Electricity in Minnesota

1. Electricity in Minnesota The "landscape is our unwitting autobiography, reflecting our tastes, or aspirations, and even our fears, in tangible, visible form.... All our cultural warts and blemishes are there, and our glories too; but above all, our ordinary day-to-day qualities are exhibited for anybody who wants to find them and knows how to look for them.” (Lewis 1979)

7. General Resources • Minnesota levies world's first carbon tariff...against North Dakota (Boingboing Jan 6, 2010) • Regulation of Electric Utilities in Minnesota (House Research) • Review of Energy Facilities (Minnesota Public Utilities Commission) • Clear Skies in Minnesota (EPA) • Minnesota Power Plant News (EIN News) • Fresh Energy • Institute for Local Self-Reliance • CapX 2020 Transmission Background & Regulatory Information • The Deregulation of the Electricity Industry: A Primer (Cato Institute) • Causes and Lessons of the California Electricity Crisis (CBO)

8. Federal Energy Agencies Department of Energy - to advance the national, economic, and energy security of the United States; to promote scientific and technological innovation in support of that mission; and to ensure the environmental cleanup of the national nuclear weapons complex Strategic goals • Energy Security:  Promoting America’s energy security - reliable, clean, and affordable energy • Nuclear Security:  Ensuring America’s nuclear security • Scientific Discovery and Innovation:  Strengthening U.S. scientific discovery, economic competitiveness, and improving quality of life through innovations in science and technology     • Environmental Responsibility:  Protecting the environment by providing a responsible resolution to the environmental legacy of nuclear weapons production

9. Federal Energy Regulatory Commission an independent agency consisting of five commissioners appointed by the President of the United States with the advice and consent of the Senate, each serving five-year terms • regulates the interstate transmission of electricity, natural gas, and oil • reviews proposals to build liquefied natural gas (LNG) terminals and interstate natural gas pipelines as well as licensing hydropower projects • The Energy Policy Act of 2005 gave FERC additional responsibilities as outlined in its Strategic Plan

10. Nuclear Regulatory Commission created as an independent agency by Congress in 1974 • to regulate the nation's civilian use of nuclear materials • to ensure adequate protection of public health and safety • to promote the common defense and security • to protect the environment Regulates commercial nuclear power plants and other uses of nuclear materials, by issuing licenses, inspecting facilities, and enforcing its standards Reactors - reactors for generating electric power and research and test reactors Materials - uses of nuclear materials in medical, industrial, and academic settings and facilities producing nuclear fuel Waste - transportation, storage, and disposal of nuclear materials and waste, and decommissioning nuclear facilities

11. Power Marketing Administrations began in the early 1900s when power produced at Federal water projects in excess of project needs was sold in order to repay the Government's investment in the projects • Power Marketing Administrations market this power in such a manner as to encourage the most widespread use thereof at the lowest possible rates to consumers consistent with sound business principles Bureau of Reclamation Power Program

12. Environmental Protection Agency • Acid Rain • Air Pollutants • Air Pollution Emissions Overview • Climate Change • Nuclear Energy • Nuclear Power Plants • Ozone • Radiation Program • Radioactive Waste Management

13. General Resources • Energy Efficiency and Renewable Energy (DOE) • EERE State Activities and Partnerships • Energy Efficiency and Renewable Energy in Minnesota - news about advances in renewable energy and energy efficiency in Minnesota and links to Web sites published by DOE's Office of Energy Efficiency and Renewable Energy (EERE) that have specific information for Minnesota. • States possess a larger share of legal authority for energy policy • DOE's Office of Energy Efficiency and Renewable Energy (EERE) provides technical assistance to state and local jurisdictions that enables them to adopt renewable energy and energy efficiency technologies • DOE funding opportunities for state programs are listed here and are intended only for state agencies • Links to state energy resources

14. States possesses authority for energy policy • The Minnesota Public Utilities Commission regulates electricity, natural gas and telephone service industries in Minnesota • Board of Electricity, Minnesota Department of Labor and Industry – under the statutory authority of Minnesota Statutes 326B.32 establishes an electrical code and inspects buildings for compliance, issues licenses to individuals working with the code • Minnesota Environmental Quality Board develops policy, creates long-range plans and reviews proposed projects that would significantly influence Minnesota’s environment including electricity generating stations and transmission lines

15. Energy Policy Act of 2005 Public Law 109-58 August 8, 2005 1,700 pages long. Tax breaks by subject area • $4.3 billion for nuclear power • $2.8 billion for fossil fuel production • $2.7 billion to extend the renewable electricity production credit • $?.? Billion for the Freedom Car initiative (1.7 billion 2003 CATO estimate) • $1.6 billion in tax incentives for investments in clean coal facilities • $1.3 billion for conservation and energy efficiency • $1.3 billion for alternative motor vehicles and fuels (ethanol, methane, liquefied natural gas, propane) • $?.? Billion for hydrogen research • The Congressional Budget Office estimated the Act will increase direct spending by $1.6 billion, and reduce revenue by $12.3 billion between 2006 and 2015

16. Major items • Provides a tax credit of up to $3,400 for owners of Hybrid vehicles • Authorizes loan guarantees for "innovative technologies" that avoid greenhouse gases, which might include advanced nuclear reactor designs as well as clean coal and renewable energy • Increases the amount of biofuel (usually ethanol) that must be mixed with gasoline sold in the United States to triple the current requirement (7.5 billion gallons by 2012) • Seeks to increase coal as an energy source while also reducing air pollution, through • authorizing $200 million annually for clean coal initiatives • repealing the current 160-acre cap on coal leases • allowing the advanced payment of royalties from coal mines • requiring an assessment of coal resources on federal lands that are not national parks • Authorizes subsidies for wind energy, and other alternative energy producers

17. Major items • Adds ocean energy sources including Wave power and Tidal power for the first time as separately identified renewable technologies • Authorizes $50 million annually over the life of the bill for a biomass grant program • Contains several provisions aimed at making geothermal energy more competitive with fossil fuels in generating electricity • Requires the DOE to study and report on existing natural energy resources including wind, solar, waves and tides • Provides tax breaks for those making energy conservation improvements to their homes • Provides subsidies for oil companies • Extends Daylight Saving Time by approximately four weeks • Requires that no drilling for gas or oil may be done in or underneath the Great Lakes • Sets federal reliability standards regulating the electrical grid (done in response to the Blackout of 2003)

18. Provisions in the original bill that were not in the Act • Limited liability for producers of MTBE • Drilling for oil in the Arctic National Wildlife Refuge (ANWR) • Increasing vehicle efficiency standards (CAFE) • Requiring increased reliance on non-greenhouse gas-emitting energy sources similar to the Kyoto Protocol

19. United States Generation

20. Today, renewable energy sources—solar, wind, biomass, and hydroelectric power—account for 9.4% of the total electricity generated in the United States • Hydroelectric power • Biomass power 19% of the total renewable electricity, ¾ of the non-hydro renewable electricity. (EIA, 2004) • Most of this biomass power is produced by direct-fired combustion from wood residues generated by the forestry industry, urban wood waste, and pulp and paper mills. • Only about 20% efficiency, • Biomass can be used in 37% efficient integrated gasification combined cycle (IGCC) • Recent advances also provide the means to convert the biomass to hydrogen, which can be used as fuel or as a component in products such as ammonia -based fertilizers. • Minnesota Biomass – Hydrogen and Electricity Generation Potential Minnesota PCA)

21. Geography of Electricity • Generating electricity • Transmitting electricity • Using electricity • Structure of Industry • Electric Cooperatives • Municipal Power • Investor-owned Utilities

22. Generating Electricity • Minnesota had 46 coal-fired generating stations in 2005 • 43.8% of the state's total electric generating capacity • 22nd out of the 50 states in terms of coal-fired electric generating capacity • In 2006, Minnesota's coal-fired power plants produced 34.9 million tons of CO2, more than 80,000 tons of sulfur dioxide, and 76,000 tons of nitrogen oxide • Coal-fired power plants were responsible for 34.1% of the state's total CO2 emissions • In 2005, Minnesota emitted 19.9 tons of CO2 per person, roughly the U.S. average • In 2007 Minnesota announced that it would add a "carbon fee" to electricity imports from North Dakota of between $4 to $32 per ton of carbon dioxide emitted by the state's coal-fired power plants, to begin in 2012 • In early January 2010 North Dakota announced it was taking legal action against Minnesota arguing that the law would unfairly tax electricity imports from North Dakota's coal-fired power plants.

24. Coal fired plants Big Stone Big Stone (SourceWatch)

25. Federal Involvement in Producing Electricity

26. Federal Involvement in Electricity industry • The electric power industry became recognized as a natural monopoly in interstate commerce (product most efficiently provided by one supplier) • All federal economic development programs increase electrical use • Federal government owned most of the Nation's hydroelectric resources • During Depression, Congress took two actions that affected the electric power industry

27. Federal Power Production • Bureau of Reclamation • Bonneville Power Administration • Western Area Power Administration • Southeastern Power Administration • Tennessee Valley Authority • 1933 Tennessee Valley Authority • 1936 Hoover Dam • 1937 Bonneville Dam • 1941 Grand Coulee Dam

28. Rural Electrification Administration (Economic History Association) • REA created in 1935 as an independent bureau • Rural Electrification Act of 1936 • Established a program for electrifying American farms – by 1941 35% electrified • Reorganized in 1939 as a division of U.S.D.A. • Abolished in 1994, replaced by the Rural Utilities Service to oversee USDA’s Electrification, Telecommunications, and Water and Waste Disposal Programs • Now run by the USDA Rural Development's Electric Programs

29. Goal of REA to provide rural areas and towns - populations under 2,500 - with inexpensive electric lighting and power • Provided long-term loans • state and local governments • farmers' cooperatives • nonprofit organizations • REA-backed cooperatives enjoyed federal power preference and exemptions from taxes and from some regulations

30. Cooperatives

31. Minnesota Cooperatives • 6 generation & transmission cooperatives • 45 distribution cooperatives • Involves 15% of electricity sold in state • In Minnesota cooperatives serve approximately • 560,000 residential customers • 37,000 commercial customers • 770 industrial customers

32. Minnesota Rural Electric Cooperatives • Governed by a board of directors elected by the customers • Traditionally, cooperative boards set their own electricity rates • 6 generation and transmission cooperatives • 44 electric distribution cooperatives • serve 741,000 customers , approximately, 1.8 million people, about 92% of which are farm and non-farm rural residents • covers 85% of the geographic area of the state • own and maintain more than 122,000 miles of distribution line • averaging 6 consumers per mile of line • range in size from 2,000 to 122,000 consumers, with a median size of 6,424 • sell approximately 14 billion kilowatt hours of electricity per year • represents about 18% of the state's total kWh sold

33. Minnesota Rural Electric Association

34. Minnesota Rural Electric Association National Rural Electric Cooperative Association Touchstone Energy Cooperatives a nationwide alliance of electric cooperatives Comprising more than 600 electric co-ops in 44 states it is the largest utility in the country, delivering energy and energy solutions >17 million customers The Minnesota Rural Electric Association is the regional partner in Minnesota Forty cooperatives in Minnesota are part of this alliance

35. Generation & Transmission Cooperatives • Basin Electric Power Association. Bismark, SD. • Provides power to 23 cooperatives, serving 1.7 million in 9 states • 4 coal-fired generating stations • Laramie Station part of Missouri Power Project • Great Plains Synfuels Plant (1984) • Dairyland Power Cooperative. La Crosse, WI • Provides power to cooperatives and 13 municipal • 5 generating plants – 3 base load

36. Generation & Transmission Cooperatives • East River Cooperative. Madison, SD • Provides power to 21 cooperatives and 1 municipal (9 counties in west MN) • 3 generating plants • Great River Energy. Elk River, MN - provides electricity to 29 coops • 3 generating stations, 1 in MN • Minnkota Power Cooperative Inc. Grand Forks, ND - provides power to 11 coops and 12 municipals in MN and ND • 1 generating station • L & O Power Cooperative. Rock Rapids, IA

37. Great River Energy • Generation and Transmission cooperative • Owned by 28 member distributive cooperatives • Coal (77%) • Coal Creek Station (ND) • Stanton Station (ND) • Natural Gas/Oil Peaking Plants • Renewables • Biomass – Elk River Station • Wind purchases • Power from cows • Hydroelectricity

38. Great River Energy

39. Dairyland Power Cooperative • Generation and transmission cooperative • Provides electricity to • 25 electric distributive cooperatives • Freeborn Mower Cooperative Services • People’s Cooperative Services • Tri-County Electric • 19 municipal utilities • Great River Energy • City of Lanesboro • City of St. Charles

40. Dairyland Power Cooperative • Coal • Alma Site • Genoa Station 3 • Weston #4 Coal-Fired Power Plant • Natural gas/Oil • Nuclear • Renewables • Hydroelectric • Landfill gas • Seven Mile Creek Landfill Station • Timberline Trail Landfill Station • Central Disposal Landfill Station • Cow power • Wind

41. Minnkota Power Cooperative • Milton R. Young Station is the primary mine-mouth generating facility for Minnkota • Located near the town of Center, N.D., the Young Station consists of two units that are supplied with lignite coal from the adjacent mines of BNI Coal, Ltd  • Young 1, owned and operated by Minnkota began commercial operation on Nov. 20, 1970  • Young 2 began operations on May 11, 1977 • owned by Square Butte Electric Cooperative and operated by Minnkota • Minnkota purchases 29% and Minnesota Power purchases 71% of the power

42. Missouri Basin Power Project • 6 regional cooperatives that constructed coal-fired Laramie River Station Wheatland WY • Basin Electric Power Cooperative, Bismarck, ND - construction manager and operator of Laramie River Station, generation and transmission to distribution cooperatives in nine states of the Missouri Basin • Tri-State Generation & Transmission Association, Inc., Denver, CO, supplier to 34 rural electric cooperatives in western Nebraska, northeastern Colorado and Wyoming • The Western Minnesota Municipal Power Agency, Ortonville, MN, a group of municipally owned electric systems in Minnesota - represented in the Project by the Missouri River Energy Services, Sioux Falls, SD • Lincoln Electric System, Lincoln, NE, the largest municipally owned electric system in the Missouri Basin • Heartland Consumers Power District, Madison, SD, a public power district serving South Dakota agencies and municipal electric systems in South Dakota, Iowa and western Minnesota • Wyoming Municipal Power Agency Lusk WY.

43. Distribution Cooperative • Wright-Hennepin Cooperative Electric Association Rockford MN Dakota Electric Association. Farmington, MN

44. Municipal Utilities

45. Minnesota Municipal Utilities • 308,000 residential customers • 46,000 commercial customers • 3,000 industrial customers • Total population of municipal electric utility cities is approximately 643,000 • 82% of have fewer than 5,000 customers; about 38% have fewer than 1,000 customers, and about 20% have fewer than 500 customers. • 125 municipal electric municipal utilities • Rochester over 100,000 residents • Moorhead 35,900 • Anoka, Austin, Owatonna, and Shakopee are the only utilities with more than 10,000 American Public Power Association Minnesota Municipal Utilities Association

46. Minnesota Municipal Power Agency • Established 1992 – to secure an adequate, economical, and reliable supply of electricity for its members • MMPA members include the cities of Anoka, Arlington, Brownton, Chaska, Le Sueur, North St. Paul, Olivia, and Winthrop. • Shakopee and East Grand Forks are MMPA customers • MMPA utilities serve almost 40,000 retail customers • Minnesota River Station – natural gas generating station • Faribault Energy Park • Silver Lake Plant Rochester • Manitoba Hydro • Western Power Administration

47. Southern Minnesota Municipal Power Agency • Established 1977 • Generates and sells wholesale electricity to its 18 municipally-owned member utilities • SMMPA member utilities are located throughout the state, most are in southern Minnesota. • serve over 95,000 residential customers • over 12,000 commercial and industrial customers • Fuel Source • 41% share of the 884 MW Sherco 3 coal-fired generator near Becker, MN. • renewable energy sources – wind, biodiesel and waste-to-energy, intermediate and peaking units owned by member utilities Owatonna Utilities

48. Missouri River Energy Services • Supplies electricity to 60 municipalities in Iowa, Minnesota, North Dakota, and South Dakota • Formed in the early 1960s as “Missouri Basin Municipal Power Agency” to help municipalities that operated their own electric systems to work together • Initially an informal association of northwest Iowa municipalities that managed their own electric systems • These municipalities decided to purchase the hydroelectric power generated at facilities along the Missouri River from the Western Area Power Administration • 50% of the electricity comes from the Missouri River • Coal-fired Laramie River Station • Exira Station and Watertown Power Plant - oil • Additional electricity wind and diesel units that are located, owned, operated, and maintained by member utilities

49. Western Minnesota Power Agency • Dba Missouri River Energy Services • hydroelectricity • wind • fossil fuel • Members • Moorhead Public Service • Detroit Lakes Public Utilities • Central Minnesota Municipal Power Agency • A joint action agency of 12 members located in south central Minnesota with similar needs but also unique differences • Each member maintains control over its power supply portfolio • Some have partial requirements power supply contracts with other power suppliers and only get supplemental service • Others get all their requirements • Members

50. Investor-owned