Federal Issues

Minnesota Farm

Key Energy and Cooperative Issues Facing Congress

111 (d) Clean Power Plan

Background
In August, 2015, the Environmental Protection Agency (EPA) finalized regulations under section 111(d) of the Clean Air Act to limit carbon dioxide emissions from fossil fuel power plants, such as coal plants. It is important we implement these regulations in a way that best preserves reliability and affordability for our members. Since no means of eliminating carbon dioxide from the smokestack of existing plants exists, compliance will dramatically reshape how America generates and uses electricity. Production from coal power plants remains vitally important; providing about 58% of the energy cooperatives rely on. Cooperatives have already invested billions of dollars for environmental control upgrades in response to recent EPA regulations. The Clean Power Plan (CPP) puts those investments at risk.
The coal generators owned by MN’s cooperatives are all located outside the state. This rule hit North Dakota (ND) based generation especially hard, with the increase in emissions reductions targets between the proposed and final rules being higher in North Dakota than any other state. The rule establishes emissions reduction requirements for each state by 2032, for example, 45% for North Dakota.
Changes must be made in the rule’s ‘interim targets’. While EPA talks about meeting reductions by 2032, the rule currently imposes high reduction requirements in much shorter timeframes. ND is required to meet two-thirds of its reduction requirement within the first three year window (2022 – 2025).
Local communities can’t afford to have plants, a vital part of a rural economy, shuttered prematurely. This rule disproportionately affects people served by co-ops, increasing electricity prices and jeopardizing reliability. Co-ops serve 93% of the nation’s persistent poverty counties. One in six of the nation’s co-op members live below the poverty line. Our members can’t afford to pay for existing power plants closed pre-maturely by a shift in federal policy, and pay again to replace them with new sources of generation.
Current Status
The rule was published Oct. 23, 2015. Numerous court cases were filed to stay the rule, pending the outcome of court action against the rule. The DC Court denied this stay, making the interim targets loom even more ominously.

Summary

  • The rule’s interim targets, starting in 2022, create unrealistic timelines for achieving the transitions that will be required under the CPP. Building a new generation source takes ten years, and yet two-thirds of the reduction in ND is required by 2022 – 2025 under these interim targets.
  • Cooperatives in MN have already installed over 2,100 MW of renewable energy, and are also facing trends of decreasing total loads.
  • We are making adjustments, but realigning the power system shouldn’t be crammed into just a few years.
  • According to the EPA’s own estimate, the rule will accelerate the shutdown of more than one quarter of electric co-ops’ coal-fired generation capacity. The burden of paying off the remaining debt on those plants and paying for electricity from other sources falls to our members, not shareholders.
  • The final rule must accommodate robust, efficient, and comprehensive trading to keep rate increases as low as possible.

Requested Action
Work with us on a letter to the EPA. In particular, we’re asking for help communicating the need for adjustments in the interim targets, which unnecessarily force expensive decisions before the rule is even well understood.

Electrify Africa – S 2152 Signed by President and became Public Law No: 114-121 on 02/08/2016
Background 
The Electrify Africa bill (S 2152) is important for the transformation of communities in remote areas of the African continent with the least access to power of anywhere on earth. Just as the Rural Electrification Act of the 30’s transformed the lives of rural America, the Electrify Africa Act will provide access to power through micro grid, off grid and system improvements throughout Sub-Saharan Africa. Projects will utilize a fuel neutral strategy including; gas, coal, hydro, solar and biomass.
The bill would create public-private partnerships to increase access to electricity to 50 million people in Sub-Saharan Africa, particularly in rural communities, by 2020. An additional 20,000 MW of electric power would be on line by that time. In sub-Saharan Africa, 68% of the population lives without electricity. For over 50 years the National Rural Electric Cooperative Association (NRECA) International has provided people in developing countries with access to electricity, resulting in millions of new jobs and higher quality of life for rural communities around the world. This work in currently ongoing across four continents. More remains to be done. This bill would boost NRECA International Program efforts in the region, and reinforce in Congress and for all involved the positive impact electric cooperatives have on the world.
It is similar to House legislation (H.R. 2548) which passed with overwhelming support last (113th) Congress, but the measure did not reach the Senate floor in the 113th Congress. S 2152 passed Senate by unanimous consent December 18, 2015.
Current Status

Signed by President and became Public Law No: 114-121 on 02/08/2016
The rule was published Oct. 23, 2015. Numerous court cases were filed to stay the rule, pending the outcome of court action against the rule. The DC Court denied this stay, making the interim targets loom even more ominously.
Summary

  • The rule’s interim targets, starting in 2022, create unrealistic timelines for achieving the transitions that will be required under the CPP. Building a new generation source takes ten years, and yet two-thirds of the reduction in ND is required by 2022 – 2025 under these interim targets.
  • Cooperatives in MN have already installed over 2,100 MW of renewable energy, and are also facing trends of decreasing total loads.
    We are making adjustments, but realigning the power system shouldn’t be crammed into just a few years.
  • According to the EPA’s own estimate, the rule will accelerate the shutdown of more than one quarter of electric co-ops’ coal-fired generation capacity. The burden of paying off the remaining debt on those plants and paying for electricity from other sources falls to our members, not shareholders.
  • The final rule must accommodate robust, efficient, and comprehensive trading to keep rate increases as low as possible.

Requested Action
Work with us on a letter to the EPA. In particular, we’re asking for help communicating the need for adjustments in the interim targets, which unnecessarily force expensive decisions before the rule is even well understood.

Minnesota Stray Voltage Guide

Background
Minnesota Rural Electric Association (MREA) recently led a broad stakeholder process to develop an important tool in dealing with stray voltage challenges across the state of Minnesota. As a result, the Minnesota Stray Voltage Guide is now available for livestock farmers across the state and being used to address any stay voltage concerns that arise in the state.
This is the first time in Minnesota a broad based stakeholder group came together to agree on an approach for handling stray voltage concerns, following a nine-month voluntary and collaborative effort. The presence of ‘stray voltage’ is a normal result of electricity traveling through utility distribution systems, which must be grounded to earth to ensure safe and reliable operation. However, if problems occur, the level of voltage present on a farm can reach levels that could impact livestock. This is most often seen at dairy farms, where voltage levels exceeding certain thresholds could affect the behavior of cows. As the nation’s sixth largest milk producer, this is important in Minnesota. Dairy farmers are our member-owners. This will give us all another tool to ensure we can successfully deal with any challenges they may be experiencing in this area. Other states have adopted standard practices to address stray voltage concern. This Guide puts standards in place that are commonly used in other states that have acted on this issue.
The participants were the Minnesota Farm Bureau, Minnesota Farmers Union, Cooperative Network, all the utilities in the state, and the Minnesota Department of Labor & Industry and Department of Agriculture.
Current Status
The Minnesota Stray Voltage Guide was published in the fall of 2015, and is available for free to download at:
http://www.minnesotastrayvoltageguide.com
Every dairy farmer in the state has been sent information about the Guide. All utilities in the state are now adopting this common approach.

Summary

  • Developing the Minnesota Stray Voltage Guide was a voluntary effort MREA led at the state level.
  • Minnesota is the sixth largest dairy state in the nation. Having these standards in place will help ensure the continued success of the state’s dairy industry.
  • The standards in the Guide are consistent with those adopted by other states, and based on a large amount of research that has been done in this area.

Requested Action
No Federal level action is required.
In the past, our Federal delegation has heard from constituents with concerns regarding stray voltage. This Guide will help address those concerns.
Please contact MREA if you hear concerns about this issue.

RUS Funding

Background
Electric cooperatives use Rural Utilities Service (RUS) Electric Loans to finance electricity generation and distribution and provide affordable, reliable electric service to approximately 42 million people every day. Consumer-owned, not-for-profit electric cooperatives maintain nearly half the nation’s electric distribution lines. Electric cooperatives’ distribution systems cover 75% of this country’s land mass while serving 12% of American electric consumers. In Minnesota, they provide electric service to 85% of the state’s land, and a third of the state’s population.

RUS loans are repaid with interest and have an extraordinary track record of repayment. RUS Electric Loans contribute to deficit reduction. In fiscal year 2016 alone, electric loan repayments will net nearly $300 million to the U.S. Treasury.
Recent Presidential budgets have recommended that portions of the total loan amount be directed toward specific purposes. Instead, we suggest RUS lending continue to be driven by the needs of the borrower rather than limited by the type of project proposed. This flexibility will help meet the diverse challenges of RUS electric borrowers and ensure loans are available whether the project is for environmental upgrades to current generation, the construction of renewable or natural gas generation, or the development of new baseload generation.

Electric co-ops appreciated the FY 2016 funding levels for RUS (5.5 Billion), Guaranteed Underwriter Program ($750 Million) and the Rural Economic Development Loan & Grant Program ($33.07 Million). RUS and Guaranteed Underwriter Program (GUP) did see spending increases in FY 2016. RUS was formerly at $5 Billion and GUP was formerly at $500 Million. There was no change in the Rural Economic Development Loan & Grant Program levels.
Current Status
RUS funding will be included in the upcoming Fiscal Year 2017 appropriations process. President’s budget release anticipated February 9, 2016.
Action to originate from the Senate and House Appropriations Subcommittee on Agriculture, Rural Development, Food and Drug Administration and Related Agencies (no Minnesota members).

Summary

  • Increasing regulatory requirements, such as the Clean Power Plan, will require additional infrastructure to comply. This makes sufficient funding levels for the RUS program even more important. Robust funding for these programs will help co-ops keep the lights on in the face of the Clean Power Plan
  • RUS funding has been a critical component to the success of rural electrification right from its earliest days – and continues to be.
  • Loans are repaid with interest, and contribute to deficit reduction.
  • Funding should not be restricted to particular priorities, but available to allow cooperatives to fund their business requirements.

Requested Action
Support adequate funding for RUS loans during the FY 2017 Appropriations process. We ask that, at a minimum, level funding from FY 2016 be maintained.
NRECA will be contacting you after the President’s budget is released to sign onto a letter of support to the Appropriations Committee.
Thank these Representatives for signing a letter of support for RUS funding in FY 2016: Emmer, Kline, Peterson, Nolan, and Walz.

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