# i BASIN ELECTRIC POWER COOPERATIVE

1717EASTINfERSTATEAVENUE

FAX: 701-557 5315

CHRIS VANDEVENTER LEGISLATIVE REPRESE.NTATIVE COMMUNICATIONS 6 ADMINISTRATION DIRECT:701-557-5416 CELL: 701426-9847 cvandevemer@bepc.com ATouchxwneRnegyCooperumcKtTestimony offered by Basin Electric Power Cooperative Before the Environmental Protection Agency

Clean Power Plan Denver, Colorado and Washington, DC

July 30, 2014



### Basin Electric Power Cooperative is a generation and transmission cooperative based in Bismarck, North Dakota. We serve more than 2.9 million consumers through 136 rural electric cooperatives across 9 states. We have a diverse energy portFolio including coal, wind, natural gas, and nuclear. More than a decade ago, we built the first commercial-scale wind projects in the Dakotas. Commitment to the environment was one of our founding principles more than 50 years ago.

Roughly 77 percent of the energy Basin Electric provides to its membership comes from coal. The Clean Power Plan as proposed could have serious impacts on affordability and reliability in our member systems. In 2013 we recommended several areas we wanted EPA to focus on in developing this rule. You responded to some, but left others on the table. As you listen to the comments today, and the written comments provided later, we urge you to keep all options open in crafting the final rule.

We appreciate EPA's willingness to consider a flexible approach to compliance. Unfortunately, the Clean Power Plan has raised more questions than it provides answers. Given the ambiguity and apparent contradictions in the draft rule, we request that you extend the comment period for an additional 60 days. With that, we would like to share some initial comments:

1. Regional plans. As a multi-state utility, we support a regional approach. However, what works for one state may not work for another. Therefore, states should have the option to develop utility-specific compliance plans without the need to join a multi-state plan.

2. Heat Rate. We designed and built our power plants to operate at maximum efficiency. There may be opportunities to improve generating efficiency where economical, but current New Source Review rules generally don't allow projects that result in higher levels of efficiency. EPA should ensure energy efficiency improvements pursued by utilities under this rule and approved by a state plan should not trigger NSR.

3. Early action. Any project that reduces CO2 emissions should be allowed for compliance as long as those reductions are verifiable and measurable. Through our subsidiary DGC, the Great Plains Synfuels Plant has captured and delivered more than 28 million tons of CO2 for ultimate sequestration in oil fields in southern Saskatchewan. As Administrator McCarthy said when she visited in March: "This facility is about the innovation in the United States. This facility is about what we can do when we work together." EPA should permit states to include innovation like this in their plans.4. Re-dispatch. A 70 percent capacity factor for combined cycle plants might

technically be possible, but permitting, transmission constraints, higher maintenance costs, and energy demand all affect a plant's ability to run. Your own analysis indicates NGCC plants will run on average just 56 percent of the time. EPA should recalculate the state targets to assume a more realistic capacity.

5. Renewable Energy. Do renewable energy credits or so-called green tags stay with the generating state or follow the load to the state in which the electricity is consumed? The rule appears to leave this matter up to the states. By 2016 we will have more than 1,000 megawatts of wind on our system. The uncertainty over the counting of green tags will certainly impact our ability to comply with the rule in our service area.

Finally, we have specific concerns about how EPA counted Basin Electric's combined cycle generation in South Dakota. Deer Creek Station was under construction for the majority of 2012, and went operational late in the year. It ran just 90 hours during its startup phase. Yet, EPA assumed the plant had a 1 percent capacity factor for the entire year. This is inaccurate and unfairly penalizes South Dakota in determining that state's emissions target. EPA should correct South Dakota's target to reflect that Deer Creek was under construction during 2012.

Thank you for holding this hearing and for taking the time to hear our concerns. We will be submitting formal written comments at a later date.