N.D. lawmakers accuse PTC of ‘wreaking havoc’ on coal sector

By Daniel Cusick | 04/04/2017 08:01 AM EDT

North Dakota is not waiting around for the Trump administration to save its coal industry.

North Dakota is not waiting around for the Trump administration to save its coal industry.

A group of Roughrider State lawmakers are seeking an immediate repeal of the federal production tax credit (PTC) for wind energy, a policy that they say has undermined coal-fired power generation in North Dakota, eroded the state’s tax base and threatens to put thousands of coal miners out of work.

In a March 23 letter to North Dakota Sen. John Hoeven (R), the leaders of the North Dakota Legislative Assembly argue the PTC, which currently provides a 2.3-cent-per-kilowatt-hour tax credit to wind farm owners, has fostered an unwanted wind turbine invasion across North Dakota.


"We are concerned about the federal government subsidizing out-of-state companies to use North Dakota as a staging area to mine federal taxpayer funds," the lawmakers wrote. "The PTC is wreaking havoc on the coal industry and its employees who have paid their fair share into the federal coffers, and now those dollars are being used to put them out of business."

They further argue that surging wind energy development has undermined North Dakota’s lignite coal industry, which directly employs nearly 4,000 people and generates roughly $3.4 billion in economic benefits annually, according to a 2015 analysis by North Dakota State University cited by the Lignite Energy Council, a trade organization representing North Dakota’s coal industry and coal-fired utilities.

Regionally sourced lignite coal has traditionally been the primary source of fossil-based electricity generation in North Dakota, where six lignite-burning power plants have a combined production capacity of just under 4,000 megawatts. Virtually all of that power flows to utilities in the Dakotas, Minnesota and Montana.

Kami Capener, a spokesman for Hoeven, said in an email that the senator had received the letter and responded with an assurance that he "continues to work hard on behalf of North Dakota’s lignite energy industry."

Lawmakers pursue restrictions on wind farms

Hoeven, who was North Dakota’s governor from 2000 to 2010, has long advocated for both renewable- and fossil-based energy. In fact, it was Hoeven’s March 17 statement about a recent wind power announcement from Xcel Energy Inc. that drew the state lawmakers’ ire.

Responding to news that Xcel would expand its wind energy investment in North Dakota, Hoeven said the utility had provided "a good example of how we can use all of our resources to create jobs and economic growth," and cited the PTC as "a good example of federal policies that provide the certainty our energy industry — both renewable and traditional — need to succeed."

That drew the following rebuke from the six senior lawmakers, including Senate Majority Leader Rich Wardner, House Majority Leader Al Carlson, and the chairs of each chamber’s taxation and energy resources committees.

"We want to respond very clearly," the lawmakers wrote. "There are NO TRADITIONAL electric generation sources being developed or even planned in North Dakota, due to the last administration’s efforts to regulate fossil fuels out of existence, and primarily because of the PTC."

Beyond a congressional repeal of the federal tax credit, which is currently set to expire in 2020, North Dakota’s coal allies have pursued legislative changes in Bismarck, including new restrictions on wind farm permitting. To date, those initiatives have failed, including a bill this week that would have required developers to secure a "certificate of need" from the state Public Service Commission before building new wind farms.

Wind energy proponents argue such measures, whether at the federal or state level, will have little effect on North Dakota’s coal industry, whose fate is tied as much to the shifting economics around energy fuels as it is to government policies.

Chris Kunkle, Western regional policy manager for Wind on the Wires, a St. Paul, Minn.-based advocacy organization, said that as recently as a year ago, many North Dakota politicians were welcoming wind farm investments as another source of state jobs and tax revenue.

Coal jobs still far outpace wind

But as wind energy has evolved into a cost-competitive, emissions-free source of electricity, utilities that once relied heavily on North Dakota lignite are beginning to shift away from coal, or at least shrink lignite’s share of their power portfolios. Today, North Dakota is the nation’s 11th-largest wind power producer, with just under 2,740 MW of installed capacity.

Kunkle also noted that much of the wind energy development occurring in North Dakota is driven by regional demand, not in-state use. So any effort to keep wind farms out of the state will bleed investment and jobs to neighboring states, where utilities will continue to seek out low-cost, emissions-free power. North Dakota’s coal industry, meanwhile, will continue to struggle to maintain its market share, he said.

To date, only one North Dakota coal-fired power plant — the 189-MW Stanton Station — is scheduled for closure next month. The plant’s owner, Great River Energy, supplies electricity to 28 electric cooperatives in Minnesota, where political pressure has mounted on utilities to shift away from coal. Great River officials have said they will replace Stanton’s output with a combination of conservation, efficiency measures and market power purchases, including from new North Dakota wind farms.

Great River also recently began operating its much larger North Dakota coal plant, the 1,100-MW Coal Creek Station, in a way that optimizes the use of lower-cost natural gas and wind energy. That change also rankled the state’s coal industry and has stoked fears of additional job losses in the mining sector.

Observers say those decisions, combined with fears about how the Obama administration’s soon-to-be-withdrawn Clean Power Plan would affect North Dakota’s remaining coal plants, triggered a wave of protectionism toward the state’s lignite industry and a backlash against wind power, which saw one of its largest growth spurts in North Dakota in 2016.

According to the American Wind Energy Association, North Dakota’s wind farms have a combined generating capacity of 2,746 MW, including 603 MW of new capacity added last year. The state’s 27 wind farms and associated manufacturing and service sectors are credited with supporting between 3,000 and 4,000 direct and indirect jobs, according to AWEA.

By contrast, the coal sector’s direct and indirect employment is estimated at more than 15,000 jobs, according to the Lignite Energy Council.