BISMARCK-The Trump administration may have rescinded the Clean Power Plan, with its federal carbon dioxide emissions standards, but Basin Electric Power Cooperative isn't taking any chances.
As part of the cooperative's annual membership meeting in Bismarck this week, member owners will participate in a Strategic Direction Meeting with two goals in mind: help shape a federal carbon emissions reduction plan that is friendly to coal and come up with a way to compete with renewables in the cooperative's new marketplace.
Basin Electric CEO Paul Sukut said he has had the chance to meet with U.S. Environmental Protection Agency Administrator Scott Pruitt on three occasions. He and other power producers have told the agency the same thing. He said Basin and major producers, such as Duke Energy and Xcel Energy, agree repealing CPP is not enough. A new plan must be made - one that will be possible for coal to meet.
In the meantime, Sukut said it is also important that his organization help demonstrate that Basin's carbon footprint can be reduced.
Basin Electric is a two-year member of the Southwest Power Pool regional transmission organization, a membership that allows the cooperative to sell excess energy produced into the market and buy when there are production shortages.
On that market, there are 790 generating units, according to SPP CEO Nick Brown. Of those, natural gas makes up 40.8 percent of capacity, coal makes up 31 percent and wind makes up just under 20 percent.
Unlike coal-fired power in many other parts of the country, North Dakota's and Basin's power plants are fed by coal mines located right at their doorsteps, according to Sukut. This makes North Dakota lignite competitive with natural gas, but zero-cost wind still outstrips coal.
In April, for example, Basin brought down one of its plants and kept it down longer than expected because it was cheaper to buy wind energy on the market than it was to produce its own power.
To adapt, the power cooperative's members are talking operational changes, potentially following Great River Energy Power Cooperative's example in a process called cycling.
Cycling allows large coal-fired power plants, which were designed to run at full capacity at all times and are difficult to fire up in a hurry, to fluctuate between full capacity to a greatly reduced rate when the wind is blowing.
"We've already found ways to lower our minimums," Sukut said.
Basin is able to compete on the SPP market now but longer term it will be difficult and the organization must look for solutions, he said.
As for its current finances, an increase in power generation has helped put Basin Electric on stronger financial footing after a tough 2016.
Sukut said a "perfect storm" of low natural gas prices that lessened the competitiveness of Dakota Gasification Company's synthetic natural gas and byproducts and mild weather in 2016, which reduced customers' power needs, led to a nearly 12 percent rate increase for Basin customers last year.
"We're in good shape now," Sukut said.
Hot summer weather helped put margins back on track, record margins in some cases, Sukut said.
In order to prevent itself from getting into a similar situation in the future, the power cooperative has begun a Margin Stabilization Plan.
Sukut said this will work somewhat like a savings account, putting money aside to offset rate increases in tough times.
Sukut said DGC is still experiencing some financial stress, but the cooperative is hopeful a restructuring and the pending opening of its new urea fertilizer facility will help.
The cooperative is developing a marketing plan for the 600,000 tons of fertilizer it will produce annually, a new dynamic for the synthetic natural gas plant, according to Sukut. When Basin first purchased DGC, the plant made 98 percent of its revenue from natural gas sales. Today that number is closer to 23 percent.