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On August 31, 2018, the U.S. Environmental Protection Agency (EPA) published in the Federal Register a proposed rule pursuant to Section 111(d) of the Clean Air Act that would establish emission guidelines for states to develop plans to limit carbon dioxide (CO2) emissions from existing coal-fired power plants. The proposed rule also provides direction on implementation of the emission guidelines and proposes revisions to the new source review program to help prevent it from being a barrier to efficiency improvement projects. The proposed Affordable Clean Energy (ACE) rule would replace the 2015 Clean Power Plan.
Under the proposed rule, EPA defines the best system of emission reduction as heat rate efficiency improvements based on a range of “candidate technologies.” EPA identified a list of the “most impactful” heat rate improvement measures to serve as the “candidate technologies” including equipment upgrades and best operating and maintenance practices for coal-fired power plants. States would be required to consider these technologies in establishing standards of performance for individual affected coal-fired units. EPA proposed that states would set a specific allowable emission rate (expressed on a pound of CO2 per MWh-gross rate) for affected sources; however, states would have broad discretion in establishing the appropriate emission rate for each particular unit. The period for public comment closed on October 31.
Great River Energy has two coal power plants, Coal Creek Station and Spiritwood Station, affected by the proposed ACE rule. Both located in central North Dakota, the plants have combined-heat-and-power attributes which make efficient use of the steam remaining after electricity generation. In addition, the coal used at the plants is enhanced through Great River Energy’s patented DryFiningTM system, which dries and refines lignite to make the plants cleaner and more efficient. Both plants have made changes or improvements to plant heat rate. We are also able to co-fire Spiritwood Station with natural gas. As a result, we believe Great River Energy is well-positioned to avoid significant capital expenses to comply with the proposed rule. If the rule is finalized, Great River Energy will participate in the process to develop North Dakota’s plan to implement the rule.
In addition, the proposed ACE rule does not change Great River Energy’s plans to evolve our power generation portfolio and pursue our goal of achieving 50 percent renewables by 2030. We also will continue to find ways to improve the operational, economic and environmental performance of all of our existing power plants.
Great River Energy believes the proposed ACE rule appropriately focuses on actions that can be taken at coal-fired power plants to improve efficiency and provides states with a key role in developing specific requirements for individual sources, both consistent with EPA’s authority under the Clean Air Act. We also support the flexibility given to the states as they develop their implementation plans. Flexibility is critical in ensuring the lowest costs for complying with a final rule and helping to ensure we can respond to market conditions, technology development and industry changes.
Given our maintenance history at our coal plants, use of DryFining technology, combined-heat-and-power installations, and natural gas co-firing, Great River Energy expects to assist the North Dakota Department of Health in demonstrating that further heat rate improvements are not economically or technically viable at our facilities. We will work with the state to ensure the benefits of these technologies are recognized.
We believe the proposed ACE rule is the right step toward achieving further regulatory certainty in regulating CO2 emissions – certainty for which we have long advocated. We look forward to actively participating in the regulatory process. Great River Energy takes actions and makes decisions based on what is best for our member-owner cooperatives while continuing to operate all of our generation resources in an environmentally responsible and economic manner.
Nov. 6, 2018