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State officials talk energy regulations

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Energy Dickinson, 58602

Dickinson North Dakota 1815 1st Street West 58602

DICKINSON - State officials responded Wednesday to the news of Westmoreland Coal Company withdrawing from the Lignite Vision 21 Program.

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The president of the Colorado Springs, Colo., company pointed to uncertainty regarding future emissions regulations as the reasoning behind the decision.

"There is much uncertainty in the utility sector on when future carbon regulations will come into effect," Westmoreland Coal Company President Keith Alessi said in a letter to the Industrial Commission of North Dakota. "This has slowed the development of coal fired power plants."

North Dakota Gov. John Hoeven said Westmoreland deciding it can't go forward with the proposed Gascoyne plant at this time is evidence of how energy development projects are constantly evolving.

"What we're seeing is the projects are changing and they are changing from the standpoint that they need to have a carbon management plan," Hoeven said.

As part of its withdrawal from the program, the company will return $562,500 in matching funds to the state.

According to Hoeven, the funds will be used to support other energy projects that are continuing throughout the state.

One of those projects is the coal-gasification plant in development by Great Northern Power Development near South Heart.

"Those projects are moving forward and we are going to support those programs that are going forward," Hoeven said. "The projects that are moving forward are those that have plans to manage the carbon."

Public Service Commissioner Kevin Cramer said the withdrawal of Westmoreland could have further positive impacts on other energy projects in the state beyond funding.

"In many respects the backup of the Westmoreland project frees up the regulatory climate in the southwest part of the state," Cramer said. "At this point, I think the gasification plant becomes more realistic. ...By backing out of it, Westmoreland clears the way for Great Northern."

Cramer said he foresees a transition from coal-power to coal-gasification plants in the near future because of coal-gasification's great ability to manage carbon dioxide emissions.

Carbon emissions have become a hot topic in recent years as fears about global warming have brought the issue to the front of the public's mind.

Currently, Sen. Joseph Lieberman, I-Conn., and Sen. John Warner, R-Va., are drafting a bill and preparing legislation in Congress for debate that would regulate carbon dioxide emissions.

Public Service Commissioner Tony Clark said Westmoreland's withdrawal shows the impact future legislation could have on the energy industry, specifically in North Dakota.

"This issue of potential federal carbon regulation could have a far reaching impact on North Dakota's economy and this project is just one example of that so far," Clark said. "...I think what it shows, is the really devastating impact that the Liebermann-Warner legislation could have on energy in North Dakota. What they propose to do is make it much more expensive to make energy through coal. Problem is consumers, at the end, pay for it."

Cramer said the policies being put in place by state governments and the federal government is based more on emotion than on hard science.

"For the last few years we've only been hearing one side of the carbon debate, now we are seeing the other side push back a little bit," Cramer said. "...They are making major policy decisions based on the politics of the times as opposed to making decisions based on the solid science of the time."

Policies in states such as Minnesota have led to a greater demand for clean forms of energy and Pubic Service Commissioner Susan Wefald said North Dakota hopes to supply that demand.

North Dakota exports a large majority of its power, nearly two-thirds, so its energy development is sensitive to changes in market demand.

Alessi alluded to difficulty finding a customer for the coal power plants in his letter.

"At this time can not predict when a long-term customer can be found and the actual plant construction could commence," Alessi said.

Minnesota is one of the state's chief energy customers and is demanding cleaner energy, such as wind power, after the state legislature made steps to lessen Minnesota's "carbon footprint."

"Let's just say I'm not surprised," Wefald said. "The customer for our power is the state of Minnesota, and they have determined through legislation that they want to reduce their carbon footprint. Therefore, that is going to have a real impact on what forms of energy are going to be built and developed in the state of North Dakota."

Hoeven said the state still believes in coal power, but is actively pursuing alternatives.

"What we've always said is that we need to develop all of our sources of energy," Hoeven said. "There's not one of our sources of energy that is going to provide everything that we need. ...We need the whole gamut."

Hoeven pointed to various forms of energy in development throughout North Dakota, including ethanol, bio fuels, wind, geothermal and several more.

"We target energy development as a major industry in North Dakota and we're seeing major energy development throughout the state," Hoeven said.

Hoeven added that helping the various forms of energy work together is imperative to making things work and that the state is encouraging companies to develop "power parks."

For example, the ethanol plant recently constructed at the Coal Creek power plant complex in Bismarck is completely operated by the steam running out of the nearby coal power plant.

"What you see is the projects evolving to produce more energy but to do it in an environmentally friendly way," Hoeven said.

According to Hoeven, the carbon dioxide issue is just the latest in a list of emission concerns they've had to deal with. Initially it was sulfur dioxide, then nitrous oxide, most recently mercury and now carbon dioxide.

Hoeven said the coal power industry developed technology to deal with those issues and it will deal with the current issue as well.

North Dakota doesn't plan to sit back and let the coal power industry develop emission sequestering technology on its own Hoeven said.

In cooperation with the University of North Dakota's Energy and Environmental Research Center, the federal government and private energy companies, the state has helped develop technology that will be deployed at Basin Electric's Antelope Valley power plant to help capture carbon emissions.

"Our customer seems to want more wind power than they want coal power," Wefald said. "If there's a way in the future that we can have a coal power plant without producing carbon dioxide...that may change."

If that does change, don't be surprised to see Westmoreland ramp up its development in Gascoyne again.

"Westmoreland does intend to continue development of the Gascoyne site," Alessi said. "We cannot guarantee that this will take place any time soon."

Clark said wind power, while a good alternative power source, is not as reliable as coal generated power.

"Wind is a very good peaking source, but you still need power that is available 24 hours, seven days a week," Clark said. "You start looking at the list and yeah, there are other ways to produce power, but not ways to produce the base load power at the price level of coal."

Wefald agreed, stating that the recent climate has most likely been unfair to coal-generated power, but it is something the industry has to deal with.

"I think that coal is a good product and although I believe in global warming, I do not believe it is being caused by emissions from power plants," Wefald said. "I don't agree with that, but I'm not the customer. ...And the customer is right, how do you argue that, they're making the choice."

"I think at some point reality is going to slap people in the face," Clark said. "We've had this period where people are opposed to energy development of any kind."

On May 28 in Bismarck, leaders, including Hoeven and Sen. Byron Dorgan, D-N.D., will meet to discuss climate change at the North Dakota Climate Change Summit.

Cramer said he hopes to get one point across to the congressional delegation about emission regulation.

"My goal in this summit will be to impress upon the senator that these things have a serious implication on the economy of this state and of the nation," Cramer said. "...We can't just swallow it like Kool-Aid. We have a responsibility to lead and not follow the pop culture of the country and not just do something because Al Gore made a movie."

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