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Patrick Springer, Published June 30 2013

Reducing carbon emissions could cause rise in electricity costs

FARGO – Utility executives say President Obama’s pledge to control carbon emissions could increase electricity costs that will deliver a jolt to consumers.

Scott Handy, chief executive officer of Cass County Electric Cooperative, said utilities have no proven, commercially viable technology to capture carbon emissions from existing coal-fired plants.

The power cooperative has “grave concerns,” he said, adding that its supplier, Minnkota Power Cooperative, has made a $425 million investment to reduce smokestack pollution to comply with haze regulations.

As a result, the cost of electricity for Cass County Electric customers jumped to 6.7 cents per kilowatt hour last year, compared to 2.7 cents per kilowatt hour 10 years earlier, Handy said.

Cass County Electric derives almost 60 percent of its power from coal, 30 percent from wind and 10 percent from hydropower.

Now the cost of electricity, once much lower than the national average, is on par with the national average of about 7 cents per kilowatt hour, he said.

Mark Nisbet, Xcel Energy’s principal North Dakota manager, said the utility is proud of the progress it has made in expanding its mix of carbon-free power sources, which provide almost two-thirds of its electricity.

“We’ve reduced our carbon by 22 percent since 2005,” he said, adding he hopes the company will be given retroactive credit for that achievement.

Nisbet and other utility representatives said they hope the Obama administration will work with industry to implement carbon reductions in a way that avoids price spikes for consumers.

“If it’s done poorly, it could obviously have an impact,” Nisbet said.

Steve Van Dyke, a spokesman for the North Dakota Lignite Energy Council, said the United States can’t afford to “walk away from coal.”

He added: “Substituting natural gas for coal to generate electricity would be a poor public policy decision, as it would drive up the price of natural gas and electricity. In our cold climate, many North Dakotans heat their homes with coal.”

If requirements to reduce carbon take effect before commercially viable emission control technology are available, Cass County Electric would be forced to drop coal-fired electricity, Handy said.

If so, that places the cooperative in a bind because Minnkota and its retail cooperatives still must repay the loans for the pollution controls, Handy said.

“I think this will be litigated,” he said, referring to industry backlash to regulations that are to be put into place in 2016.

Brad Crabtree, policy director for the Great Plains Institute, agreed commercially viable carbon capture technology remains a challenge for industry.

But, he added, “It is very misleading to claim that the technology to capture and manage carbon dioxide emissions from coal power plants does not exist.”

Southern Co. has demonstrated the capture of more than 100,000 tons of carbon dioxide per year from a plant in Alabama, and the Chinese have achieved similar results from two existing plants, reportedly at low cost, Crabtree said.

The solution for the cost dilemma could come from federal tax credits for capturing carbon dioxide and selling it to the oil industry to pump oil from mature fields that otherwise couldn’t be recovered, he said.

Revenues from the oil sales would more than cover the tax credits, he said.

Readers can reach Forum reporter Patrick Springer at (701) 241-5522