What is your reaction to how the EPA’s carbon emissions rule might affect your state? What are some ways your state is already prepared and what might be more challenging?
In North Dakota, in the proposed rules, we fared pretty well. In fact we have the smallest reduction required of any state in the nation…We’re concerned about what the final rules might look like because they could be completely different.
Unlike a lot of states, North Dakota is experiencing significant increases in demand. So looking out 10 years, we’re 3,000 mw short on power. This is a hard time to be implementing rules that restrict generation…and the facilities in our portfolio, which are largely coal.
Our concern moving forward is having a viable pathway for coal…We have coal in abundance, it’s a proven fuel in a harsh climate and it’s affordable and reliable…They say they’re for all-of-the-above energy, they say this isn’t a war on coal. We’ll see if that’s how the final rules shape up.
The utilities in our state say what they’re saying in other states, if you can’t build coal without carbon capture and sequestration then you can’t build coal because it isn’t the lowest cost option with that technology. We have a lot of need and we have an 800-year supply of coal in our state, so we’d like to be able to use that. (But) our utilities aren’t looking at developing coal-fired generation in the future, they are looking largely at gas-fired combustion turbines.
We have a lot of coal and a lot of wind, we have no combined cycle gas in our state. Overall, I don’t even know that we’ll have to change much because the wind…will probably meet our target pretty effectively, especially by 2030.
(On whether the starting year may be changed): I think it’s a concern because there are some states like Minnesota that took a lot of early action, invested heavily in wind and they feel like they haven’t benefited at all and that went unrecognized. So really is EPA going to stick with that?
I don’t even feel that the final goal is set. I do think it could become harsher. We are a largely coal-dependent state and that doesn’t seem to be something that EPA would want to reward. So why did EPA not come down harder—that’s a puzzle to me. It is impossible for me to believe that the EPA isn’t gong to adjust for some of the early work done and recognize some of that. They are going to be hearing back from lots and lots of people that’s just not appropriate. Early action—they assured people early action would be recognized and that’s not how I’m hearing other states are hearing it.
(On timing): I was pleased with 2030, but the timeframe for developing the state implementation plan is not reasonable. And quite honestly it isn’t going to happen, so they’re going to have to end up giving extensions I think.
Do you foresee your state having a formal or informal stakeholder process?
Back in January, we invited all the utilities, all the generators and the cooperatives…together and got a lot of input on what their concerns were prior to the rule.
We’ll be, in early August, inviting all the utilities back…and going back through in a deliberate way…to get a feel for how we want to move ahead and what we want to say. We’ll also be working in tandem with our state Health Department because they’ll be the ones (developing the state implementation plan).
We also have staff working with this multi-state group organized by Doug Scott, from Illinois…We aren’t getting too serious about actually implementing a regional approach until we know what the final rule is…Right now, North Dakota would probably stand to lose by joining another state in this implementation because other states have much more serious, significant goals. So if our goals stay the same it might not be to our advantage to be in a regional group.
We would never comment that we don’t like having the flexibility for the regional plan, I just think it’s too soon to say whether that’s going to be the path we follow.
Do you feel your role and responsibilities as a state regulator are evolving? Why or why not?
I think we’re having to get a lot more into the hole on policy issues on a federal level. I’ve only done this for about a year and a half, so it’s been that way my whole time. If I were to look back over the last 10 years, that is probably a significant change—where the states have really strong opinions on how some of this environmental policy is developed and implemented and each state it effects so differently. So one-size-fits-all policy from the federal government doesn’t work.
Something I’ve heard fellow commissioners talk about, but probably not a lot publicly, is that these rules are generated by the EPA and there’s this trickle-down effect where utilities will have to bear the brunt of implementing them and making this policy a reality and those utiltiies are regulated by us and we have to approve their rates, which the customers pay. Who do the customers blame for their increased rates? That entity is four layers up, so they’re going to probably look to commissioners for why the rates are going up. So that’s kind of frustrating…This is where the rubber hits the road. I don’t like the idea of passing along policies that I think are going to cost them more and decrease their reliability…So I hope the EPA listens carefully and sets up a timeframe that is reasonable.
What are some of the biggest energy issues facing your state?
North Dakota’s in a major oil boom right now…so the gas supply should not be difficult to come by…A lot of it is going to other markets now…Within the next couple of years, we’re short on power. So the pinch for us is getting enough generation on board soon enough.
This concept of reducing carbon emissions works a lot better in an environment where demand is shrinking. It’s much more challenging when you have to increase your generation so you’re looking at fewer emissions with more power—that’s a double whammy.
The large power users in our state, it isn’t fluctuating, it’s constant (take oil and gas producers, for example)…Some of the renewables don’t work as well for meeting that kind of demand, until somebody figures out how to store it.
This interview was conducted at the NARUC summer meetings in July 2014. To see Q&As with commissioners from other states, visit our interactive map. For a broader story about how state regulators from around the country are reacting to the EPA’s carbon emissions proposal, click here.
If you’re a commissioner and didn’t get to talk to Morning Consult at the conference, feel free to contact Emily Holden. We’d love to hear from other state officials and stakeholders too.