris said the action by the SPP board represents a major step toward Western’s full membership in SPP.

“It is the result of significant work by SPP, its members, committee and staff as well as Western,” Harris said. “We continue to be very impressed with SPP’s dedication and tenacity, working together to find solutions benefiting all members and look forward to being active participants in the SPP.”

According to Basin CEO and General Manager Paul Sukut, the next step in the process is Basin board action in July.

“Integrating with an RTO presents many complexities, but Basin and our entire member cooperative family are committed to working with our IS participants and SPP to facilitate this transition,” Sukut said.

Joining an RTO is a major shift in the way the IS members have traditionally done business, but all organizations involved firmly believe both the SPP members and the IS owners will benefit from the effort.

“The IS owners have been working on this effort for some time and we’re pleased the board endorsed the proposed changes as it is an important first step,” said Heartland CEO Russell Olson. “The SPP staff and membership have been a pleasure to work with. The open and collaborative process has reinforced an earlier decision to seek membership in SPP and we look forward to continuing our integration into SPP for the benefit of our customers.”

About Southwest Power Pool:

Founded in 1941, SPP is a group of 76 members in Arkansas, Kansas, Louisiana, Mississippi, Missouri, Nebraska, New Mexico, Oklahoma, and Texas that serve more than 15 million customers. Membership is comprised of investor-owned utilities, municipal systems, generation and transmission cooperatives, state authorities, wholesale generators, power marketers, and independent transmission companies. SPP’s footprint includes 48,930 miles of transmission lines and 370,000 square miles of service territory.
As a Regional Transmission Organization, SPP ensures reliable supplies of power, adequate transmission infrastructure, and competitive wholesale electricity prices. The SPP Regional Entity oversees compliance enforcement and reliability standards development.

Heartland honors retiring Basin Electric CEO Ron Harper

During their September board meeting, the Heartland Board of Directors recognized  Basin Electric Power Cooperative CEO Ron Harper with a resolution honoring his upcoming retirement.

The resolution recognizes Harper for spending “his career working to improve the lives of rural communities, always keeping in mind the person at the end of the line.”

Harper, pictured at left, joined Basin Electric in 2000 and is set to retire at the end of 2011. Harper announced his retirement in March, saying “I have had the humbling honor to have worked in the cooperative program since 1970, but now it is time to take on new adventures in life.”

Heartland’s resolution notes, “the leadership Ron has provided to the electric industry, and particularly consumer owned utilities, will be missed by all who have worked with him.”

Heartland Board President Dan O'Connor (left) and General Manager Mike McDowell (right) hold the resolution adopted September 8 to honor Ron Harper.

Heartland and Basin Electric are two of six regional, consumer-owned electric utilities partnered in the Missouri Basin Power Project (MBPP). Basin was the MBPP construction manager and remains the operating agent. Together with Western Area Power Administration, Basin and Heartland jointly own the Integrated System (IS), the high-voltage transmission system covering a seven-state area over which Heartland power is delivered.

Heartland takes great pleasure in recognizing the significant professional contributions and achievements of Ron Harper. Congratulations on your retirement.