Murphy’s Law #44

October 11, 2017

This is about the two days just spent in Bismarck covering the Energy Development and Transmission Committee (EDTC), which is one of the North Dakota Legislature’s Interim committees that I follow. It is the most active of all interim committees and they are charged with some issues that could change our taxes as well as determine where our dollars go. Of the three issues (study taxation of wind energy, the “Hub Cities” formula of how some oil money is distributed and finally, deciding if tax incentives are needed for companies to refrack wells), this one was more about wind, coal, energy markets and the electrical grid. Wind was held to the fire a bit this last session as some coal interests attempted to even the playing field. Wind has no state tax advantage, but there is a federal tax credit which is phasing out over the next five years. By the way, it occurred to me during the hearings that electricity generated in ND is similar to soybeans in that over 70 percent leaves the state.
Committee members were tutored all day by members of EmPower ND. EmPower was started back when John Hoeven was governor with the purpose of uniting all ND energy suppliers to avoid having the Legislature pick winners and losers while Coal, Wind, Natural Gas, Oil and others fought for favor each session. By and large, EmPower has brought these groups to the table and achieved much more unity than before. But this past session threatened the peace when coal came up with some initiatives that wind did not appreciate. Understand that many major providers of electricity – EmPower members all- such as OtterTail, MDU, Great River Energy, Allete, Xcel Energy and others have both coal and wind generating facilities.
Regional Transmission Organizations (RTOs) and Independent System Operations (ISOs) such as our regional Midcontinent Independent System Operator (MISO) and Southwest Power Pool (SPP) have evolved over the decades because our individual power providers like the above mentioned companies sometimes had problems with reliability (storms, accidents, shutdowns for maintenance, etc.) and needed to buy power from others. Committee members were treated to the complexity of these markets and how the fuel costs were relevant to which power source was first to be purchased or sold as demand climbs. There is also the Day Ahead market and a same day market for energy because temperatures, wind, sun, cloud cover and other factors are so changeable. Pretty much everyone’s head was swimming as EDTC Chair Senator Rich Wardner ended the first day by quoting from his teaching experience that a brain can only take in so much in one day. In my next entry I will discuss what happened the second day.