North Dakota Regional Haze

Docket EPA-R08-OAR-2010-0406

North Dakota Power Plant CEO Call/Meeting with Assi stant Administrator October 31, 2011

Meeting Notes

Attendees:

EPA Lea Anderson, Gail Fallon, Phil Lorang, Janet McCab e, Gina McCarthy, Monica Morales

Power Plants Ron Harper – Basin Electric Power Cooperative (BEPC ) Mac McLennan – Minnkota Power Cooperative (Minnkota ) David Saggau – Great River Energy (GRE) Elizabeth Gore – Brownstein Hyatt Farber Schreck (B HFS), LLP Policy Director

Meeting Notes:

Gore The EPA plan will have a huge impact on ND coops. She wants the EPA to accept the ND plan.

Harper BEPC services 2.4 million consumers. Harper showed a map of member state territories. BEPC has two power plants in ND. It also owns Great Pla ins Synfuels Plant. BEPC supports the ND SIP for low NOx burners and scrubbers. Harper disc ussed BEPC’s diversified portfolio. He requested EPA put its plan on hold to allow them to resolve issues with vendor guarantees and commercialization (for selective catalytic reductio n technology). The costs for BEPC are $260 million apart comparing EPA’s estimates/plan and ND ’s.

McLennan McLennan discussed Minnkota’s territory and diversi fied portfolio. He noted that $475 million in environmental controls were just completed on ND plants. He discussed rate increases already realized to cover pollution controls and re newable. He expressed concern about how to go back to customers with another rate increase wit hout guaranteed results. McLennan noted that for Minnkota the cost is $500 million apart co mparing EPA’s estimates/plan and ND’s.

Saggau Saggau stated that all the power generated by GRE g oes to MN. They serve 1.7 million consumers in MN. Coal Creek Station is the largest plant in ND. Coal Creek uses dry fine technology which involved a $270 million investment . He discussed various environmental benefits of this technology. He noted that EPA and State endorsed a 0.17 lb/MMBtu emission limit. The 0.12 limit EPA is asking the plant to d o is not possible without selective non-catalytic reduction technology. Since they are member-owned, all costs are passed on via straight rate2

increases to members. There will be no noticeable benefit at less than half of what EPA has designated as discernible. Coal Creek will already achieve visibility improvement by going to the 0.17 limit. This program is not about health, only visibility. GRE serves economically challenged communities. It has seen (rate) increas es over the past three or four years largely due to environmental controls. They were surprised abo ut EPA’s proposal with the requirement for Coal Creek to get down to a 0.12 emission rate.

Gore Gore emphasized that the ND plan is not status quo plan. It requires real reductions. They all had to agree to ND SIP. Companies have already inv ested a lot of money.

McCarthy McCarthy asked if the main concern was the increase in retail price.

McLennan McLennan said, yes. He talked about technical infe asibility of SCR and the real costs of $50 million per year in operating costs and more costs with reheat of gas. He noted there is no option to do something else and that you cannot walk away from the investment.

Harper Harper noted that BEPC plants in 2030 – 2040 are sc heduled to go off-line. Their costs, thus, are increased due to plant life.

McCarthy McCarthy noted that there has been a difference of opinion on technical feasibility and cost. She asked what they see as the path forward versus some one giving in.

The sentiment was noted by several parties that the y were not there to negotiate on behalf of the

State or EPA. All want a solution

McCarthy McCarthy said EPA has tried to give States a lot of latitude in the regional haze process. She noted that Jim (Martin) has tried to work this out and has struggled with this.

McCabe McCabe said there has been some talk about a pilot study. She asked where they stood with that.

McLennan McLennan said he was open to ideas of what a study might look like. He said that ND said remove the FIP and they will discuss a pilot study. Minnkota has been supportive of ND to date. He discussed the difference between field test (= 3 months) versus a pilot test (18-24 months). He said he was not opposed to discussing, but did n ot want to go against ND.3

Harper Harper discussed experience at Synfuels and that th e need to change catalyst every 3 years cost millions. There needs to be adequate and effective testing. He asked what the game plan is to get there.

McLennan

McLennan discussed the conditions under which SCR w ould work. Putting it at the end of the process adds costs for reheat. A 13-mile pipeline with a boiler is needed to get the flue gas

heated to make it work.

McCarthy McCarthy noted that Jim (Martin) struggled to find a way that we could get the study done to break through the barriers. Bringing new informati on to the table helps EPA.

McLennan and McCarthy Discussed flexibility of when testing would have to happen – 2008 SIP, 2013 look-back, and 2018 SIP. If not done for this SIP is the opportun ity gone forever? Is there flexibility about when it can happen?

McCarthy McCarthy noted that EPA is pretty boxed in. Others from EPA agreed.

CEO’s If the decision was made that testing would be requ ired, when would it have to be done by. Would pilot testing be added to the 5 year time lin e for compliance? They are looking at 4 years for testing and construction. Discussion continued regarding which plants might be involved in the testing.

McCarthy McCarthy provided two issues for further considerat ion that require agreement from all. These related to: 1) defining a clear scope for testing; and 2) determining the length of time for adequate testing. She said she would talk to Jim ( Martin) and get back to them reiterating that

EPA does want to work with them and ND.

Saggau Saggau reiterated that GRE was surprised that Coal Creek “got called out” of SIP. They invested $270 million to accomplish the 0.17 emissi on limit. Modeling the comparison between

the 0.17 emission limit down to the 0.12 limit show s results less than half of EPA’s visibility threshold. He asked McCarthy to review this.