EPA’s proposed Clean Power Plan wrong for South Dakota, PUC says

The U.S. Environmental Protection Agency’s proposed plan to regulate carbon emissions from existing power plants will have harmful results on the reliability and affordability of electricity in South Dakota if implemented as it is currently written, warned the South Dakota Public Utilities Commission. The PUC responded to the EPA’s call for comments to its Clean Power Plan by thoroughly analyzing the proposal, discussing effects with South Dakota stakeholders and submitting extensive written comments to the federal agency this month. Those comments can be read on the PUC’s website at www.PUC.SD.gov/energy/111dcomments.aspx

In mid-June of this year the EPA rolled out its proposed rule to regulate carbon emissions from existing power plants under the Clean Air Act §111(d). The agency initially opened a comment period until mid-October for the myriad parties that would be affected by the complex rule to share their concerns. The EPA extended the comment period to Dec. 1, after receiving feedback from numerous parties about the compressed timeline. The EPA expects to finalize the rule by June 1, 2015. States will be required to submit their plans on how to comply with the rule by June 30, 2016. The South Dakota Department of Environment and Natural Resources will be responsible for compiling and filing the state plan with the EPA.

In its proposed rule, the EPA specifies carbon reduction goals for the state that are based on national or regional averages with no consideration for the production and dispatch of energy in South Dakota that crosses state boundaries. The existing power plants in South Dakota targeted by the EPA’s proposal are the Big Stone Plant, a coal-fired plant near Milbank jointly operated by Otter Tail Power Co., NorthWestern Energy and Montana-Dakota Utilities Co.; and Deer Creek Station, a natural gas combined cycle plant near Elkton owned by Basin Electric Power Cooperative. The EPA’s proposal does not give credit for carbon-free electricity generated by hydropower plants located along the Missouri River in South Dakota.

PUC Commissioners Gary Hanson, Chris Nelson and Kristie Fiegen are unified in their opposition to the EPA’s proposed plan and in supporting the comments the PUC has filed. Paramount among their concerns are the proposal’s use of flawed assumptions and suggestions of carbon emission reductions that are not technically feasible, resulting in dramatic increases in the cost of electricity to consumers and a reckless disregard for electric reliability.

The PUC’s written comments focus on four primary elements: educating the EPA about South Dakota’s electric industry; identifying concerns with EPA’s short compliance timeline; identifying technical issues with the building blocks EPA has specified for states to use to comply with the Clean Power Plan; and providing economic impacts forecasted for South Dakota.

“The EPA’s proposal will be destructive to our economy,” said PUC Chairman Hanson. “I agree that environmental prudence should be part of national energy policy. I also firmly believe that energy must be affordable and reliable. I am frustrated that the EPA’s plan obviously bypasses essential facts about South Dakota’s reality. If the plan is unchanged, our state’s consumers will pay dearly,” he concluded.

“I believe the comments the PUC submitted to the EPA do a great job of stating why the EPA’s proposal is unrealistic and unattainable for South Dakota without significant cost,” stated PUC Vice Chairman Nelson. “This plan concerns me to the core and the PUC will continue to do all that we can to moderate its impact to South Dakota consumers, farmers and business people,” Nelson said.

“South Dakota is known for its common sense approach to challenges and changes,” commented Commissioner Fiegen. “Unfortunately, the EPA doesn’t place common sense very high on its priority scale, as reflected in this proposed plan. It is important that South Dakota energy consumers know that the PUC will continue to dig our heels in and advocate for rational and reasonable solutions on their behalf,” she said.

The PUC hosted a forum in July 2014 to discuss the proposed Clean Power Plan with representatives of South Dakota’s electric industry, the EPA and the state’s congressional delegation. Access presentations and recordings of the forum at www.PUC.SD.gov/energy/111dcomments.aspx

PUC Chairman Hanson delivers address at national electric roundtable

Gary Hanson, chairman of the South Dakota Public Utilities Commission, was a speaker and panelist at the national Roundtable on Energy Resource Portfolios for the Electric Power Industry in Arlington, Va., earlier this month. At the invitation-only event industry leaders examined the future of the electric power industry, the growing demand for diverse energy portfolios and challenges, and how to solve those challenges.

A primary concern at the roundtable was how the electric power industry can ensure reliable, affordable, clean and safe energy while increasing renewable energy and distributed generation. Hanson presented a provocative formula of 15 ingredients necessary to accomplish a national energy policy.

“Facts must be allowed to overwhelm emotion, special interests and partisanship at both ends of the opinion spectrum,” Hanson explained upon presenting the formula. “This is a technically complicated task, yet we are a nation of sound bites, and reaching decisions require sincere dialogue, yet we are a nation of opposing sides,” he said.

Hanson also discussed how environmental regulations and renewable incentives impact portfolio decisions and public policy goals.

“The EPA’s proposed rule to cut carbon emissions is a tremendous challenge for the energy industry. The EPA has a responsibility to safeguard our waterways and air; however, some of the EPA’s recent proposed regulations provide insignificant environmental value but significantly increase costs to every citizen and business in the country,” he stated. “Additionally, some of the regulations create a Catch-22 that makes the producer violate one regulation by complying with another.”

The U.S. Department of Energy along with the American Public Power Association, the Edison Electric Institute and the National Rural Electric Cooperative Association hosted the event Oct. 16-17.

Hanson is in his second term on the Public Utilities Commission. He serves on the electricity committee of the National Association of Regulatory Utility Commissioners and has held leadership positions in the Organization of MISO States and the National Wind Coordinating Collaborative.